LatinFinance - July/August 2014 - 34

JOÃO CASTRO NEVES, AMBEV

"OUR HEDGING POLICY
IS NOT AIMED TO BEAT
THE MARKET BUT
TO GIVE US PREDICTABILITY FOR THE 12
MONTHS AHEAD"
Analysis is made easier by the company's
transparency "in all respects" - not just in
mandatory regulatory filings in the US and
Brazil, but with the additional submission
of sustainability reports.
Still, the company has challenges. Ambev's
net income and margins grew slightly more
slowly than sales in 2011 and 2012.
Over the long term, it is the company's
ethos of "Dream, People, Culture" that will
drive sustainable outperformance, says
Neves. The Dream centers on aiming high in
all respects, and being the best means have
the best people, he says.
"Our people are our most important and
sustainable competitive advantage," he says.
"And our culture gathers the principles,
beliefs and practices that guide the actions
and behavior of everyone in the company,
always making sure we have in place the
right mechanisms to align management
incentives to long term shareholders'
interests." LF

BEST MANAGED MEXICAN CORPORATE

Arca Continental

bottler and one of the largest in the world.
The company has strived to consolidate
its operations, following the acquisition in
2012 of snack food companies Wise Foods,
in the US, and Industrias Alimenticias
Ecuatorianas (Inalesca) in Ecuador. The
salty snack producers are a natural addition
to Arca's core soft drink business, which
allows the company to cut production and
distribution costs.
The consolidation stage marks yet
another stepping stone in Arca's efforts
to raise from its humble beginnings and
consolidate itself as a truly multinational
company, says chief executive Francisco
Garza Egloff.
"We moved from being a regional and a
family company that was very successful in
its markets, to become a global, diversified
company with solid governance," Garza
FRANCISCO GARZA EGLOFF,
ARCA CONTINENTAL

"WE MOVED FROM
BEING A REGIONAL
AND A FAMILY COMPANY THAT WAS VERY
SUCCESSFUL IN ITS
MARKETS, TO BECOME
A GLOBAL, DIVERSIFIED COMPANY WITH
SOLID GOVERNANCE"

Arca Continental's drive
to double its size by 2017
and its success consolidating and streamlining its
operations have made the
Coca-Cola bottler a fitting
choice for the LatinFinance
award for Best Managed
Corporate in Mexico
Created through the merger of
Embotelladoras Arca and Grupo
Continental in 2011, Arca Continental is
Latin America's second-largest Coca-Cola

34 LATINFINANCE.COM - July/August 2014

ECONOMIES OF SCALE: bottler Arca Continental is entering a consolidation phase
after a series of acquisitions

Egloff tells LatinFinance.
By making a string of acquisitions that
also include the Mexican snack brand
Bokados in 2007, Arca Continental has been
able to increase its revenues almost five-fold
in a decade to reach 13 billion pesos in 2013.
The company's main goal last year was to
continue expanding outside Mexico and to
integrate its units into one unified entity.
"Following the merger in 2011 we
developed an aggressive program to take
advantage of synergies and save 960
million pesos in three years, but already by
the end of 2013 we had saved 1.55 billion
pesos," Garza Egloff says, adding that by
improving efficiency and technology and
by using its strong purchasing power to save
on packaging costs and sweeteners, the
company is set to save 500 million pesos
this year.
The strategy is already paying off. Wise
has expanded into western and southern
US states, including Texas and California,
and its products are now available in
some Mexican regions, such as Monterrey
and Guadalajara, through the Bokados
distribution network.
Arca Continental has continued
purchasing assets. Last year, it bought fruit
snack producer Productos Palma and a 25%
stake in Bebidas Refrescantes Nogales, a
Coca-Cola bottler near the US border. It also
took over Holding Tonicorp - a beverage,
packaging and dairy business in Ecuador in
a joint venture with Coca Cola. This latest
acquisition was announced in August, but
finalized in March this year.
Arca Continental's fundraising strategy
relies on maintaining healthy liquidity and
keeping a low debt
profile. By the end of
2013 the company's
debt was of 14
billion pesos, which
represented a 0.9
times debt-to-Ebitda
ratio.
"One of our
competitive
strengths is that, by
and large, our sales
bring in cash, which
allows us to have
strong cash flow
generation, and,
thanks to this, we
don't need to incur
debt to finance our capital expenditure
because we can get the funding straight
from our resources," says Arca's chief
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