Good day, everyone, and welcome to the Arca Continental conference call. All lines have been placed on mute to prevent any background noise. Please note that this call is being recorded. After the speaker's remarks, there will be a question and answer session and instructions will be given at that time. For opening remarks and introductions, I would like to turn the conference over to Melanie Carpenter of i-advize Corporate Communications. Ma'am, please go ahead.
Thank you, Katie. Good morning, everyone. Thanks for joining the senior management team of Arca Continental this morning to review the results for the third quarter and first nine months of 2021. The earnings release went out this morning, and it's available on the company website at arcacontinental.com in the investor relations section. It's now my pleasure to introduce our speakers. Joining us from Monterrey is the CEO, Mr. Arturo Gutiérrez, the CFO, Mr. Emilio Marcos, and the Chief Commercial and Digital Officer, Mr. José Pepe Borda, as well as the investor relations team. They're gonna be making some forward-looking statements, and we just ask that you refer to the disclaimer and the conditions surrounding those statements in the earnings release. With that, I'm gonna go ahead and turn the call over to the CEO, Mr. Arturo Gutiérrez, who is going to begin the presentation.
Please go ahead, Arturo.
Thank you, Melanie, and thanks to everyone for being with us this morning. Let me start by saying that we are encouraged by our third quarter and year-to-date performance. We continued delivering strong financial results as we successfully navigated through the challenges of input cost inflation, transportation constraints, labor shortages, and supply chain disruptions. Those factors are making 2021 even more difficult than 2020 in many respects. Nonetheless, all our regions saw sequential volume acceleration. Total consolidated volume grew 7.1% in the quarter, reaching 594 million unit cases. Total net consolidated revenue increased 7% to MXN 47.9 billion. Our positive results were driven by our portfolio and pricing initiatives, point of sale execution, rollout of affordable presentations, and financial discipline across our territories.
On a comparable basis, the impact of currency on this quarter's net revenue result was a 7.5% headwind. Notwithstanding, our focus on improving our execution enabled us to deliver overall solid results. In the U.S., the consumer environment greatly improved throughout the quarter as vaccination rates rose and COVID cases declined. Consumer mobility significantly increased, which led to more frequent social gatherings, raising travel and event activity. This drove considerably higher demand in the away-from-home channels. We are encouraged to see that in our Latin American territories, lockdowns have eased almost entirely as vaccination programs accelerated. Consolidated EBITDA for the quarter grew 6.4%, reaching MXN 9.2 billion, representing a margin of 19.2% for a dilution of 10 basis points.
Although we have experienced some delays resulting from the supply chain challenges that I mentioned, particularly in transportation, equipment, and fleet supply, due to the shortages of electronic components, our business has not experienced any material impact due to these disruptions. Nevertheless, we're confident that although these shortages are significant and widespread, they are likely to be transitory. The capabilities we have built over the years will allow us to overcome this situation. Let me dive a bit deeper into the key drivers across our geographies. Our beverage business in Mexico maintained its positive momentum, delivering another solid quarter of volume growth, up 2.6%. This was the fourth consecutive quarter of volume growth for Mexico, driven by the recovery of relevant channels such as convenience, supermarkets, on-premise, at work, and entertainment venues.
The on-premise channel posted another quarter of positive volume as the economy has started to gradually recover on the back of greater mobility and increasing availability of COVID-19 vaccinations. This dynamic also drove growth in immediate consumption packages up 2.6%. Volume growth was broad-based across the portfolio and driven by solid performances in sparkling with 1.6%, stills 14.2%, and water at 14.3%. Total net sales in Mexico rose 10% to reach MXN 21.1 billion, marking the 21st consecutive quarter of net revenue growth. Average price per case in Mexico, not including jug water, rose 5.7% in the quarter, reaching MXN 69.61.
On the profitability front, EBITDA increased 12.7% to MXN 5.4 billion, representing a margin of 25.6% for an expansion of 60 basis points. We continue innovating in the sports drink category. This quarter, we launched Powerade Fit to expand our portfolio of low-calorie products. This new Powerade version drove incremental sales, capitalizing on ad campaigns during the Tokyo Summer Olympics. Topo Chico Hard Seltzer is achieving solid positioning, standing among the top three brands in the flavored alcoholic beverage category in our key markets in Monterrey and Guadalajara. Moving now to our beverage business in South America. Total volume grew 23.9% in the third quarter, resulting from a strong performance across our three markets in the region. Argentina and Peru were the bright spots, already surpassing 2019 levels.
