Coca-Cola FEMSA Plans New Southeastern Mexico Plant

Coca-Cola FEMSA, the company's leading bottler by sales volume, is considering a long-term project to establish a new plant in southeastern Mexico, according to Gerardo Cruz, the company's chief financial officer.

The project aims to reduce transportation costs, which have risen alongside regional sales volumes, Cruz explained during a virtual conference call with analysts discussing the company's third-quarter results.

Currently, Coca-Cola FEMSA ships a significant volume of products manufactured at its Toluca plant, in the State of Mexico, to the southeastern region, driving up freight costs.

“Our freight costs have increased significantly compared to last year,” Cruz said. “This is something we are obviously looking to address by focusing on efficiencies at our existing plants in the Southeast and a long-term project for a new plant in that region,” he added.

However, the executive did not provide further details about the potential construction of the new plant in southeastern Mexico.

Cruz added that although regional growth has supported the company's business expansion, it has also put pressure on profitability and margins. As a result, the company has been exploring ways to offset these effects.

Despite these challenges, including fluctuations in the peso-dollar exchange rate, Pamela Ortiz, Coca-Cola FEMSA's director of investor relations, highlighted a sequential improvement in profitability compared with the first two quarters of the year, supported by higher sales volumes and a gradual recovery in operating leverage.