Management Discussion & Analysis
Audited Financial Results for the twelve months ended December 31, 2021. Compared to the twelve months ended December 31, 2020.

Fomento Económico Mexicano, S.A.B. de C.V. (“FEMSA”) is a Mexican holding company. Set forth below is certain audited financial information for FEMSA and its subsidiaries (the “Company” or “FEMSA Consolidated”) (NYSE: FMX; BMV: FEMSA UBD, FEMSA BD). The principal activities of the Company are grouped mainly under the following subholding companies (the “Subholding Companies”): Coca-Cola FEMSA, S.A.B de C.V. (“Coca-Cola FEMSA” or “KOF”), (NYSE: KOF, BMV: KOFL) which engages in the production, distribution and marketing of beverages, and FEMSA Comercio, S.A. de C.V. (“FEMSA Comercio”), including its Proximity Division operating OXXO, a small-format store chain, a Health Division, which includes all drugstores and related operations, and a Fuel Division, which operates the OXXO GAS chain of retail service stations. Additionally, through its Negocios Estratégicos unit, it provides logistics, point-of-sale refrigeration solutions and plastics solutions to FEMSA’s business units and third-party clients. FEMSA also participates in the specialized distribution industry in the United States. The consolidated financial information included in this annual report was prepared in accordance with the International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).

The 2021 and 2020 results are stated in nominal Mexican pesos (“pesos” or “Ps.”). Translations of pesos into US dollars (“US$”) are included solely for the convenience of the reader and are determined using the noon buying rate for pesos as published by the U.S. Federal Reserve Board in its H.10 Weekly Release of Foreign Exchange Rates as of December 30, 2021, which was 20.5140 pesos per US dollar. This report may contain certain forward-looking statements concerning the Company’s future performance that should be considered good faith estimates made by the Company. These forward-looking statements reflect management expectations and are based upon currently available data.

Actual results are subject to future events and uncertainties, which could materially impact the Company’s actual performance.

FEMSA Consolidated

2021 Amounts expressed in millions of Mexican pesos (Ps.)
as of December 31:

  Total Revenues % Growth vs’20 Gross Profit % Growth vs’20
FEMSA Consolidated 556,261 12.8% 213,713 12.7%
Coca-Cola FEMSA 194,804 6.1% 88,598 7.0%
FEMSA Comercio – Proximity Division 198,586 9.5% 84,196 13.3%
FEMSA Comercio – Health Division 73,027 12.1% 21,736 11.0%
FEMSA Comercio – Fuel Division 39,922 16.4% 5,269 22.5%
Logistics & Distribution 48,412 - 10,569 -

FEMSA’s consolidated total revenues increased 12.8% to Ps. 556,261 million in 2021 compared to Ps. 492,966 million in 2020. On an organic1 basis, total revenues grew 9.4%. Coca-Cola FEMSA’s total revenues increased 6.1% to Ps. 194,804 million, driven by volume growth, pricing initiatives, and favorable price-mix effects. This increase was partially offset by unfavorable currency translation effects resulting from the depreciation of all of Coca-Cola FEMSA’s operating currencies in South America into Mexican Pesos, and a decline in beer revenues related to the partial transition of the beer portfolio of Coca-Cola FEMSA in Brazil. In addition, during the same period of 2020, KOF recorded extraordinary income related to an entitlement to reclaim tax payments in Brazil. FEMSA Comercio – Proximity Division revenues increased 9.5% to Ps. 198,586 million, driven by an average increase of 7.7% in same-store sales, caused by a 10.2% increase in average customer ticket, partially offset by a 2.2% decrease in store traffic. FEMSA Comercio – Health Division revenues increased 12.1% to Ps. 73,027 million, driven by an average increase of 9.5% in same-store sales, reflecting positive trends in our Mexican, Chilean, and Colombian operations, partially offset by a still challenging economic environment in Ecuador, in connection with the COVID-19 pandemic. FEMSA Comercio – Fuel Division revenues increased 16.4% to Ps. 39,922 million, driven by an average increase of 12.9% in same-station sales, reflecting a 12.0% increase in the average price per liter, partially offset by a 0.7% increase in average volume. The Logistics and Distribution total revenues reached Ps. 48,412 million, reflecting positive demand dynamics in our operations in Latin America, coupled with gradual recovery trends in the United States.

