Good morning, everyone, and welcome to Coca-Cola FEMSA's Third Quarter 2020 Conference Call. [Operator Instructions] During this conference call, management may discuss certain forward-looking statements concerning Coca-Cola FEMSA's future performance and should be considered as good faith estimates made by the company. These forward-looking statements reflect management's expectations and are based on upon currently available data. Actual results are subject to future events and uncertainties, which can materially impact the company's actual performance. At this time, I will now turn the conference over to Mr. John Santa Maria, Coca-Cola FEMSA's Chief Executive Officer. Please go ahead, sir.

Thank you, and good morning, everyone. Thank you for joining us today to discuss our third quarter results. We appreciate your interest in our company, and I hope you and your loved ones are safe and well. With me today are Constantino Spas, our Chief Financial Officer; Matias Molina, Strategic Planning Director; and Jorge Collazo, Head of Investor Relations. In the face of a complex operating environment, I am encouraged by the sequential recovery and overall improving trends that we saw during the third quarter. This positive momentum is driven mainly by gradual increases in consumer mobility, the effectiveness of our comeback strategies and the resiliency of our business. Although our operating environments remain volatile and the pace and shape of the recovery is still difficult to predict, our outlook is cautiously optimistic. Notably, the consolidated volumes improved from a double-digit decline in April to a low single-digit growth in September, the first month of consolidated volume growth since the start of the pandemic. Our key priorities have played an important role in bolstering our resilient profile. Protect the safety and well-being of our employees, deliver outstanding value and service to our consumers and clients, relentlessly supporting our communities, ensure a prudent use of cash while strengthening our balance sheet and accelerating the rollout of our transformational initiatives. These priorities position us to merge a stronger Coca-Cola FEMSA once the pandemic is over. On our call today, I will briefly review our third quarter results and provide you with an operating update. I will then give you more color on our strategic priorities to drive growth and fulfill our purpose. Importantly, I will discuss the significant strategy we have made to achieve our ambitious 2020 sustainability targets ahead of year-end. Finally, I will turn the call over to Constantino to…

Thank you, John, and thank you all for joining us on today's earnings call. I will now expand on our division's highlights for the third quarter. Starting with Mexico. In this market, our top line decreased 6.7%, driven by volume declines and an unfavorable price/mix. These effects were partially offset by our revenue management initiatives. Importantly, and emphasizing the relevance of our affordability pillars, our multi-serve returnable presentations continue to grow double digits. While we also see an accelerated performance in brands such as Coca-Cola Zero Sugar and Topo Chico sparkling Mineral Water. As we enter the final stretch of the year, we are reinforcing our comeback plans in Mexico to complement our portfolio proposition and to improve our service levels through technology and new capabilities, particularly digital capabilities and we are implementing all over the organization. In Central America, our volume declined 2.9%, impacted mainly by volume declines in Panama as a result of very stringent COVID-19 containment measures that were implemented in that market. These factors were partially offset by the continuous volume growth of our operation in Guatemala. On the pricing front, revenue management initiatives, coupled with a positive currency translation effect from the Central American currencies into Mexican pesos, partially mitigated unfavorable price/mix effects. As a result, our top line decreased 4.8% in the Mexico and Central American division. However, despite the effects of COVID-19, the concentrate cost increases. And the depreciation of the Mexican peso, our operating margin for the division expanded 170 basis points while our operating cash flow margin expanded by 200 basis points. This increase was driven mainly by declining PEP costs, currency hedging initiatives and our team's outstanding job of generating operating expense efficiencies and savings, coupled with very solid results from a fuel-for-growth efficiency program that was implemented during 2019.…

Thank you, Constantino. Against the backdrop of the complex and dynamic environment, we have continued to effectively execute and perform our strategy, and we are encouraged to carry on navigating the road to recovery. Our third quarter results and trends strengthen our ambition to achieve our vision of refreshing the world anytime, everywhere. Thank you for your continued support. Operator, I would like to open the call for questions.

[Operator Instructions] We can go ahead and take our first question from Ben Theurer with Barclays.

Yes. First of all, congratulations on the results. My one question would be, if you could elaborate a little more on the dynamics throughout the quarter and what you're seeing into the fourth quarter in Mexico, and the differences between the traditional channel and the modern channel and how that recovery is currently playing out? Just to get a little bit of sense of what is needed to get you back into hopefully flattish to positive territory on the volume side in Mexico?

