EconomyFinancialFemsa: your opportunity to generate value during the pandemic

Femsa: your opportunity to generate value during the pandemic

During the pandemic, Femsa opted for digitization.

Its Coca-Cola Femsa division, the second largest Coca-Cola bottler in the world, suffered the crisis due to the closures of bars and restaurants, which are one of the company’s focuses. Therefore, the company turned to the shopkeepers, another of the relevant clients of this branch of the business, and began to serve them on WhatsApp. It was a channel to have a more agile communication, coordinate the deliveries of products and guarantee that there were no shortages in their inventories.

“We are introducing a platform that may sound very simple, but that is really revolutionary, through which a seller advises if he cannot fulfill an order or if the shopkeeper himself will not be able to receive it because he had to close, and through from a chat they can be in contact and handle orders, suggested sales and others, much more effectively and following up in real time ”, explains Eugenio Garza, the company’s finance director.

The company based in Monterrey, Nuevo León, has different business arms such as Oxxo, OxxoGas and Coca-Cola Femsa, and the crisis opened an opportunity to reconfigure its strategies in all of them, adapting to changes in consumer habits and maintaining effective communication despite restrictions, adds the manager.

“Clearly the pandemic brought us many challenges, but it also presented us with many opportunities, and it helped us, in some way, to remember the foundations and values that we have at Femsa, which, although they are to create economic value, is also to create social value. “, He says. “We hope to continue investing in all businesses. This year we expect an investment in Mexico of approximately $ 1 billion. “

The company is optimistic about the future after the pandemic, which hit the firm most strongly during the second quarter of last year. The executive reports that he already glimpses some signs of recovery, after registering a 1.8% increase in revenue in the first quarter of the year, to 124,474 million pesos, although operating cash flow contracted 0.9%.

Last year’s purchases, for example, are beginning to pay off. In the United States, the company acquired the companies Waxie Sanitary Supply and North American Corporation at the beginning of 2020, and in December it bought Southeastern Paper Group and SWPlus. These are now part of the Envoy Solution, dedicated to providing cleaning supplies, from sanitizers to mops, to restaurants, schools, hospitals and stores.

“We announced this acquisition before COVID-19, and obviously with the pandemic we have done quite well. We are giving the mass market a solution where with a phone call or an online order they can get a whole series of products at a very attractive price and with deliveries to the place where they will be used ”, he adds.

Oxxo’s financial services

Oxxo has become one of the bank correspondents with the most branches in Mexico. In its stores it is possible to pay for services, withdraw or deposit money and even make payments for purchases from some marketplaces, such as Amazon.

With the increase in the number of these transactions in the Oxxo branches, the company had an opportunity to take these services outside the stores and presented Oxxo Pay. “We serve as the most secure portal to do banking without having to go to a bank branch. We also give the opportunity for those who are not banked to make their purchases on all digital platforms that require a credit card, ”says Garza.

With Oxxo Pay, the goal is to be the main portal through which users receive, send money or pay airtime for their mobiles. “We learned a lot and we feel that we came out of this pandemic much stronger and hoping that the recovery will be gradual, that we can truly be a provider of these services with a differentiated value proposition for customers,” says the manager.

Oxxo still faces lower customer traffic, especially in branches located near work centers or schools, but is confident that the return to face-to-face classes in the country will reverse the situation.

For this reason, the company slowed down the accelerator to its opening rate, and from opening about 1,000 Oxxos per year, during 2021 it opened between 200 and 300 stores. For this year, the goal is to reach 800, according to the financial director’s projections.

This also led Femsa Comercio to rethink Oxxo’s strategy, given that due to the closures it was better to stop the openings of stores located in shopping centers, which were closed for about five months last year. The focus was to find locations where human trafficking was least affected.

“We took the opportunity to prune the stores and it was part of the brake on the openings. Today we are already seeing this recovery and we are being much more certain and having much more confidence that the 2021 openings will have a much higher rate of success, ”says Garza.

Fall in love with investors

Sustainability is now a quality that many investors seek. Femsa knows this, and recently placed 1,200 million euros in international markets in bonds linked to sustainability. The characteristic of these papers is that they are tied to the green goals of the company, and if an objective is missed, the company pays a penalty in the interest rate to the bondholders.

“This is a core part of our treasury and funding strategy. We wanted to take the opportunity to put that seal of commitment that we have with the environment. I’m putting money on my bet, it’s not just word of mouth, but I’m really betting that I’m going to meet these goals, ”explains the manager.

With this broadcast, Femsa set two goals. With the first, it promised that, at least, 65% of its energy comes from renewable sources by 2025, a percentage that should rise to 85% in 2030. With the second objective, Femsa will reduce to zero the waste that reaches landfill.

The company already participates in indices such as the Dow Jones Sustainability, and for Garza this helps to have a base of investors who see sustainability as an opportunity. “We feel that the market should recognize us through a better cost of capital, especially trusting that, by making these commitments, we can strengthen circularity, the economy and make our business much more resilient in the long term,” he concludes.

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