Coca Cola Femsa S.A.B. de C.V.
Annual Report 2022

Plain-text annual report

FUTURE- READY COCA-COLA FEMSA 2 0 2 2 I N T E G R A T E D R E P O R T At Coca-Cola FEMSA, we are building a future-ready organization to become our customers’ preferred commercial platform. Aligned with our vision, we are advancing on all of our strategic fronts—from our profound cultural transformation to our winning multi-category portfolio and industry-leading sustainable business development. Fueled by these advances, we are not only escalating our transformation into a digitalized company— adopting technology and digital capabilities across our value chain—but also accelerating our growth into an omnichannel, multi-category player. C O N T E N T S OVERVIEW OUR FRAMEWORK OUR STRATEGIC PRIORITIES APPENDICES Letter to Our Stakeholders 5 8 CFO Interview 12 Our Footprint 14 Financial & Sustainability Highlights 17 Our Value Chain 19 Strategy 20 Sustainability 26 Sustainable Financing 30 Develop a Future-Ready Portfolio 41 Become our customer’s preferred 93 Financial Summary 95 Management’s Discussion and Omnichannel Commercial Platform 50 Make a difference in environmental, social and governance (ESG) 78 Strengthen our Customer-centric Culture Analysis 99 Capital & Company Engagement 100 Comprehensive Risk Management 103 Corporate Governance 105 Integral Ethical System 106 Turnover 107 Independent Verification 111 Shareholder and Analyst Information 112 About Our Integrated Report OVERVIEW HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 5 CHAIRMAN’S AND CEO’S LETTER TO STAKEHOLDERS DEAR FELLOW STAKEHOLDERS This year we consistently advanced on all of our strategic fronts—from our digital transformation to our winning multi-category portfolio and sustainable business development. These advances fueled our momentum and a very positive year for our company. Fundamentally, we built on the strength of our enhanced cooperation framework with The Coca-Cola Company to align and execute ambitious growth plans and investments, while advancing our digital strategy and accelerating our transformation into an omnichannel, multi-category platform. STRATEGIC PROGRESS AND ACHIEVEMENTS FOR 2022 During the year, we continued developing a consumer-centric portfolio, focused on affordability, innova- tion, and mix enhancement. Through our initiatives, we grew our single-serve mix, non-carbonated bev- erage volumes, and zero- and low-sugar portfolio. Notably, the new formula of Coca-Cola Zero Sugar out- performed the sparkling beverage category across our markets, achieving 27% and 11% growth in Brazil and Mexico, respectively. In terms of mix enhancement, we leveraged our multipacks, increased cooler coverage, and execution to grow our single-serve mix across our territories. This year we consistently advanced on all of our strategic fronts—from our digital transformation to our winning multi- category portfolio and sustainable business development. IAN CRAIG CHIEF EXECUTIVE OFFICER JOSÉ ANTONIO FERNÁNDEZ CARBAJAL CHAIRMAN OF THE BOARD HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 6 Aligned with our enhanced cooperation framework with The Coca-Cola Company—along with our omnichannel platforms’ digital order-taking capabilities—we contin- ued exploring new revenue streams to complement our multi-category portfolio through pilot programs and distri- bution agreements with strategic partners across adjacent categories in certain markets. Importantly, we expanded our B2B and D2C commer- cial platforms, enabling our customers to interact with us whenever, wherever, and whichever way they want. Cur- rently, we serve over 800 thousand monthly active pur- chasers on Juntos+, our B2B omnichannel platform, up al- most threefold over the past year. We also carried on with the expansion of our D2C home delivery model, rolling out 400 new routes—reaching close to 1,650 routes serving approximately 600 thousand Mexican households. Importantly, we underscored our company’s commitment to sustainability. This year, we continued making histo- ry in sustainable financing, becoming the first company in the consumer sector in the Americas and the first in the Coca-Cola System to successfully issue social bonds. Indeed, for the third consecutive year, our sustainability (ESG) performance enabled us to be included in the S&P Global Sustainability Yearbook 2023. Environmentally, we continued focusing on making a dif- ference on climate action, circular economy, and water efficiency. We began construction of PLANETA, a food- grade recycling plant in Tabasco, Mexico, with the capacity to process approximately 50,000 tons of post-consumer PET bottles annually. This new plant—coupled with new collection centers in the southeast region—will help us to expand our PET collection and close the recycling loop towards our objective of including at least 50% recycled content in our packaging by 2030. We improved our water use ratio to 1.46 liters of water per liter of beverage pro- duced—an industry benchmark. We also look to decrease our scope 1 and 2 emissions by 50% and to reduce 20% of our entire value chain emissions by 2030. Socially, we are focusing on our neighboring communi- ties, value chain, and talent diversity. We are increasing the representation of women in leadership positions; and we have a robust plan to achieve our ambition of 40% of women in leadership and management positions by 2030. Notably, this is the fifth consecutive year that our compa- ny is part of the Bloomberg Gender-Equality Index. Finally, as part of our focus on value-enhancing acquisi- tions, we integrated CVI in record time during the year with synergies above expectations, marking an important step in the consolidation of our Brazilian footprint. FINANCIAL & OPERATING HIGHLIGHTS As we navigated an uncertain inflationary environment, our focus on affordability and relentless point-of-sale execution enabled us to deliver 8.6% year-over-year vol- ume growth—12.1% ahead of our 2019-baseline year. For the year, total revenues increased 16.4% to Ps. 226.7 billion. Operating income improved 12.5% to Ps. 30.8 billion. Operating cash flow increased 10.7% to Ps. 43.0 billion. Controlling net income rose 21.2% to Ps. 19.0 bil- lion to achieve earnings per share of Ps. 1.13 and per unit of Ps. 9.06 (Ps. 90.60 per ADS). All of our beverage categories drove growth, with our non carbonated beverages and bottled water categories growing double digits. Driven by our portfolio initiatives and point-of-sale execution, we continued gaining share across key markets and categories. Our solid volumes and revenue growth management ca- pabilities drove double-digit top-line growth. On the prof- itability front, we mitigated the impact of inflation by le- veraging our top-line growth, hedging initiatives, and cost and expense efficiency strategies throughout the year. UNIQUELY POSITIONED FOR GROWTH To achieve our ambition of building our customer’s pre- ferred commercial platform, we are convinced that we have unmatched rights to win. • First, we have the largest B2B user base in Lat- in America, serving more than 2 million clients with whom we have developed a relationship of trust over the years through our consistent customer focus. This is a user base that we grow every year, and we deliver to on average 1.8 times a week. • Second, we have an unmatched scale and distribution capabilities with leading-edge enablers. This gives us the capacity not only to reach the most remote place in our territories, but also to do it profitably, while deliver- ing a differentiated customer service level. Notably, our return on invested capital (ROIC) improved for the fifth consecutive year. Moreover, our net-debt-to- EBITDA ratio ended the year at 0.9 times—while our cash position was more than Ps. 40 billion—reflecting our strong balance sheet, while putting us in a great position to grow. • Third, we carry and deliver our customer’s and con- sumers’ preferred brands—leveraging the strength of The Coca-Cola Company portfolio. This gives us relevance at the point of sale and opens the door to serve our user base. For the year, our consolidated volumes increased signifi- cantly, driven mainly by strong growth in Argentina, Bra- zil, Colombia, Guatemala, and Mexico. Today, all of our territories’ volumes are ahead of pre-pandemic levels, evidencing positive momentum across our territories. • Fourth, we have a talented team, who enjoy a growth mindset and are used to winning in the market. • Fifth, we have in FEMSA and The Coca-Cola Compa- ny two shareholders who have a growth bias, a long- term vision, and a commitment to invest behind our business. HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 7 MANAGEMENT TRANSITION Effective January 1, 2023, Coca-Cola FEMSA’s Board of Directors appointed Ian Craig as Chief Executive Officer, succeeding John Santa María, who retired from his position as Chief Executive Officer. Working together with a talented team of professionals, John dedicated himself 24/7 and guided Coca-Cola FEMSA through challenging times, including the COVID-19 pandemic. John leaves the Company operating with positive momentum. Ian has proved an outstanding member of the FEMSA team for 28 years, with increasing responsibilities at Coca-Cola FEMSA over the past two decades. Ian served as CEO of Coca-Cola FEMSA Brazil since 2016, leading the company’s digital transformation towards a B2B platform. Ian’s appointment and the composition of Coca-Cola FEMSA’s leadership team is a testa- ment to the depth of talent across the organization. We are confident that his vision and drive will translate into a new chapter of growth and sustainable value creation for our stakeholders. • And finally, we have a strong culture focused on generating economic, social, and environmental value for our shareholders, our communities, and our people. We are confident that we are uniquely positioned for growth by leveraging these strengths, our posi- tive momentum, and by focusing on the following six strategic priorities as our guiding principles: • Grow the core. We see more runway to grow our core business by a focus on capturing the fair share of the Coca-Cola trademark across all markets and channels; accelerating the growth of Coca-Cola Zero Sugar across our territories; developing the growth opportunities in low per-capita markets; and achieving the full potential of profitable non- carbonated beverage categories. • Become our customer’s preferred omnichannel commercial platform. We will work to grow our total and digital client base across our markets. We will continue to enhance our value proposition, leveraging a curated portfolio of our customers’ and consumers’ favorite brands together with The Coca-Cola Company and our multi-category partners. This will enable us to continue generating network effects, further strengthening our platform. • De-bottleneck our infrastructure and digitize the enterprise. We aim to unlock growth by in- creasing manufacturing and distribution capacity, while ensuring we implement best-in-class logis- tics and distribution enablers. Additionally, as part of the digitization of our company, we will be un- dergoing the migration from our legacy infrastruc- ture-as-a-service ERP systems into the SAP S/4 HANA cloud-based platform-as-a-service. • Make a difference in ESG. We aim not only to re- inforce our industry-leading environmental initia- tives, but also to bolster our social and governance agenda, including community development pro- grams and diversity and inclusion. • Strengthen our customer-centric culture and reorganize the way we work. We will promote a growth mindset, building a multiplier leadership style, empowering leaders to develop our people, and foster a workplace that provides psychologi- cal safety within our teams. We will redesign our structure into a more insights driven, agile, and effective organization. • Strategic M&A. By leveraging our disciplined ap- proach, we will focus on value-enhancing, syner- gistic acquisitions as a priority, while strengthening our commercial platform capabilities. As we continue advancing along these priorities, we will continue to strengthen the relationship we have with The Coca-Cola Company, pursuing joint oppor- tunities to accelerate our growth. On behalf of our employees, we thank you for your continued confidence in our ability to deliver eco- nomic value and to generate social and environmen- tal wellbeing for you all. JOSÉ ANTONIO FERNÁNDEZ CARBAJAL CHAIRMAN OF THE BOARD IAN CRAIG CHIEF EXECUTIVE OFFICER HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 8 INTERVIEW WITH OUR CFO GERARDO CRUZ CELAYA CHIEF FINANCIAL OFFICER Gerardo Cruz, our company’s Chief Financial Officer, reflects on our ability to navigate a dynamic global environment. He also discusses the ways in which we are leveraging our enhanced cooperation framework with The Coca-Cola Company, exploring complementary revenue streams, the issuance of milestone social and sustainability-linked bonds, his previous experience within the company, and his key financial priorities for the coming years. Q) Gerardo, how would you reflect on the company’s performance for the year in the face of what proved a volatile global industry environment? A) The company has demonstrated the ability to work in volatile, ambiguous, and inflationary environments, much like the one we faced this year. Despite these headwinds, we were able to adapt quickly and continue strengthening our business by executing the right strategies locally, driving a solid top- and bottom-line performance. As we enter 2023, we are monitoring inflationary pressures to continue taking appropriate actions to mitigate their impact. With that mindset, we are leveraging three key strengths to continue growing our business: First, we enjoy a strong market position with share of sales leadership in almost every segment in all bever- age categories we serve across our markets. Currently, we serve a client large base of over 2.0 million custom- ers across our territories. This gives us an edge particu- larly in the traditional trade, which at the end of the day is the base of Latin America’s economic model. Second, KOF has an unmatched distribution network and point of sale execution. Throughout the years, we have developed a close relationship with those 2.0 million customers, which is a key driver of both per capita and market share growth, as well as giving us credibility to be able to continue growing our Juntos+ B2B digital platform. Third, we are committed to maintaining solid financial indicators. Despite volatile environments, we have HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 9 continually proven our financial resilience and cash flow generation capacity. As of De- cember 31, 2022, our net debt-to-EBITDA ratio closed below 1.0 time, while we ended the year with a cash position of more than Ps. 40 billion. Q) Could you elaborate on the significance of the enhanced cooperation framework with The Coca-Cola Company and its strategic importance? A) The enhanced cooperation framework ef- fectively aligns both companies on pursu- ing profitable growth. This year, we contin- ued leveraging the enhanced cooperation framework with The Coca-Cola Company to execute ambitious growth plans and in- vestments in the market, explore and open new revenue streams, and significantly ad- vance the rollout of our digital strategy. To- gether, we continued exploring new revenue streams to complement our multi-category portfolio, with new pilot programs and dis- tribution agreements that expand our grow- ing network of strategic partnerships—from spirits companies and, brewers, to personal care and consumer goods. We are also exploring new ventures, particularly digitally. Working closely with The Coca-Cola Company, we are coming to understand how much value we can create through data capabilities and other products and services in the digital world—which is enabling us to accelerate our digital strategy. We further enjoy a healthy and active collaboration network across the Coca-Cola System on many fronts, including digital. Thanks to this collaborative environment, we have identified significant opportunities to standardize, optimize, design, and implement digital platforms through knowledge exchanged not only within the region, but also across different regions in the Coca-Cola system. Q) Could you update us on the company’s strategic progress? A) We continue to develop a winning consum- er-centric portfolio, enabling us to improve our price-mix, provide affordability, and expand our refillable capacity, which both serves an affordability role, as well as an important sustainability tool, that is actual- ly a competitive advantage. Thanks to our portfolio initiatives, we significantly grew our single-serve mix, still beverage volumes, and zero- and low-sugar portfolio. Through- out a challenging year, our revenue growth management capabilities further enabled us to grow our top-line and generate savings by optimizing discounts and promotions. Also, we have made substantial progress building out our B2B and D2C omnichan- nel commercial platforms. Notably, we now serve over 1.3 million registered clients on our B2B platform, including more than 800 thousand active digital purchasers monthly, and we reached more than US$1.2 billion in digital revenues this year. Our people and culture are keys to our stra- tegic success. Accordingly, we continue to accelerate the development of the capabil- ities that our company needs to drive our vision, ensuring that we have an agile and digital mindset. To this end, we carried on implementing collaborative models and new ways of working, ensuring digital inclusion and up-skilling not only in finance, but also across the whole organization. On the sustainability front, we continue to make important progress throughout our company, transforming our environmental, social, and governance (ESG) framework to be at the forefront of market, regulatory, and consumer trends. Notably, we achieved another important milestone in sustainable financing this year, becoming the first com- pany in the consumer sector in all of the Americas to issue social bonds, as well as the first in the Coca-Cola System to issue such bonds. We also became the first com- pany in Mexico’s consumer sector to issue sustainability bonds. This issuance comple- ments our green bond placed in 2020 and sustainability-linked bonds issued in 2021, while reinforcing our company’s commit- ment to generating social and environmental value for our stakeholders. Additionally, we have made significant ef- forts to continue digitizing our operations, enabling and empowering our digital trans- formation journey. Initially, we transformed into a digitalized bottler, adopting digital technology and capabilities across our value chain. Now, we are becoming an omnichan- nel and multi-category player, with a clear ambition of becoming a full commercial eco- system into the future. On the sustainability front, we continue to make tremendous progress throughout our company, transforming our environmental, social, and governance (ESG) framework to be at the forefront of market, regulatory, and consumer trends. HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 10 Finally, this year we completed and integrated our acquisition of CVI in Brazil with synergies well above expectations, marking an important step in the consolidation of our Brazilian foot- print. alliances in the future. Indeed, these pilots have already proven quite successful, with us transi- tioning from pilot programs into long-term dis- tribution agreements in some cases. Furthermore, in light of volatile market condi- tions, we continued with our disciplined hedg- ing policy, enabling us to maintain a net debt of Ps. 38 billion, low net leverage of 0.9 times EBITDA, and comfortable cash liquidity. Q Could you expand on the company’s explora- tion of complementary revenue streams, par- ticularly in light of its two recent distribution agreements with Campari Group and Grupo Perfetti Van Melle in Brazil? A) Consistent with our vision and aligned with our enhanced cooperation framework with The Coca-Cola Company, we continue to explore new revenue streams with strategic partners. Our omnichannel platforms’ digital order-tak- ing capabilities are enabling us to enhance our portfolio beyond our core Coca-Cola products. To this end, we are strengthening our multi-cat- egory platform through distribution agreements and pilot programs with strategic partners in certain markets across adjacent categories, pri- oritizing leading beer, spirits, alcoholic ready- to-drink (ARTD) beverages, snacks, and con- sumer packaged goods brands. These pilots aim to prove the distribution and selling capacity of Coca-Cola FEMSA to strengthen our partner’s products presence in the traditional trade channel, enabling more customers and consumers access to a broader portfolio while always putting their satisfac- tion at the center of everything we do. We ex- pect that these pilots will enable us to not only expand our customers’ value proposition, but also obtain necessary learnings and insights to continue advancing towards potential strategic On April 19, we announced a new distribu- tion agreement with Campari Group in Brazil, marking an important step to strengthen and consolidate our multi-category platform with a high-potential spirits brand. Similarly, on July 14, we announced a non-exclusive distribution agreement with Grupo Perfetti Van Melle—one of the world’s largest manufacturers of sweet confectionary snacks and chewing gum with global brands such as Mentos and Fruit-tel- la. These two recent agreements build on last year’s agreement to distribute leading Spanish brewer Estrella Galicia’s beer portfolio with the Coca-Cola System in Brazil. Q) Could you briefly discuss the initiatives taken to strengthen the company’s balance sheet and financial position in what was a very dy- namic environment? A) In this volatile environment, we proactively un- dertook strategies to strengthen the company’s balance sheet and overall financial position. Under our liability management strategy, we repurchased part of our US-dollar-denominated Yankee bonds, and we refinanced them in the Mexican market through an issuance of the first social bonds for a consumer sector company in the Americas. This enabled us to not only gen- erate interest expense savings, but also finance important social projects. Q) In light of their strategic significance to our sustainable financing strategy, could you elaborate further on the company’s success- ful issuance of social and sustainability bonds in the Mexican market? A) As a company, we are committed to generating economic, social, and environmental value for all of our stakeholders and for the communities we serve. Aligned with this commitment and consistent with our financial discipline, strong credit profile, and commitment to sustainabili- ty, we issued social and sustainability bonds for an amount of Ps. 6.0 billion. This issuance rep- resents the first social bonds in the consumer sector in the Americas and the first social bonds for the Coca-Cola System. We also became the first company in the consumer sector in Mexico to issue sustainability bonds. This transaction was completed in two tranch- es: The first tranche was priced at a fixed rate of 9.95% (Mbono+0.30%) for an amount of Ps. 5.5 billion due in 7 years. The second tranche was priced at a variable rate of TIIE + 0.05% for an amount of Ps. 500 million due in 4 years. The proceeds from these bonds will be used to fund projects focused on the social and eco- nomic development of our communities and re- spond to their local needs. Specifically, the goal of this latest issuance is to support underrepre- sented and traditionally excluded social groups We issued social and sustainability bonds for an amount of Ps. 6.0 billion. This issuance represents the first social bonds in the consumer sector in the Americas and the first social bonds for the Coca-Cola System. HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 1 1 in our communities with programs relating to empowerment, entrepreneurship, and self-employment, financial support to mom & pop store owners, and sustainable community devel- opment, including water replenishment and access projects. I am proud of our leadership in sustainable financing and the progress our company has made to become a benchmark in this increasingly important area: From the issuance of our first Green Bond in 2020—at the time the largest for a Latin Amer- ican company and a first for the Coca-Cola system—to our 2021 issuance of the first-ever sustainability-linked bonds in the Mexican market, and now our 2022 issuance of the first social bonds by a non-financial corporate in Mexico and the first for the Coca-Cola System. and planning function for Argentina, Central America, Colom- bia, and Uruguay. Throughout my career, I have been a strong advocate for in- clusion and diversity serving as President of our company’s Inclusion & Diversity Advisory Board over the past two years, while contributing to our efforts to make the organization a better place for everyone to work in. Q) Could you briefly discuss your key financial strategies for the coming years? A) We are committed to creating long-term value for our stake- holders through sound financial strategies. In the coming years we will focus on the following financial strategies: First, we will continue prioritizing financial discipline, under- scoring our focus on an efficient financial position and our commitment to shareholder return. We will continue focusing on generating strong cash flow, maintaining a disciplined ap- proach to capital allocation and managing operational risks by continuing to implement disciplined currency and commodity hedging strategies to provide stability for our operations to be able to generate shareholder value. Q) Could you talk about your experience before becoming Coca-Cola FEMSA’s Chief Financial Officer? A) My financial experience spans almost 20 years, since I joined our company in 2003, including my most recent role as CFO for our operation in Colombia, I began my career within the corporate finance and treasury function, overseeing financing, risk management, and trea- sury, eventually taking the role of Corporate Finance and Trea- sury Director in 2013. I held this position until my appoint- ment as Planning and Finance Director for the Latin America Division in 2017, where my team and I oversaw the finance We will continue prioritizing financial discipline, underscoring our focus on an efficient financial position and our commitment to shareholder return. Second, we will double down on productivity and efficiencies across our P&L. We will continue focusing on improving our operational efficiency to mitigate inflationary impacts. This includes investing behind our supply chain optimization and digitalization to drive operating efficiencies. Third, we will allocate capital towards organic growth. Our capex for 2022 amounted to Ps. 19.7 billion. Given the out- performance of our top-line, we must accelerate investments to better serve our markets, customers, and consumers. We expect to maintain a similar level of Capex for 2023, as we continue to invest behind this positive momentum, prioritizing investments that are aligned with our return objectives. These key financial strategies will guide our decision-making in the coming years as we work together to achieve our long- term goals. MANAGEMENT TRANSITION Effective January 1, 2023, the Board of Directors elected Gerardo Cruz to serve as CFO for Coca-Cola FEMSA. Gerardo’s financial experience spans almost 20 years, since he joined the company in 2003, including his most recent role as CFO for our operation in Colombia. He previously served in several senior management positions including Corporate Finance and Treasury Director and Planning and Finance Director for the Latin America Division. As of the same date, Constantino Spas, our former CFO, was appointed to become CEO of FEMSA Strategic Businesses. We acknowledge Constantino’s contribution, dedication and leadership during his tenure as CFO of Coca-Cola FEMSA. HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 12 OUR FOOTPRINT We have the privilege to serve 270 million people through 2.1 million points of sale in 9 markets of Latin America with a wide portfolio of leading brands. MEXICO 74.3 million people served 858K points of sale 28 plants 135 distribution centers CENTRAL AMERICA (Guatemala, Nicaragua, Costa Rica and Panama) 33.4 million people served 241K points of sale 7 plants 36 distribution centers COLOMBIA 52 million people served 463K points of sale 7 plants 22 distribution centers VENEZUELA1 people served 270 million 56 plants million points of sale 2.1 249 distribution centers2 1) As of December 31, 2017, Venezuela is reported as an investment in shares, as a non-consolidated operation. 2) For purposes of this table, we have considered owned and third-party distribution centers managed by us. BRAZIL 92.7 million people served 474K points of sale 11 plants 49 distribution centers URUGUAY 3.6 million people served 26K points of sale 1 plant 3 distribution centers ARGENTINA 13.7 million people served 64K points of sale 2 plants 4 distribution centers HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 13 SPARKLING BEVERAGES 2,895 Volume1 17,731 Transactions WATER AND BULK WATER 566 Volume1 1,896 Transactions STILL BEVERAGES 294 Volume1 2,688 Transactions Argentina 939.5 Uruguay 224.2 Argentina 173.9 Uruguay 46.6 Brazil 7,014.5 Mexico 9,276.4 Brazil 1,016.2 Mexico 1,888.9 TRANSACTIONS million 22,315.1 Colombia 2,503.7 CAM South 1,196.0 Guatemala 1,160.8 TOTAL VOLUME million unit cases1 3,755.2 Colombia 330.1 CAM South 152.3 Guatemala 147.2 1) Volume is measured in million unit cases 1) Unit case is a unit of measurement that equals 24 eight-ounce servings of finished beverage. PRODUCT MIX BY PACKAGE PRODUCT MIX BY SIZE PRODUCT MIX BY CATEGORY % 7 5 % 9 6 % 4 8 % 0 8 % 3 8 % 2 8 % 3 4 i o c x e M % 1 3 a c i r e m A l a r t n e C % 0 2 % 6 1 l i z a r B i a b m o o C l a n i t n e g r A % 7 1 % 8 1 y a u g u r U % 7 3 % 3 6 i o c x e M % 5 4 % 5 5 a c i r e m A l a r t n e C % 5 3 % 5 6 % 9 3 % 1 6 % 0 3 % 0 7 % 9 2 % 1 7 i a b m o o C l a n i t n e g r A y a u g u r U l i z a r B ■ Returnable ■ Non-returnable ■ Single-serve ■ Multi-serve % of volume of total beverages Sparkling Bottled Water1 Bulk Water2 Mexico Central America Colombia Brazil Argentina Uruguay 71.4% 86.1% 77.1% 84.1% 80.2% 84.2% 5.5% 3.7% 10.3% 6.5% 9.2% 12.3% 15.9% 0.2% 3.8% 1.1% 2.2% — Still 7.2% 9.9% 8.8% 8.3% 8.4% 3.5% 1) Excludes still bottled water in presentations of 5.0 Lt. or larger. Includes flavored water. 2) Bulk water - still water in presentations of 5.0 Lt. or larger. Includes flavored water. HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 14 FINANCIAL HIGHLIGHTS 5 5 7 , 3 9 6 3 , 3 4 8 2 , 3 8 5 4 , 3 E M U L O V S E L A S 1 s e s a c t i n u n o i l l i m 7 . 6 2 2 5 . 4 9 1 6 . 3 8 1 8 . 4 9 1 S E U N E V E R L A T O T . s P n a c i x e M n o i l l i b 2022 USD1 2022 MXN 2021 MXN % Change 2019 2020 2021 2022 2019 2020 2021 2022 Sales Volume (million unit cases) 3,755.2 3,755.2 3,457.9 8.6% Total Revenues Operating Income 11,630 226,740 194,804 16.4% 1,582 30,838 27,402 12.5% Controlling Interest Net Income2 976 19,034 15,708 21.2% Total Assets 14,259 277,995 271,567 2.4% Long-term bank loans and notes payable 3,598 70,146 83,329 -15.8% Controlling Interest Capital Expenditures Earnings Per Share2 6,431 125,384 121,550 3.2% 1,009 19,665 13,865 41.8% 0.06 1.13 0.93 21.2% Millions of Mexican pesos and U.S. dollars as of December 31, 2022 (except volume and per share data). Results under International Financial Reporting Standards. 1. U.S. dollar figures are converted from Mexican pesos using the exchange rate for Mexican pesos published by the U.S. Federal Reserve Board on December 31, 2022, which exchange rate was Ps. 19.50 to U.S.$1.00. 2. Based on 16,806.7 million outstanding ordinary shares as of December 31, 2022 and 2021. Capitalizing on our strong market position, obsessive point-of-sale execution, and extremely solid financials, we successfully navigated a volatile and inflationary macro environment to deliver solid double-digit top- and bottom-line growth. We further improved our return on invested capital (ROIC) for the fifth consecutive year—closing the year in the double digits—and sustained our healthy net-debt-to- EBITDA ratio of 0.9 times, while ending the year with a robust cash position of more than Ps. 40 billion, reflecting our strong balance sheet. 8 . 0 3 4 . 7 2 4 . 5 2 2 . 5 2 E M O C N I G N I T A R E P O . s P n a c i x e M n o i l l i b 3 4 . 5 4 0 . 5 6 8 . 4 4 5 . 3 E R A H S R E P D N E D I V I D . s P n a c i x e M 2019 2020 2021 2022 2019 2020 2021 2022 1) Unit case is a unit of measurement that equals 24 eight-ounce servings of finished beverage. HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 15 SUSTAINABILITY HIGHLIGHTS Aligned with our imperative to make a difference in environmental, social, and governance (ESG), we aim to break the ceiling on sustainability initiatives— to be at the forefront of market, regulatory, and consumer trends—while elevating ESG practices across Latin America and the world. 600 thousand beneficiaries of activities focused on our environmental and social pillars DJSI KOF was named to the Dow Jones Sustainability MILA Pacific Alliance Index for the sixth consecutive year. The company was also included in the Dow Jones Emerging Markets Index for the tenth year in a row. +250K volunteer hours in +2,300 initiatives US$314.74 million were invested during 2022 in our environmental pillar, focusing on climate action, circular economy, and water stewardship projects 17% reduction of absolute GHG emissions from scope 3 vs 2015 base line 1.46 liters of water per liter of beverage produced, an industry benchmark HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 16 UNGC In 2022 we signed the United Nations Global Compact (UNGC), committing to align our business strategy with their Ten Principles. 98.5% of post-industrial waste recycled or properly disposed 1ST Mexican Company 29% to secure approval of the Science Based Targets Initiative (SBTi) for our GHG emissions reduction goals reduction of absolute GHG emissions from our direct operations scope 1 and 2 vs 2015 base line 3RD consecutive year of inclusion in S&P Global’s Sustainability Yearbook 5TH consecutive year of inclusion in the Bloomberg Gender-Equality Index 77% of our manufacturing facilities have earned Zero Waste certification 94% of our Green Bond funds have been allocated 4TH year of recognition as one of the Best Places to Work for LGBTQ+ Equality by the Human Rights Campaign Foundation and HRC Equidad MX: Global Program for Labor Equity 66% renewable energy use in our operations 1ST Sustainability- Linked Bonds issued in the Mexican market for Ps. 9.4 billion (US$470 million) with a commitment to achieve a water use ratio of 1.26 by 2026 1ST Social Bonds issued in the consumer sector in the Americas, and 1st Sustainability Bonds issued in Mexico’s consumer sector for a total amount of Ps. 6 billion HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 17 OUR VALUE CHAIN 1 Ingredients We work with our suppliers to have the best raw materials. 