AKO 20-F Report ended Dec. 31, 2012

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As filed with the Securities and Exchange Commission on April 30, 2013

United States

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

For the transition period from                       to

Commission file number 001-13142

Embotelladora Andina S.A.

(Exact name of Registrant as specified in its charter)

Andina Bottling Company

(Translation of the Registrant’s name in English)

Republic of Chile

(Jurisdiction of incorporation or organization)

Miraflores 9153, 7th Floor Renca - Santiago, Chile

(Address of principal executive offices)

Paula Vicuña, Tel. (56-2) 2338-0520  E-mail: paula.vicuna@koandina.com Miraflores 9153, 7th Floor - Renca - Santiago, Chile

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Securities registered or to be registered pursuant to Section 12(g) of the Act: None

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Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act

7.625% Notes due October 1, 2027

7.875% Notes due October 1, 2097

The number of outstanding shares of the issuer’s stock as of December 31, 2012 was 946,578,736 as follows:

473,289,368 Series A Shares

473,289,368 Series B Shares

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

x Yes o No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

o Yes x No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

x Yes o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

o Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing

If Other has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow

o Item 17 o Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

o Yes x No

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TABLE OF CONTENTS

		Page
PART I		3
ITEM 1.	IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS	3
ITEM 2.	OFFER STATISTICS AND EXPECTED TIMETABLE	3
ITEM 3.	KEY INFORMATION	3
ITEM 4.	INFORMATION ON THE COMPANY	16
ITEM 4A.	UNRESOLVED SECURITIES AND EXCHANGE COMMISSION STAFF COMMENTS	49
ITEM 5.	OPERATING AND FINANCIAL REVIEW AND PROSPECTS	49
ITEM 6.	DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES	70
ITEM 7.	MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS	81
ITEM 8.	FINANCIAL INFORMATION	82
ITEM 9.	THE OFFER AND LISTING	83
ITEM 10.	ADDITIONAL INFORMATION	86
ITEM 11.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	98
ITEM 12.	DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES	99
ITEM 12D.3	AMERICAN DEPOSITARY RECEIPTS	100
ITEM 12D.4	DIRECT AND INDIRECT PAYMENTS BY THE DEPOSITARY	100
PART II		101
ITEM 13.	DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES	101
ITEM 14.	MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS	101
ITEM 15.	CONTROLS AND PROCEDURES	101
ITEM 16A.	AUDIT COMMITTEE FINANCIAL EXPERT	102
ITEM 16B.	CODE OF ETHICS	102
ITEM 16C.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	102
ITEM 16D.	EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES	103
ITEM 16E.	PURCHASERS OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS	103
ITEM 16F.	CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT	104
ITEM 16G.	CORPORATE GOVERNANCE	104
PART III		109
ITEM 17.	FINANCIAL STATEMENTS	109
ITEM 18.	FINANCIAL STATEMENTS	109
ITEM 19.	EXHIBITS

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INTRODUCTION

References

Unless the context otherwise requires, as used in this annual report the following terms have the meanings set forth below:

· the “Company”, “we”, “Andina” and “Coca-Cola Andina” means Embotelladora Andina S.A. and its consolidated subsidiaries;

· “Andina Brazil” means the Company’s subsidiary, Rio de Janeiro Refrescos Ltda. and its subsidiaries;

· “AESA” means the Company’s subsidiary, Andina Empaques Argentina S.A.

· “EDASA” means the Company’s subsidiary, Embotelladora del Atlántico S.A.;

· “PARESA” means the Company’s subsidiary, Paraguay Refrescos S.A.

· “CMF” means the Company’s affiliate, Envases CMF S.A.;

· “ECSA” means the Company’s affiliate, Envases Central S.A.;

· “Vital Jugos” means the Company’s affiliate, Vital Jugos S.A., previously known as Vital S.A. ;

· “VASA” means the Company’s affiliate, Vital Aguas S.A.;

· “TAR” means the Company’s subsidiary, Transportes Andina Refrescos Ltda.

· “TP” means the Company’s subsidiary, Transportes Polar S.A.

· “The Coca-Cola Company” or “TCCC” means The Coca-Cola Company or any of its subsidiaries, including without limitation Coca-Cola de Chile S.A. (“CC Chile”), which operates in Chile, Recofarma Industrias do Amazonas Ltda. (“CC Brazil”), which operates in Brazil and Servicios y Productos para Bebidas Refrescantes S.R.L. (“CC Argentina”), which operates in Argentina.

· the “Chilean territory” means the Metropolitan Region of Santiago and the neighboring provinces of Cachapoal and San Antonio; starting in 4Q12, and due to the merger with Embotelladoras Coca-Cola Polar, we also participate in the regions of Antofagasta, Atacama, Coquimbo, Aisén and Magallanes.

· the “Brazilian territory” means the majority of the State of Rio de Janeiro, and the totality of the State of Espírito Santo; and

· the “Argentine territory” means the provinces of Córdoba, Mendoza, San Juan, San Luis, Entre Rios, Buenos Aires (only San Nicolás and Ramallo) and most of Santa Fe. Starting in 4Q12, and due to the merger with Embotelladoras Coca-Cola Polar, we also participate in the provinces of  La Pampa, Neuquén, Río Negro, Chubut, Santa Cruz, Tierra del Fuego  and part of the province of  Buenos Aires.

· the “Paraguayan territory” means the country of Paraguay

PRESENTATION OF FINANCIAL AND CERTAIN OTHER INFORMATION

Unless otherwise specified, references herein to “dollars,” “U.S. dollars” or “US$” are to United States dollars; references to “pesos,” “Chilean pesos”, “Ch$” or “ThCh$” are to Chilean pesos; references to “UF” are to Unidades de Fomento, a daily indexed Chilean peso-denominated monetary unit that takes into account the effect of the Chilean inflation rate during the previous month; references to “Argentine pesos” or “AR$” are to Argentine pesos, references to “real” or “reais” or “R$” are to Brazilian reais and references to “guaranies” or “guarani” or “G$” are to Paraguayan Guaranies. Certain percentages and amounts contained in this annual report have been rounded for ease of presentation.

For the convenience of the reader, this document contains translations of certain Chilean peso amounts into U.S. dollars at specified rates. Unless otherwise indicated, U.S. dollar equivalent information for amounts in Chilean pesos is based on the Observed Exchange Rate (as defined under “Item 3. Key Information—Exchange Rates”) reported by the Banco Central de Chile (the Central Bank of Chile), which we refer to as the “Central Bank.” The Federal Reserve Bank of New York does not report a noon buying rate in New York City for Chilean pesos. No representation is made that the peso or U.S. dollar figures presented in this annual report could have been or could be converted into U.S. dollars or pesos, as the case may be, at any particular rate or at all.

On August 28, 2007 the Chilean Superintendence of Insurance and Securities announced the adoption of the International Financial Reporting Standards (“IFRS”)in Chile which became mandatory for companies of a certain size beginning 2009 and 2010.  The Company decided to adopt the IFRS as issued by the International Accounting Standards Board (“IASB”) as its accounting and reporting rules beginning January

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1, 2010.  Additionally the period between January 1 and December 31, 2009 constituted the transition period towards IFRS and the Financial Statements of the year 2010 were presented comparatively with 2009.

Forward-looking information

This annual report contains or incorporates by reference statements that constitute “forward-looking statements,” in that they include statements regarding the intent, belief or current expectations of our directors and officers with respect to our future operating performance. Such statements include any forecasts, projections and descriptions of anticipated cost savings or other synergies. Words such as “anticipate,” “expect,” “intend,” “plan,” “believe,” “seek,” “estimate,” variations of such words, and similar expressions are intended to identify such forward-looking statements. You should be aware that any such forward-looking statements are not guarantees of future performance and may involve risks and uncertainties, and that actual results may differ from those set forth in the forward-looking statements as a result of various factors (including, without limitations, the actions of competitors, future global economic conditions, market conditions, foreign exchange rates, and operating and financial risks related to managing growth and integrating acquired businesses), many of which are beyond our control. The occurrence of any such factors not currently expected by us would significantly alter the results set forth in these statements. You should not place undue reliance on such statements, which speak only as of the date that they were made. Our independent auditors have not examined or compiled the forward-looking statements and, accordingly, do not provide any assurance with respect to such statements. These cautionary statements should be considered in connection with any written or oral forward-looking statements that we might issue in the future. We do not undertake any obligation to release publicly any revisions to such forward-looking statements after filing of this annual report to reflect later events or circumstances or to reflect the occurrence of unanticipated events.

Market Data

We have computed the information contained in this annual report regarding annual volume and per capita growth rates and levels, and market share, product segment, and population data in bottling and franchise territories, and it is based upon statistics accumulated and certain assumptions we have made. Additional data was obtained from third parties. Market share information presented with respect to soft drinks, juices, waters and beer is based on data supplied by A.C. Nielsen Company (“A.C. Nielsen”) and by IPSOS company and is believed to be accurate although no assurances to that effect can be given. Certain market data herein (including percentage amounts) may not sum due to rounding.

PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not Applicable

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not Applicable

ITEM 3. KEY INFORMATION

A. Selected Financial Data

The following table presents our selected consolidated and other financial and operating information at the dates and for the periods indicated. The selected financial information at December 31, 2012 and 2011 and for each of the three years ended December 31, 2012, has been derived from, should be read in conjunction with, and is qualified in its entirety by reference to our Consolidated Financial Statements, included in Item 18 of this annual report, that we refer to in this annual report as the “Consolidated Financial Statements.” Our Consolidated Financial Statements are prepared in accordance with IFRS as issued by the IASB.

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Our consolidated financial results include the results of our subsidiaries located in Chile, Brazil, Argentina and Paraguay. Our subsidiaries outside Chile prepare their financial statements in accordance with IFRS and to comply with local regulations in accordance with generally accepted accounting principles of the country in which they operate. The Consolidated Financial Statements reflect the results of the subsidiaries outside of Chile, translated to Chilean pesos (functional and reporting currency of the parent company) and are presented in accordance with IFRS.  The International Financial Reporting Standards requires assets and liabilities to be translated from the functional currency of each entity to the reporting currency (Chilean peso) at end of period exchange rates and income and expense accounts to be translated at the average monthly exchange rate for the month in which income or expense is recognized. Unless otherwise specified, our financial data is presented herein in nominal Chilean pesos and U.S. dollars.

