Felipe Ucros Nunez

Felipe Ucros asked about Coca-Cola FEMSA's confidence in growing Coke Zero in Mexico, the historical impact of the World Cup on the portfolio, and the competitive landscape regarding capacity in Brazil's southern region after the floods. He also sought clarification on whether Mexico's expected volume decline for 2026 is net of all mitigating factors, including the World Cup.

Answer

CEO Ian Craig expressed strong confidence in Coke Zero's growth in Mexico, noting its double-digit growth even during challenging periods, and anticipates a boost from the World Cup. Historically, the World Cup provides about a 5% uplift in relative volumes and significantly enhances brand equity. In Brazil's southern region, only Coca-Cola FEMSA's production facility was impacted by floods, leading to an 8-point share loss, of which 500 basis points have been recovered. Competitors were not affected. He confirmed that Mexico's low to mid-single-digit volume decline expectation for 2026 is a net figure, accounting for the excise tax, cycling the previous year's backlash, and the positive impact of the World Cup.

Felipe Ucros from Scotiabank asked about Coca-Cola FEMSA's continued confidence in 'cracking the code' for Coca-Cola Zero in Mexico, especially with accelerated growth expectations. He also inquired about the historical impacts of the World Cup on the portfolio and occasions, and the competitive landscape regarding capacity in Brazil's South region after Coca-Cola FEMSA's plant disruptions.

Answer

CEO Ian Craig expressed strong confidence in Coca-Cola Zero's trajectory in Mexico, citing its consistent double-digit growth even amidst consumer backlash and soft macro conditions. He noted the World Cup would further boost Coca-Cola Zero as a 'hero product.' Historically, the World Cup provides about a 5% uplift in relative volumes during the event months and significantly enhances brand equity. Regarding Brazil's South, Ian Craig clarified that only Coca-Cola FEMSA's production facility was impacted by floods, leading to an 8-point share loss, of which 500 basis points have been recovered since mid-year. Competitors did not experience similar disruptions, and Coca-Cola FEMSA is undertaking remediation efforts for future flood preparedness.

Felipe Ucros Nunez asked for a breakdown of profitability by country in South America, the drivers of operating leverage, and whether recent SG&A levels represent a new normal. He also followed up on consumer shifts in product mix.

Answer

CEO Ian Marcel Craig García and CFO Gerardo Celaya clarified that margin expansion in South America was broad-based, with Brazil and Colombia contributing significantly alongside Argentina. Celaya acknowledged SG&A pressure from labor and maintenance in Mexico but stated the company is focused on efficiencies. Executive Jorge Alejandro Pereda noted that product mix shifts vary, with Mexico moving to multi-serve while Brazil sees single-serve growth.

Felipe Ucros Nunez of Scotiabank asked about the company's ability to recapture market share in Mexico and Brazil as production capacity increases, requested an update on 2025 FX hedging, and inquired about the strategy that successfully boosted Coke Zero in Mexico.

Answer

CEO Ian Marcel Craig García confirmed significant share recapture opportunities, particularly in Mexico. He explained the Coke Zero success was due to a simplified price-package architecture and strong marketing. CFO Gerardo Celaya provided a detailed 2025 hedging update, noting ~35% of total FX exposure is hedged, along with significant portions of key commodities like PET, aluminum, and sugar.

Felipe Ucros Nunez from Scotiabank requested an update on the Juntos+ digital platform, specifically asking about the loyalty program's adoption and its impact on client behavior, as well as any progress on the fintech side of the initiative.

Answer

CEO Ian Marcel Craig García reported that the loyalty program is performing very well, driving a 'significant uplift' in volume and receiving positive client feedback. CFO Gerardo Celaya added that 750,000 customers are now active in the loyalty program across their operations. The fintech aspect was not detailed in the response.

Felipe Ucros inquired about the drivers behind the significant acceleration in the digital marketplace's GMV. He also asked about the net revenue per hectoliter performance in the Latin America South (LAS) region, particularly in Argentina, given the high-inflation environment.

Answer

CEO Carlos Eduardo Klutzenschell Lisboa attributed the 90% marketplace GMV growth to strong partnerships with companies like Nestle, L'Oreal, and PepsiCo Foods, noting that third-party (3P) GMV now exceeds first-party (1P). Regarding LAS, CFO Guilherme Fleury de Figueiredo Ferraz Parolari mentioned that they continue to see sequential improvement in Argentina and are carefully managing pricing to protect margins while considering consumer affordability.

