EconomyFinancialBimbo, Alsea, Cinépolis: how will AMLO's "pause" impact Mexican...

Bimbo, Alsea, Cinépolis: how will AMLO's "pause" impact Mexican companies?

In Spain more than one thinks that Bimbo is a local company. And it is that there, the name of the Mexican brand is used to name the box bread. Just as in Mexico ‘kleenex’ is used to refer to disposable handkerchiefs or ‘resistol’ to glue, in many Spanish homes the word ‘bimbo’ is used to order a package of sliced bread in the store.

Grupo Bimbo, the largest bakery in the world, introduced sliced bread –as it is known in that market– to the Spanish market in the 1960s. In 2011, the Mexican company acquired Bimbo Spain and Portugal and integrated both companies under the name Bimbo Iberia . Today, it has one of the most complete portfolios, made up of brands such as Donuts, Donettes and Bollycao.

The company chaired by Daniel Servitje is just one of the Mexican companies that have chosen Spain as an important venue for their internationalization. According to data from the Spanish government, in addition to the bakery, other Mexican companies such as Cemex; IMSA (construction materials); Softtek (Information technologies); Laboratorios Silanes (a pharmaceutical company that, with an investment of 2 million dollars, opened a branch in Spain in October 2009) and ADO (which bought the bus company Avanza in 2013) also have a presence in that country. The same as other companies such as Sigma Alimentos, Alsea, Ópticas Lux, Grupo México (Aznalcóllar mine, Seville) and Cinépolis.

Several of them have announced recent investments in that market. For example, Alsea, the leading operator of fast food, cafeterias, casual and family restaurants in Latin America and Europe, announced in October 2021 that it would increase its stake in Alsea Europe, which operates 10 restaurant brands in the market, to 76.8%. Spanish, including Domino’s Pizza, Foster’s Hollywood, VIPS, Fridays, Burger King, Ole Mole and Ginos.

Grupo Bimbo, for its part, completed in 2021 the purchase of a plant from Cerealto Siro Foods, located in the Castilian region, and whose operations are dedicated to the manufacture of sweet bread for the Mercadona supermarket chain and other clients. With this acquisition, the Mexican bakery would enter the private label sweet bread market in Spain.

In the third quarter of 2021, the company chaired by Daniel Sertvitje reported a 7.5% increase in its net sales in Europe and Asia (EAA) in peso terms. Excluding the effect of the exchange rate, net sales increased 15.5%, driven by double-digit growth in most countries and the inorganic contribution from completed acquisitions in Iberia and India, according to financial statement information.

The commercial relationship between Mexico and Spain goes beyond a trade balance – which is around 10.8 billion dollars, according to data from the Ministry of Economy. Spanish brands are well embedded in the fabric of everyday Mexican life. A fortnight that comes out of the BBVA ATM, a T-shirt with the Zara label, the gas from the stove provided by Naturgy (formerly fenosa natural gas), a Seat car produced in Catalonia. The same happens in the Spanish market: the sandwich made with Bimbo sliced bread, the film that is projected in a Yelmo cinema, now owned by Cinépolis; a hamburger sold at Vips, operated by Alsea.

How could one put a pause to this interweaving? That is what President Andrés Manuel López Obrador has proposed, arguing that in the past two administrations, Spanish companies, mainly those in the energy and infrastructure sectors, benefited from very favorable tenders.

“When the energy reform took place, Iberdrola arrived, it is the strongest in the private electricity sector and has fought for the electricity reform, which the government did not like either, and that is why it is angry with Spain, but what the companies do is to bring your investment and create jobs”, Carlos Alberto Bautista Pérez, specialist of the Business School of La Salle University.

For now, neither President López Obrador nor officials have explained the implications of “pausing” relations with Spain.

Julián Fernández, head of analysis at Bursamérica, comments that the strength of Mexican companies such as Bimbo or Cinépolis lies in the fact that they have diversified operations, which allows them to offset their global results.

“In the supposed case of a pause, what could affect exports, but it would not be putting Bimbo in danger, which does not export as such, factory there (in Spain) directly and with this the risk that it may have some dangerous situation for its operations. Although at the moment, in case there are complications in the bilateral relationship, there may be a change in the payment of taxes, but we have to wait because from ‘said to done there is a long way’”, he points out.

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