The following table presents our selected consolidated financial information. This information should be read in conjunction with, and is qualified in its entirety by reference to, our Consolidated Financial Statements, including the notes thereto in Item 18. The selected financial information contained herein is presented on a consolidated basis, and is not necessarily indicative of our financial position or results of operations at or for any future date or period.

		For the period ended December 31,
		2012		2012		2011		2010		2009
		(in million nominal Chilean pesos and million US$, with the exception of those related to debt, shares and sales volume)
		MUS$ (6)		MCh$$(6)		MCh$		MCh$		MCh$
Income Statement Data
IFRS :
Net Sales		2,442		1,172,293		982,864		888,714		785,845
Cost of sales		-1,456		-698,955		-578,581		-506,882		-455,300
Administrative, distribution and selling expenses		-665		-319,174		-261,859		-232,598		-197,422
Other Operating Income		321		154,164		142,424		149,234		133,123
Other (expense) income , net [financial results, exchange differences and share in equity investees]		-57		-27,390		-10,712		-9,294		-5,972
Income taxes		-80		-38,505		-34,685		-36,340		-29,166
Net Income		184		88,269		97,027		103,600		97,985
Basic and diluted earnings per share
Series A(7)		0.22		104.12		121.54		129.78		122.75
Series B(7)		0.24		114.53		133.69		142.75		135.02
Basic and diluted earnings per ADR(3)
Series A(7)		1.3		624.72		729.24		778.68		736.5
Series B(7)		1.43		687.18		802.14		856.5		810.12
Capital Stock
Series A		473,289,368		473,289,368		380,137,271		380,137,271		380,137,271
Series B		473,289,368		473,289,368		380,137,271		380,137,271		380,137,271
Issued Capital		564		270,759		230,892		230,892		230,892
Total dividends declared
Total Series A Shares		71		34,018		33,809		32,578		29,700

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Total Series B Shares		78		37,420		37,190		35,836		32,670
Balance Sheet Data
IFRS:
Total assets		3,208		1,539,836		741,959		688,314		642,692
Current debt that accrues interest(1)		192		92,002		12,117		11,996		5,800
Non-current debt that accrues interest		362		173,880		74,641		70,449		73,150
Controlling and non-controlling shareholders’ equity		1,861		893,605		421,979		394,865		373,558
Other Financial Information
IFRS
Cash flows from operating activities		393		188,857		138,950		125,848		131,126
Cash flows from investing activities		-325		-156,170		-89,621		-80,504		-84,318
Cash flows from financing activities		-7		-3,551		-67,159		-62,548		-67,756
Depreciation and amortizations		112		53,824		39,498		37,015		36,807
Capital expenditures		300		143,764		126,931		95,462		49,483
Ratio of total debt to total capitalization(2)		0.23		0.23		0.17		0.17		0.17
Other Operating Data
Sales Volume
Coca-Cola Soft Drinks (million UCs)(5)		517.6		517.6		448.2		438		419.6
Other beverages (million UCs) (4)(5)(6)		78.6		78.6		53.3		51.2		39.0

(1) Includes interest bearing liabilities including current bank liabilities, bonds payable discounting issuance expenses and initial discounts that are recognized forming part of the liability and other financial liabilities that accrue short term bank interests and the portion of long—term bank liabilities and bonds payable within 12 months.

(2) Total debt is calculated as the sum of current and non-current financial interest bearing debt. Total capitalization is calculated as the sum of total financial debt, non-controlling interest and shareholders’ equity attributable to the controlling shareholder. Shareholders’ equity has been determined under IFRS.

(3) Each ADR represents six shares of common stock of the corresponding series of Shares..

(4) Includes waters, juices, beer and other spirits.

(5) Unit cases (“UCs”) refer to 192 ounces of finished beverage product (24 eight-ounce servings) or 5.69 liters.

(6) Due to the materialization  of the merger with Embotelladoras Coca Cola Polar S.A. on October 1, 2012,  2012 figures both monetary and volume figures include the operations of the last quarter of the territories of Ex Embotelladoras Coca Cola Polar S.A., as well as the consolidated figures for the last quarter of Sociedades Vital Jugos S.A., Vital Aguas S.A. and Envases Central S.A. all which due to the merger passed from being associates to being subsidiaries that must be incorporated in the consolidation.

(7) For the calculation of the profits per share, it is taken into consideration the average amount of outstanding shares that is 400.809.380 shares.

Exchange Rates

The following table sets forth the annual low, high, average and period-end Observed Exchange Rate for U.S. dollars for each year beginning in 2008 and for each month during the six months immediately preceding the month of this annual report, as reported by the Central Bank.

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		Daily Observed Exchange Rate Ch$ per US$(1)
Year		Low(2)		High(2)		Average(3)		Period End
2008		431.22		676.75		522.35		636.45
2009		491.09		643.87		559.67		507.10
2010		468.01		549.17		510.22		468.01
2011		455.91		533.74		483.90		519.20
2012		469.65		519.69		486.59		479.96
Month
September 2012		469.65		481.11		474.91		473.77
October 2012		471.54		481.98		475.67		480.59
November 2012		476.20		484.48		480.56		480.39
December 2012		474.36		481.28		477.11		479.96
January 2013		470.67		475.47		472.28		471.44
February 2013		470.67		473.60		472.42		472.96
March 2013		471.10		474.82		472.44		472.03
April 2013 (4)		466.50		477.74		472.17		472.73

Source : Chilean Central Bank.

(1) Nominal Figures.

(2) Exchange rates are the actual low and high, on a day-by-day basis for each period.

(3) With respect to annual periods, the average of the exchange rates on the last day of each month during the year and, with respect to monthly periods, the actual daily exchange rates.

(4) Considers until April 26 th , 2012

The Observed Exchange Rate on April 26, 2012 was Ch$472.73 per US$1.00.

B.            Capitalization and Indebtedness

Not applicable.

C.            Reasons for the offer and use of proceeds

Not applicable.

D.            Risk Factors

The Company is subject to various economic, political, social and competitive conditions. Any of the following risks, if they materialize, could materially and adversely affect our business, results of operations, prospects and financial condition.

Risks Related to our Company

We rely heavily on our relationship with The Coca-Cola Company (“TCCC”) which has substantial influence over our business and operations

Approximately 82% of our net sales in 2012 were derived from the distribution of Coca-Cola soft drinks and 15% from the distribution of other beverages bearing trademarks owned by TCCC. We produce, market and distribute Coca-Cola products through standard bottler agreements between our bottler

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subsidiaries and, in each case, the local subsidiary of TCCC or, in the case of fruit juices and nectars, The Minute Maid Company, a subsidiary of TCCC. TCCC has the ability to exercise substantial influence over our business through its rights under the Bottler Agreements. See “Item 7. Major Shareholders and Related Party Transactions—Bottler Agreements.” Under the Bottler Agreements, TCCC unilaterally sets the prices for Coca-Cola soft drink concentrates and Coca-Cola beverages (in the case of soft drinks pre-mixed by TCCC) sold to us. TCCC also monitors pricing changes we institute and has the right to review and approve our marketing, operational and advertising plans. These factors may impact our profit margins which could adversely affect our net income and results of operations. Our marketing campaigns for all Coca-Cola products are designed and controlled by TCCC. Pursuant to the Bottler Agreements, we are required to submit a business plan to TCCC for prior approval on a yearly basis. In accordance with the Bottler Agreements, TCCC may, among other things, require that we demonstrate financial ability to meet our business plan and if we are not able to demonstrate our financial capacity TCCC may terminate our rights to produce, market and distribute Coca-Cola soft drinks or other Coca-Cola beverages in territories where we have such approval. Under the Bottler Agreements, we are prohibited from producing, bottling, distributing or selling any products that could be substituted for, be confused with or be considered an imitation of, Coca-Cola soft drinks or other Coca-Cola beverages and products.

We depend on TCCC to renew the Bottler Agreements which are subject to termination by TCCC in the event we default or upon expiration of their respective terms. We cannot assure you that the Bottler Agreements will be renewed or extended upon their expiration, and even if they are renewed, we cannot be certain that renewal will be granted on the same terms as those currently in effect. Termination, non-extension or non-renewal of any of the Bottler Agreements would have a material adverse effect on our business, financial condition and results of operation.

In addition, any acquisition we make of bottlers of Coca-Cola products in other countries may require, among other things, the consent of TCCC under bottler agreements to which such other bottlers are subject. We cannot assure you that TCCC will consent to any future geographic expansion of our Coca-Cola beverage business. In addition, we cannot assure you that our relationship with TCCC will not undergo significant changes in the future. If such changes do occur, our operations, and financial results and condition could be materially affected.

Our business is highly competitive and subject to price competition which may adversely affect our net profits and margins

The soft drink and non-alcoholic beverage businesses are highly competitive in each of our Company’s franchise territories. In our franchise territories we compete with bottlers of regional brands, including low cost “B brand” beverages and Pepsi products.  In Argentina and Brazil we compete with Companhia de Bebidas das Americas, commonly referred to as AmBev, the largest brewer in Latin America and a subsidiary of InBev S.A., which sells Pepsi products, in addition to a portfolio that includes local brands with flavors such as guaraná. This competition is likely to continue, and we cannot assure you that it will not intensify in the future which could materially and adversely affect our financial condition and results of operations. See “Item 4. Information on the Company — Part B. Business Overview— Soft Drink Business—Competition.”

Changes in the nonalcoholic beverages business environment could adversely affect our financial results

The nonalcoholic beverages business environment is rapidly evolving as a result of, among other things, changes in consumer preferences, including changes based on health and nutrition considerations and obesity concerns, shifting consumer tastes and needs, changes in consumer lifestyles and competitive product and pricing pressures. In addition, the industry is being affected by the trend toward consolidation in the retail channel. If we are unable to successfully adapt to this rapidly changing environment, our net income, share of sales and volume growth could be negatively affected.

