Coca-Cola Femsa SAB, the world’s biggest franchised bottler of the soft drink, tumbled to a 21-month low after PepsiCo Inc. announced last week that it will invest $5 billion in Mexico over five years.
Shares of Femsa dropped 3.7 percent to 137.82 pesos at 2:59 p.m. in Mexico City, the lowest on closing basis since May 2012. The decline was the biggest among the 35 members of the benchmark IPC stock index, which fell 0.3 percent.
Mexico City-based Coca-Cola Femsa has dropped 13 percent since the beginning of the year, when a tax on junk food took effect. PepsiCo, based in Purchase, New York, said last week that it will expand its food and beverage business in Mexico, citing the nation’s growing middle class and opportunities for long-term growth. The maker of Cheetos and Pepsi Cola controls more than 65 percent of Mexico’s sales of sweet and savory snacks, according to data compiled by Bloomberg.
“There is always going to be a strong dominance of Coca-Cola here, but with new taxes the consumer is going to be more aware of the price environment if Pepsi is able to reduce prices, increase competition or introduce new products,” Cristina Morales, an analyst at Punto Casa de Bolsa SA de CV in Mexico City, said in a telephone interview.
Mexico represents a “tremendous opportunity” for growth, PepsiCo Mexico President Pedro Padierna said in an e-mailed statement last week.
Jose Castro, the head of investor relations at Coca-Cola Femsa, didn’t immediately return a request for comment today.
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