Coca-cola Femsa Sab De Cv Units Cons Of 5 Shs -l- + 3 Shs Series -b- · BMV:KOF/UBL
Coca-cola Femsa Sab De Cv Units Cons Of 5 Shs -l- + 3 Shs Series -b- — The Coca-Cola Company — Investor Presentation (May 2004)
34 slides from Coca-cola Femsa Sab De Cv Units Cons Of 5 Shs -l- + 3 Shs Series -b-'s investor presentation, May 2004
Slide 1: The Coca-Cola Company Latin America Investors Meeting – May 2004
The Coca-Cola Company Latin America Investors Meeting – May 2004
Slide 2: Contents
Contents - Introduction to Coca-Cola Latin America - 2003 Performance Review - 2004 Highlights - Summary 2
Slide 3: How Are We Organized
How Are We Organized Latin Center (Central America & Caribbean, Mexico Venezuela, Colombia & Ecuador) > 2.2 Billion UC > 680 MMUC Martin Machinandiarena Dan Sayre Brazil South Latin (Argentina, Chile, Peru, Bolivia, >1 Billion UC Uruguay & Paraguay) Brian Smith > 760 MMUC James Quincey (Volume Figur
Slide 4: Latin America - 41 Countries, 100+ KO Brands
Latin America- 41 Countries, 100+ KO Brands Honduras Per Caps- Total Products Mexico 184 % NARTD share 527 % 23.9 % 30.5 $ 958 $ GDP Per Cap $ 5,773 Colombia 73 Guatemala % 11.5 107 $ 1,767 % 19.7 Venezuela $ 2,042 139 % 32.5 Ecuador $ 3,139 162 Brazil % 36.4 $ 2,030 135 % 18.9 Peru $ 2,539 105 % 35
Slide 5: KO With A Great CSD's Business - The Largest Beverage Category
KO With A Great CSD’s Business - The Largest Beverage Category KO Share of Category 2003 Latin America NARTD Industry Sport Drinks Tea 22% Juices 66 MMUC Fruit Still Tea 264 MMUC Drinks 23 MMUC 360 MMUC Sport Drinks 9% Juices 1% Packaged Water SS Fruit Still 2.3 Billion UC Drinks 8% Packaged Water S
Slide 6: Lead KO System With A Clear Understanding Of Environment Dynamics
Lead KO System With A Clear Understanding Of Environment Dynamics 2003 2003 • Economic slowdown • Government holding socioeconomic Mexico structural changes • GDP 1.3% Restricted • International confidence Economic Brazil • Consumer purchasing power still constrained • GDP <1% Conditions • 2 month s
Slide 7: Keeping A Solid Market Position
Keeping A Solid Market Position PBG • ’03 volume +1% Kola Real Reducing prices • Reducing Share of CSD’s in Venezuela -0.8 pp Kola Real • Share of CSD’s Below 3% and stable Gallito • 0.4% Share of CSD’s & stable Tubainas • Not growing • Reducing Share of CSD’s -1.4 points vs Jan ‘03 Kola Real • Redu
Slide 8: And Continue Producing Solid Results
And Continue Producing Solid Results • Maintained share of NARTD across LA SBU • Build a New Business Model in Brazil • Emerge stronger after crisis in Argentina & Venezuela • 4% volume growth in 2003 • Launched a new Pan-Latin America platform for Coca-Cola - “De Verdad” advertising drove efficienc
Slide 9: Mexico
Mexico 9
Slide 10: Consistent Performance
Consistent Performance Volume 7% CAGR • Volume & Profit growth MMUC • Healthy Coca-Cola Brand with stable indicators KO gap vs Nearest Competitor - Daily Consumers 7 : 1 - Favorite brand 5 : 1 1999 2000 2001 2002 2003 - Positive purchase intent 2 : 1 - Consumer base 3 : 1 Operating Income Currency N
Slide 11: Brazil
Brazil 11
Slide 12: A Couple Of Years Ago…
A Couple Of Years Ago… Drastic Hyperinflation fluctuations in / devaluation purchasing bursts power Consumer, Trade, Competitive Transformations Heavy informality, significant tax evasion Unstable political environment, volatile rules 12
Slide 13: Our System Confronted Tough Conditions, Developing an Operating Mentality
Our System Confronted Tough Conditions, Developing an Operating Mentality Anchored in ... 1998-2002 KO Volume & Rev/uc Indexes, Share Trends 114 120 100 Volume Index 100 Protecting Volume – 80 Share / Focus on 50.4 60 48.5 pricing 100 Share of Sales 40 69 20 Rev/uc Index 0 1998 1999 2000 2001 2002 2
Slide 14: The Dynamics Of The Operating Mentality Created A Vicious Circle…
The Dynamics Of The Operating Mentality Created A Vicious Circle… Chronic Chronic System System Disalignment Disalignment Capability Capability Cutting Cutting No No Profit Profit // ROIC ROIC Mentality Mentality Low System Profitability Restricted Restricted Price-Driven Price-Driven Portfolio Port
Slide 15: In 2003, Created A New Business Model
In 2003, Created A New Business Model Have taken significant steps • Agreed to long-term strategy with Aligned Aligned & & our bottling partners Healthy Bottlers Healthy Bottlers • Worked in close partnership with Brands Brands bottlers to offer new packages and Profoundly Profoundly Sustainable tai
Slide 16: Generating Positive Results
Generating Positive Results +2.2 pp Coca-Cola brand growing share of volume System profit increasing significantly 2002 2003 +50% +2.4 pp 2002 2003 And also share of value 2002 2003 16
Slide 17: Argentina
Argentina 17
Slide 18: From Strong Economic Expansion to Deflationary Recession - To Abrupt Implosion
From Strong Economic Expansion to Deflationary Recession - To Abrupt Implosion 21% Decline in GDP since it’s peak Post Default & Chaotic 295 Devaluation 285 Real GDP - AR$Bn 275 265 Consumers resetting values/relationships & 255 +7% Annually looking for security 245 235 -21% 225 III-97 III-00 IV-96
