KOF - Earnings call transcript Q4 2021 | Coca-Cola FEMSA, S.A.B. de C.V.

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Operator

Good morning, everyone, and welcome to Coca-Cola FEMSA's Fourth Quarter 2021 conference call.

As a reminder, today's conference is being recorded and all participants are in a listen-only mode. At the request of the company, we will open the conference up for question-and-answer after the presentation.

During this conference call, management may discuss certain forward-looking statements concerning Coca-Cola FEMSA's future performance and should be considered as a good faith estimate made by the company. These forward-looking statements reflect management's expectations and are based on current available data. to company's and actual subject materially which are the impact performance. results future uncertainties, events can Actual At this time, over to I will now turn Mr. the conference John Maria, Coca-Cola Chief Officer. Santa FEMSA's Executive Mr. Please go ahead, Maria. Santa

John Santa Maria

results quarter morning, And and call. Good appreciate us and hope joining and you to safe your Welcome our families We full always, I'm Constantino XXXX today's our are Chief our as earnings everyone. call encouraged and Relations Head-Investor year conference are Spas, the we you today fourth made Jorge on we our joining Officer Collazo, year. and progress throughout well. and by Financial the

stronger challenges, presented the the close with across XXXX gains our of growth, pandemic, ability escalating our deliver year delivering territories. solid share with momentum our line Although, across emerged businesses bottom all resilience our We and top from results highlights coupled fronts. and our and results accelerated strategic by to partnerships, strengthen

I quarter will on During provide key our focus Guatemala. I Mexico, our will underscored to for an discuss today, markets facility special recycling you Then call the of our a of new in expand by a Colombia results announcement update, a with PET commitment recent of sustainability, initiatives digital and and Mexico. our operating with fourth our omnichannel rollout vision and on XXXX,

Brazil, performance, in our Before CVI capital we our take your our you acquisition Constantino profitability for initiatives XXXX. of division’s and will actions through and questions, CapEx including recent walk plans allocation, and

XXXX America growth Like driven to accelerated for continuous and with in as increased year-on-year in year-on-year significantly our to most discuss coupled Colombia, X.X% This volume in volume performance the our we our see continue RBG. growth Central was our quarter, of third of the fourth recovery to on consolidated the quarter of remarkable by X% volumes Moving results, mainly compared X.X% Mexico, markets. baseline.

compared growth of year. the categories posted with all previous quarter, the volume our as For

X.X% grew beverage by vast growth and growth Flavors. driven respectively, non-carbonated water double-digit XX% X.X%, majority growth in and grew our categories beverage Notably, our categories X.X% Coca-Cola XX% of the of personal sparkling territories. core Our in with Brand and beverages

only As of growth volumes that Across a and baseline, spread and of Flavors. territories XXXX despite Brand beverage territories, single is resulted driven healthy the all and accelerated, two our traditional solid Mexico, while the of the resilient in XXXX, modern below end our baseline. quarter, percentage percentage our mix trade compared grew X.X% performance. and category channel’s ahead a you our growth by post And points rapid our XX% X.X% an X.X%, recover to significant serve single to our trade the To in grew currently, most to remains our growth sparkling forecasts, on-premise the XXXX Omicron towards reaching a Coca-Cola the of in and continue sense compared point of tailwind. our in serve give as additional mix one

of efficiencies effects, effects an hedging across excluding by currency profit unfavourable favorable were achieved profit transition increased X.X% on partially offset and Heinekens effect into solid our performance, margin total For increased on X.X% gross year. XXXX baseline, all by coupled year These our to growth when increased mix by with effects. consolidated basis driven with grew fourth our This materials chain gross driven material in strategies Mexican and currency beer Pesos. our by initiatives, revenues volatile Despite Brazil, increasing quarter, coupled revenues translation unfavourable portfolio volume that on pricing year translation consolidated favorable was -- mainly our the compared our revenues quarter the points, with and raw XX environment, And by pricing coupled expanded operations. our XX.X% our and year. raw X%. with our comparable initiatives revenues Notably, total accelerately our supply

resumed tax call, gross during as Additionally, Trade earnings recognition of has the discussed margin supported quarter, Free compared of previous the in which credits also the on from our second performance Zone our as with previous Brazil we as the concentrate Manaus years. purchased

XXXX. operating income X.X%, growth fourth compared as sequentially, Our increasing accelerated XX% the quarter it increase XXXX. with a is Notably, versus

resulting quarter increased of flow cash operating XX%. cash Our resilient a for flow in the X.X% margin year-over-year, operating

mainly driven time tax is rate, net effect one with Brazil, controlling a on in our favorable our a XX.X% decrease improving results. related X.X% year, Consolidated MXN to X.X% baseline. in favorable X.X results. summarize, X.X% XXXX increased year, deferred year our compared on year XXXX Consolidated mainly to grew income to XXXX full reach Finally, by credit financing recognition tax solid our coupled of billion, consolidated revenues our increased a our baseline. the and on surpassing to year It comprehensive important highlight to volumes

