Coca Cola Strategy and Compettitive Advantage

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Coca-Cola FEMSA seeks to provide its shareholders with an attractive return on their investment by increasing the company’s profitability.

The key factors in achieving profitability are increasing revenues by:

1. implementing multi-segmentation strategies in the company’s major markets to target distinct market clusters divided by competitive intensity and socioeconomic levels;

2. implementing well-planned product, packaging and pricing strategies through channel distribution; and;

3. achieving operational efficiencies throughout the company.

To achieve these goals the company continues its efforts in:

working with the Coca-Cola Company to develop a business model to continue exploring new lines of beverages, extend existing products, participate in new beverage segments and effectively advertise and market the company’s products;

developing and expanding the non-carbonated beverage portfolio organically and through strategic acquisitions together with the Coca-Cola Company;

implementing packaging strategies designed to increase consumer demand for the company’s products and to build a strong returnable base for the Coca-Cola brand selectively;

replicating the company’s successful best practices throughout the whole value chain;

rationalizing and adapting the company’s organizational and asset structure in order to be in a better position to respond to a changing competitive environment;

strengthening the company’s selling capabilities and selectively implementing pre-sale system, in order to get closer to clients and help them satisfy the beverage needs of consumers;

evaluating the company’s bottled water strategy, in conjunction with the Coca-Cola Company, to maximize its profitability across its market territories;

committing to building a strong collaborative team, from top to bottom; and

seeking to expand the company’s geographical footprint.


Competitive Advantage

Market Leadership. Coca-Cola FEMSA is the largest bottler of Coca-Cola trademark beverages in Latin America in terms of total sales volume in 2006, with operations in Mexico, Guatemala, Nicaragua, Costa Rica, Panama, Colombia, Venezuela, Argentina and Brazil. The company is also the world’s second largest Coca-Cola bottler;

Managerial expertise. FEMSA and the Coca-Cola Company provide the company with managerial experience. Coca-Cola FEMSA also offers management training programs designed to enhance executives’ abilities and exchange experiences, know-how and talent among an increasing number of multinational executives from the company’s new and existing territories.

Innovative business partnerships. Coca-Cola FEMSA is working together with the Coca-Cola Company to develop more advanced joint business models and to increase shared incentive to capture important growth opportunities- including the evident opportunities presented by Latin America’s non-carbonated beverage category.

Joint-ventures. Coca-Cola FEMSA and the Coca-Cola Company agreed to acquire Jugos del Valle, one of the leading juice manufacturers in Mexico and Brazil, through a new joint-venture company. Beyond the potential synergies, this transaction will considerably increase the company’s presence in Latin America’s fast-growing, but under-developed non-carbonated beverage segment.

Innovative, collaborative customer relationships. As an organization, Coca-Cola FEMSA continually looks to deepen its customer relationships. In Mexico, the company is working closely with its largest clients to develop stronger multi-faceted relationships. Among the company’s initiatives, are tailoring its extensive portfolio of products and packages for their stores - based on the local market’s socioeconomic demographics and the store’s distinctive characteristics.

Innovative market segmentation model. The company is better able to serve the distinct needs of its customers and...
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