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Soft-drink bottler Coca-Cola Femsa SAB (KOF, KOF.MX) said Thursday it anticipates additional pressures on profit from sweetener, marketing and labor expenses going into 2012.

Hector Trevino, chief financial officer of Latin America's biggest bottler of Coca-Cola Co. (KO) products, told analysts on a conference call that the company has been able to increase its prices significantly in each of the nine countries where it operates to offset the higher costs.

"We see competitors also increasing prices because they are experiencing the same pressures," Trevino added.

Higher prices for sweeteners and PET plastic sliced about $50 million from the company's profitability in the July-September period, in which Coke Femsa showed controlling interest net income of 2.28 billion pesos ($170 million), 7.1% more than in the year-ago quarter.

Trevino explained that a difficult comparison quarterly comparison exacerbated the rise in raw material expenses in the third quarter as the company had secured a sweetener hedge in Brazil for 2010 at "a very good price."

The company has already negotiated with suppliers of high-fructose corn syrup for its Mexican bottling facilities next year, he added, with the expectation that fructose will fulfill more than 60% of its sweetener needs here and that sugar will cover the rest.

The price negotiated for high-fructose corn syrup next year in Mexico is 5%-6% higher than the average price the bottler has paid for the sweetener in 2011, Trevino said.

The executive is more optimistic about PET plastic prices going forward, saying that the company expects flat PET expenses, or even a modest improvement, in 2012.

Trevino remarked that while PET prices can be volatile, the bottler has noticed reductions in PET prices over the last two weeks.

Wages have also pressured profitability, as workers in Argentina and Venezuela recently secured salary increases above local rates of inflation and low unemployment in Brazil has made it challenging to recruit skilled workers there.

Trevino said Coke Femsa has had to offer new hires in Brazil bigger salaries than in the past, while simultaneously having to recruit from other industries and thus dedicate more time and money to staff training.

The company is also shifting greater financial resources to marketing in several markets, notably trying to boost its competitive position in Mexico in anticipation of fiercer competition from a unified PepsiCo Inc. (PEP) bottler here.

Pepsi announced plans in July to form a nationwide beverage company in Mexico via a joint venture with local bottler Grupo Embotelladoras Unidas SAB (GEUPEC.MX) and Venezuelan food and drink producer Empresas Polar.

Trevino said Coke Femsa is trying to capture new points of sale and secure optimal positioning in stores amid expectations of more-focused efforts from Pepsi.

The executive highlighted Coke Femsa's significant cash flow generation as a source of flexibility to invest in the business both organically and via mergers and acquisitions amid accelerated consolidation in the bottling industry.

Mexican Coke bottlers Arca and Continental merged during the second quarter of this year to create Arca Continental SAB (AC.MX, EMBVF), the second-biggest Coke bottler in Latin America.

Coca-Cola Femsa followed that move by announcing the purchase of two regional Coke bottlers in Mexico.

There are nine additional independent bottlers in the Mexican Coke system.

Coke Femsa reported earlier Thursday that its cash flow as measured by earnings before interest, taxes, depreciation and amortization grew 12.3% on the year in the third quarter to MXN5.89 billion. At end-September the company showed cash, cash equivalents and marketable securities of MXN18.65 billion.

By Amy Guthrie, Dow Jones Newswires; (5255) 5980-5177, amy.guthrie@dowjones.com