Good day everyone, and welcome to the Arca Continental conference call. For opening remarks and introductions, I would now like to turn the conference over to Melanie Carpenter of i-advize Corporate Communications. Ma'am, please go ahead.
Thank you, Katie. Hello everyone. Thanks for joining the senior management team of Arca Continental this morning to review the results for the third quarter of 2020. The earnings release went out this morning, and it's available on the company website at arcacontal.com in the investor relations section. It's now my pleasure to introduce our speakers. Joining us from Monterrey is the CEO, Mr. Arturo Gutierrez, the CFO, Mr. Emilio Marcos, and the Chief Commercial and Digital Officer, Mr. Jose Pepe Borda, as well as the investor relations team. They're probably going to be making some forward-looking statements. We just ask that you refer to the disclaimer and the conditions surrounding those statements in the press release. With that, I will now turn the call over to the CEO, Arturo Gutierrez, to begin the presentation. Please go ahead, Arturo.
Thank you, Melanie, and good morning, everyone. Thank you all for joining us today to discuss our results for the third quarter. I'd like to first take a few moments to express my sincere acknowledgment and recognition to our team for their unwavering commitment to serve our customers and consumers. The dedication of our associates in supporting our communities during the pandemic has been exemplary. I want to thank them for everything they do to represent Arca Continental so well. Turning now to our performance, I am pleased to report that our company delivered another quarter of sequentially improving results, overcoming an adverse business environment impacted by the COVID-19 pandemic. Consolidated revenues in the third quarter reached MXN 44.8 billion, up five point six percent, while total consolidated volume declined five point six percent to reach 555 million unit cases. Our business improved versus the previous quarter with encouraging results.
Volume performance was better than expected during the quarantine and sequentially improved throughout the quarter. Our markets in Mexico and the U.S. had a good performance versus last year, as pandemic-related closures and mobility restrictions eased to a certain extent. Our South America business trends also began to recover as businesses and economies started reopening. In addition, our snacks business has remained very resilient. Importantly, our market position remains strong. We are sustaining value share across all our territories in the region. Consolidated EBITDA for the quarter rose seven point seven, reaching MXN 8.6 billion, representing a margin of 19.3% for an expansion of 40 basis points. We have taken several bold actions to optimize our cost structure. We are moving forward with our disciplined expense control plan announced at the beginning of the pandemic and also strengthened mechanisms to further improve visibility of cash flow, working capital, and liquidity preservation.
One of the highlights of the quarter was the launch of Topo Chico Hard Seltzer. In Arca Continental, we fully support The Coca-Cola Company's Beverages for Life strategy, and we are committed to exploring new products in dynamic beverage categories. As you may know, Topo Chico Sparkling Mineral Water got its start here in Monterrey. It has a strong 125-year history, and we are so proud that Topo Chico Hard Seltzer was inspired by the Topo Chico brand. Let me expand on the results across our operating groups and geographies, beginning with Mexico. Total volume in the third quarter declined four point two percent, cycling hard comps, but delivering a sequential quarter-on-quarter improvement of two point one percent. Volume trends in Mexico continue recovering as mobility restrictions began to ease and more points of sale started to reopen.
From a channel perspective, the traditional trade delivered strong growth, while the decline in the on-premise channel moderated. Our focus on strengthening an impacted traditional channel through numerous commercial and social initiatives has proven to be effective, resulting in a three point seven growth. Notably, 100% of our customers in the traditional channel in Mexico were open as of August. We continue supporting reopenings in the on-premise channel with initiatives such as Open Kitchen, Local Kitchen, which have helped more than 50,000 outlets, and at the same time captured over 3,600 new customers. Total net revenues in Mexico rose one point nine percent in the quarter to reach MXN 19.2 billion. Average price per case, not including jug water, rose six point two percent, reaching MXN 65.81, sustained by our revenue management and affordability initiatives. During the quarter, we executed commercial initiatives focused on protecting portfolio affordability, supported by our returnable presentations.
Returnable packages not only deliver an affordable entry price point to the category, but they also strengthen our household penetration, market share, and conversion rates. The mix of multi-serve packages grew five point six percent in the quarter, mainly due to new buying patterns and consumer behaviors preference for these formats. In response to this market dynamic, we accelerated the introduction of multi-serve returnable packages supported by our new universal bottle with a wide variety of products. We were able to grow value share in NARTD beverages as a result of the excellent market performance in still beverage categories such as water, sports drinks, and juices and nectars. EBITDA increased four point five percent to MXN 4.8 billion in the quarter, representing a margin of 25% for an expansion of 60 basis points.
Despite the volume contraction in the quarter, we were able to expand margins driven by price increases above inflation, raw material tailwinds, and efficiency initiatives. Turning now to our operations in South America, total volume was down 10.8% in the third quarter as a result of declining volume in Peru and Ecuador, which was partially offset by growth in Argentina. The region is facing a sharp downturn this year as lockdowns have continued to pummel activity levels. Nevertheless, third quarter volume confirmed the overall sequential improvement trend from the first half of this year, when the decline reached 16%. Total revenues for South America decreased two point one percent in the quarter to MXN 7.7 billion, while EBITDA declined two point eight percent to MXN 1.4 billion, representing a margin of 18.5% for a contraction of 10 basis points. In Peru, total volume declined 15.9% in the quarter.