Slide 19: Cohesive plan to Emerge Stronger; organization restructured to drive it
Cohesive plan to Emerge Stronger; organization restructured to drive it Emerge Stronger - Protect consumer base with focus on Coke, while strengthening relationship with our brands - Ensure System financial & operational viability - Reset Customer relationships & gain execution advantage - Retain so
Slide 20: Historic opportunity to strengthen Coca-Cola's connections with consumers
Historic opportunity to strengthen Coca-Cola’s connections with consumers Committed to deep consumer understanding to define relevant actions - In real time - Coke plan rebuilt aligning tone, style, and mechanics to new Continuous Tracking of Consumer reality Identity • Perception Social Environment
Slide 21: Our Emerge Stronger Strategy Worked
Our Emerge Stronger Strategy Worked • 13% volume growth vs +5% in NARTD Industry +7.6% in GDP • 19% growth in Coca-Cola / 15% Rest of CSDs • Per Capita Consumption +24 vs PY • Improving Coca-Cola brand indicators - Favorite Brand +1.3 vs PY - Worth what it costs +1.7 vs PY 21
Slide 22: Venezuela
Venezuela 22
Slide 23: KO System Was Strained By A Deteriorating Socio-Economic Situation
KO System Was Strained By A Deteriorating Socio-Economic Situation Socio-economic Situation Consumer - 2 month general strike in Dec ’02 & Jan ‘03 …dramatically deteriorated purchasing power; changing habits to “make ends meet” - GDP declined -11% in ’03; unemployment at 24% - Exchange control durin
Slide 24: Clear Roadmap to Drive Profit Growth
Clear Roadmap to Drive Profit Growth - Strengthen Coca-Cola Connections with Venezuelans - Lead Category Package & Price Architectures - Strengthen In-Market Presence - Accelerated system costs reductions / efficiency improvements ... Always Maintaining high level of flexibility to cope with uncerta
Slide 25: We Obtained Exceptional Results With Coca-Cola Brand Despite a Very Challenging Context
We Obtained Exceptional Results With Coca-Cola Brand Despite a Very Challenging Context - Volume Increase >10% vs. 2002 - Share of market: -Coca-Cola market share +4.3 pp (Dec’03 vs. Nov’02) - Consumer Indicators (Dec’03): Gap vs. Nearest Competitor • Favorite brand: 2 :1 • Consumer base: 1.3 : 1 •
Slide 26: 2004
2004 26
Slide 27: Improvement in Economic Conditions …
Improvement in Economic Conditions … Total LA GDP from 1.5% in ’03 to 3.0% in ‘04 Mexico - On the road to recovery - Potential for a more solid growth Brazil - Strengthening economic condition - Growing internal consumption - Structural reforms (taxes, energy) Argentina - Some positive signs, but so
Slide 28: Managing Our Portfolio
Managing Our Portfolio Latin Center Mexico • Accelerate growth in Key Markets, capitalizing on the KOF / PB • Main volume & profit driver integration • Will take all reasonable & prudent measures to sustain its momentum Brazil South Latin • Turn-around opportunity • Continue to remain close to consu
Slide 29: CSD's Is Our Top Priority
CSD’s Is Our Top Priority • Coca-Cola will continue to be our growth engine • Continuously adapting brand / package / price / channel architectures • Deepening relationship with consumers – programs that respond to their passions and needs • Revenue enhancing initiatives with line extensions • Selec
Slide 30: Our 23.3% Share In NARTD Shows Ample Potential, Yet CSD's Is Our Main Opportunity
Our 23.3% Share In NARTD Shows Ample Potential, Yet CSD’s Is Our Main Opportunity 2003 Latin America NARTD KO Others Tea 23 Millions Unit Cases Millions Unit Cases Sport 66 Drinks Packaged Water SS 2,339 Juices 264 7,267 Fruit Still CSD's Drinks 358 0 100 200 300 400 0 1000 2000 3000 4000 5000 6000
Slide 31: Other Beverages Have Started To Play An Important Role in Our Portfolio
Other Beverages Have Started To Play An Important Role in Our Portfolio • Developing new “Go – to market” approaches that complement existing skills and know how • Focus in areas where a leading and profitable position can be achieved • Fully exploit global brands potential, i.e. Powerade & Nestea •
Slide 32: Strong Emphasis in Customer Programs & Profitability
Strong Emphasis in Customer Programs & Profitability • Support the development of all customers and channels Customers • Specific programs for each channel • Dedicated packages and price points • Further develop revenue growth management capabilities Grow our system • Direct resources to volume & pr
Slide 33: Solid, Consistent Contribution to KO Results
Solid, Consistent Contribution to KO Results Volume Operating Income (MMUC) ($MM Currency Neutral) 4,729 1,313 * +4% CAGR 4,086 +12% CAGR 829 1999 2003 1999 2003 * 2003 currency neutral operating income excludes the impact of $24 million stock option expenses, $20 million of charges, and $299 millio
Slide 34: In Summary
In Summary • Strong Management Team and Bottling Partners - Understand market - Positioned for winning - Orientation to effectiveness & efficiencies • Great CSD’s Base Infrastructure 4.3 4.3 Billion Billion UC UC • Building Non-Carbs Business • Solid, Consistent Contribution To KO Results 34
The Coca-Cola Company — Investor Presentation (May 2004) on 6ix