Sure. Thanks. Obviously, what we're seeing is -- during the quarter, we saw a better July, a downfall in August because of the weather in Mexico and then a rebound in September. And all that combined, however, gave us -- during September, gave us a full month of growth, the first month of growth we've had since the beginning of pandemic. Sequentially, what we're seeing going forward in October is continued improvement upon that. So we're very encouraged to see that more and more markets are starting to go positive. I think in terms of performance by channel, what we're seeing the consolidated cup is traditional trade starting to pick up and go positive for us during August, September period. And modern trade bouncing back during September, from what was double digit declines -- mid-teen declines during June, July, August. So it's both encouraging for the traditional trade and for the modern trade. I think one of the concerning factor is still -- well, not concerning, but it's just a slow factor that's recovering. It is the on-premise channel in Mexico, the traditional on-premise channel in Mexico. Where we still see north of 60,000 accounts closed. And although they've been gaining little by little, that opening has been slow compared to the rest of the channels. In packages, I would say that our multi-serve packages continue to boom. We continue to grow at high single digit rates. And what's encouraging as well is single-serve packages were starting to have less deep of a decline as to what was compared to during June, July and August. So sequentially, the traditional trade channel is doing better. On-premise channel is opening up and supermarket channels are going back to normal. And what is very encouraging is also to see single-serve starting to have less decline sequentially from month-to-month. And like I said, October seems to be doing a lot better than September. So we're seeing sequential declines -- and sequential improvements as we go forward. I'm very encouraged by that.

Okay. Perfect. That was very good. Just one quick follow-up on the commentary. So basically, what we've been seeing on the transaction side, which obviously was still high teens negative during the quarter. That is something you will also expect slowly to improve because of the commentary you just made around the single-serve packages and the reopening, correct?

Absolutely. Yes. So as you see, the traditional trade on-premise accounts start leveling out. And people start moving and having higher mobility levels. In general, we will start seeing more convenience packaging and more single-serve packaging being transacted.

Okay. Perfect. That's it. Congrats.

[Operator Instructions] We can go ahead and take our next question from Álvaro García with BTG.

My question -- I have several questions, but I'll keep it to one. On Coke's restructuring, I think that's probably pretty important to address sort of what are your implications -- what are the implications for Coke specifically of this sort of larger, more networked model? What do you think some of the benefits are and maybe some disadvantages? I'd love to hear your thoughts on that.

Sure. Thank you, Alberto (sic) [ Alvaro ]. I think Coke's restructuring is something that is extremely positive for us and for the system as a whole. I think one of the things that it does is it starts streamlining the organization and making it much more agile in terms of decision-making and both taking and eliminating brands that are not performing and also bringing new brands to the market. And as an example, I would say, is Topo Chico Hard Seltzers. That is something that we collaborated on as a system. And from conception to time to market, we took 3 months to get it out, which is something extraordinarily quick for any company, let alone the Coca-Cola Company. So I see, the new organization is one, having a lot more agility to it. Second, it's going to have a lot more -- we're going to have a lot more capability to drive innovation, given the speed of implementation this requires for a good result. Third, we're going to start seeing much clearer verticals on categories as it will be coming down from Atlanta with a specific strategy in mind. And it will be clear that, that strategy is to get implemented at the market level. So there's -- the good -- those are the goods. The bads, I think you can have a little less say in terms of what can get treated and what cannot treated at the operating level or the country level. That will be both on the KAO side as well as the KOF side. So there's going to be less customization for markets. But -- and I think what we're going to be betting on is the bigger, bolder brand initiatives, taking out a lot of the smaller brands that are not adding much to our system other than complexity. And so I think the focus of the Coca-Cola Company is to continue to grow and having straight -- a very clear agenda for the categories. And I think that's wonderful. I truly think that it's an exciting time for the system. And with that, I think we can do a lot more a lot faster. Constantino you care to comment on the platform services piece?

Yes. I think that apart from the -- say, the frontline focus that John was mentioning, there's also a huge opportunity in terms of the back end processes that we have throughout the system. As Coca-Cola FEMSA, we have been working very, very aggressively into expanding and enhancing our shared services business model, but there's a clear opportunity to collaborate with the Coca-Cola Company and across -- potentially across other participants in the Coca-Cola system in that front. And at the same time, there's also a huge opportunity in data sharing across the Coca-Cola Company and ourselves in order to generate a much more robust analytics capability in order to have a much better and much more informed decision-making across the countries. So overall, I think it's a holistic benefit for the system, not only in the commercial capabilities, not only in the portfolio piece and innovation, speed to market, such as Topo Chico, as John mentioned, but also on the back end side where we have a long ways to go and where both companies, and actually all the system, has been working very adamantly in getting much better in that particular type of process. So there's definitely huge benefits here to continue to collaborate more into enhance our capabilities to drive much more efficiency across the system. So very, very positive in my point of view.

