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

(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.

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Rodrigo Cervantes is KJZZ’s bureau chief in Mexico City, where he was born and raised. He has served as opinion writer, contributor and commentator for several media outlets and organizations in Mexico and the United States, including CNN, Georgia Public Broadcasting and Univisión. Cervantes previously worked as the business editor and editorial coordinator for El Norte, the leading newspaper in Monterrey and a publication of Grupo Reforma, Mexico’s premier news group. In Mexico City, Cervantes served in Reforma as a reporter, special correspondent, editor and special sections coordinator. Cervantes also held the editor position at MundoHispánico, a division of The Atlanta Journal-Constitution and Georgia’s oldest and largest Latino newspaper. He also participated as one of the first members of the Diversity Advisory Group for Cox Media. In 2012, Cervantes was appointed as fellow for the Leadership Program of The New York Times/Nieman Foundation for Journalism at Harvard, as well as for the "Líderes Digitales" program from the International Center for Journalists. In 2010, he was awarded with the Poynter-McCormick Leadership Fellowship. Cervantes graduated with honors in communication sciences and journalism from the Instituto Tecnológico de Monterrey (ITESM), Mexico City Campus. Later, he was granted the Fundación Carolina Scholarship from the Spanish government to obtain an MBA degree at San Pablo-CEU School of Business (Madrid). Other awards include: the Power 30 Under 30 Award for Professional and Community Excellence in Atlanta, the Outstanding Alumni Medal from ITESM, and several José Martí Awards for Journalism Excellence from the National Association of Hispanic Publications (NAHP). Cervantes enjoys music, books, travel, friendship, good mezcal and the occasional company of his guitar.