Arca Continental SAB de CV
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Arca Continental SAB de CV
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Good day, everyone, and welcome to today's Arca Continental conference call. [Operator Instructions] Please note that this call may be recorded. [Operator Instructions]
It is now my pleasure to turn the conference over to Melanie Carpenter of Ideal Advisors. Please go ahead.
Thank you, Katie. Good morning, everyone. Thanks for joining the senior management team of Arca Continental to review the results for the third quarter and first 9 months of 2022. The earnings release went out this morning, and it's available on the company website at arcacontal.com in the Investor Relations section.
It's now my pleasure to introduce our speakers. Joining us from Monterrey is the CEO, Mr. Arturo Gutierrez; the CFO, Mr. Emilio Marcos; and the Chief Commercial and Digital Officer, Mr. Jose Pepe Borda; as well as the Investor Relations team. They're going to be making some forward-looking statements, and we just ask that you refer to the disclaimer and the conditions surrounding those statements in the earnings release. And with that, I'm going to go ahead and turn the call over to the CEO, Mr. Arturo Gutierrez, who is going to begin the presentation. So please go ahead, Arturo.
Thanks, Melanie, and thank you, everyone, for joining our call today. Before we review this quarter's results, I would like to take a moment to highlight an important announcement we made last month. As you are aware, we reached a long-term collaboration agreement with the Coca-Cola Company. The new corporation framework provides clear visibility of all important aspects of our relationship and ensures the long-term alignment of our growth plans and strategies for profitable growth and positions us to continue improving service for customers and consumers.
We also acknowledge the great opportunities to develop a digital alliance to build an integrated ecosystem that creates value across the digital and physical worlds, enabling our customers to adapt to a more demanding and interconnected market. This new relationship model confirms our vision and commitment to leading the beverage industry in Latin America.
Moving now to our consolidated results. I'm pleased to report that in the third quarter of 2022, we took another positive step in the face of a challenging macroeconomic backdrop. Total consolidated volume grew 4.2% in the quarter, reaching 619 million unit cases. We achieved sequentially stronger volume, cycling 7.1% volume growth in the prior year quarter. Total consolidated revenue increased 16.2% to MXN 55.7 billion as we continue winning at the point of sale, raising the bar with increased emphasis and flawless execution.
Consolidated EBITDA for the quarter grew 16.1%, reaching MXN 10.7 billion, representing a margin of 19.2% as we maintain strong top line momentum and sequential earnings growth across all our regions.
I will now go over the results across our markets, beginning with Mexico, where we sustained the strong volume performance and posted another quarter of record volume with over 100 million unit cases for 2 months in a row. Volume in Mexico grew a solid 5.1% driven by sparkling and water categories up 4.6% and 15.5%, respectively. In July, we surpassed again the monthly volume record which we set in June. We saw positive volume performance across all our channels. Traditional trade grew 1.5% and modern trade grew 15%, driven by double-digit growth in supermarkets. On-premise channel posted a solid recovery during the month of September with volumes up 6.4% compared to 2019 and driving sequential expansion in single-serve mix of 0.7%.
Total net sales in Mexico rose 18.3% in the quarter to reach MXN 24.9 billion, marking the 25th consecutive quarter of net revenue growth. Average price per case in Mexico in the quarter, not including jug water, rose 10.7% reaching MXN 76.95. We continue accelerating the expansion of AC Digital. At the end of the quarter, we reached more than 220,000 registered customers in the traditional trade, of which 71% are quarterly buyers and accounting for close to 26% of the volume in this channel.
EBITDA increased 13.5% to MXN 6.1 billion, representing a margin of 24.5%. We advanced our strategic intent to increase customer choices and play in more occasions with the launch of Topo Chico Tequila Seltzer and Topo Chico Margarita as we continue expanding our innovation pipeline in flavored alcoholic ready-to-drink beverages.
Turning now to South America. Our beverage business continued its positive momentum and delivered a strong performance across the region with total volume up 6.4% in the quarter. Total revenue was up 15.6%, reaching MXN 10.3 billion, while EBITDA increased 18.5% to MXN 1.9 billion, representing a margin of 18.3%. Our team delivered strong sequential financial and operational results, supported by our affordable portfolio initiatives and the expansion of returnable presentations.