3 Primary Distribution From our manufacturing facilities, we ship beverages to our 249 distribution centers. 5 Pre-Sale Powered by KOF digital platforms, we serve our clients in the traditional and modern channels, offering a winning portfolio of leading brands. 7 Points of Sale We reach more than 2.0 million points of sale with targeted commercial initiatives, and we use Market Analytics to maximize the value proposition for each client. 9 Recycling We encourage and help consumers to properly dispose and recycle all packages from our beverages. 2 Manufacturing Enabled by our Digital Manufacturing Platform 2.0, we produce high-quality beverages in our facilities, with an efficient use of water and energy. 4 Distribution Center In our digital warehouse process, we integrate pre-sale with secondary distribution processes. 6 Secondary Distribution Once a pre-sale order is placed, we use our Digital Distribution Platform to define an optimal Route- To-Market operation. 8 Consumption We serve more than 270 million people, offering a portfolio with choices for every lifestyle. OUR STRATEGY AND ESG FRAMEWORK HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 19 STRATEGY We are confident we are uniquely positioned for growth by leveraging our strengths, our positive momentum, and focusing on the following six strate- gic priorities as our guiding principles: • Grow the core. Capturing the fair share of Coca-Cola trademark in all mar- kets and channels; accelerating the growth of Coca-Cola Zero Sugar; de- veloping growth opportunities in low per-capita markets; and achieving the full potential of profitable non-carbonated beverage categories • Become our customer’s preferred omnichannel commercial platform. Growing our total and digital client base across our markets and enhancing our value proposition, leveraging a curated portfolio of our customer’s and consumer’s favorite brands together with The Coca-Cola Company and our multi-category partners. • De-bottleneck our infrastructure and digitize the enterprise. Unlock growth by increasing manufacturing and distribution capacity, implement- ing best-in-class logistics and distribution enablers. We will continue digi- tizing our company, including the migration of our legacy ERP System into cloud-based platform-as-a-service. • Make a difference in ESG. Reinforcing our industry-leading environmental initiatives and bolstering our social and governance agenda, including com- munity development programs and diversity & inclusion. • Strengthen our customer-centric culture. Promoting a growth mindset, building a multiplier leadership style and empowering leaders to develop our people. • Strategic M&A. Leveraging our disciplined approach, we will focus on val- ue-enhancing, synergistic acquisitions as a priority, while strengthening our commercial platform capabilities. Looking ahead to our ambition to build our customer’s preferred commercial platform, we are convinced we have unmatched rights to win. HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 2 0 REFRESHED ESG FRAMEWORK We engaged in a comprehensive ESG transforma- tion over the past year involving all parts of the or- ganization to evolve our sustainability strategy and break the ceiling on sustainability initiatives—to be at the forefront of market, regulatory, and con- sumer trends. We sought to ensure our practices are aligned not only with local requirements, but also with world-leading best practices across in- dustries, so we could establish a new frontier for our local markets on ESG trends and commitments. Our overarching vision is to become a global leader on sustainability and elevate ESG practices in Latin America and the world. ESG TRANSFORMATION METHODOLOGY Aligned with our mandate to make a difference in ESG, we divided the top-down, bottom-up ESG transforma- tion into five distinct phases to develop and refine our sustainability strategy. These phases not only defined the priorities for our sustainability strategic corridor, but also the concrete ambitions and commitments for key priorities within our strategic framework, along with the changes to our ways of working necessary to ensure the strategy can be properly executed for years to come. HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 2 1 NEW ESG STRATEGY PHASES Phase 2: DEVELOPING HOLISTIC EVALUATIONS We developed a sustainable proj- ects financial evaluation and prior- itization methodology under a joint effort among our financial, project management, and core sustainability teams. Our holistic model seeks to quantify several intangible and long- term value drivers, including the cost of externalities such as carbon emis- sions. These drivers are typically underrepresented in traditional proj- ects, but are especially relevant for ESG investments. Phase 3: AMBITION SETTING With a robust baseline in place, we conducted external market research, drew from our conversations with key stakeholders, and evaluated in- dustry benchmarks to discover what goals we wanted to achieve across each material topic in our ESG frame- work. Setting ambitions relative to these benchmarks followed our ho- listic view on ESG. Establishing these ambitions required understanding what world-leadership meant for each of our signature topics. The pro- cess of developing and tailoring our ESG goals along each topic was our ambition setting phase. Phase 1: SETTING THE ESG STRATEGIC FRAMEWORK Our initial phase required us to de- termine the topics where we had the largest impact on our society and for our business continuity. To do so, we identified and drew insights from stakeholder groups to inform our new strategic ESG framework, ensuring that we understood their highest priority topics. In setting our framework, we applied a robust baseline of our internal op- erations across sustainability areas. Through detailed benchmarking on our current state of operations, we finalized our ESG framework with re- freshed priorities across environmen- tal, social, and governance pillars. Phase 5: OPERATING MODEL To stay up to date with rapidly evolv- ing trends, our ESG strategy requires change within our organization to be executed effectively. While devel- oping our plans, we considered the interdependencies and implications that our ESG initiatives would have on our operations. As a result, we de- signed changes to our ways of work- ing, governance, and people enablers to ensure the strategy is well execut- ed for years to come. Phase 4: ROADMAP DEVELOPMENT With ambitions established, we set plans across the organization to en- sure that we achieve these goals in time, and that all priorities have con- crete and clear paths of execution. We complemented each ambition with a roadmap of investments and opera- tional requirements that we needed to execute every year to timely reach our goals. Recognizing that roadmaps are only an initial estimate of how we will achieve our goals, we will continuous- ly revise these roadmaps as markets mature, regulations change, and new technologies arise. HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 22 ESG FRAMEWORK After several iterations, we developed a refreshed framework for our sustainability priorities, with envi- ronmental, social, governance, and transversal prior- ities. Our environmental pillar seeks to improve our relationship with our environment, focused on strong climate action, circular economy, and water efficiency. Our social pillar seeks to improve our impact on all of our stakeholders, including our nearby communities, our value chain, and our talent. Our governance pillar seeks to ensure we are accountable to our stakehold- ers, which includes managing compliance and cyber & data security issues, ensuring transparency, and developing the internal governing bodies and account- ability to support this level of commitment. Transver- sally, we consider the effect our internal and external actions have on diversity, equity, and inclusion, and we consider the enablers that can help us execute the overall ESG strategy effectively. For more information see →Future Ready Sustainability Strategy Make a difference in environmental, social and governance (ESG) ENVIR ONMENTAL SOCIAL GOVER NANCE Scope 1 & 2 Scope 3 Collection Packaging Operational Waste Water Effi ciency Human Capital Development Integral Wellbeing Flexibility Sustainable Value Chain My KOF Community & y t e f a S h t l a e H Water Regeneration Replenishment Access D IV ER SIT Y, EQ UIT Y & INCLU SION D IGITALIZ ATION ( EN ABLE MEN T, TO OLS & TR A ININ G ) Supply Chain Management Cyber & Data Security Risk Management Shareholder Management & Materiality Governing Bodies ClimateActionCompliance& SecurityCorporate GovernanceCircularEconomyWaterStewardshipInternalExternal HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 23 UNITED NATIONS SUSTAINABLE DEVELOPMENT GOALS We are committed to contributing to the achievement of the United Nations Sustainable Development Goals (SDGs). While many of our actions contribute to the 17 SDGs, we are convinced that we can have a larger impact on the following nine goals through our strategic framework and initiatives. We are working with FEMSA Foundation on initiatives and so- cial programs in our communi- ties, focused on early childhood and healthy lifestyles. We are committed to ensuring the efficient use of this natural resource, conservation of wa- ter basins, and safe access to drinking water for our communi- ties and ourselves. By 2025, our ambition is to develop with our communities and stakeholders one access or replenish project in each of our priority sites to achieve the return of 100% of the water we use. Through our external and inter- nal social priorities, we continue to focus on the health, safety, and wellbeing of our employ- ees, customers, consumers, and communities. By prioritizing their health and safety, we reinforce our company’s commitment to delivering economic value, while generating social and environ- mental wellbeing. In addition, we offer a total beverage portfolio, including our growing zero- and low-sugar portfolio, and we carry out responsible marketing strat- egies for our products. We strive for energy efficiency across our value chain. We fur- ther integrate renewable sourc- es of energy and technologies to reduce our CO2e emissions— aligned with our commitment to break the ceiling on climate action. Our operations’ energy consumption focuses on a com- prehensive strategy that encom- passes our value chain. Aligned with our ambition to im- prove gender diversity at all lev- els of the organization, we are de- veloping and deploying initiatives to increase women’s represen- tation across our operations. By 2030, our ambition is for women to represent 40% of leadership and management positions. We are also carrying out programs to foster women’s financial and digital empowerment within the traditional trade. We aim to achieve sustainable economic growth through effi- cient resource utilization, pro- mote a work environment that offers comprehensive profes- sional development, create jobs in emerging markets, and apply sustainable sourcing principles. In addition, we develop initia- tives in our communities focused on empowerment to foster re- silience and reactivation of local economies. HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 24 We continually work to improve our ESG performance and foster industry innovation, especially in the areas of water steward- ship and energy efficiency, while reducing our carbon footprint across our value chain. We com- plement these programs with digital and innovation training to develop local suppliers. By 2030, to break the ceiling on climate action, we are committed to decreasing our scope 1 and 2 emissions by 50%, and reducing 20% of our entire value chain emissions. To reach our interim and final ambition on CO2e emis- sion reduction, we set initiatives to migrate relevant operational assets to lower emission alterna- tives, as well as setting various initiatives to tackle emissions across our value chain. Our work with small local busi- nesses across our rich value chain of suppliers, customers, and other stakeholders seeks to improve their financial and digital inclusion, while we work to pro- vide our communities with safe water, improved sanitation, and hygiene education. Aligned with our community en- gagement priority, we are deter- mined to advance the develop- ment of the communities where we operate. With this mindset, we will collaborate with our com- munities across all of our opera- tions to develop sustainable solu- tions that address local needs. Given the growing urgency of shared water risks and the need for systemic action across the value chain, our holistic water strategy is focused on water efficiency, replenishment, and access. We consistently lead our industry peers on water ef- ficiency, and continue to invest in minimizing our use of water. Moreover, our social water stew- ardship strategy protects peo- ple’s right to water, and aims to guarantee this resource for cur- rent and future generations. Our corporate governance and the way we conduct our business is in full compliance with applica- ble regulations in all of our coun- tries of operation, with our Code of Ethics as our compass. With our suppliers, we further apply guiding principles that focus on strategic input categories, includ- ing areas such as human rights, environmental protection, and labor rights. We hold ourselves to high stan- dards of transparency and au- thenticity in our external commu- nications, including reporting the progress on our commitments and other material topics identi- fied throughout the year. We are confident that, with the support and co-responsibility of all of the stakeholders across our val- ue chain, we will fulfill our 2030 ambition of collecting 100% of the PET bottles we place in the market through a concerted mar- ket-based approach to the circu- lar economy. We recognize that complex, ev- er-changing challenges require innovative solutions that can only be achieved and put into action together. We embrace this reality, and we partner with other companies, governments, NGOs, and institutions to maxi- mize our impact. HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 2 5 MATERIALITY MATRIX After setting and achieving several public sus- tainability targets, we conducted a comprehen- sive materiality assessment to ensure that our overall sustainability priorities were aligned with stakeholder expectations and what our business needs to thrive over the coming years. As a result of this assessment, we identified and mapped 45 material topics and 17 iden- tified priorities across the three pillars of our ESG framework. e c n a v e l e R r e d l o h e k a t S 37 42 38 41 44 45 43 3 17 15 13 16 10 4 9 18 14 21 7 12 27 23 29 19 22 20 24 26 28 31 34 36 25 35 39 40 30 33 32 1 8 2 11 6 5 ■ ENVIRONMENT 1 Packaging Circular Economy 4 GHG Emissions Reduction 5 Sustainable Mobility 6 Climate Change Adaptation 9 Energy Management: Renewables & Efficiency 10 WASH (Water Access, Sanitation, and Hygiene) 11 Context-Based Hydrological Safety 17 Water Efficiency 26 Industrial Waste Circular Economy 43 Environmentally Responsible Dairy Farming ■ SOCIAL EXTERNAL 13 Human and Labor Rights 15 Diversity and Inclusion 16 Safety, Health, and Wellness 20 Culture, Ethics, and Values 21 Labor Relations 23 Standards for Contractors 32 Talent Attraction 33 Compensation and Benefits 44 Training and Development B u s i n e s s S u c c e s s We are currently carrying out the process to update our materiality ma- trix and priorities, which we will include in our 2023 Integrated Report. ■ SOCIAL INTERNAL 2 Nutritional Attributes of Product Portfolio 7 Product Portfolio Diversification 8 Relationship with Government 12 Consumer Engagement for Circular Economy 14 Supporting Small Businesses 18 Advertising & Commercial Practices 19 Women’s Empowerment 22 Local Community Relationships 25 Information Security & Cybersecurity 28 GMOs / Traceability of Ingredients 29 Digitalization in Customers 31 Promotion of Healthy Habits 34 Customer Engagement for Circular Economy 36 Support of Local Supply Chains 37 Road Safety 38 Information & Quality of Products 39 Customer Satisfaction Measurement 40 Quality of Service for Customers 41 Supplier Relationship T&Cs Management 42 Mechanism for Consumers to Raise Concerns 45 Opportunities for Youth ■ GOVERNANCE 3 Global Integrity & Compliance 24 Best-in-Class Board Practices 27 Partnerships for Sustainability 30 Comprehensive Risk Management 35 Code of Conduct HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 26 SUSTAINABLE FINANCING Our approach to sustainable financing enables us to maximize our positive impact by publicly aligning our finance strategy with the achievement of our environmental and social ambitions, while contributing to the United Nations Sustainable Development Goals. We have leveraged our investments with financial instruments that allow us to direct our resources appropriately to mitigate risk, increase positive impact, and align incentives within the company with our ESG objectives. Green Bond Allocation As of December 31, 2022, Coca-Cola FEMSA had allocated US$664.87 million of green bond net proceeds to projects supporting circular economy, water stewardship, and climate action. US$705 Million Green Bond Issued September 2020 US$664.87 million allocated Between 2018-2022 4 7 . 4 1 3 R A E Y Y B D N E P S n o i l l i m $ S U 4 6 . 4 1 1 7 2 . 3 8 7 2 . 8 7 5 9 . 3 7 2018 2019 2020 2021 2022 Circular Economy 72% US$479.12 million Water Stewardship 3% US$20.67 million Climate Action 25% US$165.07 million Green Bond Progress Report Aligned with this approach and our sustainability strategy, we issued our first-ever green bond in September 2020, valued at US$705 million, at the time the largest for a Latin Ameri- can corporation and a first for the Coca-Cola System. As of December 31, 2022, we had allocated US$664.87 mil- lion of green bond net proceeds to finance or refinance eligi- ble green projects in three main categories—circular econo- my, water stewardship and climate action—according to our →Green Bond Framework. This total investment represent- ed 94% of the net proceeds, leaving US$40.13 million of net proceeds unallocated at the end of 2022. While eligible projects within the three categories focused on a variety of solutions, they shared the common objective of advancing our company’s mission to simultaneously create economic and social value while generating environmental wellbeing across our value chain in collaboration with all of our stakeholders. HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 27 GOAL PERFORMANCE The net proceeds of our green bond help to deliver on our company’s sustainability goals, including our commitments to increase recycled content in our PET packaging, improve water efficiency, and reduce CO2e emissions. From 2018 through 2022, we made progress against these goals, as illustrated in these charts. % 1 3 % 9 2 % 7 2 % 4 2 % 1 2 T N E T N O C D E L C Y C E R 8 5 . 1 2 5 . 1 9 4 . 1 7 4 . 1 6 4 . 1 Y C N E I C I F F E R E T A W r e t i l r e p r e t a w f o s r e t i L d e c u d o r p e g a r e v e b f o ) r e t t e b s i s s e l ( % 6 6 % 3 5 Y G R E N E E L B A W E N E R G N I R U T C A F U N A M N I 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 2021 2022 Use at least 50% recycled resin (rPET) in our PET bottles by 2030. Achieve a water use ratio of 1.26 liters of water per liter of beverage produced by 2026. In 2020, we became the first Mexican company and the third in Latin America to achieve the official approval of our emissions reduction targets by the Science Based Target initiative (SBTi), aligned with the goal of the 2015 Paris Agreement to limit global warming to well below 2°C above preindustrial levels. In 2020 KOF commited to use 100% of renewable energy in manufactur- ing and distributiuon operations by 2030. Pursuant to this public commitment, we made great progress during 2022 by increasing our renewable energy usage from 53% to 66%. HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 28 SUSTAINABILITY-LINKED BONDS SOCIAL & SUSTAINABILITY BONDS Building on our sustainability strategy, in September 2021, we issued the first-ever sustainability-linked bonds (SLB) in the Mexican market for a total of Ps. 9,400 million in accordance with our →Sustainability- Linked Bonds Framework. Recognizing that water is not only an invaluable resource for our com- pany and industry, but also an indispensable element of climate change resilience, we are focusing this first issuance on the sustainable and ef- ficient use of water, aligned with our commitment to water stewardship. Unlike the use of green bond proceeds, our sustainability-linked bonds are committed to the achievement of a water use ratio of 1.26 by 2026. Today, our water use ratio is 1.46 liters, a benchmark of water efficiency for the Coca-Cola System. Consistent with our financial discipline, strong credit profile, and com- mitment to sustainability, we issued social and sustainability bonds in the Mexican market for a total of Ps. 6,000 million in October 2022—be- coming the first non-financial corporation in the Americas and the first company in the Coca-Cola System to issue social bonds. We also be- came the first company in Mexico’s consumer sector to issue sustain- ability bonds. This transaction was completed in two tranches: The first social tranche was priced at a fixed rate of 9.95% (Mbono+0.30%) for an amount of Ps. 5,500 million due in seven years; and the second sustainability tranche was priced at a variable rate of TIIE + 0.05% for an amount of Ps. 500 million due in four years. 2 7 . 1 5 6 . 1 8 5 . 1 2 5 . 1 9 4 . 1 7 4 . 1 6 4 . 1 2016 2017 2018 2019 2020 2021 2022 ) t l ( o i t a r e s u r e t a w I P K D E T R O P E R A T A D The net proceeds from these bonds will be used to finance eligible so- cial and sustainability projects focused on the social and economic de- velopment of our communities in accordance with our →Sustainability Bonds Framework. Specifically, the goal of this latest issuance is to support underrepresented and traditionally excluded social groups in our communities with programs that provide entrepreneurial and self-employment skills, financial solutions that support store owners, and investments in sustainable community development, including wa- ter replenishment and water access projects. Subject to the issuance of applicable funding instruments, we will con- tinue to annually report on the allocation of proceeds and the associated impact in the year(s) following issuance of any future funding instru- ments under our current Green Bond and Sustainability-Linked Bonds Frameworks. OUR STRATEGIC PRIORITIES HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 30 DEVELOP A FUTURE-READY PORTFOLIO Driven by our obsessive focus on our consumers and customers, we aim to grow our core business portfolio, capturing the fair share of Coca-Cola trademark in all markets and channels and achieving the full potential of profitable non-carbonated beverage categories. HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 31 WINNING CONSUMER-CENTRIC PORTFOLIO SUCCESS STORIES Our strategy aims to build a winning, consumer-centric, multi-category portfolio for every occasion by leveraging affordability to drive sustainable beverage growth; capturing new consumption occasions and preferences through portfolio innovation; and consolidating our market leadership in emerging beverage categories—from promising alcoholic ready-to-drink to dynamic still beverage categories—while strengthening our multi-category platform across key markets. Our customers and consumers are at the center of everything we do. We proactively adapt our portfolio strategies and initiatives to satisfy their evolving preferences and practices, expanding the number of routes and households we serve with our direct-to-home Coca-Cola en Tu Hogar de- livery routes; enhancing consumer excitement and engagement through limited-edition releases from Coca-Cola Creations; developing comple- mentary indirect distribution models to increase customer service levels; and improving consumer and customer interaction while increasing our single-serve mix by leveraging popular multipacks, increased cooler cov- erage, and execution across our markets. ENHANCING CONSUMER ENGAGEMENT THROUGH COCA-COLA CREATIONS During the year, we introduced limited edition, sequential releases from Coca-Cola Creations, The Coca-Cola Company’s innovation platform, across key markets to enhance consumer engagement. These exciting new creations—featuring gaming- inspired, pixel-flavored Coca-Cola Zero Sugar Byte and the artist Marshmello’s Limited Edition Coca-Cola—enabled us to launch creative new products and experiences successively across physical and digital worlds. MEXICO: EXPANDING CONVENIENT CONSUMER-CENTRIC HOME DELIVERY To satisfy evolving at-home consumption occasions and preferences, we continued to expand our home delivery routes to serve the evolving needs of almost 600 thousand households across Mexico. During the year, we not only added over 400 new routes for a total of close to 1,650 home delivery routes, but also integrated our Coca-Cola en tu Hogar D2C omnichannel platform across 85% of those routes, dramatically expanding our base of monthly digital purchasing customers to over 125 thousand households. Thanks to the success of our D2C model, our home delivery routes are rapidly improving their productivity, average ticket, and sales. For the year, we increased the average ticket by driving the mix of non-jug-water products to over 50%, while continuing to improve our delivery effectiveness and net promoter score. For more information see →D2C Marketplace HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 3 2 SUCCESS STORIES MEXICO: DEVELOPING COMPLEMENTARY INDIRECT DISTRIBUTION MODELS Complementing our direct models, we are develop- ing and customizing indirect distribution models to not only increase customer service levels to our small mom-and-pop clients, but also achieve our saturation strategy. This is reflected in the significant growth of our emerging indirect wholesaler and distributor chan- nels. Through a clear segmentation, route to market, and category management strategy—catering to both big and small deposit wholesalers—the wholesaler channel gained 25 million incremental unit cases for close to 15% volume growth year over year. Similarly, our indirect distributor channel generated high sin- gle-digit growth year over year, contributing almost 10 million unit cases or 14% of our total volume across the traditional trade channel. We also continued with our distributor transformation and digitalization pro- cess, covering around 45% of this indirect channel’s total volume during 2022. MEXICO: DRIVING IMPROVED CONSUMER INTERACTION AND SINGLE-SERVE MIX WITH MULTIPACKS In Mexico, our popular portfolio of multipacks is not only enabling better interaction with our consumers, but also growing our profitable single-serve mix, trans- actions, and revenues across the modern trade chan- nel. For the year, our multipacks volume grew more than 35%, driving approximately 10% of our incremen- tal volume throughout the modern channel. We tailor our portfolio of six, eight, and 12 multipacks to suit the needs of our customers and consumers—from whole- salers to supermarkets and price clubs. In Mexico’s modern trade channel, our multipacks included brand Coca-Cola, Coca-Cola Zero Sugar, Sprite, Mundet, Fan- ta, Ciel, Seagrams, and Monster. COLOMBIA: HISTORIC CUSTOMER GROWTH Over the past three years, our Colombian operation achieved historic customer growth of more than 120 thousand clients. Among other strategic initia- tives, we accomplished this remarkable growth by expanding our winning consumer-centric portfo- lio, driving affordability to better serve consumers’ demands, and delivering point-of-sale excellence. Indeed, our Colombia operation significantly in- creased its score in The Coca-Cola Company’s ex- ecution index year over year, while generating dou- ble-digit volume growth for the year. HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 33 SUCCESS STORIES MEXICO: INCREASING RETURNABLE CAPACITY AND COVERAGE To bolster our returnable strategy, this year we significantly enlarged our refillable capacity and the coverage of our 3-liter returnable PET presentation of Coca-Cola Original. With this launch across seven new cities—including Leon, Queretaro, and Veracruz—this popular affordable multi-serve presentation is now present in 30 cities. We further invested in three new returnable bottling lines with an annual capacity of 50 million unit cases, strengthtening our affordable returnable strategy. MEXICO: EXPANDING UNIVERSAL BOTTLE COVERAGE ACROSS THE TERRITORY During the year, we launched our 2.5-liter return- able PET universal bottle across multiple new cit- ies. Now covering nearly all of our franchise terri- tory, the universal bottle or botella unica enables us to use the same refillable bottle for our core flavored sparkling beverage and juice brands— from our Fanta, Sprite, and Valle Frut brands to our regional Escuis and Victoria flavored brands. Importantly, the expanded coverage of our refill- able universal bottle continued to yield share of sales gains in the cities where it was launched. LEVERAGE AFFORDABILITY TO DRIVE SUSTAINABLE BEVERAGE GROWTH Affordability remained an important driver of our sustainable beverage growth. We executed to win in the “away from home” and “at home” consumption occasions thanks to several market initiatives that enabled us to provide our consumers with unmatched affordability. Importantly, we increased our returnable volume almost 25% over the past five years, supported by the successful rollout of our refillable universal bottle. To this end, we continued investing behind this core capability, including more than US$500 million in production lines and returnable bottles and cases over the past two years. HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 34 SUCCESS STORIES COLOMBIA: GROWING UNIVERSAL BOTTLE COVERAGE YIELDS POSITIVE RESULTS This year, we significantly expanded the rollout of our affordable universal bottle to cover more than 60% of the country. This transformational bottling technology enables us to offer affordable refillable PET presentations not only of brand Coca-Cola, but also of our flavored sparkling and still beverage brands to compete more effectively in the market, enabling volume and share of sale increases in the cities where it was launched. BRAZIL: CONSOLIDATING RETURNABLE GROWTH AND HOUSEHOLD PENETRATION Through our returnable affordability strategy, we continued to consolidate our volume growth and competitive advantage across the sparkling bev- erage category—growing our household penetra- tion while increasing our returnable volume year over year. For the year, returnable presentations represented close to 160 million unit cases or more than 18% of our sparkling beverage mix. This year, we further capitalized on our new re- fillable universal bottles to enable flavored spar- kling beverage expansion and to improve asset management. ARGENTINA: GROWING CONSUMER BASE AND VOLUME THROUGH AFFORDABILITY STRATEGY Under our affordability strategy, we contin- ued to regain share and expand our consumer base in the face of Argentina’s dynamic com- petitive and economic environment. Thanks to our evolving market segmentation strate- gy—leveraging our integral value proposition and execution excellence—we were able to offer consumers the right product at the right price across diverse socioeconomic seg- ments of our franchise territory, enabling us to improve our household penetration while achieving volume growth year over year. HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 35 CAPTURE NEW CONSUMPTION OCCASIONS THROUGH PORTFOLIO INNOVATION Through ongoing portfolio innovation, we contin- ue to focus on improving our competitive position and capturing the most value from our beverage brands by closely aligning our portfolio with con- sumers’ tastes and preferences. Among our ini- tiatives, we continued to drive the growth of our no- and low-sugar portfolio of sparkling beverages to satisfy and stimulate demand for our products— with no-sugar volumes an impressive 30% ahead of our 2019 baseline—while adapting our portfolio to evolving consumer behavior. Notably, the new visual identity and formula of Coca-Cola Zero Sug- ar outperformed the sparkling beverage category across our territories, growing 23% year over year as we leveraged a consistent value proposition with sampling, innovation, and customer experi- ence initiatives. SUCCESS STORIES MEXICO: COCA-COLA ZERO SUGAR OUTPERFORMING SPARKLING CATEGORY The new formula and visual identity of Coca-Cola Zero Sugar continued to outperform the sparkling beverage category across our Mexico territory. Impressively, Coca-Cola Zero Sugar achieved 20% volume growth year over year. Notably, our focus on increasing consumer contact and transactions also enabled us to achieve double-digit volume growth in the single-serve format this year. ARGENTINA, BRAZIL, CENTRAL AMERICA, & COLOMBIA: INNOVATIVE MULTIPACKS SPUR SINGLE-SERVE RECOVERY In Argentina, Colombia, and Central America, we capitalized on the re- opening of the on-premise channel and the strength of our multipack strategy to recover our single-serve mix, which has increased by more than five percentage points in Argentina and Panama. By leveraging our multipacks, increased cooler coverage, and execution, we look forward to continue growing our single-serve mix across our markets. In Brazil, we also continued to leverage the popularity and household penetration of our convenient, affordable multipacks of Coke and our core flavored sparkling beverage brands—achieving over 28% volume growth year on year. Through our multipacks and other mix initiatives, we reached a single-serve mix of almost 23% this year, exceeding our 2019 baseline by more than 2 percentage points. HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 36 SUCCESS STORIES BRAZIL: COCA-COLA ZERO SUGAR WINNING THE CONSUMER CHOICE BATTLE In Brazil, Coca-Cola Zero Sugar is win- ning the consumer choice battle through a consistent value proposition, gaining significant share of sales while generating double-digit volume growth year over year. To achieve this growth, we built on a con- sistent value proposition with sampling, innovation, and customer experience initia- tives—highlighted by the Panini FIFA World Cup Qatar 2022 sticker campaign. URUGUAY: BUILDING ON OUR COMPANY’S