We can go ahead and take our next question from Marcella Recchia with Crédit Suisse.

I have 2 quick questions here. The first one is about your comment about the concentrate price increase. Could you elaborate a little bit more? I couldn't hear you well. You mentioned that you agreed another year of increase effect July this year. So it would be helpful if you just elaborate a little bit more on this topic. And my second question is related to Brazil. Basically, just to understand, with the federal government fixing the IPI tax rate at 8% for the term period of time. Can we think about the company resuming the tax collection in Brazil as of next year? And if that is the case, what would be the impact that you are expecting for next year operation?

Sure. I can take that. Thank you for your question. In the case of the concentrate increase, as John mentioned during the call, we had a concentrate increase this quarter. The concentrate increase is in line with previous adjustments, so it's manageable. And we expect to continue to expand margins during 2020 and to protect them during 2021. So to give you an idea of different dynamics that we're handling within the company. Just to give you a sense, we expect savings in Mexico during the full year 2020 to reach approximately about $180 million, which much more than fully offset the increase. So it's in line with previous increases and it's part of our corporation framework at the end of the 3-year increase that we mentioned before. The future increases like the ones that we had, just depend on investment and profitability levels that are beneficial for both in the long term. As you know, our concentrate conversations have a long-term approach. So we continue to work together with the Coca-Cola Company to navigate short-term disruptions, but also position ourselves for long-term growth as we have done during 2020. So it's part of how the system works. And we should not be extremely overthinking these price increases since incidence has always been and will continue to be a part of the relationship going forward. So all in all, it's an increase in line with previous adjustments. We believe it's fully manageable. And I think that a demonstration of that is the fact that we were able to expand our margins during 2020. In the case of Brazil, we continue to take a very conservative approach on the IPI tax spreads. But we continuously evaluate the situation. As you mentioned, there has been recent developments in the market. But at the same time, we take a much more conservative profile when it comes to tax issues in Brazil. In our point of view, it is still convenient to be conservative. But as we've said in the past, developments like the one you mentioned might change your point of view, and we have never renounced to our rights on the credits. And then dynamic matters in Brazil -- I mean tax matters in Brazil are very dynamic. So we may use these tax credits in the future. But for the time being, we will be conservative. And in terms of amount, I mean, I think it's understandable that we don't share amounts. But definitely, a change in our approach would be positive for our business in Brazil, and it will have a positive impact in our results. I don't know if that answers your question. But that's a little bit of point in these 2 particular topics.

We'll go ahead and take our next question from Felipe Ucros with Scotiabank.

Yes. Maybe if I can do a follow-up on the concentrate price increase. Maybe if you could give us a little bit of the rationale behind the increase, especially in the context of the timing, right? Very tough timing with COVID. And especially in Mexico, a lot of attention from the government towards labeling, banning sales to minors. A lot of moves in the President's party very active on restrictions on food and bev. So maybe if you could talk a little bit about the context of doing it in this timing because in the past, the increases were not done every year, and sometimes we had half a decade or more without increases. And it seems that it's just probably an appropriate time for a break from the Coca-Cola Company. And obviously, increases is not a great time for the industry. And maybe on a follow up. You mentioned market shares, which are doing very well, and traditionally, they do very well during these times for you guys. Maybe you can give us an idea of how you expect to come out of this, especially in the context of affordability and the penetration you're getting there?