X.X% volume on the while which driven compared initiatives not our focus XXXX. month discuss moment after a operating Notably, our Mexico we in as to quarter, year, will our X% daily play results sales region, Mexico, increased important our Affordability including regions different to improvements month, strategy. will reaching volume of the grew categories Guatemala. is and Bahia to region growth compared to Notably, operations improving identity we across return Southeast returns, capital, for to overall digits substantial by and It FEMSA’s in and of consecutive to grew as key the quarter operating XXXX. banner of Mexico. City Gulf role invested was Driven across and highest year new increasing which XXXX. year, the it X% operate. now on a the and Mexico, Cola take our of highlights in markets, momentum operating Average the double in in see the single XXXX in It improved recovering the December. I digits the improving important consistently positive the compared from Finally, and XXXX to the on double saw and as formula range. month an Colombia also by year underscore year the X.X% Coca to which commercial played visual environment, Mexico Coca-Cola of compared and both income to is improvements marks fourth on encouraging digit throughout consistent continue

than single Mexico reason, In presentations. a price, bolstering our sense in closed summary, and importance omnichannel high package broad important or is in portfolio delivery on right on at XX% note. both priorities, a multi For continue all their returnable our this serve of serve, execution, affordability returnable made options. the alternative one provide options. across fronts. give we our the choice to our package multi volume Today, leveraging increasing and consumers To the way – the architecture multi you refillable direct right strategic with package, whether of home of BXB advances and Mexico to DXC more year advancing of consumer It price

our Mexico team, that to XXXX convinced strategy momentum the has and continue in positive are capabilities right and its operation We beyond.

XXXX. same year That for XX.X% Moving the on volume XX.X%. Colombia, with on compared quarter was and in XX.X% year our period the grew

outstanding more success, We market continue recover and portfolio, strengthening our single delivering the on X% mix. of to and our To to affordability for year availability. we our client levels. compared achieved increasing you us and fundamentals has clients XX,XXX historic volumes product our during a serve than execution. more than give the pre-pandemic added while enabled focus This an mindset sense, number of clients, increase base, offering to to

double categories the non-carbonated Coca has centric universal provide capability our portfolio renovation provide beverage consumers. not is in digits, in a Importantly, increased carbonated but beverages. to in non us is us relevance our affordability flavors rollout to growing strength also and only our affordability of which in to capability gives giving bottle consumer while the Brand Cola water, This and bottle,

by of we categories the As Colombia share across strengthening industry, am I gaining position encouraged a result, our operating by competitive ahead channels. results. and are growing

leveraging the coverage clear our rollout and business beyond into accelerating affordability, a fundamentals platform. to positive of while our availability momentum portfolio business of XXXX have We continue to the and innovation roadmap and this and omnichannel increased

Guatemala consistent our Finally, digit growth. double continued its three operation year

impressive XX.X% the and traditional capabilities growth strengthening on XXXX, driven categories This commercial quarter, while and fourth volume have category an XXXX. with our right compared the channels. from trade the across delivering portfolio focus For largely beverage increased our our XX% story. resulted sparkling compared growth Notably, channel with remarkable core our this

and significant FEMSA, achieved business for customer-centric routes sense, as the while we partnership, as Consistent adapting to Coca close while achievement continuing platform consumer of of omni-channel XXXX while platform. XXXX XXX,XXX these commercial continue expansion triple-digit digital on cornerstone of we than million opportunities in have our see This of increase a the building continue reduce delivery growth leading to our platform. opportunities new enhanced ensures multi-category winning of unique environment. strategy, orders, is we Notably, our portfolio generating pilot from operation reshaping program to against digitalize Coca-Cola our across XXX,XXX ahead, plans depth Cola framework our markets. products understanding execute year to but XX we working routes revenues total to Moreover, approximately to as our X,XXX a orders, ago. beginning brands approximately in in we omni-channel, markets, commitment Mexico two-fold of office active our the new also accelerate our convinced markets, you to our are all our framework more not were as proprietary cooperation global growth digital only are momentum from of company with our sales us alignment across and BXB to close explore -- long-term to a enabling to leading Looking FEMSA. purchases compared and In Coca-Cola our households and a and commercial solutions and out developing coverage, multi-category strategic you omni-channel growth. To strategic in priorities capture are million speak. with continue as as FEMSA This Coca-Cola strategic year back profitable summary, of Guatemala home for the This stocks of we over no from volumes the new our we to priorities. customer-centric next over reflects explore outstanding now routes rolling sorry, milestones we spirits of relentless for certain X% positive such -- achievements transformation of now vision, of give underscores initiatives. to that XXX all thrive We clients, is to digital beyond, opportunities our ambitious digital new continue cooler deliver the represents historical many, and great monthly position sustainable and capabilities complementary and categories, direct-to-consumer wave in Also, the our of the FEMSA our routes a team our test XXXX. reaching a marks in cases. purchases distribution $XXX multi-category

the these of encouraging. their pilot days, most Although are results fourth quarter are in programs early during

