Embotelladora Andina

Andina benefits from multiple, mutually reinforcing advantages typical of leading Coke bottlers. Intangible assets derive from Coca‑Cola’s brands and marketing scale.

Andina’s bottler agreements grant exclusive rights to produce and distribute Coca‑Cola products in defined territories of Chile, Brazil and Argentina, and the whole of Paraguay, creating efficient‑scale local monopolies that are costly for rivals to replicate.

The agreements require concentrate purchases from Coca‑Cola and are renewable at Coca‑Cola’s discretion; they currently expire in January 2027 (Chile), September 2027 (Argentina), October 2027 (Brazil) and March 1, 2028 (Paraguay).

This exclusivity, together with embedded route‑to‑market assets like coolers and returnable packaging, supports high shelf availability and retailer stickiness. Competitive intensity is real (notably CCU/ECUSA for Pepsi in Chile and Ambev for Pepsi in Brazil), but Andina’s market shares in core CSDs remain strong.

On balance, we see a durable narrow‑to‑wide moat based on efficient scale, the Coca‑Cola brand intangible, and distribution density; durability is moderated by renewal discretion and concentrate pricing power held by The Coca‑Cola Company.

Pricing is set within Coca‑Cola system frameworks and is supported by revenue management, pack/price architecture and returnable formats. Q2 2026 showed consolidated net sales up 11% with adjusted EBITDA margin expansion of 85 bps, indicating healthy price/mix and cost control.

In inflationary markets Andina has demonstrated frequent pricing and mix actions, though affordability constraints and sugar‑tax debates cap latent pricing. Concentrate costs are formula‑linked to retail pricing, and sugar/resin can swing input costs.

Net, pricing power is good but not unconstrained; we expect steady real price/mix aided by premium adjacencies (energy, low/no sugar, stills) and digital RM, with the caveat of regulator and affordability pressure.

Nonalcoholic beverages are staple, recurring purchase categories with relatively stable per‑capita consumption profiles. Andina’s multi‑country footprint reduces single‑market shocks, and the franchise model yields consistent cash conversion.

However, reported results face translation volatility from FX (notably CLP and BRL) and hyperinflation accounting in Argentina under IAS 29. Q2 2026 volumes grew 3% and transactions 4.7%, consistent with a mid‑single‑digit growth path in normal conditions.

We view organic demand predictability as high, but GAAP/IFRS volatility as mid, leading to an overall above‑average predictability rating.

Leverage is conservative and liquidity is ample. As of June 30, 2026, Andina reported total financial debt of about 1.275 billion dollars, cash and equivalents near 349 million dollars, hedge assets of 73 million dollars, and net financial debt of roughly 802 million dollars.

Net debt to adjusted EBITDA was 1.1 times and interest coverage on a trailing basis was 15 times. Ratings are investment grade (Moody’s Baa1, Fitch BBB+). Maturity ladders are diversified between local UF‑indexed bonds, local CLP, and international notes. These metrics support resilience through commodity and FX cycles.

Management allocates capital first to sustaining and growth capex along the route to market, including coolers, returnable packaging capacity, logistics hubs and selective new lines in Brazil, with a 2026 capex budget around 250 million dollars.

Free cash flow after capex has supported consistent cash dividends, and Chilean law mandates a minimum payout of 30% of IFRS net income; Series B shares receive 10% higher dividends per share relative to Series A. Share count has been stable with no material stock‑based compensation programs typical of U.S. issuers.

We view capex as necessary to defend scale and affordability moats, but note limited history of opportunistic buybacks and some exposure to inflation‑indexed debt. Overall, capital allocation is sound and shareholder‑oriented within a franchise bottler context.

Andina is run by an experienced team with long Coca‑Cola system tenure.

Miguel Ángel Peirano has served as Executive Vice President (CEO equivalent) since 2011, and CFO Andrés Wainer has been with Andina since 1996 and CFO since 2011. The controlling families (Said, Garcés, Chadwick lineages) provide stability; governance distinguishes voting control (Series A elects 12 of 14 directors) from economic claims (Series B receives 10% higher dividends).

Incentives reference consolidated EBITDA and execution KPIs. On execution, Q2 2026 showed broad‑based EBITDA growth in local currency and progress in digital tools such as the Mi ecosystem and the “Nina” generative‑AI sales assistant. We assess management as competent, conservative on leverage, and pragmatic on pricing and mix.