l Repo ua rt n 2 n 0 A 1 4 C o ca a - in Cola And 2014 Annual Report OUR COMPANY Mission, Vision and Values 8 Message from the Chairman of the Board 10 History and Deeds of Incorporation 18 Consolidated Financial Highlights 20 Corporate Governance 21 Board of Directors 24 Company Structure 26 Our Employees 28 Administrative Structure 29 Management Structure 32 Company Ownership and Dividends 34 OUR BUSINESS Argentina 40 Brazil 46 Chile 52 Paraguay 58 Andina Empaques Argentina 66 INDEX Vital Jugos 66 Vital Aguas 68 Envases Central 68 Envases CMF 69 CORPORATE SOCIAL RESPONSIBILITY ADDITIONAL INFORMATION Additional Information 74 Properties and Facilities 78 Subsidiaries and Equity Investees 82 Controlling Group 88 Relevant Changes in Company Share Ownership 93 Stock Market Trading Information 94 Compensation – Board of Directors and Principal Officers 96 Statement of Responsibility 100 CORPORATE SOCIAL RESPONSIBILITY REPORT (see enclosed pendrive) OUR COMPANY MISSION, VISION AND VALUES COCA-COLA ANDINA A Mission thousand Add value growing sustainably, refreshing our consumers and sharing moments of optimism with our clients. faces one Vision Lead the beverage market, being recognized for our management smile excellence, people and welcoming culture. Values We joined four Team Work countries to create Attitude the new Coca-Cola Austerity Andina. We are a Oriented on Results great company, Focused on our Customers where happiness is without borders. MESSAGE FROM THE CHAIRMAN OF THE BOARD 12 / 13 MESSAGE FROM On behalf of the Board of Directors achievements were accomplished I preside, I am pleased to present allowing us to optimistically view the THE CHAIRMAN the Annual Report and Financial future. OF THE BOARD Statements of Coca-Cola Andina and Consolidated volume reached 830.6 its subsidiaries, and the Sustainability million UCs, a 0.6% proforma increase Report for the fiscal year 2014. compared to the previous year. After two years of significant inorganic Company sales totaled Ch$1,797,200 growth, such as the merger with million, representing a 9.5% proforma Coca-Cola Polar during 2012, where growth. On the other hand, EBITDA we added Coca-Cola franchises amounted to Ch$289,740 million, a 7.4% in Argentina, Chile and Paraguay, proforma growth above the previous as well as the acquisition in Brazil year. of Companhia de Bebidas Ipiranga In Argentina, after 4 years of sustained (“Ipiranga”) during 2013, we were able great volume growth, the strong to focus during 2014 on improving devaluation of the Argentine Peso the productivity and profitability of our (48.8% yearly average) and the high operations. inflation rate estimated at 38%, It should be noted that the external reduced the acquisition power of context where our business was the population and thus affected our developed during 2014 did not favor us, volumes which grew 2.2% during the mainly resulting from the low growth year. Nonetheless, our soft drink market of the economies in the countries share followed the positive trend it has where we operate. Nonetheless, great had for 8 years reaching an annual MESSAGE FROM THE CHAIRMAN OF THE BOARD 14 / 15 average of 61.4%, where we are leaders in the weight of loads in the manual process, operating and administrative costs, played faced a new tax scenario regarding specific the industry’s main flavor segments. and the implementation of LGVs (Laser a critical role in the operation’s financial tax on sugared drinks (IABA), in force since In the non-carbonated beverage segment, Guided Vehicles) for handling sensitive performance. October 2014 as part of the tax reform, volumes increased 26%, notably waters products. We also achieved significant For our operation in Brazil, the year was which resulted in an increase of this tax (21.0%), isotonic drinks (22.0%) and juices trustworthiness and quality process marked by the FIFA’s 2014 World Soccer from 13% to 18% in the case of sugared (51.5%). We also increased our market improvements at the sugar clarification Cup, during which we had the honor to carbonated soft drinks, and a reduction of share in all of these categories. The plant, achieving more flexibility and host. During June and July, 7 matches were 13% to 10% in the case of carbonated soft ongoing development of the market based efficiency in the use of sweeteners. played in our franchise, as well as the final drinks without sugar. These changes had a negative impact on us, since 79.9% of our on the pillars of our strategy, which are the In Brazil, economy remains stagnant, match which was played in Rio de Janeiro’s soft drink volume in Chile is sugared. boost of returnable formats, development estimating GDP growth during 2014 at only Maracana stadium. The preparation and of the “Route to Market” models and 0.5% proforma and the annual average quality execution of our operators allowed EBITDA in our Chilean operation decreased plans aimed at reinforcing the relationship devaluation of the Real was 9.1%. In this to