OUR

STRATEGIC

CORRIDORS

Driven by our obsessive focus on our consumers and customers, we are developing a winning, multi-category portfolio with compelling options for every consumer taste and lifestyle, while promoting healthy habits—prioritizing the safety and wellbeing of our employees, customers, consumers, and communities throughout the course of the COVID-19 pandemic.

DEVELOP A WINNING CONSUMER-CENTRIC PORTFOLIO

WINNING CONSUMER-CENTRIC PORTFOLIO

Our strategy aims to build a winning consumer-centric, multi-category portfolio for every occasion by leveraging affordability to drive sustainable beverage growth; capturing new consumption occasions and preferences through portfolio innovation; and consolidating our market leadership in emerging beverage categories, while exploring multi-category opportunities across our markets.

Our customers and consumers are at the center of everything we do. By deeply understanding their changing tastes and buying habits, we proactively adapt our portfolio strategies and digital initiatives to satisfy their evolving preferences; develop complementary distribution models to increase their service levels; accelerate our first-mover advantage across digital sales channels to indulge their online purchasing patterns; and fulfill their growing needs through exemplary market execution.

I

SUCCESS STORIES

MEXICO

MEXICO: CAPITALIZING ON CONVENIENT HOME DELIVERY

As at-home consumption occasions and preferences change, we continued to expand our home delivery routes, while broadening our portfolio strategies and digital initiatives, to serve the evolving needs of nearly 600 thousand households across Mexico. During the year, we not only added over 400 new routes for a total of more than 1,200 routes, but also started the digital transformation of those routes to our Coca-Cola en tu Hogar (Coca-Cola at Home) omnichannel solution, connecting directly with our consumers via chatbot and website order-taking platforms. Thanks to increased routes, digital enablers, and portfolio initiatives, our home delivery routes are rapidly improving their productivity, average ticket, and sales. For the year, we increased the average ticket by driving the mix of non-jug-water products to close to half.

MEXICO: DEVELOPING COMPLEMENTARY INDIRECT DISTRIBUTION MODELS

We are developing and customizing complementary indirect distribution models to increase customer service levels to our small mom-and-pop clients. This is reflected in double-digit growth in emerging indirect channels such as wholesalers and distributors. Through a clear segmentation and category management strategy, the wholesalers channel gained double-digit volume growth year over year. We also moved forward with our distributors’ transformation process, covering nearly 30% of this channel’s total volume during 2021.

SUCCESS STORIES

BRAZIL

ACCELERATING FIRST-MOVER ADVANTAGE ACROSS DIGITAL SALES CHANNEL

As consumers reshape their online purchasing patterns and preferences, we’re accelerating our growth and first-mover advantage across the digital sales channel, from pure players to grocery and food aggregators to e-retailers. In Brazil, we have scaled our digital consumer experience to achieve an incidence rate of 17% in food aggregators—a benchmark for the Coca-Cola system globally—and a more than 70% share of the country’s e-retailers. Consequently, our sales volume across the increasingly important digital sales channel grew by almost 50% year over year.

GUATEMALA

AWARD-WINNING EXCELLENCE

By focusing on our fundamentals—delivering operational excellence, developing a winning consumer-centric portfolio, driving affordability to better serve consumers’ demands, and facilitating route-to-market transformation—Guatemala has increased its score on The Coca-Cola Company’s execution index, expanded our share of sales, and generated a compound annual volume growth rate of more than 11% over the last four years. Consequently, Guatemala now represents our fourth largest market in terms of revenues.

Leverage Affordability To Drive Sustainable Beverage Growth

Affordability remained an important driver of our sustainable beverage growth. Accordingly, we leveraged our unmatched execution and ability to provide affordability to consumers to drive our markets’ recovery throughout the year. To this end, we continued investing behind this core capability, including more than US$500 million in production lines and returnable bottles and cases over the past two years.

SUCCESS STORIES

MEXICO

EXPANDING AFFORDABILITY STRATEGY

In Mexico, our affordability strategy focuses not only on our expanding portfolio of refillable multi-serve presentations, but also on boosting our portfolio of affordable one-way presentations through our magic price points. In the traditional trade channel, we bolstered our magic price points with the launch of our new affordable 1.35-liter one-way PET presentation of Coca-Cola Original and our core flavored sparkling brands, along with the launch of our new affordable 2.75-liter one-way PET presentation of Coca-Cola Original. Thanks to this strategy, we gained market share in the multi-serve cola segment, and we supplemented our affordability with refillables in convenience stores.

