Everyone Feared The Mexican Soda Tax.
Coca-Cola FEMSA Called Its Bluff.
Q2 2026: consolidated revenue up 6.6% currency-neutral. EBITDA margin up 130bps to 19.7%. Mexico's operating margin is down 110bps anyway.
Coca-Cola FEMSA passed through roughly 85% of a combined excise tax hike and cumulative inflation to Mexican retail prices by the end of June. Mexican domestic volume still grew, by about 1.0%.
Sit with that for a moment. The standard fear when a government raises a sweetened beverage tax is that consumers punish the brand. Coca-Cola FEMSA raised prices on nearly the full weight of the tax. People kept buying. The rest of this quarter’s numbers only make sense once that fact is on the table.
The Tax Was Never The Problem. The Freight Bill Was
Mexico and Central America delivered revenue of Ps. 45,450 million in the quarter, up just 0.3% on a reported basis and 2.0% on a currency-neutral basis. Division volume grew 1.4%. On the surface, that reads like a division absorbing a demand shock.
It was not. Operating income for the division fell 7.0% to Ps. 6,351 million. Operating margin contracted 110 basis points to 14.0%. The cause was a 9.1% increase in operating expenses. Third-party freight costs spiked 20%. Marketing spend rose 9%, front-loaded for early FIFA World Cup activations. The tax pass-through worked. The cost line did not cooperate.
This is the cyclical versus structural question in miniature. Is Mexican margin pressure a temporary opex spike around a football tournament? Or is it a structural cost base drifting upward regardless of what management does with price? The freight number leans toward temporary. A 20% jump in third-party freight in a single quarter reads as a logistics market squeeze, not a permanent repricing of Mexican distribution. If that number holds through Q3, the read changes. For now, treat it as noise layered on top of a genuinely successful pricing execution.
Consumers did not disappear. They traded down in package format instead, shifting toward multi-serve returnable glass and PET to manage household budgets. Coca-Cola FEMSA still gained share through that shift, up 0.5 percentage points in NARTD value share and 0.7 points in CSDs. That is not a company losing a pricing war. That is a company that won the pricing war and lost the freight negotiation.