Our beverage business in Peru delivered strong sequential volume growth of 4.1%, cycling double-digit volume growth from the same quarter in 2021. The sparkling category grew 3.1% in the quarter, with Coca-Cola and Inca Kola brands sustaining positive momentum, up 2.6% and 0.8%, respectively. Still beverages delivered strong 5.2% growth driven by water category as we continue with our dual commercial strategy with San Luis and Benedictino brands. Single-serve mix in Peru increased 3.9 percentage points, in line with the sequential recovery of the on-premise convenience stores and leisure channels, all of them growing at double-digit rates.
Our beverage operation in Argentina delivered another outstanding quarter of volume growth, up 9.7%, cycling strong 26.5% volume growth from the third quarter of last year. This marks the ninth consecutive quarter of volume growth, confirming the sequential improvement throughout the last 2 years. The traditional trade was the best performer with 17.4% growth as we continue refining our revenue management capabilities to maintain pricing in line with inflation while actively promoting affordability with returnable packages.
Moving over to Ecuador. Our operation delivered sequential volume growth, up 7.6%, cycling a strong 12.2% growth from last year and driven by double-digit growth in the Flavor segment due to a strong performance in core brands, Fanta and Inca Kola. On-premise supermarkets and traditional trade channels delivered strong growth as we continue promoting immediate consumption in Ecuador. Single-serve mix also benefited from this recovery, increasing 3.4 percentage points in the third quarter. We remain focused on cost discipline, optimization and affordability as we continued investing in returnable bottles across sparkling and still beverages.
To this end, we accelerated coverage of the new 300 milliliter universal bottle refillable format. We also continued investing in market-focused initiatives, increasing cooler coverage. Year-to-date, we have installed over 11,000 cold drink units. Tonicorp, our value-added dairy business, posted sequential double-digit sales growth in the quarter while capturing additional value share. Growth was driven by yogurt, flavored milk, and ice cream categories. Product innovation is one of the main pillars of our commercial strategy. This quarter, we expanded our yogurt segment with new flavors.
Our beverage operation in the United States maintained its steady momentum and delivered another quarter of solid revenue and profit growth with its 17th consecutive quarter of EBITDA growth. Total revenue in the quarter increased 12.8% to $947 million, driven by strong pricing due to the off-cycle price increase implemented during the quarter and better management of promotions. Volume for the third quarter declined 0.9% to 116 million unit cases.
Sparkling soft drinks declined 0.7%. Brand Coca-Cola gained 1.5%, with Coke Zero continuing to be the engine of growth, up 15.2%. Our volume-driving initiatives continue to shift volume into more profitable packages and delivered growth of 1.8% in sparkling beverages in immediate consumption packages and 9.5% and 7.5-ounce mini cans. We launched 2 product innovations this quarter. The 12-ounce leak can taste the track as well as the 20-ounce and 7.5-ounce Dreamworld to drive demand for classic and sera packages. EBITDA for the quarter grew 13% to $129 million, representing a margin of 13.6%.
OpEx to sales ratio improved by 90 basis points as we continued investing to support employee retention and engagement. We continue to make solid progress in our digital and innovation agenda with the expansion of our trade promotion optimization tool, giving us a broader ability to collect great insights to optimize our promotional spend. This quarter marked the end of this year's collaboration with MIT's master business analytics programs. Through this partnership, we were able to design a methodology to define the optimal portfolio for each of our customers tailored to their own characteristics. Looking forward, the fourth quarter is loaded with great marketing activations, such as the FIFA World Cup Trophy Tour and the holiday season, which will help us continue growing transactions and our top line. In closing, our Food and Snacks business posted a double-digit sales increase in the quarter, driven by solid pricing across all our operations.
Bokados in Mexico grew EBITDA ahead of sales, capitalizing on the resilience of the traditional channel and the recovery of the modern trade and wholesale segment along with the acceleration of the e-commerce channel. Why Snacks double down on its cost-efficiency program? Several productivity initiatives are in place, including SKU rationalization to focus on high-performing items, streamlining of our supply chain to optimize freight costs and transportation logistics, among others. Moreover, we are investing in the new production line in our Berwick facility to expand kettle capacity to support the expansion of our Deep River brand.
And lastly, Intelexa posted double-digit sales and EBITDA increases in the quarter as we continue to reshape our portfolio to further increase our focus on affordability and innovation. New product launches played a key role in our profitable growth strategy. This quarter, we launched a new popcorn product line and rapidly gained share in this category. We also continue to spark consumer-centric innovation with the introduction of a new cultural product line capitalizing on the strong brand equity of our leading confectionery portfolio. I will now give you an update on our ESG initiatives.
