Kof: A Resilient Play on Latin American Consumption
Kof represents a compelling investment opportunity within the Latin American beverage market, leveraging the strength of the Coca-Cola brand with a regionally focused business model. While operating within the broader Coca-Cola ecosystem, Kof distinguishes itself as the bottling partner – purchasing concentrate from The Coca-Cola Company (KO), mixing, bottling, distributing, and marketing products throughout the region. this positioning allows Kof to directly benefit from the enduring appeal of Coca-Cola products while tailoring its approach to the specific consumption patterns of Latin America. Further bolstering its stability is the backing of FEMSA, a Mexican conglomerate with over 130 years of experience in retail, logistics, and bottling across the region.
Despite facing headwinds in the second quarter of 2025, Kof demonstrated operational resilience.While volumes decreased by 5.5%, revenue increased by 5.0%, and operating profit remained stable. Looking at the first half of the year, volume declined 3.9%, but revenue grew 6.7% and operating profit increased 3.3%. This performance was coupled with a commitment to shareholder returns, evidenced by the distribution of Ps. 0.23 per share as an ordinary dividend, totaling Ps. 3,865.5 million.
A key differentiator for Kof is its ability to maintain healthy margins in a challenging economic climate. The company reported a gross margin of approximately 45% and an operating margin near 13% in the last quarter – figures that are competitive within the Latin American beverage industry. this efficiency stems from regional scale and disciplined pricing strategies, enabling continued investment in innovation and expansion without jeopardizing financial stability.
Kof acknowledges and actively manages macroeconomic risks, including exchange rate volatility, inflationary pressures, and rising raw material costs.Demonstrating this proactive approach, the company successfully issued US $500 million in senior bonds due in 2035 with a 5.1% coupon in July 2025, strengthening its financial profile and securing access to competitive financing.
Currently, Kof’s valuation appears attractive relative to peers. The company trades at a Price-to-Earnings (P/E) ratio of 13.7x for 2025 and an EV/EBITDA ratio of approximately 6.5x. This represents a discount compared to competitors like Pepsi (17.3x), Continental Ark (14x), and the industry average (15x). Its Price-to-Book ratio of 1.39 suggests a reasonable valuation aligned with its growth prospects. Analyst consensus forecasts annual profit growth of 7% to 8% in 2025, supporting a positive outlook for operational performance.
As of the current date, KOF shares are trading at USD 81.2, with a target price of USD 111, representing a potential upside of 37%. The company also offers a dividend yield of around 2%.
Kof successfully balances operational stability with growth potential, built upon solid foundations provided by FEMSA’s support and a product portfolio aligned with evolving Latin American consumer preferences.For medium- and long-term investors, Kof presents a strategic opportunity to participate in regional consumption growth, backed by the enduring power of the Coca-Cola brand and a proven ability to execute in complex environments, demonstrating strong corporate resilience.