ZERO-SUGAR BENCHMARK During the year, we continued to build on our leadership position in Uruguay’s zero-sugar beverage market—a benchmark with our company. Harnessing the success of Coca-Cola Zero Sugar, we continued to leverage our consistent value proposition and point- of-sale execution with sampling, innovation, and an enhanced customer experience. Consequently, our zero-sugar formulas continued to outperform, with Coca-Cola Zero Sugar volume an impressive 44% ahead of our 2019 baseline. HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 37 CAPITALIZE ON EMERGING CATEGORIES & NEW MULTI-CATEGORY OPPORTUNITIES This year, we continued to capture market share across emerging still beverage categories—from hydration to energy, tea, and sport drinks. We also strengthened and consolidated our multi-category platform through distribution agreements and pilot programs with stra- tegic partners in certain markets across adjacent cate- gories, prioritizing leading beer, spirits, alcoholic ready- to-drink (ARTD) beverages, snacks, and consumer packaged goods brands. Through our winning strategic partnership model, we are building a one-stop shop for our customers and consumers, while exploring complementary revenue streams that boost our pres- ence, visibility, and share of wallet at the point of sale through targeted cross-promotion and execution op- portunities across physical and digital realms. SUCCESS STORIES BRAZIL: DELIVERING MONSTER ENERGY DRINK GROWTH Bolstered by our Monster brand, we not only achieved record share of sales, but also expanded our share of sales lead- ership position in Brazil’s fast-growing energy drink segment. Our portfolio of Monster brand energy drinks capitalized on every product—from Monster Energy Green to Monster Mango Loco and Mon- ster Absolutely Zero—to fuel volume growth of more than 26% year on year. Furthermore, our Reign brand delivered important volume growth for the year. URUGUAY: LAUNCHING SUCCESSFUL LOCAL PRODUCTION OF POWERADE After previously importing Powerade into Uruguay, we suc- cessfully began local production of this refreshing sports drink during the fourth quarter of 2022. As a result, we re- launched our 600-ml presentation of Powerade, achieving record share of sales, double-digit volume growth, and better profitability backed by a new marketing strategy within this emerging beverage segment. COLOMBIA: CONSUMER-CENTRIC BRISA MANZANA SPURS TRIPLE-DIGIT GROWTH Catering to our consumers’ shifting prefer- ence to natural, no-calorie beverages, we took portfolio innovation to the next level with the expanded consumer-centric launch of our locally developed formula of Brisa Manzana (Colombian Apple) sparkling water. By lever- aging this refreshing proposition, we almost tripled our year-on-year volume growth, while achieving significantly higher share of sales in the country’s competitive flavored sparkling water segment. HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 38 SUCCESS STORIES BRAZIL: PROMISING NEW CONSUMER- CENTRIC BEER PORTFOLIO After completing the transition of the Heineken and Amstel beer brands to Heineken’s distribu- tion network during 2021, this year we managed to increase the share of sales of our promising new consumer-centric beer portfolio, includ- ing Heineken legacy and new beer brands. No- tably, Sol beer sales recovered considerably; Kaiser took the lead of the economy segment, achieving significant market share growth; and Eisenbahn Unfiltered won a Gold Medal at the World Beer Awards 2022. Additionally, recently acquired Brazilian craft beer brand Therezópolis achieved record sales volume in the premium segment. We also leveraged our existing long- term distribution agreement with Estrella Gali- cia, achieving positive performance for the year. MEXICO & BRAZIL: EMERGING OPPORTUNITIES IN FLAVORED ALCOHOLIC READY-TO-DRINK BEVERAGES Consistent with our journey to become a to- tal beverage company with drink options for all consumption occasions, we continue to work closely with The Coca-Cola Company to identify and define a broader multi-cat- egory portfolio of beverages beyond our traditional non-alcoholic ready-to-drink beverages. Our experience with Topo Chico Hard Seltzer shows consumers are excited to see recognizable beverage brands that they already enjoy enter the flavored alco- holic ready-to-drink space. With the com- bination of a familiar, beloved brand and a strong distribution and market position, we are confident that consumers will enjoy our emerging portfolio of flavored alcoholic ready-to-drink beverages, including Topo Chico Hard Seltzer (Brazil, Costa Rica, Mex- ico), Jack Daniel’s & Coca-Cola (Mexico), Lemon-Dou (Mexico), and Schweppes Pre- mium Drinks (Brazil). HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 39 SUCCESS STORIES BRAZIL: TANTALIZING TEA, SPORT DRINKS, AND WATER GROWTH This year, we continued to leverage our reformulated portfolio to cater to our Brazilian consumers’ growing de- mand for refreshing teas. The combination of our cold-fill formula, together with the rollout of Leão brand teas, en- abled us to increase our sales volume by over 15% for the year, while increasing our sales to a record share of sales in this fast-growing beverage category. We also achieved significant share of sales and almost 60% volume growth in the profitable sport drinks category year over year. We further capitalized the on the market opportunity in the water segment to drive over 29% volume growth. BRAZIL & MEXICO: WINNING MULTI-CATEGORY STRATEGIC PARTNERSHIPS & ALLIANCES Aligned with our vision and enhanced cooperation framework with The Coca-Cola Company—while lever- aging our expanding B2B and D2C omnichannel digital platforms—we continued to roll out new distribution agreements and pilot programs with strategic partners to not only con- solidate our multi-category platform, but also test complementary catego- ries, prioritizing leading beer, spirits, snacks, and consumer packaged goods brands in certain markets. For more information on B2B and D2C plat- forms see →Become our customer’s preferred Omnichannel Commercial Platform We further carried on gath- ering important insights on the ways in which our partners’ different supply chains operate. In Brazil, we announced a new distri- bution agreement with Campari Group on April 19, another step to strength- en and consolidate our multi-category platform with a high-potential leading spirits brand. During the year, we con- tinued exploring complementary rev- enue streams in Brazil, as exemplified by our announced distribution agree- ment on July 14 with Grupo Perfetti Van Melle—one of the world’s largest manufacturers of sweet confectionary snacks and chewing gum with global brands such as Mentos and Fruit-tella. Building on our expanding pilots with leading consumer and personal care brands, we began a pilot beer distribu- tion program in Mexico to strengthen our portfolio’s presence in the tradi- tional trade channel, enabling more customers and consumers to access a broader multi-category portfolio. We expect these pilots will enable us to not only expand our customers’ value proposition, but also obtain necessary learnings and insights to continue ad- vancing towards potential strategic alli- ances in the future. HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 40 RESPONSIBLE MARKETING At Coca-Cola FEMSA, our consumers are at the center of everything we do. Therefore, we are committed to the responsible marketing of our products. Guided by the principles of transparency, fact-based information, and authenticity, we have a history of aligning our commercial practices with our values and our sustainability and business goals. As we evolve and respond to consumers’ desires for more choices across categories, we are reducing added sugar while providing more beverages with nutritional benefits; optimizing our mix of products; offering more small packaging choices; and providing our consumers with clear nutritional information. 1. Informed nutritional decisions To enable our consumers to make healthy informed choices across every one of our operations, our upfront product labels include clear, easy-to-find nutritional content information. Our nutritional labeling strategy is based on providing consumers with clear and complete information in full compliance with applicable regulations in each of the countries we serve. Our aim is to ensure that our consumers are provided with high-quality information. 2. Responsible marketing As part of our commitment to the wellbeing of our consumers and custom- ers, our advertising adheres to The Coca-Cola Company’s Responsible Mar- keting Policy and Global School Beverage Guidelines. For instance, as part of the Coca-Cola system, we diligently follow and enforce The Coca-Cola Com- pany’s Responsible Marketing Policy, and we respect the role of parents and caregivers by not marketing directly to children under 13. For more informa- tion see →The Coca-Cola Company’s Responsible Marketing Policy. 3. Highest quality Our production processes fulfill the highest quality standards; our ingredients comply with each of our operations’ local regulations and international stan- dards of other regulatory agencies, including CODEX, FDA, JEFCA, and EFSA. Our processes are performed in state-of-the-art bottling facilities within the global beverage industry—all FSSC 22000 certified—thus guaranteeing only the best quality products for our consumers. HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 41 Aligned with our priority to expand our total and digital client base across our markets we will continue to build a future-ready omnichannel multi-category commercial platform—which will seamlessly interact with other interconnected platforms and encompass our business-to- business (B2B), direct-to-consumer (D2C), indirect, and digital trade channels. BECOME OUR CUSTOMER’S PREFERRED OMNICHANNEL COMMERCIAL PLATFORM HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 4 2 JUNTOS+ TRADITIONAL OMNICHANNEL COMMERCIAL PLATFORM To achieve our vision, we are building a profitable, custom- er-centric omnichannel B2B commercial platform across our multi-category product offerings, with a differentiated end-to-end customer experience. 03:30 PM Hours later, Juan realizes that he forgot to order a specific product, but it is too late. Mario will visit him again in a few days. Juan then uses KOF’s chatbot to place an additional order, including the specific product he had forgotten. 10:00 AM Juan has been our client for some years. Today, as every Monday, Juan is visited by Mario, his usual pre-seller. While Juan is busy taking care of his business, he asks Mario to place his weekly order. 03:35 PM Mario instantly receives a notification in his hand- held: “Juan has placed an additional order.” During the year, we significantly accelerated the evolution of our customer-centric Juntos+ B2B omnichannel multi-category commercial platform. Through this omnichannel platform, we will connect every point of contact in real time for our large base of more than 2 million traditional trade clients. To this end, we are building on our successful pre-sale model and call center experience with digital touch points to amplify our customer service— from direct messaging and chatbot-enabled conversational commerce to mobile and desktop experiences via our app and web portal—so our clients can interact with us whenever, wherever, and whichever way they want. 04:02 PM Mario decides to call Juan to confirm his new request. 10:30 AM NEXT DAY Next, he confirms that his most recent orders will be delivered in the afternoon, using the order tracking functionality. 08:00 PM Overnight, Juan’s cooler malfunctioned. Using his cellphone, Juan accesses KOF’s mobile app and creates a service order to evaluate and repair his cooler. Juan receives a call from the Contact Center: “A technician will visit you in the next few hours.” 01:50 PM NEXT DAY The delivery truck arrives, and Juan receives both of his orders. He uses the built- in e-payment system in KOF’s mobile app to create a QR Code. Juan validates his payment was successful and verifies his total balance. Juan is a satisfied customer. 12:55 PM NEXT DAY As the delivery truck ap- proaches Juan’s business, he receives a notification: “Your order is about to be delivered. You will be the next customer in our route to be served.” HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 43 We processed more than 17.7 million orders on digital channels in 2022. We are serving over 1.3 million registered clients, including more than 800 thousand monthly active users digital, on our B2B platform. Digital revenue represents approximately 16% of our company’s total orders. Our Juntos+ platform is focused on the customer first and fore- most. With that mindset, we are building out our omnichannel platform around them, offering a growing array of customer-centric options and features to provide a holistic client experience across multiple points of contact. Rec- ognizing that this is very much a relationship-driven business, we are enhancing the face-to-face personal customer experience our clients enjoy with digital order-en- try tools, including our chatbot-en- abled conversational commerce solution and our evolving web portal and mobile app—which we are scaling up companywide after our successful deployment across Brazil, Mexico, and now Colombia. The mobile app’s latest version 3.0 provides our clients with a wider array of features, including 24/7 digital order entry and tracking, exclusive promotions, and a devel- oping customer loyalty program. Our large base of traditional trade customers is rapidly embracing the digital options available on our omnichannel platform. Nota- bly, we are now serving over 1.3 million registered clients, reach- ing more than 800 thousand dig- ital monthly active users, on our B2B platform—up over 170% and 210%, respectively, year over year—in Argentina, Brazil, Central America, Colombia, and Mexico. Clients’ preference for our robust omnichannel platform is clearly reflected in their growing custom- er satisfaction, acceptance, and rising orders, while amplifying the performance of new categories across our product portfolio. Overall, we processed more than 17.7 million orders on digi- tal channels, generating close to US$1.2 billion in digital revenue that represents roughly 16% of our company’s total orders—a tri- ple-digit increase in orders and revenue as compared to 2021. This year, digital sales accounted for almost US$1.2 billion. Guía de marca Juntos+ Guía de marca HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 44 BRAZIL & MEXICO: 917 THOUSAND REGISTERED CUSTOMERS EMBRACE OUR B2B OMNICHANNEL PLATFORM During 2022, our Brazilian and Mexican operations reached approximately 917,000 registered users—including almost 615,000 monthly active users—on our B2B om- nichannel multi-category commercial platform. Appealing to customer demand for a one-stop solution, our B2B platform enables our large base of traditional trade clients to not only place an order for their favorite brands/categories whenever, wherever, and whichever way they choose, but also take advantage of a constantly evolving array of features—from 24/7 digital order entry and tracking to exclusive product promotions and a customer loyalty program now deployed to over 100 thousand customers. For the year, our Brazilian and Mexican traditional trade customers generated over US$1 billion digital revenue on our B2B omnichannel platform—up 221% from 2021. COLOMBIA, BRAZIL & MEXICO: PERCENTAGE OF DIGITAL PURCHASING CUSTOMERS EXPANDS This year, our Colombian operation expanded its base of digital pur- chasing clients to over 177,000 dig- ital monthly active users on our B2B omnichannel commercial platform. Building on the successful strate- gic evolution of our omnichannel platform in Brazil and Mexico, we capitalized on growing customer demand for our chatbot-enabled conversational commerce solution. This easy-to-use solution enables our large base of traditional trade clients to expand their order entry window to 24/7, empowering them to place an order for their favorite brands/categories whenever and wherever they want. HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 45 D2C MARKETPLACE Our goal is to develop a profitable and scalable D2C business model to market our company’s prod- ucts and services directly to our consumers’ homes, acting as a benchmark in the market. Aligned with this goal, our mission is to become households’ favorite D2C multi-category platform through- out our operations, offering top- class services. EVOLVING D2C OMNICHANNEL PLATFORM Aligned with our mission, we continue to enhance and develop the functionalities of our evolv- ing D2C model throughout our customer-centric points of contact to become the favorite plat- form for home consumers throughout our company’s operations. Vision Develop a profitable and scalable standardized model to sell products directly to the consumer at home, being a reference in the market Mission Be the favorite B2C platform for consumers in KOF’s operations offering top-class service • Personalized attention • Direct support to consumer • Living the experience • Penetration • Immediacy • Practicality • Shopping experience • Loyalty plans • Different payments means • Multi-functionality SFA device Web Consumer Chatbot CCETH ERP Sales and delivery route HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 46 average ticket by 2 times versus auto sales model. As we move forward, we will con- tinue to enhance and develop the functionalities of this evolv- ing D2C omnichannel platform throughout our main consum- er-centric points of contact—from the integration of web-based digital payment platforms and multi-category product offerings to 24-hour and scheduled deliv- eries—to improve our value prop- osition and expand our house- hold penetration while continuing our consumer-focused evolution. This year, we carried on with the historic expansion of our D2C home delivery model, rolling out 400 new routes—reaching close to 1,650 routes serving almost 600 thousand households in Mexico. Our home delivery cov- erage continued to prioritize the cities and territories with the most market potential, including Mexico City, Leon, Puebla, San Luis, Tapachula, Toluca, Tuxtla, and Veracruz. Looking ahead, we are exploring the possible expan- sion of our home delivery model to other countries of operation based on their market potential and digital maturity. Importantly, we integrated our consumer-centric D2C omni- channel platform across 85% of our home delivery routes, and we dramatically expanded our base of monthly active users. Thanks to our evolving D2C om- nichannel platform, home con- sumers enjoy the personalized attention and direct support of their delivery route drivers and customer call centers; the 24/7 digital home order-entry plat- form; and the digital shopping ex- perience of the Coca-Cola en tu Hogar (CCETH) website, enabling them to view our complete port- folio with all of our promotions. The success of our D2C platform is reflected not only in home consumers’ growing acceptance and digital orders, but also in our multi-category portfolio’s en- hanced price-mix performance, with the average ticket of con- sumers who buy online increas- ing almost two times. We processed more than 900 thousand digital home delivery orders in 2022, expanding our We processed more than 900 thousand digital home delivery orders in 2022, expanding our average ticket by 2 times versus auto sales model. HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 47 Furthermore, our Juntos+ app cell is cap- italizing on our customer knowledge to optimize the user interface of our mobile app, considering user frictions, expecta- tions, and objectives. In this way, we have improved the customer experience at ev- ery stage of the journey—from searching and browsing to gathering product knowl- edge and ordering, to consulting and con- firming delivery status. DIGITAL & ANALYTICS HUB: DRIVE AGILE, DIGITAL EVOLUTION Aligned with our vision, the mission of our digital and analytics hub is to enable the expansion of our omni- channel commercial platforms by connecting the needs of our customers, consumers, and business—using tech- nology to drive a new way of working across the com- pany. Through our agile, digital, analytical, and custom- er-focused talent and mindset, we not only empower our organization’s cultural transformation and strategic capability building, but also co-create prioritized digital and analytical solutions that accelerate the deployment of our commercial platforms and solutions holistically through agile cells—ranging from our Juntos+ B2B, D2C, and indirect omnichannel platforms to digital payments, pricing, and promotions. Enabling A New Way of Working (WoW) Through our digital and analytics hub, we have imple- mented a co-creation process where we assemble agile cells—with different profiles, skills, functions, and areas— that ensure our business units’ participation from the conception and development to the delivery of our digital and analytical solutions to our operations, clients/cus- tomers, and consumers. To this end, we use agile product construction frameworks such as scrum or kanban that enable continuous value deliveries over short time spans, while building workspaces and environments that facili- tate collaboration and encourage teamwork. AGILE CELLS ACCELERATE EXPANSION OF OMNICHANNEL COMMERCIAL PLATFORMS Our agile cells co-create a growing portfolio of digital and analytical solutions that ac- celerate the expansion of our omnichannel commercial platforms. AppApp Home Chatbot Digital Payments DPO Product Teams Service Order Indirect Suggested Order Pricing Hedging Promo ● Juntos+ B2B Platform ● Enablers ● D2C Enabling An Aggressive Pipeline of Digital and Analytical Solutions Through our co-creation model, our agile cells are not only accelerating the expan- sion of our omnichannel platforms, but also generating positive value through an aggressive pipeline of digital and ana- lytical solutions. One of our agile cells is working to design, implement, and scale the suggested order analytical solution for our Juntos+ B2B platform, utilizing ma- chine-learning algorithms. This solution enables us to predict the number of prod- ucts our clients’ need to prevent out of stocks, and thereby, improve the customer experience by tackling two key pain points for our traditional trade clients: increasing sales while reducing out of stocks of their preferred products. Consequently, the more than 1.1 million Brazilian and Mexi- can customers with suggested order have increased their sales significantly. Another agile cell is optimizing distribu- tion planning at the strategic, tactical, and operational levels, using machine learn- ing and digital applications to accelerate our delivery response capacity in order to increase customer service and business profitability. As a result, we have improved our customer service levels considerably, utilizing artificial intelligence to calculate the necessary delivery times for 1 million customers in Brazil and Mexico. HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 4 8 SUPPLY CHAIN ENABLERS: FACILITATE OMNICHANNEL STRATEGY Our omnichannel multi-category strategy leverages our leading-edge supply chain enablers to enhance our customers’ experience when they interact with us, while evolving our capabilities to win in the market and the industry. Digital Distribution After the successful deployment of our Digital Distri- bution 2.0 platform throughout our Brazilian and Mex- ican operations, we began the implementation of this platform across our Colombia, Costa Rica, and Guate- mala operations over the course of 2022. Addressing the entire strategic and tactical planning cycle of our secondary distribution process—from analytics to de- livery route planning and execution—this enhanced platform features route traceability, a web-based app for supervisors, end-to-end supply chain network analysis, digital real-time control of our distribution operation, and interaction with customers to track their orders. Through our increasing operational disci- pline and use of these digital tools, we seek to contin- uously improve our customer service and the produc- tivity of our delivery teams. CUSTOMER CONTROL TOWER ENABLES DYNAMIC ROUTING FOR 24/7 ORDER ENTRY Through our Customer Control Tower, we monitor and manage our entire commercial and distribution op- eration, enabling both real-time and dynamic routing. With the deployment of dynamic routing across our secondary distribution fleet in Argentina, Brazil, Colombia, Costa Rica, Guatemala, Mexico, Panama, and Uruguay, we are able to offer 24/7 order entry. Thanks to this enabler, we enjoy the flexibility to plan ve- hicles’ routes on a daily, weekly, and monthly basis, thereby optimizing available delivery resources and distances traveled to serve our customers. For more information on the positive environmental impact of dynamic routing see →Climate Action With the evolution of our Digital Distribution 2.0 platform, we have completed the rollout of real- time routing across 100% of our Brazil and Mexico operations’ secondary distribution routes, serving 220 thousand clients per day. With real-time routing, we adapt our delivery process to unplanned daily events, constantly integrating and analyzing traffic, road, climate, and other conditions to define the most efficient delivery sequence and route, thereby fulfilling our sales promise while improving customer service and engagement. Aligned with the deployment of our Digital Distribution 2.0 platform, we have implemented our web-based Delivery Supervisor App to enable delivery supervisors to better manage their teams in Brazil, Mexico, Panama, and Uruguay. By connecting our route monitoring tools and telemetry equipment, this app allows managers to not only make quick inquiries about routes, drivers, and customers, but also to act swiftly to account for any incidents or deviations during the execution of delivery routes. Consistent with our omnichannel multi-category strategy, we further deployed our order-tracking platform to enable customers to track their orders— created on any commercial channel—from the moment of shipment to delivery. Through our increased operational discipline and utilization of these digital tools, we look to continuously improve our customer service and our delivery teams’ productivity. For example, in Mexico, we implemented the My KOF Route project, a business initiative that processes key information from different strategic areas to generate added value and facilitate integrated operational teams management. During the year, we also explored the use of advanced analytics to predict customer service times, maximizing our route planning capabilities through a tool capable of serving all of our operations. HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 49 Warehouse Optimization & Digitalization During the year, we continued with our warehouse optimization to enable our growing multi-category product portfolio and to increase our warehouses’ storage density and productivity, while avoiding significant capital expenditures (CAPEX). We are transforming the way we analyze, design, and utilize our warehouses. Through the introduction of new concepts—from optimal height utilization to more fronts and less depths, and honeycombing effect reduction—our estimated increase in warehousing capacity is around 25,000 pallet positions, equivalent to an estimated CAPEX avoidance of US$30 million. Based on the methodology derived from a customized artificial intelligence (AI) platform, our teams developed several different algorithms and implemented optimizations across 16 operating units with positive results. Using this AI platform, we continued working on new warehouse design capabilities for pallet and case slotting, staffing, and docks optimization. Moreover, we plan to expand these capabilities to the rest of our territories and to explore optimization opportunities across the rest of our supply chain, from inventory to distribution. We also continued the systematic deployment of advanced picking solutions, including both real and optimal picking. Utilizing voice and digital images, these advanced picking solutions improve our warehouses’ level of service through the assertive assembly of mixed pallets according to each client’s specific needs, maximizing load and route optimization while increasing productivity. By year-end 2022, we not only integrated real picking across 100% of our Brazilian operating units, but also rolled out this solution to 87 operating units across three different operations. We further finalized the implementation of optimal picking throughout all of our Brazilian operating units. MANUFACTURING 4.0 As part of our digital supply chain strategy, we defined the technological tools and applications behind our Manufacturing 4.0 strategy to ensure seamless manufacturing performance, while focusing on devel- oping the capabilities to ensure operational responsiveness and efficiency. Line Performance Connected Workforce Digital Maintenance Digital QSE Objectives Improve bottling line reliability and productivity through deployment of line visualization platform Digitize and automate operation model activities to create execution efficiency Implement future state of Quality and Safety evolution by leveraging digital solutions Improve maintenance planning and execution processes through digital solutions that mitigate risk and maximize asset productivity and reliability Foundations Digital Manufacturing Capabilities Development OT/IT Management and Architecture Cybersecurity During the year, we further carried out proofs of concept, where we compiled insights about those technologies that will enable us to build scalable, digital capabilities. Starting in 2023, we will begin the deployment of use cases for different digital technologies and applications in Brazil, Colombia, and Mexico. HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 50 MAKE A DIFFERENCE ESG IN For purposes of these metrics, we have considered owned and third- party distribution centers. Plants acquired during the year 2022 will report on these metrics in the 2023 Integrated Report. HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 51 OUR ESG TRANSFORMATION METHODOLOGY We based our transformation work over the past year on six guiding principles: 1. Integrate ESG in the business: Embed ESG in all critical business actions to engrain a new way of working for Coca-Cola FEMSA. 2. Balance “best-in-class” efforts across the three ESG pillars: Ensure that leader- ship was attained holistically across envi- ronmental, social, and governance perspec- tives. 4. Consider all sources of value and a cost of inaction: Balance immediate financial incentives with the long-term value of ESG progress. 5. Define metrics and ensure transparency: Develop clear metrics quickly that could be cascaded throughout the organization. 3. Drive change from the top while 6. Amplify change management with involving all stakeholders: Encourage bold decision-making and shared responsibility for advancing ESG initiatives. training: Translate corporate-level ESG strategy to key stakeholders across the or- ganization, enabling them to enact change. The execution was divided into five distinct phases to develop and refine our sustainability strategy. For more information see →Sustainability Framework. OUR CULTURE OF ACTION At Coca-Cola FEMSA, we have a deep drive to improve our environment and the commu- nities in which we operate, and conversely, to understand the impact our environment and communities have on our business. We have established sustainability priorities based on materiality assessments, and shift- ed our capital strategy to finance our sus- tainable development, using green and sus- tainability-backed bonds to finance some of our important work. Over the last year, we engaged in a compre- hensive ESG transformation process involving all parts of our operation. We sought to en- sure our practices aligned not only with local requirements, but also with world-leading best practices across industries, so we could establish a new frontier for our local markets on ESG trends and commitments. We established an ESG Committee, com- prised of the company’s senior leadership team,1 including our CEO, guided the trans- formation process and met regularly to make strategic sustainability decisions. To ensure enduring success, senior executives with knowledge of the business and sustainabili- ty actively participated in this new vision for change and contributed perspectives from across all areas of our organization. At Coca-Cola FEMSA, our guiding strate- gic framework incorporates Environmental, Social, and Governance (ESG) principles in two complementary ways. The first is over- arching guidance for each of our strategic priorities to ensure that the decisions we make and the resulting changes we drive through these six corridors are sustainable. This ensures that our growth is responsible throughout our organization and serves all of our stakeholders. The second is as one of our priorities—our imperative to make a dif- ference in ESG. We separated this from our overarching guidance of sustainable devel- opment because we want to ensure that we are proactive in our approach to become a more sustainable organization. Much more than compliance, our plans for sustainability proactively foster a culture of action. 