Our team in Ecuador was honored by the International Women's Economic Forum with the recognition of iconic companies creating a better world for all. For its consistent participation in the development of programs and strategies that promote generic quality, inclusion, and nondiscrimination. Among the implemented initiatives was the program named Tesaro and Ventersiclaqui, which assists hundreds of small-scale recyclers by providing training and advice to ensure that their activities are profitable and efficient. Furthermore, Coca-Cola Southwest Beverages and the Coca-Cola Company partnered to share the new packaging for Sprite and Dasani bottles with the Texas market.
The new packaging includes a transition to clear bottles from traditional green pride bottles as well as 100% recycled plastic material. These changes help protect our planet by decreasing carbon emissions and minimizing new plastic as they are a step forward in our goal to support our World Without Waste initiative. Moreover, we reaffirmed our commitment to the sustainable development goals at last month's Business Summit for sustainability, organized by the United Nations Global Mexico chapter in Monterrey.
At this event, we pledged our support for the women's empowerment principles and continue promoting an equal opportunities environment while creating safe and inclusive workplaces. We also reaffirmed our commitment to the science-based targets initiative as part of our ongoing efforts to reduce our carbon footprint and recognize the importance of contributing to mitigate the global climate challenge. And with that, I will turn it over to Emilio. Please, Emilio.
Thanks, Arturo. Good morning, and thank you all for joining us today. I'm pleased to report that we have reached another quarter of consolidated positive volume, double-digit top line, and EBITDA growth as well as a sustained EBITDA margin compared to the same period of 2021. Despite a complex macroeconomic environment and increased inflationary pressures in all of our markets, our proactive pricing architecture strategy and operational discipline were the key pillars to achieve this outcome. Turning to the financial results for the quarter. The third quarter consolidated revenue rose 16.2%, while year-to-date growth was 15.6%, led by volume growth obtained through our market execution and pricing strategies.
On a currency-neutral basis, net revenue grew 17.8% in the quarter and 16.8% in the first 9 months. During the quarter, gross profit increased 16.4% to MXN 25.1 billion. Increased pricing along where a consistent hedging strategy managed to offset any impact from raw material pricing, resulting in a 3 basis point expansion in the contribution margin. For the 9-month period, gross profit rose 14.1% to MXN 69.4 billion. Despite executing previously mentioned initiatives, gross margin declined by 60 basis points due to the volatility in raw material pricing during the first half of the year.
Operating income for the quarter came in at MXN 8.4 billion, a 23.5% increase against the same quarter of 2021. The operating margin presented a 90 basis point expansion, mostly led by operational efficiencies and a strong top line, even though inflationary trends have remained on the rise. For the first 9 months, the operating income totaled MXN 22.8 billion, a 19.8% rise and 50 basis point expansion in margin compared to the same period of the previous year, driven by the previously mentioned initiatives. Discipline and learnings over the last couple of years remaining gained within our organization, leading to a 70 basis point reduction in our OpEx ratio to sales for the period. In the third quarter, consolidated EBITDA grew 16.1% to MXN 10.7 billion with a steady margin of 19.2%. For the cumulative period, EBITDA grew by 12.8%, while the margin declined 50 basis points due to the previously mentioned inflationary pressures on the contribution margin. Net income increased 25.1% during the quarter, a 50 basis point expansion in the net profit margin.
Year-to-date, net income reached MXN 11.5 billion, a 26.9% increase versus the previous year. Operating income growth, as well as financing expenses, contributed positively for both quarterly and year-to-date increases. Moving on to the balance sheet. Cash and equivalents at the end of September stood at MXN 34.3 billion, while total debt was MXN 49.2 billion, reaching a leverage ratio of 0.4x. The strong position of our balance sheet provides us with the possibility to further assess any growth opportunities that may arise and continue to create value for our shareholders.
CapEx was MXN 6 billion as we continued to reinforce investments in our commercial capabilities as well as production, in line with current volume growth trends. This represents an increase of 23.5% when compared to the same period of last year. All commercial and cost optimization strategies implemented throughout the first 9 months of the year give a solid foundation to mitigate any possible impact. Looking ahead, we expect higher comps in the fourth quarter of 2022 as we continue to face volatility and a challenging macroeconomic environment. We're confident that our operational discipline and strong pricing capabilities should enable us to sustain our strong momentum for the remainder of the year. Now let me hand it back to Arturo.
