Consumer Staples / Beverages / Mexico
NYSE - KOF
Current Rating - HOLD (15/04/2023) [Price - 83.64]
Coca-Cola FEMSA is the largest franchise bottler in the world by volume, with a portfolio of over 129 brands. These brands include Coca-Cola, Sprite, Powerade, and Monster amongst others.
These beverages are sold across over 2 million points of sale, from 49 manufacturing plants and 268 distribution centres across Latin America. This includes countries such as Mexico, Brazil, Venezuela, and Uruguay.
The company produces, markets, sells and distributes Coca-Cola beverages in the regions Coca-Cola FEMSA is active in. This is done in containers authorised by The Coca-Cola Company in other words its world-famous glass bottles and cans.
47.2% of shares are owned by FEMSA (FMX), 37.8% are owned by The Coca-Cola Company (KO) and the remaining shares are publicly listed across two different series Series B and Series L. The publicly traded shares are listed on the Mexican Stock Exchange in the form of units, with each unit consisting of 3 Series B shares and 5 Series L shares. The New York Stock Exchange listed ADRs (KOF) represent 10 units.
The company's longer-term strategy ambitions revolve around developing a broader platform for customers. This digital platform is to make things easier for customers (whether businesses or consumers) to buy Coca-Cola FEMSA beverages and to get these delivered simply and easily.
Interestingly, beverage sales are typically seasonal in nature. Generally, sales pick up between April and August and during the year-end holidays in December.
When it comes to the marketing side of things, Coca-Cola FEMSA uses various channels to advertise the range of beverages it sells. These can be as broad as promotional material for businesses selling the company's beverages, promotional drinks coolers and advertising on media channels.
Product distribution is done slightly differently depending on the country. The main distribution methods include:
Pre-sale system - trucks distributing beverages that have already been ordered to retailers;
Truck route system - the driver of the trucks make sales of the inventory they are holding in their truck;
Sales via wholesalers and distributors.
In Mexico, finished products are taken from the bottling plants straight to the distribution centres. From these centres, the company's own trucks deliver the goods to retailers.
In the company's other significant market, Brazil, distribution to retailers is done both by trucks owned by the company and third-party distributors.
Raw materials are bought from The Coca-Cola Company or suppliers approved by Coca-Cola as per the bottling agreements. This includes the concentrate and sweeteners used in the manufacture of the drinks themselves. The price of the concentrate is set by Coca-Cola though they are determined as a percentage of the weighted average retail price of the finished products.