Sure. I mean as I said before, Felipe, the relationship we have with the Coca-Cola Company has a long-term view. There are conversations, plans and strategies that have a longer horizon planning and thinking than just 1 year. It's clear that we have had a very complex year in 2020, as you mentioned. But it is very important that we understand the concentrate price increase is part of how the system works. We -- once more, I don't think we should over overemphasize this as an issue that could signal relationship issues or anything like that. I mean we have the planning for the Coca-Cola Company. We have a 5-year view on things. And once more, as I mentioned, it is -- when you put it into the context of all the levers that we have within the business, all the work that we're doing with portfolio, with revenue management, all the efficiency programs that we've had in inside our organization like the fuel for growth initiative that we initiated in 2019. And we continue, as we have shown, to identify and work on cost containment and efficiency measures within the organization. We believe it's manageable, it's part of the way we conduct the business with the Coca-Cola Company. And we don't see any big issue on the timing of this particular concentrate increase. Now having said that, and as you mentioned, there are clear regulatory and also, I would say, macroeconomic conditions that we need to monitor going forward. And in line with that, we will have the discussions -- the sensical discussions that we always have with the Coca-Cola Company regarding potential future concentrate increases. So I think once more, it's part of the business and it's part of the way we have a relationship with the Coca-Cola…

Yes. Felipe, I would just like to add a couple of things. We're seeing share gains across all categories, across all countries, the exception being probably Argentina, as mentioned by Constantino. And I'd like to point out one fact, is that we continue to gain share in affordability, an affordable cycle. We have -- we're unique in that sense in most of our countries that we are the only ones in the returnable segment that is highly, highly affordable versus one-way packages, and that is the packages that are growing. Now where are we going with this? And why do I think this is sustainable and even enhanceable is because one, our returnable packages, we will be using the universal bottle, where we can put in not only more flavors into the same bottle, but also different categories into the same bottle, so that we can expand category penetration versus the returnable package strategy. We will be putting in much more capacity into the marketplace next year in various of our markets. So we'll be putting in a lot of different lines to be able to increase our capacity to maintain the growth in that strategy. And so therefore, I do think it is sustainable. And I do think that as the consumers are coming out of the COVID situation hurting, we will be there for them, and we'll be offering them the value propositions that they required via this is enhanced capability in returnable packaging formats.

We'll go ahead and take our next question from Alan Alanis with Santander.

John, Constantino, Matias and Jorge, hope you and your families are well. Congratulations on the results, very clear. I mean pretty impressive flat revenues and mid- to high single-digit EBIT and EPS growth in this environment with market share gains, that deserves a congrats. So my questions are more related to different topics that are nonoperational more. And specifically, M&A, the first one. And the second one has to do with alcoholic categories. Today is kind of a symbolic day, I guess, because you lost the #1 ranking as the largest coke bottler in the system worldwide with Coca-Cola European partners closing on the acquisition of Amatil, $6.6 billion. I just realized you have 40% of that amount in cash. So I'm glad that you were very disciplined. It would have been very, very dilutive. And my question has to do precisely with the valuation in your view globally of the system. I mean CCAP is acquiring Amatil at more than twice the EBITDA multiple at which you are trading and even much more than that on a PE basis. What are your views in terms of what's happening? How does this transaction affect, if at all, I think your strategic thinking in terms of the long term? I know Constantino emphasized this idea of higher dividends and you already increased dividends pretty substantially. But I would like to hear you using your reaction about that transaction and the discrepancies between -- such radical discrepancy in terms of multiples that you're seeing across the coke system worldwide. That will be the first question.

Constantino, you want to take a crack at that and I'll add to it?

Sure. I mean we're here to discuss Coca-Cola FEMSA's third quarter results, right? Just to understand that. I would love to spend more time on that than having an opinion on somebody else. However, we believe that based on the information that was provided yesterday by other companies, I think it's an interesting transaction. We are firm believers that if there is value to be captured within the consolidation of the system, that's a great thing. Portfolio and geographical diversification as well as developing better capabilities and scale across the system are always sometime -- something that is positive in our view. I think we have -- we are a demonstration of that. But overall, I have not been part of longer history of Coca-Cola FEMSA. But for about more than 26 years, this company has been able to develop state-of-the-art capabilities and emerging markets across different regions, not only in Latin America, but also in the Philippines, I believe we did a phenomenal job in terms of developing capabilities. So scale is definitely an enabler on all that. Does this change your point of view? Definitely not. I mean we're committed to our M&A strategy, which is very disciplined. We always -- and we have emphasized that in the last conversations with you all, but we are looking at opportunities that have to make sense strategically, and the price has to be right in order to unlock value of our shareholders. Scale for the sake of scale or geographical expansion for the sake of geographical expansion is not something that we have in our strategy. And -- but we definitely believe that there is a dynamic and volatile environment right now. And that we're extremely well-prepared not only from a balance sheet perspective, but once more on a capability perspective to add value whenever that makes sense to the company. So we continue to screen. I mean, definitely, we continue to screen opportunities across the world, not necessarily only in Latin America. But for the time being, we have not seen anything that makes strategic and financial sense to our business and our shareholders. So if that is the case, we stay put. If not, we act upon it. I don't know, John, if you want to follow-up on this.

