Through our divisions we contribute to the direct employment of more than 200,000 people across Latin America, deliver close to 33.1 million products and services, and serve more than 13 million consumers every day.

An important part of our business model is our commitment to sustainability and our alignment with FEMSA’s strategy focusing on Our People, Our Community, and Our Planet. FEMCO divisions made significant progress during the year in contributing to FEMSA’s Sustainability Strategy and related corporate goals by working on a variety of initiatives and programs.

Proximity Division

FEMSA Comercio’s Proximity Division operates the largest chain of small-format stores in Latin America with the aim of delivering convenience and simplifying the lives of all our customers.

Under the brand name, OXXO, our value proposition is one of one-stop convenience: responding to our customers’ daily, on-the-go needs in ways that will simplify their lives. While mobility did not fully return in 2021 to pre-pandemic levels, we saw increases in store foot traffic as COVID-related operating restrictions eased, establishments opened, and commutes resumed to some degree. Consumer shifts toward in-home food consumption continued and, in all cases, OXXO responded to our customers’ evolving needs with agility and resiliency.

We continued to focus on financial discipline, expense efficiencies, and cost containment in 2021, tightening our standards for approving and operating new stores as the pandemic stretched into a second year. Although our expansion plans were slowed, we completed the year with 865 net store additions in Mexico. OXXO same-store-sales were up 7.7% for the year, reflecting a 2.2% drop in-store traffic and an increase of 10.2% in the average customer ticket, both against 2020.

*Through our joint-venture with Raízen; Grupo Nós. Includes 1,162 Shell Select stores operated by independent franchisees.

Redefining Food, Beverage and Self-Care Convenience
As mobility and on-the-go consumption needs began to recover during the year, we reinforced our value proposition to best meet customer needs. In 2021 we focused on:

• Strengthening our offerings for fresh, hot meals at affordable costs. We continued to offer our popular freshly prepared food brand ¡O’Sabor! in Mexico, which includes a variety of specialized items such as tacos, tortas, and fresh sandwiches. As of the end of 2021, 1,183 stores now offer the ¡O’Sabor! concept and we expect to continue its expansion. This year we also installed new equipment and reconfigured displays to freshly prepare new perishable concept offerings, including pizzas and bread. We also added new modules for rotisserie chicken in select locations.
• Adjusting SKUs in our portfolio to continue responding to consumer habits related to health, hygiene, groceries, and self-care. In response to the needs of the pandemic-era consumer and demands for products that promote health and wellness, we strengthened our portfolio and in-store displays of personal protection products such as sanitizing gels, disinfectant wipes, and face masks. We also expanded affordable pantry items for increased at-home consumption patterns, including cooking oil, milk, eggs, rice, cheese, nuts and seeds, pet food, and even OXXO’s own brand of sandwich bread. Further, we adjusted and improved the nutritional content of several OXXO private label products by reducing excess calories, sugar, or fat.
• Expanding our selection of alcoholic beverages by increasing sales in adjacent categories such as the Wines & Spirits category. In 2021 we continued working closely with suppliers on packaging and flavors exclusive to OXXO, making wider selections available for affordable new consumption occasions. We also continued to offer brands produced and distributed by HEINEKEN Mexico and Grupo Modelo, adding several markets this year where both portfolios of brands are available, representing more than half of our stores in Mexico.

Financial Inclusion & the Digital Opportunity
As part of our commitment to communities and generating economic and social value, OXXO plays an important role in expanding financial inclusion. With OXXO’s strong infrastructure and unmatched geographic network of locations, the Proximity Division is well positioned to build on our strengths in correspondent banking and financial services to capture our next stage of promising growth in the digital world.

• In March 2021, we announced ‘Spin by OXXO’ a new platform that offers financial services including sending and receiving funds though a cell phone; accepting deposits, withdrawals, and balance inquiries at any OXXO store; facilitating purchases via a VISA card; and completing SPEI^® transfers and transfers between app users. ‘Spin by OXXO’, is a brand operating under a conditional authorization.
  