Although Ecuador has been struggling to emerge from lockdowns, there have been tangible successes as lockdowns eased and vaccination programs accelerated. Total revenue in South America rose 15.5%, reaching MXN 8.9 billion. EBITDA increased 11.7% to MXN 1.6 billion, representing a margin of 17.9%. Our beverage business in Argentina delivered solid 26.5 volume growth in the quarter, cycling strong volume growth from the same quarter in 2020. Performance was driven by colas, personal water and still beverages up 18%, 29.5% and 99.2% respectively. Our commercial initiatives was focused on protecting portfolio affordability via an accelerated introduction of multi-serve returnable packages as we continued capitalizing on the launch of the Universal Bottle refillable format.
With almost half of the population fully vaccinated and the easing of restrictions allowing greater flexibility in social and economic activities, Argentina is beginning to feel a positive change in relation to the COVID-19 pandemic. In Peru, our beverage operation delivered sequential volume growth in the quarter of 29.4%. This represents an 8.9% volume increase compared to the same quarter in 2019. The sparkling category grew 27.8% with Coca-Cola and Inca Kola brands sustaining positive momentum up 28.1% and 28.5% respectively. Still beverages once again delivered remarkable double-digit growth, driven by Powerade in the sports drinks category. The traditional trade, wholesale and on-premise channels were the best performers, with 12.3%, 53.1% and 101.3% growth respectively.
We continue accelerating our digital agenda in Peru by actively expanding partnerships with e-tailers and food aggregators to capture additional share of the digital shelf. We are also doubling down on the rollout of the suggested order tool using advanced analytics algorithms to reduce stock-outs. I will conclude my commentary on South America with our operation in Ecuador. Volume was up 12.2% in the quarter, driven by still beverages up 44.8%. Volume in the quarter was just slightly below volume posted in the same quarter of 2019. The ambitious plan launched by the new president to vaccinate 9 million people against COVID in 100 days was accomplished on time and has played a key role in reviving the economy. We continue promoting immediate consumption and returnable packages.
Single serve mix increased 7.1 percentage points as compared to last year, once again driven by the recovery of the on-premise channel, up 53.2%. Returnable packages have shown solid growth throughout the crisis and continue to accelerate. Just in the third quarter, the mix of returnable packages increased 2.8 percentage points. The use of our Universal Bottle brings more flexibility to expand the availability of brands such as Fanta, Sprite, and Fioravanti. Once again, returnable packages were a proven vehicle to deliver affordability to consumers as they allowed a sustainable entry price point to the category. Turning now to our beverage operation in the United States, Coca-Cola Southwest Beverages maintained steady momentum with its thirteenth consecutive quarter of EBITDA growth.
Net revenue grew 12.4%, reaching $840 million, thanks to a successful off-cycle price increase to mitigate rising inflation. Net price rose 7.7%, driven by our sustained strategy of shifting volume mix to high profit per case packages. Volume for the quarter expanded 4.3%, reaching 117 million unit cases, slightly below volume posted in the same quarter of 2019 and signaling a steady recovery across the FSOP and large store channels. We continue to see strong demand overall, fueled by consumer confidence and improved mobility in home market channels. Volume shifted substantially to single-serve presentations as our FSOP outlets continued recovering and consumers began to resume pre-COVID activities. We continue to grow value share in sparkling beverages.
Transaction packages, immediate consumption, and 12 oz cans were the main drivers of our share growth in the quarter. In still beverages, BODYARMOR closed another successful quarter, gaining incremental space in large stores. We still face a challenging staffing environment, so we initiated innovative actions to hire new associates and retain our current ones. We made compensation adjustments, provided performance incentives, invested in improving our facilities and enhanced training programs. Despite these challenges, EBITDA for the quarter increased 7% to $114 million, representing a margin of 13.6%. We made significant progress in our digital agenda as we prepare to deploy a new supply chain management IT platform that will help us further improve forecast accuracy, production planning and finished product transportation.
This system will be a key enabler to help offset some of the raw material price increases we expect in 2022. Importantly, e-commerce sales represented 11% of total revenue in the third quarter. August was a record month as we reached our highest number of active customers in mycoke.com. Currently, over 11,000 customers actively place their orders through our B2B ordering platform. I will finish our operation review with our food and snack businesses. Bokados in Mexico posted sequential double-digit sales increases with strong EBITDA growth driven by the traditional channel, solid pricing, and enhanced management of promotions and discounts. Wise snacks in the U.S. posted mid-single-digit sales decline in the quarter. Wise was impacted by rising commodity inflation and incremental labor and transportation costs, as well as co-manufacturer price increases.
