In a highly fragmented market, several small distribution companies in the United States suffered the impacts caused by mobility restrictions. “They are family businesses that, as a result of the pandemic, could have had a problematic situation in their performance. And that was used by FEMSA”, says Montañez.
The series of purchases began in March 2020, with the acquisition of Waxie Sanitary Supply and North American Corporation. Since then, through its subsidiary Envoy Solutions, the bottler has added another six companies to its distribution portfolio in the United States. The combined revenues of the acquired companies exceed $1.7 billion a year. FEMSA did not respond to Expansión’s request for an interview.
“When FEMSA entered this market for the first time, with the purchase of Waxie and North American Corporation, they were acquisitions on the side. The Mexican firm has increased its growth in the United States through acquisitions of other companies. But then, the purchases of smaller companies, from Daycon to Penn Jersey Paper, through Next-Gen, have been more advantageous”, highlights Alejandro Fuchs, an analyst at Itaú BBA
With a larger distribution chain and coverage of a large part of the US market, the goal is to increase negotiating power with suppliers to make the operation more efficient. “Although distribution represents only between 9 and 10% of sales and 6% of the company’s EBITDA, the margins in this segment already show certain synergies and efficiencies, which shows that the strategy is correct,” says Fuchs.
In addition to these advantages, FEMSA also aims to increase its exposure to the dollar, which provides good financial coverage. And the investments of the last two years promise to be just the beginning of a long way to go in the US market, with which the Monterrey-based company will seek to consolidate itself in that country.