Fomento Economico Mexicano S.A.B. de C.V. (FMX)



Fomento Economico Mexicano, S.A. de C.V., also known as FEMSA (FMX), is one of Latin America's largest beverage companies exporting to the U.S., Canada, Europe, and Asia. Headquartered in Monterrey, Mexico, FMX operates through Coca-Cola FEMSA (KOF), FEMSA Cerveza, and FEMSA Comercio. Coca-Cola FEMSA (around 47% of total revenue) produces and distributes carbonated beverages in Latin America. Indeed, it is the largest Coca-Cola bottler in Latin America and the second largest Coca-Cola bottler globally, in terms of sales volume. FEMSA Cerveza (25% of total revenue) produces and distributes various brands of beer. The company operates several breweries in Mexico and exports its products to 60 countries worldwide, with North America being the most important market. FEMSA Comercio (28% of total revenues) operates a chain of retail stores, the Oxxo convenience stores, which are located in Mexico. Currently, Oxxo is the largest convenience store chain in Latin America with over 5,000 stores in Mexico.

The company uses low risk investment to promote growth. Growth in the last few years has come from diversification into non-gasified drinks.1998-2008 total sales have had an annual compounded growth of 16%[1]

Business and Financial Metrics

  • 21.4% increase in overall Net Income is due to double digit growth in all three business segments. In the Beer segment - cost reduction in operations and a decrease in working capital to offset the Mexican peso depreciation and rising costs of raw materials. Sales by volume increased 1.5% and though sales in Brazil decreased 3.9% beer exports increased 12.3%. In the Soft Drink segment – due to expansion into the Mercosur and Central American markets as well as a constant growth in Mexico. In the Convenience Store segment – the company opened 160 new stores.
  • Investments in PP&E in 3T09 were 3.183MM MXN, a 20.4% reduction compared to 3T08. This was due to restructuring of some of FEMSA Cerveza and a slight decrease in the rate at which new convenience stores were being opened.
  • Total income increased 14.6% to 14.08BB MXN due in large part to the opening of a 183 new stores bringing the total number of new stores in 2009 to 906. Introducing the sale of “tiempo aire” or cell phone talk time increased sales and average total per sale in the convenience store segment. [2]
  • In 2008 FEM S.A. acquired Jugos del Valle to further its strategy of diversifying its drink portfolio into non-carbonated drinks. It also acquired REMIL, a Brazil based company that expanded FEM S.A.’s market share by over a third and expands FEM S.A.’s consumer coverage.
  • Over 40% of “new” beer sales in 2008 were derived from FEM S.A. micro-segmentation market approach. Using a considerable amount of their market knowledge and information technology FEM S.A.’s approach has been for every distributor deals with a very particular product in a specific distribution channel.[3]

Image: FEMSA dividendpayout.JPG

Business Segments

  • Convenience Stores –OXXO (27% of Total Income): This business segment leverages FEMSA’s soft drink and beer business to create a synergistic solution.
  • Beer (25% of Total Income): Number 2 beer Company in Mexico and demand is growing in the U.S. and Brazil in the “imported beer” market. Has begun a joint venture with Heineken.
  • Soft Drinks (48% of Total Income): Number one soft drink business in all countries where FEMSA operates.

The company perates in the U.S., Mexico, Guatemala, Nicaragua, Cost Rica, Panama, Colombia, Brazil, Venezuela and Argentina.[4]

Trends and Forces

Regulation increases regarding highly caloric drinks

Obesity and diabetes in Mexico have prompted the Mexican government to keep a closer eye on Soft Drink companies. Government health campaigns further serve to deter Mexican away from highly caloric drinks.

Low sugar content drinks

The demand for these have increased as a result of the regulation increases regarding highly caloric drinks. The promotion of healthier options will soon become a determinant in market share.

Reduced budget for soft drinks/beer

Spending patterns have shifted given the economic downturn. Despite this brand loyalty still remains strong. This has also prompted the appearance of low cost carbonated options like Big Group from Ajegrou

Soft drink market and expected maturity





  1. Company Webstie, 2009
  2. Company 3T09, 2009
  3. Company 10k, 2008
  5. El Universal,,
  6. Reuters,
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