汇丰银行全球食品饮料行业全球饮料业在消费者的圣餐台上201842348页

Disclosures&DisclaimerThisreportmustbereadwiththedisclosuresandtheanalystcertificationsintheDisclosureappendix,andwiththeDisclaimer,whichformspartofit.Issuerofreport:HSBCSecurities(USA)Inc.ViewHSBCGlobalResearchat:–27AprilIfyouvalueourserviceandinsight,voteforHSBCClickheretovoteVoteinExtel2018TheCoca-ColaCompany’snewconsumer-centricmodelisevidentinitsexperiments,includinganewCoca-ColaformulaBottlersareretoolingcapabilitiesandmatchchangeatCoke;Heineken’srisk/rewardfromterminatingtheKOsystem’sbeerdistributioninBrazilisaffectedbychangesatKOandKOFWeretainourratingsandraiseourTPsforKO,FMXandHeinekenFocusingontheconsumerinsteadofitstopbrand’svolumegrowthasthehighestpriorityischanginghowtheCokesystemexperiments,actsandretoolsforgrowth.TheevidenceofchangeweseeispowerfulandwillbeleveragedbybottlerslikeKOFandtheroutetomarketupgradestheyaremaking.Heineken,too,nolongerviewstheworldthroughgreen-tintedglasses,andchangesatKOmayhelpittorethinkthechangingrisks/rewardsitfacesifitterminatesCokebottlingdistributioncontractsinBrazil.WhentheCokeformulaisnolongersacredinMexico,whatisofflimits?Coke’sexperimentationcultureshouldgetaboostfromMexicowhereanewbrandCoca-Colaformulawithone-thirdlesssugarisbeingtestedtopossiblyreplacetheoriginalformulainmostpackages.Mexicocouldbethemega-markettohaveanewbrandCoca-Colaformulaasitstopseller.Iftheexperimentispulledback,itstilltellsusthatthenewleadershipisunafraidtoexperiment.Bottlingchangeispowerfultoo.Coca-ColaFEMSAisundergoingaprofoundbusinessmodelchangeaidedbytechnologyandanalyticsthatwillgeneratecustomerinsightsbypointofsale,ratherthanclusters.Itisaboutculture,processesandcustomerrelationships.Themanagementofchangeisthechallengenow,notthetechnologyortheanalytics,perKOF.ThedigitalplatformwentfullyoperationalinNovemberandotherLatAmbottlersaretrackingitsprogress.ItishelpingKOFdriverevenuemanagement,demandplanning,warehousingandproductiondifferently.Targeteddiscountstrategiesaremoreimpactfultoo.TheportfoliocomplexityLatAmbottlersarestartingtoexecuteisofagradeneverbeforeseen.KOFisnowissuing5milliontargetedstoreinstructionsperweekacrossMexicoandBrazil.Thescalerequiredtodothisisacompetitiveadvantage,amoat.AllthischangemayproduceanunexpectedBrazilbeermodel.Weofferauniqueandcounter-consensusperspectiveonhowHeineken’spoor34-yearexperiencewithBrazil’sCokebroketherelationshipin2017andhowchangeatKOandKOFaffectsHeineken.Revisions.Weupdateourearnings,andinmostcasesTPstoo,forTheCoca-ColaCompany,FEMSA,Coca-ColaFEMSA,andHeineken.WeretainourAmBevestimatesandTP.23April2018CarlosLaboySeniorAnalyst,GlobalBeveragesHSBCSecurities(USA)[e-mail][phone]GlobalBeveragesEQUITIESBEVERAGESGlobal______Targetprice_______Upside/__________2018e___________CompanyCcySharepriceNewOldRatingdownsidePEEV/EBITDAFEMSA(FMXUS)USD96.9116.0112.0Buy19.7%24.58.4Coca-ColaFEMSA(KOFUS)USD67.1107.0107.0Buy59.5%18.77.7Heineken(HEIANA)EUR88.5102.093.0Hold15.3%21.010.5TheCoca-ColaCo(KOUS)USD44.361.052.0Buy37.7%21.116.4AmBev(ABEV3BZ)BRL23.521.521.5Reduce-8.5%28.115.9Source:HSBCestimates.Pricedatcloseon19April2018.AtthealtaroftheconsumerEQUITIES●BEVERAGES23April20182Thinkbig3Thinkbypointofsale6Canabad34-year-oldmarriagegetfixed?8Coca-ColaFEMSA14FEMSA23Heineken29TheCoca-ColaCompany32Ambev35Disclosureappendix42Disclaimer47Contents3EQUITIES●BEVERAGES23April2018Whatmorecompellingevidencecouldtherebeofanewconsumer-centricfocusandofnewfoundcouragetoexperiment?NewleadershipatTheCoca-ColaCompanyhasbeentalkingaboutbeingconsumer-centricratherthanbrand-centricandofstokingexperimentationinordertoaccelerategrowth.Butinvestorsfrequentlyask,whereistheproof?Isthechangeprofoundenoughandfastenough?Whatisstillmissing?Inthisreport,wediscussevidencefromMexico,Chile,Japan,BrazilandtheUnitedStatesthatmakesanaffirmativecasefordeepandongoingchange.AnewformulaforbrandCoca-Colaisbeingtestedinthemarket,withanartificialsweetenerandsugarblendinMexico.ThepursuitofbrandCoca-ColavolumegrowthandthemystiqueofthesecretformulahadbeentheholygrailoftheCokesystemforwelloveracentury.WewerethussurprisedinarecentmarketvisittolearnthatTheCoca-ColaCompanyhasbeenrunningatestsinceSeptember2017withanewCoca-Colaformula.Itisonlyavailableinthe3-literone-waybottleandcutsone-thirdofthesugarout.Itrebalancesthesweetnesswithsucralose,anartificialsweetenercommonlyfoundinSplenda.IttastesjustlikeCoketousandhasapparentlyhadnopushbackfromconsumers.Ourinformalblindtestwiththreeotherindividualscouldnoteasilydetermineanydifference.Moreimportantly,consumersdon’tseemtohavenoticedanychangeintaste,judgingfrombloggingandsocialnetworkactivityaccordingtoTheCoca-ColaCompanyandtotheMexicoCitybottler’sseniormanagement.PepsiCohasdoneitalreadyinMexico,withnodiscernablecommunicationanditgotnoconsumerpushback,perPepsiComanagement.Granted,PepsiCo(PEPUS,USD105.57,notrated)haslesstoloseinMexicoasitisasmallernumbertwoplayer.Curiously,PepsiCoseemstohavemadeamuchbroadershiftinitsformulaforbrandPepsiinMexicobyshiftingallofitsbrandPepsipresentationstothe