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Corporate Presentation
1
Disclaimer
During this presentation management may discuss certain forwardlooking statements concerning Arca Continental’s future performance
that should be considered as good-faith estimates made by the
Company.
These forward-looking statements reflect management expectations and
are based upon currently available data. Actual results are subject to
future events and uncertainties, which could materially impact Arca
Continental’s actual performance.
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A solid partnership with Coca-Cola since 1926
90 YEARS
Pioneers of the
in Mexico
system
3
Current ownership structure
Arca Continental
Control Group
68%
Float Mexican Stock
Exchange: AC*
19%
The Coca-Cola Company
9%
4%
Lindley Family
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An institutional company
• Balanced Board of Directors:
‒ 21 members
‒ 6 of them are independent
• Majority shareholders only at Board
level
• Audit Committee comprised of
independent members only
• No transactions with related parties
The Coca-Cola Company appoints one member of the Board
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Sustainable and profitable growth…
1%
Exports
13%
2002
CAGR
15%
99%
7.0x
55%
10%
3Q16
LTM
15%
7%
Snacks
Mxp$13 billion
Mexico Beverages
Exports and Vending
Mxp$ 91 billion
Mexico Ecuador Argentina Peru
Snacks
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…based on strong organic growth and an
excellent M&A track record
2002
2007
2008
2010
2011
2012
2014
2015
ARCA
Merger
Snacks
Mexico
Argentina &
Jugos del
Valle
Ecuador
CONTAL
Merger
Snacks
International
& Santa
Clara
Tonicorp
Peru
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Delivering solid results in a challenging
environment
MXP$ billion
Sales
EBITDA
$91*
$17
$76
$60
$20*
$62
$13
$56
$51
$14
$11
$10
2011 2012 2013 2014 2015 2016
*Last twelve months as of 3Q16
2011 2012 2013 2014 2015 2016
EBITDA
Margin
18.9% 20.1% 21.3% 22.0% 21.9% 21.6%
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Highest credit rating among Mexican companies
Global Scale
Net Debt / EBITDA
1.9
“A2”
“A”
1.3
National Scale
0.5
“Aaa”
“Aaa.mx”
2014
Global Investment Grade above
Mexico’s sovereign rating
2015
2016e
Financial flexibility and low leverage
ratio
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Consistent value creation…
+179%
(MXP$ billion)
$191
$18
$209
+275%
$48
$12
$60
$16
Market Cap Arca Market Cap Arca
Dec '02
Dec '10
$75
Contal
Arca
Dividend
'02 - '10
Total Value
Dec '10
Market Cap
Arca+Contal
Dec '10
Market Cap
Dec '16
Dividend
'11 - '16
Total Value
Dec '16
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…based in our strategic core pillars
Value Creation
Operational Strengths
Execution (ACT)
• Segmentation
• Price-pack architecture
• Service models
• Talent development
• Organizational
capabilities
Supply Chain
Management
• Supply network design
• Operational Excellence
• Sustainability
People &
Organization
Finance & IT
• Solid financial profile
• Standard and streamlined
business process
• State of the art IT platform
• Culture
• Social Responsibility
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A model that connects the entire organization
in order to reach the perfect execution
Segmentation
RGM
RTM
Fundamentals
Market tools
Sales School
Collaboration
Commitment
Innovation
Innovation
Standardization
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Balanced business portfolio
New sparkling beverage
franchises
Emerging still categories +
Value added dairy
CSDs
Snacks, vending machines
and exports
Core
NARTD
Adjacencies
SSDs
NARTD: Non-Alcoholic ready to drink
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Arca Continental: beverage operations
Start date: 1926
Start date: 2010
• Sales volume (MUC)
•
Mexico
•
1,078
% KO volume
30%
Population served (MM) 30
• Sales volume (MUC)
•
Ecuador
•
156
% of KO volume
100%
Population Served (MM) 15
Start date: 2015
• Sales volume
•
Peru
•
292
% of KO volume
100%
Population served (MM) 31
(MUC)
Start date: 2008
• Sales volume
•
Argentina
•
143
% of KO volume
21%
Population Served (MM) 9
(MUC)
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An extensive brand portfolio to satisfy
every consumption occasion
28 Brands
2006 +128SKUs
+
Brands
50
2015 + 1,200 SKUs
+
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Strategic franchise location in Mexico
Nogales
• The dawn of a new era of growth
CDF
• Active participation in the
consolidation of the KO System in
Mexico
AC
Nayar
Bepensa
Rica
Colima
• Further opportunities for synergies
and find better ways to serve
KOF
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Mexico
2%
7%
10%
S-Markets
Vending
6%
11%
On Premise
Stills
Flavors
5%
Water
13%
C-Stores
17%
Jug
Channel
Category
8%
Other
60%
61%
Traditional
Colas
Format
48%
Single-serve
52%
Multi-serve
37%
Returnable
63%
Non
Returnable
Package
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Argentina: Investing in core capabilities and
increasing profitability
• EBITDA margin expansion from 10% to
20% in 7 years
• Increasing cooler coverage and reaching
a 48% cooler coverage
• Standardized operational processes and
replicating best practices such as ACT
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Argentina
2%
21%
1%
3%
On Premise C-Stores
10%
Stills
S-Markets
29%
Other
Water
25%
Flavors
Channel
Category
47%
62%
Traditional
Colas
8%
Single-serve
Format
44%
Returnable
56%
92%
Non
Returnable
Multi-serve
Package
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Ecuador: Successful expansion of best practices
• Deployment of business strategies learned in