1 The ESG Committee is comprised of our company’s CEO, CFO, Human Resources Director, a COO from one of our main operations, Supply Chain Director, Corporate Affairs Director, and permanent invitees from the FEMSA Sustainability team, among others. HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 52 OUR ESG STRATEGIC FRAMEWORK Make a difference in environmental, social and governance (ESG) ENVIRONMENTAL SO CI A L GOV E RNAN CE Scope 1 & 2 Scope 3 Collection Packaging Operational Waste Water Effi ciency Human Capital Development Integral Wellbeing Flexibility Sustainable Value Chain My KOF Community & y t e f a S h t l a e H Water Regeneration Replenishment Access DIVER SIT Y, EQUIT Y & INCLUSION DIGITALIZATI ON (ENABLEMENT, TOOLS & TRAININ G) Supply Chain Management Cyber & Data Security Risk Management Shareholder Management & Materiality Governing Bodies ClimateActionCompliance& SecurityCorporate GovernanceCircularEconomyWaterStewardshipInternalExternal HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 53 ENVIRONMENT CO₂ CH₄ N₂O HFCs PFCs SF₆ CLIMATE ACTION We follow the Science Based Targets initiative’s (SBTi) guidance on reducing rather than offsetting most of our CO2e emissions. We separate our emissions mainly in scope 1 and 2 (direct and indirect emissions from our op- erations) and scope 3 (indirect emissions from our value chain, covering purchased goods and services provided by suppliers and upstream transportation and distribution). By 2030, to break the ceiling on climate action, we are committed to decreasing our scope 1 and 2 emissions by 50%, and reducing 20% of scope 3 emissions in our en- tire value chain. We annually calculate our emissions by evaluating them across various categories, including asset emissions such as our fleet, and emissions from energy consumption in our bottling plants and distribution centers. We also esti- mate emissions from our value chain, including ingredient and packaging emissions, and emissions from cold drink equipment operations at the point of sale. We also report our emissions to the Carbon Disclosure Project (CDP), fol- lowing their guidelines to baseline. This ensures that we follow international standards and increase transparency around our sources of emissions and progress to date. SCOPE 2 Achieve 100% renewable electricity for our operations. SCOPE 1 Reduce 50% absolute GHG emissions from our operations (scope 1 and 2) by 2030 compared with a 2015 baseline year. SCOPE 3 Reduce 20% absolute GHG emissions from the value chain (covering purchased goods and services provided by suppliers and upstream transportation) by 2030 compared with a 2015 baseline year. UPSTREAM Scope 3 • Subcontracted fleet. • Ingredients: sugar, HFCS, CO₂. • Packaging: PET, aluminum, glass, labels, screw caps, crown caps. DIRECT OPERATIONS Scope 1 • Plant boilers. • Owned fleet. • Refrigerant gases. Scope 2 • Power consumption in plants, distribution centers, and offices. HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 54 SCOPE 1 & 2 EMISSIONS – CONTEXT & AMBITIONS 2022 CARBON FOOTPRINT: TOTAL KOF To reach our interim and final ambition on CO2e emission reduction, we have set initiatives to migrate these assets to lower emission alternatives. Project 1 Fuel substitution in boilers. 2 Energy efficiency in own fleet and fuel-switch. 3 Integration of electric vehicles. Refrigerant gases management. 4 1 A Energy efficiency in manufacturing facilities Renewable energy supply 2 A 5 6 Initiatives Migrate boilers to natural gas. Improve fleet efficiency. Transition of own transport fleet to electric. Refrigerant gases from sales equipment will be confined and / or recirculated. Manufacturing plants will reach their full potential by 2030. 100% of the electricity requirements will be renewable by 2030. SCOPE 3 EMISSIONS – CONTEXT & AMBITIONS Project Efficiency in third party fleet. 7 8 9 10 3 A Initiatives Improve efficiency of the new subcontracted transport fleet. Improve the efficiency of new sales equipment. Energy efficiency of sales equipment. Sustainable packaging and light weighting. Strategic suppliers development. Collaborate with our suppliers to improve their Achieve 50% rPET content in our packaging by 2030. 11 Renewable energy in SMEs emissions per unit of product. Migration to renewable energy. Over the last three years, our scope 3 emissions made up 84% of our CO2e emissions on av- erage, driven by agents across our entire value chain. Our main sources of scope 3 emissions are cold drink equipment at the point of sale, ingredients, and packaging. We set various ini- tiatives to tackle these emissions, many of which require new partnerships along our value chain, and better ways to manage our supply chain. MANUFACTURE (Scope 1 & 2) DISTRIBUTION (Scope 1, 2 & 3) COOLERS (Scope 1 & 3) PACKAGING (Scope 3) INGREDIENTS (Scope 3) • Plant electricity • Boilers / Fossil • CEDIS electricity • Primary and • Electricity • Coolers Fuels secondary fleet • PET / rPET • Glass • Aluminum • Others • Sweetener • CO2 as an ingredient TOTAL CO2 KOF EMISSIONS: 3,789 kt CO2e 3% 15% 32% 25% 26% * kt CO2e: thousand tons of CO2 equivalent HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 55 CLIMATE ACTION – PROGRESS AND 2022 HIGHLIGHTS In 2022, absolute CO2e emis- sions across our value chain amounted to 3,789 kt CO2e. Our overall value chain emissions are broken down as follows: PERFORMANCE ON SBTi Reduce absolute scope 1 and 2 GHG emissions 50% by 2030, from a 2015 base year. Reduce absolute scope 3 GHG emissions 20% from purchased goods and services and upstream transportation and distribution by 2030, from a 2015 base year. Increase annual sourcing of renewable electricity from 8.7% in 2015 to 100% by 2030. Scope 1 15% 555 kt CO2e Scope 2 1% 52 kt CO2e 3,789 kt CO2e Scope 3 84% 3,182 kt CO2e 29% 2030 50% 2030 17% 20% 2030 100% 66% HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 56 EXPANDING ELECTRIC VEHICLE FLEET This year, we expanded our fleet of electric vehicles to 482 vehicles. We also significantly expanded our supplier base for electric vehicles in the Latin America region to eight leading global suppliers, working with them to develop elec- tric units that meet the bottling industry’s specifications. Through our sustainable mobility community, we are working to align the electric vehicle strategy followed across our operations. Within this community, we devel- oped and deployed a total cost of ownership (TCO) and scenarios analysis tool. Moreover, to further align our op- erations, we developed a standardized protocol to test new electric vehicle technologies—with a standard fuel ef- ficiency KPI to measure fuel consumption by country—to reinforce and improve our migration to electric vehicles. Thanks to these and other initiatives, we will continue our efforts to transition to electric vehicles, prioritizing areas with restricted mobility. SUSTAINABLE MOBILITY Through our Sustainable Mobility Strategy, we aim to reduce the impact of our fleet (including primary and secondary distri- bution trucks) on the CO2 emissions of our supply chain, and to position ourselves as an industry leader in Latin America in terms of vehicle efficiency, environmental stewardship, and safety. Aligned with this strategy, our projects are to: • Transition of own transport fleet to elec- tric fleet efficiency, prioritizing areas with restricted mobility • Achieve a 25% increase in efficiency in fuel consumption (MJ)/kilometers of distance covered (km) During 2022, we continued to execute route optimization strategies to maximize overall vehicle efficiency. With the de- ployment of KOF Digital Distribution 1.0 platform in Argentina, Brazil, Colombia, Central America, Mexico, and Uruguay, we installed vehicle telemetry systems on 80% of our primary and secondary distri- bution fleet. Thanks to each truck’s telemetry data—to- gether with the functionality of our mobile delivery devices— we enjoy the ability to identify and correct deviations in distribu- tion route execution versus our route plan. This equipment also enables us to analyze route execution patterns in order to iden- tify an optimal combination of variables to improve our route planning process. As a result, we optimize our fleet’s usage and improve key road safety indicators, while reducing fuel consumption and CO2 emissions. Indeed, we have developed a standardized KPI for fuel use efficien- cy that will enable us to perform inter- nal benchmarks to improve this indicator moving forward. Moreover, with the deployment of dynamic routing across our secondary distribution fleet in Brazil, Colombia, and Mexico, we enjoy the flexibility to plan vehicles’ routes on a daily, weekly, and monthly basis, thereby optimizing available fleet resourc- es and distances traveled to serve our customers. HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 57 In addition to our sustainable mobility initiatives, we continue to drive down scope 1 emissions from the re- lease of refrigerant gases. We have upgraded more of our coolers at the point of sale to cleaner refrigerant gases, and confined a greater percentage of gases at the end-of-life. Our scope 2 improvements were led by investments in energy efficiency and renewable energy. We assess our operation’s energy efficiency through an annual ener- gy assessment, understanding sources of inefficiencies and opportunities to drive down emissions. To this end, we invested US$146.84 million in climate action initia- tives, focused on operating with steam and executing our Top 20 Energy Efficiency Strategies across our oper- ations. Since 2015, these initiatives have enabled us to increase our energy efficiency to 5.97. We were also able to increase our use of renewable energy for our operations, achieving 66% renewable energy use. Scope 3 emissions pose the greatest challenges to our climate action ambi- tions, and they are the greatest source of emissions in our value chain. In 2022, our scope 3 emissions amounted to 3,182 kt CO2e or 84% of our total value chain emissions. Since 2015, we have de- creased our scope 3 emissions by 303.02 thousand tons, leading to progress on our scope 3 ambitions of 17%. In 2022, we migrated part of our cold drink equipment to high-efficiency ver- sions, enabling us to reduce emissions from electricity use at the point of sale, while benefitting many small and medi- um-sized enterprises (SMEs) in our value chain by reducing their energy costs. Moreover, we continue our work with suppliers to reduce our scope 3 emis- sions. We are integrating scope 3 emis- sions into our agreements and conversa- tions with suppliers, and are looking for better ways to collaborate with top sup- pliers and drive down the climate impact of our value chain. 7 9 . 5 5 . 5 6 . 5 6 6 . 5 1 . 5 5 . 4 4 . 4 2 . 4 2015 2016 2017 2018 2019 2020 2021 2022 Y C N E I C I F F E Y G R E N E e g a r e v e b f o s r e t i L J M r e p d e c u d o r p HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 58 CIRCULAR ECONOMY COLLECTION AND PACKAGING – CONTEXT & AMBITIONS To mitigate the impact of our production vol- umes, we have set ambitions to collect 100% of all the PET we put in the market by 2030 and to have 50% of recycled resin in our pack- aging by 2030. Local market conditions for recycled PET (rPET) collection and recycling differs drasti- cally across our countries of operation, and we are currently evaluating the best approach for collection and recycling in the short term. We recognize that several markets will require us to partner with communities, the public sector, and regulators to ensure our supply of rPET. Our shift to more sustainable packaging is also driven by adoption of returnable/reusable bot- tles. As of 2020, the Coca-Cola system had ambitions to reach 25% adoption of return- able/reusable bottles across its network by 2030. At Coca-Cola FEMSA, we have already exceeded these targets—with 31.5% adop- tion of returnable/reusable bottles for 2022— bolstered by our affordability initiatives and our universal bottle that can be used across multiple beverage categories. →For more information see Portfolio. OPERATIONAL WASTE – CONTEXT & AMBITIONS Our ambition is to have 100% of our bottling plants certified as zero waste by 2025. While our distribution centers have a longer way to go, we aim to have 100% of our distribution centers certified as zero waste by 2030. CIRCULAR ECONOMY (COLLECTION, PACKAGING, AND OPERATIONAL WASTE) – PROGRESS & 2022 HIGHLIGHTS This year, we continued our efforts in PET col- lection and use of recycled resin across our operations, collecting 26% of the PET we put in the market and using 27% recycled resin across our beverage portfolio. This year, we changed our methodology to calculate our col- lection rate to only include direct and subcon- tracted collection, where we are certain as to who collected the material. In terms of direct and subcontracted collection, we collected over 45% more tons of PET in 2022. % 1 3 % 9 2 % 7 2 % 4 2 % 1 2 % 1 2 2017 2018 2019 2020 2021 2022 T N E T N O C D E L C Y C E R % HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 59 We collected more than 80 thousand tons of the PET we put into market in 2022 versus more than 50 thousand in 2021 through both collective and individual action. Ensuring adequate collection across our regions of op- eration requires us to actively partic- ipate in civil and industry alliances. For example, we collaborate with ECOCE, a Mexican civil association that promotes waste collection and recycling, to advance our levels of collection. ECOCE reached a national collection rate of 59% in 2021, on par with the EU. We also operate through joint col- lection centers in Brazil, Mexico, and Costa Rica, which enabled us to col- lect 64,184 tons of PET in 2022. WORKING WITH KEY PARTNERS TO MULTIPLY OUR SUSTAINABLE COLLECTION CAPABILITIES By joining efforts, we multiply the effects of our ac- tions. Accordingly, we partner with communities, authorities, industry allies, and NGOs on different initiatives to raise awareness of post-consumer waste management, carry out collection and recy- cling programs within our communities, and inform consumers about the proper disposal and handling of the waste generated from our products. Across Latin America, we continued to strengthen our sustainable collection capabilities, including the following collaborative initiatives in our countries of operation: Argentina – We are focused on reinforcing our recycling capabilities in municipalities through pro- grams such as Ruta Verde. Brazil – During 2022, four collection centers were added in São Paulo, Mutinga, Porto Alegre, and Belo Horizonte. Colombia – We expanded our MovimientoRE program, an industry/business alliance to increase the collection of PET in the cities of Barranquilla, Cartagena, Santa Marta, and Cali (through “Cali Cir- cular”), as well as Reciclave Bogotá with the em- powerment of recyclers. Costa Rica – We use green trucks on our home delivery routes to collect PET from the households to whom we deliver our products. We also work, through our Geocycle, Misión Planeta, and industry alliances. Guatemala – Some of our programs include cleaning of Río las Vacas, Recíclalos, Casas Verdes, Ecobots, and the beach clean up. Mexico – We opened five new collection cen- ters, so we can increase recycling in the southeast region of the country. We also aligned with small customers, as well as with larger chains, to collect waste at their stores through “Mi Tienda sin Residu- os” (“my zero waste shop”) program. Nicaragua – Starting in 2021, we established a strategic alliance with Gravita, which operates through a network of base recyclers in several mu- nicipalities, guaranteeing the recovery and treat- ment of PET, so that it can be reused as a raw ma- terial again. Panama – We formed an alliance with Recicla- dora Nacional to increase the collection and treat- ment of PET plastic bottles and create a circular economy for the use of these materials. Uruguay – We have an industry agreement with Crystal PET to close the PET recycling loop through the use of rPET. We continued to accelerate our use of recycled resin in our port- folio of beverages’ packaging, with more than 85 thousand tons of recycled resin used in 2022. Most of our recycled resin is ac- quired from third parties, but we have also continued our joint recycling ventures in Mexico, recycling more than 18 thousand tons of rPET through our IMER plant. We are in the procees of building a new plant “PLANETA”, in Southeast Mexico with and investment of US$70 million. Overall, our bottles were made of 97.13% recyclable materials this year. We also continue to exceed targets from the Coca-Cola system in sales of returnable bottles, with 31.5% of our sales coming from reusable packaging. In addition to reducing packaging waste, we have made strides in our operational waste control. We certified 37 bottling plants as zero waste, achieving progress of 77% for our bottling plants. We recycled 98.5% of our industrial solid waste this year, and improved our waste ratio to 6.31 grams of waste per liter of beverage. HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 60 WATER STEWARDSHIP WUR 1.26 by 2026 100% of the water we discharge from our manufacturing opera- tions is processed by wastewater treatment plants to fulfi ll local and Coca-Cola Com- pany requirements to ensure suffi cient wa- ter quality to foster aquatic life. Anual Water Risk Assessment (WRA) My KOF Community Increase effi ciency 100% discharged water treatment under KORE (Coca-Cola Requirements) Water access, sanitation, hygiene (WASH) projects in social risk operations Regenerative operations Resilient Communities We are committed to ensuring the efficient use of this natural resource, conservation of water basins, and safe access to drinking water for our communities and ourselves. Water regeneration Healthy watersheds 100% Water replenished in watersheds with high and medium water stress Water funds in watersheds where collective action is needed Given the growing urgency of shared water risks and the need for systemic, transversal action across the value chain, our holistic water strategy is focused on four main interrelat- ed elements: • Reducing the water we consume and secure water avail- ability for our operations (efficiency) • Returning the water we use to the source (replenishment) • Implementing water funds where collective action is needed • Improving access to water for us and our communities (access) Since water efficiency seeks to minimize our use of the wa- ter source, it is a core part of our environmental pillar. Watershed resilience HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 61 WATER EFFICIENCY – PROGRESS & 2022 HIGHLIGHTS This year, we used a total of 30,240.92 megaliters of water, discharging 8,564.43 megaliters back. We treated 100% of this discharged water to quality levels that could sustain aquatic life. Megaliters of Megaliters of municipal water municipal water Megaliters of Megaliters of rainwater rainwater Megaliters of Megaliters of well water well water Megaliters of Megaliters of river water river water Total water Total water consumption consumption (ML) (ML) 9,315.6 10.3 19,278.4 1,636.6 30,240.9 Megaliters Megaliters of water of water discharged to discharged to sewers sewers Megaliters Megaliters of water of water discharged into discharged into rivers rivers Total water Total water discharged discharged (ML) (ML) 3,940.9 4,623.5 8,564.4 Total KOF (ML) Total KOF (ML) We invested a total of US$7.07 million in water efficiency programs to reduce our water use, guided by our “Top 20 Water Saving Initiatives.” Through these initiatives, we continued to improve our water efficiency to an industry leading level of 1.46, down from 1.47 in 2021. 2 7 . 1 5 6 . 1 8 5 . 1 2 5 . 1 9 4 . 1 7 4 . 1 6 4 . 1 2016 2017 2018 2019 2020 2021 2022 Y C N E I C I F F E R E T A W r e t i l r e p r e t a w f o s r e t i L d e c u d o r p e g a r e v e b f o ) r e t t e b s i s s e l ( WATER EFFICIENCY – CONTEXT & AMBITIONS Our main tool to reduce the impact on water reservoirs of our operations is to use less of this resource to produce our bev- erages. We analyze this through our water use ratio (WUR), which calculates the liters of water required per liter of bev- erage produced. We have consistently led our peers in the industry in water efficiency, and continue to invest in minimizing our use of water. For this purpose, we designated our first issuance of sustainability-linked bonds in Mexico for Ps. 9,400 million to improving our water efficiency. For more information see →Sustainable Financing. We realize that complacency is ineffective to stave off the social and environmental impact of water scarcity, and our vision is to continue to break the ceiling on water efficiency. For this reason, we are committed to reduce our WUR to 1.26 by 2026. HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 62 WATER REPLENISHMENT – CONTEXT & AMBITIONS Water is a vital resource for life on the planet, and we must work to conserve this resource in the same environment where we operate. With this in mind, we defined a social water stewardship strategy to guarantee this resource for current and future gen- erations. To develop this strategy, we conducted a cross-sectional analysis of water risk within our company, supported by our partnership with The Coca Cola Company, FEMSA, FEMSA Foundation, The Coca-Cola Company Foundation, and various consultancies. We identified 31 priority sites that operate in areas of high or medium water stress. We set ambitions to go beyond water neutrality and ensure the regen- eration and protection of water in these basins. By 2030, our ambition is to replenish 100% of the wa- ter we use in our production, focusing on medium and high stress sites. WATER REPLENISHMENT – PROGRESS & 2022 HIGHLIGHTS Water replenishment remains a priority for investment and partnerships. We currently replenish more than 100% of our total water use. During 2022, more than 43 thousand hectares were impacted through conservation, protection, and reforestations projects. EXEMPLARY CONSERVATION, PROTECTION, AND REFORESTATION PROJECTS MEXICO TLALOC Reforestation Project – This project has already intervened in the reforestation of the 1,833-hectare Alto Atoyac Watershed. So far, it has reforested 20 hectares, and restored soil on 130 hectares for the purpose of supplying the Toluca Valley aquifer. Regenerative Agriculture and Access Program – In collaboration with the World Resources Institute (WRI), the company developed a three-year pro- gram to promote regenerative agricul- ture, addressing water infiltration and quality problems on 200 hectares that support 100 local producers. CENTRAL AMERICA AND COLOMBIA Agua por el Futuro (Water for the Future) – Through several conser- vation projects, this program has re- plenished 100% of the water that we use in Colombia, Costa Rica, Guate- mala, and Panama. Forest Protection, Agroforest- ry Promotion, and Reforestation Projects (Guatemala) – One project protects 231.47 hectares of land in the Xaya-Pixcaya Watershed, which provides approximately 30% of the water supply for the Guatemala City metropolitan region. This project has already reforested 51.42 hect- ares and implemented agroforestry on 8.16 hectares through the plant- ing of hedgerows and trees. Another project protects 218.58 hectares of forestland in the Los Ocote, Teocinte, Las Vacas, and Villalobos East Wa- tersheds in the Guatemala City met- ropolitan region. This project has al- ready restored 8.4 hectares of forest. We believe partnerships and industry alliances are fundamental and critical to the success of water projects. Therefore, we always look for the appropriate partnerships with communities, third parties, or other companies. Through the Latin American Water Funds Partnership, we have worked with The Nature Conservancy, FEMSA Foundation, the In- ter-American Development Bank, and the Global Environment Facility to develop eight water funds located in basins of interest: • In Colombia, we participate in several water funds, such as Agua So- mos, Cuenca Verde, and Biocuenca, which are dedicated to providing water security in the country. For example, the Agua Somos project is implemented across five watersheds located in the Guasca, Sesqui- le, and La Calera municipalities of southwest Bogota, Colombia. This project consists of five different activities—forest conservation, par- amo conservation, passive forest restoration, grassland restoration, and active restoration—that impact a total of 1178.6 hectares. • In Costa Rica, we participate in the Agua Tica water fund that promotes the conservation and supply of water sources. Since 2014, the fund has impacted 607 hectares and the supply of 631,700 cubic meters of wa- ter through an in-situ monitoring system that measures both the quality and origin of the water, as well as the condition of the forests • In Guatemala, we participate in the Funcagua water fund, aimed at pro- moting the availability of safe water for the population in the country's capital. A total of 1,000 people have benefited from this program. • In Mexico, we participate in the Agua Capital and Cause Bajio water funds, created to contribute to water security and the sustainable management of the basin through nature-based solutions. • In Uruguay, we are part of the Alianza Uruguaya por el Agua (AUA), a wa- ter fund designed to provide water security to the Río de la Plata region. HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 63 bia, we partnered with FEMSA Foundation to provide a water treatment vehicle that offered clean and safe water to several communities that have water access difficulties and defi- ciencies, benefiting 67,907 people. Moreover, in Costa Rica, at Belen (distribution center), we established a new system in order to return clean and safe water to the environment, and built a wastewater treatment system. Further- more, in Guatemala, we benefitted 105 people through the distribution of Vivienda Digna kits, designed to capture rainwater in various zones across the country that have limited access to drinking water. WATER ACCESS – CONTEXT & AMBITIONS WATER ACCESS – PROGRESS & 2022 HIGHLIGHTS The human right to water is not only essential to live with dignity, but also a precondition for the realization of other human rights. One of our objectives is to provide water se- curity in the watersheds where we operate. Therefore, we work hand-in-hand with com- munities, governments, and other institutions to create water resilience that provides for the return of water to nature and ensures a safe and reliable water supply for communities. With this mindset, we aim to improve access for our communities to safe drinking water. Throughout our cross-sectional water risk anal- ysis, we have identified 17 priority sites for wa- ter access, sanitation, and hygiene initiatives (WASH). Currently, we have access projects in Argentina, Colombia, Costa Rica, Guatemala, and Mexico. We partner with The Coca-Cola Company, The Coca-Cola Foundation, and FEMSA Foundation to co-develop community initiatives and mag- nify our impact. For example, Escuelas de Lluvia is a comprehensive program that provides clean water to Mexico schools suffering from water scarcity through the installation of a rainwater harvesting system and the implementation of an environmental education program. This year, we installed rainwater-harvesting systems in 24 schools across 5 Mexican states and supported the hygiene of 2,800 students. Additionally, in Mexico, we developed the Water 4 Happiness program in conjunction with the Coca-Cola Foundation to improve the quality of public water supply sources in the town of Apizaquito, Tlaxcala, Mexico, benefiting 10,200 people. Similarly, in Argentina, we participated in the improvement of water access infrastructure for the Buenos Aires’ neighborhoods of Tigre and Tuna, benefiting 1,649 people. Also, in Colom- HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 64 SOCIAL programs that better respond to their specific needs. We aim to final- ize concrete ambitions for this group by next year. We also aim to support our PET collectors through our Sustainable Value Chain initiatives. Our PET collection performance and adher- ence to collection guidelines established by The Coca-Cola Company depends on our ability to collaborate with PET collectors across our countries of operation, and we can play an enormous role in re-en- forcing the socioeconomic progress of these groups. Together with our Supply Chain Management ambitions, we seek to improve our relationships with the small and medium enterprises in our supplier base. We are already working together with our procure- ment team to reach our SME suppliers, while we also seek new ways to collaborate to improve socioeconomic development while meet- ing our environmental goals. The development of our social ambitions and strategy is founded on an understanding that our license to operate relies on developing mutually beneficial relationships between our company and our in- ternal and external stakeholders. Internally, we are guided by an un- derstanding that our people are the lifeblood of Coca-Cola FEMSA, and the best way to grow is to ensure that our talent can live fulfilling lives—balancing their purpose in and out of the workplace. Externally, we are focused on our relationships with local communities and the value chain. Recognizing that our operations have an enormous im- pact on our society and communities close to our plants, our goal is to continue to add value to ensure sustainable growth for our company and community in tandem. SUSTAINABLE VALUE CHAIN – CONTEXT & AMBITIONS We enjoy tremendous opportunities to collaborate across our rich value chain of suppliers, customers, and other stakeholders to max- imize our impact on society, and make our value chain more sustain- able. Within our Sustainable Value Chain, we have highlighted our small local businesses, PET collectors, and SME suppliers for closer collaboration. Small local businesses are the heartbeat of our large and thriving commercial network—they are the small and medium retailers and shopkeepers that distribute our final product to consumers. Our small business network has an enormous impact on our sustainability: we sell and market our products through more than 1.8 million points of sale across our traditional sales channel, including a large percentage of women shopkeepers and other diverse groups. As the main con- tact at the point-of-sale, small local businesses are close to consum- ers, and can contribute significantly to our environmental goals. Our work with small local businesses will seek to improve their fi- nancial and digital inclusion, while amplifying our own environmental development and lower scope 3 emissions. To achieve these goals, we are working to better understand the social conditions of small local businesses across our regions of operation in order to tailor HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 65 MY KOF COMMUNITY – CONTEXT & AMBITIONS EXTERNAL SOCIAL – PROGRESS & 2022 HIGHLIGHTS Our community engagement priority is called My KOF Community in our ESG strategic framework. This reflects our understanding that our com- munities cannot be treated as completely distinct from our business op- erations—sustainable growth for us requires sustainable growth for the communities in which we operate. We define our communities according to different standards of our prox- imity and levels of interaction. We are focusing on our local community operations for the purposes of these ambitions. At Coca-Cola FEMSA, we are determined to advance the development of the communities where we operate. With this in mind, we will collab- orate with our communities across all of our operations to develop sus- tainable solutions that address local needs. Our activities across our ecosystem include strategic volunteering through our people, enhancing economic development of SMEs within the community, promoting health and minimizing safety issues within our operations, and interacting with local authorities. By 2030, we aim to have at least one community engagement plan per site to improve our relationships based on our MARRCO (Model for Ad- dressing Risks and Relations with Our Community) methodology. These engagement plans include prioritized activities to support business con- tinuity and contribute to community needs. This year, we continued to engage with our value chain and communities through investments and social programs, impacting over 331 thousand people’s quality of life and socioeconomic development. We also innovated in our use of sustainable financing to fund our social projects, with social and sustainable bond issuances this year totalling Ps. 6,000 million. →Sustainable Financing. Our traditional trade channel is a key segment of our value chain that we always look to strengthen through our community projects. We focus on ensuring that these projects are always connected to priority topics for our company, such as water, PET collection, and renewable energy. SUSTAINABLE VALUE CHAIN We supported our local business owners with several local initiatives across our operations. We couple our initiatives with elements designed to improve our small business owners’ capabilities with our work on diversity, equity, and in- clusion. To this end, we continued our focus on female small business owners through empowerment initiatives that provide business man- agement training to foster the success of their businesses. EXEMPLARY SUSTAINABLE VALUE CHAIN INITIATIVES In Colombia, our work with programs such as Ruta Tenderos focuses on providing small business owners with access to management advice, information, and training for their businesses in areas such as account- ing, PET collection, and economic reactivation. We supported our small business owners improving their credit access, and provided them with training for their personal and professional development through Mu- jeres Tenderas ICP programs. HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 66 In Brazil, we implemented Acelera SC – Rota do Empreende- dorismo, a program that contributes to small entrepreneurs’ business innovation processes by fostering the innovation eco- system, presenting opportunities for more companies to partic- ipate, helping small businesses to reposition themselves in the market, promoting networking and co-creation, and expanding the vision of open innovation in companies that are already con- solidated or in the process of repositioning. We also supported the use of differentiated credit, and worked on the Empreenda como Uma Mulher initiative, providing specific technical training for women, while developing new work skills. We further continued our initiatives to support women-led busi- nesses through the Villa Talento program in Costa Rica and Nic- aragua; and through the Emprendamos Juntas program in Ar- gentina and Uruguay. Our Mexico operation partnered with The Coca-Cola Foundation to start the Empoderamiento de mujeres y pequeños negocios program in 2021. The program’s goal is to support the social, economic, and digital development of women and their small businesses—driving their success through a personal-profes- sional training plan. Since its inception, the program has im- pacted 17,000 women throughout Mexico. In Panama, we supported their use of cashless and digital capabilities. PET COLLECTORS In addition to improving our small business owners’ capabili- ties, we work with them to improve their skills in other aspects of our company’s business. For example, to facilitate PET col- lection, projects such as Mi Tienda sin Residuos focus on help- ing our small local business owners or “tenderos” to strengthen their business by incorporating elements that invite the com- munity to participate in waste collection. During 2022, this proj- ect supported almost 200 local business owners, while advanc- ing our PET collection priority. EXEMPLARY PET COLLECTOR INITIATIVES We also work on PET collection across the value chain, working with collectors to improve their capabilities, access to resourc- es and networks, and compliance with local regulations. For example, through the collaboration of companies and associ- ations, programs such as Reciclar Pelo Brazil work to regulate, improve, and professionalize the performance of cooperatives and associations of collectors of recyclable materials, aligned with the National Solid Waste