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Raw material prices may be subject to U.S. dollar/local currency exchange risk and price volatility which could increase our costs of operations

Numerous raw materials, including sugar and resin, are used in producing beverages and containers. We purchase raw materials from both domestic and international suppliers. See “Item 4. Information on the Company—Part B. Business Overview—Soft Drink Business—Raw Materials and Supplies.” Because the prices of raw materials are fixed in U.S. dollars, we are subject to local currency risk in each of our operations. If the Chilean peso, Brazilian real or Argentine peso were to depreciate significantly against the U.S. dollar, the cost of certain raw materials could rise significantly, which could have an adverse effect on our financial condition and results of operations. We cannot assure you that these currencies will not lose value against the U.S. dollar in the future.   Additionally, some raw materials prices are subject to high volatility that could also have a material negative effect over our profitability.

Instability in the supply of utility services and oil prices may adversely impact our results of operations

Our operations depend on a stable supply of utilities and fuel in the countries where we operate that the Company cannot assure fluctuations in oil prices have adversely affected our cost of energy and transportation in the four countries we operate and we expect that they will continue to do so in the future. We believe that the increase of energy prices will not have a significant effect over our results of operations.

Water scarcity and poor quality could negatively impact the Company’s production costs and capacity.

Water is the main ingredient in substantially all of our products. It is also a limited resource in many parts of the world, facing unprecedented challenges from overexploitation, increasing pollution and poor management. As demand for water continues to increase around the world, and as the quality of available water deteriorates, the Company may incur increasing production costs or face capacity constraints that could adversely affect our profitability or net operating revenues in the long run.

Significant additional labeling or warning requirements may inhibit sales of affected products.

The countries in which we operate, may adopt significant additional product labeling or warning requirements relating to the chemical content or perceived adverse health consequences of certain of the Coca-Cola products. These types of requirements, if they become applicable to one or more of the Coca-Cola products under current or future environmental or health laws or regulations, may inhibit sales of such products.

If we are unable to protect our information systems against data corruption, cyber-based attacks or network security breaches, our operations could be disrupted.

We are increasingly dependent on information technology networks and systems, including the Internet, to process, transmit and store electronic information. In particular, we depend on our information technology infrastructure for digital marketing activities and electronic communications among the Company and our clients, suppliers and also among our subsidiaries. Security breaches of this infrastructure can create system disruptions, shutdowns or unauthorized disclosure of confidential information. If we are unable to prevent such breaches, our operations could be disrupted, or we may suffer financial damage or loss because of lost or misappropriated information.

Perception of risk in emerging economies may impede our access to international capital markets, hinder our ability to finance our operations and adversely affect the market price of our common shares and American Depositary Receipts.

As a general rule, international investors consider Argentina and Paraguay, and to a lesser extent Chile and Brazil, to be emerging market economies. Consequently, economic conditions and the market for securities of emerging market countries influence investors’ perceptions of Chile, Brazil and Argentina and their evaluation of companies’ securities located in these countries.

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During periods of heightened investor concern regarding emerging market economies, in particular Argentina and to a lesser extent Brazil and Paraguay, have experienced significant outflows of U.S. dollars.

In addition, in these periods Brazilian, Argentine and Paraguayan companies have faced higher costs for raising funds, both domestically and abroad, as well as limited access to international capital markets, which have negatively affected the prices of the aforementioned countries securities. Although economic conditions are different in each of the emerging-market countries, investors’ reactions to developments in one of these countries may affect the securities of issuers in the others, including Chile. For example, adverse developments in other developing or emerging market countries may lead to decreased investor interest in investing in Chile or in the securities of Chilean companies, including securities of the Company.

It may be difficult to enforce civil liabilities against us or our directors, executive officers or controlling persons

We are a sociedad anónima , or stock corporation, organized under the laws of Chile. Some of our directors, executive officers and controlling persons reside in Chile or outside of the United States. In addition, all or a substantial portion of the assets of these persons and of our assets are located outside of the United States. As a result, it may not be possible for investors to effect service of process within the United States upon such persons, or to enforce against them in U.S. courts judgments predicated upon civil liability provisions of the federal securities laws of the United States or otherwise obtained in U.S. courts. Because our assets are located outside of the United States, any judgment obtained in the United States against us may not be fully collectible in the United States.

If we experience strikes, work stoppages or labor unrest, our business would suffer.

Strikes, work stoppages or other forms of labor unrest at any of our production facilities could impair our ability to supply products to customers, which would reduce our revenues and could expose us to customer claims.

Regulatory Risks

We are subject to regulation in each of the territories in which we operate. The principal areas in which we are subject to regulation are water, environment, labor, taxation, health and antitrust. Regulation could also affect our ability to set prices for our products. The adoption of new laws or regulations or a stricter interpretation or enforcement thereof in the countries in which we operate may increase our operating costs or impose restrictions on our operations which, in turn, may adversely affect our financial condition, business and results. Further changes in current regulations may result in an increase in compliance costs, which may have an adverse effect on our future results or financial condition.

Voluntary price restraints or statutory price controls have been imposed historically in several of the countries in which we operate. Currently there are no price controls applicable to our products in any of the territories in which we operate, other than in Argentina, were there are voluntary price restraints. There are currently no published laws or regulations imposing price controls on our products in Argentina. Nonetheless, the company has assented to the request by Argentine Government authorities to maintain prices of certain products sold through supermarkets. The imposition of these restrictions or voluntary price restraints in Argentina or other territories may have an adverse effect on our results and financial condition.  We cannot assure you that government authorities in Argentina or in any country in which we operate will not impose statutory price controls, or that we will not be asked to accept further voluntary price restraints in the future.

The countries in which we operate may adopt new tax laws or modify existing laws to increase taxes applicable to our business.

We cannot assure you that any governmental authority in any country where we operate will not impose new taxes or increase taxes on our products in the future. The imposition of new taxes or increases in taxes on our products may have a material adverse effect on our business, financial condition, prospects and results.

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For example, in Chile, a tax reform became effective on 2011, pursuant to which there was a temporary increase in the income tax rate from 17% to 20%, to finance the reconstruction of the country after the earthquake of 2010. Pursuant to an amendment issued on 2012, the 20% income tax rate will continue to apply through 2013 and onwards.

In Brazil, the federal taxes applied on the production and sale of beverages are based on the national average retail price, calculated based on a yearly survey of each Brazilian beverage brand, combined with a fixed tax rate and a multiplier specific for each class of presentation (glass, plastic or can). On October 1, 2012, a number of changes to the federal taxes on beverages became effective. These changes include the increase of the multipliers used to calculate soft drink taxes sold  in cans or glass bottles. As of effectiveness,  the multiplier for cans increased from 30.0% to 31.9%, and as of October 2014, the multiplier will further be increased gradually to 38.1% by October 1, 2018. The multiplier for glass bottles increased from 35.0% to 37.2% as of effectiveness, and as of October 2014, the multiplier will further be increased gradually to 44.4% by October 1, 2018. In addition, the amendment suspended the 50% production tax benefit that had previously applied to juice-added soft drinks, and raised the rate for such beverages to the level currently applied to cola beverages. In addition to the changes in the federal sales taxes on soft drinks, there was a reduction in the federal production tax rate  on concentrate, from 27.0% to 20.0%. This reduction reduces the tax credit on the purchase of concentrate.

Risks Relating to Chile

Our growth and profitability depend on economic conditions in Chile

Approximately 49% of our assets and 32% of our net sales in 2012 were derived from our operations in Chile. Thus, our financial condition and results of operations depend significantly on economic conditions prevailing in Chile. According to data published by the Central Bank, the Chilean economy grew at a rate of 6.1% in 2010, 6.0 % in 2011 and 5.6% in 2012. Our financial condition and results of operations could also be adversely affected by changes over which we have no control, including, without limitation:

· the economic or other policies of the Chilean government, which has a substantial influence over many aspects of the private sector;

· other political or economic developments in or affecting Chile;

· regulatory changes or administrative practices of Chilean authorities;

· inflation and governmental policies to combat inflation;

· currency exchange movements; and

· global and regional economic conditions.

Inflation in Chile may disrupt our business and have an adverse effect on our financial condition and results of operations

The annual rates of inflation in Chile which in 2010, 2011 and 2012 were 3.0%, 4.4% and 1.5%, respectively (as measured by changes in the consumer price index and as reported by the Chilean National Institute of Statistics) could adversely affect the Chilean economy and have a material adverse effect on our financial condition and results of operations. We cannot assure you that, under competitive pressure, we will be able to realize price increases, which could adversely impact our financial condition and results of operations. Additionally, an important part of our financial debt is UF denominated, this is, linked to the inflation of the country, and therefore the value of the debt reflects any increase of the inflation in Chile.

The Chilean peso is subject to depreciation and volatility which could adversely affect the value of an investment in our securities

The Chilean government’s economic policies and any future changes in the value of the Chilean peso against the U.S. dollar, could adversely affect our operations and financial results and the dollar value of an investor’s return. The Chilean peso has been subject to large nominal devaluations in the past and may be

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subject to significant fluctuations in the future. Based on the Observed Exchange Rates for U.S. dollars in the period from 2010 to 2012 the Chilean peso relative to the U.S. dollar appreciated 5.62% in nominal terms. During 2012 the Chilean peso relative to the U.S. dollar depreciated 0.5% in nominal terms. See “Item 3. Key Information-Exchange Rates.”

Our Class A shares and Class B shares are traded in Chilean pesos on the Chilean Stock Exchanges. Cash distributions with respect to the shares will be received in Chilean pesos by the depositary, currently The Bank of New York Mellon Corporation (as depositary for the Series A and Series B shares represented by the Series A and Series B ADRs), which will convert such Chilean pesos to U.S. dollars at the then prevailing exchange rate to make U.S. dollar payments in respect of the ADRs. If the value of the Chilean peso depreciates relative to the U.S. dollar, the value of the ADRs and any distributions to be received from the depositary would be adversely affected. In addition, the depositary will incur costs (to be ultimately borne by the ADR holders) in connection with the foreign currency conversion and subsequent distribution of dividends or other payments with respect to our ADRs.