Despite some near-term challenges, we see plenty of opportunity to increase profitability through improving our average selling price, becoming more efficient with productivity, simplifying our supply chain and logistics network, and rationalizing SKUs. On a positive note, Deep River Snacks delivered solid sequential performance as food service customers continued reopening. Inalecsa, our snack business in Ecuador, posted a double-digit sales increase in the quarter, resulting from improving mobility trends and lapping the big COVID-19 restrictions in 2020. In a noteworthy item, our food and snacks subsidiary completed the acquisition of Carli Snacks based in Quito. Carli Snacks is among the leading companies in the snacks industry in the country, with a wide national footprint and a relevant market position in categories such as potato chips, extruded snacks, tortillas, protein snacks, and plantain-based chips. This transaction increases our presence and strengthens our competitiveness in Ecuador.
The combination of Inalecsa and Carli Snacks provides a solid platform that will bring innovation to our portfolio, product, and brand expansion, as well as synergies and the sharing of best practices. Before I turn it over to Emilio to discuss our financial performance in detail, I like to mention the great progress we continue to make in our sustainability initiatives. As part of our World Without Waste efforts, our beverage operation in the U.S. increased the PET collection rate to 30% of the volume we're putting out in the market from a 6% baseline in 2020, and reduced our usage of virgin plastic by 7 million pounds. To date, we have recycled more than 29 million pounds of PET, which has been integrated into our new 100% recycled PET bottles.
Furthermore, we collected more than 38 million pounds of PET through our Every Bottle Back initiative, our highways, waterways, and parks cleanup events, and our partnership with PetStar. I'm pleased to report that this quarter we inaugurated the first of four wastewater treatment systems we're developing in conjunction with the Mexican Coca-Cola industry and state governments. This first wetland, which is a nature-based water treatment system, is now serving a large part of the community in Jalisco, treating 3 million liters of water per day to supply clean water for the population, as well as hydration for an expansive nursery and forestry preserve. We're investing a total of MXN 170 million in these projects. This initiative is part of the Mexico Reforestation and Water Harvesting Program in collaboration with the Coca-Cola Foundation to support our ongoing efforts to preserve water sources and reduce our environmental footprint.
In closing, I would like to mention that our annual corporate integrated responsibility report was recently issued and highlights our performance against our ESG goals. If you have not done so already, I encourage you to read it. It is available for download on our corporate website. Thank you. Emilio, over to you.
Thank you, Arturo. Good morning, everyone. It's great to be with you today to review our performance. I'm pleased to report that we started the second half of the year with a solid top-line recovery and positive consumption trends across all our regions, with price adjustments to mitigate the increase in raw material prices, mainly PET. Our strong operational and financial discipline were key enablers to help protect profitability. Let me now provide you more details on our financial results. Consolidated revenues increased 7% in the third quarter. We're sustaining sales growth acceleration since the beginning of the year, mainly driven by positive volume trends in our various businesses, including the significant increase in consumption in Peru and through rate price adjustments in the United States and Mexico.
On a currency-neutral basis, net revenue grew 14.4% in the quarter, as we see a revaluation of the Mexican peso against all the currencies. Year to date, consolidated revenue rose 6% to MXN 134 billion and 12.1% on a currency-neutral basis. Gross profit grew 6.3% in the quarter, reaching MXN 21.6 billion with a dilution in contribution margin of 30 basis points. This was mainly driven by the increase in raw materials and partially offset by pricing initiatives and the recovery of the single-serve mix. We continue to maintain our holistic cost management plans to optimize SG&A. We have been able to sustain a healthy balance of positive volume performance and OPEX to sales optimization for a 120 basis points benefit.
This helped us reach an operating income of MXN 6.8 billion, up 12.6% for an expansion of 70 basis points. For the quarter, consolidated EBITDA increased 6.4% to MXN 9.2 billion for a 19.2% margin. Excluding the FX impact, EBITDA in the quarter grew 12.4%. Our year-to-date EBITDA margin maintains a healthy expansion of 100 basis points, in line with our goal to protect profitability throughout the year. The tax rate reached 33% for the quarter, 2.3 percentage points higher than the previous quarter. This is a one-time adjustment as we expect to close the year slightly above tax rate level of 2020.
Net income grew 23.2% in the quarter for a solid net margin expansion of 90 basis points due to the combination of two factors, the increase in the operating income and the decrease of 43% in the comprehensive financial results. The decrease is made up of a reduction of 12.1% in interest expenses and an exchange rate gain of MXN 177 million. We continue making great progress in our liability management initiatives to optimize our outstanding debt, taking advantage of the conditions available in our markets. As of September, net income rose 17.3% for a 70 basis points expansion. Now moving on to the balance sheet.