Policy. MY KOF COMMUNITY We continue to prioritize the safety and wellbeing of our em- ployees, customers, consumers, and communities through our community projects and donations, including special emergen- cies such as in the aftermath of natural disasters. During 2022, we provided support to more than 240 thousand members of our communities through donations of our hydra- tion products during natural disasters, as wells as donations for the improvement of public spaces such as parks, sidewalks, and playgrounds in the areas where we operate, among others. Overall, we managed to benefit over 600 thousand people in our communities through our environmental and social (pro- grams and donations) initiatives, improving their quality of life and socioeconomic development. HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 67 HUMAN CAPITAL DEVELOPMENT – CONTEXT & AMBITIONS The strength of our workforce today is a key driver of our growth tomorrow. By 2030, we aim to increase opportunities for our employees to fulfil their individual career needs and be the real protagonist of their own careers. To enable our development strategy, we are looking at various ways in which employees can sustain continuous career development. Ca- reers require opportunities, and we are aiming to increase the internal career mobility opportu- nities across various company functions, coun- tries, and business units. We also realize that development requires tools to perform well, and we have set ambitions to maintain annual train- ing hours at best-in-class levels across contri- bution levels and gender. Engaging career development offers the poten- tial to improve our employee retention, and we consider this one of our key metrics to improve. We will continue analyzing strategies for reten- tion through human capital development to sus- tain our human capital ambitions. INTEGRAL WELLBEING – CONTEXT & AMBITIONS Focusing on our employees’ and their families’ wellbeing is where we all win. By 2030, we want to foster a culture of wellbeing based on a holis- tic view of self-care and prevention. Our wellbeing ambitions include helping our employees to lead meaningful lives. To this end, we invest continuously to ensure our people enjoy the opportunity to volunteer in environ- mental or social initiatives, and make an impact beyond their direct job function. We also aim to improve our employees’ physical and mental health, as measured by our rates of absentee- ism and lost time due to illness, and the overall rate of serious illness in our workforce (i.e., re- gardless of impact to operations). Our wellbeing initiatives should be accessible to our people across our various geographies, functional areas, and levels. Accordingly, we are working to ensure that our programs cover more of our workforce every year, and that more em- ployees leverage these programs. For more information see →Social Development, Occupational Health & Wellbeing. INTERNAL SOCIAL Our social commitments also have a strong focus on our employees. As part of our peo- ple-centric culture, we have a robust Human Resources Operating Model that manages all aspects of our talent, and our sustainability strategy complements that model with ambi- tions around our employees’ development, in- tegral wellbeing, flexibility at work, and internal diversity, equity, and inclusion (DEI). Notably, our sustainability goals within our in- ternal social context are underpinned by our ex- isting integral ethical system, composed of our Code of Ethics, the Ethics Committee, and the whistle-blowing system known as KOF Ethics Line. Our Code of Ethics lays the foundation for our values and behavior, including topics that are relevant to our sustainable talent management such as Human Rights, Inclusion and Diversity, Discrimination, and Violence and Harassment. We have an ethics committee in each of our terri- tories that guarantees compliance with this code, reports to the Corporate Ethics Committee, and attends to the company’s most relevant ethical situations and complaints. Our whistle-blowing system, the KOF Ethics Line—managed by an ex- ternal provider—ensures that employees, suppli- ers, third parties, or anyone with a relationship with Coca-Cola FEMSA can anonymously lodge complaints of non-compliance. Our third-party line management ensures that these complaints are considered fairly, and analyzed by a group of investigators impartially and confidentially. HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 68 FLEXIBILITY AT WORK – CONTEXT & AMBITIONS INTERNAL SOCIAL – PROGRESS & 2022 HIGHLIGHTS As part of our commitment to business ethics, we continued to uti- lize our integral ethical system across our organization, with all of our employees signing the Letter of Compliance to our Code of Eth- ics, ensuring that they understand the Code of Ethics and are aware of KOF Ethics Line. We received a total of 1,371 complaints this year through this system, none of which were related to Human Rights violations. This year, we evolved the management of our integral ethical sys- tem—migrating from a focus on reports from KOF Ethics Line to an integrated vision that brings together key elements that guide us towards prevention, surveillance, detection, and response to ethical dilemmas. Through our management model, we gave our strategy the impulse and systemic approach, as well as the empowerment that our organization requires. In addition, we now employ more solid mechanisms that enable us to comply with our integrated ethical vision: • Common reference framework: New corporate standards and in- ternal guidelines on ethical matters • Communication strategy aimed at promoting knowledge and con- fidence in KOF Ethics Line and reinforcing ethical behavior • New management platform for KOF Ethics Line that enables us to carry out efficient, transparent, and reliable management • Annual specialized training plans for our ethics complaint investigators. We continue to drive human capital development together with our priority to strengthen our Customer-Centric Culture. This year, we expanded our trainings across all contribution levels, providing our workforce with an average of 22.13 hours of training. Flexibility is a mindset that extends throughout our operations. By 2030, we aim to ensure that our employees have more control over their life, along all of the different steps of their work experience. We understand that flexibility at work is of utmost importance to many of our employees, and effective flexibility programs can increase workforce produc- tivity, wellness, DEI, and improve our competitiveness in our talent market. We are working to define concrete ambitions around flexibility next year, un- derstanding the needs of our administrative employees, and evaluating the feasibility of expanding flexible work options for our frontline employees in the medium term. DIVERSITY, EQUITY, AND INCLUSION – CONTEXT & AMBITIONS Diversity, Equity, and Inclusion (DEI) has implications for initiatives involv- ing our internal social, external social, and governing bodies topics. For this reason, it is one of our transversal topics contained in our new ESG framework. However, we have concentrated our DEI ambitions so far on our workforce, building a steady path towards becoming a more inclusive and diverse organization. Our talent should mirror our market and business. As a company, we aspire to be an organization preferred by diverse talent for our ability to grow and support all of our employees. This year, we have focused on the representation of women in our workforce across all of our organizational levels. By 2030, our ambitions are for women to represent 40% of our leadership and management positions. Additionally, aligned with our commitment to DEI, we will continue to ensure that our ini- tiatives and programs enable us to attract, develop, and retain diverse talent into our workforce, including people with disabilities, ethnic, and economical- ly vulnerable groups according to each country’s priorities. For more infor- mation see →Diversity, Equity, and Inclusion. HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 69 Our training this year was a mix of synchronous, asynchronous, digital, and in-person events. We expanded our digital offerings, training 495 leaders through our Agile & Digital Academies. We further continued our Lab Leadership Program to facilitate accelerated talent development for the Supply Chain & Engineering and the LATAM Marketing functions. For more information see →Talent Management and Development. In Brazil, we developed Escuelas de Formación to train female talent within our communities to improve their opportunity to enter the labor force. Additionally, we trained women to perform refrigeration equip- ment maintenance to promote female participation in technical areas. Likewise, we staffed a new distribution center with 40% female talent since its inception. We expanded our digital ESG training significantly during the year. Through multiple training sessions throughout the year, we trained our top-level of management on our revamped ESG strategy, focusing on developing a comprehensive understanding of ESG and our strategy. We also developed more detailed training programs tailored to different functional areas. We developed our integral wellbeing initiatives this year, while lever- aging feedback from our biennial employee engagement survey, last launched in 2021. We continued to offer our Employee Support program to support emotional wellbeing and consider other aspects of wellbeing in the workplace through our Occupational Health & Wellbeing Man- agement System. For more information see →Occupational Health & Wellbeing. Our DEI efforts this year were spearheaded by initiatives to attract and retain women in our workforce, with oversight from our Diversity, Equity & Inclusion Advisory Board. Given the existing gender gap within the industry, we have promoted the representation and inclusion of female talent in a sustainable manner, empowering women to make decisions in key positions and implement- ing actions to attract, develop, and retain women in front-line positions: In Colombia, we launched the “Cinta Violeta” program, aimed at pre- venting gender violence within their personal lives and enabling them to share stories in a safe environment. We also expanded the accelerated development of our female talent for leadership roles. In Guatemala, we set up the first all-female production line, demon- strating that the integration and development of women in operational positions is possible. For more information see →Diversity, Equity, and Inclusion. We further expanded our efforts for talent recruitment of other under- represented groups. In Brazil, Colombia, Guatemala, and Mexico, we undertake active recruitment initiatives to improve the representa- tion of people with disabilities in our workforce, with many of our other countries of operations actively working to improve accessibility and inclusion within our workplace. We also work to improve recruitment of LGBTQ+ talent, and allied with Contratá Trans in Argentina, to im- prove the inclusion and social mobility of the trans community. To this end, we continued to improve inclusion of these LGBTQ+ communities through ally pledges, affinity groups, and consciousness and awareness programs across our countries of operations. In addition, we continued talent programs to attract and retain indigenous, afro-descendant, and economically vulnerable groups into our workforce. HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 70 SAFETY & HEALTH SAFETY & HEALTH – CONTEXT & AMBITIONS Our ambitions across health and safety are both in- ternal and external—they are relevant to our people, our third-party partners and contractors, and our neighbouring communities. Coca-Cola FEMSA’s Safety 0.0 Strategy is based on the understanding that safety is a fundamental val- ue and element of our ambitions and organizational strategy. We believe and understand that nothing is more important than the safety and wellbeing of our people. Our overarching safety vision is “zero is possible.” We aim to cause no harm or injury while people manufacture or supply our products or provide any of our services. To achieve this goal, we prioritize safety and give it high organizational relevance, em- powering our leaders and recognizing that each em- ployee is a fundamental contributor to our physical and psychological safety. To ensure the safety of our operations and the plac- es where we operate, we focus on ensuring the safety and reliability of our people and our work environment. Our comprehensive safety strategy is designed to develop the necessary capabilities and processes that will enable us to systematically re- duce our accident rates and continue to achieve our commitments. Our safety strategy includes five strategic pillars with 13 strategic actions associated with our key activities. We have also developed seven key initiatives and con- siderations needed to achieve these ambitions. S E L B A R E V I L E D & Y G E T A R T S 5 pillars 13 strategic actions Safety Culture & Leadership Risk Management, Process & Systems Capability & Talent Development Infrastructure and Technology; Digitalization of Processes Performance management, Improvement and Innovation 1. Communication strategy to position Safety as a fundamental part of our DNA & Company Culture. 2. Formalize and reinforce my responsibility and Accountability in Safety. 3. Evolve to a Congruent Leadership. 4. Strategy grounded in our Management System and perceived on the floor through the Operating Models. 5. Management and development of third parties - contractors. 6. Evolution to Risk and Incident Management based on HOP principles, global standards / barriers and a solid internal audit process. 7. Standardize and professionalize the Safety function. 8. Development of technical and human competencies, ensuring a solid induction process and risk and opportunity management skills. 9. Assurance and compliance with basic and inviolable rules. 10. Redesign and strategy of Safety Machinery and LOTO. 11. Ensure Infrastructure and Technology in machinery and equipment and E2E vehicles (from design and improvement). 12. Involvement of the Support Areas in the SAFETY Strategy. 13. Review and adjustment of the models of behaviors, recognitions, consequences and Best Practices considering Safety as a key element. 7 key initiatives 01 Serious & Fatal Injuries Prevention Program & HOP 02 14 Life saving Rules, KORE 3.0 KOF Standards 03 Safety Maturity & QSE Internal Audit Model 04 Safety in Third parties 05 Safety RTM 0.0 and Fatality Elimination Plan 06 Safety machinery & lock out & Tagout Program 07 Safety culture through Digitalization HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 7 1 We continue to focus on key programs and initiatives that have contributed to significant improvements in our safety performance over the past few years. While we continue to improve on traditional metrics, we recognize that we still have a major challenge to enable “zero” in our operations, which requires ongoing focus and initiatives to sustain our desired results. Common across these initiatives are efforts to improve capabilities, technology, accountability, communications, and other processes that can drive down our incident metrics. es, and safety vehicle infrastructure. We continuous- ly look to discover best practices and improve road safety in the many communities and countries where we operate, proactively sharing our knowledge with external entities that can enable these practices to be deployed more widely—from our communities to companies, governments, and non-governmental or- ganizations. By 2030, our goals and ambitions are to achieve zero fatalities, while reducing other incident metrics. In 2022, 365 million kilometers were travelled in the 9 countries where we operate. Our Safety RTM 0.0 route-to-market, distribution, and logistics safe- ty initiative has already reduced several of our road incident rates. From our people’s perspective, our focus is on developing the skills and behaviors we need to develop professional experts capable of an- ticipating and preventing incidents. In addition, we aim to ensure the infrastructure and safety elements of our vehicles, developing the processes and envi- ronments necessary for our workforce to manage the risks they face every day. This strategy has required us to accelerate our road safety investment to devel- op the capabilities of our employees and third parties and to acquire equipment such as road simulators, advanced telemetry systems and monitoring devic- 2025 public goals: • Reduce annual fatalities (avoidable or within our control) to zero • Reduce the Lost Time Incident Rate to 0.4 • Reduce the Total Incident Rate to 0.8 • Reduce the Crash Rate to 6.5 • Reduce the Major Crash Rate to 0.5 • Reduce Serious Incidents by 75% and High Poten- tial Serious Incidents (avoidable or within our con- trol) by 40% In addition to these safety practices, we have devel- oped ambitions around our talent’s health and well- being, including other forms of occupational safety. For more information see →Occupational Health & Wellbeing. HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 72 We continued the implementation of our Incident Management Process, contemplating a differentiated classification by four levels of incidents to manage and learn based on risk consequence and probability. Thus far, 100% of our operations have already migrated and implemented this new standard of Incident Management and Prevention for Serious and Potentially Serious Incidents. Starting in 2022, we expanded beyond our traditional metrics, incor- porating objectives and leading indicators related to Serious and Fatal Incidents and Potentially Serious and Fatal Incidents. These leading indicators are designed to help us detect risks and manage mitigation strategies for serious incidents. Our Behavior-Based Safety program is linked to this metric, and employees are now contributing to a reduction in this indicator across the organization. In 2022, a baseline of Serious Incidents and Potentially Serious Incidents was built and is now includ- ed in our performance tables. SAFETY & HEALTH – PROGRESS & 2022 HIGHLIGHTS This year, we continued executing our safety strategy and revamping our safety organization, helping us to improve most of our safety indicators. We redesigned our organization in 2020, and as of this year, implement- ed 90% of our new structure. In 2022, we achieved a lost time incident rate of 0.61. Our total incident rate decreased 13% this year, achieving a rate of 0.90—the lowest in our company’s history. 7 7 . 1 3 3 . 1 8 1 . 1 0 1 . 1 T N E D I C N I E M I T T S O L R I T L - E T A R ) r e t t e b s i s s e l ( 3 7 . 0 8 5 . 0 1 6 . 0 2016 2017 2018 2019 2020 2021 2022 6 0 . 93 6 . 2 9 9 . 1 9 8 . 1 3 3 . 1 4 0 . 1 0 9 . 0 T N E D I C N I L A T O T ) r e t t e b s i s s e l ( R I T - E T A R 2016 2017 2018 2019 2020 2021 2022 Since 2016, we have reduced fatalities involving our own vehicles or personnel by 85%. This year, we also decreased our crash rate by 20% year over year to 7.90, and our major crash rate by 27% year over year to 0.61. 0 2 . 6 1 3 3 . 4 1 6 9 . 0 1 1 8 . 9 0 9 . 7 E T A R H S A R C ) r e t t e b s i s s e l ( 4 8 . 1 E T A R H S A R C R O J A M ) r e t t e b s i s s e l ( 3 8 . 0 1 6 . 0 2018 2019 2020 2021 2022 2020 2021 2022 Among our key initiatives for decreasing fatal and serious incidents in plants, distribution centers, and RTM, we continued to deploy our “14 Life Saving Rules.” To ensure successful implementation and evalua- tion of our “14 Live Saving Rules,” each operating unit—manufacturing, warehouses, distribution, and sales—performs a quarterly evaluation on the progress of their action plans. In 2022, 100% of our operating units conducted this self-diagnosis, and the level of implementation was 84% for our manufacturing plants and 67% for distribution centers. We continued with the certification of our Safety and Health System in manufacturing plants based on the ISO 45001 standard, and we improved the performance of external audits by The Coca-Cola Company. In 2022, we achieved a 25% decrease in major and critical findings compared to 2021. This year, a new safety audit model was incorporated throughout the system that includes elements of compliance, safety strategy-based management, and culture and leadership. Under this new model, 66% of the operations had satisfactory results, and 33% of the operations had opportunities for improvement. At the corporate level, FEMSA’s internal audit had zero findings. HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 73 In our manufacturing operations, the main risks are related to machin- ery intervention and hazardous energy management. To minimize and eliminate these related risks, a global initiative has been developed, and US$20 million will be invested over 2022 and 2023 to ensure successful implementation. Developed during 2022, this global initiative consol- idates risk analysis, capability building, implementation of active and passive safety infrastructure, maintenance, and audits. As part of our training, we continued to provide and develop new train- ing programs relating to safety. We developed six safety modules for our QSE Academy and 20 modules for our RTM Academy, which will be available for implementation across all of our operations during 2023. The main topics for 2022 were road risks—focused on motorcycle safety and transport vehicle driving—and essential topics such as Safety Fun- damentals, Safety Culture, Serious and Fatal Incident Prevention Pro- gram, and Roles and Responsibilities. Road simulators are among our main capabilities development tools that we aim to implement across our operations. In 2022, we invested over US$2 million in simulators, with more than 10 in operation. These simulators enable us to imitate the handling of heavy vehicles (primary and secondary fleet); motorized vehicles (motorcycles); work at ele- vated heights; emergency situations in critical systems; and other rel- evant operational processes. To further develop this infrastructure, we acquired road simulators in Argentina, Brazil, Guatemala, Mexico, and Uruguay this year. Through this continuous investment, we have become not only one of the private companies with the highest capacity for sim- ulation training, but also an industry benchmark for safety simulation. FATALITIES Unfortunately, over the past year, 38 people died either through their work for Coca-Cola FEMSA or community members involved in an inci- dent with one of our vehicles. Any fatality is unacceptable, so we will not be satisfied until we fulfill our promise of ZERO incidents. We extend our condolences to all of the families and everyone affected by our opera- tions, and we are committed to implement best practices to prevent any losses in the future. This report documents the total number of fatalities (with or without legal responsibility where we were somehow involved during 2022). Importantly, we include any fatalities involving our own personnel, third parties, and communities, integrating all of our operations—manufactur- ing, distribution, and commercial locations operated by our own person- nel, contractors, and third parties. Total Fatalities Fatalities w/ Responsibility 2016 2017 2018 2019 2020 2021 2022 24 26 17 30 37 54 38 9 9 6 8 8 5 4 Year 2016 2017 2018 2019 2020 2021 2022 KOF Collaborators 6 3 3 2 4 0 0 Third Parties 9 5 4 0 3 5 4 Communities 39 29 19 22 23 12 34 HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 74 GOVERNANCE Governance plays an enormous role in ensuring a company is sustainable. Without effective governance, companies risk not following through on their sustainability ambitions, engaging in behaviour that can intentionally or accidentally damage their rep- utation, and ignoring their stakeholders’ priority issues. Within the context of sustainability, we view governance as a way to improve our relationship with all of our stakeholders along two key dimen- sions: engagement and transparency. GOOD GOVERNANCE ENABLES ENGAGEMENT AND TRANSPARENCY Aligned with our goal to break the ceiling on sustainability, we are shifting the ways we engage our stakeholders—moving from com- pliance with local regulation and investor requirements to becom- ing more proactive with our sustainability goals. We already have an internal ESG committee at the top management level, including our CEO, and are working to establish clear accountability across areas on our ESG initiatives. We are also setting strong ambitions of lead- ership on compliance and security topics such as cybersecurity. Our reporting to external agencies is key. We are reporting our emis- sions baselines to the Carbon Disclosure Project (CDP). We have also been a part of the Dow Jones Sustainability™ Emerging Markets Index for 10 consecutive years, and consequently, are evaluated annually under the S&P Global Corporate Sustainability Assessment, the leading sustainability metric for companies worldwide. We are also part of the MILA Pacific Alliance Index, FTSE4Good Emerging Index, and the S&P/BMV Total Mexico ESG Index, which require us to maintain high levels of transparency. COMPLIANCE & SECURITY As we move from compliance to proactivity, we are changing our approach to standard compliance and security topics around the organization. To this end, we identified three compliance ar- eas with ESG implications for this shift: risk management, supply chain management, and cyber and data security. RISK MANAGEMENT – CONTEXT & AMBITIONS Our risk management functions manage the impact that internal and external factors have on our business, identifying both short- term and long-term risks, quantifying their impact, developing mitigation plans, and reporting material risks. Embedding ESG into these processes requires us to take a longer term and broader view of our operations, considering interde- pendencies such as the link between regulation and our ability to operate our fleet effectively. Several of our risks can be mitigated through effective ESG actions, and an effective mapping of these risks is crucial to our ESG strategy. Additionally, to improve our levels of transparency, ESG risk management requires proactive reporting, ensuring our stakeholders are aware of our key risks and the actions we take to mitigate them. To this end, our ambition is to embed a fully mature and indus- try-leading ESG risk management process, quantifying our ESG impact and reporting these risks to our stakeholders. HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 7 5 As a baseline, during the latest update of our risk and control base, we have identified around 40% of risks that are connected to one or more aspects of ESG. SUPPLY CHAIN MANAGEMENT – CONTEXT & AMBITIONS We also must upgrade our policies on our supply chain partners to enable our sustainability goals. En- vironmental and social priorities, such as mitigating scope 3 emissions, are heavily dependent on our abil- ity to work closely with our suppliers and innovate in our supply chain. At the same time, we are respon- sible for ensuring a well-functioning, resilient supply chain to deliver products to our customers, many of whom depend financially on a steady supply. To manage our supply chain effectively, we are work- ing on implementing several ESG levers, including: • Strengthening our Supplier Code of Conduct with ESG requirements. • Assessing current suppliers’ ESG performance. • Seeking out collaboration opportunities with key suppliers to mitigate ESG impact. • Increasing our procurement functions’ ESG sophis- tication in order to balance ESG trade-offs with oth- er efficiency/cost considerations. Our ambition is to: • Ensure 100% of key suppliers audited compliant, by 2030 with Supplier Guiding Principles. • Ensure 100% of our key suppliers have emissions reduction ambitions by 2050. CYBER & DATA SECURITY – CONTEXT & AMBITIONS Over the past decade, our business has grown its digi- tal footprint, as we actively pursued our strategic cor- ridor of digitizing our core. Reliable digital platforms enable much of our commercial and sustainable suc- cess. Our manufacturing and maintenance programs are built on digital platforms, and our commercial ef- forts are based on digital point-of-sale management. While digital platforms enable much of our strategy, we are also responsible for ensuring the security of sen- sitive data from our customers, stakeholders, and our company. Without effective cyber and data security mechanisms, we risk operational disruption due to ran- somware attacks, unauthorized exposure of sensitive information, fraud, and various other disruptive events. Our efforts to improve our cyber and data security are focused on both protecting our data from cybersecu- rity attacks and managing our sensitive information ethically. This means that we are considering how we handle information from storage to use, and commu- nicating our data use transparently. Our cybersecurity operating model is based on an in- dustry best practices framework, which provides a systemic approach that considers controls aimed at prevention, detection, and resilience to cybersecuri- ty incidents. We have governance bodies at different levels, which include the Board of Directors’ Audit Committee, an Executive Steering Committee, and a Chief Information Security officer (CISO) responsible for leading our cybersecurity strategy. Our technically specialized organization that combines our own and third-party technical resources, while considering proper duty segregation between government and op- erations. A permanent internal audit process special- izing in cybersecurity reports directly to the Board’s Audit Committee, and independent firms conduct pe- riodic assessments, enabling us to assess our level of maturity and security posture while providing insights for our investment program. Also, as a reference, we have The Coca-Cola Company’s “Business Resilience Framework,” which provides the guidelines that the bottling system must meet in terms of cybersecurity and resilience. Lastly, we have a permanent cyberse- curity program supported by economic and human resources, which aims to achieve constant, positive evolution in cybersecurity and data protection. Following our theme of moving beyond compliance, our 2030 ambition on this topic is to be recognized as a cyber and data security leader in the Coca-Cola System and our value chain. Internally, achieving this leadership position will require us to improve cyber expertise and visibility in our governance bodies and reach and maintain a cybersecurity level appropiate for our industry and our risk appetite. It will also re- quire external effort, requiring us to extend our cyber risk management to our value-chain partners, and increasing our transparency regarding our governace strategy and risk management. HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 76 COMPLIANCE & SECURITY – PROGRESS & 2022 HIGHLIGHTS This year, we continued our initiatives to advance compliance and security topics (risk management, supply chain management, and cyber and data security) to leading levels. We are also working with more strategic suppliers aligned with The Coca-Cola Company’s Supplier Guiding Principles and Sustainable Agricultural Guiding Principles. This year, The Coca-Cola Company carried out 120 evaluations of suppliers in our system. We assessed the criticality of the identified risks according to our current evaluation methodology and considering the mitigating controls associated with each and found that we do not currently have any residual risk at a critical level. As a next step, we are focusing on a deeper analysis of these risks to guarantee full cov- erage of the key variables that may contribute to them, enhance our mitigating controls, and improve the methods of communicating them internally to leadership in a timely manner to act. Adherence to our various supplier guiding principles increased this year as part of our focus on supply chain management. We assessed 665 suppliers under our own Suppli- er Guiding Principles, ensuring alignment with our company’s operating principles and values across four categories: Social/Labor Rights; Environment; Ethics and Values; and Community. 