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CORPORATE PRESENTATION May 2019
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CORPORATE PRESENTATIONM a y 2 0 1 9
It all started with Topo Chico mineral water
123 YEARS
Coca-Cola System pioneers in Mexico
Strong partnership with
93YEARS
Serving5 countries across the Americas
2.2BUC
S a l e s
V o l u m e
159MXP$B
R e v e n u e
50
P r o d u c t i o n
F a c i l i t i e s
379
D i s t r i b u t i o n
C e n t e r s
63Thousand
A s s o c i a t e s
+1.3Million
P o i n t s o f
S a l e
USA
MEXICO
ECUADOR
PERU
ARGENTINA
4
99%
1%
A balanced portfolio of markets and business…
Mxp$ 13 billion
EXPORTS AND
VENDING
MEXICO
BEVERAGES38%
35%
10%
7%
5%
5%
UNITED STATES
PERU
ECUADOR
ARGENTINA
2018Revenues
Mxp$ 159 billion
2002CAGR17%
5
MEXICO
SNACKS &
OTHER BUSINESS
12x
…with a strong organic growth and an excellent M&A track record
2002ARCA
Merger
2007Snacks
Mexico
2008Argentina &
Jugos del Valle
2010Ecuador
2011CONTAL
Merger
2012Snacks &
Santa Clara
2014Tonicorp
2015Peru
2016Sugar Mill
Argentina
2017USA, AdeS
& Snacks
2018Innovation &
Snacks
USA
Great Plains
EcuadorArgentina
Peru Mexico
AC Bebidas
Market Cap(1): USD$202 Bn Market Cap(1): USD$9.8 Bn
Coca-Cola Refreshments
99.8%
100%
Our Corporate Structure
Coca-Cola Southwest
Beverages
Food & Snacks
100%
100% 100%
100%80%20%
7____________________(1) Considering a share price as of December 31, 2018. AC market cap was calculated using an exchange rate of MXP$19.65
Best in class Corporate Governance
• Majority shareholders only at Board level
• Audit Committee comprised of independent members only
• No transactions with related parties
• A professional and independent Management Team 8
Our commitment to pursue value creation opportunities for our shareholders
NARTD: Non-alcoholic ready to drink
Emerging still categories + Value added diaryStills
Food & Snacks
CORENARTD
9
New sparking beverage franchisesSSDs
A wide brand portfolio to satisfy every occasion of consumption
+ 28 Brands
+ 128 SKUs
+60 Brands
+1,500 SKUs2006 2018
10
Strong presence in attractive markets…
Start date: 1926
• Sales volume (MUC): 1,226
• % of KO volume: 33%
• Population served (MM): 33
MEXICO
Start date: 2015
• Sales volume (MUC): 278
• % of KO volume: 100%
• Population served (MM): 32
Start date: 2008
• Sales volume (MUC): 130
• % of KO volume: 23%
• Population served (MM): 9
Start date: 2010
• Sales volume (MUC): 142
• % of KO volume:100%
• Population served (MM): 17
Start date: 2017
• Sales volume (MUC): 443
• % of KO volume: 12%
• Population served (MM): 32
USA
ARGENTINA
ECUADOR
PERU
____________________
MUC –Million Unit Cases
KO – The Coca-Cola Company 11
…with a model that connects the entire organization in order to reach the perfect execution
METRICS
Segmentation
RGM
RTM
Market Audit
Picture of Success FUNDAMENTALS
Customer
Love Score (CLS)Digital Tools
People
12
A sound financial position…
• Conservative net leverage
level of 1.39x
• 97% of debt denominated in
local currencies
• 73% of debt at a fixed rate,
with an average cost of debt
of 6.4%
• Long-term debt profile with
average maturity of 7 years
13
48% 40% 12%
27%
31% 63%
MXP PENUSD
Total Debt:
MXP$ 55.4 billion
Cash Balance:
MXP$ 17.0 billion
Fixed Variable
MXP PENUSDDenominated in:
73%
Rate:
Denominated in:
ARS
2%4%
____________________
*As of March 2019
…with balanced sources of revenue
• 45% of the company’s revenues
and 30% of EBITDA are
denominated in dollars
• Consolidated EBITDA in USD of
around $475 MMD in 2019
• Raw materials needs in US dollars
of $270 MMD in Mexico and $152
MMD in Peru
14
39%
45%
11%
5%
MXN
PESO
US DOLLARS
SOLES
ARS
PESO
2018
Revenue
Mxp$ 159 billion
Mexico
Maintaining positive trend in volume while increasing price
Growing all the beverages portfolioPositive economic sentiment
• Very positive trend in market share across all categories
• Command #1 or #2 market leadership in most still categories
• Still beverages already represent 16% of total mix with 15
consecutive quarters of growth representing 53% of the total
growth
• Consistent volume growth across all channels in 2018
supported on strong market execution.
