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How FEMSA Became a Top Player in Brazil |
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Written by Jeff Cioletti
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Wednesday, 12 September 2007 |
 Jose Antonio Fernandez
"Brazil is pretty much everything that Mexico is, except multiplied by a factor of two," observes Juan Fonseca, Fonseca's vice president of investor relations. "If there are 100 million people in Mexico, Brazil has 200." (Give or take: Latest census figures have Mexico at about 108 million and Brazil at about 190 million).
FEMSA's acquisition of Panamerican Beverages (Panamco) gave its soft drink operations a firm foothold in the country back in 2003.
"We arrived in that country in 2003 through the acquisition of a large Coca-Cola bottler whose territory included Sao Paulo, the largest metropolitan area in Brazil," explains FEMSA chairman and CEO José Antonio Fernández Carbajal. "Three years learning to operate the soft drink business in that country prepared us to capitalize on an acquisition opportunity in the Brazilian beer market, by gaining knowledge of the local market dynamics, people, culture, etc.
That opportunity came in January 2006 when FEMSA Cerveza acquired a 68 percent stake in Brazil-based Cervejarias Kaiser from Molson Coors Brewing Co., transforming FEMSA into the rare brewer with significant operations in both Mexico and Brazil.
"Eighteen months after that acquisition, we are making solid progress and are very optimistic about our prospects," Fernandez Carbajal adds.
FEMSA upped its non-alcohol presence in the huge South American country last month when the Coca-Cola Company agreed to sell it one of its bottling operations there, increasing the FEMSA soft drink footprint to about 30 percent from 23 percent of the national Coke volume.
"We landed four years ago to a fair amount of skepticism, quite frankly, from Wall Street, because we had never operated in Brazil," recalls Juan Fonseca, vice president of investor relations at FEMSA. "Brazil had historically been a very tough place to do business for beverages."
While it's still Latin America, it's what Fonseca says is a very "idiosyncratic" market—its national language being only one factor that separates it from the rest of the region. It's there that beer and soft drinks are sold and delivered together on the same trucks—which, given FEMSA's business interests, is quite advantageous.
"We've been delivering amazing growth rates and the potential ahead is really quite promising," Fonseca says. |