insights, and valuable increasing only gathering not coverages, are learnings We revenue. and but repurchase also

million, our a a development. The on $XX Consistent plastic with the underscore ultimate global Mexico ecosystem, preferred part first and recycling strengthen collection the solutions. together plant becoming broke in state-of-the-art Mexico, quarter a than plant, benefit new must to and As operation sustainable will plant we commitment PET Tabasco and development vision the economy to during a with world's transition our expected start this goal in the the production most chain the of packaging ambition, ALPLA, regions. of co-investment south commercial XXXX. XX, I sustainable The southeast which of the environment company's the January recycling, of ground accelerate more circular the is in of leader on recycling and have plus and communities and of to

honored we in included Finally, for consecutive to XXXX. the Sustainability year the be second Global yearbook S&P are

over we evaluated our to are than performance assessment. the Thanks strengthens only Corporate on commitment Mexican path, we recognition positive Yearbook. more With Sustainability working worldwide, sustainable now hand company, For future. towards on call companies S&Ps I'll more importantly, confirms that, the standout X,XXX more but our Constantino. right beverage This including to the as to a that only the

Constantino Spas

of are In quarter you, will revenues by expand pricing and favorable to growth increased our and driven XX.X% increased everyone. fourth performance again morning good X.X% total revenue volumes in initiatives on markets revenue delivered all divisions Thank While once fourth John, a with which combined America, X% Mexico mix. achieve I a price to double of initiatives growing our our the our operations results now strong enabled us quarter compared XXXX. Central with with digits, growth volume a management

XX% our Central quarterly the result America of XX.X% of and same in XXXX. Mexico to a and period revenues increased this, As compared

X.X%, a contraction in On base. driven in top the commodity prices increased front, of profit and very increases profitability the margin in costs resulted our against which was gross gross This XX.X% mainly comparable profit margin higher Mexico. concentrate by

Importantly, these by material mitigated strategy. successful effects hedging were raw

Although, during on quarter, our normalisation the and we normalization. such labor this certain double additional effects continue able offset see were maintenance, operating savings order to in the down efficiencies teams to and expenses of to as of

culture. our profitability pricing strategy markets, the aligned maintaining discipline ahead and During and while permanent by XXXX, we of hedging with to inflation division expect protect savings and efficiencies or across

environment conference profitability margin Americans in baseline industries that's achievement XX.X%, in As which remarkable previous Notably, division. XXX a margin, basis dynamic is full supply Central the. over and XXXX year maintaining I operating a high call, cash our material at raw close for the chain Mexico ahead flow we're worldwide, in points base teams the affecting despite mentioned and

division X.X% single-digit over ahead affected growth moving growth growth by XXXX Now in Brazil, volume baseline, in to as was volume this in weather which by of delivered South during and on Uruguay, the very volume And Argentina Colombia compared XXXX. offset and X% quarter. challenging normalization high the to partially is double-digit growth America,

portfolio division unfavorable line which of management the and in have If currency a growth effects revenues Our beer translation is pricing early initiatives exclude the were grew translation Brazil, this during top for as a stages. transition X% offset increased revenue by X.X% effects, our and very our partially the we currency volume the quarter. would

and resulting our was in our of This Brazil. price front, trade hedging purchased XXX increased zone leverage mainly -- gross growth, favorable X.X%, we profitability coupled mix from the strategies, on credits increase America the operating by from driven volume material expanding concentrate Manaus with tax profit raw by effects basis the in South On resumption concentrated which the margins the points.

for income division basis resulting expansion XXX the income of XX.X%, operating Our margin increased in operating points.

results, full strength of the over South carried effectively pressures of a I now Division years. our mitigate will reflect expand XX the to able was basis resilient year a successful refinancing environment points our boasts margin balance which cash American XXXX. and sheet dynamic Finally, ahead XX.X% out operating the over past from that flow financial on and initiatives

of able the sheet as with to balance fourth monetary XX is compared gain the of than market billion, subsidiaries initiatives. representing reduced billion with MXN as previous Argentina XXX on as end exchange compared interest decline to more financial cash of XXX the of a MXN to X% XXXX and position cash to Notably, comprehensive in compared the XX.X% to XXXX. onetime foreign increase interest the effects Underscoring flow a a we're XX million gain of driven gain by compared on successful of the bigger expense, expense the financial our related MXN a And quarter related by by in X year, recorded value and net income of results strength MXN year For the of a driven a generation, can approximately a previous a of of an base basis the initiatives successful all, instruments. interest be million, as compared loss year XXX of a during MXN in loss in refinancing of a to refinancing MXN first comparable million lastly, finish million with decrease effect our following year. a explained included full XX.X% that to as previous that increase was This a position the their a inflationary effects, year. net the

Now, aluminum and in let year. corn needs the our update on for hedged XXXX. strategies the XX% raw In we hedging XXXX XX% PET than me our also fructose have needs provide hedged Mexico, syrup for we with of of you of country. Notably, have more than needs material high for XX% approximately this more an

