WINNING PORTFOLIO BUILD-UP
OPERATING MODEL TRANSFORMATION
Disciplined capital allocation
Strategic mergers and acquisitions
As a strategic partner to The Coca-Cola Company and the largest Coca-Cola franchise bottler in the world, by sales volume, Coca‑Cola FEMSA holds a leadership position within the beverage industry with a multi-category portfolio and global footprint.
Our Strategic Framework steers our long-term business growth strategy by promoting company-wide collaboration and sharing best practices. As we grow, both organically and through strategic acquisitions, we aim to create value for all our stakeholders by realizing new operational efficiencies and innovations. In this way, we are focused on strengthening our multi-category portfolio, transforming our operational capabilities, and evolving toward a unified corporate culture. We are also integrating a stronger emphasis on sustainability and proactive environmental management across our business strategy.
Winning portfolio buildup
In 2017, we generated over 25 billion transactions serving sparkling beverages, juices, isotonic sports and energy drinks, teas, waters, dairy products and plant-based beverages to more than 381 million consumers. To continue to expand our level of service in diverse markets, we are focused on building a winning portfolio of beverages, as well as anticipating—and responding to—evolving consumer preferences.
We are revitalizing our sparkling beverage offerings, diversifying in still and dairy beverage options, and exploring new, innovative categories. Innovation is a cornerstone of our path toward strategic growth and development. In 2017, as part of our portfolio innovations that offer our consumers more suitable options for their lifestyles, we launched:
We also continue to complement the organic growth of Coca‑Cola FEMSA with value-creating acquisitions.
Together with The Coca-Cola Company and the Coca-Cola System in Latin America, we added AdeS plant-based beverages to our expanding offerings in the region. AdeS will complement and strengthen our still beverage portfolio, providing consumers with a broader range of choices. As a nutritious, dairy-free product, AdeS is well-positioned to benefit from favorable dynamics in the broader dairy-alternative beverage segment, as well as positive consumption trends for premium, nutritious, and natural products.
Ensuring product affordability
To better serve and strengthen our connection with consumers, particularly in the challenging macroeconomic environment of 2017, we rolled out affordability initiatives across our operations through our strong platform of affordable, returnable multi-serve packaging alternatives. In Mexico, Brazil and Colombia, we reinforced the coverage of these returnable presentations, as we look to provide the right package at the right price for every consumer.
Additionally, we continue implementing our Magic Price Points strategy to intensify our connection with consumers. This approach helps ensure affordability of our single-serve portfolio at “magic price” points. As a result, we were able to improve consumer segmentation through revenue management, increase profitability and gain or maintain market share, as we did in Argentina, Brazil and Colombia.
Operating Model Transformation
As we work to create a leaner and more agile organization, we are building a sustainable competitive advantage by developing and deploying next-generation strategic capabilities through our Centers of Excellence (CoEs).
In our Commercial CoE, we continue to accelerate the transformation of our operating model, highlighted by the implementation of our upgraded KOFmmercial Digital Platform (KDP), which is based on four pillars: advanced analytics for revenue transformation; dynamic initiative management; omnichannel integration of customer connection points; and improved route-to-market to maximize customer value creation while managing costs. We rolled out the KDP platform in Mexico in early 2017 and have now expanded to Brazil, the Philippines, Colombia, Costa Rica, Nicaragua and Panama. In 2018, we will continue upgrading and rolling out KDP throughout our markets.
Our Distribution & Logistics CoE redefined its organizational structure into KOF Logistics Services (KLS), which designs and deploys our Supply Chain Planning model to standardize processes, enhance centralized organizational capabilities and incorporate cutting-edge technological tools. We continue to invest in new technology platforms, such as the Digital Distribution System, which delivers increased resource optimization, improved employee and driver safety, and higher customer satisfaction. The CoE’s safety strategy includes initiatives that support the entire company, including transforming our safety culture, managing key risks and professionalizing the safety function. These safety initiatives are adding value by reducing the amount of resources we use and improving the safety of our communities. After implementing Digital Distribution in Mexico in 2017, we have now expanded the platform to Brazil and aim to continue implementing in our remaining territories by 2019.
In our Manufacturing CoE, we continued the development and rollout of our proprietary Manufacturing Management Model to bolster efficiency and productivity, which includes our Plant Operating Model, Centralized Plant Maintenance Planning, Standardized Maintenance System and Manufacturing Execution System. We are also creating a culture of safety, and working to advance our safety programs, which has resulted in fewer accidents. These initiatives not only create a better work environment for our employees, but also drive cost savings.
Spotlight on Sustainability: To conserve the amount of resources and energy needed for our operations, our goal is to use recycled materials in 25% of our total PET presentation production by 2020. As of 2017, we are approaching the achievement of our goal, using 21% recycled materials in the production of our PET presentations.
Through our continuous evolution, we are creating a strong, unified corporate culture, founded on the cornerstones of leadership, talent and innovation. Together, we share a passion for excellence—embracing diversity across our increasingly multicultural operations. We are focused on identifying the strengths and opportunities of our workforce and leadership team, with an aim to empower employees by giving them the tools and capabilities they need to succeed in their roles.
|2017 Cultural Evolution Highlights|
|Organizational Health Index Survey||
Coca-Cola FEMSA launched its fourth annual employee engagement survey and gathered feedback from more than 21,000 participants. We registered a five-point increase in our overall organizational health from our baseline survey in 2014.
|Talent Management and Development||
In 2017, we invested US$ 12.7 million in employee training initiatives, accounting for 3.4 million of total training hours. Additionally through the Universidad FEMSA online platform, we offered to our people more than 5,000 different resources such as: events, courses, videos and diverse online materials aligned with the best practices of our Centers of Excellence.
By 2020, our goal is to achieve one million hours of volunteer work through the KOF Volunteers program. At year-end 2017, we have accumulated 681,224 volunteer hours since 2016—representing 68.2% of our goal.