Embotelladora Andina S.A.(AKO_B) - 2023 Q4 - Annual Report

Company Overview - Coca-Cola Andina was incorporated in 1946 and is the principal manufacturer of Coca-Cola products in Chile since then[78]. - In 2012, Coca-Cola Andina merged with Embotelladoras Coca-Cola Polar S.A., granting former Polar shareholders a 19.68% ownership interest in the merged entity[80]. - In 2018, Coca-Cola Andina completed the acquisition of 100% of Comercializadora Novaverde S.A., a company focused on juices and ice cream production[82]. - Coca-Cola Andina holds a 10.26% ownership interest in Leão Alimentos e Bebidas Ltda., a key player in the iced tea market in Brazil[83]. - The company has a 35% stake in Coca-Cola Del Valle, focusing on juices and non-carbonated beverages[80]. - Coca-Cola Andina has been actively involved in mergers and acquisitions to enhance its market presence and product diversity across South America[80][82]. Distribution Agreements and Partnerships - In 2021, Coca-Cola Andina signed a distribution agreement for Estrella Galicia-branded beers in Brazil, with exclusivity throughout the territory[85]. - As of August 2023, Coca-Cola Andina signed a distribution agreement with Perfetti Van Melle for their branded portfolio in Brazil, valid until 2028[85]. - A distribution agreement with Grupo Peñaflor S.A. for alcoholic beverages in Mendoza, San Juan, and San Luis provinces is set to expire in June 2026[88]. - The company began distributing Monster products in Argentina in February 2018 and has since expanded its energy drink offerings[88]. - The distribution of alcoholic beverages includes brands like Budweiser, Corona, and Heineken across various countries[101]. Financial Performance - In 2023, the company reported consolidated net sales of Ch$2,618,437 million and a total sales volume of 882.6 million unit cases of beverages[94]. - The soft drinks segment accounted for 62.2$535,018 million, a 13.3% increase from Ch$472,404 million in 2022[107]. - Net sales in Chile rose by 6.1$1,191,974 million in 2023, attributed to higher average prices despite a 3.1% decrease in sales volume[197]. - Brazil's net sales increased by 17.0% to Ch$745,383 million in 2023, with a sales volume growth of 8.2$460,338 million in 2023, a decline of 33.2% from Ch$688,705 million in 2022, primarily due to currency translation effects and price controls[197]. Capital Expenditures and Investments - Capital expenditures increased to Ch$222,620 million in 2023, up from Ch$173,675 million in 2022, primarily due to new projects[89]. - The company plans to allocate approximately US$250 million for capital expenditures in 2024, focusing on machinery and infrastructure improvements across various plants[93]. - The company has initiated several sustainability projects, including water treatment and recycling initiatives, as part of its capital expenditure plans[90]. - The company has budgeted for improvements in information technologies to enhance client and consumer relationships, incorporating more technological solutions[93]. Market Presence and Sales Volume - In 2023, Chile accounted for 35.1% of the company's volume and 45.5% of consolidated net sales[102]. - The company is the largest bottler of Coca-Cola trademark beverages in Chile and Argentina, and the third largest in Brazil[94]. - The company maintains a diverse customer base, with Mom & Pops accounting for 33% of sales in Brazil and 38% in Paraguay[108][118]. - In Brazil, the company accounted for 34.1% of volume and 28.5% of consolidated net sales in 2023[104]. - Paraguay represented 8.8% of the company's volume and 8.5% of consolidated net sales in 2023, with net sales of juices, waters, seed-based beverages, sports, and energy drinks totaling Ch$49,130 million[115]. Regulatory Compliance and Environmental Standards - The company must comply with various government regulations across its franchise territories, including labor, health, and environmental laws[159]. - Environmental regulations in Chile and Brazil are evolving, with potential future laws that could impose additional restrictions on operations[162][166]. - The company has received all necessary permits and certifications for its operations in Brazil and Chile, ensuring compliance with quality and environmental standards[166]. - The company is currently in compliance with all material regulatory requirements in its franchise territories as of December 31, 2023[159]. Leadership and Governance - The board of directors consists of fourteen members, with terms expiring on April 25, 2024[258]. - Juan Claro has been the Chairman since 2004, bringing extensive experience in civil engineering and business representation[261]. - Gonzalo Said has served on the board since 1993, specializing in finance and corporate governance, with 30 years in the beverage industry[261]. - The company emphasizes the importance of experienced leadership in navigating market challenges and opportunities[276]. - The board aims to leverage Rossi's expertise to enhance operational efficiency and drive growth initiatives[276].