• Mexico consumer confidence reaches record peak in February
2019 hitting its highest level on record.
• This positive consumer outlook coupled with our execution
capabilities and strong brand portfolio positions us for a
another year of volume growth.
16
Volume
85%
36%11%
61%
0%
20%
40%
60%
80%
100%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Powerade Market Sharevs Main Competitor(%)
Main Competitor Powerade
8.3%
2.6% 2.3%
2016 2017 2018
A flexible price-pack architecture to drive consumption and profitability
66%Retornable
No Retornable
$6 $10 $13 $20$6 $25
600 PET
3.0 NR
2.0 Ref Pet
355 mlVR
Low elasticity SKU´s Protect affordability
(multi-serve &
Returnable)
Leverage on single serve presentations
+25 SKUs only for regular Coke in Mexico
PACKAGE FORMATMXP
$6
MXP
$34
68%
32%
RETURNABLE
54%
46%
NON RETURNABLE
MULTISERVE
SINGLE SERVE
17
USA
• Completed the first full year of CCSWB operating under the ACT model. This commercial strategy allowed us to:
− Improve our trade execution and customer intimacy by increasing face-to-face interactions.
− Increase visit completion from 78% to 87%, and strike rate improved from 78% to 85%.
− Increase our cold drink equipment in the Strike Zone placement by going from 33% in 2017 to 40% in 2018.
• In 4Q18, CCSWB delivered its 7th consecutive quarter of net revenue growth of +2.9% vs PY, together with a continuous growth in value share above our competitors and the national average
• CCSWB delivered its 7th consecutive quarter of value share growth, finishing the year with a solid +0.8 percentage points vs prior year and a total of 32.9% value share, above the national average
CCSWB maintained focus on execution through the Fundamentals
San Antonio
McAllen
Houston
El Paso
Fort Worth
Gulfgate
AbileneDallas
Oklahoma
Nacogdoches
19
Improving execution at POS and capitalizing synergies
Focus on better pricing Positive POS execution results
• The ACT model will continue to be the backbone of our
execution strategy, delivering tailored strategies based on a
customer segmentation and securing true rate increase
above consumer inflation
• Price in 2018 grew +3.4% vs PY achieving our target and
securing rate above consumer inflation of 2%.
• We continued investing in developing our Go to Market
capabilities to ensure exceptional customer service while
maintaining profitable growth
20
Volume
0.1%
0.8%
2017 2018
Sales
1.0%
4.1%
2017 2018
CCSWB to build new plant in Texas
• Investment of US$250 million in a facility close to 1 million square feet in size
• First Coca-Cola production plant built in the U.S. in a decade
• New facility in Houston will utilize state-the-art technology, with five new production lines and in-line blow molding capabilities
• Includes distribution facilities, warehouse and sales, which will enable CCSWB to efficiently serve the Southeast Texas market
• Close to USD $30 million in cost savings and operating efficiencies, as part of the USD 90 million synergy program.
