FEMSA has managed to consolidate itself in the United States, a market it entered in March 2020 with the distribution of products. Since then, the Monterrey bottling company has established a logistics and distribution business in that market.
The arrival in the United States began when the company acquired Waxie Sanitary Supply and North American Corporation. In December 2020, it bought Southeastern Paper Group and SW Plus, and started Envoy Solution, the business arm dedicated to providing cleaning supplies, from sanitizers to mops, to restaurants, schools, hospitals and stores.
“We announced this acquisition before COVID-19, and the pandemic gave us an unexpected boost. Now, we are giving the mass market a solution in which with a phone call or an online order they get a whole series of products at a very attractive price, “said Eugenio Garza, the company’s finance director, in a
FEMSA detailed in its latest financial report that its logistics and distribution business generated revenues of 33,809 million pesos from January to September 2021, equivalent to 8.36% of the total of the firm’s total entries, which totaled 404,275 million.
Carlos Hermosillo, an independent consumer sector analyst, comments that the integration of this business in the United States has been a success for the company, amid a boom in electronic purchases and home deliveries.
“Functioning as a distribution channel to third parties fits perfectly with the future: purchases will tend to be remote, generating the need for a greater number of ‘intermediate’ or ‘small’ distribution centers, which will require significant logistics efforts. And this is the strong point of a company like FEMSA ”, declares the analyst.
The purchases that began in 2020 were consolidated last year with other acquisitions that have allowed the company to gain a presence in the neighboring country. The first announcement of 2021 was Envoy Solutions’ agreement to acquire Daycon Products, an independent specialty distribution company based in Upper Marlboro, Maryland, which was made public in August and closed in September.
With this move, FEMSA strengthened its specialized distribution platform along the east coast of the United States, with a presence in Washington DC, West Virginia, Maryland, Delaware, New Jersey and Pennsylvania.
In September 2021, FEMSA disclosed the agreement to buy the distributor Penn Jersey Paper, based in Philadelphia, Pennsylvania, and with coverage in the metropolitan area of Philadelphia and New York.
Two months later, in November, it announced that its subsidiary Envoy Solutions reached an agreement to buy Next-Gen Supply Group, another distribution company in the United States.
The company has not disclosed the amount of the transactions.
With these new acquisitions, FEMSA has strengthened a business model based on making periodic deliveries, two or three times a week, to a mass market. It is an operation in dollars, which is usually a currency that is more resistant to market shocks.
“Having a greater presence in the United States is undoubtedly a strength. Its debt in dollars represents 27% of its total liabilities, so the income in this currency can help it and would have less impact due to the increase in rates in the United States. “, says Iván Santiago, CEO and Investment Director of BlackBull Advisors.