Exchange controls and withholding taxes in Chile may limit repatriation of foreign investments

Equity investments in Chile by persons who are not Chilean residents are generally subject to various exchange control regulations that govern the convertibility and repatriation of the investments and earnings. The ADRs are governed by an Agreement among us, the depositary and the Central Bank of Chile (the “Foreign Investment Agreement”). The Foreign Investment Agreement guarantees the depositary and the ADR holders access to Chile’s Formal Exchange Market, permits the depositary to remit dividends it receives from us to the ADR holders and permits the holders of ADRs to repatriate the proceeds of the sale of shares withdrawn from the ADR facility, thereby enabling them to acquire currencies necessary to repatriate investments in the shares and earnings there from.  Pursuant to current Chilean law, the Foreign Investment Agreement may not be amended unilaterally by the Central Bank of Chile, and there are judicial precedents (which are not binding with respect to future judicial decisions) indicating that the Foreign Investment Agreement may not be voided by future legislative changes.

Dividends received by ADR holders of are paid net of foreign currency exchange fees and expenses of the depositary and are subject to Chilean withholding tax, currently imposed at a rate of 35%, subject to credits in certain cases as described under “Item 10. Additional Considerations —Tax Considerations Relating to Equity Securities”.

We cannot assure you that additional restrictions applicable to ADR holders , the disposition of the shares underlying the ADRs and the convertibility and/or the repatriation of the proceeds from such disposition or the payment of dividends will not be imposed in the future, nor can we advise as to the duration or impact of such restrictions if imposed. If for any reason, including changes in the Foreign Investment Agreement or Chilean law, the depositary was unable to convert Chilean pesos to U.S. dollars, investors would receive dividends or other distributions, if any, in Chile and in Chilean pesos.

Risks Relating to Brazil

Our business is dependent to some extent on economic conditions in Brazil

Approximately 21% of our assets and 38% of our consolidated net sales in 2012 were derived from our operations in Brazil. Because demand for soft drinks and beverage products is usually correlated to economic conditions prevailing in the relevant local market, which in turn is dependent on the macroeconomic condition of the country in which the market is located, our financial condition and results of operations to a considerable extent are dependent upon political and economic conditions prevailing in Brazil.  According to data available to general public, the Brazilian economy grew at a rate of 7.5% in 2010, 2.7% in 2011 and 1.0% in 2012.

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The Brazilian government exercises influence over the Brazilian economy, which together with historically volatile Brazilian political and economic conditions, could adversely affect our financial condition and results of operations and the market price of our shares and ADRs

Historically, the Brazilian government has changed monetary, credit, tariff, and other policies to influence the course of Brazil’s economy. Such government actions have included wage and price controls as well as other measures such as freezing bank accounts, imposing exchange controls and imposing limits on imports and exports. Changes in policy and other political and economic developments could adversely affect the Brazilian economy and have a material adverse effect on our business, financial condition and results of operations. We cannot assure you that present economic conditions and policies intended to promote a sustainable economic development will continue.

Although inflation in Brazil has stabilized in recent years, increased inflation may adversely affect the operations of Andina Brazil which could adversely impact our financial condition and results of operations

As meas ured by the Brazilian Índice Nacional de Preços ao Consumidor or INPC, inflation in Brazil was 6.5%, 6.1% and 6.2% in 2010, 2011 and 2012, respectively. Increased inflation rates may result in lower consumer purchasing power on behalf of consumers and lower sales volume for Andina Brazil. We cannot assure you that levels of inflation in Brazil will not increase in future years and have a material adverse effect on our business, financial condition or results of operations. Inflationary pressures may lead to further government intervention in the economy, including the introduction of government policies that could adversely affect the results of operations of Andina Brazil and consequently our financial condition and results of operations and the market price of our shares and ADSs.

The Brazilian real is subject to depreciation and volatility which could adversely affect our financial condition and results of operations

During 2010, the real apreciated 4.3% against the U.S. dollar compared to the prior year period. Nevertheless in 2011 and 2012 it depreciated 12.6% and 8.9%, which had an impact in the financial condition and results of operations of our Brazilian subsidiary.

Depreciation of the real relative to the U.S. dollar may increase the cost of servicing foreign currency-denominated debt that we may incur in the future, which could adversely affect our results of operations and financial condition. In addition, depreciation of the real can create inflationary pressures in Brazil that may negatively affect our results of operations. Depreciation generally curtails access to international capital markets and combined with other macroeconomic aspects, may prompt recessionary government intervention. It also reduces the U.S. dollar value of our revenues, distributions and dividends, and the U.S. dollar equivalent of the market price of our common shares. On the other hand, the appreciation of the real against the U.S. dollar may lead to the deterioration of Brazil’s public accounts and balance of payments, as well as to lower economic growth from exports.

The Brazilian government imposes certain restrictions on currency conversions and remittances abroad which could affect the timing and amount of any dividend or other payment we receive

Brazilian law guarantees foreign shareholders of Brazilian companies the right to repatriate their invested capital and to receive all dividends in foreign currency provided that their investment is registered with Brazil’s Central Bank. We registered our investment in Andina Brazil with the Brazilian Central Bank on October 19, 1995. Although dividend payments related to profits obtained subsequent to January 1, 1996 are not subject to income tax, after the sum of repatriated capital and invested capital exceeds the investment amount registered with the Brazilian Central Bank, repatriated capital is subject to a capital gains tax of 15%. Under current Chilean tax law, we will realize a tax credit in respect of all Brazilian taxes paid relating to Andina Brazil. There can be no assurance that the Brazilian government will not impose additional restrictions or modify existing regulations that would have an adverse effect on an investor’s ability to repatriate funds from Brazil nor can there be any assurance of the timing or duration of such restrictions, if imposed in the future.

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Risks Relating to Argentina

Our business is dependent to some extent on economic conditions in Argentina

Approximately 13% of our assets and 27% of our net sales in 2012 were derived from our operations in Argentina. Because demand for soft drinks and beverage products usually is correlated to economic conditions prevailing in the local market, which in turn is dependent on the macroeconomic condition of the country, the financial condition and results of operations of our franchise in Argentina are, to a considerable extent, dependent upon political and economic conditions prevailing in Argentina.

GDP growth in Argentina was 9.2% in 2010, 8.3% in 2011 and 2.0% in 2012. Facing the international financial crisis, the public sector did not default and carried out payments using the reserves of Argentina’s Central bank and loans from Banco de la Nación Argentina, generating new and significant macroeconomic policy challenges. Although Argentina managed to roll with the punches of a recessive year and an international crisis without upsetting the main financial variables, we cannot assure that economic conditions in Argentina will continue improving or that our operations will continue experiencing good results.

Political and economic instability may recur which could have a material adverse effect on our Argentine operations and on our financial condition and results of operations.

In the period from 1998 through 2003, Argentina experienced acute economic problems that culminated with the restructuring of substantially all of Argentina’s sovereign bond indebtedness. A succession of presidents were inaugurated during this crisis period and various states of emergency were declared that suspended civil liberties and instituted restrictions on transfers of funds abroad and foreign exchange controls, among other measures. Argentina’s GDP contracted 10.9% in 2002. Beginning 2003, Argentine GDP began to recover and from 2004 to 2008 recorded an average rate of growth of 8.4%. In the political environment, legislative elections carried out in June of 2009 were a misfortune for the government’s political party losing the majority in both houses. This new political scenario in Argentina could make the executive power need to arrive at a consensus with the opposition regarding rules and regulations in order for them to be approved by the legislative power.

The macroeconomic condition in Argentina has been characterized by:

· increased inflation which has been slightly controlled by price control;

· deeper state of intervention in the economy;

· fiscal deficit ; and

· strong salary pressures.

The Argentine government continues to face significant exposure to litigation from holders of its defaulted debt that did not participate in the Argentine government’s exchange offer.

The Argentine government could impose certain restrictions on currency conversions and remittances abroad which could affect the timing and amount of any dividends or other payment we receive from our Argentine franchise

Under current Argentine law, we may declare and distribute dividends with respect to our Argentine subsidiary and our Argentine banks may lawfully process payments of those dividends to us and other non-resident shareholders.   Our declaration and distribution of dividends is subject to certain statutory requirements and must be consistent with our audited financial statements.  The processing of payment of dividends by our Argentine banks is subject to Argentine Central Bank regulations, including verification of our Argentine subsidiary’s compliance with foreign debt and direct investment disclosure obligations.  In addition to statutory and administrative rules affecting our Argentine subsidiary’s payment of dividends, during 2012 the Argentine Government imposed discretionary restrictions on Argentine companies as part of a policy to limit outbound transfers of U.S. dollars.  These de facto restrictions essentially halted dividend payments to non-resident shareholders.   The Argentine Government has begun to relax these restrictions.  Nonetheless, we cannot give any assurances that we will be able to cause our Argentine subsidiary to

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distribute dividends to its non-resident shareholders now or in the foreseeable future, despite otherwise meeting all statutory and regulatory requirements for payment.

Argentina’s government may impose certain restrictions on imports which could have an impact in our operation.

Argentina’s government could eventually limit our access to foreign exchange to pay for imports, and also could restrict raw materials or machinery imports, which are necessary for our operation in the country.

Inflation in Argentina may adversely affect our operations which could adversely impact our financial condition and results of operations

Argentina has experienced high levels of inflation in recent decades, resulting in large devaluations of its currency. Argentina’s historically high rates of inflation resulted mainly from its lack of control over fiscal policy and the money supply. The official annual rates of inflation (published by INDEC- Instituto Nacional de Estadísticas y Censos - National Statistics and Census Institute as measured by changes in the consumer price index) between 2010, 2011 and 2012 were, 10.9%, 9.5% and 10.8%, respectively for each year.  High levels of inflation in Argentina could adversely affect the Argentine economy and have a material adverse effect on our financial condition and results of operations.  In the last years the accuracy of the national accounts of Argentina was questioned by some international public organizations.