  1. Excludes the effects of significant mergers and acquisitions in the last twelve months.

Consolidated gross profit increased 12.7% to Ps. 213,713 million in 2021 compared to Ps. 189,653 million in 2020. Gross margin decreased 10 basis points to 38.4% of total revenues compared to 2020, reflecting gross margin expansion at Coca-Cola FEMSA and FEMSA Comercio’s Proximity Division, offset by a contraction at FEMSA Comercio’s Health and Fuel Divisions.

Consolidated operating expenses increased 9.2% to Ps. 161,720 million in 2021 compared to Ps. 148,150 million in 2020. As a percentage of total revenues, consolidated operating expenses decreased from 30.1% in 2020 to 29.1% in 2021.

Consolidated administrative expenses increased 18.4% to Ps. 27,219 million in 2021 compared to Ps. 22,988 million in 2020. As a percentage of total revenues, consolidated administrative expenses increased 20 basis points, from 4.7% in 2020 to 4.9% in 2021.

Consolidated selling expenses increased 8.6% to Ps. 134,079 million in 2021 as compared to Ps. 123,405 million in 2020. As a percentage of total revenues, selling expenses decreased 90 basis points, from 25.0% in 2020 to 24.1% in 2021.

Consolidated income from operations increased 25.3% to Ps. 51,993 million in 2021 as compared to Ps. 41,503 million in 2020. As a percentage of total revenues, operating margin increased 90 basis points, from 8.4% in 2020 to 9.3% in 2021, reflecting margin expansion at Coca-Cola FEMSA and FEMSA Comercio’s Proximity and Health Divisions, partially offset by a contraction at FEMSA Comercio’s Fuel Division.

Some of our subsidiaries pay management fees to us in consideration for corporate services we provide to them. These fees are recorded as administrative expenses in the respective business segments. Our subsidiaries’ payments of management fees are eliminated in consolidation and, therefore, have no effect on our consolidated operating expenses.

Net financing expenses decreased to Ps. 13,384 million from Ps. 14,911 million in 2020, reflecting lower interest expense and a foreign exchange gain related to the effect of FEMSA’s US Dollar-denominated cash position, as impacted by the depreciation of the Mexican peso during 2021.

Income before income taxes and share of the profit in associate results increased 118.0% to Ps. 41,276 million in 2021 compared to Ps. 18,936 million in 2020, reflecting an increase in our income from operations, lower other non-operating expenses and a decrease in net financing expenses described above.

Our accounting provision for income taxes in 2021 was Ps. 14,278 million, as compared to Ps. 14,819 million in 2020, resulting in an effective tax rate of 34.7% in 2021 as compared to 76.7% in 2020, which reflected an extraordinary tax payment agreed with the Mexican tax authority during the second quarter of 2020, magnified by decreased operating income, in the comparable period.

Consolidated net income was Ps. 37,678 million in 2021 compared to Ps. 3,756 million in 2020, reflecting i) higher income from operations across our business units; ii) higher non-operating income; and iii) an increase in our participation in associates’ results, which mainly reflects the results of our investment in HEINEKEN, including an exceptional gain recorded by HEINEKEN during the 3Q21, reflecting a fair value adjustment from one of their investments.

Controlling interest income amounted to Ps. 28,495 million in 2021 compared to a loss of Ps. 1,930 million in 2020. Controlling interest income in 2021 per FEMSA Unit2 was Ps. 7.96 (US$ 3.88 per ADS).

  1. FEMSA Units consist of FEMSA BD Units and FEMSA B Units. Each FEMSA BD Unit is comprised of one Series B Share, two Series D-B Shares and two Series D-L Shares. Each FEMSA B Unit is comprised of five Series B Shares. The number of FEMSA Units outstanding as of December 31, 2021 was 3,578,226,270, equivalent to the total number of FEMSA Shares outstanding as of the same date, divided by 5.

