FEMSA

Fomento Económico Mexicano, S.A.B. de C.V.

Type	Public (BMV: FEMSA NYSE: FMX)
Industry	Beverages
Founded	(1890)
Headquarters	Monterrey, Mexico
Key people	Jose Antonio Fernandez, (Chairman) & CEO)
Products	Sodas, Juice, Convenience stores
Revenue	US$ 13 .6 Billion (2010)
Net income	US$ 3.2 Billion (2010)
Website	www.femsa.com

FEMSA (BMV: FEMSA / NYSE: FMX) is the largest beverage company in Mexico and in Latin America^[1][2] and as of September 2011 also the largest independent Coca-Cola bottler in the world.^[3][4] FEMSA originated as the Cuauhtémoc Brewery in 1890, which, through debt management, was restructured as FEMSA in 1988. It is based in Monterrey, Mexico.

FEMSA purchased the Kaiser Brewery in 2006, renaming it FEMSA Cerveja Brasil. FEMSA is the parent company of the world's second largest bottler of Coca-Cola, Coca-Cola FEMSA, S.A. de C.V., and operates OXXO, the largest and most profitable convenience store chain in Latin America.^[1] The company is also the owner of C.F. Monterrey, a Mexican soccer team in the Mexican Premier Soccer League.

In January 2010, Heineken International announced it will acquire the beer operations of FEMSA. This transaction will not involve cash, Heineken will pay FEMSA with shares. FEMSA will be one of the major shareholders of Heineken (just after the Heineken family) with 20% of the shares. Advising FEMSA on the deal was international law firm Freshfields Bruckhaus Deringer.

Origins

FEMSA's roots can be traced back to the foundation of Cervecería Cuauhtémoc in 1890 by Isaac Garza Garza, Francisco Sada Muguerza, José Muguerza, and José María Schneider. Cervecería Cuauhtémoc was close to bankruptcy when its founders were forced to leave the country, after the brewery was taken over by Villistas and Carrancistas during the Mexican Revolution in 1910.

By 1936 the Garza and Sada families owned two interrelated groups, the Cervecería Cuauhtémoc and the Vidriera Monterrey. In 1936 both families decided to reorganize their stock holdings through the creation of Valores Industriales S.A. (later known as FEMSA) as a holding company to control both families' shares, especially Cervecería Cuauhtémoc and FAMOSA (Fábricas Monterrey, S.A.).

In 1988, after restructuring the company's debt, FEMSA (Fomento Económico Mexicano, S.A. de C.V.), the main subsidiary of VISA, was constituted by Eugenio Garza Lagüera, bringing together the beer, packaging, soft-drink and retail companies.

FEMSA Divisions

FEMSA is divided into four business units:

1) Coca-Cola FEMSA

FEMSA owns 53.7% of the world's second largest bottler of Coca Cola, Coca-Cola FEMSA, S.A. de C.V. ("KOF"), which operates in 9 countries covering the metropolitan area of Mexico City, southeast Mexico, Central America and South America.

Coca-Cola FEMSA is the anchor bottler of Coca-Cola and its related soft drink products in much of Latin America. The company is an important part of the Coca-Cola System. Specifically, Coca-Cola FEMSA distributes about 10% of the worldwide production of Coca-Cola products. This makes it, after Coca-Cola Enterprises the second largest Coca-Cola bottler in the world.

The company is owned 53.7% by FEMSA, 31.6% by the Coca-Cola Company and the remaining interest trades on the New York Stock Exchange and the Mexico City Stock Exchange.^[5] The company is headquartered in Monterrey

The company is the bottler of Coca-Cola in most of Mexico (including Mexico City, Oaxaca, Tabasco, Guanajuato, Veracruz, Puebla and Michoacan) the Buenos Aires region of Argentina, São Paulo and other areas of Brazil, greater Guatemala City, Guatemala, most of Colombia, and all of Costa Rica, Ecuador, Nicaragua, Panama, Peru and Venezuela. This represents 40% of the population of Latin America.

In 2003 the company distributed 1.8 billion unit cases of soft drinks. A unit case is 24 8 oz servings (roughly 5.678 liters). The company also distributes beer and bottled water in some of its territories.^[6]

On December 19, 2006, Coca-Cola FEMSA announced their attempt to buy out Mexican juice producer Jugos Del Valle.

On 29 June 2011, was announced that FEMSA will merge to the bottling division of Grupo Tampico, agreeing to pay $9.3 billion pesos ($790 million dollars) in stock for the Coke bottling operations of Grupo Tampico.^[7]

2) FEMSA Comercio

FEMSA Comercio operates OXXO, the largest convenience store chain in Latin America, as well as other smaller convenience stores called “deposits”.

3) FEMSA Cerveza

FEMSA Cerveza owns Cervecería Cuauhtémoc Moctezuma, the second largest brewer in Mexico, just after Grupo Modelo, and produces well-known Mexican beers like Tecate, Sol, Dos Equis, Indio, and Kloster.

