Mexico's tax on junk food, sugary drinks hitting Pepsi, Coke

No wonder Coke and Pepsi are spending millions of dollars to fight proposed taxes on sugary drinks in California.

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PepsiCo reported a higher quarterly profit Thursday as global sales increased, but one weak spot was Mexico. The company said a new tax on junk food and sugary drinks hurt its snacks sales volume by 3 percent. The company reported similar declines for the first half of the year, starting when the tax went into effect.

Coca-Cola has also blamed the tax for volume declines in Mexico.

The declines underscore why the beverage industry is fighting tax proposals on sugary drinks in San Francisco and nearby Berkeley. Voters will decide whether to pass the taxes, which would be the first of their kind in the U.S., on Nov. 4.