As you remember, the stringent lockdown implemented to contain the COVID-19 spread gave a historic blow to the economic activity, contracting by nearly a third. The phased reopening of different sectors has helped increase activity and establish strong recovery momentum. Over 93% of our customers are now open, with 100% of the traditional channel doing business from a low point of 80%. We grew both volume and value share in the quarter, driven by the sparkling category. Coca-Cola brand showed its resilience, growing eight point two percent in September.
Fanta also posted positive results, thanks to the launch of the returnable one point five and two Litre packages. Also in the quarter, we launched 600 mL PET bottle of Inca Kola and Coca-Cola, seeking a more competitive price per liter presentation. The traditional channel continued providing its resilience with only one percent volume drop in the quarter. September was positive, up five percent compared to last year.
We launched a new website, Open Store or Bodega Abierta, to provide thousands of customers in the traditional trade channel with free tools to manage their business and stay on top of the safety protocols in order to remain open. We also provided virtual training to more than 7,000 mom-and-pop customers through alliances with different institutions on topics such as how to best run their business, accessing credit, managing changes in consumption occasions, and adapting to the new shopper and consumer dynamics. Shifting gears to our beverage business in Ecuador, total volume dropped 11.7% in the third quarter. A nationwide quarantine was announced since March in response to a rapidly escalating domestic COVID-19 outbreak. Restrictions have been gradually eased since early May, and most measures have now been lifted. Mobility data shows that activity has returned to just 20% below pre-COVID levels.
98% of our customers are currently open from a low point of 46%. The traditional channel went from 60% to 100% as we deployed initiatives to support the reopening. The sparkling beverage segment stood out once again. Coca-Cola brand posted a favorable performance in September, up three point five percent. We expect this positive trend to continue as we accelerate our initiatives to increase coverage in returnable presentations across all our brands nationwide. Tonicorp, our value-added dairy business, posted a double-digit sales decline in the quarter. In the wake of the pandemic, Tonicorp has faced a challenging environment. The overall dairy industry in Ecuador has been impacted by a significant drop in demand. Despite this contraction, Tonicorp leads the value-added dairy industry with a growing trend in value share in core categories such as yogurt, flavored milk, and ice cream.
We continue reconfiguring our portfolio to support the economy of families with new presentations oriented towards affordability without losing nutritional properties and thus maintaining our high-quality credentials. I will conclude my commentary on South America with our business in Argentina, where COVID-19 remains a hotspot. The government recently announced another quarantine extension, suspending international flights and keeping borders closed for international tourism. Argentina is the only country in the region that has seen a consistent rise in new cases since early July. Despite these mandatory restrictions, our operation delivered sequential volume growth up two point one percent in the third quarter, driven by growth in colas and still beverages, up nine point five percent and seven point two percent respectively. We continue actively promoting affordability with returnable bottle initiatives. Importantly, our mix of returnables grew by a high single digit in the quarter.
Moving on to our beverage operation in the United States, total volume declined four point four percent in the quarter, reaching 112 million unit cases, as we continue to see the impact of the COVID-19 pandemic in terms of closures and restrictions, particularly in the on-premise channel. Total revenue rose zero point three percent in the third quarter to reach $747 million. Our price package strategy enabled us to deliver solid top-line results, raising our price above inflation.
Net price in the U.S. grew four point nine percent, with a four point eight percent true rate increase and a positive mix impact of zero point one percent, driven by high-revenue packages such as 12-ounce cans, transaction packages, energy category, and BODYARMOR. We're starting to see a slow recovery of the FSOP channel as customers start reopening. Conversely, the large store channel continued to outperform as consumers are increasing at-home consumption, resulting in this channel growing four point five versus prior year.
We continue driving innovation in our still beverage portfolio. This quarter, we launched new flavors of smartwater in 700 ml presentation. We also launched POWERADE ULTRA and POWERADE POWER WATER to expand our presence in the flavored enhanced water category. We're also capitalizing on the recent launch of AHA and rapidly gaining share in the fast-growing sparkling water category. On the profitability front, EBITDA grew nine percent, reaching $106.6 million, representing a margin of 14.3%, a solid expansion of 110 basis points. These results reflect the steady progress of our revenue management initiatives while following operational discipline to control expenses. This equation allowed us to grow earnings faster than sales. We also accelerated the pace of key digital initiatives in our pipeline, especially our e-commerce platform, myCoke.com, as more and more customers shifted to online shopping. The number of ordering customers on myCoke grew 31% in the quarter.
