For First Time Ever, Mexican Bottling Company To Bottle Coca-Cola In US

By Rodrigo Cervantes
Published: Monday, June 13, 2016 - 5:08am
Audio icon Download mp3 (1.89 MB)
(Courtesy Arca Continental)
The bottling plant of Arca Continental in Monterrey, Mexico.

For the first time in its history, Coca-Cola, that most-American of drinks, will be bottled in the United States by a Latin American company.

“Taste the feeling” is Coca-Cola’s most recent slogan. But for Mexican-based bottling company Arca Continental, Coca-Cola is still “the real thing.”

Arca Continental, headquartered in Monterrey, and the Atlanta-based Coca-Company recently announced their intent to start a joint venture in the U.S., specifically in the Southwest operating unit of Coca-Cola Refreshments, which includes Texas and part of New Mexico, Oklahoma and Arkansas.

This is the first time a Latin American company would bottle Coca-Cola in the United States, but the relationship between both parties is not new. Arca Continental is the second-largest Coca-Cola bottler in Latin America and the third-largest independent bottler in the world, in terms of unit case volume. Coca-Cola FEMSA, also based in Monterrey, Mexico, is the the largest franchised company bottling Coca-Cola products in the world.

Arca Continental has a story of its own within the United States. Their snack division operates Weiss and Mr. Snacks, while its beverage division exports Topo Chico mineral soda and what some consumers call “MexiCoke”— Coca-Cola sweetened with sugar and sold in glass bottles— from Mexico.

The new business entity to be created by Arca Continental and The Coca-Cola Company will be called AC Beverages. The Coca-Cola Company will contribute by sharing the distribution and production in the Southwest operating unit in exchange for a 20 percent equity stake in this new, privately held entity that will also include all of Arca Continental’s existing beverage businesses in Latin America.

For Rogelio Gonzalez, a director at Fitch Ratings Mexico specializing in food and beverages, the new joint venture will represent a great opportunity for Arca Continental, which already is one of the most profitable companies of the Coca-Cola system.

“I believe it will give them a good diversification in hard revenue generation as well as an opportunity to become a big bottler in the Coca-Cola system in the United States, as it will become the second largest bottling company in the United States,” González said.

Sergio Rodríguez, also from Fitch Ratings Mexico, Arca Continental’s project in the U.S. with Coca-Cola will represent a good challenge, as it will face different territories, more competition against Pepsi and a market where the consumption of carbonated soft drinks is high.

“Looking at the track record of Arca Continental, it has a good record of operations in their territories and one of the things that it is going to share is its best practices of Mexico in the U.S.”

In a public statement, The Coca-Cola Company considered the project a key milestone in their efforts to refranchise their North American bottling territories. The world’s largest beverage company expects to complete the strategy by the end of 2017.

Arca Continental declined to comment.