  This innovation aims to simplify our consumers’ daily needs while bringing secure financial services to the entire population through mobile device innovation and technology.
• We also launched our new loyalty program, OXXO PREMIA, across Mexico in October 2021, which operates either as a stand-alone program, or in tandem with ‘Spin by OXXO’ by creating a membership account for every ‘Spin by OXXO’ customer. Members receive benefits such as OXXO PREMIA points (earned from purchases), SellOXXOs (free products when reaching a certain goal), and other exclusive promotions. In addition to rewarding our customers, this program allows us to use loyalty program insights to continuously improve our products and services while offering customers more personalized communications according to their profiles and needs. As of year-end, more than 3 million accounts had already been created. Looking ahead, we will continue to improve the app’s user experience and functionality as we aim to increase membership to 5 million users by next year.

• Through our OXXO PAY service, powered by Conekta, customers can easily make cash payments at any OXXO store for digital goods and services, such as initiating or renewing Spotify Premium subscriptions. In 2021, we again achieved strong performance in real-time service payments, with OXXO PAY representing 48% of the growth in payment receipts (accumulated to September), representing 24.4% of the volume of total payments received. Through our alliance with Amazon México, customers that do not have a credit or debit card can purchase any Amazon product and pay for it at their local OXXO store using an auto-generated Amazon PayCode via OXXO PAY. After paying, customers can then return to retrieve their packages at one of 787 stores currently operating as secure “pick up points” in Mexico. Since this program began in 2018, more than one million packages have been safely delivered and picked up at OXXO stores.

These digital innovations build on the strong foundation and trust we have built with our customers over many years through the correspondent banking services we offer in our more than 20,000 stores throughout Mexico. Through these offerings, customers can access approximately 7,400 electronic and financial services, such as deposits, cash withdrawals, remittances, money transfers, payment of services or household bills, such as internet or electricity. In addition to our existing partnerships with BBVA, Santander, Scotiabank, HSBC, Inbursa, Bancoppel, Afirme, and Caja Popular Mexicana cards, among others, we continued to grow this network and expand financial inclusion in 2021 by also integrating service for Banregio and Hey Banco cardholders.

OXXO International
Beyond Mexico, we continue to strengthen our value proposition and leverage our scalable business platform through expansion to new markets. As mobility trends improved in 2021, we profitably accelerated store openings (increasing the store base by 14%) despite uncertain and restrictive environments. We focused expansion in residential areas, a large segment where our value proposition proved to be highly resilient and well received. In both Peru and Chile, same-store-sales surpassed 2019 pre-pandemic levels, with both achieving margin expansion and relevant contribution growth versus 2019 in all international operations. These improvements resulted from an agile adaptation of our value proposition to the prevailing consumer context, as well as structural operational efficiencies across all markets. For example, in Chile, Colombia, and Peru, we revamped our convenience food offerings with the launch of new concepts, including a line of artisan pizza that complements the reactivation of core concepts such as andatti coffee and the Vikingo sandwiches line.

In Colombia, to better serve our customers’ daily needs, we also profitably ramped up the development of our digital platform to quickly strengthen online sales and home delivery capabilities in response to increased demand (delivery sales represented 6% of total sales). This move set a strong foundation for us to work toward a longer-term digital strategy to capture new business opportunities and deliver the ultimate convenience experience.

In Brazil, we continued to grow our presence during the year through our 2019 joint venture with Raízen, “Grupo Nós”. Our value proposition for the Brazilian consumer maintains the flagship elements of the OXXO chain that have been so successful in Mexico, while also “regionalizing” the stores to deliver the most competitive solutions that cater to local tastes. We also successfully expanded to a second local market (Brazil’s largest), São Paulo Capital, where OXXO’s revenue performance exceeded expectations. In total, we opened 230 new stores in Brazil in 2021, including 117 franchised Shell Select stores (to reach a total of 1,162 franchises) and 113 company-owned and operated stores (to reach a total of 73 OXXO and 40 Shell Select stores). Looking ahead, we will continue to strengthen our international presence by continuing to grow in Brazil and across our South American markets.