Let me close the review of our U.S. operation with an update of our synergy program. We are 100% on track to capture $90 million in synergies over a three-year period. Our new facility in Houston, Texas, is fully operational and has been a major enabler of these synergies. The plant brought great flexibility in terms of production as we had to adapt to a shift in consumption of certain SKUs. Now, to conclude with our operations review, let's move to our food and snack businesses. Wise Snacks delivered mid-single-digit sales decline in the third quarter, impacted by the closure of outlets due to COVID-19. The e-commerce channel continued its strong performance with over 70% growth versus last year. We relaunched our variety pack portfolio and Wise Golden Original on amazon.com. Bokados in Mexico posted solid high single-digit sales growth driven by the traditional channel.
We have continued our pilot program to distribute Kellogg's products, including cereal bars and Pringles chips, in select territories in northern Mexico. We are committed to adding value and delivering great brands and products to our consumers while leveraging our distribution and merchandising capabilities in the traditional channel. Also, a new distribution center was opened in Mexico City as we deploy our plan to become a national brand in this country. We will continue making targeted partnerships and driving innovation in our portfolio while further expanding distribution capabilities in new territories. Inalecsa posted a low teen sales decline in the third quarter. As you remember, the COVID-19 outbreak in Guayaquil quickly escalated to one of the worst in Latin America, though case counts have since stabilized. We're rapidly adopting new digital capabilities in our snack operation in Ecuador.
This quarter, the AC Digital Corporate Platform was deployed with a focus on the traditional channel. As of today, over 3,100 customers utilize this tool to place orders directly. Let me now turn the call over to Emilio Marcos to go over our financial results. Please, Emilio.
Thank you, Arturo, and good morning, everyone. We appreciate your participation in this call. Our third quarter was still challenging in terms of volume performance due to different mobility restrictions at the beginning of the quarter in each of the countries in which we operate. As Arturo mentioned, despite the on-premise channel's limited consumer traffic due to governmental capacity restrictions, we're seeing a gradual recovery in both the volume and mix across our operations. We continue to demonstrate our flexibility to adapt to changing market conditions, delivering another profitable quarter driven mainly by three key factors. First, our price pack initiatives, which remain consistent with our strategy to deliver pricing growth above inflation in Mexico and the United States. Second, tailwinds in raw materials, particularly packaging. Third, our cost optimization initiatives that were established right at the beginning of the pandemic. Together with our disciplined approach at capitalizing on efficiencies.
Moving to the result for the quarter, consolidated revenues increased five point six percent, mainly due to exchange rate benefits from our US dollar operations and a strong pricing in Mexico and the US. We're starting to see a recovery in channel, packaging, and category mixes, which were particularly upset by the negative volume performance. It is important to mention that we reached an agreement with the Coca-Cola Company regarding concentrate prices on sparkling beverages in Mexico. The new price increase became effective as of July of this year. The agreement is part of our business partnership over the long term, allowing each to focus on strengthening the Coca-Cola system. Cost of goods sold were up five point three percent during the quarter. This increase is mainly explained by FX rates and concentrate price increase in Mexico, which were partially offset by lower PET prices across all our regions.
Consolidated EBITDA for the quarter rose seven point seven percent, reaching MXN 8.6 billion, resulting in an EBITDA margin of 19.3% for a 40 basis point expansion compared to last year. This expansion was achieved by the top-line growth, driven by a positive performance in the price mix of our Mexico and U.S. operations. Several PET prices remained lower than last year, and an efficient management of OpEx in all our operations.
Expenses related to COVID-19 for this quarter reached MXN 160 million, of which MXN 17 million were non-recurring as our operations stabilized. When we look at our EBITDA margin results, the U.S. and Mexico posted a solid 100 basis points and 60 basis points expansion, respectively. These results were driven mainly by the factors described before. Strong price mix, low raw material prices, SG&A efficiencies, and a steady progress in delivering synergies in our beverage operation in the U.S.
Our South America operations EBITDA margin recovered from 12% in the second quarter to an 18.5% in the third quarter, only 10 basis points lower versus third quarter 2019. Despite still facing a significantly challenging environment, the three countries have had sequential top-line improvement and effectively executed OpEx savings initiatives. We're still on track to achieve our target of $90 million in synergies, with around MXN 80 million to be delivered by the end of this year, and some carryovers for 2021 as our Houston production facility completes a full year of operations. The Northpoint facility is set to bring a total of MXN 30 million in annual savings in cost and operating efficiencies. Comprehensive cost of financing in the quarter registered MXN 1.1 billion from MXN 709 million due to an exchange rate loss of MXN 208 million as a result of our cash position in U.S. dollar.
Net income increased six point six percent to MXN 2.9 billion, which represent a margin of six point five percent. Now, let's turn to the balance sheet. On September 30th, 2020, an extraordinary dividend of MXN 1.5 per share was distributed, which led to a payout ratio of over 70%. Our capital allocation priorities remain consistent, and we continuously analyze different options to return value to our shareholders. As of September, our cash position was MXN 32 billion, with a debt of MXN 53 billion, which reflects net debt to EBITDA leverage ratio of 0.8 times. Our CapEx investment in the third quarter was MXN 4 billion, around 47% less than last year, as investments were optimized to better meet the needs of the current consumer environment. We expect to return to our regular CapEx level next year as the contingency continues to positively evolve.