Yes. Alan, good to hear from you. I guess the first thing I would say is, okay, in terms of the ranking, the largest is not necessarily commensurate with the best, okay? So I'll leave you with that comment. I think the second thing is, in terms of valuations, it really depends on where you're buying and what the perspective is of stability, volatility in currencies as opposed to -- and the ability to go out there and grow. I currently think that -- solidly think that we are in Latin America undervalued, particularly because of the outlook for Latin America. Well, not the out, the way people have been looking at Latin America. And I think the only thing that we can do to go out there and just prove them is grow faster. And I think we're doing that on a relative basis, with the gains in share that we're having as soon as the share -- as soon as the markets come back, we should be absolutely growing faster than the market. So I think those are 2 things to think about. And I do believe, like you're going to see -- as we go forward, we're going to see further consolidation opportunities. Why? I think, first, the system is gravitating to larger players, larger well-funded capitalized and probably public players. And secondly, the cost of staying in the business, you get a cost to maintaining yourself digital. To running the whole digital transformation of your company is enormous. So I think those that continue to go invest in that, those that drive those capabilities that Constantino was saying. Those that can actually bridge into a digital company in the future, will be successful. And that has nothing to do necessarily with size. It has to do with capability. And once we have that, okay, and I think we're going very fast towards that. But I think we're in different margin settings going forward to be able to go out there and leverage up even further acquisitions. So I think we're in a very conservative situation right now because we are -- we maintain a lot of cash on our balance sheet, first, to maintain our liquidity position. And secondly, take advantage of anything that does come up that is opportunistic within a reasonable -- what we would consider a reasonable price for value delivery. That's what I could comment on it.

No. That's very useful. They're very useful. And to Constantino's point, I mean, very fair. It's more of a strategic question rather than the quarter. And I really, really appreciate both answers because they're very useful. One last quick follow-up, more operational. It has to do with alcoholic beverages. I mean you saw obviously better than us what happened in Chile and all the pilots that you're doing in Brazil by delivering spirits and beer. What are the different scenarios and what are the economics in putting -- I can think about the future of the coke system in Latin America, specifically, Coca-Cola FEMSA, venturing into the alcoholic category? And what are the probability of you distributing beer in other places besides Brazil and Argentina?

Sure. Good question. Listen, I am very excited about the fact that the Coca-Cola Company has decided to start involving itself in low-grade alcohols. It's an extraordinarily high-growth market, and the margins on those products are higher than the Coca-Cola products, which is really where you want to go. And so therefore, any growth in those categories would bring incremental value almost immediately. And obviously, we're going to be found with a lot of competition from a lot of different players in the marketplace. But we think we have an enormously strong system. We have enormously strong brands to be able to capitalize this in the next 2, 3 years. And the other thing, too, Alan, is I wouldn't say that Topo Chico Seltzer is the first and only pony in this ride. I think there's many other products to come. And the vector of growth is something that excites me because it is a new market redefinition from the Coca-Cola Company as to where they play and, therefore, how they play is going to be important. So I think that's really important. And secondly, when you talk about being able to do beer in other markets. I think more and more of the Coca-Cola Company and the bottlers are realizing that there's enormous synergies that could be developed. There's more opening of that fact in different markets. And so I think beer is something that has synergies to it. And we continue to do some experimentation with Diageo in Brazil, that is also doing very well. So it's -- I think as we step forward, we have tremendous avenues for growth, both in our core businesses of sparkling. Our NCD business continues to have enormous upside potential. And we can deliver that by going into, I think, what is affordable packaging and returnable packaging strategies, and that's going to really give the consumer much more alternatives and affordable price. The ability to get into low-grade alcoholic beverages is -- sourcing and distributing our system, it's impressive. Plus we have brand extensions that can help us there. And the fourth piece is what I would consider avenues for growth that we leverage our system further in terms of distribution expenses and also allow us to take a market-making competence we have to grow both beer brands or alcoholic or spirits brands. So I think out of the year, what you're seeing -- over the year, 1.5 years, what you're seeing is a redefinition of where to play. And I don't know. I think that's exciting for the growth of our company.

