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A new 16 percent "luxury tax" on petfood in Mexico could lead to more abandoned and neglected dogs in Tijuana, according to a report.
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The tax is meant to help ease Mexico's budget woes. Pet ownership is viewed by the government as a luxury, therefore making the petfood tax a "luxury tax."
Josh Pratter, director of Baja Dog Rescue in Tijuana, said the group has started to see the result of the tax on the abandoned dog population.
"We're seeing a larger dog on the street now. Bigger dogs are consuming more food so it's more costly to have a bigger dog. They want a smaller dog so the cost is less on a weekly or monthly basis for them," Pratter said.
Mexico introduced a 16 percent tax on processed petfood on January 1. The tax will be applied at the retail level.
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In proposing the tax, government officials called pet ownership a "recreational activity," not a basic need.
The tax will not apply to feed for horses, because the government is exempting livestock feed in an effort to support the agricultural sector of the economy.
Pet owners in Mexico are reportedly protesting after the country's Finance Ministry proposed tax changes that would include a 16 percent sales tax on petfood. The government's tax reform plan opted out of applying the sales tax to food, instead proposing the petfood tax.
Owners argue that the tax increase will lead to increasing malnutrition in pets as well as an increase in the number of abandoned animals. Euromonitor estimates nearly 14 million out of 27 million cats and dogs in Mexico are homeless, which opponents to the tax reform plan say will only increase.
Mexico's lower house approved the deal and the Senate must approve it by the end of October.
Mintel Global Market Navigator released a report on "Pet Food in Mexico," with annual year-end market size data, most recently updated in 2012.
The report covers packaged, prepared dry and wet food for dogs and cats. It includes data on market size, historical data, socio-economic data for Mexico and industry forecasts. The petfood market report can be purchased online.
InVivo NSA Mexico has invested US$16 million in a new petfood manufacturing facility in Morelos, Mexico.
The new petfood manufacturing facility will increase petfood production capacity from 75,000 to 90,000 metric tons per year.
"With over 26 million dogs and cats, the Mexican petfood market is clearly stated as one of the growth drivers of InVivo NSA...," said Hubert de Roquefeuil, director of InVivo Animal Nutrition and Health.
Economic forecaster The Economist Intelligence Unit has teamed up with Mintel for a new whitepaper that predicts trends over the next three years in fast moving consumer goods categories in five emerging markets compared to the USA and EU, including Mexico's growing pet food market.
The whitepaper, Convergence with Divergence, found that sales of pet food in Mexico have doubled in the last five years, as pet owners shift from feeding their dogs and cats scraps to buying prepared pet food. The whitepaper notes that pet food companies such as Nestle and Mars are leading Mexico's pet food market, which is beginning to resemble that of the US.