Looking ahead toward the end of the year, our priorities have not changed. We'll continue our disciplined OpEx execution, reinforce our digital and commercial initiatives, and strengthen the relationship with our customers, particularly in the traditional trade, which is key component of our positive results. In 2021, we'll continue to focus on those priorities that accelerate our recovery for more effectively serve our customers while maintaining a solid, profitable level. With that, I will turn it back to Arturo.
Thank you, Emilio. 2020 has been an unusual and challenging year for all, but we are encouraged by our results and our ability to thrive and excel during this COVID-19 pandemic. Our first priority is and has always been the safety of our associates. We've put in place robust processes and policies to protect our employees and customers and further limit the spread of the virus. We are keenly aware that the uncertainty of today's health and economic landscape is likely to extend into 2021. Therefore, it is more important than ever to keep a long-term vision of the business while focusing on preserving and strengthening our relations with customers, consumers, and the community. Our market focus and operational flexibility has allowed us to swiftly adapt to a weaker overall consumer environment while maintaining profitability and market share.
The progress we've made in terms of revenue management and stepped-up execution prepares us to rapidly adapt to the new market dynamics. Consumer behavior has changed dramatically during the pandemic. Undoubtedly, COVID-19 has pushed consumers online faster than expected. As you may remember, last year during our investor day, we laid out our digital transformation plan and the journey we embarked on. This pandemic has certainly been an accelerator of our digital initiatives, and thankfully, we were ready to pick up the pace at just the right time. We believe e-commerce and home delivery platforms as consumer preferences that will remain after the contingencies. As a result, we deployed new omni-channel capabilities and expanded the number of touchpoints with AC Digital, our e-commerce mobile application.
In the U.S., we're expanding our online B2B platform with new digital capabilities, including payments, loyalty programs, and launching a new myCoke.com application to better interact with customers. We optimized a portfolio of SKUs, shifting towards package sizes that better adapt for online sales and redeployed consumer and trade promotions towards digital in order to grow beverage incidents. I also want to highlight the outstanding resilience of the traditional channel. We are convinced that mom-and-pops are the heart and soul of our communities and are the key to reactivating economic local activities. We have been actively supporting their reopening and helping them emerge from this crisis. Another top priority going forward is to expand the reach of our digital platforms to the traditional trade and to strengthen our relationship with these customers by facilitating access to other consumer products.
As we look to the remainder of the year, we will continue stringent oversight of our financial resources and seek additional opportunities to reduce costs and expenses. We are following the same disciplined methodology that we are familiar with to attain synergies in the integration of new businesses. These actions have always been an integral part of our operations but will be further emphasized in the upcoming quarters. Our solid institutional foundation, sound financial discipline, and firm dedication to adapting to the dynamic needs of our customers and consumers are the platform on which we will capture new opportunities for growth in the beverage and snack industries. That concludes our remarks. Operator, we are ready for questions, please.
Thank you, sir. At this time, we'll open the floor for questions. 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 Ben Theurer with Barclays.
Hey, good morning, Arturo, Emilio, Pepe. First of all, congratulations on the results. I have just two very quick ones. One, the concentrate price increase in Mexico, that's because of the formula and because the business did so well and what you were able to expand gross profit in Mexico, hence there was like a retrospective increase on the concentrate price. Every time you do well, you're going to have to share it a little bit with The Coca-Cola Company. Is that correct?
Good morning, Ben. Well, yes, that is conceptually correct. We have, as you know, an agreement with The Coca-Cola Company that is different to what we had before regarding concentrate prices and sparkling beverages in Mexico. I think our agreement now is based on criteria. We have an ongoing conversation. Certainly, we had a very good third quarter, as you saw growing even with this impact of concentrate price increase, which was not significant as you can see from our results, including margins. Yeah, the answer is yes.
Okay, perfect. Then the actual question I was having is about high fructose corn syrup. Where do you stand on the contracting in Mexico and U.S., just considering what's going on in the commodities market to get a little bit of a sense into 2021 from some of the sweetener cost you might be facing and what you're going to have to do on a price pass-through into next year, considering some of the prices there, where we are right now?
Well, fructose prices should remain stable in dollars, I would say. We have hedged most of our needs for 2020. The remaining is at a spot price that is probably even slightly below the hedge. Maybe for 2021, the prices would be higher if current corn prices continue at current levels. In Mexico, we expect a total year price reduction in 2020 compared to 2019 due to decline in corn prices in the last few months. Similar to the U.S., prices might increase going forward if the cost of corn continues at current level. In general, I would say prices will remain relatively stable, but there's some fluctuation as I described. I don't know, Emilio, if you want to add something about hedging and how we covered some of that risk.
Yes. Well, as you mentioned, we have 81% cover hedge for U.S. this year, a lower price than 2019. The rest is a spot price, which is even lower than the hedge. We have a very good, healthy combination of prices for 2020. For 2021, considering the window and the opportunity of stable corn prices, we have hedged part of the needs for 2021. We don't see any significant changes on high fructose prices. Sugar, well, this year in Mexico, we have higher prices than last year, even a little bit above inflation. We expect next year to be mostly in line with inflation sugar prices. You know that we have our own sugar mill. In Ecuador, are very stable prices. On Peru, we also have some hedges for next year, lower 75% hedge for next year at a lower price than this year.