Since January 2006 FEMSA have owned 68% of FEMSA Cerveja Brasil, a South American brewery founded in 1982 in Brazil as "Cervejarias Kaiser". By 2005 the brewery had 8.7% of the market share in Brazil with annual production of 2,500 million litres. The brand was bought by Molson in 2002. Following the sale to FEMSA, Molson will retain 15% of the company along with a seat on the board.^[8]

The company brews a range of lagers under the brand names Bavaria, Kaiser^[9] and Sol. Other beers are Xingu, Palma Louca and Bavaria Pilsen.

In addition, FEMSA Cerveza produces glass bottles, aluminum cans and crown caps.

On January 11, 2010, the Dutch brewing company Heineken International announced it would do a joint-venture with the beer activities of FEMSA making of them Global Leaders.^[10]

4) FEMSA Insumos Estratégicos

FEMSA Insumos Estratégicos is designed to drive the business units’ development through quality products and services such as refrigeration, distribution and information solutions, among others. It is subsequently divided into:

a) FEMSA Logística

FEMSA Logística is in charge of the primary distribution (from production points to warehouses) of both Coca Cola FEMSA and FEMSA Cerveza products, as well as product delivery from warehouse to sales location for FEMSA Comercio. It is also in charge of repairing and maintaining all of FEMSA's motorized vehicles. FEMSA Logística functions through operational bases, relief bases and cross-docks, and warehouses that are strategically located throughout the country, and currently expanding into South America. It also provides logistics services to third parties.

b) FEMSA Empaques

FEMSA Empaques is in charge of designing and creating the bottles, as well as labels, for Cervecería Cuauthémoc Moctezuma products as well as refrigerators, and other promotional products. FEMSA Empaques operates 5 production plants: Silice del Itsmo, S.A. de C.V. (SISA); Vendo de México, S.A. de C.V. (VENDO); Plásticos Técnicos Mexicanos, S.A. de C.V.; Grafo Regia, S.A. de C.V.; and Quimiproductos, S.A. de C.V.

Since 1995, José Antonio Fernández has been the General Director of FEMSA. In 2001, José Antonio Fernández was elected as Chairman of the Board and of FEMSA.

Cascade Investments LLC

On December 20, 2007, Cascade Investments LLC, whose main partner is Bill Gates, announced it will invest 390 million dollars in FEMSA. FEMSA's President Jose Antonio Fernandez said in a statement about the news: "This type of decision on the part of large investment funds is a show of recognition and confidence in our company's performance,".

See also

• Mexican beer
• Heineken International

References

1. ^ ^{a b} Cirillo, Jennifer. "Cover Story: A "Green" Way of Life". BeverageWorld.com. http://www.miox.com/news/images/PDFs%5CCover-Story--A--Green--Way-of-Life--Beverage-World-November--09.pdf. Retrieved 17 July 2011. 
2. ^ "SAP Business Management Software Products Newsletter". SAP Business Management Software. http://www.sap.com/uk/services/support/maxattention-community/pdf/MaxAttentionNewsletter_May-June.pdf. Retrieved 17 July 2011. 
3. ^ Sandoval, Verónica (20 September 2011). "Anuncia Coca-Cola FEMSA dulce fusión con CIMSA (Femsa Coca-Cola announces "sweet" fusion with CIMSA)". Milenio. http://monterrey.milenio.com/cdb/doc/noticias2011/ae325c6da7214b308bcd1dc444f15082. Retrieved 20 September 2011. 
4. ^ 4-Traders.com. "Coca-Cola FEMSA, S.A.B. de C.V. : KOF and Grupo CIMSA announce agreement to merge". http://www.4-traders.com/COCA-COLA-FEMSA-S-A-B-D-6492892/news/COCA-COLA-FEMSA-S-A-B-DE-C-V-KOF-and-Grupo-CIMSA-announce-agreement-to-merge-13803555/. Retrieved 20 September 2011. 
5. ^ "FEMSA - Corporate Structure". http://ir.femsa.com/corp_structure.cfm. Retrieved 2009-06-18. 
6. ^ Coca-Cola FEMSA information FEMSA.com
7. ^ Elinor Comlay (29 June 2011). "Mexico's Coca-Cola FEMSA open to more deals". Reuters.com. http://www.reuters.com/article/2011/06/29/cocacolafemsa-idUSN1E75S19420110629. Retrieved 30 June 2011. 
8. ^ Molson Coors Press release
9. ^ Kaiser
10. ^ "Heineken agrees Mexican beer deal". BBC News. January 11, 2010. http://news.bbc.co.uk/2/hi/business/8451617.stm. Retrieved May 2, 2010. 

External links

• (Spanish) FEMSA Official Webpage
• Cerveja Sol
• RateBeer
• Mestre-Cervejeiro.com - O Portal da Cerveja