An extraordinary dividend of MXN 1.50 per share was distributed on September 13, 2021, which represent a payout ratio of 76% and a total dividend yield of 3.5%. Our capital allocation priorities remain consistent, and we keep continuously analyzing alternatives to return value to our shareholders. As of September, cash and equivalents stood at MXN 33 billion with a total debt of MXN 53 billion, resulting in a leverage ratio of 0.6x. This leverage level put us in a good position to be ready for any M&A opportunity we may find. CapEx was MXN 4.3 billion as we expanded investments mainly on returnable bottles and commercial and distribution capabilities.
These investments will allow us to make our commercial capabilities more resilient, ensuring excellent market execution to drive increases in immediate consumption penetration, along with the recovery of the on-premise channels. We will continue with our positive momentum, and we're optimistic that we will return to pre-pandemic levels sooner than expected. The speedup of economic activity in our territories and the increasing consumption from the reopening and stabilization of all our channels, combined with our strong pricing capabilities and the discipline to keep stable our OPEX to sales ratio, should help us to accomplish our goal of maintaining profitability margins throughout the rest of the year and to have a solid start in 2022. Now, let me hand it back to Arturo.
Thanks, Emilio. Just as we experienced in 2020, the COVID-19 recovery period in 2021 is creating significant volatility in demand, which has required us to remain nimble and flexible in managing our business. Our recovery story has gained steady momentum as away from home channels begin to take hold and positively impact price mix. We realize that mobility is on the rise, but we are convinced that certain consumer habits have changed and will keep evolving. That is why we will continue making great strides to accelerate our digital agenda and the rollout of our B2B platforms. Although we foresee near-term uncertainty, we expect that the current pace of inflation is transitory and confident that we are better positioned to manage through this environment. Despite the upward pressures in commodities and pandemic-related disruption in supply chains, we feel good about the rest of the year.
We're working diligently to take appropriate action in the back half of this year to manage the ongoing volatility, applying our operational discipline and adjusting productivity levers. Looking ahead into 2022, we think there is potential for greater operating leverage as we capitalize on our strong pricing capabilities and effective cost management to continue driving healthy profitability while enabling substantial reinvestment. We have demonstrated the resiliency of our business and our ability to operate with agility during an unprecedented crisis while focusing on strengthening our relations with customers, consumers, and the community. Thank you for your continued trust and support. Katie, we are ready to open the floor for questions, please.
Thank you, sir. At this time, we will open the floor for questions. If you would like to ask a question, please press the star key followed by the one. That is star one on your touch tone phone now. If at any time you would like to remove yourself from the questioning queue, please press star two. As a reminder, due to high interest and time, please limit yourself to one question. We will pause for just a moment to allow everyone the opportunity to signal for questions. Thank you. Our first question will come from Marcella Recchia with Credit Suisse.
Hi, Emilio, Arturo. Thank you very much for taking my questions. I have two questions here on my side. First is about Mexico. You delivered better trends than your peer, KOF, that published results yesterday night, particularly in terms of profitability, right? In your view, what could mainly explain these gaps, and how can we think about the region's margin trajectory going forward? That's my first question. Secondly, I would like just to understand a little bit more what drove the decline in U.S. and consequently the margin compression that we saw this quarter. Thank you very much.
Marcella, good morning. Let me talk about Mexico first, and maybe Emilio can make a few remarks on the U.S. operation. As you saw, our Mexico business unit closed with an EBITDA growth and, you know, a very good margin considering the circumstances. What we're seeing now is volume you know clearly recovering from the pandemic crisis. We're pretty much back on our pre-pandemic levels at this point. If you go through the channels, modern channel has recovered significantly, it grew 10% versus previous year. The traditional channel has been very important for us. I think that has been really the engine of our growth and profitability throughout the pandemic.
It's remained flat versus previous year, but it has been facing a challenging comparison. It is growing now almost 4% versus third quarter of 2019. As we've seen in other similar crisis in the past, the number of outlets in the traditional channel has increased. That is a very relevant factor. The other thing that I would point out is the recovery in the on-premise channel as well. It continues to show improvement. It was 34% versus previous year. The volumes are getting closer to reach its pre-pandemic level. It's still below third quarter 2019. It's about 11% below third quarter of 2019.
We're not there yet since there are some capacity restrictions, and that remains active. You know, we're very optimistic that we've been able to maintain very good volumes despite the circumstances. We still have the upside, considering that we're still operating under many limitations. The other important thing to highlight is the resiliency of the categories, how we've been able to maintain you know, especially the cola category growing and the recovery of some of the categories that have been mostly impacted during the pandemic. You know, pricing has been a very important factor there. As you know, we've been able to manage prices very effectively.
In Mexico, we've been pricing above inflation consistently, both in our net price and our true rate. We plan to continue to do that in the future. We already have our plans for 2022 and some carryover from what we've done this year. Also, I think a very important factor are the efficiencies in our SG&A. These are initiatives that we've been implementing for the last year and a half. They've been impacting positively our margins. Although some of those expenses might be coming back, especially as they relate to marketing, we've also had important learnings that have been very important to preserve our margins going forward.
