Dear fellow


2016 was not only a year full of great challenges—from currency and raw material volatility to a demanding consumer environment—but also a year full of great growth and positive results. Among our achievements, we accelerated our transformation by focusing on the pillars of our Strategic Framework to expand and consolidate our position as a truly diversified multi-category global beverage leader.

2016 was not only a year full of great challenges—from currency and raw material volatility to a demanding consumer environment—but also a year full of great growth and positive results. Among our achievements, we accelerated our transformation by focusing on the pillars of our Strategic Framework to expand and consolidate our position as a truly diversified multi-category global beverage leader.

Launch of our 250-ml presentation
Through our Magic Price Points strategy, we launched our 250-ml presentation for brand Coca-Cola in Mexico—generating almost 4 million incremental unit cases and reinforcing our robust portfolio of single-serve presentations during 2016.

We continue to optimize our portfolio through our innovative packaging, proactive pricing architecture, and profitable product mix.

Accelerating Towards Excellence: Strategic Pillars

To satisfy and adapt to our customers and consumers diverse lifestyles, we are building our winning product portfolio for each of our markets, including a wider array of sparkling beverages, waters, teas, juices, isotonics, and dairy products. Capitalizing on the strength of brand Coca-Cola, we are reinforcing our non-caloric sparkling beverage portfolio. We are revitalizing our flavored sparkling beverage growth, and we are escalating our portfolio growth throughout the still beverage category.

After rolling out KDP across our traditional sales channel in Mexico and 50 routes in Brazil, we achieved incremental volume and revenue growth, along with improved point-of-sale execution.

Together with our partner The Coca-Cola Company, we agreed to acquire Unilever’s AdeS soy-based beverages business. As the leading soy-based beverages brand in Latin America, AdeS will complement and strengthen our still beverage portfolio, providing our consumers with a broader range of nutritious, delicious choices.

Propelled by our centers of excellence (CoEs), we are accelerating the transformation of our operating model—highlighted by the launch of our KOFmmercial Digital Platform (KDP). During 2016, we rolled out KDP across almost 3,500 routes in Mexico, serving over 600,000 clients across our traditional sales channel, and we began implementation of KDP at 50 routes in Brazil. Consequently, we achieved incremental volume and revenue growth, with improved point-of-sale execution, in the areas with KDP.

Led by our Distribution & Logistics CoE, we are developing an integrated, best-in-class supply chain across our global beverage categories, geographies, and business models. Simultaneously, our Distribution & Logistics CoE began the rollout of our Digital Distribution platform at four distribution centers in Mexico, covering 360 delivery routes.

Moreover, our Manufacturing CoE’s comprehensive Manufacturing Management Model will offer us an integrated operational perspective to optimize costs, raise productivity, and drive efficiency. Through our relentless effort to maximize every resource in our production process, we achieved hard manufacturing savings of US$36 million in 2016. We also achieved the best quality index in the history of our company.

In 2017, we will continue to rollout KDP throughout Mexico and Brazil, as well as other targeted markets.

We are further accelerating our cultural evolution. To this end, we are creating a unified corporate culture founded on the cornerstones of leadership, talent, and innovation. Among our initiatives, we are cultivating inspiring leaders; defining clear career tracks; offering a more flexible work environment; and utilizing innovative technology to empower our employees to speak up, provide ideas, and help solve problems.

Accelerating Towards Excellence: Operating Highlights

Guided by our Strategic Framework, our company navigated strong headwinds to deliver positive results for the year. For 2016, our reported total sales volume was over 3.3 billion unit cases, with transactions outpacing volumes to reach almost 19.8 billion throughout Latin America. Total revenues grew 16.6% to Ps. 177.7 billion. Operating income grew 5.6% to Ps. 23.9 billion. Operating cash flow grew 13.6% to Ps. 35.5 billion, and net controlling interest income was Ps. 10.1 billion, resulting in earnings per share of Ps. 4.86 and earnings per ADS of Ps. 48.58.

Throughout the year, we created opportunities for further growth across our operations. In Mexico, transactions once again outperformed our volume growth—totaling 9.9 billion. For the year, we expanded our leading market position in the sparkling beverage category, while achieving gains across the still beverage category. In Central America, our volumes grew by 4.2%, driven by Costa Rica and Nicaragua’s highest volume growth in the past 10 years.

In Brazil, we overcame a tough consumer and economic environment to continue growing market share across every beverage category. Notably, we acquired Vonpar. This strategically important franchise borders our territories in southern Brazil, and bolsters our leading position in one of the largest markets for Coca-Cola products—enabling us to serve approximately 88 million consumers.

Our transactions outperformed volumes by 3.7% in Colombia, reaching 2.4 billion. In Argentina, we closed the year positively, with market share gains across every beverage category. Moreover, in Venezuela, we managed an exceptionally challenging environment.

In Mexico, our del Valle juice brand achieved 20% volume growth during the year. To sustain and build this robust brand, we rolled out several initiatives, including our launch of del Valle Blends—a 100% juice available in an appealing mix of mango and strawberries, pineapple and tangerine, and orange and guava.

billion Mexican Ps.

The three pillars of our Strategic Framework:

  1. Winning Portfolio Buildup
  2. Operating Model Transformation
  3. Cultural Evolution

In the Philippines, we achieved high single-digit transaction and volume growth, together with improved profitability during 2016. Looking ahead, our Philippines’ business top- and bottom-line growth will continue to positively contribute to our revenues, profits, and overall consolidated results for 2017.

During 2016, we reached a broad new cooperation framework with our partner The Coca-Cola Company. Designed to maintain a mutually beneficial business relationship over the long term, this framework sets the stage for us to capture the next wave of inorganic growth through our understanding to assess, on a preferred basis, the acquisition of specific territories within The Coca-Cola Company’s Bottling Investments Group in Latin America, the United States, and other regions.

Furthermore, we advanced our company’s strategic commitment to sustainable development. Among our results, we contributed more than 374,000 volunteer hours for our communities; benefited close to 1,000,000 people through our healthy lifestyles programs; utilized recycled material in almost 19.8% of our PET packaging; and returned 100% of the water we used to produce our beverages in Mexico and Brazil to the environment.

As we enter 2017, we welcome a renewed focus on every aspect of our business. Moving forward, we will focus on: maximizing our cash flow generation, protecting our financial margins, and reducing our debt; advancing our CoEs’ big transformational initiatives, bolstered by the launch of our new Analytics CoE; growing sparkling beverages while diversifying aggressively in still beverages; enriching our close, accretive relationship with The Coca-Cola Company; and attracting, retaining, and developing the best multicultural talent in the industry.

Through our innovative one-brand “Taste the Feeling” campaign, we generated significant incremental sparkling beverage transactions during the year.

Transactions per operation
Mexico 50.0%
Central America 7.6%
Argentina 5.1%
Brazil 21.3%
Colombia 12.1%
Venezuela 3.9%

On behalf of every employee who works for our company daily, we would like to thank you for your continued confidence in our capability to deliver economic, social, and environmental value for you all.

José Antonio
Fernandez Carbajal

Chairman of the Board

Santa Maria Otazua

Chief Executive Officer