Felipe Ucros Nunez of Scotiabank requested an update on the third-party marketplace on the BEES digital platform, asking about the evolution of partnerships, profitability, and return on invested capital (ROIC) following recent optimizations.

Answer

CEO Carlos Eduardo Lisboa reported that the BEES marketplace GMV grew nearly 50% in 2024, driven by third-party expansion, positioning Ambev as a 'one-stop shop' for its customers. CFO Lucas Lira added that the business model is highly attractive, generating strong ROIC by leveraging the company's existing distribution network and customer base with minimal incremental capital, even as margins continue to improve.

Felipe Ucros Nunez from Scotiabank inquired about the specific impact of adverse weather on the beverage portfolio versus general consumption weakness, the competitive pricing environment in Chile, and the operational success of the new proprietary distribution system in Argentina.

Answer

CEO Patricio Jottar Nasrallah clarified that poor weather was the primary driver of volume declines, with beer volumes falling mid-teens versus a mid-single-digit drop for non-alcoholic drinks. He noted the industry is rationally raising prices to offset cost pressures but wouldn't comment on specific competitor moves. He also expressed extreme satisfaction with the new distribution system in Argentina, which has improved efficiency and enabled the water business to achieve positive EBITDA.

Felipe Ucros Nunez from Scotiabank inquired about the primary driver of poor volumes, questioning whether it was adverse weather or broader consumption pressure. He also asked about competitive pricing rationality and the operational success of the new distribution system in Argentina.

Answer

CEO Patricio Jottar Nasrallah confirmed that adverse weather was a significant factor, with beer volumes down mid-teens versus a mid-single-digit drop for non-alcoholic beverages. He stated the industry is rational on pricing due to shared cost pressures but declined to comment on specific competitor moves. Regarding Argentina, he expressed high satisfaction with the smooth transition to a new, integrated distribution system with Danone, which has improved efficiency and made the water business profitable despite a 30% market volume contraction.

Felipe Ucros Nunez of Scotiabank inquired about the competitive environment in Chile amidst peso devaluation, questioning if the sector was pricing rationally. He also asked if the Wine segment's volume recovery was driven by restocking or consumer demand.

Answer

Felipe Dubernet, Chief Financial Officer, explained that competitors increased promotional activity, leading to lower prices, while CCU maintained pricing in line with inflation, supported by strong brand health. Regarding the Wine segment, he confirmed the volume recovery was due to inventory normalization in the supply chain after a period of destocking, with volumes now back above 2019 levels.

Felipe Ucros Nunez inquired about the competitive environment in Chile amidst peso devaluation, asking if the sector was pricing rationally. He also questioned if the Wine segment's strong volume growth was driven by restocking or final consumer demand.

Answer

Felipe Dubernet, Chief Financial Officer, explained that competitors increased promotional activity, leading to flat or lower prices. In contrast, CCU leveraged its strong brand health to raise prices in line with inflation. For the Wine segment, he confirmed that Q1 marked a normalization after a period of inventory destocking by distributors, with volumes now back above 2019 levels, and noted key growth initiatives in markets like China.

Asked about the operational start to 2024 in Argentina, the margin outlook there, the underlying consumer demand in Chile when factoring out weather impacts, and the long-term strategy for the challenged wine segment.

Answer

Argentina's Q1 2024 is continuing the Q4 trend with price hikes matching inflation and high single-digit volume contraction; profitability will be defended through the HerCCUles plan. In Chile, underlying consumer demand is weak, but January saw low single-digit growth with better weather. The wine segment's decline is a global issue; CCU is focusing on premiumization, innovation, and improving execution in key export markets (China, US, UK) to turn it around.

Asked about the normalization of post-pandemic sales volumes, the outlook for costs, and the performance and future expectations for the wine segment.

Answer

The executive stated that comparing volumes to 2021 is misleading due to stimulus effects; compared to 2019, volumes are up. The Q3 dip was due to weather and consumption deceleration, but the company expects to maintain scale. On costs, non-alcoholic beverages face pressure from high sugar and orange juice prices. For the wine segment, there is optimism as the export volume decline has slowed, with October showing the first month of growth, suggesting the destocking trend is ending.