Scheduled to begin operating in early 2020 21
Detailed work plans for short and mid-term identified synergies
Revenue:
• Vending
• Topo Chico
• Mexican Coke
Strategic:
• New facility in Houston
• Shared Services
USD$ 32 MM
Synergies captured in 2018
Savings:
• In-line blow molding (ILBM)
• Direct Procurement
• Improvement in production lines
• Lightening of the PET bottles
• Reduction in freight costs
Capitalize uniqueness of the US market
23
Market Street Challenge
Prices
Fundamentals
Tools Automation
Revenue
Value Share
Volume
Recognized Leadership
System Collaboration
Community Engagement
PAC
Customer Service
Execution
Solid Base Continuous Improvement
11 Regions
10 Plants
Specialized GTM
3 MUs
Product Quality
Enabling Segmentation
Capabilities Investment
New GTM FSOP Models
Analytics
E-Commerce
Joint Business Plan
+1 Mindset
Strong Collaboration
Top Line Growth
ACT Model
Collaboration
Execution
Operating Model
2424
Topo Chico is now distributed in our Red Truck across the USA
Evolving the Way We Go To Market in USA
25
Strike Rate
84%90%
Visit Completion
79%85%
Customer Intimacy GTM 2.0 Optimize Visit Planning
Drink Equipment Tracking Vending Profitability GTM KPIs
South America
Peru – Volume recovery and protecting profitability
Offsetting volume impactMaintaining
profitability• Leveraging the experience gained from past cases in Mexico and
Ecuador allowed us to mitigate the impact of the increase in excise
tax,
• Solid volume growth in 4Q18 confirmed the recovery trend of the
last couple of quarters
• Introduced in 2018 more than 30,000 coolers and more than
900,000 returnable bottles
• Leveraged by the price-pack strategy and a positive
performance of our vending business
• Operative efficiencies with the consolidation of production in
Pucusana Plant and in distribution with the new meg
distribution center in Lima inaugurated in 2018
27
MUCs Cooler
CoverageEBITDA /
Sales
278 278
29%
37%
18%
23%
2015* 2018 2015* 2018 2015* 2018
41% Single-serve
59% Multi-serve
Package Format
28% Returnable
72% Non
Returnable
Ecuador – Positive trend in volume and pricing
Focusing our efforts on 3 pillarsCapturing market opportunities• Impulse stills category through launching of new products and
presentations
• Strong expenses control that will continue bringing efficiencies in
2019
• Package Price strategy and innovations to increase volume
• Positive results in 2018 due to improvement in execution
capabilities
• Focus on RGM initiatives to improve the price per case
• Gained value share in 2018, despite weakening consumer
demand
28
VolumeMUCs Cooler
Coverage (1)
EBITDA / Sales
119
142
24%
51%
17.0%17.3
%
2010* 2018 2010* 2018 2010* 2018
2016 2017 2018
-8.8%
-3.4%
+3.7%
2018
-6.8%18%
64%
Argentina – Focused on Fundamentals in a challenging economic environment
Leveraging on commercial capabilities Improving price pack architecture
• Consumption have been severely impacted by a slowing
economy, rising inflation and reduced disposable income.
• Positive volume in 2018 outperforming the national results
• Gained value share in NARTD as we reinforced our two-fold
strategy to promote single-serve consumption and to increase
affordable, returnable presentations.
• Price-package architecture allowed us to pass-through most
of the effect of high inflation rates
• Focused on cost discipline and optimization. In 2018, we
captured significant savings as a result of the vertical
integration in cane sugar
Cooler CoverageEBITDA /
Sales
2008*
10%
21%
29
Volume
AC System
2016 2017 2018
2008* 2018 2018-8.8%
-1.1%
+0.1%
11% Single-serve
89% Multi-serve
Format
Food and Snacks
A relevant player in the snacks industry…
31
3rd mostImportant Brand
in Mexico
#2 BrandMetropolitanarea of NY
#1 Brandin Ecuador**Baked Goods
#2 Salty Snacks
Around USD$ 380 MM Sales
…with high potential growth opportunity based on strategic adjacencies
Complementary to our core business
Strengthen our presence in Mexico and the US
Expand snack business in Mexico under Bokados and complements with Wise
32
Innovation at Arca
Continental
1. PRODUCT AVAILABILITY
Why Advanced Analytics?