considerably expand the presence of 7.2%, resulting from lower volumes, cost with our consumers, have allowed us to context, volumes increased 0.5%, while the Coca-Cola brand especially in the city pressures and increased taxes. continue strengthening the indicators of our our annual average soft drink market share of Rio de Janeiro and achieve new record This situation forced the Chilean operation brands. increased 70 basis points to 59.1%. The sales within the stadiums compared to to work on two fronts; the first aimed at On the other hand, EBITDA in Argentina year was marked by the integration of our previous World Soccer Cup. Lessons the operating transformation process increased 16.5% in local currency, although subsidiary in Brazil with Ipiranga, which learned during the event will aid us in being focused on developing lower operating cost it dropped 7.4% in Chilean pesos due to the allowed us to capture significant operating very well prepared for the America’s Cup models, which started its implementation strong devaluation. synergies, estimated at R$ 26 million, as which will be held in Chile during 2015, as phase towards the end of the year, and the volumen well as the Olympic Games which will be sales During 2014 several projects were well as transferring best practices between second aimed at capturing greater market held in Rio de Janeiro during 2016. implemented in Argentina that will enable us both franchises. value, focused on increasing market share to obtain significant savings and increased The financial results were very satisfactory, The scenery changed in Chile during by improving execution indicators and productivity, such as “automatic sorting” and EBITDA increased by 19.9% in local 2014; the economic slowdown affected deepening the portfolio. which lets us automatically classify the currency on a proforma basis, and 25.3% consumption, with private consumption Thus, while volumes in Chile decreased returnable bottles that return from the in Chilean pesos. The actions implemented growing at around 2.4%, thus affecting by 1.3%, market shares showed positive market, “heavy load picking” consisting in the past 2 years with focus on increasing the demand for our products. Meanwhile, figures, especially in carbonated soft drinks, of a robotized arm that sets up pallets efficiency, including the internalization the 15.2% annual average devaluation of where our average market share increased 831 million composed of heavy boxes, granting more of distribution, a cogeneration project, the Chilean peso affected the cost of our from 67.6% to 68.5%. US$3.151 unit cases sustainability to the process by reducing modernization of lines, reduction of dollarized main raw materials. Finally, we million Argentina 28% Argentina 26% Brazil 37% Brazil 40% Chile 28% Chile 27% Paraguay 7% Paraguay 7% MESSAGE FROM THE CHAIRMAN OF THE BOARD 16 / 17 The operating transformation task already Argentina and Brazil by the population living admired company in Chile ranked by Diario of alternative energy initiatives (solar initiated will help us in the coming years near the borders, and negatively affects the Financiero and PriceWaterhouseCoopers. panels in Paraguay, cogeneration in Brazil, to substantially improve our productivity, Paraguayan border trade with Brazil, main Also in the annual report of Chile biogas plant in Argentina), and reduction streamline our production costs, logistics source of income for these cities. Soft drink Transparente, Coca-Cola Andina obtained in the use of raw materials, especially resin and commercial processes, and with all this volumes grew 0.5% and non-carbonated second place in the ranking that measures used in bottles and caps. During 2014 we make a more profitable operation. beverages grew 13.2%. In both categories, availability of financial information and continued delivering wellness to clients and The task to capture greater market value we increased our average market share, business market, dissemination of anti- consumers, through the organization of will allow to resume volume growth through reaching 62.1% for soft drinks and 48.7% corruption programs and organizational sporting events such as the a portfolio of products that are low in sugar, for non-carbonated beverages. transparency. Coca-Cola Cup, Fanta Dance, Hey thus accompanying our consumers’ trends, These results are a consequence of the We are proud of these awards, and are Let’s Play, Fields for Chile, Active Life in who continue to demand from us a wider implementation of the “Route to Market” convinced that these are a result of the schools, and many other activities such range of such products. This is why during process which allowed us to capture new commitment and effort that all of as marathons, refreshing moments that 2014 customers, as well as the restructuring Coca-Cola Andina’s collaborators put in promote active life and teamwork, and Coca-Cola Life was re-launched with a of the sales area, which went from a their daily work.