Coca-Cola
FEMSA

Winning portfolio buildup
In 2017, we generated over 25 billion transactions serving sparkling beverages, juices, isotonic sports and energy drinks, teas, waters, dairy products and plant-based beverages to more than 381 million consumers. To continue to expand our level of service in diverse markets, we are focused on building a winning portfolio of beverages, as well as anticipating—and responding to—evolving consumer preferences.

We are revitalizing our sparkling beverage offerings, diversifying in still and dairy beverage options, and exploring new, innovative categories. Innovation is a cornerstone of our path toward strategic growth and development. In 2017, as part of our portfolio innovations that offer our consumers more suitable options for their lifestyles, we launched:

• Coca-Cola Sin Azúcar  in Mexico, a sugar-free alternative that comes in a variety of portion sizes.
• Fanta Guaraná  in Brazil to offer our consumers a lower sugar alternative and revitalize our flavored carbonated soft drink category.

We also continue to complement the organic growth of Coca‑Cola FEMSA with value-creating acquisitions.

We know that with multi-category beverage leadership also comes great responsibility. We are taking steps to promote healthy habits in our communities and encouraging people to combine good nutrition with physical activity in their lives. Our strategy is centered on three levels of action:

• Local initiatives: In 2015, we set a goal to benefit five million people by 2020 through programs supporting healthy habits and nutrition awareness. In 2017, approximately 1.6 million people had been benefited in our programs, with an investment of US$ 6 million. To date our progress on this goal is 62%.
• Multi-sector initiatives: In 2016, we launched the Latin American Commitment for a Healthy Future, a multi-sector coalition that promotes initiatives and educational tools to empower school-aged children and their families to make good decisions about their eating habits and physical activity.
• Responsible marketing: In addition to strict nutritional labeling standards and limited advertising in media to children, we also adhere to the Responsible Marketing policies and the Global School Beverage Guidelines of The Coca-Cola Company.

Together with The Coca-Cola Company and the Coca-Cola System in Latin America, we added AdeS plant-based beverages to our expanding offerings in the region. AdeS will complement and strengthen our still beverage portfolio, providing consumers with a broader range of choices. As a nutritious, dairy-free product, AdeS is well-positioned to benefit from favorable dynamics in the broader dairy-alternative beverage segment, as well as positive consumption trends for premium, nutritious, and natural products.

Ensuring product affordability
To better serve and strengthen our connection with consumers, particularly in the challenging macroeconomic environment of 2017, we rolled out affordability initiatives across our operations through our strong platform of affordable, returnable multi-serve packaging alternatives. In Mexico, Brazil and Colombia, we reinforced the coverage of these returnable presentations, as we look to provide the right package at the right price for every consumer.

Additionally, we continue implementing our Magic Price Points strategy to intensify our connection with consumers. This approach helps ensure affordability of our single-serve portfolio at “magic price” points. As a result, we were able to improve consumer segmentation through revenue management, increase profitability and gain or maintain market share, as we did in Argentina, Brazil and Colombia.

Operating Model Transformation
As we work to create a leaner and more agile organization, we are building a sustainable competitive advantage by developing and deploying next-generation strategic capabilities through our Centers of Excellence (CoEs).

In our Commercial CoE, we continue to accelerate the transformation of our operating model, highlighted by the implementation of our upgraded KOFmmercial Digital Platform (KDP), which is based on four pillars: advanced analytics for revenue transformation; dynamic initiative management; omnichannel integration of customer connection points; and improved route-to-market to maximize customer value creation while managing costs. We rolled out the KDP platform in Mexico in early 2017 and have now expanded to Brazil, the Philippines, Colombia, Costa Rica, Nicaragua and Panama. In 2018, we will continue upgrading and rolling out KDP throughout our markets.

Our Distribution & Logistics CoE redefined its organizational structure into KOF Logistics Services (KLS), which designs and deploys our Supply Chain Planning model to standardize processes, enhance centralized organizational capabilities and incorporate cutting-edge technological tools. We continue to invest in new technology platforms, such as the Digital Distribution System, which delivers increased resource optimization, improved employee and driver safety, and higher customer satisfaction. The CoE’s safety strategy includes initiatives that support the entire company, including transforming our safety culture, managing key risks and professionalizing the safety function. These safety initiatives are adding value by reducing the amount of resources we use and improving the safety of our communities. After implementing Digital Distribution in Mexico in 2017, we have now expanded the platform to Brazil and aim to continue implementing in our remaining territories by 2019.

In our Manufacturing CoE, we continued the development and rollout of our proprietary Manufacturing Management Model to bolster efficiency and productivity, which includes our Plant Operating Model, Centralized Plant Maintenance Planning, Standardized Maintenance System and Manufacturing Execution System. We are also creating a culture of safety, and working to advance our safety programs, which has resulted in fewer accidents. These initiatives not only create a better work environment for our employees, but also drive cost savings.

Spotlight on Sustainability: To conserve the amount of resources and energy needed for our operations, our goal is to use recycled materials in 25% of our total PET presentation production by 2020. As of 2017, we are approaching the achievement of our goal, using 21% recycled materials in the production of our PET presentations.

Cultural Evolution
Through our continuous evolution, we are creating a strong, unified corporate culture, founded on the cornerstones of leadership, talent and innovation. Together, we share a passion for excellence—embracing diversity across our increasingly multicultural operations. We are focused on identifying the strengths and opportunities of our workforce and leadership team, with an aim to empower employees by giving them the tools and capabilities they need to succeed in their roles.