‘Mexico’s moment?’

18 Oct 2013

The traffic in Mexico City is not for the faint hearted.  It feels like eight lanes of cars are constantly jostling into four. 

Thankfully our taxi driver, Horacio, is an expert in the art and we gradually make progress towards the Polanco district. Here, designer brand shops and smart restaurants line the streets.  It is as clear an illustration as you will find of Mexico's aspirational culture and growing economy. 

Indeed, some say it is 'Mexico's moment'. With government pursuing ambitious structural reforms, it is hoped that the foundations are being laid for future growth and better living conditions for millions of Mexicans. 

Aspirational consumers and increasing affluence usually create opportunities for imported products, including Scotch Whisky.  Popular in cities such as Guadalajara and Monterrey, Scotch is already one of the fastest growing UK exports to Mexico.  Shipment value has increased by in excess of 100% over the last decade to £92 million.  The result is that Mexico has already broken into the industry's top ten markets. 

This is despite a high tax regime that penalises quality products.  When I visited Mexico last month much of the talk was about the publication of a long awaited tax bill, a key plank of the government's reform agenda. 

The proposed changes to the alcohol tax system are, however, disappointing.  Local and international spirits producers will therefore continue to argue for changes that expand the tax net, whilst lowering the 53% excise rate to a level that reduces the incentive to buy from the large informal alcohol market. 

Tackling the informal market will be as challenging as navigating the rush hour traffic.   However, tax reform and improved revenue controls would benefit consumers, government and producers alike.  

David Williamson is SWA deputy director of international affairs