Strategic Shareholder Relationships
Our business depends on our relationship with The Coca-Cola Company and FEMSA, and changes in this relationship may adversely affect us.

• Termination of the bottler agreements
• Actions contrary to the interests of our shareholders other than The Coca-Cola Company and FEMSA

• Comply with the bottler agreements.
• Work together and promote effective interaction between our strategic shareholders in order to maximize value creation.

Consumer Preferences
Changes in consumer preferences, purchase drivers, and consumption habits might generate variability in the demand for some of our products.
Environmental issues.

• Variability in the demand for our products

• Transform into a total beverage company aligned with consumers’ changing tastes and lifestyles.
• Build a winning multi-category portfolio of products and presentations.
• Drive our low- and no-sugar portfolio ahead of consumer trends.
• Offer sustainable packaging options for our beverages.

Coca-Cola Trademarks
Coca-Cola’s and our brand reputation or brand violations could adversely affect our business.

• Damage to Coca-Cola’s and our trademark reputation.

• Maintain the reputation and intellectual property rights of Coca-Cola trademarks and our own trademarks.
• Effective brand protection.
• Strictly comply with Responsible Marketing Policies.

Competition

Competition could adversely affect our business, financial performance, and results of operations.

• Changes in consumer preferences.
• Lower pricing by competitors.

• Offer affordable prices, returnable packaging, effective promotions, access to retail outlets and sufficient shelf space, enhanced customer service, and innovative products.
• Identify, stimulate, and satisfy consumer preferences.

Cyber Incidents
Since our business is highly leveraged by information systems and digital services, it could be significantly affected in the event of a security breach or cyber incident that affects the confidentiality, availability, or integrity of information and information systems.

• Business disruption.
• Theft or unauthorized exposure of sensitive or confidential information.
• Regulatory non-compliance.
• Fraud.
• Economic loss.
• Reputational damage and/or impact on share value.

• A systemic approach to cyber security based on industry standards and the TCCC (The Coca-Cola Company) Business Resilience Framework.
• Oversight by the Board’s Audit Committee, the senior management, and a CISO (Chief Information Security Officer).
• Cybersecurity-focused organizational structure.
• Risk management process supported by periodic independent assessments.
• Personnel awareness and training program regarding cybersecurity, social engineering, and phishing prevention.
• Continuous investment to strengthen the security of existing processes and technologies.
• Security by design approach to the new business digital initiatives.
• Continuous improvement of monitoring, incident response, and resilience capabilities.

Economic, Political, and Social Conditions
Adverse economic conditions, political, and social events in the countries where we operate and elsewhere, and changes in governmental policies may adversely affect our business, financial condition, results of operations, and prospects.

• Affect and reduce consumer per capita income, which could result in decreased consumer purchasing power.
• Lower demand for our products, lower real pricing of our products or a shift to lower margin products.
• Negatively affect our company and materially affect our financial condition, results of operations, and prospects.

• Through a risk management strategy, hedge our exposure to interest rates, exchange rates, and raw material costs.
• Annually or more frequently evaluate, when the circumstances require, the possible financial effects of these conditions and, to the extent possible, anticipate mitigation measures.
• Usage of foresight methodologies to map our upcoming sociopolitical risks through analyzing key economic and social data against upcoming political risks factors such as elections, constitutional reforms and increasing political repression.
• Develop scenarios and contingency plans for adverse sociopolitical conditions (e.g., social revolt after an election) that allow for business continuity considering, among others: alternative distribution routes, stock management to prioritize critical SKUs, securing financial assets, etc.

Regulations
Taxes and changes in regulations in the regions where we operate could adversely affect our business.

• Increase in operating and compliance costs.
• Restrictions imposed on our operations.
• The imposition of new taxes, increases in existing taxes, or changes in the interpretation of tax laws and regulation by tax authorities may have a material adverse effect on our business, financial condition and results of operations.

• Identify regulatory risks and proposals of changes to regulations that directly affect our operation or financial condition.
• Advocacy work to provide advice on legislators’ proposed regulatory changes.

Legal Proceedings
Unfavorable outcomes of legal proceedings could adversely impact our business.

• Investigations and proceedings on tax, consumer protection, environmental, and labor matters.

• Comply with applicable laws and regulations and comply with workplace rights policy.

Weather Conditions, Natural Disasters, and Public Health Crises
Adverse weather conditions, natural disasters, and public health crises may adversely affect our business, financial condition, results of operations, and prospects.

• Impact consumer patterns and beverage sales.
• Affect plants’ installed capacity, road infrastructure, and points of sale.
• Negatively affect our business, financial condition, results of operations, and prospects.

• Implement business continuity plans and safety protocols to protect employees and avoid significant disruptions to our business.
• Insure assets and operations against such adverse events.

Acquisitions and Business Alliances
Inability to successfully integrate acquisitions or achieve expected synergies could adversely affect our operations.

• Difficulties and unforeseen liabilities or additional costs in restructuring and integrating operations.

• Integrate acquired or merged businesses’ operations in a timely and effective way, retaining key qualified and experienced professionals.

Foreign Exchange
Depreciation of the local currencies of the countries where we operate relative to the U.S. dollar could adversely affect our financial condition and results.

• Financial loss.
• Increase cost of some raw materials.
• Adversely affect our results, financial condition, and cash flows in future periods.

• Closely monitor developments that may affect exchanges rates.
• Hedge our exposure to the U.S. dollar with respect to certain local currencies, our U.S. dollar-denominated debt obligations, and the purchase of certain U.S. dollar-denominated raw materials.

Climate Change
Adverse weather conditions could adversely affect our business and results of operations.

• Negatively affect consumer patterns and reduce sales.
• Affect plants’ installed capacity, road infrastructure, raw material supply, and points of sale.

• Identify sources of our operations’ CO₂ emissions.
• Support and comply with climate change mitigation measures.
• Identify and reduce our environmental footprint through efficient use of water, energy, and materials.

Social Media
Negative or inaccurate information on social media could adversely affect our reputation.

• Damage to our brands or corporate reputation without affording us an opportunity for correction.

• Effective brand protection.
• Proactive external communication.

Water
Water shortages or failure to maintain our current water concessions could adversely affect our business.

• Water supply may be insufficient to meet our future production needs.
• Water supply may be adversely affected due to shortages or changes in governmental regulations or environmental changes.
• Water concessions or contracts may be terminated or not renewed.

• Efficient water usage.
• Execute water conservation and replenishment projects.
• Maintain 100% legal compliance.
• Develop a water risk index, including four issues that need to be assessed: community and public perception risks, scarcity of water and other inputs, regulatory risks, and legal risks for each of our bottling plants.
• Update water risk assessment tool and work plans that contemplate aspects such as climate change, resilience to hydrological stress, media and social vulnerabilities, as well as regulations and production volumes for each of our bottling plants.
• Secure water concessions for our production facilities.

Raw Materials
Increases in the price of raw materials we use to manufacture our products could adversely affect our production costs.

Insufficient availability of raw materials could limit the production of our beverages.

• Shortage or insufficient availability of raw materials may adversely affect our capacity to ensure production continuity.
• Adjustments to our product portfolio according to availability.

• Implement measures to mitigate the negative effect of product pricing on our margins such as hedging via derivative instruments.
• Proactively address risk of supply on our value chain.
• Strict compliance with our Supplier Guiding Principles.
• Strategically adjust our product portfolio to enable us to minimize the impact of certain operating disruptions