Colombia should consider following Mexico in imposing a tax on sugary drinks to prevent an obesity crisis, Colombian health minister says

Nevin Barich

BOGOTA, Colombia , April 4, 2014 (Bloomberg LP) – Colombia should consider following Mexico in imposing a tax on sugary drinks to prevent an obesity crisis, the Andean nation’s Health Minister Alejandro Gaviria said.

“This could become a very serious health problem,” Gaviria said yesterday in an interview in Bogota. “Mexico has a huge obesity problem. We’re not anywhere close to that, but we’re interested in having this debate.”

Mexico’s imposition of a tax on sugary drinks and junk food on Jan. 1 is being followed by Chile, where President Michelle Bachelet sent a proposal to tax soft drinks to Congress on April 2. Coca-Cola Femsa SAB forecasts that sales of Sprite, Coke and other sugared drinks may fall as much as 7 percent in Mexico this year, in response to the new tax of one peso (8 cents) per liter.

Mexico is the world’s largest per-capita consumer of soft drinks, according to data tracker Euromonitor International, and has the fattest population in the Americas. Mexico’s 33 percent obesity rate compares to 32 percent in the U.S., 30 percent in Chile and 18 percent in Colombia, according to the World Health Organization.

Gaviria, 47, who studied economics at the University of California in San Diego, said a tax increase will face resistence from the nation’s sugar producers.

“Here in Colombia there are media groups that are big sugar mill owners,” Gaviria said. “So Ministers who propose this don’t get very far.”

FRUIT FLAVORS

Postobon SA, owned by billionaire Carlos Ardila Lulle, Colombia’s 3rd-wealthiest person, sells sweet, brightly-colored fruit-flavored drinks, as well as PepsiCo Inc. products. Postobon and PepsiCo between them had a 44 percent value share of the carbonates market in 2012, compared with 21 percent for Coca-Cola Co., according to Euromonitor International.

Ardila Lulle owns television and radio network RCN as well as sugar and ethanol producers. Postobon and RCN didn’t immediately reply to e-mails seeking comment.

Bloomberg Philanthropies funded media campaigns last year in support of Mexico’s soda tax, part of its efforts to combat obesity, according to its website. The organization is controlled by Michael Bloomberg, the majority shareholder of Bloomberg LP, which owns Bloomberg News.

Health spending will need to rise over the next few years, as the population grows and ages, Gaviria said. Colombia spent $432 per capita on health in 2011, according to the World Bank, compared with about $1,121 per capita in Brazil and $8,608 per capita in the U.S.

Gaviria said he wants to attract generic drugmakers from Korea and India to enter the Colombian market, to boost competition.

Munir Jalil, head analyst at Citigroup Inc.’s Colombia unit, says Gaviria is a possible future finance minister if President Juan Manuel Santos wins a second four-year term in presidential elections to be held May 25.

To contact the reporter on this story: Oscar Medina in Bogota at omedinacruz@bloomberg.net To contact the editors responsible for this story: Matthew Bristow at mbristow5@bloomberg.net Philip Sanders

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