Even though we're gonna be facing some pressure in our margins, we're very optimistic about how we handle pricing and OPEX going forward. With that, I'll turn it over to Emilio to make some comments on our U.S. operations and profitability.
Sure. Thank you, Arturo. Thank you, Marcella, for your question. Yes, our U.S. operations, Coca-Cola Southwest, diluted the margin in the quarter 70 basis points. We can explain that because we had higher SG&A expenses coming basically from promotional activities that we reduced last year because of the pandemic. We are increasing that kind of expenses. Also, we had an increase in payroll expenses due to you may know that there are some challenges on the labor market right now in U.S. We have some impact on the payroll particularly in the third quarter.
We expect that our staffing challenges to gradually improve in the remainder of 2021. We expect that impact will be reducing in the coming quarters. I think it's important to mention that year-to-date margins are really good. We have 15%, 130 basis points higher than last year. We have a very good, you know, level. EBITDA was up 7% in the third quarter, even though the margins were lower, but EBITDA grew 7%. Year to date, we have an increase of 20.7% in local currency in the U.S. operation.
For 2021, we will continue our positive trend and we expect to close the year with a margin expansion compared to the margin of 2020 for the U.S. operation.
Yeah. Those two factors are very relevant. One is the challenge in staffing. As you know, the environment was very challenging, especially for us during the summer. Second, the shortages and allocations we faced in the supply of products that we do not produce in-house, such as Powerade, smartwater, and others, and some of the glass presentations. Those two factors, which, as Emilio is saying, are, we believe, transitory. They've been improving, you know, week by week.
That's very clear. Thank you very much, gentlemen.
Thank you. Our next question comes from Antonio Hernández with Barclays.
Hi. Good morning. Thanks for taking my question. My question is regarding, I mean, you've already mentioned some of the items affecting profitability and how they can be offset, but more from a gross profit point of view, considering of course input inflation, but also the fact that sales mix has been recovering with the reopening and less mobility restrictions across all countries. What are your expectations more at the gross profit line considering these two items? Thanks.
Thank you, Antonio. Good morning. Your question is, I suppose in general or you're referring to a specific operation?
Well, Mexico and also South America. Because you mentioned that Argentina and so on, they've been recovering late last year.
Yeah. We, as Emilio said, expect to close 2021 with a positive trend. As you saw, we were able to protect our margins this quarter and maintain, you know, our margin expansion as of September. We have several effects that we expect, certainly recovering the top line for next year, although we're facing harder comparisons as we move to the end of the year. We expect volume growth across all operations. Second is pricing. As I said, pricing will be in line or above inflation. We have already our plans for 2022, where in both countries, in the U.S. and Mexico, we expect to be above inflation in our pricing, both in our net price.
We have a mix effect in both countries of maybe 1% in Mexico and 0.5% in the U.S. that will improve our overall pricing. Certainly we will be seeing more of the impact of raw material costs going forward. That is why it was very important to implement the off-cycle price increase in the U.S. and also the price adjustments that we've been making in Mexico. That will provide significant carryover, especially in the U.S., for 2022. We have probably more than 3% will be carryover for next year. That's very important as we face a tougher raw material environment.
With respect to raw materials, just to be more precise, this is gonna be mostly in the U.S. for aluminum and to a lesser extent, sweeteners. The raw material environment in Mexico is gonna be more stable. Again, we know that 2021 was maybe a high point in our margins and that if you go back, you know, five years, probably this is and after we consolidated the U.S. operation, maybe this is the best margin we've had. We gonna have tougher comps in 2021.
Our goal is to protect margins through pricing, obviously volume and the discipline in SG&A that continues to be very important for us, as a source of profitability for the company.
Perfect. Thanks a lot. Have a nice day.
Thanks, Antonio.
Thank you. Again, as a reminder, please press star one if you would like to ask a question. Our next question comes from Juan Guzman with Scotiabank.
Good morning, Arturo, Emilio, Pepe, and everyone at the team. Congrats on the results, and thanks for the space for questions. I have two questions here. The first one is regarding the direct to home platform. Even when the on-premise channels keep recovering across your regions, it seems like this at home digital channel also keeps gaining traction and posting solid results in countries like Mexico and Peru, and also appears to be a nice complement to vending. If you could share this with us, what's the current contribution of this direct to home channel to your regional volume for sales? Or how should we think about this channel contribution in the future? My second question is regarding recycled PET.
Would appreciate if you could share with us some additional color on how this project is advancing in terms of usage across your regions, beyond the U.S. in order to reach your rPET commitments for 2025. Thank you very much.
