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

12/30/2024

Fomento Económico Mexicano, S.A.B. de C.V.  FEMSA (FMX): A Diversified Business Empire

Fomento Económico Mexicano, S.A.B. de C.V. (FMX), commonly known as FEMSA, is a multinational company headquartered in Monterrey, Mexico. With a rich history dating back to 1890, FEMSA has evolved into a diversified business empire spanning multiple sectors, including retail, beverage production, and digital services. This article delved into the three primary business sectors of FEMSA, highlighting its significant impact and achievements.

1. Retail

FEMSA's retail sector is primarily driven by the extensive network of OXXO convenience stores. As of the latest data, FEMSA operates 23,000 OXXO stores, making it one of the largest convenience store chains globally. Additionally, FEMSA has expanded its retail footprint through the operation of 4,500 pharmacies, 600 gas stations, and 2,800 convenience stores in Europe.

OXXO in Latin America

OXXO has been expanding rapidly across Latin America, particularly in Brazil and Chile. The number of stores opened in the last 12 months in various countries is as follows:

In Brazil, OXXO is considered a leading convenience store chain, competing with prominent brands such as Grupo Pão de Açúcar (GPA), Carrefour Brasil, Hirota, and AmPm. OXXO's strategic expansion and competitive positioning have solidified its status as a key player in the Latin American retail market.


2. Coca-Cola Bottling

FEMSA owns Coca-Cola FEMSA, S.A.B. de C.V. (KOF), the world's largest Coca-Cola bottler by volume. Coca-Cola FEMSA supplies over two million points of sale, primarily to kiosk owners, with Coca-Cola products and other goods. These kiosks may be integrated into FEMSA’s digital financial ecosystem in the future. The founding families retain 39% ownership, ensuring long-term capital allocation. Coca-Cola FEMSA's vast distribution network and operational excellence have established it as a dominant force in the beverage industry.


3. Digital Services

FEMSA has ventured into the digital services sector through its innovative digital wallet, Spin, which boasts 8 million monthly active users. Spin allows users to send and receive money without a bank card and offers two tiers: "Spin Base" with a maximum of 6,483 pesos and "Spin More" with a maximum of 200,000 pesos. Despite not being among the top 10 digital wallets in Mexico, Spin competes with well-established platforms like PayPal and Mercado Pago.


Additionally, FEMSA's digital services include the OXXO Premia program, which rewards customers for their purchases at OXXO stores. The program has approximately 20 million monthly active users, reflecting its popularity and effectiveness in fostering customer loyalty.

Conclusion

FEMSA's diverse business portfolio spans retail, Coca-Cola bottling, and digital services, demonstrating significant growth and expansion in Latin America. The company's strategic investments and shareholder returns highlight its commitment to long-term success and innovation in the digital financial ecosystem. With a strong foundation and forward-looking approach, FEMSA continues to be a trailblazer in the global business landscape, poised for sustained growth and prosperity.


Current Dividend yield 4.6%

Market Cap: 149.63B

PE: 43.98

FEMSA (FMX) Retail 

FEMSA Retail

Retail will contribute more than two-thirds of revenue and profits


* October 1, 2024, FEMSA announced that it has successfully closed the transaction previously announced on August 1, 2024, with Delek US Holdings, Inc. (“Delek”) (NYSE: DK), to acquire Delek’s retail operations, consisting of 249 convenience stores located mainly in Texas.

FEMSA Convenience Store Chains and Services 

OXXO Smart (OXXO)

Launched in 1977, OXXO is FEMSA's flagship convenience store chain, with over 19,000 locations across Mexico and other countries. OXXO targets a broad customer base.  In 2019, OXXO Smart is a modernized version of OXXO, focusing on technology and digital services. OXXO Smart stores are typically located in urban areas. It offers a range of products and services, including:

OXXO Smart stores are designed to be more modern and tech-savvy than traditional OXXO stores, with self-service kiosks and digital payment options.  Primarily in Mexico, but also in other Latin American countries like Colombia, Chile, and Ecuador, as well as in the United States. Focus on urban areas.

Bara 


Acquired by FEMSA in 2014, Bara operates primarily in the northeastern states of Mexico, particularly in Nuevo León and Tamaulipas. Bara targets a more affluent customer base.  No specific data available, but it's likely that the majority are company-owned. The convenience store chain that offers a similar range of products and services to OXXO Smart, including:

Bara stores are known for their modern design and wide selection of products. Mainly in Mexico, specifically in the northeastern states. Focus on urban areas.

Pronto

Launched in 2015, Pronto is a convenience store chain focused on speed and efficiency. Pronto stores are often located near highways, airports, and bus terminals. Similar to OXXO, with around 50% of stores being company-owned and 50% franchised.  The convenience store chain that offers a range of products and services, including:

Pronto stores are known for their fast and efficient service. Primarily in Mexico, with a focus on high-traffic areas like highways, airports, and bus terminals. Often in suburban or rural areas.

Andatti Drive 


Introduced in 2020, Andatti Drive is a drive-thru convenience store concept, targeting busy customers who want to grab what they need quickly without leaving their cars.  No data available, but as a relatively new concept, it's likely that most locations are company-owned.  Is a drive-thru convenience store chain that offers a range of products and services, including:

Andatti Drive stores are designed to be quick and convenient, allowing customers to pick up what they need without leaving their cars.  Currently only in Mexico. Often in suburban or rural areas.

FEMSA Healthcare

- Farmacias YZA: Founded in 1940, Farmacias YZA is one of Mexico's largest pharmacy chains, acquired by FEMSA in 2012. YZA operates over 500 stores across Mexico.  Around 70% company-owned and 30%  franchised

https://www.yza.mx/

- Farmacias FM Moderna: Established in 1996, Farmacias FM is another prominent pharmacy chain in Mexico, acquired by FEMSA in 2015. FM operates over 300 stores.  Around 50% company-owned and 50%  franchised

- Socofar: Socofar is a Colombian pharmacy chain acquired by FEMSA in 2019. Socofar operates over 1,000 stores in Colombia. Around 80% franchised operated

- Cruz Verde: Cruz Verde is a Chilean pharmacy chain acquired by FEMSA in 2020. Cruz Verde operates over 600 stores in Chile. Around 60%  franchised operated

Future expansion plan: