When it comes to inorganic growth, Fomento Economico Mexicano S.A.B. of C.V. (FEMSA) is “obsessively focused on getting the value proposition right,” Jose Antonio Fernandez Garza, CEO of FEMSA’s retail division, said during the company’s first-quarter earnings call Monday.
“I think exactly the wrong way to do it is try to be M&A driven without a value proposition, right?” Garza said. “I mean, you see what's happening in the U.S., you guys follow it probably more than I do.
“The players that are winning share are the super-regionals, the Wawas, the Casey’s, the QuikTrips,” he continued. “They're not obsessed with big M&A, they're obsessed of getting the value proposition right and expanding organically. That’s what we want to do.”
Garza said FEMSA, the Monterrey, Mexico-based beverage bottler and convenience-store retailer, down the road would look for a “good M&A opportunity if it comes in the regions that we think we could be a big consolidator, which is the Southwest and the Southeast, without California and without Florida. We’ve been very public on that.”
As part of its strategic growth, FEMSA earlier this year began rebranding the convenience stores it acquired from Delek US Holdings Inc. last fall to OXXO, CSP reported in February.
The most important thing is for the company is to have the right value proposition, he said.
“We’re very happy with what we’re seeing in terms of excitement around the OXXO brand in West Texas, in Midland and Odessa, but it's too early to claim any type of victory or to expand,” Garza said. “But our obsession would be organic growth with certain inorganic opportunities if they present.”
- FEMSA is No. 32 on CSP’s 2025 Top 40 Update to the2024 Top 202 ranking of U.S. c-store chains by store count. Watch for the full 2025 Top 202 ranking in the June issue of CSP magazine and in CSP Daily News.
FEMSA also is pushing for increased affordability across categories, working in tandem with its key supplier partners, Garza said.
“These initiatives aim to expand our assortment to include more affordable brands and presentations, including in key categories like tobacco, soft drinks, beer, spirits and healthy snacks,” he said.
“We have launched targeted plans to reactivate the Andatti coffee offering and to support the beer and soft drink categories, including returnable multiserves,” he said, adding that they continue to increase the breadth of their financial services and correspondent partnerships with banks and fintechs.
They also are “increasingly leveraging the insights from our Spin Premia loyalty program to improve the effectiveness of our promotions,” Garza said. “And this connects with our efforts to drive profitability at the gross margin level as we keep working with our supply partners to find incremental value through the precise execution of more targeted promotions.”
For the first quarter, FEMSA Retail's total revenues for the Proximity Americas Division, which includes OXXO convenience stores, grew 6.8% and income from operations decreased 11.8% versus 2024’s first quarter.
In the U.S., “it's too early to talk about the food issue,” Garza said. “We're iterating a new format. We are already launching the Andatti coffee brand and we're seeing incredible results. We are going to try some stores with Dona Tota [a quick-service restaurant chain] and we have a partnership with a pizza chain that we are very excited to continue growing.”
Garza added that it’s “a great opportunity for us to learn a category that we have not developed well in Mexico, and I think huge opportunity.”
OXXO is trying “a few other things in terms of fried food, etc., but it’s too early,” he said. “We would love to achieve up to 10% of our revenues of in-store sales on foodservice, but it's too early to tell yet how that will turn out. We need more months to iterate.”
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