Thank you, Emilio. This year, we have been able to consistently outperform and deliver outstanding results with pricing power, operational flexibility, and a rigorous discipline in costs and expenses. Nonetheless, we are aware that the uncertainty of today's economic landscape is likely to extend into 2023. Therefore, we will remain focused on further sharpening our revenue management capabilities as consumers adjust and adapt to persistent inflationary pressures. So far, demand elasticity has been in line with our expectations. However, we will continue to closely monitor consumption trends. We will also continue accelerating our cost management initiatives and taking the appropriate actions to navigate input cost inflation and supply chain volatility.
Looking ahead, we remain optimistic and excited about the future of our business. We are encouraged by the opportunities that our new cooperation framework with the Coca-Cola Company will provide. In summary, we are pleased with the progress and trajectory of our business and remain encouraged by the long runway for growth across our markets. Thank you for the confidence you've placed in us. And with that, Emilio, Pepe, and I will be glad to take your questions. Katie, please open the floor.
[Operator Instructions] Our first question will come from Marcella Recchia with Credit Suisse.
I have just 2 questions from my side. First, on U.S. Can you give us a little bit more color on the drivers of EBITDA margin expansion? And what's your view about the volume going forward, especially in the case of a potential recession? And secondly, regarding the multi-category framework following this new pilot program with Diageo in Mexico, would you consider also entering the beer segment in the country, as just announced by Corey?
With respect to your first question, we're very satisfied with our results in the U.S. despite the volatility in raw material prices that we've seen, margins have been sustained and improved over the years, as you've seen in our U.S. operation. I think very important for that has been a pricing strategy, pricing leadership, I would say, in the U.S., and also the focus on profitability of our packages, transactions, and a better mix in general. Very important to say is that for next year, we already have an important carryover for price for '23. And obviously, that will depend on mix changes.
But all in all, it would be something around a 6% carryover from all the cycles and other price moves that we've had in 2022. So that's very significant if you consider the profitability of the business for next year, which is certainly going to be more challenging in some respects, but also we're going to have better raw material comparisons, particularly in aluminum, and I would say, more stable PP, maybe some impact in fruit dose. The volume for our market still has to recover. We have an upside in the on-premise channel, particularly.
So that's another of the positive things going forward. And obviously, we will maintain our OpEx discipline as we've had before. So despite the headwinds, our expectation is to sustain our margins and to continue to have strong profitability for '23 because of those reasons. With respect to multi-category framework, as we've said before, the whole concept is how we can leverage our capabilities, our go-to-market capabilities in our markets in Latin America. I think with new technologies with our digital initiatives. We know that we can expand into other categories. And the pilot that we're going to launch, and we announced in Helisco is an example of that. And certainly, beer would be a very clear opportunity. As you know, we already sell beer in Argentina. We have a pilot in Ecuador that has been successful, and we have been having conversations and considering that opportunity for Mexico as well. We have nothing specific to announce at this point. But certainly, that is something that we are exploring. And jointly with the Coca-Cola Company, we think it's a very important opportunity for our Mexican market as well.
Our next question will come from Ben Theurer with Barclays.
Congrats on the results. Just following along the lines with the agreements and what you can do and how you can leverage, call it, the flexibility with the Coca-Cola company now. So obviously, you've stressed it just in your comments right now, there's a lot that you can do within Latin America to go to market, and I get it there's a lot of white space just given the nature of the traditional channel. But where do you see any potential to leverage what would be flexibility within the U.S. territory? I mean it's about 1/3 of your portfolio, but what could you envision or what could work out for you to also leverage the greater flexibility with Coca-Cola Company to potentially deliver things in the U.S. aside from the beverages portfolio under tax?
Thank you, Ben. As you know, the agreement that we've signed and this new collaboration framework refers specifically to Latin America. What we've discussed with the Coca-Cola Company, and this was actually a conversation of a global meeting with all bolters, there has to be a model that would be adapted to the different markets around the world. So this is something that represents a new form of partnership for Coca-Cola with bottlers around the world. But certainly, the different markets would require different approaches to capitalize on the presence in the market and the infrastructure that you have in any particular market. So in the case of Latin America, we've identified very clearly those opportunities, and we would have to analyze what would make sense in the U.S. for our current go-to-market approach.
So at the end, the framework is about alignment with the Coca-Cola Company. And if you think about the U.S. market, there -- a number of things where we can have better alignment, I would say, mostly in our sales opportunities going forward. And I think that would be our first priority in that market. But certainly, the big change in mindset and paradigm is that the whole system bottlers and the company are much more open to explore opportunities beyond our core business and to understand that we can do other things without affecting or even improving the performance of the core business. So that's something to be defined in the other markets.