The Argentine peso is subject to depreciation and volatility which could adversely affect our financial condition and results of operations

During 2012, the exchange rate in Argentina underwent a depreciation of 13.8%. The Argentine government’s economic policies and any future devaluation of the Argentine peso against the U.S. dollar could adversely affect our financial condition and results of operations. The Argentine peso has been subject to large devaluations in the past and may be subject to significant fluctuations in the future.

We cannot assure you that the policies to be implemented by the Argentine government in the future will stabilize the value of the Argentine peso against foreign currencies

Risks Related to Paraguay

Our business is dependent to some extent on economic conditions in Paraguay

Approximately 17% of our assets and 3% of our net sales in 2012 were derived from our operations in Paraguay. Since the demand for soft drinks and drinks is generally related to the economic conditions prevailing in the local market which, in turn, depend on the macroeconomic and political conditions of the country, our financial situation and our operations results could be adversely affected by changes in these factors over which we have no control.

The Gross Domestic Product (GDP) for 2012 reveals a contraction of the real economy of around -1.2% compared to the previous year, result it is interrupted two years of a very good behavior of the economic activity (4% in 2011 and 15% in 2010),

The economic performance in 2012 was influenced by a predominant factor that motivated a declination in economic activity: the effects of the drought that had a negative impact in the agricultural industry for 2011/2012, mainly on soybeans, corn and sunflower crops, in addition to the outbreak of foot and mouth disease detected in the last months of 2011 that resulted in the closing of markets for Paraguayan meat and has had an effect in the reduction of the levels of slaughtering during the first half of this year which, however, was reversed during the second half of the year, experiencing a significant upturn with the return of more than 20 markets for Paraguayan meat.

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Inflation in Paraguay may adversely affect our operations which could adversely impact our financial condition and results of operations

Inflation during 2012 was 4%, below 4,9% in 2011 and 7,2% in 2010. This annual inflationary result implies that the total inflation has, for the sixth consecutive year, a one-digit figure and is below the top of the target range (7,5%).

An increase in the inflation could decrease the purchasing power of our consumers, which could have an effect in our volume growth and therefore, could have an impact in our sales income. We can’t assure you that the Paraguayan inflation will continue to be under the current levels.

The Paraguayan Guaraní is subject to depreciation and volatility which could adversely affect our financial condition and results of operations

The exchange rate is free and fluctuant and the BCP participate in the exchange market in order to smooth abrupt oscillations.

In 2012, the local currency appreciated in 3.0%. Nevertheless, it was very variable during the year. It was appreciated during the first quarter to then become strongly depreciated (around 11%), as a result of the lower export earnings to then be stabilized towards the last quarter of the year, closing 2012 with an appreciation of around 3%.

An important depreciation of the local currency could adversely affect our financial situation and financial results, because 25% of our total costs of raw materials and supplies are in dollars, as well as other expenses such as professional fees and maintenance costs.

Risk Factors Relating to the ADRs and Common Stock

Preemptive rights may be unavailable to ADR holders

According to the Ley de Sociedades Anónimas No. 18.046 and the Reglamento de Sociedades Anónimas (collectively, the “Chilean Companies Law”), whenever we issue new shares for cash, we are required to grant preemptive rights to holders of our shares (including shares represented by ADRs), giving them the right to purchase a sufficient number of shares to maintain their existing ownership percentage. However, we may not be able to offer shares to United States holders of ADRs pursuant to preemptive rights granted to our shareholders in connection with any future issuance of shares unless a registration statement under the U.S. Securities Act of 1933, as amended, is effective with respect to such rights and shares, or an exemption from the registration requirements of the U.S. Securities Act of 1933, as amended, is available.

Under the procedure established by the Central Bank of Chile, the foreign investment agreement of a Chilean company with an existing ADR program will become subject to an amendment (which will also be deemed to incorporate all laws and regulations applicable to international offerings in effect as of the date of the amendment) that will extend the benefits of such contract to new shares issued pursuant to a preemptive rights offering to existing ADR owners and to other persons residing and domiciled outside of Chile that exercise preemptive rights, upon request to the Central Bank of Chile. We intend to evaluate at the time of any rights offering the costs and potential liabilities associated with any such registration statement as well as the indirect benefits to us of enabling United States ADR holders to exercise preemptive rights and any other factors that we consider appropriate at the time, and then make a decision as to whether to file such registration statement.

We cannot assure you that any registration statement would be filed. To the extent ADR holders are unable to exercise such rights because a registration statement has not been filed, the depositary will attempt to sell such holders’ preemptive rights and distribute the net proceeds thereof if a secondary market for such rights exists and a premium can be recognized over the cost of any such sale. If such rights cannot be sold,

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they will expire and ADR holders will not realize any value from the grant of such preemptive rights. In any such case, such holder’s equity interest in the Company would be diluted proportionately.

Shareholders’ rights are less well defined in Chile than in other jurisdictions, including the United States

Under the United States federal securities laws, as a foreign private issuer, we are exempt from certain rules that apply to domestic United States issuers with equity securities registered under the United States Securities Exchange Act of 1934, as amended, including the proxy solicitation rules, the rules requiring disclosure of share ownership by directors, officers and certain shareholders. We are also exempt from certain of the corporate governance requirements of the Sarbanes-Oxley Act of 2002 and the New York Stock Exchange, Inc., including the requirements concerning independent directors.

Our corporate affairs are governed by the laws of Chile and our estatutos or bylaws, which function not only as our bylaws but also as our articles of incorporation. Under such laws, our shareholders may have fewer or less well-defined rights than they might have as shareholders of a corporation incorporated in a U.S. jurisdiction.

Pursuant to Law No. 19,705, enacted in December 2000, the controlling shareholders of an open stock corporation can only sell their controlling shares via a tender offer issued to all shareholders in which the bidder would have to buy all the offered shares up to the percentage determined by it, when the price paid is substantially higher than the market price (that is, when the price paid was higher than the average market price of a period starting 90 days before the proposed transaction and ending 30 days before such proposed transaction, plus 10%).

The market for our shares may be volatile and illiquid

The Chilean securities markets are substantially smaller, less liquid and more volatile than major securities markets in the United States. The Bolsa de Comercio de Santiago (the “Santiago Stock Exchange”), which is Chile’s principal securities exchange, had a market capitalization of approximately US$313,456  million at December 31, 2012 and an average monthly trading volume of approximately US$3,870 million for 2012. The lack of liquidity owing, in part, to the relatively small size of the Chilean securities markets may have a material adverse effect on the trading prices of our shares. Because the market for our ADRs depends, in part, on investors’ perception of the value of our underlying shares, this lack of liquidity for our shares in Chile may have a significant effect on the trading prices of our ADRs.

ITEM 4. INFORMATION ON THE COMPANY

A. History and development of the Company

Our legal name is Embotelladora Andina S.A. and our commercial name is Andina. We were incorporated and organized on February 7, 1946 under the Chilean Companies Law as a sociedad anónima (stock corporation). An abstract of our bylaws is registered with the Registro de Comercio de Santiago (Public Registry of Commerce of the City of Santiago) under No. 581 on page 768 of the year 1946. Pursuant to our bylaws, our term of duration is indefinite.

Our shares of common stock are listed and traded on the Bolsa de Comercio de Santiago (Santiago Stock Exchange),  on the Bolsa Electrónica de Chile (the Chilean Electronic Stock Exchange) and the Bolsa de Comercio de Valparaiso (the Valparaiso Stock Exchange). Our Series A and Series B ADRs representing our Series A and Series B shares, respectively, are listed on the New York Stock Exchange. Our principal executive offices are located at Avenida Miraflores 9153, Piso 7, Renca, Santiago, Chile. Our telephone number is +56-2-2338-0520 and our website is www.koandina.com.

Our depositary agent for the ADRs in the United States is The Bank of New York Mellon Corporation, located at One Wall Street, New York, New York 10286. Our depositary agent’s telephone number is (212) 815-2296. Our authorized representative in the United States is Puglisi & Associates, located at 850

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Library Avenue, Suite 204, Newark, Delaware 19711, United States and their phone number is (302) 738-6680.

History

In 1941, The Coca-Cola Company licensed a private Chilean company to produce Coca-Cola soft drinks in Chile, and production began in 1943. In 1946, the original licensee withdrew from the license arrangement, and a group of U.S. and Chilean investors formed Andina, which became The Coca-Cola Company’s sole licensee in Chile. Between 1946 and the early 1980s, Andina developed the Chilean market for Coca-Cola soft drinks with a system of production and distribution facilities covering the central and southern regions of Chile. In the early 1980s, Andina sold its Coca-Cola licenses for most areas outside the Santiago metropolitan region and concentrated on the development of its soft drink business in the Santiago area. Although no longer the sole Coca-Cola bottler in Chile, Andina has been the principal manufacturer of Coca-Cola products in Chile for an uninterrupted period of 66 years.

In 1985, a majority of Andina’s shares was acquired by four Chilean families who compromise Inversiones Freire Ltda. (“Freire” or “the Controlling Shareholders”). On December 31, 2012, the Controlling Shareholders owned 55.3% of our outstanding Series A shares, which have preferred voting rights and thereby control the Company; and 45.3% of our outstanding Series B shares, consequently the Controlling Shareholders of Andina hold a 50.3% ownership interest in the Company.   Further information regarding our Controlling Shareholders can be found on page 114 of our 2012 Annual Report which is available at our website: www.koandina.com.

