DRINK UP

Costa Rica 2018 | INDUSTRY | INTERVIEW

TBY talks to Anibal Lagos, General Manager of FEMSA, on the benefits of working in Costa Rica, opportunities in the drinks segment, and regional differences in taste.

 Anibal Lagos
BIOGRAPHY
Anibal Lagos joined FEMSA in 1998, in Argentina, and has served in several progressive roles. In addition, he has experience in finance, working for Otis Elevator Company Argentina as CFO. He holds a bachelor’s degree in business administration from the Universidad Católica del Uruguay, an MBA degree in finance from the University of San Francisco, and an executive scholar on marketing and sales from Kellogg School of Management.

What is the significance of FEMSA's operation in the region?

We bottle for Coca-Cola in Costa Rica, Guatemala, Nicaragua, Panama, and the Central American region at large. We also serve Mexico, Colombia, Venezuela, Argentina, Brazil, and the Philippines. With 10% of total Coca-Cola sales, we are the largest bottler of Coke in the world in terms of volume.

Many companies come to invest and operate in Costa Rica. Apart from lower costs, what is the benefit of doing so?

Everything started here as a supply base for the Andean division. The other factor was the Coca-Cola Company had its operations here in Costa Rica and was, therefore, a good fit for us. Over time that division changed, and Colombia and Venezuela went on to report to the Latin America division, while Central America retained Panama, Nicaragua, Guatemala, and Costa Rica.

Are there other potential business opportunities for Coca-Cola in Costa Rica?

We have two plants in Costa Rica. FEMSA is for soft drinks, while the Coronado plant handles production of all non-carbonated products. With these two plants, we cover almost everything within the beverage category. We do not produce or sell alcoholic or dairy products, apart from the latter in Panama.

Where do you see the growth of the company in 2018?

We still have opportunities for growth in the soft drink market. Undoubtedly, there are also important growth opportunities in other categories such as tea, juices, and isotonic drinks. Another category in which we are making an important effort is with the Monster energy drink.

How does Costa Rican soda consumption compare to Mexico for example?

The case of Mexico is particular. This is because Coca-Cola was part of the family basket of basic goods in Mexico. For a long time, it was also sold at a relatively low price, which made it easy for people to get used to drinking. That did not happen in other countries. Mexico has the largest per-capita consumption of Coca-Cola in the world. In the case of beverages, we can continue growing through new flavors and formulas and new and different ways of marketing. For example, in Costa Rica we are growing in the cola segment at almost 5% due to the marketing campaign for Coca-Cola without sugar.

What are the main business challenges faced in Costa Rica?

So far, we have developed an excellent way to operate and manage our business in Costa Rica, we have had our challenges but we have overcome them all. An interesting issue arised when we launched a new formula for Fanta without sugar (Fanta Frontier). However, the Costa Rican market continues to demand the original formula, so we continue to work with both. This has been a great learning opportunity within the company and an important message from the market. For example, in California, the market continues to demand for soft drinks sweetened with sugarcane. Therefore, we have to bring sugarcane from Mexico to manufacture the product according to the market's wishes. This product is then sold for 40% more than more standardized products manufactured elsewhere in the US not made from cane. Moreover, the problem is not necessarily sugar, but excessive consumption. This is the root of so many products' problems: one must avoid excessive consumption.

What are your goals for 2018?

We have made a substantial strategic change during the past five months. We have worked to align our prices to the purchasing power of the Costa Rican consumer. In doing so, we have made a large investment and hope to have a return in 2018.

What commitments are shared by FEMSA and Costa Rica?

We are in a green country, and we support the process of environmental conservation and sustainable development here. We have several recycling campaigns and water reuse projects. Coca-Cola FEMSA is committed to generating economic, social, and environmental value for all of its stakeholders across the value chain.