just On Call - Coca-Cola FEMSA cuts 1,300 jobs as Mexico soda tax bites
A tax hike on full-sugar soft drinks in Mexico has hit Coca-Cola FEMSA this year
Coca-Cola FEMSA has had to cut around 1,300 jobs as its copes with Mexico's new soda tax, but volumes are not being as badly affected as predicted, according to its CFO.
In an analysts' conference call following the group's nine-month results yesterday, Héctor Treviño Gutiérrez also revealed the bottler has closed an unspecified number of production lines and increased prices by around 16% in its home market. Mexico introduced a levy of MXN1 (US$0.08) per litre on sugar-sweetened soft drinks in January this year.
Despite the new tax, Gutiérrez said that Coca-Cola FEMSA only expects its full-year volumes in Mexico to be down around 4%. At the start of 2014, the group had forecast a fall of between 5% and 7%. Q3 sales from its Mexico & Central America unit rose 3.6%, helped by higher pricing.
“We have adjusted the operations in Mexico," said Gutiérrez. "We have reduced our headcount by at least 1,300 people. We have closed production lines.
“Every single point of volume that we lost represents millions of cases... we have continued to work very diligently in adapting our organisation and our cost structure to this new reality.”
For 2015, Gutiérrez said he expected to see “some volume growth” in Mexico.
The company, Latin America's largest Coca-Cola bottler, yesterday reported a 12.2% lift in nine-month sales and 1.2% rise in profits.
Companies: Fomento Economico Mexicano
The non-alcoholic bottling landscape in Latin America is ripe for consolidation. Reports out of the region this week, claiming three major Coca-Cola system bottlers have opened talks about a merger, a...
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