Our next question will come from Fernando Olvera with Bank of America.
The first one is regarding -- it's about Mexico. Regarding the pricing seen this quarter, can you give us a breakdown of how much came from price hikes and how much from the mix? And also, can you come these additional price hikes are needed to be able to recover your margins? And just very quickly, given the strength of your balance sheet, how are you thinking about dividends towards the end of the year, considering that you have distributed extraordinary dividends in the last couple of years?
Thank you, Fernando. I will turn it over to Pepe for the first part and Emilio for your second question. The first quarter, I'll just tell you that price leadership has been so important for us in every market intruding Mexico. And it's not only about pricing and how much we have accomplished but also what is behind that. I would say, in general, that we have much more robust processes for pricing in every market. And I think what you've seen now is the result of how those capabilities have been rolled out in every market. For the specific details, I'll turn it over to Pepe.
Thank you, Arturo, and thanks, Fernando, for your question. As you know, we always aim to maintain a balance between market share, profitability, and volume growth. And that is based on our world-class execution and segmentation. And our aim is to always increase prices in line with inflation. We will continue to utilize pricing as one of our key top-line drivers, leveraging our install RGM capabilities and segmented brand price pack architecture, maximizing the pricing decisions. In Mexico, what I can tell you is in the total AC, for example, in 2022, 74% of our incremental volume is coming from single presentations. That's why on top of the 2 rate increases that we are having, also the mix is working in our favor.
In Mexico, specifically, we are growing our price 8.6% versus previous year, and this comes from a balance of a true rate increase of 8.2% coming from price increases in the first and third quarters focused primarily on single serve and even those single service growing, as I said, and also a carryover of 3.1% from the previous year. And also, we have a positive impact of 0.4% as the single-serve mix is growing 1.3 percentage points versus the previous year. And that is coming because we are capturing the gradual recovery of immediate consumption channels and the launch of specific packages of the 250 MLP multi-category platform as entry packages.
For the rest of the year, we have already 8.4% of carryover. And we are going to enter 2023 with at least a 3% carryover for next year. As we said, maintaining that balance between share profitability and volume growth, we will evaluate another increase in December if we see the space for that, and we can do it. Emilio, I think I'll pass to Emilio on the other question.
Thank you for your question. Regarding dividends, as you know, we have a policy to pay 30% of retained earnings, which we already did with an ordinary dividend of MXN 18. On our shareholders' general meeting, it was approved to the Board that the Board could authorize any extraordinary dividend as we did in the past 2 years. So that may come in the next months if there's no M&A operational transaction. So we'll have to wait for the rest of the year if that's approved by the Board.
Our next question will come from Sergio Matsumoto with Citigroup. Iron Capex.
My questions are about Mexico. Firstly, on -- you mentioned 15% growth from the supermarket channel. Just wanted to get some color on how much of that was due to the -- with the water sale due to the tap water shortage. Perhaps it was a base of comparison that was for you? And also, how does the digital platform help in that channel? That's the first question about the supermarket. And the next question is more broadly. We saw that talks about near-shoring and reshoring back to Mexico. Are you seeing any tangible observations you can point to? Or is this still a lot of discussions so far?
Yes. Thank you, Sergio. I will address the second question first and then turn it over to Peter for the first part. And with respect to mirroring, this is a very important point, and it's not only a conversation. It's a reality of investment in many parts of Mexico. But I would tell you that Mexico is really segmented in that regard. If you look at the north of Mexico and some of the regions that have the infrastructure to attract that investment, there's been a lot of activity. There are some restrictions, actually, labor has been one of them and some of the infrastructure restrictions. But there is a lot of investment coming into those parts of the country, particularly in the northern part of Mexico in the border towns and here in the northeastern part. I participated in a group with the Mexican private sector that is working on making recommendations to the government of Mexico and the U.S. to precisely capture investment opportunities for the region. And this is called the U.S.-Mexico CEO Dialogue. And we have companies in the U.S. and in Mexico to participate, and I co-chair the investment section of that initiative.
