1,422
net new OXXO stores
136
net new stores of our Health Division
87
net new OXXO Gas service stations
+0
average SKUs per OXXO store
0%
Revenue growth at FEMSA Comercio‘s Proximity Division
17,999
OXXO stores in
Mexico, Colombia,
Chile and Peru
+14,000
new jobs created
by FEMSA Comercio in 2018
1,422
net new OXXO stores
136
net new stores of our Health Division
87
net new OXXO Gas service stations
+0
average SKUs per OXXO store
0%
Revenue growth at FEMSA Comercio‘s Proximity Division
17,999
OXXO stores in
Mexico, Colombia,
Chile and Peru
+14,000
new jobs created
by FEMSA Comercio in 2018
Building on a decade of strong, steady growth, FEMSA Comercio continued to thrive in 2018 as a market leader. Despite a challenging market environment throughout Latin America, our retail operations drew on our brand leadership, deep industry knowledge and operational expertise to achieve new growth and geographic expansion. As a result, FEMSA Comercio’s three business divisions—Proximity (formerly Retail), Health and Fuel—all posted growth across markets, delivering strong value for our stakeholders. Together, they contributed 54 percent of FEMSA’s consolidated revenues in 2018 (up from 50 percent in 2017) and 38 percent of EBITDA (up from 33 percent in 2017).
The year saw significant strategic moves that reflect our commitment to expanding our successful small format stores across Latin America. We opened our first OXXO stores in Peru and our Health Division announced our entry into the Ecuadorian market through Socofar’s acquisition of Corporación GPF*, one of Ecuador’s leading drugstore operators with more than 620 points of sale nationwide.
* Acquisition pending to receive regulatory approval
Sustainability Progress
As we expand into new territories and grow our footprint, we continue our commitment to sustainability. Initiatives across all our business units seek to manage the social and environmental impact of our products, services and activities while supporting our people, embracing resource conservation and engaging with our communities. For example, to address the reality of climate change and help offset our direct and indirect greenhouse gas emissions, we maintain several sustainability commitments across FEMSA Comercio, including energy efficiency projects, LED lighting requirements and renewable energy targets at our stores, pharmacies and service stations.
Proximity Division
In the third quarter of 2018, we announced the reorganization and renaming of FEMSA Comercio’s Proximity Division (formerly known as the Retail Division). This business segment now includes only FEMSA Comercio’s proximity and proximity-related operations, most of which operate under the OXXO brand across our markets. The reorganization provides a more accurate picture of performance for this high-growth business, which saw year-on-year revenue growth of 11.8 percent in 2018.
OXXO proximity stores represent one of FEMSA’s strongest brands, collectively drawing 13 million customers per day and generating approximately 34 percent of FEMSA’s total revenue. OXXO’s fast and steady growth has allowed it to become one of the leading generators of formal employment in Mexico, as well as the second largest retailer in the country in terms of revenues, while consistently delivering best-in-class margins and returns.
Delivering Convenience
Our differentiated retail approach, characterized by a focus on creating value for consumers, has driven OXXO’s steady growth. Increasingly, our customers visit our stores to take advantage of one-stop convenience that ranges from grabbing a quick drink or picking up a prepared meal, to purchasing household products and using our diverse banking, remittance or bill paying services. Our Correspondent Banking network currently includes more than 10 partner-banking institutions.
Supporting Employees with Disabilities
More than 730 of our OXXO employees in Mexico have disabilities. To support our longstanding commitment to promote their professional development and inclusion in an equitable work environment, in 2018 we opened 6 new OXXO Directed Labor Training Centers in Mexico, reaching now 9 centers that we operate across the country. The initiative, launched in partnership with the National System for Integral Family Development (DIF), expands opportunities for our employees with disabilities by providing three months of job training in a simulated retail environment that prepares them to work at any OXXO store or at any other retail company.
In our ongoing effort to improve our customer value proposition, we have developed a broad assortment of high-quality private label products in a variety of categories such as snacks, groceries and pantry products. On average, an OXXO store carries 250 private label SKUs.
OXXO proximity stores enjoy strong brand recognition and are highly accessible, with a large geographic footprint and extended opening hours daily. We utilize these advantages, as well as our trusted partnership network, to deliver convenience in unique ways to our large customer base. For example, while in an OXXO store, our customers can purchase pre-paid gift cards for streaming online services, transfer cash remittances, pay their phone and electricity bills, or pay for their plane tickets on select airlines—among many other services.
Pursuing International Growth
We opened our first OXXO store in Monterrey, Mexico in 1978 and today we are the largest proximity store chain in the Americas by units. On average, we open a new OXXO store every six hours and we use proprietary models to identify optimal locations, new store formats and expanded product categories. For the last several years, we have also been planning for long-term growth and expansion of the OXXO brand beyond Mexico.