In Argentina, as you know, we have also our own sugar mill.
Okay, perfect. Thank you very much.
Thank you.
Thank you, man.
Thank you. Our next question comes from Isabella Simonato with Bank of America.
Thank you. Good morning, Arturo. Good morning, everyone. I have a couple questions. First of all, when we look at volumes, right? Coca-Cola guided for volumes in October down low single digits. If you could comment on how you're seeing the performance across the territory. Also with a little bit of focus on in Argentina, right, which I think was quite of a surprise this quarter. If you could give us a little bit more color what you're seeing there and the expectation going forward. The second question will be the savings, right? You mentioned almost MXN 2 billion in savings year to date. If you could elaborate the sources of those savings and what is the general goal that you're looking for. Thank you.
Thank you, Isabella. Good morning. Let me talk about volume trends first. If you compare our third quarter with our second quarter, you'd see a sequential improvement across all of our operations. If we compare, it's harder to see the recovery in our main markets. Mexico and the U.S. had great results last year, third quarter 2019, Mexico grew more than four percent and the U.S. more than three percent. In South America, the situation is different. We had softer comps due to last year's volume declines especially in Argentina and flat volumes in Peru. Throughout the quarter, we had a slowdown in July and August, which was to be expected. In September, we had a great result, where the U.S. grew one point five percent, Mexico grew even more than that, and Argentina grew close to eight percent.
Again, the comps were easier in those countries. We had positive volume growth. We had a much better month of September as compared to the rest of the quarter. South America is still impacted, but with gradual recovery. Customers are reopening in all markets. Mexico and the U.S. seem better so far, but we're still cautious about with the surge of COVID-19 cases. What we believe that there's a clear correlation between mobility and volume performance. From the beginning of the pandemic, we have seen that correlation, and mobility was affected due to restrictions from government. I think it was greater in our South American markets with the closure of establishments. Since those restrictions were lifted, we have naturally seen a recovery in mobility in our volume.
Things are not yet normalized from a mobility point of view, but our volume has had a promising recovery. Especially, if you look at the traditional trade, I think that is very important to see the healthy operation of traditional trade. Talking about Argentina is still under mandatory isolation, and that has been extended. However, during the third quarter, our volume grew two point one percent, and some categories have proven very resilient. Colas is growing in Argentina. Our prices were in line with inflation pretty much throughout the quarter, but we have focused on affordability. Returnable packaging is a very important strategy in Argentina, and that has been growing more than 12% year to date, and it actually grew in the third quarter significantly. We continue to expand our returnable portfolio in both sparkling and still beverages and increase coverage with those packages.
We're also supporting customers to safely operate their business through multiple programs. Argentina, as you see, is showing a recovery, but again, we had a not very good quarter last year. If we move into The savings program. I will let Emilio go into a little more detail about that. What I can tell you is that we've been working to manage expenses throughout the crisis, committed to reduce OpEx across the board without affecting the operation. We have launched a Cost Savings and Efficiency Plan to prioritize liquidity and profitability of the business. We have a team that's coordinating that effort. We're using actually the same methodology that we're familiar with when we have integrated new businesses in the last few years. There are a number of things that we've optimized. We have paused hiring, except for some critical roles, obviously.
Limited temporary labor. That is obviously a consequence as well from declining volumes. We have identified marketing spend that can be optimized. We are also reassessing deployment of capital projects. We're revising all discretionary operating expenses and challenging what is essential to make sure that every expense is appropriate. That is going to continue, not only for the fourth quarter, but going forward through 2021. I don't know if you want to add to that, Emilio?
Well, only that we estimate for savings for 2020 of around MXN 2.5 billion. We have year-to-date almost MXN 2 billion, we expect a little bit more for the rest of the year. Basically all the initiatives and concept that Arturo just mentioned, we are really revising all discretionary operating expenses and challenging, but it's really essential to make sure that every expense is appropriate. As Arturo said, we started that at the beginning of the pandemic, and it's working with very good results in all operations.
Excellent. Thank you.
Thank you, Isabella.
Thank you. Our next question comes from Felipe Ucros with Scotiabank.
Yes. Good morning, Arturo, Emilio, and team. Thanks for the space for questions. If I can do a first one on concentrate price increases. First, if you could comment on what the magnitude was. I imagine it was another one percent of sales. Also, if you could talk about the duration. I imagine it's this year, but not sure if you have anything said about next year or the following one with Coca-Cola Company. Then, assuming your comments are similar to the ones from Coke yesterday, it should probably be one or two years. When you start adding them up, it's four to five percent of sales in a matter of half a decade, right? Five years in a row. It starts to add up. In Mexico, you guys have very good margins in the mid-20s, but they've been stable to declining the last five years.
