Latin America’s second-largest Coca-Cola bottler is taking the long view amid challenging conditions, by making investments that should reap benefits as near-term headwinds abate, executives said during a quarterly investor call.
Arca Continental CEO Arturo Hernandez said, “We continue to invest in things that we know that are going to make us emerge stronger when we face a more positive environment,” with conditions including macroeconomic uncertainty, unfavorable weather in Mexico during peak buying season and an increase in an excise tax on sweetened beverages.
He explained consistent elements of the company strategy, including price-pack architecture and continued investment in point-of-sale coolers, which he called “super important.”
As an example of the success of this tactic, he cited the “remarkable result” for Peru, where quarterly volumes increased by 17.6% on the year and provided a tailwind for the entire company, after a challenging 2025.
Among its investments last year in Peru were cold-drink units, to help increase market penetration for its products, and Arca is capitalizing on the investments now, Hernandez said. “So that’s something that we have learned over the years because in Latin America, we know that there’s volatility in the markets. And so we’ve been consistent in that strategy as well, and that’s paid off every time. So we look forward to a much better future in Mexico as well.”
In addition, the company invested $150 million toward an expansion of PetStar in Mexico, the world’s largest food-grade PET recycling plant, and in early 2026 announced it would invest about $1 billion in its Americas operations throughout the year.
Keeping the ‘elastic’ customer
Elastic customers – those whose buying habits are especially prone to swings in pricing and economic conditions – can be crucial to strategy for brand owners.
In addition to staying the course on investment, the company is monitoring price-pack architecture, matching product packaging sizes, types and prices with what buyers are willing to pay. During its own earnings call July 28, the Coca-Cola Company echoed this theme, framing its packaging strategy against affordability concerns.
“Across much of the world, we see an uneven consumer environment,” said Coca-Cola CEO Henrique Braun. “The economy is strong in many places, yet many consumers face inflationary pressures, geopolitical uncertainty and economic challenges. They are evaluating how they shop, what they value and what they want to put in their basket. In markets like the US and Europe, the consumer backdrop is stable in aggregate, but many [consumers] remain under pressure.”
Hernandez noted that Arca Continental aims to price its beverages at or above the inflation rate, and returnable packaging – including a new 1.5-liter returnable, refillable bottle – was a key element of this strategy in Latin America, as well as a sustainability initiative.
Jean Claude Tissot, chief operating officer of Arca Continental, added, “We implemented our digital pricing tools with granular segmentation and price elasticity scenario, where we knew that affordability was going to be key, the single-serve packages were going to play a critical role and our master plan of returnables.”
Raw materials, fuels pressure performance
Coca-Cola Southwest Beverages, Arca’s US beverage operation, reported “sound financial results” in Q2 despite volatility, Hernandez said. “This performance was underpinned by disciplined pricing, effective cost management and strong point-of-sale execution, allowing us to navigate input cost volatility, inflationary pressures and evolving regulatory dynamics.”
The company felt the effects of soaring costs for PET resin during the quarter, with the pressure most pronounced in its US operations.
In addition to higher PET costs, Arca is subject to elevated pricing for diesel fuel, said Jesús “Chuy” García, chief strategic capabilities and planning officer.
In contrast to its plastics and fuels exposure, the Mexico-headquartered company is mostly hedged for its aluminum supply contracts, Hernandez said, shielding it from the worst pricing volatility.
Adding to the elevated costs was Mexico’s higher tax on sweetened beverages, though Arca passed through the increase in full to customers, executives said.
World Cup supports June container volumes
Total Q2 volumes rose by 0.6%, and by 1.7% year to date, with a global boost from the Coke-sponsored 2026 FIFA World Cup-related events, Hernandez said. “We also leveraged the World Cup to foster consumer connections, drive engagement and consolidate brand relevance, contributing to value share gains across all categories during the first half of the year.”
And while US volumes fell by 2.3% on the year, year-to-date volumes were higher by 0.9%. In South America, total volume rose by 11% for Q2 and by 7.1% for the first half of the year.
Tissot said unfavorable weather during the quarter affected volumes for water and flavored beverages. He added that consumer preferences continue to shift toward ready-to-drink, isotonic products such as Powerade.
EBITDA rose by 1.8% for the quarter, and year to date EBITDA increased by 5.4%.
Net sales for both Q2 and first-half 2026 were flat on the year, at Mexican Ps. 63.489 billion (US $3.65 billion) and Ps. 120.616 billion (US $6.92 billion), respectively.
“South America presents an improving operating environment,” Hernandez said. “The region is showing renewed momentum, reflecting the strength of our business model and our ability to capture growth as underlying market conditions become more favorable.”