SUCCESS STORIES

MEXICO

& COLOMBIA

& COLOMBIA

INCREASING UNIVERSAL BOTTLE COVERAGE

The launch of our Universal Bottle or Botella Unica—which enables us to use the same refillable bottle for Coca-Cola, flavored sparkling beverages, and juices—is delivering better than expected results. Now covering 75% of our territories across Mexico, we increased our Universal Bottle production capacity, while expanding our labeling production capacity by more than 40% during 2021. To scale the Universal Bottle’s impact, we continued the rollout of our 2.5-liter returnable PET Universal Bottle beyond the traditional trade channel, while beginning the rollout of our 500-ml returnable glass Universal Bottle in certain cities. Indeed, our focus on increasing the coverage of our Universal Bottle continues to provide share gains. Notably, our 2.5-liter refillable PET Universal Bottle contributed to a share of sales gain in the cities where it was launched. Similarly, our Universal Bottle is proving successful in Colombia, with volumes and share of sales increases in the cities where it was launched. By expanding our returnable reach beyond Coca-Cola, this transformational bottling technology enables us to launch affordable returnable PET presentations of our flavored sparkling and still beverage brands to compete more effectively in the market.

BRAZIL

LEVERAGING THE POPULARTIY OF MULTIPACKS

This year, we continued to leverage the popularity and household penetration of our convenient, affordable multipacks of Coke and our core flavored sparkling beverage brands in our single- and multi-serve non-returnable presentations. By harnessing the power of brand Coca-Cola to introduce consumers to our flavored sparkling beverage brands, our multipack strategy largely enabled us to grow our volume of Fanta Guaraná by more than 9% year over year, while capturing increased share of sales in the sparkling beverage category.

ARGENTINA

IMPROVING HOUSEHOLD PENETRATION

Under our affordability strategy, we continued to regain share and expand our consumer base in the face of Argentina’s dynamic competitive and economic environment. Thanks to our market segmentation strategy, we were able to offer the right product at the right price across diverse socioeconomic segments of our franchise territory, enabling us to improve our household penetration while preserving our profitability. We further increased our volume versus our baseline year of 2019.

Capture New Consumption Occasions Through Portfolio Innovation

Through ongoing portfolio innovation, we continue to focus on improving our competitive position and capturing the most value from our beverage brands by closely aligning our portfolio with consumers’ tastes and preferences. Among our initiatives, we continue to drive the growth of our no- and low-sugar portfolio of sparkling beverages to satisfy and stimulate demand for our products, while adapting our portfolio to evolving consumer behavior.

SUCCESS STORIES

MEXICO

SUCCESSFULLY LAUNCHING NEW FORMULA OF COCA-COLA SIN AZÚCAR (ZERO SUGAR)

This year, we successfully launched the new formula and visual identity of Coca-Cola Sin Azúcar (Zero Sugar) with a great reception from our consumers. Notably, our focus on increasing consumer contact and transactions enabled us to achieve double-digit volume growth year over year, mainly focused on the single-serve format.

GROWING PREMIUM TOPO CHICO SPARKLING MINERAL WATER

The power of portfolio innovation and expansion is exemplified by the successful launch and popularity of our Topo Chico brand of sparkling mineral water. With volume growth of over 60%, this naturally sourced mineral water complements our portfolio, offering consumers a superb premium offering. After its launch last year, we expanded Topo Chico’s mineral water coverage across the country’s modern and traditional trade channels, achieving consistent share growth in the sparkling water category. Also, our dual Topo Chico and Ciel mineral water strategy drove us to reach a leading share of the mineral water category in the modern trade channel. Furthermore, we continued to innovate in the flavored sparkling water segment with new flavors of both Topo Chico and Ciel mineral water.

SUCCESS STORIES

BRAZIL

INNOVATIVE MULTIPACKS SPUR SINGLE-SERVE RECOVERY

This year, our single-serve multipacks, including our convenient 24-pack of 200-ml bottles and six-pack of 350-ml cans, contributed to a more than 13 pp recovery in our single-serve sparkling beverage mix. Moreover, the volume of these popular mixed multipacks of our Coke and core Fanta brands grew more than 30% year over year.