Sure, Juan. Good morning. I will let Pepe Borda answer the first part of the question, and then maybe he can turn it back to me for PET. Just to say that, you know, direct to home is certainly a very important channel. It's gaining a lot of traction. Even, you know, as we normalize our channels, it continues to be very relevant for our strategy. It combines with our digital strategy as well. I'll let Pepe talk about that, and then I'll make a few remarks on PET.
Thanks, Arturo, and thank you, Juan, for your question. As in many other industries, in last year, we had a boost in our direct to home operations. During the third quarter of this year, we have our registered customers reached 510,000 households in our territory, increasing 15% versus previous year.
Out of those, around 310 are active monthly buyers growing around 8% versus previous year, you know. We continue developing that platform and growing penetration in more categories. You know, this started as a job business, and now it's becoming a total beverage business. We have penetration of sparkling beverages around 83% of our customers, dairy 63%, and other categories growing up to almost 40%, you know. We are growing revenues in those categories. On the other hand, our digital buyers topped around 21,000 customers in Q3, and that's growing 40% versus 2020. We are retaining most of those digital buyers.
An important initiative here to increase the average ticket in direct to consumer is increasing digital payments. We've increased the number of cashless transactions by almost 25%. We are testing different alternatives in Peru and Ecuador with low results yet, but we are every time learning and adjusting our platforms. Today, we sell around $100 million in Mexico in that platform to have an idea of the volume of that channel with very good profit margins. Most of that volume is really aggressive because it's not cannibalized volume. We expect that platform to grow 10%-20%, at least in the next years.
We are investing a lot in technology and in processes to be able to serve our customers in that platform. Arturo, do you want to take the other question?
Juan, I wanna address your question on PET and recycled PET. You know, first by saying that the adoption of this circular economy in our business model is very important. That's really embedded into our business strategy. We have our sustainable packaging principles that are applied across our operations. Now we're getting close to 30% of recycled PET in our packaging. It's not only the recycled PET content, it's also about using more returnable bottles. That you've seen that the Universal Bottle initiative has been very important in Argentina, Peru, Ecuador, Mexico. In the U.S., we have been improving significantly, incorporating more recycled resin into our bottles.
We now are gonna be reaching 50% of recycled resin in every bottle that we produce in the U.S. There are other factors that also relate to being responsible in connection with recycled material. We're committed to create also social value through PetStar in what we call the inclusive collection model. That refers to being more responsible in the way bottles are collected in Latin America and also addressing some of the needs of the waste pickers and their families. An example of that, in Mexico, we support 900 boys and girls that are children of waste pickers and those are supported by our programs.
It is about collecting bottles, it's about doing it responsibly, it's about incorporating recycled material. We believe that these solutions are imperative to really creating a path to keep plastic out of our natural environments for good. We really don't wanna see any of our packaging end up where it shouldn't. That's why we aim to collect and recycle every bottle and can, regardless of where it comes from, for every one we sell. That's the goal for 2030. That's the driving force to establish our World Without Waste goals three or four years ago. We have so much to do but we have made significant progress against these goals in territories that we serve.
Bottles are made all with 100% recyclable plastic. They're now available in Mexico, U.S., and Peru in certain packages and products. As I said, in the U.S., we're getting close to 50% in what we produce. That was 10% a few years ago. We will not stop until we meet the goals that we put forward and that, you know, we grow the business the right way.
Great. Always a pleasure talking to you. Thanks for the call.
Thank you, Juan.
Thank you.
Thank you. Our next question comes from Luis Willard with GBM.
Hi, guys. Good morning, and thanks for taking my question. Just a quick one. Well, first of all, also congratulations on the results, very solid. I would like to talk about the state of the consumer, both in Mexico and in the U.S. I mean, probably with inflation stickier, not only in your products of course, but also in other ones. How do you see the health of the consumer entering into 2022? How sticky do you see your pricing actions to be throughout the year? That would be my question. Thank you.
Thank you, Luis. Well, what we're seeing in every market is a very steady recovery. If you look at our operations in the case of the U.S. and Mexico, we didn't have as big an impact with the pandemic. All in all, our volumes now are above 2019, which is truly the baseline that we're using this year. Still operating under significant limitations. That you know gives you an idea of you know how the environment has been improving and how you know resilient the business is and how you know consumption is really picking up. We look at our main channels and how they have a positive trend in the third quarter.
In the case of the U.S., large stores continue to grow. They grew, you know, 8%. In traditional trade in Latin America, 2.5%. Those were the engines for growth. Then, as I said before, the on-premise is getting back slowly, but already in the positive side, growing, you know, 37% versus previous year. It's still not yet at their pre-pandemic level, but that signals a very important recovery. We see in the U.S. a more accelerated recovery of consumption, and that would be due to the advance in vaccination deployment and government initiatives to accelerate economic recovery. Mexico has been a very resilient market. It would have, you know, a full recovery by the end of the year.