2015 100 30 Coca-Cola FEMSA Country Mexico Costa Rica Guatemala Nicaragua Brazil Panama Argentina Colombia Uruguay Total 130 2016 198 120 84 2017 245 106 49 94 45 2018 172 34 34 27 66 36 31 402 539 400 2019 165 41 36 21 63 24 31 30 15 426 2020 164 35 35 15 245 30 17 51 27 619 2021 143 47 57 24 266 36 42 56 28 699 2022 217 38 68 13 187 34 41 45 22 665 The Coca-Cola Company Country Mexico Costa Rica Guatemala Nicaragua Panama Argentina Brazil Colombia Total 2016 52 3 5 1 0 11 47 7 126 2017 40 7 8 0 3 19 102 18 197 2018 59 0 7 0 3 10 51 11 141 2019 37 1 8 1 2 10 42 4 105 2020 27 7 7 1 1 10 57 10 120 2021 130 0 7 0 1 25 65 25 253 2022 46 1 7 1 3 11 45 6 120 We encourage the use of our SGP for our Tier 2 suppliers—the suppliers of our suppliers. In 2022, we evaluated 35 indirect Tier 2 suppliers based on our Guiding principles. Since 2018, we have conducted 178 evaluations under these principles. This year, under our permanent cybersecurity program, we continued implementing and improving controls oriented toward processes, technology, and people. These controls are aimed at prevention, detection, and resilience in the face of eventual cybersecurity incidents. We continued to provide awareness and training programs among company personnel and encourage safe behaviors, especially regarding social engineering and phishing risks. Concerning technological controls and processes, we improved our data protection and the se- curity of our infrastructure, systems, networks, applications, and identity and access manage- ment. We also continue to strengthen our monitoring, detection, and response capabilities. HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 77 TRANSVERSAL Throughout our ESG transformation, we set world-leading am- bitions on various environmental, social, and governance top- ics. However, achieving these goals requires important chang- es in the way we execute our day-to-day operations, as well as deep mindset shifts. We have already made many of these changes within our operations, but the changes we must make to sustain this strategy will take several years. Our transversal topics focus on several operational levers and key considerations that enable us to successfully execute our ESG strategy: DEI and digitalization. DIVERSITY, EQUITY, AND INCLUSION – CONTEXT & AMBITIONS Our aim is to ensure that we are proactive in our transversal DEI efforts, while considering the impact our transformation has on diverse groups’ representation and opportunities. Crucially, we are uniquely positioned to significantly improve DEI across our communities and value chain. For instance, our small local business population has a large representation of women, and improving business outcomes in our sustainable value chain actively contributes to better representation of diverse groups. Empowering these diverse groups yields both direct and indi- rect benefits—improving the lives of diverse populations can improve entire communities through accelerated and more bal- anced economic development. We have opportunities to iden- tify these groups across all of our work and take actions to im- prove their opportunities. DIGITALIZATION (TOOLS, TRAINING, & ENABLEMENT) – CONTEXT & AMBITIONS Our ability to become more sustainable depends on an array of different processes and groups within our organization, which requires effective tools for knowledge sharing and data capture. Digital platforms, including tools and training, enable quick and effective distribution of ESG information across our organiza- tion, as well as access to data that can help us pivot to more sustainable operations. A crucial aspect of this topic is an effective ESG training pro- gram through our online platforms and beyond. Aligned with our Human Capital Development ambitions, we will deliver ESG training that enables our people to understand the ESG impact of their work, and take action to advance our sustainability am- bitions. We have already provided several types of ESG training, and our objective is to leverage our digital platforms to cascade this training across all levels of our organization. Different ESG initiatives can also benefit from increased levels of digitalization, especially our fleet efficiency and electrifica- tion initiatives. To this end, we will continue to assess opportu- nities for increased levels of digitalization that can enable us to reach our different ambitions faster and more effectively. HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 78 STRENGTHEN OUR CUSTOMER-CENTRIC CULTURE HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 79 Our Human Resources’ (HR) function is working across three strategic corridors to foster a future-ready, people-centric culture, with the agility and digital savvy to support an open business ecosystem: SHAPE THE ORGANIZATION OF THE FUTURE Agile, collaborative, and high- performing, leveraging digital capabilities to support an open business ecosystem DEVELOP THE NEW PIPELINE OF TALENT Diverse, people-centric, and radically flexible, based on human dignity and connected to our purpose to fulfill and sustain our strategy EVOLVE OUR HR PLATFORM Enabled, empowered, digital, data-driven HR, leveraging a deep human connection, effective service, and management model to support the organization To advance along these corridors, we have achieved a clearer picture of the strategic challenges that we face to accelerate the development of the capabilities our organi- zation needs for long-term and day-to-day business suc- cess, coupled with much more assertive initiatives for our talent and digitalization roadmap. OUR HR WINNING ASPIRATION Lead our company’s cultural transformation by accelerating the organizational capabilities needed to ensure the pursuit of our purpose and the consolidation of our strategy. Purpose-Driven Organization People-Centric Management Agility & Digital Savviness We aspire to transform HR into a flexible, agile, and efficient platform that ensures our contribution to business growth through the focus on people-centered management, the positive impact on the wellbeing and development of our employees, their families, and their environ- ments, and the construction of safe and virtuous collaboration spaces that facilitate the unleashing of their talent potential. HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 80 SHAPE THE ORGANIZATION OF THE FUTURE Our company’s transformation journey, together with the complex outlook brought on by the COVID-19 pandemic, required the continuity of relevant cultural changes throughout the organization. HR became an active strategic business partner, effi- ciently facing the company’s business needs and adding value to the strategy. In 2018, we launched KOF DNA to ensure that our customers and consumers are at the center of our activities. This year, we reinforced our DNA to support our business vision and transformation, achieving improvement in key behaviors such as people first, operational excellence, and agile decision-makers. To this end, we continued to create mechanisms and practices to live and refresh our DNA throughout our organization. For example, we continued to implement and im- prove our “Estrella KOF” peer recognition program, where our people nominate and recognize their colleagues for showing extraordinary commitment to the ele- ments of our DNA. We gained a better understanding of where we must build key organizational ca- pabilities to advance our business strategy, focusing on accelerating our digital transformation while maintaining and growing our core business in a complex en- vironment. For HR in particular, this means becoming a platform that will enable us to develop deeper “people-centric” connections through digitalization and quality data, which will allow us to offer individualized solutions. We also improved our Employee Value Proposition (EVP). Aligned with our pur- pose, we developed a clear and comprehensive narrative, where we defined our total rewards strategy that focuses not only on our people’s compensation schemes, but also on their development and wellbeing. Benefits include flexible hours, home office for administrative positions and other roles where their func- tion allows, lactation rooms to support breastfeeding at work, and parental leave in accordance with the specific country’s regulations. % 4 . 7 9 % 7 . 8 9 % 5 . 8 9 MALE FEMALE TOTAL % 6 . 0 8 % 7 . 8 7 % 6 . 3 6 E T A R N R U T E R 1 R E D N E G R E P E T A R N O I T N E T E R 2 R E D N E G R E P MALE FEMALE TOTAL ¹ Employees that returned to work after Parental Leave. ² Employees that continue working 12 months after Parental Leave. Male Parental Leave varies in each country from 2 to 14 days. HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 81 INTEGRAL WELLNESS Our priority is for our employees to enjoy health across all of the dimensions of their lives. That is why we offer options for physical, emotional, and family wellbeing. We recognize their effort, commitment, and contribution to the generation of value for our business. POSITIVE WORK ENVIRONMENTS We are interested in making our people feel motivated, committed, and successful. That is why we offer collaborative, innovative, and trusting environments, where they can take calculated risks and work productively with the flexibility that adjusts to their functions and life moments. KOF EMPLOYEE VALUE PROPOSITION SHARED PURPOSE We are interested in what our employees believe and what moves them. That is why we offer them the opportunity to be the protagonist of our business’ transformation into a digital, agile, flexible, customer- focused, and collaborative ecosystem, placing sustainability at the center of our actions. This is how we make a difference in people’s lives, communities, and the planet. AGILE, DIGITAL AND PEOPLE-CENTERED CULTURE AND LEADERSHIP We are interested in our employees becoming the best version of themselves, and we believe that our differences strengthen us. That is why we offer our employees a respectful, inclusive, and collaborative environment, where their voices will be heard. CONTINUOUS LEARNING AND DEVELOPMENT We are interested in our people’s professional and personal aspirations. That is why we offer them options to develop and enhance their holistic growth, reaching their maximum potential. +400 employees trained through our digital and agile training programs Aligned with our imperative to make a difference in ESG, we expanded our digital ESG training significant- ly this year. To facilitate our company’s transition into a worldwide sustainability leader, we not only offered training to top-level management on our renewed ESG strategy, but also developed more detailed training programs tailored to different functional areas. Addi- tionally, we complemented the design and transfor- mation of our ESG framework with employee train- ing to enable the understanding of fundamental ESG concepts. →For more information see Future Ready Sustainability Strategy. As part of our strategy to become a learning ecosys- tem, during the year, we delivered the training agenda, according to the level of knowledge required for each of our organization’s contribution levels. Aligned with learning tendency, we also delivered more accurate training, catering the content and duration of the pro- gram to ensure the best learning experience for our colleagues. This year marked “the moment of truth” in the defini- tion of our new normal and hybrid working schemes. As a group, we formally announced that we are a hy- brid company, where we empower our leaders to un- dertake assertive conversations with their teams and to establish the best model for each team. We are also analyzing our FlexKOF model to better align it with our improved EVP. Exemplifying our new ways of working, our digital and analytics hub has implemented a co-creation process where we assemble agile cells—with different profiles, skills, functions, and areas—that ensure our business units’ participation in the delivery of valuable digital and analytical solutions across our operations while creating workspaces that empower collaboration and teamwork. We are also working through different com- munities in areas like our Supply Chain and HR func- tions to identify and share insights and best practices. Comprised of multinational teams, these communities are focused on defining and updating the organiza- tional model, variable compensation schemes, and multi-category offerings, among other areas. This year, we further implemented a pilot for KOF Financial Ser- vices (KFS), with a complete remote working scheme, where we monitored the implementation and results to ensure success. →For more information see Digital & Analytics Hub. We also designed our Lean-Agile Center of Excellence (LACE) Service Model to support the organization’s dig- ital and agile transformation, and we deployed digital and agile training programs for more than 400 employ- ees, which we will continue to implement throughout the rest of the organization in the coming year. HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 82 We implemented our biennial employee engage- ment survey throughout our operations during 2021. With 92% participation and 91% engage- ment levels, the survey results focused on four dimensions: intent to stay 84%, discretionary effort 91%, pride to belong 95%, and willingness to recommend the organization 94%. As a result, we significantly improved employees’ engage- ment and communication with their direct lead- ers through cultural and communication efforts such as KOFFEE Talks, which are spaces where our leaders enjoy the opportunity to interact with their people to discuss various topics of interest. During the year, we focused on analyzing the re- sults by country and area to develop assertive action plans to mitigate identified gaps. Looking ahead, we will implement our biennial employee survey in the coming year—aiming to maintain high engagement scores while making progress on targeted gaps. Consistent with our comprehensive approach to our people’s wellbeing, we further developed a conscious leadership program. The goal of this program is to migrate the concept of health from a purely medical to a more holistic approach to wellbeing, including physical health, emotional wellbeing, spiritual self-development, and con- scious leadership. During the year, the program reached middle management across our Colom- bia, Guatemala, and Mexico operations, and is expected to reach our Argentina, Brazil, Costa Rica, Nicaragua, Panama, and Uruguay opera- tions during the coming year. This year, we continued with the utilization of our integral ethical system across our organization to create a safe environment for our people— where they can anonymously raise their voice if they should have any complaints concerning the company’s code of conduct. Overall, we received a total of 1,371 complaints this year through this system, some of which were related to work environment and leadership, operational, and financial topics. →For more information see Integral Ethical System. We also continued analyzing the gaps identified in the labor risk assessments that we performed across our operations last year to measure the labor conditions of our people and possible im- pacts. During the year, we not only analyzed the identified gaps, but also implemented assertive plans to mitigate them. To this end, we have fo- cused on investments to improve the infrastruc- ture of our work centers and guarantee optimal labor conditions. We also constantly look for opportunities in our organizational model and structure to ensure that we operate with the greatest efficiency, agility, and efficacy—always accompanying our evolving business strategies and operating con- ditions, and complying with the countries’ local regulations. HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 83 DEVELOP NEW PIPELINE OF TALENT Our people and the way they work together are our compa- ny’s most valuable assets. Accordingly, we comprehensive- ly manage, attract, develop, and motivate our people, pre- paring the next generation of leaders today. To this end, we improved our talent attraction and retention strategy to ensure that we have the right digital and skilled talent to face coming challenges while leading our organi- zation’s digital transformation. During the year, we recruited 14,645 skilled employees, including 71 digital and IT posi- tions at the corporate level. Recognizing that we have many talented people across the company, we constantly reinvent ourselves and mobilize the entire organization to get the best out of our talent, un- leash its full potential, and inject new capabilities. Among our initiatives, we designed and implemented accelerated development programs like the Lab Leadership Program for the LATAM Marketing and Supply Chain functions, and we continued promoting critical experiences for our people, enabling us to enjoy greater talent visibility and a better succession pipeline for key positions. LAB LEADERSHIP PROGRAM: LATAM MARKETING Like the Supply Chain & Engineering function, our Lab Leadership Program aims to accelerate development of marketing talent at the LATAM division to develop, expose, and generate international mobility. PROGRAM FEATURES Duration: 18 to 24 months segmented into three semesters - two for local and one for international critical experiences Talent pipeline sourced: Middle-management marketing positions drawn from top internal or external talent with three to five years of work experience Top reasons for entering program: Clear professional development plans, leadership opportunities, work/life balance, and improved compensation Program support: Sponsor – Chief Operating Officer – LATAM Division, Mentor – Marketing Director, Project Leader – Hiring Manager, Monthly Follow-up – HR/Talent Area CRITICAL EXPERIENCES FOCUS – MARKETING OF THE FUTURE Digital POS Execution Revenue Growth Management Trade Marketing Consumer Marketing Developing tomorrow’s marketing talent today We also improved our employer brand to attract the best talent, and we designed an umbrella of early career programs, including college schol- arships, internship programs, and our new trainee’s talent program to increase talent injection and to prepare future generations of talent. During the year, we continued consolidating the performance evaluation process, focused on each employee’s value generation and contribution to our business strategy—reinforcing and promoting meritocracy. We also continued to encourage our executives to engage in ongoing con- versations with team members about their performance and develop- ment. This year, we evaluated 97% of our employees’ performance. 84% of our company’s director-level talent requirements filled by internal candidates HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 84 TRAINING HOURS 3 3 4 3 8 2 9 2 R E P S R U O H E G A R E V A L E V E L N O I T U B I R T N O C s r e d a e l c i g e t a r t S s r e d a e l l a c i t c a T s r e d a e l e l p o e P 7 2 1 2 2 2 0 1 s n r e t n I F O K l a t o T s r o t u b i r t n o c l a u d i v i d n I s r o t u b i r t n o c s n o i t a r e p O 0 2 5 2 S R U O H E G A R E V A R E D N E G R E P S R U O H P U O R G E G A R E V A E G A R E P e l a M e l a m e F 0 2 8 1 3 1 4 3 - 8 1 4 4 - 5 3 9 5 - 5 4 + 0 6 Moreover, we kept on improving our talent management processes, assertively ensuring that we offer the best user experience. This year, we deployed our annual 9-Box Talent As- sessment for 94% of our people leaders, tac- tical leaders, and strategic leaders throughout the organization. This evaluation helps us to assess our talent that has more than 6 months in their current position, through their per- formance and potential, and identify our key talents. We also applied a 360° DNA-oriented assessment of our managers and directors’ behavior. This survey was applied to 84% of our directors and managers to assess their be- haviors regarding our DNA values. Notably, we performed a smooth, successful senior management succession for our CEO, multiple members of our senior leadership team, and country managers. This robust suc- cession planning process enables us to not only quickly identify internal talent, as well as key talent from other FEMSA business units and the market whenever necessary, but also ensure operational continuity across all of our leader- ship levels. HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 85 DIVERSITY, EQUITY, AND INCLUSION Under the umbrella of our ESG strategy, we continued to carry out a number of initiatives to reinforce our compa- ny’s commitment to diversity, equity, and inclusion. From our “WE Talks” discussion forums to our Inclusion and Diversity Forum, we raise awareness of important societal issues, work to eliminate unconscious biases, and en- able our employees to play an integral role on our way to creating a more flexible and inclusive organization. INCLUSIVE LEADERSHIP Recognition as a company with inclusive leaders and work teams FLEXIBLE ENVIRONMENT Foster a flexible and agile environment that adapts to the needs of our surroundings DIVERSE TALENT Ensure a diverse, inclusive, and respectful workplace for all our employees Inclusive Leadership Training Certifications and Recognitions • Unconscious biases in leadership and recruitment workshops and training • Ignite leader’s role as inclusion and diversity advocates • Bloomberg Gender-Equality Index, Human Rights Campaign, UN Women, Women Matter – McKinsey Discussion Forums • WE Talks discussion forums • Provide safe places for our employees to dialogue Processes and Practices • Review, design, align, and deploy flexible processes and practices, including Parental and FlexKOF models Representation • Undertake efforts to foster female employability and representation • Measure female talent mix in leadership and operational positions • Embark on efforts to include refugees in the workforce Engaging and Connecting • Inclusion & Diversity Forum »Lean In Circles (Brazil) »Cinta Violeta (Colombia) »Transformando Mirades (Central America) »Dale la mano a la que sigue (Mexico) Raise awareness and create a call to action on social issues that impact our communities HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 86 IMPROVING GENDER DIVERSITY Aligned with our commitment to improve gender diversity at all levels of the organization, our operations are developing and de- ploying initiatives to increase women’s representation. Among their actions, Mexico implemented several initiatives to recruit, develop, and retain female talent, such as through the expanding Home Delivery program. Brazil not only continued its program to train women to operate forklifts and perform refrigerator main- tenance, but also staffed a distribution center with 40% women employees since it began operations. Additionally, the operation carried out training for women to create opportunities for them in the labor market. Moreover, Colombia launched the “Cinta Vi- oleta” integral initiative for women, incorporating female talent across different areas to encourage their development and help them to prevent gender violence. DIVERSITY, EQUITY & INCLUSION ADVISORY BOARD Our diversity, equity, and inclusion (DEI) efforts are cur- rently integrated through a DEI Advisory Board. This board is focused on five main purposes to sustain DEI change across Coca-Cola FEMSA: Aligned with our commitment to improve gender diver- sity at all levels of the organization, our operations are developing and deploying initiatives to increase wom- en’s representation. Additionally, as a signatory to the UN Women’s Empowerment Principles, we continue working towards those standards as we create a more equitable, inclusive, and diverse organization. 1. Engage and hold leaders accountable throughout the organization 2. Define both long- and short-term objectives and strat- egies aligned with our company’s inclusion and diver- sity vision 3. Ensure functionality of work teams at a country and regional level 4. Ensure deployment of an internal and external com- munication plan 5. Measure, monitor, and evaluate initiatives. Leveraging our DEI Advisory Board, as well as company leaders, to accelerate our strategic development, we have prioritized our company’s talent diversity, placing great emphasis on increasing the gender mix at all levels of the organization with the main focus on leadership and opera- tional positions. By 2030, our ambitions are for women to represent 40% of leadership and management positions. Importantly, for the fourth consecutive year, the Human Rights Campaign Foundation and HRC Equidad MX rec- ognized our company as one of the Best LGBTQ+ Places to Work in Mexico. Recognizing that women and LGBTQ+ groups represent only a fraction of our people’s diversity, we began mapping unrepresented groups in our opera- tions to establish clear ambitions for the coming year. We have also worked to improve recruitment of LGBTQ+ talent, and allied with Contratá Trans in Argentina to im- prove the inclusion and social mobility of the trans com- munity. To this end, we have continued to improve inclu- sion of these LGBTQ+ communities through ally pledges, affinity groups, and consciousness and awareness pro- grams across our countries of operations. In addition, we continued talent programs to attract and retain indig- enous, afro-descendant, and economically vulnerable groups into our workforce. For more information see →Diversity, Equity, and Inclusion – Context & Ambitions. HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 87 NUMBER OF INTERNAL EMPLOYEES EMPLOYEES BY CONTRIBUTION LEVEL Female 11,478 14.3% 6,121 39,444 STRATEGIC LEADERS TACTICAL LEADERS PEOPLE LEADERS INDIVIDUAL CONTRIBUTORS OPERATIONAL CONTRIBUTORS INTERNS 78% 22% 116 73% 27% 898 71% 29% 2,375 74% 26% 25,337 92% 8% 51,721 53% 47% 314 TOTAL 80,447 Male 68,969 85.7% 102 560 1,261 36 1,239 2 767 272 2,190 3,068 125 3,226 URUGUAY 662 COSTA RICA 1,261 The number of total employees for 2022, which includes both internal and third party collaborators, is 97,213. NICARAGUA 769 GUATEMALA 3,068 PANAMA ARGENTINA COLOMBIA 3,351 2,462 1,275 ■ Total ■ Indefinite ■ Determined EMPLOYEES BY CONTRACT & REGION 65 21,969 ■ Male ■ Female ■ Total BRAZIL 22,034 MEXICO 45,565 EMPLOYEES BY AGE GROUP UNDER 30 30,902 30-50 43,795 50+ 5,750 348 5,402 ■ Total ■ Female ■ Male 4,871 26,031 6,259 37,536 HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 88 COMPENSATION AND BENEFITS Our people’s compensation and benefits schemes not only recognize their effort and commitment to their jobs, but also their contribution to our company’s val- ue creation. With the optimization of our company’s job valuation process—through a model based on job families—we generate effi- ciencies in our current workforce man- agement, and we strengthen our talent processes such as development, suc- cession, and talent planning. Moreover, we continue analyzing the current variable compensation schemes throughout our operations in order to re- duce the number of schemes and to im- plement a tool to manage and automate them. We also focused on the evaluation of parental schemes to offer our people a flexible benefits program comparable to those we identified within the market and aligned with our people’s interests. At all levels of our organization, we en- sure that our employees’ remuneration is competitive, and their conditions are equal for both men and women. To that end, we continued analyzing our gen- der pay gap obtaining a result of 4.6%, which will serve us to design strategies to reduce those gaps and to ensure em- ployee retention. Additionally, based on studies performed by international consulting firms that enable us to make comparisons between countries, we can determine that our employees are re- ceiving an integrated salary that is great- er than or equal to the market average. We act in accordance with obligations defined by law and in full respect of la- bor rights, exceeding the conditions and benefits established in the laws of each country where we operate. We re- spect our people’s right of association and, as such, our collective agreements cover approximately 62.1% of employ- ees. These employment contracts are reviewed and agreed on with all of our union representatives, respecting the established validity periods, as well as complying with all notification deadlines. AT ALL LEVELS OF OUR ORGANIZATION, WE ENSURE THAT OUR EMPLOYEES’ REMUNERATION IS COMPETITIVE, AND THEIR CONDITIONS ARE EQUAL FOR BOTH MEN AND WOMEN. HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 89 SOCIAL DEVELOPMENT Aligned with our holistic approach to our people’s quality of life, we launched our integral program of wellbeing this year. KOF Volunteers Program We encourage the development of our employees and their families as responsible citizens, committed to their community, society, and environ- ment. Through the KOF Volunteers program, we promote initiatives that enable us to beneficially impact the quality of life and wellbeing of the com- munities where we operate, strengthening our relationships with them, while positively affecting our corporate position and reputation. Our overall volunteer activity is committed to six different causes: COMMUNITY DEVELOPMENT We come together to carry out collective action and generate solutions to common problems to create a positive impact and build stronger and more developed communities. ENVIRONMENT We are focused on responsible environmental management and the responsible care and use of natural resources, with attention to our ESG Framework, especially on issues such as water, energy, carbon emissions, water bodies’ cleanup, and reforestation. NATURAL DISASTERS We promote solidarity efforts in the event of natural disasters, providing support to people and affected areas, while carrying out prevention activities for greater awareness, with special attention given to the communities where we operate. HEALTH EDUCATION We undertake activities that promote healthy physical and bio- psychosocial lifestyles, as well as initiatives related to humanitarian aid, nutritional training, and with the health sector in general. Our activities aim to improve educational levels and promote cultural, creative, and technological development. HUMAN RIGHTS We seek to generate positive volunteer experiences based on respect and compliance with Fundamental Human Rights. To this end, our Social Development Strategy concentrates on five dimensions: • Health: We promote healthy physical and bio-psychosocial lifestyles for our employees. • Social Relationships: We encourage satisfactory relation- ships in harmony with the environment and community through employee volunteering activities. • Economic: We promote the protection of assets and the gen- eration of savings through a culture of financial intelligence. • Education: We promote participation in programs and train- ings to improve and increase knowledge and personal devel- opment skills. • Labor: We promote positive work experiences based on re- spect and compliance with Human Rights, as well as fostering work spaces that promote safety and labor relations. In this complex environment, we focused on remote and distance volun- teering activities to support the quality of life of our people and commu- nities. During the year, 105,958 participants, including our employees and their families, devoted 250,812 hours to 2,337 volunteer initiatives, supported by an investment of US$8,719,611. For more information see →External Social – Progress & 2022 Highlights. 2,675 million hours of volunteer over the past eight years HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 90 OCCUPATIONAL HEALTH & WELLBEING At Coca-Cola FEMSA, we seek to improve employees’ physical and psycho-emo- tional health, encourage engagement and a sense of belonging within the orga- nization, and strengthen our health and social programs for an improved work environment. Occupational Health & Wellbeing Management System Our Occupational Health & Wellbeing Management System establishes the vision, strategy, objectives, elements, and activities through which we improve the quality of work life for our employ- ees across our company’s work centers and strategic business units. Comply- ing with our legal, ethical, scientific, and organizational framework, this system encompasses our health processes and programs that we apply according to ap- plicable risk matrices, local legislation, and operational needs. During 2022, we achieved a 12.5% im- provement in our Lost Days due to Gen- eral Illness Index versus 2021, driven mainly by our decentralized health pro- grams, global disease prevention strate- gy, integral wellbeing activities, and epi- demiologic watch systems. 12.5% improvement in our Lost Days due to General Illness Index versus 2021 Health & Wellbeing Policies At Coca-Cola FEMSA, our Corporate Oc- cupational Health area is responsible for proposing relevant revisions and updates to our two Health & Wellbeing Policies: • Global Safety and Occupational Health Policy • Human Rights Policy As well as this annual corporate review, which is sent for approval to our Direc- tor of Social and Labor Development and Global Director of Human Resources, our company’s internal audit area reviews these policies for dissemination and im- plementation across our operations. Employee Support Program Throughout 2022, we continued with our Employee Support Program across all of our operations. This emotional support program is designed to help our people and their families to cope with any situ- ation that may cause stress, anxiety, and depression, among other emotional dis- turbances, and to give them psychologi- cal support. This program is part of our comprehen- sive welfare strategy to reduce psycho- social risk factors inside and outside of work through the counseling and atten- tion of psychologists and other health professionals according to our people’s different situations. 2 . 5 4 5 4 . 4 3 5 5 . 