INCREASING COVERAGE, VOLUME, AND SHARE OF COCA-COLA SEM AÇÚCAR (ZERO SUGAR)

This year, we continued to increase the coverage of Coca-Cola Sem Açúcar (Zero Sugar) across our franchise territories, gaining significant share of sales growth while generating double-digit volume growth year over year. Consequently, we managed to build on the popularity of Coca-Cola Sem Açúcar (Zero Sugar) to not only drive volume growth of over 14% and 10% versus 2020 and 2019, respectively, but also contribute to our record share of sales across the sparkling beverage category.

ARGENTINA

& URUGUAY

EXPANDING ZERO-SUGAR CATEGORY GROWTH

Harnessing the successful new formula of Coca-Cola Sin Azúcar (Zero Sugar), we successfully expanded the no-sugar beverage category across our Argentina and Uruguay franchise territories. Thanks to the popularity of this refreshing sugar-free alternative, coupled with our superior market execution, we achieved double-digit growth in per capita consumption across our no-sugar sparkling beverage category in Argentina, while we expanded our market leadership in Uruguay’s no-sugar beverage category—spurred by Coca-Cola Sin Azúcar (Zero Sugar) reaching more than 32% volume growth year over year.

Capitalize On Emerging Categories & New Multi-Category Opportunities

This year, we continued to capture market share across emerging still beverage categories—from hydration to nutrition, energy, tea, and sport drinks—while identifying, defining, and exploring multi-category opportunities across our markets.

SUCCESS STORIES

MEXICO

DELIVERING DOUBLE-DIGIT DAIRY AND DAIRY-ALTERNATIVE GROWTH

Under our joint venture with The Coca-Cola Company, we satisfied growing consumer demand for our portfolio of wholesome Santa Clara brand UHT whole milk, specialized milk, and flavored milk products. Thanks to our unmatched market execution, we expanded our share of sales and achieved more than 20% volume growth year over year across the traditional trade channel. Simultaneously, we captured consumers’ taste for dairy-alternative beverages through our AdeS brand, significantly increasing our volume in the plant-based beverage category.

COLOMBIA

LAUNCHING REFRESHING BRISA SPARKLING FLAVORED WATER

In Colombia, we took portfolio innovation to a new level with the launch of refreshing Brisa sparkling water in enticing Colombian Apple and Lemon-Lime flavors. By year-end, we essentially doubled our volume and achieved higher share of sales in the country’s competitive flavored sparkling water segment.

MEXICO

& BRAZIL

& BRAZIL

ACCELERATING ENERGY GROWTH

In Mexico, thanks to our point-of-sale execution, we achieved high double-digit volume growth year over year in the energy category, which drives us to be the leader within the premium energy brands segment. Also, we’re continually innovating with new product launches such as Monster Pacific Punch, Lo Carb, and Hamilton. Additionally, we continued to build on our successful launch of Predator, a more affordable value brand from the Monster family. Predator complements our energy portfolio across the modern and traditional sales channels, while enabling us to gain market share in this attractive, growing beverage segment. By leveraging the traditional trade and wholesalers’ channels, we’ve achieved amazing volume growth of more than 50% year over year. In Brazil, we launched new flavors of our Monster and Reign brand energy drink, including Monster Pacific Punch and Dragon Tea Pessego, significantly expanding our share of sales, while increasing our sales volume by more than 80% year over year in this segment. Notably, Monster not only achieved record share of sales, but also share of sales leadership in Brazil’s fast-growing energy drink segment.

SUCCESS STORIES

BRAZIL

BUILDING A WINNING CONSUMER-CENTRIC BEER PORTFOLIO

This year, together with Heineken, The Coca-Cola Company, and the rest of the Coca-Cola System in Brazil, we successfully redesigned our beer distribution partnership in the country. As a result, during the year, we completed the transition of the Heineken and Amstel brands to Heineken’s distribution network, and we proactively evaluated and rolled out promising new brands to complement our beer portfolio. Leveraging our continued relationship with Heineken, we incorporated and launched two brands from Heineken’s portfolio: Eisenbahn, a premium brand, and Tiger, a pure malt mainstream brand. We furthered capitalized on market opportunities to acquire Brazilian craft beer brand Therezópolis, together with Coca-Cola Andina, and announced a new agreement to distribute leading Spanish brewer Estrella Galicia’s portfolio, together with the Coca-Cola System in Brazil.