Mexico to mitigate tax effect
• Increasing cooler coverage from 24% to 45%
in the last 5 years
• All CAPEX investments made from its own
cash flow
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20
Ecuador
13%
8%
10%
On Premise
S-Markets
1%
C-Stores
Stills
32%
10%
Flavors
Water
11%
Other
Channel
Category
67%
48%
Traditional
Colas
Format
21%
29%
Returnable
Single-serve
79%
71%
Multi-serve
Package
Non
Returnable
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New partnership in South America
COLOMBIA
ECUADOR
•
•
•
•
•
•
•
Population
Currency
2015 Sales volume
EBITDA margin
Net Debt
Collaborators
Production facilities
31 million
Nuevos soles
292 MUC
+17%
$380 MMD
3,300
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Iquitos
Sullana
Piura
BRAZIL
PERU
Chiclayo
Trujillo
Callao
Lima
Cusco
Ica
BOLIVIA
Arequipa
Plants (8)
Key Population Density:
80-6,000
10-25
25-80
0-10
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Peru: large market with attractive macroeconomic
and demographic dynamics
Five avenues to reach value creation opportunities of US$25 million at CL
1. Raw Materials
2. Process Innovation and
Packaging
3. Supply Chain and Transportation
4. Administration
5. Revenue Expansion Alternatives
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Peru
9%
1%
11%
S-Markets
4%
On Premise
Jug
7%
Stills
4%
Vending
17%
C-Stores
Water
8%
Other
Channel
Category
67%
72%
Traditional
CSDs
Package
41%
Single-serve
59%
28%
Returnable
Multi-serve
72%
NonReturnable
Format
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RGM strategy: sustain profitability & affordability
$30
MX
2.0
RP
$5
MX
600
PET
12 Oz
VR
$5
3.0
NR
$5
$10
$13
$20 $25
Low elasticity SKU’s
Protect affordability
(Multi-serve & Returnable)
Keep magic prices
Leverage on diet & single serve
presentations
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Transactions: A way to profitable volume
•
•
Smaller formats, higher profitability
Finding new opportunities and competitive advantages
1 x 2 lts
3 x 600 mls
better than
3 transactions
• Higher price per milliliter
• Increase single-serve mix
• Packaging innovation
1 transaction
• RGM initiatives
• New consumption occasions
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Growing our Still Beverage Portfolio
• Very positive trend in Market Share
• Higher volumes in AC than in the rest of
Mexico
Market Share
Total Channels (%)
85.0
57.5
39.1
11.0
• Surpassed our main competitor in the
indicator base of consumption and
closing gap in the indicator Favorite
Brand
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Powerade
Main Competitor
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An extensive brand portfolio to satisfy every
consumption occasion
Mexico
• Introduced UHT milk in in the traditional
channel, 48% growth vs 2015
• Leveraging our Direct to Home channel
• Coverage of 39% in traditional channel
• More than 3,000 coolers introduced in the
last two quarters
Ecuador
• Founded in 1967, with leading position
in high value-added dairy: flavored milk
and yogurt
• 50/50 Joint Venture with TCCC
• Consolidating AC as one of the most
important consumer companies in
Ecuador
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Leveraging our capabilities in adjacent business:
Salty Snacks…
2007
• 3rd largest snack brand in •
Mexico
•
• 40 year history
•
• Plan to expand
nationwide
•
• One of the largest
distribution networks
2013
2013
Over 90 years history
• 40 year history
Leading regional brand
• Strong position in the
Ecuadorian market
#1 brand in NY metro
area
USD$7 billion market
size in regions served
• 2nd largest player at a
national level
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… and successful development of Direct to
Consumer channels
Vending
Leading innovation with telecommunications to
increase profitability
Direct to Home
Jug Water & DTH currently reach more than
600,000 households
Mexico
DTH Routes
Vending
Machines
532
(‘000)
336
31
226
26
163
2012
2012
2013
2014
2015
2015
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Capitalizing on exports to the US
$104 MM USD growing market
Million Unit Cases
Exports to USA
8.0
Coca-Cola (Nostalgia)
6.9
7.7
6.8
6.4
5.2
4.5
3.9
3.1
2005
4.9
2.0
2006
2007
13.0
13.0
2013
2014
2015
10.6
4.0
2.9
13.0
9.0
4.3
4.4
2008
2009
6.6
2010
2011
2012
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Expanding Topo Chico
• On July, Arca Continental (AC) agreed to
transfer the rights of the Topo Chico
brand in Mexico to The Coca-Cola
Company (TCCC)
• This will allow the expansion of volume in
all the territories operated by Arca
Continental.
• The new territories are the states of
Jalisco, Zacatecas, Durango, San Luis
Potosí and Aguascalientes
• We expect a 20% volume increase for
Topo Chico
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Our strategic revenue growth target
Future
2x
Sales
100
MXP$ billion
2x
2x
13
2002
56
25
2008
2012
2017
Strategic pillars support our goal to reach
Mxp$100 billion in sales by 2017 and sustain
our profitable growth momentum beyond…
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Our Commitment to Sustainability
RECYCLING
Mexico 2015
34%
Of PCR
49,447 Tons
of resin produced by PetStar
Mexico is the global leader in
recycled resin use
*2015 data for AC Consolidated
WATER*
1.69
Water Lts. /
Beverage Lts.
16% Improvement
vs 2010
Leader in water reuse
technology
ENERGY*
23.5
G CO2/
Beverage Lts.
10% energy reduction
Vs 2010
17.3% from renewable
sources
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Contact us at:
[email protected]
[email protected]
[email protected]
[email protected]
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