If you look at South American operations, they've had a great performance in the third quarter as mobility restrictions have been reduced in those markets. Remember, Peru and Ecuador were the most affected by a strong COVID wave during the second quarter. So we're gonna, you know, carry those impacts throughout the end of the year, but, and we're expecting to reach pre-pandemic volume levels by, you know, the first quarter of next year, 2022. I would say, in summary, Mexico, the U.S. and Argentina are in the best position to reach 2019 volume levels now. Actually, they are reaching it this year. Peru and Ecuador, it's gonna be by early next year. But certainly their consumption trend right now is gaining more traction.
that's you know the general environment. I don't know, Pepe, you wanna add something to that?
Yes, just adding to Arturo's comments. As you know, we manage our pricing with a lot of detail, understanding elasticities and measuring them constantly. Our affordability strategy is one of the key efforts that we have around Latin America. We're reinforcing our affordability platforms and refillables in the areas where we see most of the opportunities that is powered also by our Universal Bottle. We can make price adjustments in the places where we see that possible. We are seeing good traction in most of our markets. As Arturo was saying, we're seeing Peru catching up. Argentina, even though facing difficulties, also catching up in consumption.
We are deploying a set of actions to make sure that we can cater to more price-sensitive customers at the same time that we can capture incremental revenue where we can. Hope that's helpful, Luis.
Very helpful. Thank you very much. Very clear.
Thank you, Luis. Thank you.
Thank you. Our next question comes from Álvaro García with BTG Pactual.
Hey, good morning, Arturo, Pepe, Emilio, and team. I have two questions. My first one is on this last topic you were discussing, Pepe, Arturo, on elasticities in the U.S. We saw a similar rate increase four or five years ago from the system. I was wondering if you can sort of compare the elasticity you saw then to now. That's my first question. My second question, KOF in their call and in their release was a lot more vocal about their multi-category distribution strategy, really diversifying the red truck. We've discussed this a lot, Arturo, in the past on sort of the potential for Juntos+ and the potential for CPG companies that don't have DSD to grow alongside your capabilities.
I was wondering if you can sort of give us an update on that strategy and if you're seeing more traction there, less traction there? An update there would be wonderful. Thank you very much.
Yes. Thank you, Álvaro. I think you know, Pepe, you can address the first part of the question and then turn it over to me and talk about multi-category. In the U.S., just briefly, we've been you know, very effective in our price strategy, not only this year, in the four plus years we've been operating in the U.S. I think effectiveness would mean you know, that customers would agree that this would create value for our chain, and also that you know, the industry in general has reacted to those price movements. Pepe, maybe you can provide more detail.
Yes. Just adding to what you're saying. We've seen a small price sensitivity and elasticity in this price increase in the U.S. that we've seen that the history, the last part here has shown. Obviously, this is a good moment in which consumption in the U.S. is booming, in which all the businesses are reopening. We haven't seen an important fall in our volumes. I think this has been a very good moment for that off-cycle pricing.
We obviously rely on our brands that are strong enough to support these increases due to our marketing, our innovation, our execution efforts, and we use that to offset the pressure we have on costs. Now, we are price leaders in all of our markets, with few exceptions, so competition is following and customers are also benefiting from better economics. We continue to rely on this RGM and pricing processes with selective price increases. As I said before, affordability strategy is key. A better pricing and packaging architecture that we are starting slowly but steadily to deploy in the U.S. permits us doing smarter price increases that we were able to do in the past. We know we've done that for a long while in Latin America.
We're pretty confident that this price increase is being done at the right level and the right time.
I think that final point is very, very important, Álvaro. That we have added some complexity to our price-pack architecture, and that allows us to manage more effectively, you know, our revenue management. Let me talk about the second part of your question, which is the multi-category distribution. As you know, we have a different perspective to that than we've had in the past and our partnership with Coca-Cola Company has evolved. We are working on the details of that alignment actually, with Coca-Cola to evaluate potential opportunities. Also, as you know, we have been distributing other products, even in the Retruck. In the case of Argentina, we've been distributing beer for many years.
By the way, this category has had significant volume. We're growing 29% this year, and that's on top of growth in 2020, even under the crisis. We had learnings about, you know, what are the potential of our system. If you think about it, all in all, what we do is really create value with our customers in the channels where we operate and connect leading brands and execute most effectively with them. We think there's more opportunity in more categories across Latin America, and categories especially that complement and strengthen our portfolio. We will explore those jointly with the Coca-Cola Company in the following months.