BRAZIL

& COSTA RICA

& COSTA RICA

TANTALIZING TEA AND SPORT DRINKS GROWTH

We continued to capitalize on our reformulated portfolio to cater to our Brazilian consumers’ growing demand for refreshing teas. Strategically, the combination of our new cold-fill formula together with the rollout of our Leão brand teas enabled us to increase our sales volume by almost 20% for the year, while expanding our sales to a record share of this fast-growing beverage category. We further achieved significant share of sales and almost 50% volume growth in the profitable sport drinks category year over year. Moreover, in Costa Rica, we successfully launched a fusion of Hi-C and Fuze Tea in the mainstream tea segment, expanding our share of sales year over year.

MEXICO

& BRAZIL

& BRAZIL

EMERGING OPPORTUNITIES IN FLAVORED ALCOHOLIC READY-TO-DRINK BEVERAGES

Consistent with our journey to complement our portfolio with options for all consumption occasions, we are identifying and defining a broader multi-category portfolio beyond our traditional non-alcoholic ready-to-drink beverages. Our experience with Topo Chico Hard Seltzer shows consumers are excited to see recognizable beverage brands that they already enjoy enter the flavored alcoholic ready-to-drink alcohol space. With the combination of a familiar, beloved brand and a strong distribution and market position, we are confident that consumers will enjoy our emerging portfolio of flavored alcoholic ready-to-drink beverages, including Topo Chico Hard Seltzer. Additionally, we further continue to rollout pilot programs to test the distribution of complementary categories such as leading spirit brands, other alcoholic beverages, and leading consumer products in certain markets.

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RESPONSIBLE MARKETING

At Coca-Cola FEMSA, our consumers are at the center of everything we do. Therefore, transparency, fact-based information, an analytical culture, and a high sense of responsibility are the guiding principles for our marketing practices.

1

Informed nutritional
decisions

To enable our consumers to make healthy informed choices across every one of our operations, our upfront product labels include clear, easy-to-find nutritional content information, including the nutrients, fats, sugar, and sodium in each of our products. Our nutritional labeling strategy is based on providing consumers with clear and complete information in full compliance with applicable regulations in each of the countries we serve. Our aim is to ensure that our consumers are provided with high-quality information.

2

Responsible marketing
 

As part of our commitment to the wellbeing of our consumers and customers, our advertising adheres to The Coca-Cola Company’s Responsible Marketing Policy and Global School Beverage Guidelines. For instance, as part of the Coca-Cola system, we diligently follow and enforce The Coca‑Cola Company’s Responsible Marketing Policy, and we do not market products in channels with an audience predominantly of children under 13. In this and other ways, we underscore our devotion to the healthy habits of our consumers.

3

Highest quality
 

Our production processes fulfill the highest quality standards; our ingredients comply with each of our operations’ local regulations and international standards of other regulatory agencies, including CODEX, FDA, JEFCA, and EFSA. Our processes are performed in state-of-the-art bottling facilities within the global beverage industry—all FSSC 22000 certified—thus guaranteeing only the best quality products for our consumers.

DELIVERING HIGH-QUALITY PRODUCTS AND SERVICES

As a customer-focused company, we are in constant communication with our customers, giving them an open channel where they can voice their concerns and complaints. With that in mind, one of the ways we measure customer satisfaction is by reducing the number of complaints through our ongoing process optimization and food safety and quality assurance systems.

This year, we are pleased to report that we enjoyed our best quality control performance in the past eight years across key performance indicators. Notably, we managed to reduce complaints by 35%, while lowering minor product non-conformities by 63%. We also managed to reduce internal incidents by 25%, surpassing our 15% reduction goal. We further achieved a 7% reduction in non-quality event costs, a significant result taking into consideration that we invest more than US$1 million per year to address those types of occurrences. Overall, in terms of our key performance indicators for quality control, we had our best performance in the past 8 years.