FEMSA diversifies

As it becomes the largest Coca-Cola bottler and achieves a significant increase in sales, the Mexican company FEMSA begins to invest in non-carbonated drinks, the dairy industry and coffee machines.


FEMSA, now the largest Coca-Cola bottler in the world


As of Oct. 3, Coca-Cola FEMSA is the largest bottling company for the Coca-Cola brand worldwide. On that day The Coca-Cola Company (TCCC) closed a deal with the European company Coca-Cola Enterprise (CCE).


Through this transaction the European company gives up its operations in North America (the United States and Canada) in exchange for its plants in Norway and Sweden, thus reducing its share in the total sales volume of the Coca-Cola system, from approximately 16 percent to 8 percent.


FEMSA, for its part, will retain its 10 percent share in the brand's global sales volumes, making it the largest bottling company not just in Latin America, but also in the world.


Matte Leão en Brasil = FEMSA


Through a joint-venture agreement with The Coca-Cola Company, FEMSA has added a whole line of ready-to-drink teas to its Brazil portfolio of products, which will be sold under the brand name Matte Leão. In early 2010, it began marketing Leão Ice Tea, with very good results. Now it has added three new products to its portfolio: Matte Leão, Chá (Tea) Leão and Guaraleão.


In the last five years, the ready-to-drink tea market has grown in Brazil at rates of nearly 20 percent, and projections forecast that those rates will remain steady over the next few years.


Matte Leão is a brand of tea with products both in the "ready-to-drink" segment and in the dry segment (tea bags). Now with FEMSA's distributing power it will reach over 217,000 sale points.


Brazil, a country of 193 millions people as of June 2010, presently has 16 Coca-Cola bottling companies, among them FEMSA, which sells its products in three territories: São Paulo, the state of Minas Gerais (including its capital Belo Horizonte), and Mato Grosso.


FEMSA acquires Panama's Grupo Industrias Lácteas


FEMSA announced that it has signed a preliminary agreement to acquire the entire capital stock of the Panamanian Grupo Industrias Lácteas ("Estrella Azul" and "Del Prado").


If the final deal comes through, FEMSA will enter the dairy products segment, one of the most dynamic, largest and most valuable segments of Latin America's non-alcoholic beverage industry.


Grupo Industrias Lácteas is an industrial conglomerate formed by Estrella Azul, Conservas Panameñas and Plásticos Modernos. It was founded 60 years ago, has three production plants, covers all of Panama's domestic market, employs some 1,800 workers and is the country's leading dairy operator.

FEMSA to compete with Nestlé in Mexican coffee machine market

FEMSA has decided to compete with Nestlé in the Mexican market of coffee machines.


The bottling company is installing coffee dispensing machines in cities where Coca-Cola is distributed, and it plans to install as many as 35,000 of these coffee dispensers under the brand Blak in neighborhood stores.


Its incursion in the coffee market is part of FEMSA's strategy to move forward in the non-carbonated drinks segment, in partnership of The Coca-Cola Company, which has a 50 percent share in the Mexican bottling company.


FEMSA began a coffee pilot program last year and hopes to have 5,000 dispensing machines in Mexico City by next December, with that number potentially increasing by sevenfold over the next four years.


In 2007, FEMSA acquired Mexico's second largest juice manufacturer, Jugos del Valle, increasing its sales to Latin America through partnerships with bottling companies in the region. "If the Blak brand follows the model of Jugos del Valle, the number of dispensing machines could go up as high as 60,000," FEMSA's financial executive officer, Javier Astaburuaga, said.




From Montevideo, Enildo Iglesias


October 28, 2010

Enildo Iglesias





With information from EFE and Diario Financiero
Illustration: Rel-UITA

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