Health Division

FEMSA Comercio’s Health Division responds to the pharmacy, health, and wellness needs of the communities where we have a presence. Through a large and growing network of drugstores and related operations in four countries, we represent the third largest pharmacy chain in Latin America in terms of sales. We distribute and sell patented and generic pharmaceutical drugs, beauty products, medical supplies, and wellness and personal care products, among other categories.

As we have grown, we have evolved from a set of local operations in a historically fragmented industry to a consolidated and centralized regional system. Our size, scale, and unified network differentiates us from our competitors because we are able to use these advantages to work with our producers and suppliers on a regional scale to secure the best health and beauty products, for the best prices, which we then pass on to all our customers. 100% ownership of our health platforms in Mexico and South America since 2020 has also allowed us to strategically deploy talent in different parts of the platform, establishing a free flow of best practices across brands and countries.

Our pharmacies play an essential role in ensuring that people across Latin America can access important medicines, sanitizers and other self-care, beauty, and immunity-boosting supplies. We also participate in every part of the medicine business. For example, in Colombia, where we recently opened our 520th point of sale – becoming one of the country’s largest drugstore operators – we also deliver daily medicines to 3,500 beds in 28 intra-hospital pharmacies, as well as directly serve more than 5 million people in the public health system through our medicine dispensing business.

Total revenues increased 12.1% as compared to 2020 and same-store sales increased an average of 9.5% from 2020, mainly reflecting higher consumption in Chile coupled with positive trends in our Mexican and Colombian operations. We expanded our drug store count by 284 net additions to reach a total of 3,652 open units across our territories as of year-end.

Enhancing our Customer Value Proposition
In 2021, we continued to enhance our customer value proposition in several important ways:

• Loyalty program: We are proud to offer our customers in Chile and Colombia a free loyalty program that offers discounts twice a week on products that support health and wellness needs. As of 2021, we have 7 million customers enrolled in our loyalty program in Chile, representing more than 50% of the country’s total population older than 18 years of age and driving approximately 87% of our pharmacy sales. In Colombia, as of 2021 we have approximately 1 million customers enrolled, with plans to expand similar programs to Ecuador and Mexico.
  
  Our loyalty program not only helps inform our product sourcing and geographic distribution decisions, but also allows us to expand digital marketing and communicate in a very personalized way with our customers. Monthly, we launch 420 digital campaigns based on targeted interests and preferences. We also have special opt-in groups based on specific healthcare issues, such as cholesterol or diabetes, through which we offer additional discounts on products related to those concerns. This data helps us communicate directly with producers to ensure we are bringing the best products and offerings for specific customer needs.

• Digital inclusion: An important part of our transformation of the customer pharmacy experience has been through the development of a digital ecosystem and online order management system. In 2020 in Chile and Colombia, and in 2021 in Mexico and Ecuador, we launched an e-commerce website and app, which account for approximately 3% of our sales in Chile and approximately 7% of sales in Colombia. Home-based purchases have increased during the pandemic, but we have also learned that not all customers are interested in changing their consumption habits or paying delivery fees for smaller ticket sizes. We continue to offer the popular “click-and-collect” service (through which customers can go to our website or app, confirm inventories, compare prices, click on the products they need, pre-pay, and collect purchases quickly and at their convenience). More than half of our online sales are through the click-and-collect service, where pickups are currently available in 70 pharmacies in Chile.
  
  Looking ahead to 2022, we are aspiring to expand these capabilities to become a full omnichannel service, first in Chile and Colombia, followed by Ecuador and Mexico.

• Transparency: In June 2021 in Chile, we launched a campaign focused on expanding the transparency of our customers’ purchases and transactions. Monthly, we share via email the breakdowns of the margins and pricing structures of medicines with 1.5 million customer accounts.
  
