LatinFinance - July 2013 - 32

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AmBev: leading in the Dominican Republic
its Dominican acquisition. The company
also managed to keep its debt profile
low while improving its credit metrics
through the process. Standard & Poor’s
and Fitch both upgraded the firm one
notch in 2012, bringing its rating to
A3/A/A.
And despite a significant increase in
capex since 2009, the firm has kept strong
cash balances and has continued paying
dividends to shareholders.
It’s unlikely to borrow from debt

AmBev’s product portfolio includes
soft drinks like the well-known Antarctica
Guaraná label, but its main focus is beer.
Three main factors influence demand: the
weather, consumers’ disposable income
and price.
The company has little sway over
the first two, but with a big share of the
Brazilian market, it is typically able to
keep costs tight and its prices down.
However, a tax rise in Brazil in
October pushed up beer prices by around
4%, and further tax rises could impact
profitability, says Jamel.
“Taxation is always an important topic
for us. We have a very high tax burden,”
he says.
The company is hoping for a boost
from the 2014 football World Cup in
Brazil. And markets in the country’s
underdeveloped north and northeast
offer scope for expansion. The company
has been investing between 2 billion and
2.5 billion reais annually in Brazil since
2009 – up from around half that number
previously.
“We have been stepping up capex in
Brazil to cope with the opportunities we
see,” says Jamel.
2013 could set another record for its
investment in the country, with roughly 3
billion reais planned. LF

markets to fund further investment,
either, says Jamel.
Expanding further in Central
America and the Caribbean is a core
part of its growth strategy, he says. “We
see opportunities not only to continue
growing in our home market of Brazil but
also to continue growing abroad,” Jamel
says. While opportunities are “more
limited today”, Central America and the
Caribbean in particular present a range of
opportunities for acquisitions, he adds.
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Corporate with the best ex-regional strategy

Coca-Cola Femsa

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Eastern promise
A successful Asian foray for Coca-Cola Femsa provides a springboard for
further expansion

hey may be an ocean apart, but the
Philippines and Latin America have
a fair bit in common. It’s not just shared
historical influences: their beverage
markets, too, feature a number of
similarities.
To Mexico’s Coca-Cola Femsa (KOF),
the opportunity was clear. Says its
CFO Héctor Treviño, when it comes to

32 LatinFinance July 2013

consuming soft drinks, no other market in
south east Asia looks as much like a Latin
American nation as the Philippines. “In
other [Asian] countries you see a much
higher percentage of hot beverages and
tea,” he notes.
Such dynamics were behind the
company’s first Asian foray last December,
when it agreed to buy a 51% stake in

Coca-Cola Bottlers Philippines for $689
million. Although the deal was its first
acquisition outside Latin America, its
boldness and reach made the company a
clear front-runner for corporate with the
best ex-regional strategy.
KOF structured the purchase from
the Coca-Cola Company with upside
and downside options. KOF can put the
shares back to Coca-Cola after six years,
but also has a seven-year option to buy
the remaining 49%. Either operation
would be at $2.50 per unit case, the same
multiple as the original transaction.
KOF is eyeing a number of ways to
increase the profitability of its Philippine
operation. Some, such as a shift away

LatinFinance - July 2013

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