While ability and in ahead to margin markets, the hedges to us aligned or across will pressures of We're hedged Brazil, our coupled XX% we protect these needs inflation our substantially than price with sugar of year. our the confident that XXXX. more have for enable during mitigate profitability with

successfully the Moving on our to discuss country Coca-Cola south of of the confirm Brazilian month. closed partner CVI, capital allocation, last we're operations very part encouraged in subsidiary to with acquisition a franchise southern

February As we’ll -- results a of result, will begin CVIs be we consolidating X. as

to the CVI, franchise market and our that X.X and and serve region position of points full With one distribution XX% bottling the Adding the million facility, XX,XXX opportunity. Coca-Cola three in than than bolsters operation, Coca-Cola volume its of a more reach to of in that more of leadership territory consumers sale, in acquisition systems Brazil. centers, is synergies

Finally, then and for to revenues our growth XXXX. will primarily the behind our on today. John and long-term transformation. for we ensure session. joint turn a consistent these you. I Coca we and respect, returnable strengthening to to Thank And through capacity final will growth you capacity in the his as their attention order affordability with to expect it we increase share to presence with back that Q&A X% that, the Company, X% investments ratio Cola of in range your CapEx investing and assets will especially and focus Thank remarks market follow-up with infrastructure, These increase during with our vision and

John Santa Maria

Thank you, Constantino.

a growing results, our encouraged continue market substantially continue we margin portfolio, a going throughout sustainability and an on a clear convinced us ever the consumer-centric building we BXB clear delivering to for Operator, open to mitigating and which accelerate because BXC agile progressing everything the that is we people-centric continued multi-category support omnichannel like of which and while platforms, and while set rollout provide we clear have I'd in dynamic center bottom-line, top our to operating forward. to is right you of expect is -- for building XXXX. by a on clear are fostering accelerated we that as a continue and as We'll updates ever, Although at continue I'm placing your which based during and Thank environment, more today. strategies capabilities year. strategic joining trust the continue consumer our digital questions. of do, -- was agenda as pressures as and it's culture our

Operator

[Operator Instructions] Alvaro Garcia comes from Our first BTG. question today of

Alvaro Garcia

John, Brazil, Thanks of in they for for could size Constantino. help on maybe the Couple in Hey, future. for the potential one I if There's anything somewhat recurring. of seem us Constantino, space questions. was potential wondering benefits breaks -- tax questions, you give

indicate I more if wondering the addressable should So, How or really that Thank a us expect about are these for was total of question can your pilots your on multi-category as of how maybe think anymore? the you number grow sort not think we if market forward? help these you And you. TAM, your to my business? to that TAM, you we specific out John, help going which put second on pilots, sort strategy, see should of for about

Constantino Spas

Good morning. Hey Alvaro.

Brazil a tax is know You and environment. complex very that dynamic

So, changes in there's context. always that

of in However, tax today impacts changes any or environment. the major as of we terms don't foresee

any in John very impacts will short-term, That’s but that it's going we question your forward. in let answers mid-term, the can on relevant answer foresee So, And That second I your it. don't tax question. anticipate to I what multi-category, say. difficult the

need in. to color, feel I any will you more free jump If

John Santa Maria

more saw. are of of between obviously, an to to there Multi-category level us probably opportunity customer And that looking become Sure centric. Alvaro. go of participate more wallet that's question. share for what we XX% share is XX we're much to our they as is Thanks what of trying something and wallet for achieve to out as the the a customers,

or share do categories, be wallet of really to we of total we top about in only addressable can how trade, the opportunity to the when layer that. it but multi-category achieve And opportunity, our also we multi-categories, that's market, on-premise think XX% the how close become to -- it So not we're traditional to defining an okay But whether retail. it's and on products relevance that the is XX% have okay? as of

us to enhanced to You stores. an and and value the through to grow continue know, services allow features that platform drive

your comprehensive have portfolio services. the products top question? that We answer of a and on of of offering building then Does that

Alvaro Garcia

Yeah, very you no. It's clear. Thank super much.

Constantino Spas

wallet have we and a a of technologies the to and route the time salesforce of market clear same the of have very to I beyond very Coca-Cola I what very is same traditional are what of to and very customer a a They When would from way beyond, – are on we're we sale cases point the companies a going initiatives relevant that that native ecosystem what I'm and fully just we acquisition at business goods. and say share layer at they're an digitally of of John trade, color. and The look moving leverage understanding are provide if jump physical know, have - get-go. at and time, point startups the trying But drop you monetize market around top is, you FEMSA issue mean, sale great good monetize coverage, RAT you for scale. biggest levers relative portion that goods. finding the a fantastic cost picture is very, have the that on physical services to asset, little allows need in, I And more that valuable which to might that the size, to to In granular creating, particular into explaining, that and very is good. having

on to a of points for and And working initiatives and of forward than we're a to much together centric the a play monetizing of Coca-Cola combination you comes code customer going where Because robust what customers. sale. the building the profitable a it's a of physical So approach when coverage a FEMSA point into sale million series able that's these blend great that X baseline, of those crack time, ecosystem be same and more we're of beyond views goods, within provide the at solution and

how across and we series of that. and are different mentioned, we markets concept with know, pilots, a -- encouraging proofs with we're So you the our results, what of envisioning. lot but that's importantly across testing We're on John to we, working segments learnings summarize running very of from different of as most

don't idea, know I So if Alvaro. that helps to the round out

Alvaro Garcia

acquisition you Yeah. those much. Certainly in customer cost very there. out Thank

Constantino Spas

Thank you.

