E-Malt.com News article: Mexico: FEMSA to increase beer prices by 11% if the government raises taxes

Mexican brewer and bottler FEMSA would be forced to raise its beer prices by 11 percent if a government plan to raise taxes is approved, Genaro Borrego, the company's head of corporate affairs, was quoted as saying by Reuters on September, 29.

"It's an excessive proposal," Borrego said. "The proposal would mean that for every peso of beer sold, 50 centavos would go to the tax man."

Mexican President Felipe Calderon has proposed a 2 percent sales tax on all products, including currently exempt food and medicine. He also wants to increase income tax and existing taxes on goods like beer, soft drinks and cigarettes.

FEMSA, the rival of Grupo Modelo, makes Bohemia, Tecate and Dos Equis brand beers.

Grupo Modelo makes Corona brand.

The proposals have been criticized and may be altered before being passed by Congress, where Calderon lacks a majority.

Congress is expected to vote on the plan by October 31.

Borrego, who once led the Institutional Revolutionary Party, the main opposition party currently in Congress, said the proposed tax plan would deeply hurt some of the country's oldest businesses.

"This means lower (beer) volumes that would hurt an industry that has been in the country for over 100 years and has always paid taxes," said Borrego.

FEMSA has had weak sales this year because of the recession, but some of its units, like convenience store chain Oxxo, have rapidly expanded.


30 September, 2009