FEMSA Expands Non-Core Portfolio, Enters Fast Food
Mexico's FEMSA is the largest beer company in Latin America , and its Coca-Cola FEMSA unit is the largest Coca-Cola bottler in the world by volume. Given its size and its annual sales of about US$18bn, it is not surprising that FEMSA has built up a portfolio of non-core businesses. In addition to operating pharmacies, FEMSA has now taken a bite into Mexican fast food , announcing plans to acquire Gorditas Dona Tota - a chain that is believed to be particularly strong in Mexico's n orthern region , according to the Financial Times .
In our view, FEMSA very likely realised that it will need to expand into new segments if it is to continue its strong performance. While rising consumer incomes have in recent years allowed big beer companies to significantly grow their volume and value sales, the highest rates of growth are behind us, and a slowdown in core soft drinks and beer is inevitable. Gorditas is thought to have more than 200 restaurants, includ ing around 10 in the US. The chain's menu is built around convenient Mexican fast food.
This is the second major development in Mexican food services in a matter of wee ks . Mexico's leading casual dining food services company Alcea recently acquire d Vips , which is the largest chain restaurant in Mexico with about 350 locations ( see ' Alcea Buys Walmex's Restaurant Business ' September 11 ). If the FEMSA-Gorditas deal is completed , the fast-food operator will provide FEMSA with an attractive new business opportunity . Indeed, fast food and casual dining are expected to continue growing quite strongly over the next few years as more people are able to afford to eat out on a more regular basis.