Coca Cola Femsa SAB DE CV (KOF) Q2 FY26 earnings call: guidance and Q&A

How much of Monster's growth in Brazil is from household penetration versus geographic expansion, and how does it complement the portfolio?

Monster's strong growth in Brazil is driven by portfolio innovation (new flavors) and capturing market share, complementing CSDs and sports drinks. Growth comes from improved coverage and household penetration, with tailwinds from GLP-1 and a shift to zero/no-cal offerings. Monster is performing well across all geographies.

“Half of it volumes are now in so sure or no-cal offerings. So we only expect positive things from Monster. And it's really performing well across all geographies, not only in Brazil but everywhere.”

asked by Alvaro Garcia · answered by Ian Marcel Craig García

Can you unpack Mexico's performance throughout Q2, considering easier comps, and what are the expectations for H2 given the soft consumer and tax headwinds?

Mexico volumes improved sequentially, with June showing over 12% growth after negative first two months, partly due to base effects. The company has built a significant share cushion, allowing them to catch up on pricing with inflation. While the consumer environment remains challenging, the full-year volume guidance for Mexico is expected to move from 'slightly negative' to 'flattish'.

“So if we look within the quarter, the first 2 months were negative, slightly negative, around the 3.5% range. And then June, it picked up to a growth of over 12%. But that, like you rightly pointed out, it was mostly due because of -- we have seen trends continue to improve.”

asked by Ben Theurer · answered by Ian Marcel Craig García

Clarify the impact of mix on realized prices in Mexico and the strategy for catching up pricing with inflation going forward.

The company passed about 85% of the tax and inflation impact in Mexico, learning from past share losses. This conservative approach helped gain significant market share (0.5 pts NARTD, 0.7 pts CSD). With this share cushion, they plan to finalize inflation pass-through in August, expecting a positive year-end. Mix shifted significantly towards more affordable one-way multi-serve presentations, impacting realized prices but retaining consumers within their portfolio.

“So this time, we were more -- a little bit more conservative. I think it played out perfectly because it was a big increase, nonetheless, for our consumers. So it was very tough, but we did not want to lose household penetration and consumer preference.”

asked by Henrique Brustolin · answered by Ian Marcel Craig García

How much of Coke Zero's growth in Mexico is incremental versus cannibalization, and when can it become a true growth driver?

The Coca-Cola Zero playbook, implemented across markets, consistently drives high single-digit or double-digit growth. In early stages (Mexico at 4% mix), it sources growth from competitors, juices, and waters, with minimal cannibalization. Cannibalization typically becomes significant around 20% mix. Mexico has plenty of incremental volume to gain, similar to other markets like Guatemala (under 2%) and Colombia (9%). Sprite Zero is also being leveraged with a similar playbook.

“So for example, in Mexico, we are around 4% mix. So it's very, very small mix in Brazil, we're at 30% mix. When we do start to see cannibalization and like you said, switch from [indiscernible] Coke Zero is around the 20% mix.”

asked by Froylan Mendes · answered by Ian Marcel Craig García

What drives KOF's strong share gains in Brazil, how much headroom remains, and what's next for innovation in LatAm?

Brazil's share gains are driven by portfolio quality, affordability, presence in consumption occasions, and strong digital execution (Omnichannel digital ecosystem, Juntos Advisor). Headroom exists in per capita consumption and specific segments like flavors (400 bps share gain) and energy (50% share). Innovation is being accelerated with reorganized LatAm marketing units, focusing on top 3 value buckets per country. Mexico will see new launches in Q4 and Q1, addressing areas like 'as Frescas' and profitable NCVs.

“So in Brazil, we're gaining 400 basis points of share in flavors. It's wild what's happening in Brazil, and this is due to Sprite. So we made sure we were very well positioned with excellent flavor profiles in the seas category for flavors, and that's translated into very large share gains flavors.”

asked by Rodrigo Alcantara · answered by Ian Marcel Craig García

After successful strategy implementation, what areas still concern you for the next couple of years, beyond short-term issues?

Primary concerns include Mexico's growth remaining below potential and the uncertainty surrounding potential tax and labor reform in Brazil for 2027, which could lead to an adjustment year. Otherwise, the company benefits from a vibrant industry, positive demographics, and disposable income trends in the region. The positive flywheel of expanding relative scale and digital enablers provides confidence in continued growth.

“Everything else, we happen to be in a vibrant industry in a part of the world where we have positive demographics and disposable income trends over the next 10 to 15 years. So there's a lot of tailwinds to us.”

asked by Ricardo Alves · answered by Ian Marcel Craig García