Coca-Cola_Femsa_Strategy

STRATEGY Coca-Cola FEMSA is focused on sustaining and expanding its business across Latin American territories by continuing its multi-segmentation strategy. The strategy lays emphasis on the introduction of different product/packaging/price portfolios based on market groups. The company has segmented its market based on socio-economic levels and competition. The strategy is likely to enable the company define and manage multiple pricing and packaging portfolios at the same time and enhance profitability by driving consumption. As part of the strategy, Coca-Cola FEMSA has also put in place a market intelligence solution, which supplies critical information required by the company for targeting a particular channel or consumer segment. Subsequently, the solution gathers and processes data required for tailoring Coca-Cola FEMSA's product, price, distribution and package strategies for different consumers. The company expects this strategy to improve its sales further in the coming years. However, raw material prices and the influence of Coca-Cola on its operations will continue to determine the company's progress. The company is also expanding its conventional distribution channel, striving to foster demand for returnable multi-serve packages. The company is also expected to continue with strategic acquisitions, a recent example for which is the takeover of Jugos del Valle (in 2006). In 2005, Coca-Cola FEMSA introduced different packaging presentations for its flagship brand Coca-Cola at various prices ranging from Ps4 to Ps16, in Mexico. The company could adopt a similar strategy in other territories, in an attempt to promote demand for multi-serve beverage consumption. Coca-Cola FEMSA's product innovations, particularly in the flavoured CSD segment, are expected to boost sales in the coming years, given the high growth potential for the beverage category. The company is also gearing to exploit the sound sales prospects for the non-carbonated beverages segment. The growing youth segment is also presenting an avenue of opportunity for the company, which has increasingly sought to connect with this population segment by introducing novel light drinks. In the past, the packaging trend in the soft drink industry in Mexico had moved toward non-returnable presentations. However, in 2004, due to the entrance of low price brands in multiple serving size presentations, they refocused packaging mix strategy to reinforce our sales of multiple serving size returnable packages. Returnable packages present an opportunity for us to attract new customers and maintain customer loyalty, because they make Coca-Cola trademark beverages more attractive to price-sensitive consumers. Finally, KOF focus on management quality as a key element of our growth strategies and remain committed to fostering the development of quality management at all levels. Both FEMSA and The Coca-Cola Company provide them with managerial experience. Top Competitive AdvantageMarket Leadership. Coca-Cola FEMSA is the largest bottler of Coca-Cola trademark beverages in the world in terms of total sales volume, with operations in Mexico, Guatemala, Nicaragua, Costa Rica, Panama, Colombia, Venezuela, Argentina and Brazil. Business partnerships. Coca-Cola FEMSA is working together with the Coca-Cola Company to develop more advanced joint business models to continue exploring and participating in new lines of beverages, extending existing product lines and effectively advertising and marketing our products. As partners, we have a shared incentive to capture important growth opportunities in Latin America’s fast-growing, but under-developed non-carbonated beverage segment, developing and expanding our still beverage portfolio through innovation, strategic acquisitions and by entering into agreements to jointly acquire companies with The Coca-Cola Company. Strong brand portfolio. The company offers a powerful and wide portfolio of beverages to its customers and consumers, and continuously explores promising beverage categories to capture growth in its different markets. To get closer to its customers and help them to satisfy consumers’ expanding needs, Coca-Cola FEMSA has become a one-stop shop for its retailers by offering a complete beverage portfolio - including carbonated soft drinks, bottled water, juices, orangeades, isotonics, teas, energy drinks, milk, coffee and even beer in some markets such as Brazil. Collaborative customer relationships. As an organization, Coca-Cola FEMSA continually looks to deepen its customer relationships. Our 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, relevant consumption occasion and the store’s distinctive characteristics. We partner with our customers on multiple fronts-from knowledge management and capabilities development to go-to-market and point-of-sale execution-to ensure each and every shopper’s trip counts. Channel Marketing. In order to provide more dynamic and specialized marketing of our products, our strategy is to classify our markets and develop targeted efforts for each consumer segment or distribution channel. Our principal channels are small retailers, “on-premise” consumption such as restaurants and bars, supermarkets and third party distributors. Presence in these channels entails a comprehensive and detailed analysis of the purchasing patterns and preferences of various groups of beverage consumers in each of the different types of locations or distribution channels. In response to this analysis, we tailor our product, price, packaging and distribution strategies to meet the particular needs of and exploit the potential of each channel. Multi-Segmentation. We have been implementing a multi-segmentation strategy in the majority of our markets. This strategy consists of the implementation of different product/price/package portfolios by market cluster or group. These clusters are defined based on consumption occasion, competitive intensity and socio-economic levels, rather than solely on the types of distribution channels. Client Value Management. We have been transforming our commercial models to focus on our customers’ value potential using a value-based segmentation approach to capture the industry’s potential. We have started the rollout of this new model in our Mexico, Brazil, Colombia and Central America operations. Go-to-market strategies. We continuously evaluate our distribution model in order to fit with the local dynamics of the marketplace and analyze the way we go to market, recognizing different service needs from our customers—from traditional mom-and-pop retailers to modern hyper and supermarkets—, while looking for a more efficient distribution model. As part of this strategy, we are rolling out a variety of new distribution models throughout our territories looking Full Operating Potential. More with less is a key part of the Coca-Cola FEMSA corporate culture. The company continually seeks to optimize manufacturing and distribution capacity to maximize operating efficiency, adapting its organizational processes to address changing competitive, economic, and sociopolitical environments. In addition, we rely on state-of-the-art market intelligence systems that enable the company to execute and refine its channel-marketing and multi-segmentation strategies, consistent with customers’ and consumers’ purchasing patterns and preferences. Managerial expertise. We focus on management quality as a key element of our growth strategy and remain committed to fostering the development of quality management at all levels. Both FEMSA and The Coca-Cola Company provide us with managerial experience. To build upon these skills, we also offer management training programs designed to enhance our executives’ abilities and to provide a forum for exchanging experiences, know-how and talent among an increasing number of multinational executives from our new and existing territories. Sustainable Development. Sustainable development is an important pillar of our Company’s strategy. We continually develop programs that ensure the creation of social and economic value by fostering the quality of life of our employees, promoting a culture of health and well-being, supporting our surrounding communities and minimizing our operations’ environmental impact.