Andina Brazil, our Brazilian subsidiary, began production and distribution of Coca-Cola soft drinks in Rio de Janeiro in 1942. In June 1994, we acquired 100% of the capital stock of Andina Brazil for approximately US$120 million and contributed an additional US$31 million to Andina Brazil’s capital immediately after the acquisition to repay certain indebtedness of Andina Brazil.   In 2000, we purchased through Andina Brazil, from the Coffin Group, a Coca-Cola franchise license for a territory in Brazil comprising the State of Espírito Santo and part of the States of Rio de Janeiro and Minas Gerais (NVG), for US$74.5 million. NVG was merged into Andina Brazil in 2000, and its operations were integrated with Andina Brazil in 2001.   In 2004, Andina Brazil entered into a franchise swap agreement with the Brazilian subsidiary of The Coca-Cola Company, Recofarma Indústria do Amazonas Ltda., for (1) an exchange of franchising rights, goods and other assets of Andina Brazil in the territory of Governador Valadares in the State of Minas Gerais, and (2) other franchise rights of The Coca-Cola Company in the territories of Nova Iguaçu in the state of Rio de Janeiro, which was previously owned by Companhia Mineira de Refrescos S.A.  In 2007 TCCC along with the Coca-Cola bottlers in Brazil create a Joint Venture, Mais Indústria de Alimentos, in order to enhance the non-carbonated business for the entire System in that country, and in   2008 The Coca-Cola System acquires a second company that produces non carbonated beverages called Sucos del Valle do Brasil Ltda  These two companies merged in 2011 and SABB (Sistema de Alimentos y Bebidas do Brasil) was created  in which Andina Brazil holds a 5.74% ownership interest. In 2010 TCCC along with the Coca-Cola bottlers in Brazil acquired Leão Junior S.A. through a Joint Venture.  Leão Junior S.A. among others, commercializes Matte Leão.  This company has a consolidated presence and market share within the ready-to-drink teas category in Andina Brazil’s territory. Andina Brazil has an 18.20% ownership interest in Leão Junior S.A.  Andina Brazil holds an average ownership interest of 10.74% in Leão Junior and SABB. In November, 2012 Andina Brazil materialized the acquisition of a 40% stake in Sorocaba Refrescos S.A., a Coca-Cola  bottler located in the state of Sao Paulo, for $R146,946,004.

Production of Coca-Cola soft drinks in the Argentine territory began in 1943 with the start-up of operations in the province of Córdoba, Argentina, through Inti S.A.I.C., which we refer to as “INTI”. In July 1995, we (through Inversiones del Atlántico S.A., an investment company incorporated in Argentina), which we refer to as “IASA”, acquired a 59% interest in Edasa, the parent company of Rosario Refrescos S.A. and Mendoza Refrescos S.A. These entities were subsequently merged to create Rosario Mendoza Refrescos S.A., which we refer to as “Romesa”. In 1996 we acquired an additional 35.9% interest in Edasa, an additional 78.7% interest in Inti, a 100% interest in Cipet located in Buenos Aires (a PET plastic bottle and packaging business) and a 15.2% interest in Cican S.A. During 1997, the operations of Romesa were merged with INTI. In 1999, Edasa was merged into IASA. In 2000, IASA was merged into Inti, which in turn changed its

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corporate name to Embotelladora del Atlántico S.A. (EDASA). In 2002 Cipet merged into Edasa. During 2007 EDASA’s ownership interest in Cican S.A. was sold to Femsa. Currently, Edasa is the Coca-Cola bottler in the provinces of Entre Rios, San Luis, San Juan, Mendoza, part of Santa Fe and part of Buenos Aires (San Nicolás y Ramallo.)

In 1998, Andina repurchased from The Coca-Cola Company its 49% stake in Vital. Concurrently with that transaction, The Coca-Cola Company purchased Vital’s mineral water springs located at Chanqueahue, 80 miles south of Santiago. As part of the transaction, the Vital bottler agreement was replaced with a juice bottler agreement with Minute Maid International Inc., as well as a new mineral water bottling agreement with The Coca-Cola Company. In addition, the 1995 shareholders’ agreement between us and The Coca-Cola Company regarding ownership of Vital was terminated. The restructuring of the water and juice business in Chile enhanced our focus on the production of soft drinks, water and juice.  During 2005, the production and packaging business of water, juice and non-carbonated beverages licensed by TCCC in Chile was restructured. Vital Aguas S.A., which we refer to as VASA, was created to develop the production and packaging businesses of Vital de Chanqueahue, mineral water and other water products. VASA is focused on developing juice and non-carbonated beverages. Andina, Embonor S.A. and Embotelladora Coca-Cola Polar S.A. own 56.5%, 26.4% and 17.1%, respectively, of the outstanding capital of VASA.  During January of 2011, the juice business was restructured, allowing the incorporation of the other Coca-Cola bottlers in Chile to the property of Vital S.A. which changed its name to Vital Jugos S.A.  Andina, Embonor S.A. and Embotelladora Coca-Cola Polar S.A. own 57%, 28% and 15%, respectively, of the outstanding capital of Vital Jugos S.A.

In Chile we participate in the business of producing PET bottles through a 50/50 joint venture we entered into with Cristalerías de Chile in the year 2001.  On January 27, 2012, Coca-Cola Embonor through its subsidiary, Embonor Empaques S.A. acquired Cristalerías de Chile’s stake equivalente to a 50% ownership interest in Envases CMF.

On March 30, 2012, after completion of due-diligence procedures, the Company signed a Promissory Merger Agreement with Embotelladoras Coca-Cola Polar S.A. (“Polar”). Polar is also a Coca-Cola bottler with operations in: Chile, servicing territories in the II, III, IV, XI and XII regions; Argentina, servicing territories in Santa Cruz, Neuquén, El Chubut, Tierra del Fuego, Río Negro La Pampa and the western zone of the province of Buenos Aires; and Paraguay, servicing the whole country. The merger was made in order to reinforce the Company’s leadership position among Coca-Cola bottlers in South America.

Prior to closing, the merger was approved by the shareholders of both of the companies, as well as the Chilean Superintendence of Securities and Insurance, and the Coca-Cola Company. The terms of the merger prescribed the exchange of newly issued Company shares at a rate of 0.33269 Series A shares and 0.33269 Series B shares, for each outstanding share of Polar. Prior to the materialization of the merger and the approval of the Shareholder Meetings of the Company and Polar, dividends were distributed among their respective shareholders, in addition to those already declared and distributed with charge to 2011 income. The dividends distributed by the Company and Polar amounted to Ch$28,155,862,307 and Ch$29,565,609,857 respectively, that represented Ch$35.27 per each share of the Series A and Ch$38.80 per each share of the Series B.

The physical exchange of shares took place on October 16, 2012, with which former shareholders of Polar then had a 19.68% ownership interest in the merged Company. Based upon the terms of the executed agreements, the actual control over day-to-day operations of Polar transferred to the Company as of October 1, 2012, and the Company began consolidating Polar’s operations from that date forward. Additionally and as a result of Embotelladora Andina becoming the legal successor of Polar’s rights and obligations, the Company indirectly acquired additional ownership interest in Vital Jugos S.A., Vital Aguas S.A. and Envases Central S.A. that added to its previous ownership interest in those entities. The Company’s current ownership enables it to exercise control over these entities, and thus incorporate them into the consolidation of the financial statements beginning October 1, 2012.

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PARESA is the first authorized Coca-Cola Bottler Company in Paraguay, which started its operations in May 13, 1965. In 1967, Plant 1 was inaugurated with a capacity of 400,000 annual unit cases. In 1980, the Barcequillo Plant - located on Km 3.5 Barcequillo of the Ñemby route, in the City of San Lorenzo- was inaugurated, reaffirming and applying the concept of the highest end technology of bottling. Beginning in 2004, Paresa became property of the Grupo Polar from Chile, continuing its operations in the Paraguayan market. On October 1, 2012, Paresa became part of Grupo Coca-Cola Andina due to the merger of  Embotelladoras Coca-Cola Polar S.A. into Embotelladora Andina S.A.

In 1996, our shareholders approved the Reclassification of Capital Stock, which we refer to as the “Reclassification”, of Andina’s common stock into two new series of shares. Pursuant to the Reclassification, each outstanding share of Andina’s common stock was replaced by one newly issued Series A share and one newly issued Series B share. The Series A and Series B shares are principally differentiated by their voting and economic rights. Therefore, and after the modification of our bylaws as of June 25, 2012, that increased the number of directors from 7 to 14 — and thus, eliminating the alternate directors-  the holders of the Series A shares have full voting power and are entitled to elect 12 of 14 members of the board of directors, and the holders of the Series B shares have no voting rights but for the right to elect 2 members of the board of directors. In addition, holders of Series B shares are entitled to a dividend 10% greater than any dividend on Series A shares.

After the Reclassificaction, the Superintendence of Pension Fund Managers ( Superintendencia de Administradores de Fondos de Pensiones ) decreed that Chilean pension funds would not be permitted to acquire Series B Shares due to their limited voting rights. Later, during 2004, the Superintendence approved Series B shares as investment instruments for Chilean Pension funds. Series A shares have always been eligible as investment instruments.

Capital Expenditures

During 2012 the Company financed its permanent investments exclusively from internal resources.

The following table sets forth our capital expenditures by territory and line of business for the periods indicated:

		Year ended December 31,
		2012		2011		2010
		MCh$		MCh$		MCh$
Soft Drinks:
Chilean territory		53,249		72,669		46,673
Brazilian territory		36,109		28,951		35,607
Argentine territory		44,682		18,801		8,961
Paraguayan territory		6,085
Other Beverages:
Vital Jugos S.A. and VASA		1,487		—		3,315
Argentine territory		—		3,780		—
PET Packaging:
Argentine territory		2,152		2,730		906
Total		143,764		126,931		95,462

During 2012, the Company has made disbursements totaling Ch$3,333 million (unaudited figures) for improvements in industrial processes, equipment to measure industrial waste flows, laboratory analyses, consulting on environmental impacts and other studies.  For further details please refer to Note 27 of our Consolidated Financial Statements filed herewith.

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Our total capital expenditures were Ch$143,764 million in 2012 and Ch$126,931 million in 2011. In 2012, capital expenditures were principally related to the following:

Soft drinks:

Chile

· Returnable bottles (glass and PET bottles) and bottle cases;

· Cooling equipment, post mix and other point of sale equipment;

· New equipment to increase efficiency and production capacity;

· Implementation of the new Renca bottling facility.

Brazil

· Returnable Ref Pet and glass bottles and bottle cases;

· Coolers, post-mix and other point-of-sale equipment;

· Equipment to increase efficiency and production capacity;

· Purchase of distribution trucks and automobiles for the sales force.