2. COMMERCIAL EXCELLENCE
34
Arca Continental has a long-
standing culture of favoring data-
driven decisions
It has achieved a solid level of
sophistication, in key commercial
capabilities
The explosion of available data
and computing power brings an
opportunity to take this effort to
the next level
In this context, Advanced Analytics
is a key capability to drive growth,
profitability, and maintain
competitive advantage
The desire to transform our business through
ever-increasing internal and external data,
delivering value and creating a sustainable
competitive advantage
Putting Big Data to work
Going from a mindset of viewing data as
something to be isolated, warehoused and
used for reporting, to a view that looks it as
the raw material for all decision making
Understanding key variables to drive growth
175 Variables 93 Variables 3 Categories11 Sets of Variables
19% 16% 10% 2% 14% 3% 11% 7% 4% 4% 4%
Price Gap
Promotion & Advertising
Price Change
Holiday and
Weekend Stockup
Sales Visits
New Customer
Performance
Service Indicators
RED Improvement
Economic
Environment
High Temperature
Weather
Identify key variables of overall performance and
build a scorecard, also differences between Arca
Continental´s Markets
Actions
Price Religion and Fundamentals
Findings
We strengthen our price religion in territories with high
price elasticities and build our fundamentals (KPI´s)
FINDINGS ACTIONS
“ W h y M o d e l ”
35
1. PRODUCT AVAILABILITY
Concrete use cases to apply analytics to improve execution at the point of sale
Out of stock
in POS
Forecast non-availability of
products by SKU and create a
"suggested order“ by POS
1-2 p.p.
Quantify the effect of each
execution variable by POS and
prioritize it
Volume sales
increase
2-3%
2. COMMERCIAL EXCELLENCE
36
• Improving store activation
• Adding Web-enabled POS
5K
Customers
2018
3%
Sales
increase • Sales information on all categories
• Customer insights
• Discounts Control
• Increases traffic, sales and profits
• Additional income from e-payments
• Competitive advantage
Improving sales performance in traditional channel with technification
Customer Benefits
AC Benefits
37
Financial
Performance
Investments focused on incremental revenue initiatives
39
2019eCAPEX~7-8% of Sales
• New Plants
• Coolers
• Returnable Bottles
• Vending Machines
• IT
• Production Lines
• Trucks
MexicoComplementary Business
Ecuador ArgentinaPeruUS
38%
34%
10%
10% 6%
2%
Conservative debt profile & diversified
maturity schedule…
• 97% debt is in local currency
• Projected debt profile with average maturity of 7 years
AC Debt Maturity Profile
Total Debt: MXP$ 55,429 million
____________________
*As of March 2019
By
Interest Rate
By
Currency
USD
27%
73%Fixed
40
12%
48%
40% MXP
PEN
Variable
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
USPP Bonds Bank loans
2,651
6,860 6,756
5,6635,843
2,1541,474
2,314
6,3887,863 7,863
…with the highest credit rating among Mexican issuers
Financial flexibility and low leverage ratio
“A2”
Global Investment Grade above Mexico’s
sovereign rating
“AAA(mex)”
“A”
“mxAAA”
Global Scale
National Scale
Net Debt / EBITDA
41
1.281.16
1.451.39
2016 2017 2018 1Q19
Social
Responsibility
____________________
*2018 data for AC consolidated
of resin produced by PetStar
30% of PCR
50,186 Tons
1.7Water Lts. /
Beverage Lts.
20% improvement
24.5 g CO2/
Beverage Lts.
20% energy reductionvs 2010vs 2010
38% from renewable
sources
Leader in water reuse
technology Mexico is the global leader in
recycled resin use
Strong commitment towards our environment
WATER* ENERGY*RECYCLINGMexico 2018
43
One of the largest Coca-Cola bottlers in the world with
a leading profitability in the KO System
Resilient and defensive industry
Strong presence in attractive markets
Highly diversified and well-balanced geographic
presence with a wide product portfolio and
distribution channels
Proven track record of disciplined growth
Strategic business model that connects the entire
organization in order to optimize execution
Key investment highlightsKey investment highlights
Global leader…
…in the right markets…
…the right products…
…and a disciplined growth
strategy
44
Outlook for 2019
45
Price in line with inflation at each of our operations, while ensuring
affordability of our products
Plan to invest 7-8% percent of total sales in CAPEX in 2019
Target $90 million dollars in annual synergies by 2020 in CCSWB
Consolidated volume growth in 2019 of ~2%, on a comparable
basis
Investor Relations Contact Information:
Ulises Fernandez [email protected]
Felipe Barquin [email protected]
Pamela Ortiz [email protected]
Francisco Leyva [email protected]
THANK YOU!