Coca-Cola FEMSA

Coca-Cola FEMSA total revenues increased 6.1% to Ps. 194,804 million in 2021 compared to Ps. 183,615 million in 2020. Total revenues were driven by volume growth, pricing initiatives, and favorable price-mix effects, partially offset by unfavorable currency translation effects resulting from the depreciation of Coca-Cola FEMSA’s operating currencies in South America into Mexican Pesos, and a decline in beer revenues related to the partial transition of Coca-Cola FEMSA´s beer portfolio in Brazil. In addition, during the same period of 2020, Coca-Cola FEMSA recorded extraordinary other operating income related to an entitlement to reclaim tax payments in Brazil.

Coca-Cola FEMSA gross profit increased 7.0% to Ps. 88,598 million in 2021, compared to Ps. 82,811 million in 2020, with a gross margin expansion of 40 basis points. Favorable price-mix effects, raw material hedging strategies, and the positive effect of the resumption of tax credits on concentrate purchased from the Manaus Free Trade Zone in Brazil were partially offset by: i) higher raw material prices; ii) higher concentrate costs in Mexico; iii) and the depreciation in the average exchange rate of most of their operating currencies as applied to our U.S. dollar-denominated raw material costs. Gross margin reached 45.5% in 2021.

The components of cost of goods sold include raw materials (principally concentrate, sweeteners and packaging materials), depreciation costs attributable to Coca-Cola FEMSA’s production facilities, wages and other employment costs associated with labor force employed at our production facilities and certain overhead costs. Concentrate prices are determined as a percentage of the retail price of our products in the local currency, net of applicable taxes. Packaging materials, mainly PET and aluminum, and HFCS, used as a sweetener in some countries, are denominated in U.S. dollars.

Operating expenses increased 7.6% to Ps. 60,720 million in 2021 compared to Ps. 56,444 million in 2020.

Administrative expenses increased 14.2% to Ps. 9,012 million in 2021 compared to Ps. 7,891 million in 2020. Selling expenses increased 6.5% to Ps. 51,708 million in 2021 compared with Ps. 48,553 million in 2020.

Income from operations increased 8.6% to Ps. 27,402 million in 2021 compared to Ps. 25,243 million in 2020.

FEMSA Comercio
Proximity Division

FEMSA Comercio – Proximity Division total revenues increased 9.5% to Ps. 198,586 million in 2021 compared to Ps. 181,277 million in 2020, reflecting an average increase in same-store sales of 7.7% and the addition of 865 net new stores during the year. As of December 31, 2021, there was a total of 20,431 OXXO stores. As referenced above, OXXO same-store sales increased an average of 7.7% compared to 2020, driven by a 10.2% increase in average customer ticket, partially offset by a 2.2% decrease in store traffic.

Cost of goods sold increased 6.9% to Ps. 114,390 million in 2021 compared to Ps. 106,981 million in 2020. Gross margin increased 140 basis points to reach 42.4% of total revenues. This increase reflects more dynamic commercial income activity and promotional programs with our key supplier partners, as well as the sustained growth of the services category, including income from financial services.

As a result, gross profit increased 13.3% to Ps. 84,196 million in 2021 compared with 2020.

Operating expenses increased 5.7% to Ps. 65,809 million in 2021 compared to Ps. 62,276 million in 2020. The increase in operating expenses was driven by our continuing initiative to strengthen our compensation structure of key in-store personnel, including the gradual shift from commission-based store teams to employee-based teams; partially offset by increased efficiency across our operations.

Administrative expenses increased 7.9% to Ps. 6,145 million in 2021 compared to Ps. 5,696 million in 2020; as a percentage of sales, it remained stable at 3.1% in 2021.

Selling expenses increased 6.3% to Ps. 59,542 million in 2021 compared with Ps. 56,030 million in 2020; as a percentage of sales, they reached 29.9% in 2021.

Income from operations increased 53.0% to Ps. 18,387 million in 2021 compared to Ps. 12,020 million in 2020, resulting in an operating margin expansion of 270 basis points to reach 9.3% as a percentage of total revenues for the year, compared with 6.6% in 2020, mainly reflecting a recovering operating leverage, which was affected by the COVID-19 pandemic during 2020.

FEMSA Comercio
Health Division

FEMSA Comercio – Health Division total revenues increased 12.1% to Ps. 73,027 million in 2021 compared to Ps. 65,172 million in 2020, mainly driven by an average increase of 9.5% in same-store sales, reflecting positive trends in our Mexican, Chilean, and Colombian operations, partially offset by a still challenging economic environment in Ecuador, in connection with the COVID-19 pandemic. As of December 31, 2021, the Health Division had a total of 3,652 drugstores across its geographies.

