So we’re going after those volumes there. And after that share, and you’re seeing the results, it’s – in our opinion, it’s a more sustainable model than pushing pricing and losing relative scale, which is what was happened in the last five years.
Alan Alanis: And it’s clearly working, and it’s clearly working. And just a quick follow-up on that. You’re increasing penetration in coverage. Could you expand a little bit of where and how, I mean, because you found – you find Coca-Cola in Mexico everywhere? I mean, where are you getting the new clients or the new penetration? That would be my last question. Again, congrats.
Gerardo Cruz: We recovered a lot of clients that – let me put it this way, primarily in the on-premise segment, there were a lot – it was the one that suffered the most during the pandemic. And even by the start of the year, our client count in on-premise was below pandemic levels. In on-premise, not in modern trade, modern trade was already above, like you correctly pointed out. So we’re making a big push in non-trade to recover those plans. Also, when we started focusing on customer service, and we rolled out our what we call our sales service metric, and our delivery service metric, we found out that there were substantial portion of small silver and bronze outlets that we weren’t servicing consistently. So when you’re having certain unavailability issues, you focus on large clients.
And now, where that is being part of the compensation of everyone on focusing on how we’re doing on our commercial and distribution service metric. All of a sudden, our client fulfillment and satisfaction scores are going up, because these clients are being serviced directly, and we’re finding more clients. So there are a lot of things that we did to incentivize all of these clients. We don’t include them in our execution surveys, the first year they sold, there were a lot of wrong incentives to increasing our client base, Alan. And we’re removing those incentives and actually putting incentives toward increasing and better serving our client base.
Alan Alanis: Now that makes all the sense in the world, I mean, yeah, exactly the return of the on-premise after the pandemic, and you’re taking the opportunity to serve them in a different way. Congratulations. Thank you so much. That was very, very clear.
Ian Craig: Thank you, Alan.
Operator: Thank you. Our next question comes from Alvaro Garcia of BTG Pactual. Please go ahead.
Alvaro Garcia: Hi, Ian, Gerry. Jorge. Congrats on the quarters. Great results. Two questions. One for Gerry, just a quick for housekeeping. You mentioned in your prepared remarks sort of commented on the differences between the changes on depreciation and the differences in EBITDA and EBIT, and we also saw higher operating expenses in other operating expenses in the quarter. Is that related? I’m not sure if that was related, is that sort of explained that difference? Or if the other operating expenses for something else? So more color there would be great? And then my second question would be, I guess, for Ian or whoever you want to take it on back to Mexico, and back to the very impressive volume performance? And I guess, just a very simple question of with this COK System decision, both in Mexico and in Brazil, or was this a KOF specific decision to really emphasize volumes? Thank you.
Gerardo Cruz: All right. Thank you very much, Alvaro. I’ll start with the first one. It’s two different issues. The first one that I clarified in the prepared remarks is related to an adjustment in useful life of assets that was done in the third quarter of 2022 to standardize the useful life across our operations that resulted specifically for our Mexico operation, and a depreciation negative impact in 2022. So the base, the negative base that we have to compare resulted in a better EBIT number for this year as compared to our EBITDA number. So that’s the one that I mentioned in the prepared remarks. On the other operating expenses, the reason that explains that movement in other operating expenses is the impact of the depreciation of the Mexican peso that we saw during the quarter.
We ended up the previous quarter at a very high Mexican peso numbers. So for the quarter, the peso depreciated and that resulted in a MXN 97 million impact in other operating expenses that explains the other part of your question.
Ian Craig: Hi, Alvaro. With the Mexico strategy, the analysis of where our competitive position was, was done together with a Coca-Cola company. And we were looking at a point where we kept pushing along the prior strategy, we would have lost relative scale, which would have then made it more difficult to keep having a differential in our relative prices, and it would just have gone into a vicious circle. So we needed to reverse that. What we’re looking at is really sustainable revenue growth. And that by definition is a different equation for volumes and share. But we are looking at the revenues just that we want to do that in a sustainable format and not something that we’re doing it by pushing prices which has – there’s an end where you lose relative scale going to that strategy and you actually make it more difficult to yourself to have a better relative better market position.
So it was done together with the Coca-Cola Company to focus on this sustainable revenue growth.
Alvaro Garcia: [Technical difficulty] very much. And congrats again.
Operator: Thank you. Our next question comes from Carlos Laboy of HSBC.
Carlos Laboy: Yes, good afternoon, everyone. Ian your answer to Alan spoke to perhaps penetration. Can you expand on service some more? You mentioned that NPS numbers in Colombia were very strong. I don’t know if you can share with us the – what those scores might be and how they’ve improved in Colombia, Mexico, Brazil over the last couple of years? But what actions do you think are most driving this level of trust from store owners and their perception of good service? I’m curious, what do they do for you that may be helping you gain volume and market share as well? What concessions what kind of things do you get from them as a result of improved service and trust?
Ian Craig: Hello, Carlos. How are you? I think the biggest change for us and we were doing this already in Brazil was really measuring how we’re doing with our customers in terms of our sales and both our delivery. And it’s one thing to look only at Amazon says this a lot at the heart figures of the data, our field rates and such. And it’s quite a different thing to survey your customer as well and see what he has to say. So we developed two, now three indicators on our sales service metric, our sales work and doing delivery service metrics or delivery function is doing and our digital service metric as well for our platforms. And these metrics, they not only take into account, hard data, such as on time in full indicators that we have, but they also survey the client.
So we survey and ask them did you get what you asked for? Did you get it in time? Was it in quality? Are there any – we look at the complaint rates, how the complaints being serviced? Are they closed all of these complaints with satisfaction or not? Or were they just answered? So all of that requires a big adjustment in the size and processes of our customer service area. And, it starts to show up in clients being happier when they’re using our platform. And whether dealing with our salespeople, and it generates a lot of focus for our supply chain folks to deliver to all of that clients just focus on feel great in large clients, but all across. So I think the biggest change was, is measuring and putting that as part of the objectives and the compensation of the team and it shows up.