  In another initiative in support of transparency and inclusion, we are also expanding access to very affordable, generic medicines through the Maicao chain of stores, which has historically been positioned as a beauty store. For those customers who are looking to pay less for medicines, we will be opening specialized pharmacies in close to 100 Maicao stores in Chile.

Fuel Division

FEMSA Comercio’s Fuel Division operates the OXXO GAS brand of retail service stations in Mexico, selling gasoline and diesel to both retail and Business-to-Business (B2B) customers. With a network of 567 service stations (out of approximately 12,000 total stations in the country) in 17 states, OXXO GAS is one of the largest operators in Mexico. OXXO GAS’ value proposition aims to provide the customer with a superior and distinctive service, supported by the values of honesty and trust.

During 2021, mobility restrictions related to COVID-19 continued to impact vehicle usage and fuel consumption. As the year progressed, restrictions relaxed, and we experienced improvements in fuel demand. However, OXXO GAS sales for the full year remained below pre-pandemic levels. We continued to implement the sanitization protocols established in 2020 in all our service stations to safeguard our employees and customers.

We have improved our value proposition for our B2B customers, to whom we offer personalized service and access to reliable and easy-to-use technological platforms for efficient fuel and fleet management. This allowed us in 2021 to provide service to more than 5,000 corporate fleets and grow the volume for this segment by 22% versus the prior year.

OXXO GAS celebrated 25 years of operations in 2021. The business that began with just two stations in Nuevo León has gone through many changes over the years. During that time, we have focused on changing the way fuel is sold in Mexico by offering a trustworthy and high-level service to our customer, while prioritizing the development and wellbeing of our employees.

Competitive Differentiation
In an increasingly competitive environment, we focus on differentiating ourselves by delivering the industry’s most efficient, friendly, and reliable customer service. We also pride ourselves on exemplifying trust and honesty, as well as offering conveniently located, safe and clean facilities with excellent sales promotions.

We have strict security and maintenance protocols for calibrating our gas pumps to guarantee full liters. To further strengthen our customers’ confidence that the liters they pay for are the liters they receive, we launched the “Prueba de Litros Completos” (Complete Liters Test) program in nine states in Mexico in July 2021. Through this initiative, which we plan to extend to more locations, customers can request to fill a liter of gasoline into a glass measuring container, showing that the liter is indeed complete.

Another way we improved the customer experience is through technology. Last year, we installed a new contactless point of sale system, coupled with handheld devices that allow us to make customer interactions at our service stations faster, more convenient, and efficient, including real-time billing at the pump. We also continue to offer an app that allows users to locate our service stations and see all the services available, such as payment methods, prices, available fuel, and access to billing options.

Committed to our Employees
We are only able to deliver the strongest customer service and maintain our competitive edge because of our employees, who are committed to upholding our organizational culture. We seek to ensure that our collaborators have all the tools, training, and motivation they need to do their jobs well, and we take active steps to support their quality of life, both professionally and personally. In 2021, we redesigned and evolved our training program to help employees better respond to the needs of each type of customer. Through constant communication, targeted engagement activities, career development plans, and coaching programs – along with above-industry wages and compensation structures – we reduce turnover and support continued employee growth within the company.

The Fuel Division has also implemented strategies for the benefit of a diverse, inclusive, and equitable culture, transforming our team of more than 7,000 employees. In an industry that was historically made up mostly of men, today 25% of the OXXO GAS team is made up of women, 63 collaborators are senior adults, and 24 employees represent people with disabilities. In 2021, we won the “Gasoline Leadership” award by Onexpo Nacional, in recognition of our social responsibility efforts related to occupational health and inclusion and diversity, further solidifying our commitment to the Our People pillar of FEMSA’s Sustainability Strategy.

Looking ahead, to maintain our status as a leading brand in the fuel industry, our strategy is to sustainably grow our footprint by bringing our quality services – and the advantages of our promotions, accessibility, proximity, safety, and full liters – to more people in Mexico.