And I can tell you that we've identified a number of supply chains, actually 11 supply chains, that are going to be relocated or could be relocated to our country. And we presented to the government, actually to the President of Mexico and senior officials of the U.S., 2 very concrete opportunities among those 11 supply chains that would come here and what is required. So these are not only conceptual ideas, tangible plans, and also investment that it's already coming in into the sectors that previously existed here in Mexico. So I think that's going to be a tremendous opportunity for Mexico having a free trade agreement, having just the logistics advantage with the U.S. for the next few years as supply chains kind of regionalize around the world. So that's a very important point. For your first question, I'll turn it over to Pepe Borda.
Thanks, Arturo, and thanks, Sergio, for your question. First of all, regarding the growth in the supermarket channel, yes, in the quarter, we grew 15%, but it's pretty much a revaluation from what's happened in the last 3 or 4 years to a pandemic. If you go back to numbers against 2019, we see that the traditional channel has grown over 8% and the modern trade has grown around 10%. And the on-premise channel is the channel that despite growing 15% in this quarter, still is below 2019 figures for the year-to-date, but catching up already a minus 3% in September, and that comes mainly because the entertainment channel, Cinemas and those have not recovered yet, but the restaurants and bars already have. The water category has grown around 16%, not only in Mexico but also in South America, growing 13%. So specifically to your question, the water category has benefited from the events in the last quarter, but that's come mainly across channels, not specifically in supermarkets.
Regarding the digital platforms, we do have EDS, electronic data interchange with most of our biggest supermarket channels since a long time ago, and we always perfect those systems and work together with them to make them as seamless and as profitable as possible. I hope that answers your question.
Yes, it does.
Our next question will come from Felipe Ucros with Scotiabank.
Congrats on the results, and thanks for the space for questions. A couple on my end. The first one is on returnables, right? As inflation rises and it starts getting to the breaking point for the consumer, how do you manage returnables to provide affordability? Are you proactive in making it more available in the market? Or do you wait for the consumer to start sort of pulling it? And just also wondering the role that the universal model plays in this, given that the portfolio is somewhat different from what the last time we had accessing throughout the entire region. Just wondering if the rollout of the universal model is where you want it to be and you're very prepared for this? Or if there's a little more to go with the universal model before getting into the recession? And then I'll make a follow-up question about Snacks.
Thank you, Felipe. With respect to returnables, I'll make a general point and then turn it over to Pepe. I would say it's generally a very deliberate strategy for us in Latin American markets, and it becomes more relevant precisely when there are difficult economic times. And we've been doing this for many years.
And the point here is that it's not only about presenting the options to the consumer. It's actually an operational capability that we have. So it requires coordination, it requires distribution capabilities that are different. It's harder for someone just to start doing returnables overnight. It requires investment certainly on the one hand, but also a way of operating that is different to a normal more simplified business with one-way packages. And that is why what we're doing and also introducing the bottles to the market and doing it that in the most effective way so that they can be used and they can end up with the consumer that would precisely buy those packages.
So it's a pretty sophisticated capability, I would say, and we've developed that. If you see our mix of returnables in the different markets. We've been very successful in some markets, Mexico, Argentina, I think we have a good opportunity in some of those markets where Ecuador is becoming very relevant, for example. So we've been focused on that opportunity, same thing as Peru. And in that regard, Universal Bottle has become a very important part of that strategy. So I'll let Pete share about details of Universal Bottles.
Thank you, Arturo, and thank you, Felipe, for your question. As Arturo was saying, the universal bottle is one of the most important initiatives in LatAm as it helps us increase the mix of affordable options not only in Coca-Cola but also in flavors and steels, and that is going to be even more important in a recession environment in the near future. Today, the universal bottle multiservice packages represent 20% of our total multi-serve returnable portfolio in LatAm. And during the next year and the next years, we are going to continue developing returnables and the universal bottle.
As Arturo said, this is a long-term play. In the short term, mixes can go up or down because of specific promotional activity, but the long-term aim is to increase our offering in Universal Bottle in the longer run. In the short term, we've had some supply chain limitations in production due to the shortage of glass in some presentations. And as this continues to get solved within the next months, we're going to be able to further expand our universal bottle and refillable options and thus increasing our consumer base, protecting the bottom of the pyramid. I hope that's...
That's very clear, guys. And maybe if I can do a follow-up on Max. In Mexico, I think Bocas had double-digit top line and EBITDA now for something like 6 quarters in a row. Similar with Alexa, I think my count is at 5 quarters or even maybe a little more. And why you didn't see the same in EBITDA, but it's 4 quarters of double-digit top line? So clearly, Snacks are doing very well. So just wondering if this is just still a recovery from the pandemic or if you're already above that and still growing at these rates because execution and turnaround plants have gone better than you expected. And then, more importantly, maybe what's the long-term plan for this business?