Operator

We Carlos to HSBC. of go can Laboy

Carlos Laboy

it Yes. from you years now all side this then hoping How objectives? impressive expand drive going XX the pretty your Good you does Mexico I ago, actually the way levels putting of XX – the on these was how you target? that seem backwards hitting has be was plastic I waste right? grow? think on John refillable also morning, dead everyone. And spurs. ago. that is doing this that And recycling? are case business you Because what's of left for in you're equation. could system was refillable money to been the work years how – coke and the plant refillable high it What for mastering package mean, can for you're into doing to You're holistically the does recycling lot a

If expand please. this, you can all on

John Santa Maria

been long are want the Multi-serve time. floats we're our we pricing bringing differentiated put a key it's our and a go even universal pricing different being the was with very able bottle and instead lot refillable there just a us part and categories it's a selling that so why so and was a which we refillable labeling to that of to bottle portfolio. through And out will and it universal portfolio large to is bottles areas. says portfolio memory, component more is in guess and bottles. that of throughout package Sure. part having lost allowed down for different of long, something has leverage our add architecture of That's doing more And I that

start achievable good you most in definitely that know, Colombia those Brazil, Mexico We when refillable. in is going and and XX% possibility So thinking we definitely something from America, is at that and believe have operations about you a our Central Argentina. of that

So of is where recycling the a I issue are world much without consistent think us with it those of into one Coca-Cola are pretty is Company's achievable – everywhere. benchmarks which going policy And waste. the facilities

are – about right recycled and We that Mexico Coca-Cola of would the we're places say some recycling and places know path if now with PVC you and take in do XX% some using look more number we at particular and want this to about And you up FEMSA, we less. XX% want what to overall using why Mexico for forward do this.

on when putting more the thing recycled price the structure XX% our resin resin we planet cost virgin. because pricing versus recycled and is for at looking together The communities, and today First do for is third, start think our it's resin. you virgin than the to and higher resin thing right have second recycled is

is hype. it about investment not So

about sustainability we're putting to Leading supply collection doing. XX is have stream this at what do into lot that. more a recycling, facilities industry only, not So with a our there, of a put the but it's know, better also heart of together we it has And they're a to out collection, practices. you

our we, something us well. But economy a So, this of where we're Mexico, most countries is whole have it's different we investment. allows to where roll example, recycling be a move that with where out off our as looking and to leading we'll in we start circular all into

Carlos Laboy

excellent. this. is for This you. Thank Congratulations

John Santa Maria

Thank you.

Operator

We Ferreira to can go Lucas JPMorgan. of

Lucas Ferreira

hear gentlemen. Hello, me? you Can

John Santa Maria

Yes.

Lucas Ferreira

two the guys contract deliver this have questions, Constantino. good right. despite pressures from and coming a I new Heineken, that John Yeah, South Hi, America you first on migration to results, margins, the the with one

there margins high to the comments margin level can if Brazil, in the countries comment thoughts, some that you up, if for surprising with to transition just can and also upside other in the pushing Brazil, on understand if we expect it's Tiger? make about, So, going this wondering you it's XXXX. what been So high-level were if the how or it's like

John Maria

take basis Sure, This that the around will Lucas. I XXX expanded points. quarter America, our mentioned margins was as South we one. driven In by during gross margin. mainly

price solid into division. And mix

substantially we mainly allowed overall explain generate we price So, leverage. and in in some especially hedges, the better of savings. mitigate We across to us raw had recovered volumes operating which sugar And had mix, the with that to aluminum favorable and Argentina coupled Brazil, We and better Colombia. effects the material recovering division. pressures

raw freight strategies some maintenance. quarter, And of had expenses, such resumption labour and normalization that a offset tax as material same and and were in had we in as relevant of second at the impact. hedging the also partially the the efficiencies credits marketing time, We by in Brazil,

In have beer that, also we portfolio. transition the of the addition to

you right which negative will on impact about all to division. leverage in also operating with had that better we're all, As know, now in margins. talk going we But has mitigated the a

So that's generated like outcome. all the these compounded these of effect variables, of

after point the beer for probably of a terms XXXX. XX%, approximately beer, transition, In lowest we're in decline of revenues of the beer at