7 6 4 L A R E N E G O T E U D S E E Y O L P M E 0 0 1 R E P X E D N I S Y A D T S O L S S E N L L I 2020 2021 2022 ) r e t t e b s i s s e l ( HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 91 cases concerning employee performance, strategic workforce plan- ning, and organizational network analysis. Some of these use cases will enable us to gain better insights for decision-making, enabling us to determine whether an employee is well suited for a particular vacancy, or if a gap opportunity in a certain priority area arises, as well as how we can help employees with their career growth and development. Through these steps, we are convinced that we will continue evolv- ing our HR capabilities to put our people at the center of the orga- nization, offering a unique and customized employee value propo- sition built on the pillars of our HR of the Future—analytics, digital architecture, service model, and people profile. EVOLVE OUR HR PLATFORM During the year, we carried on working to move our HR function into the digital era while improving our employee experience. To this end, we continued the deployment of our Success Factors talent platform throughout all of our operations. Ultimately impact- ing all of our employees, this platform will integrate, improve, and simplify our leaders’ and employees’ experience with HR process- es. Currently, we are working on standardizing and migrating our HR Administration backbone—including our master database and payroll systems—to a cloud-based solution in order to meet market trends and set the foundation for our path to digital. Moreover, we continued to make significant progress on HR process standardization and automation for our third parties management, variable compensation, and time and attendance processes. We also began the implementation of a tool to digitalize our documents throughout our operations, which will enable us to be more agile creating, updating, and managing our people’s files. We further implemented a powerful online survey tool to gather greater information about our employee voice, and we launched several surveys that gave us valuable employee insights for our strategy. We also continued researching new technologies that could help us to enjoy a better employee experience, including the exploration and functionality testing of an HR chatbot. Additionally, we carried on automating and improving our dash- boards—enabling us to offer equal information or benchmarks—and we proceeded developing and testing several people analytics use APPENDICES HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 93 FINANCIAL Amounts expresed in millions of U.S. dollars and Mexican pesos, except data per share and headcount. SUMMARY Income Statement Total revenues Cost of goods sold Gross profit Operative expenses Other expenses, net Comprehensive financing result Income before income taxes and share of the profit or of associates and joint ventures accounted for using the equity method Income taxes Share in the profit (loss) of equity accounted investees, net of taxes Consolidated net income Equity holders of the parent for cotinuing operations Non-controlling interest net income for continuing operations Ratios To Revenues (%) Gross margin Net income margin Cash Flow Operative cash flow Capital expenditures (7) Total cash, cash equivalents U.S. (*) 2022 (6) 2021 2020 2019 2018 (3) (4) (5) 2017 (1) (2) (3) 11,630 6,485 5,145 3,538 50 233 1,323 336 20 1,007 976 30 44.2 8.7 1,820 1,009 2,066 226,740 126,440 100,300 68,981 983 4,549 25,787 6,547 386 19,626 19,034 592 44.2 8.7 35,491 19,665 40,277 194,804 106,206 88,598 60,720 807 4,219 22,852 6,609 88 16,331 15,708 623 45.5 8.4 32,721 13,865 47,248 183,615 100,804 82,811 56,444 3,611 6,678 16,077 5,428 (281) 10,368 10,307 61 45.1 5.6 35,147 10,354 43,497 194,471 106,964 87,507 60,537 2,490 6,071 18,409 5,648 (131) 12,630 12,101 529 45.0 6.5 31,289 11,465 20,491 182,342 98,404 83,938 57,924 1,881 6,943 17,190 5,260 (226) 15,070 10,936 768 46.0 8.3 29,687 11,069 23,727 183,256 99,748 83,508 58,044 31,357 5,362 (11,255) 4,184 60 (11,654) (16,058) 679 45.6 (6.4) 33,236 14,612 18,767 HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 94 Balance Sheet Current assets Investment in shares Property, plant and equipment, net Intangible assets, net Deferred charges and other assets, net Total assets Liabilities Short-term bank loans and notes payable Interest payable Other current liabilities Long-term bank loans and notes payable Other long-term liabilities Total liabilities Equity Non-controlling interest in consolidated subsidiaries Equity attributable to equity holders of the parent Financial Ratios (%) Current Leverage Capitalization Coverage Data Per Share Book value (8) Income (loss) atributable to the holders of the parent (9) Dividends paid (10) Headcount (11) U.S. (*) 2022 (6) 2021 2020 2019 2018 (3) (4) (5) 2017 (1) (2) (3) 4,063 434 3,652 5,289 821 14,259 437 44 2,491 3,598 924 7,495 6,764 333 6,431 1.37 1.11 0.39 8.68 0.383 0.058 0.035 97,211 79,212 8,452 71,205 103,122 16,004 277,995 8,524 862 48,574 70,145 18,014 146,119 131,876 6,491 125,385 1.37 1.11 0.39 8.68 7.460 1.133 0.679 97,211 80,364 7,494 62,183 102,174 19,352 271,567 2,453 811 42,957 83,329 14,445 143,995 127,572 6,022 121,550 1.74 1.13 0.41 6.11 7.232 0.935 0.634 83,754 72,440 7,623 59,460 103,971 19,572 263,066 5,017 712 37,116 82,461 15,303 140,609 122,457 5,583 116,874 1.69 1.15 0.43 5.13 6.954 0.610 0.608 82,334 56,796 9,751 61,187 112,050 18,055 257,839 11,485 439 39,086 58,492 18,652 128,154 129,685 6,751 122,934 1.11 0.99 0.37 5.51 7.315 0.723 0.443 82,186 57,490 10,518 61,942 116,804 17,033 263,787 11,604 497 33,423 70,201 16,312 132,037 131,750 6,806 124,944 1.26 1.00 0.41 4.22 7.434 0.831 0.419 83,364 55,657 12,540 75,827 124,243 17,410 285,677 12,171 487 42,936 71,189 18,184 144,967 140,710 18,141 122,569 1.00 1.03 0.39 4.20 7.293 (0.765) 0.422 79,636 Income statement information considers full-year of KOF’s territories and full-year of Coca Cola FEMSA Venezuela. (1) (2) Balance sheet information does not include Coca-Cola FEMSA Venezuela's balances due to deconsolidation as of December 31, 2017. (8) Based on 16,806.7 million ordinary shares as of December 31, 2022, 2021, 2020, 2019, 2018 and 2017. (9) Computed based on the weighted average number of shares outstanding during the periods presented:16,806.7 million for 2022, 2021, 2020, 2019 and 2018, Venezuela balance is included as investement in shares as of December 31, 2017. and 16,730.8 million in 2017. (3) KOF Philippines has been classified as a discontinued operation in our profit and loss statement for the years ended December 31, 2017 and 2018. (4) (5) (6) (7) Income statement information includes eight months of the financial results of our acquisitions in Guatemala. Income statement information includes six months in the financial results for Uruguay. Information considers full-year of KOF’s territories and eleven months of CVI Refrigerantes Ltda. (“CVI”). Includes investments in property, plant and equipment, refrigeration equipment and returnable bottles and cases, net of disposals of property, plant and equipment. (10) Dividends paid during the year based on the prior year's net income, using 16,806.7 millions outstanding ordinary shares for 2022, 2021, 2020, 2019 and 2018 and 16,583.4 million oustanding ordinary shares for paid on 2017. (11) Includes third-party and for 2017 excludes 16,566 employees for our discontinued operation in Phillipines. * Exchange rate as of December 31, 2022 Ps. 19.496 per U.S. dollar solely for the convenience of the reader according to the federal USA reserve. HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 95 MANAGEMENT’S Results for the Year Ended December 31, 2022 Compared to the Year Ended December 31, 2021 DISCUSSION & ANALYSIS CONSOLIDATED RESULTS The comparability of our financial and operating perfor- mance in 2022 as compared to 2021 was affected by the following factors: (1) translation effects from fluctuations in exchange rates; (2) our results in Argentina, whose econo- my satisfied the conditions to be considered a hyperinfla- tionary economy; and (3) the ongoing integration of merg- ers and acquisitions completed in recent years, specifically the acquisition of CVI in Brazil in January 2022. For the convenience of the reader, we have included a discussion of the financial information below on a comparable basis, excluding the translation effects from fluctuations in ex- change rates and the acquisition of CVI in Brazil in January 2022. To translate the full-year results of Argentina for the years ended December 31, 2022 and 2021, we used the exchange rate at December 31, 2022 of 177.16 Argentine pesos per U.S. dollar and the exchange rate at December 31, 2021 of 102.72 Argentine pesos per U.S. dollar. The depreciation of the exchange rate of the Argentine peso at December 31, 2022, as compared to the exchange rate at December 31, 2021, was 72.5%. In addition, the average appreciation of currencies used in our main operations rel- ative to the U.S. dollar in 2022, as compared to 2021, was 4.3% for the Brazilian real and 0.8% for the Mexican peso, and a depreciation of 13.7% for the Colombian peso rela- tive to the U.S. dollar. Total Revenues. Our consolidated total revenues increased by 16.4% to Ps. 226,740 million in 2022 as compared to 2021, mainly as a result of volume growth, our revenue management initiatives, and favorable price-mix effects. These factors were partially offset by a decline in beer rev- enues related to the transition of the beer portfolio in Brazil and unfavorable currency translation effects from most of our operating currencies into Mexican pesos. In addition, for 2021, this line included other operating revenues due to a favorable determination from the Brazilian tax author- ities, which allowed the recognition of a deferred tax credit in Brazil for Ps. 254 million. See Note 24.2.1 to our consol- idated financial statements. On a comparable basis, total revenues would have increased by 17.8% in 2022 as com- pared to 2021. Total sales volume increased by 8.6% to 3,755.2 million unit cases in 2022 as compared to 2021, driven mainly by volume growth across all of our territories, including dou- ble-digit increases in Brazil, Colombia, Argentina, and Gua- temala, coupled with solid performances in Mexico and Uruguay. On a comparable basis, total sales volume would have increased by 7.5% in 2022 as compared to 2021. • In 2022, sales volume of our sparkling beverage portfo- lio increased by 6.4%, sales volume of our colas portfo- lio increased by 6.1%, and sales volume of our flavored sparkling beverage portfolio increased by 7.5%, in each case as compared to 2021. On a comparable basis, sales volume of our sparkling beverage portfolio would have in- creased by 5.6% as compared to 2021, driven by growth across all of our operations. Sales volume of our colas portfolio would have increased by 5.4%, mainly due to volume growth in all of our territories, and sales volume of our flavored sparkling beverages portfolio would have increased by 6.6%. • Sales volume of our still beverage portfolio increased by 21.7% in 2022 as compared to 2021. On a comparable basis, sales volume of our still beverage portfolio would have increased by 16.9%. • Sales volume of our bottled water category, excluding bulk water, increased by 29.0% in 2022 as compared to 2021. On a comparable basis, sales volume of our water portfolio would have increased by 27.6%. • Sales volume of our bulk water category increased by 5.8% in 2022 as compared to 2021. On a comparable basis, sales volume of our bulk water portfolio would have decreased by 5.2%. Consolidated average price per unit case increased by 10.9% to Ps. 58.75 in 2022, as compared to Ps. 52.99 in 2021, mainly as a result of favorable price-mix effects and revenue management initiatives. This was partially offset by the negative translation effect resulting from the deprecia- tion of most of our operating currencies relative to the Mex- ican peso. On a comparable basis, average price per unit case would have increased 13.0% in 2022 as compared to 2021, driven by our revenue management initiatives. HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 96 Gross Profit. Our gross profit increased by 13.2% to Ps. 100,300 million in 2022 as compared to 2021, with a gross margin decrease of 130 basis points as compared to 2021 to reach 44.2% in 2022. This gross margin decrease was driven mainly by a tough comparison base due to the recog- nition of an extraordinary profit of Ps. 1,083 million during the second quarter of 2021, related to credits on concen- trate purchased from the Manaus Free Trade Zone in Brazil, higher concentrate costs in Mexico, and higher raw material costs, mainly PET resin and sweeteners. These effects were partially offset by top-line growth and favorable raw ma- terial hedging initiatives. On a comparable basis, our gross profit would have increased by 14.6% in 2022 as compared to 2021. The components of cost of goods sold include raw mate- rials (principally concentrate, sweeteners, and packaging materials), depreciation costs attributable to our produc- tion facilities, wages and other labor costs associated with labor force employed at our production facilities, and cer- tain overhead costs. Concentrate prices are determined as a percentage of the retail price of our products in local cur- rency, net of applicable taxes. Packaging materials, mainly PET resin and aluminum, and HFCS, used as a sweetener in some countries, are denominated in U.S. dollars. Administrative and Selling Expenses. Our administrative and selling expenses increased by 13.6% to Ps. 68,981 million in 2022 as compared to 2021. Our administrative and selling expenses as a percentage of total revenues de- creased by 80 basis points to 30.4% in 2022 as compared to 2021, driven mainly by efficiencies in marketing and labor expenses, partially offset by higher fuel and maintenance expenses. In 2022, we continued investing across our terri- tories to support marketplace execution, increase our cooler coverage, and bolster our returnable presentation base. Other Expenses Net. We recorded other expenses net of Ps. 983 million in 2022 as compared to Ps. 807 million in 2021. This increase was mainly a result of an increase in tax contingencies in Brazil. For more information, see Notes 9 and 19 to our consolidated financial statements. Comprehensive Financing Result. The term “compre- hensive financing result” refers to the combined financial effects of net interest expenses, net financial foreign ex- change gains or losses, net gains or losses on the monetary position of hyperinflationary countries where we operate, and market value gain (loss) on financial instruments. Net financial foreign exchange gains or losses represent the impact of changes in foreign exchange rates on financial as- sets or liabilities denominated in currencies other than local currencies, and certain gains or losses resulting from de- rivative financial instruments. A financial foreign exchange loss arises if a liability is denominated in a foreign currency that appreciates relative to the local currency between the date the liability is incurred and the date it is repaid, as the appreciation of the foreign currency results in an increase in the amount of local currency, which must be exchanged to repay the specified amount of the foreign currency liability. Comprehensive financing result in 2022 recorded an ex- pense of Ps. 4,549 million as compared to an expense of Ps. 4,219 million in 2021. This 7.8% increase was driv- en mainly by a foreign exchange loss of Ps. 324 million as compared to a gain of Ps. 227 million recorded during the same period of 2021, as our cash exposure in U.S. dollars was negatively impacted by the appreciation of the Mexican peso. In addition, we recognized a loss in the market value of financial instruments of Ps. 672 million, as compared to a gain of Ps. 80 million during 2021. Moreover, our interest expense increased to Ps. 6,500 million, as compared to an expense of Ps. 6,192 million in 2021, driven mainly by in- creases in interest rates, partially offset by the tender offer of senior notes completed during the third quarter of 2022. Finally, we recognized a lower gain in monetary position in inflationary subsidiaries, recording Ps. 536 million during 2022, as compared to a gain of Ps. 734 million during the previous year. These effects were partially offset by higher interest income of Ps. 2,411 million during 2022, as com- pared to a gain of Ps. 932 million recorded during 2021, as a result of an increase in interest rates. Income Taxes. In 2022, our effective income tax rate de- creased to 25.4%, as compared to our effective income tax rate of 28.9% in 2021, mainly as a result of favorable de- ferred tax credits. For more information, see Note 24 to our consolidated financial statements. Share in the Profit (Loss) of Equity Accounted Investees, Net of Taxes. In 2022, we recorded a gain of Ps. 368 million in the share in the profit of equity accounted investees, net of taxes, mainly due to the results of Jugos del Valle, our associate in Mexico, as compared to a gain of Ps. 88 million registered during the previous year. Net Income (Equity holders of the parent). We report- ed a net controlling interest income of Ps. 19,034 million in 2022, as compared to Ps. 15,708 million in 2021. This 21.2% increase was driven mainly by operating income growth, coupled with a decline in our effective tax rate during the year. RESULTS BY CONSOLIDATED REPORTING SEGMENT MEXICO AND CENTRAL AMERICA Total Revenues. Total revenues in our Mexico and Cen- tral America consolidated reporting segment increased by 13.1% to Ps. 131,002 million in 2022 as compared to 2021, mainly as a result of a volume increase in all of our HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 97 territories, coupled with favorable price-mix effects and revenue management initiatives. Total sales volume in our Mexico and Central America con- solidated reporting segment increased by 6.3% to 2,188.4 million unit cases in 2022 as compared to 2021, as a result of a volume increase in all our territories. • Sales volume of our sparkling beverage portfolio in- creased by 4.5% in 2022 as compared to 2021, driven mainly by a 8.3% increase in our flavored sparkling bev- erage portfolio. Sales volume in Central America increased by 11.8% to 299.5 million unit cases in 2022, as compared to 267.8 million unit cases in 2021, mainly as a result of solid execu- tion and a solid performance in all our territories across the region. • Sales volume of our sparkling beverage portfolio in- creased by 10.3% in 2022 as compared to 2021, driven by a 9.9% increase in colas and a 12.0% increase in our flavored sparkling beverage portfolio. • Sales volume of our still beverage portfolio increased by 26.8% in 2022 as compared to 2021. • Sales volume of our still beverage portfolio increased by • Sales volume of bottled water, excluding bulk water, in- 13.1% in 2022 as compared to 2021, due to double-digit increases in both Mexico and Central America. creased by 10.1% in 2022 as compared to 2021. • Sales volume of our bulk water portfolio increased by • Sales volume of bottled water, excluding bulk water, in- 39.8% in 2022 as compared to 2021. creased by 24.9% in 2022 as compared to 2021, due to double-digit increases in both Mexico and Central America. • Sales volume of our bulk water portfolio increased by 6.9% in 2022 as compared to 2021, due to a solid per- formance in Mexico and a double-digit increase in Central America. Sales volume in Mexico increased by 5.5% to 1,888.9 million unit cases in 2022, as compared to 1,790.0 million unit cases in 2021, mainly as a result of solid volume performance. • Sales volume of our sparkling beverage portfolio in- creased 3.4% in 2022 as compared to 2021, driven by a 2.5% increase in our colas portfolio and a 7.6% increase in our flavored sparkling beverage portfolio. • Sales volume of our still beverage portfolio increased by 10.5% in 2022 as compared to 2021. • Sales volume of bottled water, excluding bulk water, in- creased by 26.8% in 2022 as compared to 2021. • Sales volume of our bulk water portfolio increased by 6.8% in 2022 as compared to 2021. Gross Profit. Our gross profit in this consolidated reporting segment increased by 8.1% to Ps. 62,035 million in 2022 as compared to 2021, and gross profit margin decreased 210 basis points to 47.4% as compared to 2021. This gross margin contraction was driven mainly by an increase in raw material costs such as PET resin and sweeteners, coupled with higher concentrate costs in Mexico. These effects were partially offset by our revenue management initiatives, fa- vorable price-mix effects, and our raw material hedging strategies. Administrative and Selling Expenses. Administrative and selling expenses as a percentage of total revenues in this consolidated reporting segment decreased by 70 basis points to 31.2% in 2022 as compared to the same period in 2021. Administrative and selling expenses, in absolute terms, increased by 7.3% in 2022 as compared to 2021, driven mainly by an increase in variable operating expenses as a result of top-line growth. SOUTH AMERICA Total Revenues. Total revenues in our South America con- solidated reporting segment increased by 21.2% to Ps. 95,738 million in 2022 as compared to 2021, mainly as a result of volume growth, favorable price-mix effects, and our revenue management initiatives. These factors were partially offset by a decline in beer revenues related to the transition of our beer portfolio in Brazil, and unfavorable currency translation effects resulting from the depreciation of some of our operating currencies as compared to the Mexican peso. In addition, for 2021 this line included other operating revenue due to a favorable determination from the Brazilian tax authorities, which allowed a recognition of a deferred tax credit in Brazil for an amount of Ps. 254 million. See Note 24.2.1 to our consolidated financial state- ments. Total revenues for beer amounted to Ps. 5,599 mil- lion in 2022. On a comparable basis, total revenues would have increased by 24.4% in 2022 as compared to 2021. Total sales volume in our South America consolidated reporting segment increased by 11.9% to 1,566.8 million unit cases in 2022 as compared to 2021, mainly as a result of double-digit volume growth in Brazil, Colombia, and Ar- gentina, coupled with volume growth in Uruguay. On a com- parable basis, total sales volume would have increased by 9.5% in 2022 as compared to 2021. • Sales volume of our sparkling beverage portfolio in- creased by 8.8% in 2022 as compared to 2021, driven mainly by a 9.4% increase in our colas portfolio. On a comparable basis, sales volume of our sparkling bever- age portfolio would have increased by 7.2%. • Sales volume of our still beverage portfolio increased by 34.7% in 2022 as compared to 2021, due to a dou- ble-digit increase in all of our territories from the division. HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 98 Sales volume in Colombia increased by 10.8% to 330.1 million unit cases in 2022, as compared to 297.9 million unit cases in 2021. • Sales volume of our still beverage portfolio increased by 94.2% in 2022 as compared to 2021. • Sales volume of bottled water increased by 18.0% in On a comparable basis, sales volume of our still beverage portfolio would have increased by 24.5%. • Sales volume of our bottled water category, excluding bulk water, increased by 33.2% in 2022 as compared to 2021, due to a double-digit increase in all of our territories from the division. On a comparable basis, sales volume of our water portfolio would have increased by 30.2%. • Sales volume of our bulk water portfolio decreased by 4.4% in 2022 as compared to 2021, due to a decline in Colombia and Argentina, partially offset by a double-digit increase in Brazil. On a comparable basis, sales volume of our bulk water portfolio would have decreased by 11.4%. Sales volume in Brazil increased by 12.5% to 1,016.2 mil- lion unit cases in 2022, as compared to 903.3 million unit cases in 2021. On a comparable basis, total sales volume in Brazil would have increased by 8.8% in 2022 as compared to 2021. • Sales volume of our sparkling beverage portfolio in- creased by 8.5% in 2022 as compared to 2021, driven mainly by a 7.1% growth in colas and 16.1% volume growth in our flavored sparkling beverage portfolio. • Sales volume of our still beverage portfolio increased by 34.4% in 2022 as compared to 2021. • Sales volume of bottled water, excluding bulk water, in- creased by 27.4% in 2022 as compared to 2021. • Sales volume of our bulk water portfolio decreased by 16.9% in 2022 as compared to 2021. Sales volume in Argentina increased by 11.9% to 173.9 million unit cases in 2022, as compared to 155.4 million unit cases in 2021. • Sales volume of our sparkling beverage portfolio in- • Sales volume of our sparkling beverage portfolio in- creased by 8.7% in 2022 as compared to 2021, as a re- sult of an increase of 9.9% in our colas portfolio and an increase of 5.3% in our flavored sparkling beverage port- folio. On a comparable basis, sales volume of our spar- kling beverage portfolio would have increased by 6.2%. • Sales volume of our still beverage portfolio increased by 39.2% in 2022 as compared to 2021. On a comparable basis, sales volume of our still beverage portfolio would have increased by 23.1%. • Sales volume of our bottled water, excluding bulk water, increased by 37.3% in 2022 as compared to 2021. On a comparable basis, sales volume of our water portfolio would have increased by 31.7%. • Sales volume of our bulk water portfolio increased by 36.2% in 2022 as compared to 2021. On a comparable basis, sales volume of our bulk water portfolio would have increased by 10.8%. creased by 11.4% in 2022 as compared to 2021, impact- ed mainly by a 12.8% increase in colas and a 6.4% in- crease in our flavored sparkling beverage portfolio. • Sales volume of our still beverage portfolio increased by 11.1% in 2022 as compared to 2021. • Sales volume of bottled water, excluding bulk water, in- creased by 35.8% in 2022 as compared to 2021. • Sales volume of our bulk water portfolio decreased by 28.6% in 2022 as compared to 2021. Sales volume in Uruguay increased by 7.5% to 46.6 mil- lion unit cases in 2022, as compared to 43.4 million unit cases in 2021. • Sales volume of our sparkling beverage portfolio in- creased by 4.2% in 2022 as compared to 2021. 2022 as compared to 2021. Gross Profit. Gross profit in this consolidated reporting segment amounted to Ps. 38,265 million, an increase of 22.5% in 2022 as compared to 2021, with a 50 basis point margin expansion to 40.0%. This increase in gross profit was driven mainly by a favorable price-mix effect, our raw material hedging strategies, and an increase in our top-line. These factors were partially offset by the depreciation of the average exchange rate of some of our operating curren- cies in the consolidated reporting segment as applied to our U.S. dollar-denominated raw material costs. In addition, for 2021 this line included the recognition of an extraordinary benefit of Ps. 1,083 million during the second quarter of 2021, related to credits on concentrate purchased from the Manaus Free Trade Zone in Brazil. Administrative and Selling Expenses. Administrative and selling expenses as a percentage of total revenues in this consolidated reporting segment increased by 70 ba- sis points to 29.4% in 2022 as compared to 2021, driven mainly by an increase in variable operating expenses as a result of our top-line growth. Administrative and selling ex- penses, in absolute terms, increased by 24.2% in 2022 as compared to 2021. HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 99 CAPITAL & COMPANY ENGAGEMENT Capital Human Nature Company Engagement Capital Company Engagement Capital Company Engagement Our people are the lifeblood of our compa- ny. As part of our people-centric culture, we aim to increase opportunities for our people to fulfill their individual career needs, foster a culture of wellbeing based on a holistic view of self-care and prevention, ensure our people enjoy more control over their life, along all of the different steps of their work experience, and enable our company’s diversity, equity, and inclusion. Our business is committed to the responsible use of natural resources. We are committed to reducing the water we consume and se- cure water availability for our operations (ef- ficiency), returning the water we use to the source (replenishment), and improving access to water for our communities and ourselves (access). We also work to increase energy efficiency across our value chain, while inte- grating clean and renewable energy to reduce carbon emissions. Furthermore, we are fo- cused on accelerating the transition to a circu- lar economy, strengthening our PET collection and use of recycled resin across our opera- tions, while reducing packaging and opera- tional waste. Social & Relationship Financial The development of our social ambitions and strategy is founded on an understanding that our license to operate relies on developing mutually beneficial relationships between our company and our internal and external stakeholders. Internally, we are guided by an understanding that our people are the lifeblood of Coca-Cola FEMSA, and the best way to grow is to ensure that our talent can live fulfilling lives—balancing their purpose in and out of the workplace. Externally, we are focused on our relationships with local com- munities and the value chain. Recognizing that our operations have an enormous impact on our society and communities close to our plants, our goal is to continue to add value to ensure sustainable growth for our company and community in tandem. Our financial and operating discipline, strong capital structure and financial flexibility, trans- formational digital initiatives, and adaptabili- ty to changing market dynamics enable us to capture organic and inorganic growth oppor- tunities in our industry, while creating sustain- able value for our investors. Intellectual We are accelerating the digital evolution of our business to become the world’s preferred, most sustainable commercial ecosystem. Through our digital and analytics hub, we not only empower our organization’s cultural transformation and strategic capability build- ing, but also co-create prioritized digital and analytical solutions that accelerate the de- ployment of our commercial platforms and solutions holistically through agile cells that maximize our competitiveness, proactive- ly address industry challenges, capitalize on market opportunities, and foster intellectual development across our organization. Manufactured Our highly experienced teams operate 56 bottling plants and 249 distribution centers across nine countries, deliver approximately 3.8 billion unit cases of beverages through a primary and secondary fleet to more than 2 million points of sale, and serve a population of more than 270 million. HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 100 COMPREHENSIVE RISK MANAGEMENT Our company is present in different countries and regions. Consequently, we are continually exposed to an environment that presents challenges and risks. Our ability to manage the risks that may arise in the global environment where we operate is vital for our business’ value creation. Accordingly, our strategy includes a Comprehensive Risk Management Process through which we are able to identify, measure, register, assess, prevent, and/or mitigate risks. Main Risk Potential Impacts Key Mitigation Actions Main Risk Potential Impacts Key Mitigation Actions · Termination of the bottler agreements. · Actions contrary to the interests of our shareholders other than The Coca-Cola Company and FEMSA. · Comply with the bottler agreements. · Work together and promote effective interaction between our strategic shareholders in order to maximize value creation. · Variability in the demand · Transform into a total beverage company for our products. aligned with consumers’ changing tastes and lifestyles. · Build a winning multi-category portfolio of products and presentations. · Drive our low- and no-sugar portfolio ahead of consumer trends. · Offer sustainable packaging options for our beverages. · Damage to Coca-Cola’s · Maintain the reputation and intellectual and our trademark reputation. property rights of Coca-Cola trademarks and our own trademarks. · Effective brand protection. · Strictly comply with Responsible Marketing Policies. Strategic Shareholder Relationships Our business depends on our relationship with The Coca-Cola Company and FEMSA, and changes in this relationship may adversely affect us. Consumer Preferences Changes in consumer preferences, purchase drivers, and consumption habits might generate variability in the demand for some of our products. Environmental issues. Coca-Cola Trademarks Coca-Cola’s and our brand reputation or brand violations could adversely affect our business. Competition Competition could adversely affect our business, financial performance, and results of operations. Cyber Incidents Since our business is highly leveraged by information systems and digital services, it could be significantly affected in the event of a security breach or cyber incident that affects the confidentiality, availability, or integrity of information and information systems. · Changes in consumer · Offer affordable prices, returnable packaging, preferences. · Lower pricing by competitors. effective promotions, access to retail outlets and sufficient shelf space, enhanced customer service, and innovative products. · Identify, stimulate, and satisfy consumer preferences. · Business disruption. · Theft or unauthorized exposure of sensitive or confidential information. · Regulatory non- compliance. · Fraud. · Economic loss. · Reputational damage and/or impact on share value. · A systemic approach to cyber security based on industry standards and the TCCC (The Coca-Cola Company) Business Resilience Framework. · Oversight by the Board’s Audit Committee, the senior management, and a CISO (Chief Information Security Officer). · Cybersecurity-focused organizational structure. · Risk management process supported by periodic independent assessments. · Personnel awareness and training program regarding cybersecurity, social engineering, and phishing prevention. · Continuous investment to strengthen the security of existing processes and technologies. · Security by design approach to the new business digital initiatives. · Continuous improvement of monitoring, incident response, and resilience capabilities. HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 101 Main Risk Potential Impacts Key Mitigation Actions Main Risk Potential Impacts Key Mitigation Actions Economic, Political, and Social Conditions Adverse economic conditions, political, and social events in the countries where we operate and elsewhere, and changes in governmental policies may adversely affect our business, financial condition, results of operations, and prospects. · Affect and reduce consumer per capita income, which could result in decreased consumer purchasing power. · Lower demand for our products, lower real pricing of our products or a shift to lower margin products. · Negatively affect our company and materially affect our financial condition, results of operations, and prospects. · Through a risk management strategy, hedge our exposure to interest rates, exchange rates, and raw material costs. · Annually or more frequently evaluate, when the circumstances require, the possible financial effects of these conditions and, to the extent possible, anticipate mitigation measures. · Usage of foresight methodologies to map our upcoming sociopolitical risks through analyzing key economic and social data against upcoming political risks factors such as elections, constitutional reforms and increasing political repression. · Develop scenarios and contingency plans for adverse sociopolitical conditions (e.g., social revolt after an election) that allow for business continuity considering, among others: alternative distribution routes, stock management to prioritize critical SKUs, securing financial assets, etc. Regulations Taxes and changes in regulations in the regions where we operate could adversely affect our business. · Increase in operating and · Identify regulatory risks and proposals of compliance costs. · Restrictions imposed on changes to regulations that directly affect our operation or financial condition. our operations. · The imposition of · Advocacy work to provide advice on legislators’ proposed regulatory changes. new taxes, increases in existing taxes, or changes in the interpretation of tax laws and regulation by tax authorities may have a material adverse effect on our business, financial condition and results of operations. Legal Proceedings Unfavorable outcomes of legal proceedings could adversely impact our business. Weather Conditions, Natural Disasters, and Public Health Crises Adverse weather conditions, natural disasters, and public health crises may adversely affect our business, financial condition, results of operations, and prospects. Acquisitions and Business Alliances Inability to successfully integrate acquisitions or achieve expected synergies could adversely affect our operations. · Investigations and proceedings on tax, consumer protection, environmental, and labor matters. · Comply with applicable laws and regulations and comply with workplace rights policy. · Impact consumer patterns and beverage sales. · Implement business continuity plans and safety protocols to protect employees and avoid significant disruptions to our business. · Affect plants’ installed · Insure assets and operations against such capacity, road infrastructure, and points of sale. · Negatively affect our business, financial condition, results of operations, and prospects. · Difficulties and unforeseen liabilities or additional costs in restructuring and integrating operations. adverse events. · Integrate acquired or merged businesses’ operations in a timely and effective way, retaining key qualified and experienced professionals. HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 102 Main Risk Potential Impacts Key Mitigation Actions Main Risk Potential Impacts Key Mitigation Actions Foreign Exchange Depreciation of the local currencies of the countries where we operate relative to the U.S. dollar could adversely affect our financial condition and results. Climate Change Adverse weather conditions could adversely affect our business and results of operations. Social Media Negative or inaccurate information on social media