It seems you're sharing a lot of EBITDA with the Coca-Cola Company while at the same time keeping very little of the improvements. I don't know if you can reconcile that with the comments you gave to Ben on at what point do you feel like maybe the Coca-Cola Company is taking a little too much, or if you think this is totally fair and how you can maybe forecast it to the market in a more consistent manner. Thanks.
Good morning, Felipe. Well, first, with respect to the magnitude you asked, this is about maybe a point five percent of COGS increase year to date, I would say. Probably Emilio can give you more detail. Well, yes, we have an agreement with Coca-Cola. Let me tell you this. We have a 94-year relationship with Coca-Cola. This is part of the franchise agreement, but it is certainly much better now than before since we renegotiated the terms. What's important is any of these actions are implemented on the basis of previously agreed criteria. We have the opportunity to discuss with Coca-Cola the implications and also how the Coca-Cola Company can continue to support our operations. This is a relationship that goes two ways. Our concentrate conversations have that long-term approach.
We actually are discussing now how they can support our operation going forward, and that is looking to balance our relationship considering all the elements of our economic model. Again, in Mexico particularly, where we have reached that agreement, I think we're in a much better spot than we were before when this was pretty much unilateral without any discussion. If you look at our margins, our margins are actually improving. If you compare even under the pandemic, our third quarter margin when this came into effect is more than 28%, and it was in the 25.6% or something like that a year ago. We believe it's a balanced relationship. Obviously, this is a negotiation. We would always like to end up in a better position.
Certainly, we believe it's a much more balanced, much more stable and equitable relationship with the Coca-Cola that we had years back.
Thanks for the call, Arturo. As analysts, every time we sit with investors, they seem to pound on this topic. It's something that clearly investors care a lot about. Is there any way or have you at any point had conversations with the Coca-Cola Company about how to kind of give more visibility to the market in terms of when the increases are coming and what magnitude they are. It kind of gives them more consistency, right? At periods, we go many years without any increases, and then we go many years with increases, and it becomes the most talked about subject in calls and with investors. I'm not sure that's not great for you guys, not great for the Coca-Cola Company or for investors. Is there any way to improve visibility?
The problem there, Felipe, is that our relationship is very complex, so we cannot disclose just one element of all our economic models. There are many things going on and support that we get from Coca-Cola. It's not only concentrate pricing, so probably that's the reason for not detailed transparency.
Got it. Fair enough. Thank you for the comments.
Thank you, Felipe.
Thank you. Our next question comes from Alan Alanis with Santander.
Thank you so much. Good day, everyone. Hey, Arturo, Emilio. Felipe, I hope you and everyone around you is doing well. I have to echo what Felipe just asked. Investors care a lot about this topic, and I think that you already got enough questions about it. I'm just going to do a really quick one on that topic and then change. You have a 50/50 for the Jugos del Valle, everything that doesn't have bubbles, anything that is non-sparkling. That doesn't change under this agreement? Does the alcoholic beverages in Mexico go into the sparkling model or to the JV of Jugos del Valle?
Good morning, Alan. Good to talk to you. Hope you're also well. Yes, we have, as you know, separate models for our different businesses. Jugos del Valle is a pure 50-50 joint venture, and I would say in a traditional way. It's complicated accounting because we manage only the traditional trade, and the company, in a centralized way, serves the modern channel. Certainly, it's easier conceptually to understand. In the case of sparkling, as you know, we have an incidence model, which is different.
Every new product that we launch will be negotiated and will have their own particular arrangement.
Topo Chico Hard Seltzer is not within the JV umbrella.
The gross margin that it contributes to our business is very healthy. When you look at these categories, it's not only about percentage, but also about the actual peso or dollar contribution per case. That, in the case of hard seltzer, would be higher than sparkling because it's a higher priced product. I think that's good for us and good for our system and also opens the possibility to explore a whole new range of categories. That, I think it's a positive sign, also flexibility. Going back to the concentrate discussion, our approach with Coca-Cola is to look at the overall business and trying to find the balance considering stills and sparkling altogether.
Yeah, that makes sense. I'm just going to underscore, repeat what you said. Congratulations on the results. You have a margin expansion and a growing EBITDA in the middle of the worst pandemic, clearly you're doing a lot of things right. We don't want to surprise you with over-emphasizing this topic, given the excellent results that you have. It's just that investors ask, though. Let me ask one last. Sorry?
No, I understand that. My point is, we have, again, a more than 90-year relationship with Coca-Cola, and we hope you can trust that we have good negotiations and that they're for the best interest of our company.
Yeah. No, that's clearly very evident. Let me ask you a more strategic operational question on your business. 100% of the points of sale in Mexico are open, you're serving the traditional channel. What will happen with volumes and profitability as the convenience stores go back into full operation and restaurants will go into whatever new normal there will be? You've been extremely good at expanding margins, transitioning into the traditional channel, and I just want to make sure that if we assume that you can maintain this margin expansion, I'm not missing anything in terms of profitability as the other channels normalize, Arturo.