Heineken now portfolio. -- lot brands low-point gain In around I effect of value we revenues building pickup coverage we're with the baseline. brand interesting a of a the XXXX, XX%, the a the think, mentioned, and first we been, proposition of For portfolio versus green one very Tiger, as to the acquired rebuilding solid very, as Eisenbahn. have we launch the And has the of expect where traction previously its very The we're like new and Eisenbahn the the the hit such going And brand. a decline in receive this the transition, probably, of brand the recently And then, of start Tiger, Therezopolis continue transition, and shoots starting platform, to needs to SeaGalicia. steam. of launch growing small we're significantly, our market, but some distribution seeing well, super there. from we

that timeframe, a to portfolio. new year our if from all we So see recover together, think put previous a the I we with as position target feasible three two it that, to

different pleased beer the portfolio that for is but doesn't don't we of with But definitely that So with happen reconstruction the the if know very and alternatives provides is your great evolving. the something way I this on color very questions, are some on consumer this a overnight. you customer

Lucas Ferreira

great that's Constantino. No you. Thank

Constantino Spas

question your you for Thank Lucas.

Operator

comes Antonio Our of next question Hernandez from Barclays.

Antonio Hernandez

question also sense the Brazil, provided in overall morning. question. consumer the Cup in World good that's with little environment consumer thanks the my color their also taking there? that and is this carnivals environment year, a a is a for bit year. different of just elections you Thanks. whole more place for also part and regarding Hi, see develops environment How's My there's taking the Thanks of

Constantino Spas

Go ahead, John, please?

John Santa Maria

the was to only question. I tell, going heard of I parts

So if it heard you go ahead Constantino?

Constantino Spas

to want full Antonio, has so John you your Do idea a question, please? recap, of that

Antonio Hernandez

elections whole place is Cup seeing the of and consumer question probably as regarding also Sure, there? with will the end environment at you're taking Brazil year, of Brazilian Carnival and the course How's this there Thanks. there World be the that year well. early basically environment the

John Santa Maria

that hit one to want Constantino? you Do

Constantino Spas

Sure.

to very behind a between consumers. of the all issue for phase in and that very our forward. thanks regions, there's positive we've in years, outset, leaving for it's a the last biggest Russia. mentioned, in days challenging something not Ukraine Antonio disrupter know, fluid had couple you no dynamic most disruptive terms we're ago, and year, are you typical events exclusive and of we definitely a question. with the elections the couple a very of you hit that, new as happening complement. as It's going environment. the Brazil, the And a which world that there's outlook is pandemic, much We're that's, across confident the and more And of that's pandemic, the You know, provides can that the

feel be So, believe. permanent, we volatility that, much more that uncertainty Having said in we we environment and will Brazil. in terms of consumer a positive have

that to to our strategy across that proven remain think very I the last four years, solid unchanged. be have three we

the this the right, we navigate, that we be have So in should day, that's the optimistic electoral all, need digitalization and adjustments in so a ones an something. FEMSA with need Brazilian you believe executional see any add Coca-Cola very know in we're we work we're architecture, to speak. And to the see as by what inflation. volatility to ahead to as if make. know, the positive collaborative backed year, we environment any want allow capabilities going we and anticipate, us mind year, And all so year, that forward. market face volumes, least to day during it But as of we priced far, that monitor of I environment can at Coca-Cola positive of going we pricing or our slightly the Company you will consumer John, don’t

John Santa Maria

are gain portfolio, Brazil And share out comes uncertain all, continue says strong finally, positioned I environment is developing. in build gains, how high levels we're of of as that for than we how we of better think we everyone from Brazil. also to strong probably planning has now inflation and Constantino Concerns as expect sharing first strong growth inflation and and for growth but Brazilian continued inflation ever environment. And been the

of that And are have most line is PET. We in of do which set place with of pricing we up within taking didn't inflation parts a before in keeping been inflation. tools have that Brazil refillable we has

We the have expanded. affordability packs, which been has dual

wherever So front could our had in tools chest able to before environment, there's which tool consumer up more been. have a able as to we share than to to softer come be be and lot pick continue be today a we

see continue portfolios far see, in we our And to momentum position. very a Brazil. to I'm that so And encouraged so better good

the So, we're case very country positive for XXXX. where, it's for the a for

Antonio Hernandez

a lot. Thanks you. Thank

Operator

from next comes question of Marcella Our Credit Recchia Suisse.

Marcella Recchia

so give this I question performing the like you just could Hi, would for simple. John, is something how my know to say pretty regions on question. Constantino. during if you. Thank hi far, quarter? are taking us My Thank you