Yes. And very aligned with the Coca-Cola Company. I mean, you clearly have a lot of competitive advantages on that front. And as you said, I mean, it could be revenue and margin accretive. So congratulations for the results.

We'll go ahead and take our next question from Isabella Simonato with Bank of America.

I have 2 questions. First, if you could elaborate on Mexico? How are you seeing the new labeling impacting performance of volumes or mix or if at this point since it's been only a month. It's hard to tell. And the second question is on South America. We understand that there is some gradual improvement, right, on volumes and also on margins. But how are you seeing performance in the coming quarters for that division, specifically, assuming that certain mobility restrictions will remain in place and et cetera. How can we think about profitability in South America?

Sure. Let me take the labeling piece first. I think the labeling is something that has come into effect the first of October, and we have 90% of our packages in compliance with that. And we're working with the government to find a solution to put those labels on a returnable package. As you know, we don't have to go through all the glass slope to be able to do that. So we are working with them to find extensions of new labeling requirements. But we are fully compliant with -- other returnables compliant with the new labeling requirements, NOM-051 for Mexico. And when you think about the impact of this, there's a lot of talk about it. But we have not seen, Isabella, any impact really on the sale of our category. It hasn't been noticeable at all. And I think what we're doing is putting better consumer information in front of consumers. But you have -- in effect, where everybody is coming out with labels. So the effect of a particular category or a particular product gets diluted in the mass of how labels are being now emitted in Mexico around the shelf. So this is something that so far has been minimum effect on our volumes so far. In South America, and I think it's really interesting to see how things are coming back. Brazil is just doing great growth. So they're continuing to grow spectacularly. and we have not only volume momentum, but share gain momentums across all categories. Uruguay is starting to come back very strong for us. Argentina is starting to come back for us. We're starting to see year-over-year over the last September and probably into this month, we're starting to see volume growth. The problem with Argentina is not so much volume growth, but price restrictions that we have, price controls that have been put on by the government. So -- but at least we're seeing our franchise and our consumers hanging onto our franchise via returnable packaging. And I think it's interesting that the Argentina is coming back. And although they do have social mobility issues, they are having -- we are seeing a good rebound from a segmented strategy we put in place during the beginning of the year. The big turnaround for us is in Colombia. We're starting to see Colombia start to come out sequentially from a difficult third quarter, making it an average quarter for probably mid-single digits, high single -- high single-digit declines, and -- but they're growing every month versus that. So we're seeing a turnaround in the Colombian situation, and that is very encouraging. So I think overall, South America is doing very well, and should continue to do very well on the fourth quarter basis.

We'll take our next question from Carlos Laboy with HSBC.

Yes. Constantino, given that you have this long-term plan with Coke, can you give us some more color on, first, the scope of the increase, but really, most importantly, as you look out over the next 2 to 3 years, are we done with these adjustments? Are we likely to see more of these concentrate adjustments? If they are, are they likely to be very minor? What can you tell us about the long-term outlook of these? And then on the operating side, John, if you could expand on refillables and the potential with single-serve packages, right? I know with COVID, it's obviously hard and interrupted. And the universal bottle and a lot of these measures are multi-serve initiatives. But do you see a surge of innovation coming through on single serves over the next couple, 3 years?

So I'll take your first question, Carlos. I think that we could expect a similar increase to the one of this year in the next year of a horizon going forward if and only market conditions do not change significantly or do not deteriorate significantly. So we have potential regulatory headwinds in the next couple of years that we need to take into consideration. We need to understand how the macroeconomic conditions going forward develop. And in line with those, I would say, those 2 big issues, we could -- we will plan with the Coca-Cola Company a potential increase in concentrates or not. That's the way we're seeing it. So if there is, there might be one next year. And if there is one next year, there might be an impact similar to the one that we have today. Now having said that, as we mentioned, we have a series of containment -- cost-containment measures and efficiency measures on one end. And on the other hand, we continue to improve and enhance our value proposition across portfolio and at the same time, revenue management, that would allow us to mitigate it like we've done this year. And in line with what was done this year in terms of compensating for that increase. I would say that would be, if any, what I would think, could occur in 2021.