We already launched or have evaluated a few of those possibilities. As you know, we have launched in the case of Yonp. Another initiative, which is to distribute some of the products directly to our customers in the traditional channel. That has also the purpose of connecting better, addressing a pain point of the up-and-down-the-street retailer and creating more loyalty. At the same time, we're evaluating the Retruck for other possibilities that would be, you know, obviously profitable for the system, but at the same time complementing what we have and creating the stronger connection with our retailers.
The other part is that this has a very strong connection with our digital strategy as well. If you think about the possibility of having a wider portfolio of products, it relates to the ability to deploy our B2B platforms for, you know, order taking. Sometimes we can distribute, sometimes we can use third parties. We're developing those models and testing those models as well.
Great. Thank you very much.
Thanks, Álvaro.
Thank you again. As a final reminder, if you'd like to ask a question, please press star one now to join the queue. Our next question comes from Fernando Olvera with Bank of America.
Hi, good morning, everyone, and thanks for taking my questions. I have two, if I may. First one, can you comment what is your market share by region and how it compares to 2020? My second question is, given your solid financial position now with the net debt to EBITDA ratio at 0.6x, have you evaluated to pay another extraordinary dividend before year-end as you did last year? Thank you.
Thank you, Fernando. I'll respond briefly to the second part and then turn it over to Pepe. As you know, the shareholders' meeting of our company has delegated to the board the possibility of paying additional dividends. That will be dependent on, you know, projects that we might have and use of our cash resources. That is for the board to analyze that and decide. It is certainly a possibility going forward. With respect to the market share, we've had, you know, a stable share across time. Last year we had actually, you know, probably the highest share that we had in some of the markets. We have leading market share, as Pepe mentioned.
that, you know, continues to evolve within a very identifiable range. Pepe, maybe you can give more color on that.
Yes. Adding to that, you know, during 2020, we had an exceptional market share growth within our NARTD categories, even with the challenging environment that the pandemic brought. You know, this was achieved through our solid execution, our digital capabilities, such as AC Digital, which allowed us to remain in close contact with our customers even during the pandemic. This is also a demonstration of the resilience of our operations to face difficult and unforeseen situations. This year we're cycling 2020's extraordinary growth. And for example, in Mexico, market share values are now receding slightly versus 2020. However, comparing against pre-pandemic levels, we have continued our growth. So we are...
We obviously are adjusting our packaging architecture in highly competitive areas and reinforcing our affordability platforms to recover that share. The long-term trend is overall positive.
We always aim to maintain that the balance of market share, profitability, volume growth and based on better execution and segmented execution, I would say. Okay, great. Thank you.
Thank you for having me.
Thank you. Our next question comes from Sebastian Hickman with JP Morgan.
Hi, guys. Thanks again for the call, and congratulations on the strong quarter. I'm sorry if I'm making you repeat yourselves here, but it seems I was dropped off the call when you were speaking about the U.S. earlier. I was just wondering if you could quickly go over the outlook that you had here in terms of prices and margins going into 2020. Again, sorry if I'm making you repeat yourselves. Thanks a lot.
Yeah. No problem, Sebastian. Well, yeah, as we said, the U.S. has maintained a steady momentum, whether it's now the thirteenth consecutive quarter of EBITDA growth in the U.S. despite, you know, the crisis that we faced. We continue to see signs of recovery, especially in the on-premise market. That's 20% above previous year. A strong performance in the large store channel. That's 8% versus previous year. That obviously projects what will continue in the future. We mentioned that we faced two significant challenges, the staffing environment, and we've taken action there. It's affected some of our OPEX, mostly because of overtime. But that's transitory and improving.
We've also faced supply shortages in allocation of products, especially those that we do not produce in the U.S. That also is improving. Despite the challenges, EBITDA for the quarter continued to grow. We had a margin contraction, you know, mainly because of those factors. We continue to grow value share in the marketplace. Going forward, we expect a challenging fourth quarter since we have. We're already on our way to recovery in the fourth quarter of last year. We project to close the year with volume growth, with stable gross margins and solid margins.
Going forward, we are facing, you know, a difficult raw material environment, particularly with aluminum going up and to a lesser extent, fructose. The upcycle price increase that we implemented, plus effective actions in trade promotion optimization and still, you know, further initiatives to improve our OpEx and SG&A in general will result in very solid margins for 2022. That's our expectation.
Okay. Thank you very much.
Thank you, Sebastian.
Thank you. At this time, I would like to turn the call back over to management for closing remarks.
Thank you. Thank you all for participating in our call and for your continued interest in our company. Please, reach out to our investor relations team for any questions you might have. Have a great day.
Thank you, ladies and gentlemen. This concludes today's teleconference. You may now disconnect.