· Industrial projects at Jacarepaguá: Pet Ref Line, 2 volumetric fillers and one blower.

Argentina

· Bottles (glass and PET bottles) and bottle cases;

· Coolers and post mix equipment;

· OW PET production line and the adaptation of another existing OW line to improve productivity;

· Nueva Línea de Embotellado para productos de llenado en caliente “Hot Fill” Line for waters and sensitive products; (investment began in 2011) and a New Line of Tetra Pack Juice packaging;

· Expansion of the Finished product deposit and of the patio in the Floor of the Córdoba Plant (13,600 m2) and in the Bahia Blanca plant (2,800 m2);

· Purchase and modifying Moulds for Short Finish.

Paraguay (only considers the investments materialized in 4Q12)

· New Line for waters and sensitive products.

· Equipment to increase efficiency and production capacity.

· Miebach Project — Warehouses, deposits and roof in the truck cargo loading area.

· Bottles (glass and PET bottles).

· Coolers and post mix equipment.

Juices and Waters

Juices

· Incorporation of a new Tetra Gemina line and a new pasteurizer with a production capacity of 500cc, 750cc, 1000cc and 1.500cc. formats;

· Water Treatment System (Reverse Osmosis), for production with controlled water demineralization formulated products;

· Investment in a new PET Aseptic line (STORK);

· Adaptation of OW Pet Line No. 3 for the manufacture of new Andina Sabores Caseros and Glaceau Vitamin Water products;

· Purchase and installation of pasteurizer for line 3;

· Upgrade of the central control system  of the design//formulation room;

· Acquisition and installation boiler for steam generation;

· Expansion of the finished products warehouse (system drive in) and freight yard//patio.

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· Increase of capacity and change of technology in the Industrial Water pumping systems (60 to 150 m3 hr).

Waters

· Construction of a new casino;

· Expansion of the finished product warehouse (system drive in);

· Monitoring system and ozonisation record;

· Conversion of cappings into Short Finish tops  in Line 3 and 4;

· Installation of automatic volume controller for CO2;

· Riles containment pool.

Divestitures

Not Applicable

B. Business Overview

Andina is among the seventh largest Coca-Cola bottlers in the world, servicing franchised territories with 50 million people, delivering over 3,300 million liters of soft drinks, juices, and bottled waters on 2012. We are nationwide producers of soft drinks in Paraguay, the largest producer of soft drinks in Chile and the second largest soft drink producer in Brazil and in Argentina. Our principal business is the production and distribution of Coca-Cola soft drinks, which accounted for 82% of our consolidated net sales in 2012. On 2012, we recorded consolidated net sales of Ch$967,370 million and total sales volume of 517.6 million unit cases of Coca-Cola soft drinks.

In addition to the Coca-Cola soft drinks business, through Vital Jugos S.A., we produce and distribute fruit juices and other fruit-flavored beverages in Chile under trademarks owned by TCCC. Through Vital Aguas S.A., we produce and sell mineral water and purified water in Chile under trademarks owned by TCCC.  Through Envases Central S.A. we produce flavored waters and certain formats for soft drinks under trademarks owned by TCCC.  We also manufacture PET bottles primarily for our own use in the packaging of Coca-Cola soft drinks in Chile and Argentina. In Brazil, we also distribute the beer brands Amstel, Bavaria, Birra Moretti, Dos Equis (XX), Edelweiss, Heineken, Kaiser, Murphy´s, Sol and Xingú. Also we distribute beer in the south of Argentina and spirits in the south of Chile.

Our Products

We produce, market and distribute the following Coca-Cola trademark beverages and brands licensed from third parties throughout our franchise territories:

Chile: Andina, Andina Light, Aquarius, Benedictino, Burn, Coca-Cola, Coca-Cola Light, Coca-Cola Zero, Dasani Citrus Antiox, Dasani Durazno, Dasani Manzana, Dasani Tangerine, Dasani Manzana Antiox, Fanta Frutilla, Fanta Limón, Fanta Naranja, Fanta Naranja Zero, Fanta Uva, Fanta Roja, Hugo, Kapo, Minute Maid 100%, Sabores Caseros, Fuze Tea, Fuze Tea Light, Nestea, Nestea Light, Nordic Mist Ginger Ale, Nordic Mist Tónica, Powerade, Glaceau, Powerade Light, Quatro Guarana, Quatro Light, Sprite, Sprite Zero, Inca Kola, Inca Kola Zero, Tai, Cantarina, Vital and some spirits in Punta Arenas.

Brazil: Amstel, Aquarius Fresh, Bavaria, Birra Moretti, Burn, Chá Leão, Coca-Cola, Coca-Cola Light, Coca-Cola Light Plus, Coca-Cola Zero, Crystal, Del Valle, Del Valle Frut, Del Valle Limao & Nada, Del Valle Fruta & Nada, Del Valle Mais, Del Valle Mais Soja, Dos Equis, Edelweiss, Fanta, Fanta Diet, Fanta Zero, Gladiator, Guaraná Leão, Heineken, I9, Kaiser, Kapo, Kapo Chocolate, Kuat, Kuat Eko, Kuat Zero,

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Leão Ice Tea, Matte Leão, Matte+Guaraná Leão, Murphy’s, Powerade, Schweppes, Schweppes Light, Sol, Sprite, Sprite Diet, Sprite Zero, Xingú.

Argentina: Aquarius (Manzana, Naranja, Pera, Pomelo, Pomelo Rosado and Uva), Bonaqua (with and without gas), Cepita (Banana, Durazno, Naranja and Uva),  Nutri Defensas; Manzana and Naranja 100%; Multifruta; Naranja Light and Pomelo Rosado), Coca-Cola (Regular, Light and Zero), Crush (Lima-Limón and Naranja), Dasani (with and without gas), Epika, Fanta (Limón, Naranja, Naranja Zero and Pomelo), Kin (with and without gas), Powerade (Citrus, Frutas Tropicales, Mandarina, Manzana, Mountain Blast, Naranja and Naranja Light), Quatro Liviana (Pomelo, Limonada and Naranja Durazno), Schweppes (Citrus, Citrus Light, Lima limón, Pomelo and Tónica), Sprite (Regular and Zero) and Tai. Beers (Austral, Bieckert, Birra Moretti, Budweiser, Corona, Guiness, Heineken, Imperial, Kunstmann, Modelo, Otro mundo, Palermo, Paulaner, Salta and Schneider), Energy drinks Black Fire and Infusions (yerba La Vuelta).

Paraguay : Aquarius Manzana, Aquarius Naranja, Aquarius Pera, Burn Energy, Coca-Cola, Coca-Cola Zero, Crush Naranja, Crush Piña, Crush Pomelo, Dasani without Gas, Dasani with Gas, Fanta Guaraná, Fanta Naranja, Fanta Naranja Zero, Fanta Naranja Mandarina, Fanta Piña, Frugos Durazno, Frugos Manzana, Frugos Naranja, Frugos Pera, Powerade Manzana, Powerade Mountain blast, Powerade Multifruta, Powerade Naranja, Sprite, Sprite Zero, Schweppes Tónica and Schweppes Citrus.

We produce, market and distribute Coca-Cola soft drinks in our franchise territories through standard bottler agreements between our bottler subsidiaries and the local subsidiary in each jurisdiction of TCCC (collectively, the “Bottler Agreements”). We consider the enhancement of our relationship with TCCC an integral part of our business strategy.

We seek to enhance our business throughout the franchise territories by developing existing markets, penetrating other soft drink, waters and juices markets, forming strategic alliances with retailers to increase consumer demand for our products, increasing productivity, and by further internationalizing our operations.

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1. Soft Drink Business

Sales Overview

We measure sales volume in terms of unit cases, which we refer to as UCs. Unit cases contain 192 ounces of finished beverage product (24 eight-ounce servings) or 5.69 liters. The following table illustrates our historical sales volumes for each of our territories:

		Soft Drink Sales Volumes
		Year ended December 31,
		2012		2011		2010
		(millions of UCs)
Chile		149.9		135.1		132.6
Brazil		197.8		183.5		187.0
Argentina		153.4		129.6		118.4
Paraguay		16.5

In 2012, our Coca-Cola soft drinks business accounted for net sales of Ch$967,370 million and operating income of Ch$147,381 million representing 82% and 96% of our consolidated net sales and operating income, respectively.

Our Chilean soft drink operations accounted for net sales in 2012 of Ch$299,673 million; the Brazilian soft drink operations for net sales of Ch$359,116 million, the Argentine soft drink operations for net sales of Ch$281,696 million, and the Paraguayan soft drinks operations for net sales of Ch$26,885 million.

The following tables set forth, for the periods indicated, our net sales and volume of Coca-Cola soft drinks sold in our franchise territories for the periods indicated.

		Year ended December 31, 2012
		Chile				Brazil				Argentina				Paraguay*
		MM$		MMCUs		MM$		MMCUs		MM$		MMCUs		MM$		MMCUs
Colas		228,651		114.4		280,829		154.7		218,878		119.2		16,373		10.1
Flavored soft drinks		71,023		35.5		78,287		43.1		62,818		34.2		10,512		6.4
Total		299,673		149.9		359,116		197.8		281,696		153.4		26,885		16.5

		Year ended December 31, 2011
		Chile				Brazil				Argentina
		MM$		MMCUs		MM$		MMCUs		MM$		MMCUs
Colas		197,610		104.6		302,278		148.5		162,180		101.7
Flavored soft drinks		57,826		30.5		63,326		35.0		46,668		27.9
Total		255,436		135.1		365,604		183.5		208,848		129.6

		Year ended December 31, 2010
		Chile				Brazil				Argentina
		MM$		MMCUs		MM$		MMCUs		MM$		MMCUs
Colas		189,941		104.4		297,644		155.6		127,808		91.5
Flavored soft drinks		51,231		28.2		53,180		31.4		39,139		26.9
Total		241,172		132.6		350,824		187.0		166,947		118.4

(*) Figures only reflect 4Q12 in Paraguay

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In Chile, Coca-Cola soft drinks are distributed in returnable and non-returnable glass and PET bottles and aluminum cans of various sizes. It is also distributed as Post-mix syrup, which is mixed with carbonated water in a dispenser at the point of sale, in stainless steel and bag-in-box containers. In Brazil, Coca-Cola soft drinks are distributed in returnable and non-returnable glass and PET bottles of various sizes, in aluminum cans and also as post-mix syrup. In Argentina, Edasa produces and distributes Coca-Cola soft drinks in returnable and non-returnable glass and PET bottles of various sizes, in aluminum cans and as post-mix syrup. In Paraguay Coca-Cola soft drinks are distributed in returnable and non-returnable glass and PET bottles and aluminum cans. It is also distributed as Post-mix syrup, which is mixed with carbonated water in a dispenser at the point of sale, in stainless steel and bag-in-box containers. Regarding Juices, they are distributed in non-returnable glass and PET bottles, returnable glass bottles, in bi-laminated sachets, cardboard Tetra Pak containers and bag-in-box as concentrated juice that is mixed with water at the point of sale. Waters are distributed in returnable glass bottles and non-returnable PET bottles.