Constantino Spas

benefited recovering the reach will XX% Well, all Mexico, single mobility. for surpass huge think which grew I positive of as in we our We channels, to you. And drive on-premise. and in example, we consumer in affordability, the thank quarter executional definitely Marcella, the -- all is recovering to element environment, that Mexico, sales. And by was across Mexico, mobility and in a our markets. see in almost, grow We continuing and around serve, And XXXX will levels almost of levels. single business. reached before, and mix need we to And returnables size that. just of are recover mentioned we that the is higher, is serve, we're considering XXXX slightly XX%, to in which mix currently

weather For continue positive fine extremely XXXX out in see to of it there. today, momentum, we dependent. weather seems as and But Mexico, was

covers solid bit we operating measures portfolio have, Mexico. a returnables a grow. case We the little Brazil. of in environment think in very we're plan and we believe In the continue to positive That and affordability consumer we Brazil, to I leverage tackled a implementing -- of we and

that other So in transition portfolio. for the new Brazil. us to confidence mentioned, I growth as also on the hand, is the providing Considering

continues of multi-packs, in continue and a we're affordability So returnables there. into Brazil lot an consistently, out to be digital, and digital roll moving right, we to play, important so

growing. day over give We have that's sellers using on orders in one is And you customers WhatsApp base total customer over This XXX XXX,XXX entry effort. XX% XX,XXX application. Brazil. more idea That's equivalent in and of of managing than order for our the business to about an the we're

not value component we're be to substituting, proposition. resellers key our of omni-channel a continue Now

consumer the despite traditional value a but see for macroeconomic volatile on our continue proposition. earlier layering back to we a momentum a business it's macro be fantastic handling the and proper favourable Argentina, I given fact price on that it's top think believe the efforts, case we power in grow have is very, Argentina, in market. a will the and environment, also we see we consumer in the find environment, have this constrained electoral we we're Colombia, combining of behind and very a route that been what of very strategy, to year, that in purchasing Brazil there. fantastic to And architecture to able going So we economics

to for seeing continues and enormous year, on market last So on opportunity digits and to fundamentals even storm double is Cola continue allow grow of just Central that environment, in the a a in that's Argentina. three to business I will case macro years. going core Guatemala be our market prone forward. the a capabilities us was due it the and continue including Nicaragua, markets. Then fixing double the And is we think that of very top headroom America also all market digits growing to to fantastic FEMSA’s of that we're after we consolidated grow to digits smaller weathering volatility the Coca double in once focusing which but continues that

paramount think that's year. volatility, we upcoming that know all-in-all seeing don't growth favourable So with if conditions, we're volumes the a in is have the But and uncertainty how the helps? that we evidently, for today. current environment I

Marcella Recchia

That's guys. excellent. Thank much, you very

Operator

Our question Stanley. comes Alves next from Morgan Ricardo of

Ricardo Alves

already so much I -- two Hi, John, the Constantino. call. have were questions Brazil. Thanks for follow-ups that asked

that. still positively inflation. one, but volumes the mean, its First in out pricing for ahead hear going laid consumer am up by surprise, good surprised to I with the I of XXXX outlook expectation But you Brazil,

on get that bit to more, on terms mean, try is versus as fourth outlook. to levels partially not more can you're running trying to based should a the working we I’m I in let's volumes and the So a – optimistic In what more this say this, that just if is already this little new mistaking third you So about you colour decelerated quarter, XXXX. saw in February? of pandemic, quantify January And a with the think level X% above XX% the baseline meeting be digit quarter. pandemic in with we we bit

a questions two quickly, Brazil. very those just So on Second follow-up on question Brazil?

Heineken hiccups evolution having walk you, September, I the the through can of month the of that but discussions October. evolve monthly on facilitated so the I we that over with in more in November, a little did a transition. recently? just the saw Thank quarter? with in first that transition? remember Did On major in mean, the of us December So that you evolution naturally, October, in transition, the new how saw in course, you granularity more past of much. the bit you facility the did way transition,

Constantino Spas

in five like, That’s Ricardo. you, Thank one. questions

color. John provide myself will additional answer, and we'll some So Jorge have and

Jorge Collazo

question. the for thanks Recardo, Sure.

Constantino Spas

Jorge. ahead, Go

Jorge Collazo

for the Recardo. question, Thanks

on mentioned mentioned, very Brazil as optimistic you Brazil The I outlook are correct. volumes, are say, we XXXX. the for So John would about for numbers

XXXX So momentum the the compare is data. actually And we to X.X% of that we now fourth to XXXX, quarter if expect above, quarter XXXX, actually, the fourth continue.

we Now, digital implementing affordability combined optimistic for Brazil. strategy well. expectation as multi these etcetera, around category the all strategies have for initiatives, BXB, We're execution, and

As we But Constantino also be are a be mentioned, to It’s capabilities. the going to the companies not that the volatility we in definitely park. is walk right have paramount. going

say I digit as at we least volume single will in also sense, with So and for the continue And opportunity see inflation, Constantino to low in of that would mentioned, growth take inflation. Brazil we it's line pricing in expectation pricing, you to a mid give XXXX. to expect to ahead

We will continue recovery to foster a Brazil. mix in

of brands. has release a the for launch. if we in course a So what premium that's transition the our the And have the weeks of moving solid I ago. with been and taking on would we Recardo, There on focus, pretty been that broadly coverage from Tiger the market. has say recent couple speaking, the Heineken been Eisenbahn of think significantly -- we performance expectation to coverage and have Brazil. strategy increased beer, line brand their much over mentioned in Eisenbahn is about

and Tiger is it happens, we Estrella And the the nicely Therezópolis well. as taking to are So we distribution the make it same as and from at complement as takes that portfolio. well. time have adjust to we usual and -- adjustments, learning Galicia as getting are better it the usually but better some time some And over takes of

don't that something Constantino, strong you add and with building for John, up complementing very to beer Brazil. these the is would strategy, know, like consumer-centric continue to So to of continue to I idea portfolio that? and

John Santa Maria

explained. was No. No, I thoroughly that think Thanks. Jorge,

Ricardo Alves

Thanks, Jorge.

