MEXICO CITY: New investment from Coca-Cola Femsa is to increase competition with Nestlé for sales of coffee products in Mexico.
The firm, the world's second-largest bottler of Coca-Cola, will have installed 5,000 coffee machines in Mexico City stores by December as part of a pilot programme.
It plans to install up to 35,000 in corner shops across the country over the next two to four years, with rollout plans to be decided at the beginning of 2011.
Aggressive expansion would put Coca-Cola Femsa in direct competition with Nestlé, the current market leader in Mexico.
Javier Astaburuguaga, chief financial officer of Femsa, Coca-Cola Femsa's parent company, said that the bottling company would have a competitive advantage due to the nature of its business.
"We believe that in Mexico, even though Nestlé has a very strong presence in this segment, there are opportunities for us because of our direct service to corner stores," he said.
The plan is to roll out in cities where the bottling company already delivers Coca-Cola products.
Coca-Cola Femsa sells cappuccino and latte coffee under the brand name Blak.
Making a play for the coffee market in Mexico is one of a series of initiatives undertaken by Femsa, which operates in a 50-50 partnership with Coca-Cola.
Astaburuaga anticipates that, if Femsa can organise partnerships with other Coca-Cola bottlers, the Blak coffee brand may eventually support 50 or 60,000 dispensers.
Data sourced from Bloomberg; additional content by Warc staff