Yes. And it's -- yes, Constantino. And I think it's also going to depend on what the outlook is there for the economy and the macros are. So I think it's pretty -- we're very collaborative on that front. And we're walking into a tax situation in Mexico that may not happen, okay? So it's going to be a very fluid situation because -- Constantino -- I mean, Carlos, as Constantino pointed out. Let me just get back to what you're saying on the operating side because most of the affordability issues have been on multi-serve returnables. So let me first say, that our -- what we're trying to do as a strategy is to maintain a very solid portfolio of packages in offerings with consumer that have very, very pointed price points, MXN 20, MXN 25, MXN 15, MXN 18. And what we have done is not only go out there and put up more affordability in terms of multi-serve returnable packages, but also adjusted our pricing architecture by launching 1.75 liter in Coca-Cola and 1.35 liter in Coca-Cola. So we do have that flexibility to do that, and we're obviously revenue managing, the trading and the options and the choices for the consumer, making sure that they have that affordable packaging, both in returnables and nonreturnables cargo. So it's a combination of both. Now looking at single-serve packages, we will be applying the same universal packaging towards 12-ounce and half liter propositions that we have in the marketplace as soon as we get the right equipment in place to do so. So that's going to be at least a 3- to 4-, 5-year project. But we will be applying that kind of technology and giving consumers that kind of an option to be able to choose, not only what is currently in the ACL graph there, but also in ensuring that we have a float of bottles that can go out in cross categories in the short term. Does that answer your question? Carlos?

Yes.

[Operator Instructions] We'll go ahead and take our next question from Miguel Tortolero with GBM.

My question will be on the regulatory environment in Mexico. I mean the industry has been exposed to so much noise this year. First was the new labeling rules just entering the course a couple of weeks ago, the ban of sales of sugar drinks to minors in Oaxaca and Tabasco and the express support of other states to potentially join the initiative. And most recently, a very aggressive proposal to increase tax on sugary drinks from 1.25 to MXN 0.65 per liter. All of the mentioned above is part of the government's efforts to reduce the obesity and increase funding. I know the President has said that we should not expect any increase this year, but it seems very likely that we will be brought back to the table next year. So what would be your view in this regard? And also, what would be your thoughts on the recent ban to minors in a couple of states?

Sure. Let me try to address this as follows. There is 2 laws that passed at state level that have restricted the sales of carbonated soft drinks and processed foods. And I would say, processed foods or just packaged beverages as a whole to minors, okay, in the state of Tabasco and Oaxaca. This is not something that is directed solely at the soft drink industry but it is directed towards the food and beverage -- the processed food and beverage industry in Mexico. And these 2 laws were approved there. What we have been doing, and we've been working with both state legislatures and both state executives. We have been working with them to see how they plan to implement that and see how we can work with them. Because at the end of the day, it's -- the implementation of these rules are extremely tricky because we cannot service any account, and we cannot stop service any account, nor can we become reliable for anybody that they sell to. So we're working with them. And we're working with the federal government to ensure that whatever proposition comes out towards this and doesn't turn out to be a state-wide initiative, that all of a sudden you have 33 implementations or 33 different laws coming through on this. So the government has been very, very supportive on it. The President has come out and so that he does not favor prohibition, okay? And he was very clear about that after the passing of -- in the first 2 laws in the states. And we're looking to work with not only President Lopez Obrador and his cabinet, but also with the state governors to be able to go out there and implement this in a manner that could be accepted overall.…

Yes. That was very clear.

All right. It appears there are no further questions at this time. I'd like to turn the conference back to the speakers for any additional or closing remarks.

I guess one of the things we did not talk about too much in our conversation today was how well we are doing with digital and our digital transformation. As pointed out by Constantino, we have come up with a very efficient platform on WhatsApp, and we're applying it in Brazil, we're close to 200,000 clients. And in Brazil -- we're starting to roll and test it in Mexico, and we're starting to roll and test it in Colombia. Our objective for next year is going to be 500,000 accounts, okay? To be able to -- and that's a 1/4 of our accounts on this platform by the end of next year. And what we have seen so far is that this is increasing our frequency and our order taking and our transaction size, our drop size at the point of sale, primarily with smaller clients, middle and smaller clients. So this is, I think, something that excites us a lot. And obviously, it is part of our digitalization strategy that we have with our customers and our consumers. So with that, I think we have a very, very strong quarter. We continue to generate positive cash flow. We're starting to see a rebound of our volumes. And we're very, very optimistic about a fourth quarter that's going to be doing sequentially better than the third quarter of this year. And thank you for your confidence and interest in Coca-Cola FEMSA. I hope you and your families are safe and well. And as always, our team is available to answer any of your remaining questions offline. Thanks a lot.

This concludes today's call. Thank you for your participation. You may now disconnect.