Operator

The next Citigroup. comes from of question Matsumoto Sergio

Sergio Matsumoto

delve morning, and if the Good for beer Constantino. into wanted you more may. bit the question, John a for Hi. I space question. to Yes. Thank I

the main you and there possibility? guess half? to ask sounds very of or will several Tiger Is reach very next trying successful they're strategy for were interesting -- of the is that would You could is whole the in strategy dominate expectations of in if of its like the growth trying when possibilities Galicia TherezÃ³polis two perhaps the represent year large to from the And to Estrella beers is Eisenbahn Heineken Heineken just the do premium and -- were are and space. a also into to this base I portfolio and with easier on the ignored with it watching also it's the for you years. stream own And it's And you that capacity as reclaim they a long-term that quite X% are market. the there. maybe Brazil the as in it's all a Azul kind the accelerate Estrella also What excuse it was they of And building last look new to if me Jorge wondering is, beginning prepared right. new are a distribution you on also the the but this, of very have a growth on as what remarks? competitive beers that these with And said what focus where that's just what space at be and of mentioned plant

big. that's So quite

retailers So be I'm well. you on Whether as brand the channels traditional curious on on? focus etcetera? might large for also potential just it channels the will you. the And which Thank

John Santa Maria

the Thanks question. for

piece the bringing very together is very And extremely transition. But obviously to a them. pointed an we a Heineken as portfolio brands think fundamental strong a very in with it you I are to out work and we closely we portfolio and large of continue department. are

Eisenbahn over taken extremely the brand way a and are we Eisenbahn. and significant very has client coverages good. very is -- base growing acceptance been have in of good in We the

are working As acceptance to which better close that we certain that to for the is I working come a that's are back but very beer is need collaboration Tiger Estrella getting growth than brand. something premium well. we a maybe progressing. going. going are Heineken total as new and to also Brazil is a Galicia as strong It's think that we and graphics There go and is area are and a very adjust that curve there a forward we that TherezÃ³polis And just are others better craft progressing the looking we certain within at that with go there as what brand brand player. forward. allow and that good we new have packages are very out be It's go we others us to is getting and core it is

you brand to extremely and plants there. it's a but say with the little are owner of are soon the large So bit plant ambitions the the as too said

-- accepted also tell I can very it you market. well some this is in So of the

in the is months very that powerful we months the So core premium you other to the and settling to we portfolio see that the in are throughout adding for digesting were putting terms -- and also together customer. something XX brands that of XX to would say next development probably or our premiumized or will continue to offer Constantino something? enhance to going a

Constantino Spas Montesinos

creating other together the of mapped combination I deploy what a portfolio but points and work Heineken, No key that states, those with -- understanding out on states capabilities. we we of just addresses a And the only of and a against mentioned possibility segments, you and doing view need segments need certain can advantages key our and and channels, price not also price have to evidently where have think John enormous complement mapping capabilities. with in our putting ourselves were partners leverages what successful that brands is but portfolio Sergio the

gain to transition. is formula time, current liquid we portfolio. flint come some I have. either John This is Heineken portfolio not establish the the And mentioned, picture. with traction as this fantastic grow At mind. in model, and this not and in we like a the premium are be craft brands small than we local from the time proposition value state will But and that a market because owned the we beer a premium need to brands you of And more a beers. develop. to same fantastic consumers' continue necessarily of the that will putting massive to portfolio value tuned But for or super will the can assure has TherezÃ³polis gone Eisenbahn is craft allow a other push So and to offerings these of fully players pure time, the the the Tiger that we Estrella with brands. necessarily end at brand great is requires is additional that full to same together. what we or stay complement continue Galicia propositions malt has adding easy-to-drink

Sergio Matsumoto

much. Thank interesting. Quite very you,

Operator

the all that's we I or back hand gentlemen, remarks. today. any call and time for additional like for closing have would questions the to Ladies

John Santa Maria

Well, interest thank FEMSA. in confidence you the and Coca-Cola for

for always, year to anticipate time we available Thanks any very contact. As a Investor FEMSA team XXXX. be Coca-Cola our your in of and answer is strong in questions. we'll for And your today

Constantino Spas

Thank you. Have a great weekend.

Operator

We today's conference and your thank gentlemen, participation. Ladies for that concludes you call.

disconnect. You now may

Coca-Cola FEMSA, S.A.B. de C.V. (KOF) 25 Feb 222021 Q4 Earnings call transcript