Greening our Stores
To contribute to a healthier environment and greener local communities, we plant trees at every OXXO store where there is sufficient outdoor space and other necessary resources. As of the end of 2018, we have planted more than 19,234 trees at OXXO stores in Mexico. Trees mitigate climate change by removing carbon dioxide from the air, storing carbon and releasing oxygen. They reduce flooding risks by catching rainwater, reducing erosion and creating more permeable soils.
Enabling Financial Inclusion 
Financial inclusion is an important pathway for reducing poverty but remains a significant development challenge in Mexico. According to a 2016 study by the Instituto Nacional de Estadística y Geografía (INEGI), only 18% of Mexican adults have a credit card and approximately 39% have a bank account. Through new partnerships and innovations, OXXO is taking a lead in enabling broader financial access and boosting e-commerce among the country’s unbanked consumers.
Since 2012, OXXO has sold and activated more than 11 million Saldazo debit cards. This VISA card issued by Citibanamex ensures that a larger percentage of Mexico’s population has easy access to a secure savings account option where they can make deposits and whithdrawals. The card has simple set-up requirements and no minimum balance, and it is sold and activated in less than five minutes.
OXXO is also offering new e-commerce solutions. In partnership with Conekta, a leading Mexican digital payment processing company, we launched OXXO PAY in 2017, which allows consumers to digitally transfer cash payments by providing OXXO cashiers with a 14-digit numerical reference. Stores receive real-time notifications to confirm transferred payments. In 2018, over 1,000 on-line businesses were using OXXO PAY, greatly expanding financial access options and the shopping experience for our customers.
Finally, OXXO is addressing some of the biggest barriers to online shopping in Mexico by providing solutions for both payments and pickup. Consumers can pay cash at their nearest store to make purchases from online merchants through our partnership with Mercado Libre. And, through a “click and collect” partnership with Amazon, users can securely pick up their online orders at OXXO. First launched in 2015, this program now operates in over 3,000 OXXO locations.
Since 2009, when we opened our first five OXXO stores in Colombia, we have gradually and consistently adjusted the value proposition of our stores to better satisfy consumer needs in different markets.
Since our 2016 acquisition of Chilean convenience store Big John, we have increased the international reach of the OXXO brand. As we look ahead, we are continuing to focus on understanding what the Chilean consumer wants from OXXO and how we can most conveniently serve their needs.
In 2018, we also opened our first OXXO store in Peru, marking the latest addition in our international growth strategy and bringing our small box-store format expertise to a market of more than 32 million consumers. Overall, our value proposition in each of these South American markets has improved significantly and we are gearing up to accelerate our growth across the region.
Health Division
In 2018, FEMSA Comercio continued to build a strong presence in the health and drugstore industry in Latin America, satisfying consumers’ healthcare needs by delivering medicines and health-related products and services to our clients.
With 2,361 points of sale at year-end 2018, our Health Division is consolidating a significant market position in Latin America, a few years after acquiring three regional chains in Mexico as well as a mayority stake in Socofar, a leading health and pharmacy operator in Chile and Colombia under the Cruz Verde brand.
During 2018, revenues increased by 9.1 percent, with same-store sales increasing by 5.8 percent.
2,361
Strengthening Latin America’s Health and Pharmacy Presence
Leveraging Socofar’s strong capabilities in the health sector combined with FEMSA Comercio’s deep retail operational and logistical expertise, our Health Division is focused on consolidating a fragmented health and drugstore industry across Latin America. In 2018, we announced our entry into Ecuador, a market with more than 16 million consumers, through Socofar’s acquisition of Corporación GPF*, a leading drugstore operator with more than 620 outlets, mainly under the Fybeca and SanaSana banners.
Our ongoing growth strategy aims to continue to create value from our acquisitions, consolidate our presence in current markets and pursue other opportunities in new markets.
* Acquisition pending to receive regulatory approval
Fuel Division
FEMSA continues to participate in the evolution of Mexico’s oil and gas industry, which continued to transition to a competitive open-market model in 2018. Despite market volatility, we remain focused on improving our customer value proposition in an increasingly competitive market. During the year, we launched effective cross-promotional strategies jointly with OXXO stores, and we made further progress in our commitment to strengthen service station teams through incremental training and improvements in compensation.
Expanding our Network
Our Fuel Division has a growing presence in 17 Mexican states. In 2018, we further expanded our network of service stations by adding 87 units, a new record for us and representing 24 percent growth, to reach a total of 539 locations. This expansion, together with an accelerated effort to transition all of our stations to our new commercial image, reflects a continued focus on consolidating our presence in the market and creating additional value for shareholders. Our strong brand presence in the country’s retail sector, combined with our reputation for reliable, high-quality service, have enabled us to pursue growth, build trust with customers and differentiate our brand from competitors.
