OXXO Wants to Open Hundreds of C-Stores in Texas

What’s stopping FEMSA-owned Mexico-based retailer from implementing U.S. strategy?

OXXO (CSP Daily News / Convenience Stores / Gas Stations)

MONTERREY, Mexico – Executives with Mexican convenience-store company OXXO say they are anxious to expand into Texas and have been eyeing the Lone Star State for some time, according to a report by WOAI Radio.

"OXXO is prepared to make a major investment all across Texas," they recently told a Texas House committee. "We plan to open 900 stores in the next 10 years … investing more than $850 million and creating more than 6,000 jobs”

They continued, "The overall business friendly climate in the state along with the strong economy and many consumers who are already familiar with the OXXO brand, make it extremely attractive for the expansion of our stores.”

OXXO opened one “proof-of-concept” c-store in Eagle Pass, Texas, in May 2014, but denied it was anything other than a lone prototype.

The chain operates approximately 12,400 c-stores in Mexico and Central America. OXXO is part of FEMSA Group (Fomento Económico Mexicano SAB de CV), the largest beverage company in Mexico. It is the largest independent Coca-Cola bottler in the world and an investor holding the second largest equity stake in brewer Heineken.

The hitch? The company’s leaders are asking the state legislature to repeal a law that prohibits retailers from being owned by firms with ties to the liquor industry, a law that is blocking OXXO from making a major move into Texas.

In September, a Texas appeals court upheld a decision barring the OXXO from obtaining a state license to sell alcohol, ruling its corporate parent’s indirect and partial ownership of Heineken violates cross-ownership rules, said a report by Law360.

The decision from the Austin Court of Appeals said broadly written statutes preclude the same company from owning both an alcohol manufacturer and retailer, despite multiple layers of corporate separation and even when there is no evidence one entity can exert any control over the other.

The ruling bars a permit for OXXO’s Texas subsidiary, Cadena Commercial USA Corp., because OXXO is owned by FEMSA, and FEMSA in turn has an indirect stake in the parent company of Heineken brewers, which hold a Texas manufacturer’s permit.

The court rejected OXXO’s argument that the law requires a common owner to have a controlling interest in multiple tiers—retail, distribution and manufacturing—to be barred from a permit, and said FEMSA’s ownership interest in both OXXO and Heineken is significant.

The measure to repeal the current law was not voted on by the committee, said the report.