Mexican coke bottler enjoys soft drink boon

Coca-Cola Femsa, which is the world's second largest bottler of Coca-Cola products, said Friday that profit was up 6.7 per cent to €1.1bn for the period ending 30 June. The company's performance over the three month also improved, with operating margins of 8.5 per cent from just 7 per cent last year. The group employed a mixed strategy of both consolidating its position domestically, along with expansion into emerging country's like Brazil to improve profitability in its operations. Through both its soft drink and beer brands, which include global labels such as Sol lager, the group highlighted exports and international operations as the key segments for growth over the quarter. In terms of soft drinks production, the pressures of increased sweetener costs, specifically through its Mexican operations, were offset by sales growth throughout its markets. Revenue as a result was up 8.2 per cent to €525m for the division. In Mexico, sales volumes rose 3.8 per cent for the quarter, spurred on by the launch of the Coca-Cola Zero brand. It was non-carbonated drinks, which dominated the market in the country though, with volumes up 40 per cent in the quarter. The figure excluded the bottled water segment. There was a similar performance in the group's Central American division, which includes Guatemala, Nicaragua, Costa Rica and Panama. Sales were up by 7.7 per cent to about €700,000 during the same period the previous year, led by improved sales volumes of its carbonated beverages, which accounted for 65 per cent of income. Non-carbonated beverages volumes, particularly for juice and its Powerade brand were up by 25 per cent, again excluding bottled waters. Carbonated beverages also led the way in Venezuela, where decreased volumes of jug water were more than offset by strong growth in the category. Volumes of non-carbonated beverages were up five per cent as sales for the quarter increased by 21.1 per cent to €133m. The company's operations in Argentina posted improved sales volumes of 37.6m hectolitres, up by 2.5 per cent over the same quarter last year. The Coca-Cola Zero brand again compensated for volume declines in other carbonated brands. Non-carbonated beverage volumes were also up by 3.2 per cent in the quarter. In Brazil, the continued strength of the Coca-Cola brand ensured that carbonated drinks accounted for 85 per cent of sales growth, with volumes up 11.1 per cent. The launch of Aquarius no-calorie water and growth of the Minute Maid Mais juice brand allowed the group to double its share of total sales volumes in the country for non-carbonated beverages from a small base to 1.6 per cent. Coca-Cola Femsa's beer arm also enjoyed improved sales through its three main divisions of 2.7 per cent. Though the quarter started slowly in their Mexican operations, the group increased sales volumes in the country by 3.2 per cent to 7.2m hectolitres helped by its major brands like Sol, Kaiser and Bavaria. The growing importance of the Brazilian market to the company was reflected in an 8.1 per cent increase of sales volumes over the quarter again helped by its major brands. However, exports led the way for beer growth, as sales volumes increased 27.1 per cent to 968 hectolitres. The group said that the growing popularity of the Dos Equis and Tecate brands in the US was a key factor in the growth.