Who is Arca Continental?
Arca Continental is a Mexican company dedicated to the production, distribution, and sale of beverages under The Coca-Cola Company’s brands. They cater to the southwestern United States market, including Texas and parts of New Mexico, Oklahoma, and Arkansas.
The Tariff Impact
Tariffs Imposed by the US Government
On March 12, the U.S. government set a 25% tariff on all aluminum imports, and on January 2, it applied the same rate to imported empty aluminum cans.
Arca Continental’s Response
Emilio Marcos Charur, Arca Continental’s Director of Administration and Finance, stated that the company has experienced minimal impact due to these tariffs. The effect is primarily on aluminum cans in the U.S., potentially accounting for less than 1% of their beverage goods sold (COGS) in the southwest U.S. Coca-Cola, assuming tariffs remain at current levels.
Mitigating Tariff Impact
Charur explained that the spot market for aluminum has already reflected the tariff impact. However, the company can partially offset this through financial hedges contracted to protect against price volatility.
Key Products and Tariff Exemptions
Arca Continental exports products like Topo Chico and the Nostalgia Coca-Cola line, including Barrilitos, to the U.S. These products are exempt from tariffs due to the USMCA trade agreement between Mexico, the U.S., and Canada.
Supply Chain Resilience
Arturo Gutiérrez Hernández, Arca Continental’s General Director, highlighted that one advantage of their business is the lack of direct or significant exposure to bilateral international trade or supply chain input volatility.
Key Questions and Answers
- What is the primary impact of U.S. tariffs on Arca Continental? The main effect is a minor increase in the cost of aluminum and empty aluminum cans, which are crucial raw materials for their beverage packaging.
- Which products are exempt from U.S. tariffs? Products like Topo Chico and the Nostalgia Coca-Cola line, including Barrilitos, are exempt due to the USMCA trade agreement.
- How is Arca Continental mitigating tariff impacts? The company uses financial hedges to protect against price volatility caused by tariffs.
- What is Arca Continental’s market reach? Arca Continental serves the southwestern U.S. market, including Texas and parts of New Mexico, Oklahoma, and Arkansas.
- Why is Arca Continental’s supply chain resilient? The company has minimal direct exposure to bilateral international trade or supply chain input volatility.