Yes. With respect to Snacks, the operations in Latin America were less impacted, I would say, especially Bokados in Mexico was more resilient. And Ecuador, just because of how difficult the situation with Covid, had a bigger impact. But in general, those businesses have been more stable from a profitability standpoint. And in the case of Wise, we did have a significant impact, particularly in Deep River with our on-premise and on-the-go markets during the pandemic and mostly in the Northeast of the U.S., which is one of our main markets.
So I would say that for Wise, this is more of a recovery of the business, and it's been a great recovery. We've been posting a double-digit sales increase, and we've also improved profitability. The delivery portfolio keeps on growing profitably. We're capitalizing on e-commerce, and we're focusing on RGM practices and SKU rationalization and also on restructuring our whole distribution network in the U.S. So it's I would say it's a much bigger transformation than what is going on in Wise. We're very satisfied, but I wouldn't say that we are at the point of stability of that business. Yes, we're heading in that direction, I would say, for 2023.
And that business, going to the final part of your question, it's probably less synergistic with the rest of our operation if you compare that with Latin America because we operate in different markets in comparison to what we do in Mexico and Ecuador in the U.S. So we still are working on improving that operation, but certainly not as connected to our Veris business as it is in the Latin American markets.
Our next question will come from Thiago Bortoluci with Goldman Sachs.
Congrats on the results. I'd like to follow up also on the enhanced cooperation agreement with Coke. And my question is regarding inorganic opportunities, right? So I'd just like to understand with this better alignment of the interest and a common focus on pursuing further growth, does it change at all the position my Arca might have on driving further consolidation in ops broad distribution system going forward and where the firm currently is in terms of potential M&A and organic going forward?
Thank you, Thiago. Well, I would say that the context of M&A and inorganic opportunities remain the same. And what we've said is that we believe that the system is still fragmented in many regions around the world and that fragmentation presents opportunities. And just based on what we've seen before in operations, not only in our company but other partners and how value has been captured through scale. What we've said is that this business has become, over the years, much more a business where economies of scale were relevant than in the past when you had smaller franchises that then required the benefits of scale as much as we have right now.
And not only because of larger customers and more complex distribution, but also some of the capabilities that we talked about in RGM and digital, sometimes regard scale and also ESG initiatives, those kind of things. So the business requires more scale. There's fragmentation. So the normal thing to happen for the future is more consolidation. So as we've said, we want to participate because that is, first of all, the mandate that we have from our Board. We have the financial capability.
And more importantly, I think we have developed the capabilities to integrate businesses, not only in our original markets, which is Latin America, but also in the U.S. So the success we've had in the U.S. over the last 5.5 years, it's been very important for us to demonstrate how we can leverage those capabilities for further growth. On the other hand, those transactions require patients because the business was very resilient. Some of the companies and the owners are satisfied with where they are and not prepared to take strategic decisions sometimes at this point.
And on our side, we have been very prudent about valuation of businesses and cautious about the -- making sure the synergies are captured and creating value for us as we integrate and acquire. So nothing to announce at this point, but I think the opportunities would arise over time because I think that's just the natural trend of our bottling system around the world.
Our next question will come from Lucas Ferreira with JPMorgan.
Two follow-ups on the multicategory, -- maybe the first one for Pepe. If you can give an update on how Arca is ready on a B2B, let's say, digital capabilities to leverage the multi-category across the region? So health the adoption of your clients to, let's say, online order taking? How much you interact with your B2B clients on an online basis because that, I think, is a key part of the success, right, for the multi-category strategy. So how advanced are you in that? How -- what are the challenges?
And maybe the second one for Arturo, that discussion -- the previous question. I just wanted to understand if -- well, you guys have been super vocal about M&A opportunities in the U.S., but correct me if I'm wrong, but U.S. is much more mature than Latin America in terms of distribution. You have a very, like, say, consolidated food service delivery network, while Latin America is much more of like fragmented. So there are more manufacturers. Does it mean that you're going more multi-category now, makes maybe opportunities for consolidation within Latin America more interesting than they were before? Or not necessarily do you guys think that M&A in the U.S. would probably be the next big step for that?