The following table sets forth, for the periods indicated, our sales of Coca-Cola soft drinks in Chile, Brazil, Argentina and Paraguay by packaging type, measured as a percentage of total sales volume:

Soft Drink Sales by Packaging Type

		Year Ended December 31,
		2012								2011
		Chile		Brazil		Argentina		Paraguay		Chile		Brazil		Argentina
		% Total		% Total		% Total		% Total		% Total		% Total		% Total
		Mix		Mix		Mix		Mix		Mix		Mix		Mix
Returnable		59		9		50		49		61		11		51
Non-returnable		37		88		49		50		35		86		48
Post Mix		4		3		1		1		4		3		1
Total		100		100		100		100		100		100		100

Customers and Distribution

As of December 31, 2012, we sold our products to approximately 63,000 customers in Chile, 68,500 customers in Brazil, 79,401 customers in Argentina and 49,300 customers in Paraguay. Although the mix varies significantly among the franchise territories, our distribution network generally relies on a combination of Company-owned trucks and independent distributors in each territory.

The following table sets forth, for the periods indicated, our sales of Coca-Cola soft drinks in Chile, Brazil, Argentina and Paraguay, by type of customer, measured as a percentage of total sales volume:

Soft Drink Sales by Type of Customer

		Year ended December 31,
		2012								2011
		Chile		Brazil		Argentina		Paraguay		Chile		Brazil		Argentina
		(%)
Mom & Pops		51		24		47		40		53		22		50
Supermarkets		20		30		20		9		17		28		18
On Premise		13		22		3		22		11		26		3
Wholesale distributors		16		24		30		28		19		24		29
Total		100		100		100		100		100		100		100

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Chile . As of December 31, 2012, Andina’s sales force consisted of 297 salespeople (262 workers hired indefinitely and 35 hired on a fixed term basis) who call on most customers on average 1.8 times per week. For sales to major supermarkets, we employ 6 key account heads, 20 field supervisors and 534 third party promoters who are on-site supervisors who handle our products, monitor displays and track the pricing and marketing strategies of our competitors. Account executives are also assigned to major fast food outlets to work with the customer to develop sales on a consistent basis. Our distribution system for our soft drink products consisted of a group of 67 exclusive distributors, which are independent businesses that collectively deploy approximately 571 trucks (30 of which are company property), depending on seasonal demand. The 67 distributors collectively service all of our Chilean customers. In most cases, the distributor collects payment from the customer in cash or check. Where applicable, the driver also either collects empty returnable glass or PET bottles of the same type and quantity as the bottles being delivered, or collects cash deposits for the net returnable bottles delivered. This task is particularly significant in the Chilean territory where returnable containers accounted for approximately 59% of total soft drinks volume in 2012. Certain important customers (such as supermarkets), maintain accounts receivables with us, which are settled on average every 45 days after invoices are issued. On average, accounts receivable from all clients are liquidated on a 20-day term.

Brazil . As of December 31, 2012, Andina Brazil’s sales force in Brazil consisted of an average of 1,325 salespeople (475 commercial representatives and 375 supermarket promoters, 29 unpackers y 77 field supervisors) divided into three major groups responsible for: (i) sales to key accounts and fast food chains (who purchase soft drinks in post-mix dispensers, in cans and bottles), (ii) sales to supermarkets (consisting of bottle and can sales) and (iii) all other traditional customers. Each of these three groups also manages sales of the other beverages (beer, water, juice, energy drinks and ready-to-drink tea) distributed by Andina Brazil. In Brazil, we generally distribute Coca-Cola soft drinks through a distribution system that includes: (i) trucks operated by independent distributors pursuant to exclusive distribution arrangements with us;  (ii) trucks operated by independent transport companies on a non-exclusive basis and (iii) own trucks. In 2012, 10% was distributed by exclusive distributors, 85.5% by independent transport companies and (iii) 5% by our own trucks. Distribution of all of Andina Brazil’s beverages takes place from distribution centers and production facilities. In 2012, approximately 18% of Andina Brazil’ soft drink sales were paid for in cash at the time of delivery, 9% were paid by check and 73% were paid were paid with other bank securities with an average payment term of 13 days.

Argentina . As of December 31, 2012, our sales force in Argentina consisted of 642 employees, grouped in salespeople, merchandisers, and Contact Center personnel. In 2012, 70% of Edasa’s Coca-Cola soft drinks were distributed by direct distribution (trucking) and 30% by wholesale distribution. All of the direct distribution is done by a group of independent transport companies (each with three or more trucks). In 2012, approximately 75% of EDASA’s soft drink sales were paid for in cash and 25% were credit sales.

Paraguay : As of December 31, 2012, the sales force consisted of 282 people, grouped into sellers and shelf stackers or replenishers. Paresa distributed 71% Coca-Cola soft drinks through direct distribution, and 29% through wholesalers distributors. The frequency of visit of the direct sale is 1.6 times a week. For sales to important supermarkets, there is one key account manager, 5 sales people and 99 on-site outsourced sales promoters who handle our products, monitor exhibitions and follow up on our pricing strategies, exhibitions and the marketing of our competitors. There are also account executives appointed to major “fast food” chains that work with the client to develop sales in a consistent way. All direct distribution is done by a group of small truck businessmen. In 2012 approximately 64% of sales of Paresa soft drinks were paid in cash and 36% were credit sales.

Competition

We face intense competition throughout the franchise territories principally from bottlers of competing soft drink brands. See “Item 3. Key Information — Risk Factors — Risks Related to our Company — Our business is highly competitive and subject to price competition which may adversely affect our net profits and margins.”

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Chile. The soft drink segment of the Chilean beverage industry is highly competitive. The most important areas of competition are product image, pricing, advertising, ability to deliver product in popular bottle sizes, distribution capacity, and the amount of returnable bottles held by retailers or by consumers. Returnable bottles can be exchanged at the time of new purchases in lieu of paying a bottle deposit, thereby decreasing the purchase price. Our main competitor in the Chilean franchise territory is Embotelladora Chilenas Unidas or ECUSA, a subsidiary of Compañía Cervecerías Unidas S.A. or CCU, the major brewer in Chile. ECUSA produces and distributes Pepsi-Cola products and its own brands (soft drinks and bottled water).

Brazil. The soft drink segment of the Brazilian beverage industry is highly competitive. The most important areas of competition are product image, pricing, advertising and distribution capacity (including the number and location of sales outlets). According to A.C. Nielsen, our main soft drink competitor in the Brazilian territory is American Beverage Company or Ambev, the largest beer producer and distributor in Brazil and also produces soft drinks, including Pepsi-Cola products.

Argentina. The soft drink segment of the Argentine beverage industry is highly competitive. The most important areas of competition are product image, pricing, advertising, ability to produce bottles in popular sizes and distribution capacity. The greatest competitor is Ambev, the Latin American unit of the largest brewery group of the world (Inbev) that produces and commercializes Pepsi-Cola products. As far as B-brands, the most significant are: Talca, Pritty and Interlagos representing over 60% of the volume for B-brands. Pritty S.A., a company established in the city of Córdoba, is dedicated to the production and sale of beverages without alcohol; it commercializes Pritty, Doble Cola, Saldán, Switty, Rafting, Hook and Magna. O.E.S.A., a preceding Pepsi bottler in the province of Mendoza, produces and commercializes soft drinks and soda water under the brand Talca. Embotelladora Comahue, located in Río Negro comercializes the brands Interlagos, Patagonia y Bardas Limay.

Paraguay: The soft drink segment of the Paraguayan beverage industry is highly competitive. The most important areas of competition are product image, pricing, advertising, ability to produce bottles in popular and the amount of returnable bottles held by retailers or by consumers.

The greatest competitor is the local brand “Niko/De La Costa” produced and bottled by Embotelladora Central S.A , which has a 20.7% market share. The segment of economic brands in Paraguay represents 29.6% of the soft drink industry. Pepsi which resumed its operations in Paraguay in November 2011, reached a market share of 10.2% in December 2012, and it is produced and marketed by Group Vierci, a local franchisee.

Based on reports by A.C. Nielsen, we estimate that in 2012, our average soft drink market share within our franchise territories reached 69.5%, 59.1%, and 59.1% for Chile, Brazil, and Argentina, respectively. In the case of Paraguay, our average soft drink  market share for October, November and December 2012 published by IPSOS reached 60,1%.

The following table presents the market share of our main competitors in Chile, Brazil and Argentina for the periods indicated:

Market Share

		Year ended December 31,
		2012								2011
		Chile		Brazil		Argentina		Paraguay*		Chile		Brazil		Argentina
		(%)
Coca-Cola soft drinks		69	%	59	%	59	%	60	%	69		57		57
ECUSA soft drinks		21		—		—		—		20		—		—
Pepsi-Cola and 7 Up products		4		5		20		9		4		4		21
Pritty products		—		—		7		—		—		—		8
Antarctica products		—		12		—		—		—		12		—
Brahma products		—		1		—		—		—		2		—
Other		6		23		14		31		7		25		14
Total		100	%	100	%	100	%	100	%	100	%	100	%	100	%

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