Well, yes. In the case of Mexico, as you see, traditional channel has been performing very well. It's incredibly resilient, and it's gained relevance. It's a proximity neighborhood store. It's grown four percent volume year to date. Even in the quarter, it grew three point six percent volume. If you look, where is that probably volume shifting from? It's coming mostly from the on-premise, what we call the eating and drinking channel and the leisure channel, which are also very profitable. Even if it's convenience. Convenience in Mexico has been down six percent for the year. Still very profitable. I think over the years, we've been able to balance the profitability across channels. Costs to serve are different, if you think about supermarkets and convenience. I think we're very optimistic about profitability for the future.
Got it. No, that makes sense. I just wanted to confirm that. Again, congratulations for the results, and stay safe. Thank you so much for taking my question.
Thank you, Alan.
Thanks.
Thank you. Our next question comes from Miguel Tortolero with GBM.
Hi. Good morning, everyone. Thanks for the space for questions. My question would be on e-commerce. You mentioned on your press release and on your initial remarks the growth that you've been witnessing on this channel, on this e-commerce channel. I understand that the comps are still very small, but with all the disruptions we are seeing and the investments you've made in the digital front, it would be very interesting to hear how do you picture this channel in the long run? What's the scope you see and the role you expect it to have within the portfolio, let's say, 10 years? Anything you could share, it would be very interesting.
Sure. Good morning, Miguel. Thank you for your question. I will let Pepe elaborate on that. I'll just tell you that the key for us in digital transformation is to integrate that to our current processes. It's not really a separate list of projects because they have to be connected to our mainstream operation. We have a dedicated team implementing the strategy, particularly in e-commerce, with key metrics, interaction with food aggregators, and trying to understand the particularities of how to deal with those customers. Certainly that has been growing, in the U.S., obviously, but also in Latin American markets throughout the pandemic. I will let Pepe elaborate more on that.
Thank you, Arturo, and thank you, Miguel, for your question. We are working in different fronts in terms of e-commerce. We have strengthened our structure with a global e-commerce manager and director, and we're starting to put people in charge in each of the different operations. We are seeing three different place. One is with food aggregators, in which we are a very good partner of Rappi, and we're getting very good information that helps us increase the incidence, that is the amount of how many of the orders have one of our products. Our goal is to be as good as we are in brick-and-mortar in the e-commerce arena. We're expanding also with a contract with Uber Eats and DiDi. What we're working there is mainly to make sure that we can get that attachment of one of our products in each order.
That's very much food aggregators. In terms of e-retailers, we have done a lot of work in terms of pricing guidelines and specific pricing and packaging architectures, how these channels really intertwine with the rest of our business, working on digital layouts, activation and investment guidelines. We are getting prepared for the growth of this channel that, as you said, is still very small, but is having growth of between 50% and 100% in the different geographies. Also with the pure players like the MercadoLibre in LATAM or Amazon, we are preparing ourselves to work with them as a seller, where we can own the transaction through their platforms and not as a vendor where we just sell to them, so we can work together with them to develop our products.
The other arena where we're working is in the B2B, both in LATAM with AC Digital, in the U.S. with mycoke.com. In AC Digital, we already have 120,000 downloads of the application, and around 90,000 of these customers are already using this application to connect with us and to check the product, to check promotions, to take orders, to evaluate our service, and many different things. That's pretty much where we are. As you said, it's still small, but growing fast, and we are getting prepared to be a very good player in that and be as good or better as we are in the brick-and-mortar.
Great. That's very clear. Thank you. Thank you both. Just a quick one on CapEx. It's been evident that you're being more conservative in terms of your CapEx deployment this year given, of course, the circumstances we're going through. The question would be, how should we think about CapEx for next year?
Well, I can take that one. Well, as we mentioned last conference call, we are looking at each of the investment that we're doing to be in line with the situation of each of the operations. We have reduced that. I think it's going to be around this year, three percent over sales. If the trend keeps positive, we expect to have next year around six percent and then the following years around five percent over sales on CapEx.
Great. Thank you, Emilio, and thank you, Arturo and Pepe.
Thank you, Miguel.
Thank you.
Thank you. Our next question comes from Alvaro Garcia with BTG.
Good morning, gentlemen, or good afternoon. I have two questions. My first one is on pricing in the U.S. We saw a four point nine percent rate increase, or four point nine percent increase, with the majority coming from rates, which have been surprising. There's a nice sequential acceleration there. My second question is on sort of a broader, bigger picture question basically, Arturo, just trying to get your thoughts on what the benefits of being a larger bottler means. This is obviously in the context of the deal we saw between CCEP and Amatil, and it's also relevant in the context of the restructuring that Coke announced last week. Just your broader thoughts on the benefits of being a larger bottler, and obviously that has a lot to do with digital. Thank you.
Thank you, Alvaro. Well, first, about pricing. As you know, every year, our goal is to capture value-adjusting prices in line or above inflation in all our markets. That would leverage our revenue management capabilities and our capacity to implement a segmented brand price pack architecture. We keep refining those capabilities. It's not just having the will to do it's obviously doing it in a better way each time and having the right metrics and the right processes to do it. The focus going forward, rather than price, actually, it's about profitability, if you think about it. Going forward, in the case of Latin America, for example, returnable packages might not represent more pricing, but margins will be healthy. In the case of the U.S., the net price grew four point nine percent, which is significantly above inflation.