Yes. Thank you, Lucas. Maybe I'll address the second part, Pepe, if that's okay, and then turn it over. Yes, with respect to M&A, there could be some differences as we evaluate synergies, as you say, and I probably could agree with that. But still, I think it makes a lot of sense for us to look for opportunities. I certainly, we won't discriminate if we have opportunities in either part of the continent, if it's the U.S. or Latin America and whether it's acquisitions or some other creative way to integrate business. So we're -- even though that might be the case, it really won't change our approach into trying to identify potential opportunities to integrate and synergize in the future.
We're convinced that there are synergies in the U.S. and Latin America, maybe even in other markets, which are not our focus at this point, probably for different reasons, as you say. But we have enough information about the U.S. now to know that they're real and very concrete synergies to be attained. With respect to multi-category and the B2B opportunity, I think, with the signing of the new collaboration agreement, we have now the possibility of integrating much better what we had been doing in terms of B2B multi-category and our own independent approach through Yampa over the time now with what we have been doing with the B2B of AC Digital for Coca-Cola, but I'll let Pepe expand.
Thanks, Arturo, and thanks, Lucas, for your questions. So as Arturo was saying, while we continue optimizing the current business through digitization, our main focus today is converging this present forward approach of optimizing the current business and optimizing and digitizing our commercialization with a future-back approach of digitizing the traditional trade, multi-category distribution and the direct-to-consumer channel. As with the LTR sign, we are starting to integrate Yun with AC Digital in on B2B2C digital ecosystem, aiming to become the best solution for our traditional trade and continue being perceived as the best partner for the traditional trade. And we've talked many times about it that why we are doing this is because we want to increase sales of our current portfolio and optimize our current cost to serve.
We want to expand our portfolio. We want to develop and strengthen the traditional trade and our partnership with them and maybe and probably another one that is getting more insights from all this experience to help the other. As of last quarter, as of the third quarter, AC Digital in LatAm reached 550,000 registered customers, which represents close to 70% of the customers in the traditional trade and accounting for 23% of the volume in the last quarter. We plan to close the year with close to 35% of our traditional trade sales through digital channels.
To give some perspective, year-to-date 2022, USD 420 million of revenues have been through digital channels. If we only take October 22 and make it a 12-month running rate, that number is already $1.1 billion that are going through our digital channels in the traditional trade. And for the next year, this number will be between $2 billion and $3 billion with WhatsApp and the integration of John and is digital. And why this is important because we have seen that customers that adopted AC digital as their ordering channels have experienced at least between 3% and 5% sales growth versus nonadopters, putting 11% more orders and selling 15% more SKUs. So we plan to increase that. And in the U.S., during the third quarter, my coke sales footprint reached USD 116 million. That's 29% over the previous year. We saw 80% of our eligible monthly customers using myCoke during September. We have made significant progress in digitizing customer engagement, aligned with our go-to-market and service model strategy. So we are moving in that direction in all of those channels. I hope that was helpful.
Yes, super helpful.
Our next question will come from Rodrigo Alcantara with UBS.
Just to component here the discussion, you mentioned, in the beginning, some investments in new capacity. I was wondering if you can comment about that and any other projects that you have in the pipeline there to increase your production capacity, perhaps on the Snacks in Mexico in the U.S.
Yes, I think that as we move into a post-pandemic scenario, we've identified that we require to invest for growth in every one of our business units. And the investments that we have in our plan are in the typical basic things that we invest year-over-year. It's, as you know, in coolers, especially assets for the market and our warehouses and renovating our facilities and trucks, obviously, returnable borrows, as I mentioned before, probably now we're going to have more focus in some of the investments in our supply chain to make sure that we have enough capacity to satisfy demand. Now that we've had some disruptions in the supply chain in the peak season this year, we've identified opportunities going forward.
Most of those disruptions, I would say, were external from suppliers and from the freight and other supply chain issues. But there are some things that are internal as well. So we are thinking about new distribution centers in some of the major metropolitan areas that we serve, some new production lines. And very importantly, we're investing in Topo Chico line. So I would say that, that would be the most relevant, if you can call it, extraordinary investment, although it's really part of our operation, but we're installing new lines in our Topo Chico facility precisely to face the growing demand for Topo Chico, both in Mexico and the U.S. I would say that those would be the most relevant items. But in terms of the level of investment, that would be consistent with what Emilio has been telling you over the years.
Thank you. This does conclude today's Q&A. I will now turn the call back over to management for closing remarks.
Okay. Thank you, and thank you all for participating in our call and for your continued interest in our company. We look forward to speaking with you again soon. Have a nice day. Thank you.
Thank you. Ladies and gentlemen, this concludes today's conference. You may now disconnect.