could adversely affect our reputation. · Financial loss. · Increase cost of some raw materials. · Adversely affect our results, financial condition, and cash flows in future periods. · Closely monitor developments that may affect exchanges rates. · Hedge our exposure to the U.S. dollar with respect to certain local currencies, our U.S. dollar-denominated debt obligations, and the purchase of certain U.S. dollar-denominated raw materials. Water Water shortages or failure to maintain our current water concessions could adversely affect our business. · Negatively affect · Identify sources of our operations’ CO2 consumer patterns and reduce sales. emissions. · Support and comply with climate change · Affect plants’ installed mitigation measures. capacity, road infrastructure, raw material supply, and points of sale. · Damage to our brands or corporate reputation without affording us an opportunity for correction. · Identify and reduce our environmental footprint through efficient use of water, energy, and materials. · Effective brand protection. · Proactive external communication. Raw Materials Increases in the price of raw materials we use to manufacture our products could adversely affect our production costs. Insufficient availability of raw materials could limit the production of our beverages. · Water supply may be insufficient to meet our future production needs. · Water supply may be adversely affected due to shortages or changes in governmental regulations or environmental changes. · Water concessions or contracts may be terminated or not renewed. · Shortage or insufficient availability of raw materials may adversely affect our capacity to ensure production continuity. · Adjustments to our product portfolio according to availability. · Efficient water usage. · Execute water conservation and replenishment projects. · Maintain 100% legal compliance. · Develop a water risk index, including four issues that need to be assessed: community and public perception risks, scarcity of water and other inputs, regulatory risks, and legal risks for each of our bottling plants. · Update water risk assessment tool and work plans that contemplate aspects such as climate change, resilience to hydrological stress, media and social vulnerabilities, as well as regulations and production volumes for each of our bottling plants. · Secure water concessions for our production facilities. · Implement measures to mitigate the negative effect of product pricing on our margins such as hedging via derivative instruments. · Proactively address risk of supply on our value chain. · Strict compliance with our Supplier Guiding Principles. · Strategically adjust our product portfolio to enable us to minimize the impact of certain operating disruptions. For more information please visit our see 20F report. HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 103 CORPORATE GOVERNANCE BOARD OF DIRECTORS DIRECTORS APPOINTED BY SERIES A SHAREHOLDERS José Antonio Fernández Chairman of the Board of FEMSA Alternate: Javier Gerardo Astaburuaga Sanjines 30 Years as a Board Member José Henrique Cutrale Director of Sucocítrico Cutrale Ltda. Alternate: Graziela Cutrale Board member as of September 2022 Alfonso González Migoya* Business Consultant 17 Years as a Board Member Daniel Alberto Rodríguez Cofré Chief Executive Officer of FEMSA Alternate: Francisco Camacho Beltrán 1 Year as a Board Member Federico Reyes García Independent Consultant Alternate: Eugenio Garza y Garza 30 Years as a Board Member Ricardo Guajardo Touché* Independent Consultant 30 Years as a Board Member Enrique F. Senior Hernández* Managing Director of Allen & Company, LLC 19 Years as a Board Member Luis Rubio Freidberg* Chairman of México Evalúa Centro de Análisis de Políticas Públicas, A.C. 6 Years as a Board Member Francisco Zambrano Rodríguez* Independent Consultant and Co-Chief Executive Officer of Desarrollo Inmobiliario y de Valores, S.A. de C.V., Corporativo Zeta DIVASA, S.A.P.I. de C.V. and IPFC Inmuebles, S.A.P.I. de C.V. 20 Years as a Board Member DIRECTORS APPOINTED BY SERIES D SHAREHOLDERS John Murphy Executive Vice President and Chief Financial Officer of The Coca-Cola Company Alternate: Stacy Lynn Apter 4 Years as a Board Member José Octavio Reyes Lagunes Retired Alternate: T. Robin Rodgers Moore 7 Years as a Board Member Nikos Koumettis President of Europe Operating Unit of The Coca-Cola Company 1 Year as a Board Member Mr. José Luis Cutrale, Board member, long-time advisor and friend of our company, unfortunately passed away on August, 2022. Mr. Cutrale contributed his talent and business skills to our Company since 2004. As of September 28, 2022, his son, Mr. José Henrique Cutrale replaced Mr. José Luis Cutrale as Board Member. Jennifer K. Mann Corporate Senior Vice President and President of North America for The Coca-Cola Company Alternate: Marie D. Quintero-Johnson Board Member as of March 2023 DIRECTORS APPOINTED BY SERIES L SHAREHOLDERS Victor Alberto Tiburcio Celorio* Independent Consultant 4 Years as a Board Member Luis Alfonso Nicolau Gutiérrez* Partner at Ritch, Mueller, Heather y Nicolau, S.C. Alternate: Jaime A. El Koury* 5 Years as a Board Member Amy Eschliman* Managing Director of Retail at Google Cloud Board Member as of March 2023 SECRETARY OF BOARD (NON-MEMBER) Alejandro Gil Ortiz Secretary of the Board Alternate: Carlos Luis Díaz Sáenz 1 Year as a Secretary * Independent Director EXECUTIVE OFFICERS Ian Craig Chief Executive Officer Gerardo Cruz Celaya Chief Financial Officer Karina Awad Pérez Human Resources Officer Nicolás Bertelloni Chief Growth Officer Rafael Ramos Casas Supply Chain and Engineering Officer Gabriel Coindreau Montemayor Strategic Planning Officer Ignacio Echevarría Mendiguren Digital and Technology Officer Fabricio Ponce García Chief Operating Officer—Mexico Eduardo Pereyra Méndez Chief Operating Officer—Brazil Aitor Ocejo Zubizarreta Chief Operating Officer—Latin America HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 104 BOARD COMMITTEES PLANNING AND FINANCE COMMITTEE The Planning and Finance Committee works with management to set our annual and long-term strategic and financial plans and monitors adherence to these plans. It is responsible for setting our optimal capital structure and recommends the appropriate level of borrowing, as well as the issuance of securities. Financial risk management is another responsibility of the Planning and Finance Committee. Ricardo Guajardo Touché is the chairman of the Planning and Finance Committee. The other members include: Federico Reyes García, John Murphy, Amy Eschliman, Enrique F. Senior Hernández and Eugenio Garza y Garza. The secretary non-member of the Planning and Finance Committee is Gerardo Cruz Celaya, our Chief Financial Officer. CORPORATE PRACTICES COMMITTEE The Corporate Practices Committee, which consists exclusively of independent directors, is responsible for preventing or reducing the risk of performing operations that could damage the value of our company or that benefit a particular group of shareholders. The committee may call a shareholders meeting and include matters on the agenda for that meeting that it deems appropriate, approve policies on related party transactions, approve the compensation plan of the Chief Executive Officer and relevant officers, and support our Board of Directors in the elaboration of related reports. The chairman of the Corporate Practices Committee is Luis Rubio Freidberg. Pursuant to the Mexican Securities Market Law, the chairman of the Corporate Practices Committee is elected at our shareholders meeting. The other members include: Jaime A. El Koury and Luis A. Nicolau Gutiérrez, and two permanent non-member guests, Daniel Alberto Rodríguez Cofré and José Octavio Reyes Lagunes. The secretary non-member of the Corporate Practices Committee is Karina Paola Awad Pérez, our Human Resources Officer. AUDIT COMMITTEE The Audit Committee is responsible for reviewing the accuracy and integrity of quarterly and annual financial statements in accordance with accounting, internal control, and auditing requirements. The Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the independent auditor, who reports directly to the Audit Committee (such appointment and compensation being subject to the approval of our Board of Directors); the internal auditing function also reports to the Audit Committee. The Audit Committee has implemented procedures for receiving, retaining and addressing complaints regarding accounting, internal control and auditing matters, including the submission of confidential, anonymous complaints from employees regarding questionable accounting or auditing matters. To carry out its duties, the Audit Committee may hire independent counsel and other advisors. As necessary, we compensate the independent auditor and any outside advisor hired by the Audit Committee and provide funding for ordinary administrative expenses incurred by the Audit Committee in the course of its duties. Victor Alberto Tiburcio Celorio is the chairman of the Audit Committee and the “audit committee financial expert.” Pursuant to the Mexican Securities Market Law, the chairman of the Audit Committee is elected at our shareholders meeting. The other members are: Alfonso González Migoya and Francisco Zambrano Rodríguez. Each member of the Audit Committee is an independent director, as required by the Mexican Securities Market Law and applicable New York Stock Exchange listing standards. The secretary non-member of the Audit Committee is Gerardo Estrada Attolini, FEMSA’s Administration and Corporate Control Department Officer. HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 105 INTEGRAL ETHICAL SYSTEM Through our ethical culture, we manage under schemes that must be adopted as a way of life and that inspire the actions of all those who are part of the organization through the establishment of an integral ethical system. Our ethics management is based on: • Prevent illicit behaviors that may affect our hu- man capital and our heritage • Detect improper acts through open communica- tion channels • Respond and provide feedback to our organiza- tion to build trust Our system is comprised of three fundamental el- ements: the →Code of Ethics, the Ethics Commit- tee, and the whistle-blowing system known as KOF Ethics Line. Code of Ethics The foundation of our organizational culture, the Code of Ethics communicates our values, con- templates our main behaviors, promotes good be- havior inside and outside of our organization, and guides our correct decision-making based on ethi- cal principles. Our recently updated Code includes important topics such as Human Rights, Inclusion and Diversity, Discrimination, Violence and Harass- ment, Conflicts of Interest, Misuse of Information, and Anti-corruption. Specifically, regarding the subject of gifts, courtesies and entertainment, our Code of Ethics specifies: • We do not receive, give, pay, offer, promise, or authorize on behalf of Coca-Cola FEMSA or on a personal basis, in a direct or indirect way, mon- ey, gifts, advantageous conditions, salaries, trav- el, commissions or anything else of value to ob- tain any undue advantage or benefit of any kind. • We do not give or offer gifts to government officials. • We only accept, give, or offer gifts of a promo- tional nature, occasional and of symbolic value. • We only provide hospitalities in accordance with our Corporate Policy and the applicable legal provisions. • When a client or a supplier offers an invitation, which implies a trip outside the city or to attend a sporting event or any other entertainment, we shall comply with this Code of Ethics and other Internal Guidelines and must obtain prior neces- sary approval to attend such invitation. Ethics Committee The Ethics Committee is the oversight and control body that guarantees compliance with the Code of Ethics and attends to the company’s most relevant ethical situations. In each of our territories, there is an Ethics Committee, and each Committee reports to the Corporate Ethics Committee. Unsubstantiated 31% In review 45% Complaints by Status Substantiated 24% Operational 12% Financial Information 2% Complaints by Topics Human Resources 86% KOF Ethics Line Whistle-blowing System Complaints about noncompliance with the Code of Ethics are received through →KOF Ethics Line, which is managed by a third party. Employees, customers, suppli- ers, third parties or anyone who has a rela- tionship with Coca-Cola FEMSA can use the system anonymously. A group of investigators analyzes the com- plaints impartially and confidentially and, if a violation of the Code is found, corrective measures are applied. In 2022, we received 1,371 complaints; some of which were related to work environment and leadership, operational and financial information. To strengthen our culture, our workers sign a Letter of Compliance to our Code of Ethics. Its purpose is to ensure that our employees are aware of the Code of Ethics, understand the main acts or omissions that may be incurred and can put our organization at risk, and report any viola- tion of the Code that they know. For further information and access to the full doc- ument of our Code of Ethics please access one of the following links: →Spanish →English →Portuguese HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 106 EMPLOYEE TURNOVER As mentioned in the Culture chapter, retaining top-tier talent is a priority for KOF, which is why we have worked on offering our employees a flexible benefits program, an optimal and inclusive work environment, and competitive remuneration. To keep track on the effectiveness of our initiatives and in our effort to consistently optimize them, we track our employee turnover rate, which can help spot any areas of improvement and make sure that our employees desire to remain with the company. % 2 . 0 2 % 1 . 9 1 % 7 . 2 1 % 0 . 2 1 % 2 . 9 % 7 . 9 WOMEN MEN ■ Involuntary ■ Voluntary TOTAL Y R A T N U L O V N I & R E V O N R U T Y R A T N U L O V E E Y O L P M E Turnover by Country Argentina Brazil Colombia Costa Rica Guatemala Mexico Nicaragua Panama Uruguay Total KOF Involuntary Turnover by age group Argentina Brazil Colombia Costa Rica Guatemala Mexico Nicaragua Panama Uruguay Total Involuntary Voluntary 8.23% 13.71% 5.69% 6.39% 116.73% 17.70% 2.54% 5.16% 11.66% 19.10% 5.33% 6.38% 8.37% 11.49% 3.39% 12.09% 9.24% 1.19% 9.61% 9.65% Turnover Women Argentina Brazil Colombia Costa Rica Guatemala Mexico Nicaragua Panama Uruguay Total KOF Involuntary Voluntary 7.33% 12.48% 6.79% 6.39% 15.56% 13.04% 3.99% 4.35% 18.38% 12.00% 17.09% 9.85% 11.60% 11.80% 9.43% 14.74% 12.97% 4.35% 19.04% 12.72% Turonver Men Argentina Brazil Colombia Costa Rica Guatemala Mexico Nicaragua Panama Uruguay Total KOF 8.36% 13.95% 5.28% 6.39% 124.48% 18.30% 2.32% 5.25% 9.53% 20.20% Involuntary Voluntary 30 or less 30-50 50+ 18.40% 15.40% 7.61% 9.09% 268.82% 25.44% 5.28% 9.66% 27.70% 28.67% 5.81% 13.26% 5.51% 5.52% 69.01% 11.61% 2.37% 3.65% 10.84% 13.67% 3.74% 9.57% 2.87% 4.32% 25.67% 10.17% 0.00% 5.58% 1.18% 9.35% Voluntary Turnover by age group Argentina Brazil Colombia Costa Rica Guatemala Mexico Nicaragua Panama Uruguay Total 30 or less 30-50 15.14% 9.13% 15.32% 18.48% 4.36% 20.09% 12.82% 2.32% 26.44% 16.76% 3.23% 5.45% 7.12% 10.01% 2.84% 6.08% 9.47% 1.10% 8.08% 5.75% 3.69% 5.69% 7.20% 11.43% 2.92% 11.75% 8.66% 0.87% 6.63% 9.17% 50+ 0.23% 1.44% 0.00% 0.86% 3.80% 1.41% 3.73% 0.00% 2.36% 1.37% HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 107 INDEPENDENT LIMITED VERIFICATION REPORT: PERFORMANCE METRICS Av. Ejército Nacional 843-B Antara Polanco 11520 Mexico, D.F. Tel: +55 5283 1300 Fax: +55 5283 1392 ey.com/mx Independent Limited Assurance Report To the Board of Directors of Coca Cola FEMSA, S.A.B. de C.V.: Scope of our Work We have been engaged by Coca Cola FEMSA, S.A.B. de C.V. (“KOF” or the “Company” to perform a ‘limited assurance engagement,’ as defined by International Standards on Assurance Engagements, here after referred to as the engagement, to report on KOF’s selected performance indicators included (“Subject Matter”) and presented in the Annual Integrated Report (the “Report”) and mentioned in the annex A; corresponding to the period from January 1st to December 31st 2022. Other than as described in the preceding paragraph, which sets out the scope of our engagement, we did not perform assurance procedures on the remaining information included in the Report, and accordingly, we do not express a conclusion on this information. Criteria applied by Coca Cola FEMSA, S.A.B. de C.V. In preparing the selected performance indicators, Coca Cola FEMSA, S.A.B. de C.V. applied their internal developed criteria, as well as those based on what is set forth in the GRI Standards (Criteria). system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements. Description of procedures performed Procedures performed in a limited assurance engagement vary in nature and timing from and are less in extent than for a reasonable assurance engagement. Consequently, the level of assurance obtained in a limited assurance engagement is substantially lower than the assurance that would have been obtained had a reasonable assurance engagement been performed. Our procedures were designed to obtain a limited level of assurance on which to base our conclusion and do not provide all the evidence that would be required to provide a reasonable level of assurance. Although we considered the effectiveness of management’s internal controls when determining the nature and extent of our procedures, our assurance engagement was not designed to provide assurance on internal controls. Our procedures did not include testing controls or performing procedures relating to checking aggregation or calculation of data within IT systems. A limited assurance engagement consists of making enquiries, primarily of persons responsible for preparing the selected performance indicators and related information and applying analytical and other appropriate procedures. Our procedures included: • • • Interviews with the responsible persons to obtain an understanding of the data management systems and processes used to generate, disaggregate, and report information related to each Criteria. Analytical procedures such as validations of ratios and proportions or expected results and trends considering the correct application of calculations and formulas in the documentation submitted for the Criterion in question. Inquiries to responsible persons regarding each of the Criteria to explain deviations from expected results and trends and to be able to correct or document them. Coca Cola FEMSA, S.A.B. de C.V. ’s responsibilities Conclusion Coca Cola FEMSA, S.A.B. de C. V’s management is responsible for selecting the Criteria, and for presenting the selected performance indicators in accordance with that Criteria, in all material respects. This responsibility includes establishing and maintaining internal controls, maintaining adequate records and making estimates that are relevant to the preparation of the Subject Matter, such that it is free from material misstatement, whether due to fraud or error. EY’s responsibilities Our responsibility is to express a conclusion on the presentation of the indicator included in Annex A based on the evidence we have obtained. We conducted our engagement in accordance with the International Standard for Assurance Engagements Other Than Audits or Reviews of Historical Financial Information (‘ISAE 3000’), and the terms of reference for this engagement as agreed with Coca Cola FEMSA, S.A.B. de C.V on February 16, 2023. Those standards require that we plan and perform our engagement to obtain limited assurance about whether, in all material respects, the Subject Matter is presented in accordance with the Criteria, and to issue a report. The nature, timing, and extent of the procedures selected depend on our judgment, including an assessment of the risk of material misstatement, whether due to fraud or error. We believe that the evidence obtained is sufficient and appropriate to provide a basis for our limited assurance conclusions. Our Independence and Quality Control We have maintained our independence and confirm that we have met the requirements of the Code of Ethics for Professional Accountants issued by the International Ethics Standards Board for Accountants and have the required competencies and experience to conduct this assurance engagement. EY also applies International Standard on Quality Control 1, Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements, and accordingly maintains a comprehensive Member Practice of Ernst & Young Global Limited Based on our procedures and the evidence obtained, we are not aware of any material modifications that should be made to the selected performance indicators as of December 31, 2022; for it to be based on the Criteria. Other Information The notification to the Global Reporting Initiative (GRI) about the publication of the Report, following the guidelines of the GRI standard 1: Foundation, Reporting with reference to the GRI Standards, Notify GRI (the organization shall notify GRI of the use of the GRI Standards and the statement of use by sending an email to reportregistration@globalreporting.org), is the responsibility of the Company and we have been informed that it will be done within 5 business days following the issuance of this conclusion. Mancera, S.C. A Member Practice of Ernst & Young Global Limited C.P.C. Luis F. Ortega Sinencio March 27, 2023 Mexico City, Mexico Member Practice of Ernst & Young Global Limited HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 108 INDEPENDENT LIMITED VERIFICATION REPORT: PERFORMANCE METRICS Performance indicators Annex A Verified GRI contents and Coca Cola FEMSA’s own indicators GRI Name of the disclosure or performance indicator Scope of the information 102-7 (2021) 301-2 306-4 (2020) 306-5 (2020) Total number of employees All countries of operation Use of recycled PET resin All countries of operation Waste not destined for disposal All countries of operation Waste for disposal All countries of operation Reported information 97,213 14.3 85.7 31.8 45.1 5.9 26.62 98.5 1.5 Unit Total number of employees % female gender % male gender % Age range under 30 % Age range 30 - 50 % Age range over 50 years old (%) % Recycled vs. virgin resin % Recycled waste % Waste for disposal 1,933,774,046.99 MJ Thermal energy consumption 302-1 Energy consumption in the organization All countries of operation 1,480,272,064.84 MJ Renewable energy consumption 302-3 303-3 (2018) 303-4 (2018) 303-5 (2018) IP 305-1 Energy intensity All countries of operation Water withdrawal All countries of operation Water discharge All countries of operation Water consumption All countries of operation Water consumption efficiency* All countries of operation 751,374,020.64 MJ Energy consumption from other sources 5.97 30,241 8,564 30,241 1.46 Liters of beverage produced/MJ Mega Liters Mega Liters Mega Liters Ratio, liters of water consumed per liter of beverage produced Direct GHG emissions (Scope 1) All countries of operation 554,500.71 tons of CO2e 305-2 Indirect GHG emissions from energy generation (Scope 2) All countries of operation 52,105.72 tons of CO2e 305-3 Other indirect emissions (Scope 3) All countries of operation 3,182,146.35 tons of CO2e GRI Name of the disclosure or performance indicator Scope of the information 403-9 403-10 Total incident rate (TIR) All countries of operation 1 Lost time incident rate (LTIR) All countries of operation 2 Reported information 0.90 0.61 Unit Cases per 200000/ Worked hours Cases per 200000/ Worked hours 1 Does not include Venezuela 2 Does not include Venezuela * This indicator was developed by Coca Cola FEMSA and is defines as the liters of water it was necessary to consume to produce one liter of beverage. HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 109 INDEPENDENT REASONABLE VERIFICATION REPORT: GREEN BOND Av. Ejército Nacional 843-B Antara Polanco 11520 Mexico, D.F. Tel: +55 5283 1300 Fax: +55 5283 1392 ey.com/mx Independent Reasonable Assurance Report To the Board of Directors of Coca Cola FEMSA, S.A.B. de C.V.: Scope of our Work We have been engaged by Coca Cola FEMSA, S.A.B. de C.V. (“KOF” or the “Company”) to perform a reasonable assurance engagement,’ as defined by the International Standards on Assurance Engagements, hereafter referred to as “the Engagement”, to report on KOF’s net proceeds allocation and use for the eligible projects based on the established criteria in KOF’s Green Bond Framework (“Subject Matter”) included and presented in the Annual Integrated Report (the “Report”) and mentioned on Annex A; for the period from January 1st to December 31st, 2022. Other than as described in the preceding paragraph, which sets out the scope of our Engagement, we did not perform assurance procedures on the remaining information included in the Report, and accordingly, we do not express an opinion on this information. Criteria applied by Coca Cola FEMSA, S.A.B. de C.V. In preparing the net proceeds allocation and use for the eligible projects based on the established criteria in KOF’s Green Bond Framework, Coca Cola FEMSA, S.A.B. de C.V. applied the criteria set forth in the Green Bond Principles published by the “International Capital Market Association” (Criteria). Such Criteria were specifically designed for the construction and reporting of Subject Matter as a result; the Subject Matter information may not be suitable for another purpose. Coca Cola FEMSA, S.A.B. de C.V.’s responsibilities Coca Cola FEMSA, S.A.B. de C.V’s management is responsible for selecting the Criteria, and for presenting the Subject Matter in accordance with that Criteria, in all material respects. This responsibility includes establishing and maintaining internal controls, maintaining adequate records, and making estimates that are relevant to the preparation of the Subject Matter, such that it is free from material misstatement, whether due to fraud or error. EY’s responsibilities Our responsibility is to express an opinion on the presentation of the Subject Matter, included in Annex A, based on the evidence we have obtained. We conducted our Engagement in accordance with the International Standard for Assurance Engagements Other Than Audits or Reviews of Historical Financial Information (‘ISAE 3000’), and the terms of reference for this Engagement as agreed with Coca Cola FEMSA, S.A.B. de C.V on February 16, 2023. Our responsibility according to the previously mentioned Standards require that we plan and perform our Engagement to obtain reasonable assurance about whether, in all material respects, the Subject Matter is presented in accordance with the Criteria, and to issue a report. The nature, timing, and extent of the procedures selected depend on our judgment, including an assessment of the risk of material misstatement, whether due to fraud or error. We believe that the evidence we have obtained is sufficient and appropriate to provide a reasonable basis for our opinion. Our Independence and Quality Control Member Practice of Ernst & Young Global Limited We have maintained our independence and confirm that we have met the requirements of the Code of Ethics for Professional Accountants (including the International Independence Standards) issued by the International Ethics Standards Board for Accountants (“IESBA”) and have the required competencies and experience to conduct this assurance engagement. EY also applies International Standard on Quality Control 1, Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements, and accordingly maintains a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements. Description of procedures performed The procedures performed focused on the following: • Conducted interviews with relevant personnel to understand the business and reporting process, including the sustainability strategy principles, and management • Conducted interviews with key personnel to understand the reporting period, including the process for collecting, collating, and reporting the information in accordance with the Green Bond Principles • Checked that the calculation criteria have been correctly applied in accordance with the methodologies outlined in the Criteria • Undertook analytical review procedures to support the reasonableness of the data • Tested, on a sample basis, underlying source information to check the accuracy of the data Opinion In our opinion, the net proceeds allocation and use for the eligible projects based on the established criteria in KOF’s Green Bond Framework included in the Annual Integrated Report of the Company for the period from January 1st to December 31st, 2022, is presented, in all material respects, in accordance with the Green Bond Principles criteria issued by the “International Capital Market Association” (Criteria). Mancera, S.C. A Member Practice of Ernst & Young Global Limited C.P.C Luis F. Ortega Sinencio March 27th , 2023 Mexico City, Mexico Member Practice of Ernst & Young Global Limited HOME OVE RVIE W O UR F R AME WORK OU R ST RAT EGIC PRIOR I TI ES A PPENDICES COC A-COLA FEMSA | 2 022 Integra ted Repo r t | 1 10 Annex A Green Bond Proceeds Allocation by category- for the period of January 1st to December 31st, 2022 The following data was assured by EY in strict accordance with our established procedures. This information is presented by the company in its Annual Integrated Report. Category Figure Unit Total investment 314.74 Millions USD Circular Economy 160.83 Millions USD Climate Change 146.84 Millions USD Water Stewardship 7.07 Millions USD INDEPENDENT REASONABLE VERIFICATION REPORT: GREEN BOND Member Practice of Ernst & Young Global Limited Investor Relations Jorge Collazo Lorena Martin Marene Aranzabal José Enrique Solís kofmxinves@kof.com.mx Sustainability Luis Darío Ochoa Rosaura Castañeda Fernanda Turcott Daniel Insulza Yunuen Velázquez sostenibilidad@kof.com.mx Corporate Communication Aurea Patiño Diana Pino Aldana Solano Legal Counsel of the Company Carlos L. Díaz Sáenz Mario Pani Nº 100 Col. Santa Fe Cuajimalpa 05348, Ciudad de Mexico, Mexico. Phone: (52 55) 1519 5000 COCA-COLA FEMSA, S.A.B. DE C.V. Mario Pani N° 100 Col. Santa Fe Cuajimalpa 05348, Ciudad de Mexico, Mexico (52 55) 1519 5000 Independent Accountants Mancera, S.C. A member firm of Ernst & Young Global Antara Polanco Av. Ejército Nacional Torre Paseo 843-B Piso 4 Colonia Granada 11520 Ciudad de Mexico, Mexico Phone: (5255) 5283 1400 Stock Exchange Information Coca-Cola FEMSA’s common stock is traded on the Bolsa Mexicana de Valores (the Mexican Stock Exchange) under the symbol KOFUBL and on the New York Stock Exchange, Inc. (NYSE) under the symbol KOF. Transfer Agent and Registrar Bank of New York Bank of New York 101 Barclay Street 22W New York, New York 10286, U.S.A SHAREHOLDER & ANALYST INFORMATION KOF NEW YORK STOCK EXCHANGE Quarterly Stock Information U.S. Dollars per ADS Quarter ended Dec-30 Sep-30 Jun-30 Mar-31 $ High 68.91 59.15 56.23 55.15 $ Low 67.49 57.65 54.64 53.40 U.S. Dollars per ADS Quarter ended Dec-31 Sep-30 Jun-28 Mar-29 $ High 56.52 58.94 52.93 48.97 $ Low 47.53 51.99 46.56 42.21 2022 $ Close 67.88 58.39 55.28 54.95 2021 $ Close 54.38 56.27 52.93 46.20 KOFUBL MEXICAN STOCK EXCHANGE Quarterly Stock Information Mexican Pesos Quarter ended Dec-30 Sep-30 Jun-30 Mar-31 $ High 133.22 118.81 113.16 109.80 $ Low 131.05 116.02 110.56 106.28 Mexican Pesos Quarter ended Dec-31 Sep-30 Jun-28 Mar-29 $ High 114.98 117.34 105.71 100.95 $ Low 101.17 104.14 93.88 87.79 2022 $ Close 131.84 117.67 111.34 109.53 2021 $ Close 111.54 116.32 105.47 94.41 ABOUT OUR INTEGRATED REPORT Stock listing information: Mexican Stock Exchange, Ticker: KOFUBL | NYSE (ADS), Ticker: KOF | Ratio of KOFUBL to KOF = 10:1 Coca-Cola FEMSA files reports, including annual reports and other information with the U.S. Securities and Exchange Commis- sion, or the “SEC,” and the Mexican Stock Exchange (Bolsa Mexicana de Valores, or the “BMV”) pursuant to the rules and reg- ulations of the SEC (that apply to foreign private issuers) and of the BMV. Filings we make electronically with the SEC and the BMV are available to the public on the Internet at the SEC’s website at www.sec.gov, the BMV’s website at www.bmv.com.mx, and our website at www.coca-colafemsa.com. Coca-Cola FEMSA, S.A.B. de C.V. is the largest Coca-Cola franchise bottler in the world by sales volume. The company produces and distributes trademark beverages of The Coca Cola Company, offering a wide portfolio of 134 brands to a population of more than 270 million. With over 97 thousand employees, the company markets and sells approximately 3.8 billion unit cases through more than 2 million points of sale a year. Operating 56 manufacturing plants and 249 distribution centers, Coca-Cola FEMSA is committed to generating economic, social, and environmental value for all of its stakeholders across the value chain. The company is a member of the Dow Jones Sustainability Emerging Markets Index, Dow Jones Sustainability MILA Pacific Alliance Index, FTSE4Good Emerging Index, and the S&P/BMV Total Mexico ESG Index, among others. Its operations encompass franchise territories in Mexico, Brazil, Guatemala, Colombia, and Argentina, and, nationwide, in Costa Rica, Nicaragua, Panama, Uruguay, and in Venezuela through its investment in KOF Venezuela. For further information, please visit www.coca-colafemsa.com From our headquarters in Mexico City, we present the 2022 edition of our Integrated Report. This report was developed following the guidelines of the International Integrated Reporting Council (IIRC) and in accordance with the GRI (Global Reporting Initiative) Standards, as well as material indicators of the SASB (Sustainability Accounting Standards Board) for the Non-Alcoholic Beverage Industry. Furthermore, this report elaborates on our annual Communication on Progress (COP) to the United Nations Global Compact, included by FEMSA in its 2022 report. The information contained in this report corresponds to the period from January 1 to December 31, 2022. It includes data from the countries where Coca-Cola FEMSA, S.A.B. de C.V. has operations or a majority share. Its operations encompass franchise territories in Mexico, Brazil, Guatemala, Colombia, and Argentina, and, nationwide, in Costa Rica, Nicaragua, Panama, and Uruguay. The company is a member of the Dow Jones Sustainability Emerging Markets Index, Dow Jones Sustainability MILA Pacific Alliance Index, FTSE4Good Emerging Index, and the S&P/BMV Total Mexico ESG Index, among others. CHIEF FINANCIAL OFFICER GERARDO CRUZ CELAYA 1. For comparability purposes, the non-financial quantitative data for 2022, 2021, 2020, 2019, and 2018 is represented without Venezuela, since as of December 31, 2017, Venezuela is a deconsolidated operation reported as an investment in shares. Moreover, the 2017 information is represented without the Philippines. 2. References herein to “Mexican pesos” or “Ps.” are to the lawful currency of the United Mexican States, or Mexico 

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