The true rate increase is four point eight percent. The mix is not that significant. It was only point one percent. We did grow in high-revenue packages, such as 12-ounce cans and what we call the transaction packages. The energy category, Monster, and also the new sports drinks, like BODYARMOR, that is growing fast, and it's a higher-priced segment. We do have a change in mix of channels that helps also as we have shifted some of the fountain volume from the on-premise to more of the take-home consumption. That's helped as well. We remain committed to that strategy going forward. Talking about the benefits of being a larger bottler, I would say that over the last couple of decades, probably, the model of being a Coca-Cola bottler has changed.
I think one of the most significant ways in which it has changed is that scale has become more relevant and more important. We do have an implicit most favored nation treatment by Coca-Cola, but many other things you can benefit from scale, from a procurement and the scale to have more robust processes within our operation. If you look at how the business has become more complex, what Pepe just described about digital and e-commerce, the need to have, again, more refined capabilities, commercial capabilities, but also in our supply chain. As the world moves into digital platforms, I think it's become more and more relevant. When you think about consolidation in the system in the last 10 or 20 years, it's created value, I guess, to a great extent because of that.
Agreed. Thank you very much.
Thank you, Alvaro.
Thank you. Our next question comes from Carlos Laboy with HSBC.
Yes. Hello, everyone. I know Alan told us not to beat this horse anymore, but I'm going to give it one more try. Coca-Cola Company likes to say that they want 50/50 profit splits across a lot of markets, and the cost adjustments very often are to do that 50/50 split. How far are you from a 50/50 profit split with the Coca-Cola Company, is one question. Then just on a follow-up to that, can you expand maybe a little bit further on what are maybe some of the new revenue pools that you're discovering with your digital platforms that look like compelling low-hanging fruit here over the next years you go into 2021? Because it seems that you're probably accelerating market share and the opportunities to grow 2021 revenues even faster.
Yeah. Thank you, Carlos. It's always good to talk to you. Well, let me talk first about profit splits. Certainly, as I said before, we believe we have a much more balanced relationship with Coca-Cola and also more open and transparent about profitability of our respective businesses. I think the idea is to approach that balance across our operations. That is different from one country to another. Certainly, it changes over time. What we try to do in our discussions with them is to have something that would be more stable rather than looking at a year in isolation. We believe that we have now a pretty balanced situation with Coke with respect to that idea, but not necessarily country by country would apply. That is obviously the spirit of the relationship.
Second, with respect to other alternatives, I'll turn it over to Pepe, but I'll just say that certainly if we are moving it successfully into a digital space, some opportunities might arise. We're now capitalizing most of those for our own core business. It's a lot about collecting information and big data and analytics. That's been very interesting, not as a new revenue stream, but certainly as a new strength within our company to sustain leadership going forward. Probably in the future, that will also create a solid foundation for additional opportunities in the market. I will let Pepe comment on that.
Thanks, Arturo, and thanks, Carlos. Great to hear from you. I can tell you about three different or potential new revenue streams that we're working on, or maybe they are new or we are enhancing them. One is the direct to consumer. You know that we've had this business for a while here, but we are digitizing it, and that lets and gives us a much deeper connection with the consumers, where we get to know them more. As we evolve, we're going to be able to target them by name and use that information in the different platforms, in the different interactions we have with them. We serve around 430,000 households. Most of them are still in an analog way, but we are rapidly increasing the share of them.
Today, it's 30,000 of them in which we are serving them digitally and understanding very much the connections with them. The other one is self-serve retail, vending machines, micro markets, and how do we interact with consumers. We are also expanding into that arena, and that is going to help us to move into at work, into places where there are high concentration of people. That's another important revenue stream. We have an important vending business in Latin America, but we think that technology is opening up many other opportunities in that arena. The third one is the automation of the traditional trade. We already have a little less than 11,000 customers with our Jump platform. Just to give you some numbers, we have processed more than seven million cell phone recharges. We have almost four million payments in services.
We have processed around 100 million tickets in the bills. That information, as Arturo was saying, that information, we're going to use it to develop our current business. In a while, as this business grows, that can also become an important new revenue stream. We are also serving around those 11,000 customers, and we are seeing the possibility to also help them with their purchases, and we're also testing that. There are many other potential new revenue streams that come from the automation of the traditional trade. I think those are the three main opportunities that we are seeing today in the digital arena. I hope that's helpful.
That is helpful. Thank you very much. Back to the original question, Arturo, do you think we are close to a 50/50 now in Mexico?
Yeah, probably we're not that far from that balance.
Thank you.
Thank you. At this time, I would now turn the call back over to management for closing remarks.
Thank you. I'd like to thank all of you for taking the time to join us this morning and for your insightful questions. We appreciate the confidence you have in Arca Continental, and we hope that you and your families stay safe.
Thank you, ladies and gentlemen. This concludes today's conference. You may now disconnect.