OREANDA-NEWS. December 16, 2015. Fitch Ratings expects the majority of Latin American beverage companies to remain stable in 2016, supported by strong brand positions, diversified operations and portfolio mix. These strengths should offset generally high inflation rates, currency depreciation and weak consumption.

Fitch expects single digit volume growth due to the weak regional environment. Overall volume growth will be driven mainly by double-digit growth of non-carbonated soft drink products such as water, juices, teas, isotonics and energy drinks. For the carbonated soft drink category, the largest in terms of volume, Fitch expects low- to mid-single-digit growth.

Completion of expansion projects and scaling back on investments due to the regional slowdown will allow the median free cash flow (FCF) to improve to positive territory. Fitch expects the median capex to be around USD75 million in 2016, down from an expected USD85 million in 2015 and USD180 million in 2013.

Fitch expects increased industry consolidation; recent transactions within the beverage industry highlight the growing need of regional companies to expand into underpenetrated markets to increase profitability.