Cost of goods sold increased 12.5% to Ps. 51,291 million in 2021, compared with Ps. 45,597 million in 2020.

Gross margin decreased 20 basis points to reach 29.8% of total revenues. This was mainly driven by: i) higher institutional sales in our operations in Chile and Colombia; and ii) increased promotional activities in our operations in South America. These were offset by improved efficiency and more effective collaboration and execution with key supplier partners in Mexico. Gross profit increased 11.0% to Ps. 21,736 million in 2021 compared with 2020.

Operating expenses increased 6.2% to Ps. 17,974 million in 2021 compared with Ps. 16,919 million in 2020. This increase was driven by the organic growth in Mexico and South America, partially offset by cost efficiencies and tight expense control throughout our territories.

Administrative expenses decreased 1.8% to Ps. 3,255 million in 2021 compared with Ps. 3,314 million in 2020; as a percentage of sales, they reached 4.5% in 2021. Selling expenses increased 8.0% to Ps. 14,620 million in 2021 compared with Ps. 13,540 million in 2020; as a percentage of sales, they reached 20.0% in 2021.

Income from operations increased 41.6% to Ps. 3,762 million in 2021 compared with Ps. 2,656 million in 2020, resulting in an operating margin expansion of 110 basis points to 5.2% as a percentage of total revenues for the year, compared with 4.1% in 2020, reflecting higher operating leverage.

FEMSA Comercio
Fuel Division

FEMSA Comercio – Fuel Division total revenues increased 16.4% to Ps. 39,922 million in 2021 compared to Ps. 34,292 in 2020, reflecting a 12.9% average increase in same-station sales. As of December 31, 2021, there was a total of 567 OXXO GAS service stations. As referenced above, same-station sales increased an average of 12.9% compared to 2020, reflecting a 12.0% increase in the average price per liter, partially offset by a 0.7% increase in average volume.

Cost of goods sold increased 15.5% to Ps. 34,653 million in 2021 compared with Ps. 29,992 million in 2020. Gross margin increased 70 basis points to reach 13.2% of total revenues. Gross profit increased 22.5% to Ps. 5,269 million in 2021 compared with 2020.

Operating expenses increased 10.5% to Ps. 3,853 million in 2021 compared with Ps. 3,487 million in 2020. This increase was driven by OXXO Gas’ organic growth partially offset by tight expense control and increased expense efficiencies.

Administrative expenses increased 15.1% to Ps. 290 million in 2021 compared with Ps. 252 million in 2020; as a percentage of sales, both comparable years remain the same with 0.7%. Selling expenses increased 10.7% to Ps. 3,571 million in 2021 compared with Ps. 3,226 million in 2020; as a percentage of sales, they decreased 40 basis points to 9.0% in 2021.

Income from operations increased to Ps. 1,416 million in 2021 compared with Ps. 813 million in 2020, resulting in an operating margin expansion of 110 basis points to 3.5% as a percentage of total revenues for the year compared with 2.4% in 2020.

Logistics and Distribution

Logistics and Distribution total revenues amounted to Ps. 48,412 million, reflecting positive demand dynamics in our operations in Latin America, coupled with gradual recovery trends in the United States. These were partially offset by the negative currency translation effect from the depreciation of the Brazilian Real relative to the Mexican peso.

Cost of goods sold amounted to Ps. 37,843 million, reflecting favorable sales mix and efficiencies in our Latin American operations. Gross profit amounted to Ps. 10,569, representing 21.8% of total sales.

Operating expenses amounted to Ps. 8,438 million in 2021. Administrative expenses amounted to Ps. 4,533 million in 2021; as a percentage of sales, the accounted for 9.4%. Selling expenses amounted to Ps. 4,060 million in 2021; as a percentage of sales, they accounted for 8.3% in 2021.

Income from operations amounted to Ps. 2,132 million, representing 4.4% of total sales, reflecting operating leverage driven by tight expense control and efficiencies across markets.

Key Events during 2021

The following text reproduce our press releases as they were published.

Coca-Cola FEMSA included in the S&P Global Sustainability Yearbook 2021
On February 19, 2021 Coca-Cola FEMSA announced that it became the only Mexico-based beverage company to be included in the S&P Global Sustainability Yearbook 2021, due to its high performance in the S&P Global Corporate Sustainability Assessment (CSA).

The Company is ranked within the top 15% of leading beverage companies in sustainability under S&P Global’s proprietary annual evaluation of the environmental, social, economic, and corporate governance dimensions of more than 7,000 companies around the world.

As result of Coca-Cola FEMSA’s sustainability performance in alignment with its strategic framework, the Company is part of the Dow Jones Sustainability Index for Emerging Markets, being the only Latin American beverage company included for eight consecutive years. Additionally, in 2020, it became the first Mexican company and third in Latin America, to secure official approval from the Science Based Targets initiative (SBTi) of its 2030 carbon emissions reduction goals, confirming the Company’s commitment to meet the target set by the Paris Agreement to limit the rise in global temperatures to well below 2 °C above preindustrial levels.

Over the last five years, Coca-Cola FEMSA has increased the use of clean energy in its operations by more than four times, supplying 80% of its bottling plants’ electricity needs with clean sources of energy.

Considering the relevance of water as a valuable resource, the Company has increased its water use efficiency by 24% over the last 10 years and it conducts, along with The Coca-Cola Company, water conservation initiatives that have succeeded in replenish to nature the same amount of water than the used in its beverages across the markets where it has presence.

Consistent with its path towards sustainability and the challenges ahead, in September 2020 the Company issued its first green bond for US$ 705 million, currently the largest green bond for a Latin American corporation and the first of its kind for the Coca-Cola System.

Additionally, Coca-Cola FEMSA has received other noteworthy recognitions for its sustainability performance in recent years, including its listing in the FTSE4Good Emerging Index, the S&P/BMV Total Mexico ESG Index, and the Bloomberg Gender-Equality Index.

The Coca-Cola Company, The Coca-Cola System in Brazil, and HEINEKEN announce redesigned distribution partnership
On February 24, 2021 Coca-Cola FEMSA announced that The Coca-Cola Company, the Coca-Cola System in Brazil and HEINEKEN had reached an agreement (the “Agreement”) to redesign their longstanding distribution partnership in Brazil. The Agreement marks a new milestone in the relationship among the companies; it re-aligns the interests of all parties for the future and builds on a solid historical foundation.

As per the Agreement, expected to become effective mid-2021, the parties will begin a smooth transition of the Heineken and Amstel brands to HEINEKEN Brazil’s distribution network. The Coca-Cola System in Brazil will continue to offer Kaiser, Bavaria and Sol, and will complement this portfolio with premium brand Eisenbahn and other international brands. The Agreement allows the parties to better serve consumers and customers in the Brazilian market with a solid portfolio, building on the positive momentum developed over many years of successful collaboration.

Additionally, as part of the redesign of the distribution partnership, the parties will have more flexibility. Subject to certain mutually-agreed upon terms established in the Agreement, the Coca-Cola System in Brazil will be able to produce and distribute alcoholic beverages and other beers in a certain proportion to HEINEKEN’s portfolio and HEINEKEN will be able to explore further opportunities in the non-alcoholic segment. This will allow Brazilian consumers to benefit from a wider array of options.

FEMSA Announces Successful Sustainability Linked Bond Issuances in the Euro Market
On April 28, 2021 FEMSA announced the placement of Euro-denominated sustainability linked notes in the international capital markets. FEMSA successfully issued EUR €700 million in senior notes due in 2028 bearing interest at an annual rate of 70 basis points over the relevant benchmark for a yield of 0.551%, and EUR €500 million in senior notes due in 2033 bearing interest at an annual rate of 88 basis points over the relevant benchmark for a yield of 1.068% (the “Notes”). This issuance represents the largest ever sustainability linked bond by a Latin American issuer, and it was backed by 196 international institutional investors and was oversubscribed 1.9x times.

In connection with the Notes, FEMSA adopted and published its Sustainability Linked Bond Framework, which was prepared in accordance with the Sustainability-Linked Bond Principles (“SLBP”) 2020, as administered by the International Capital Market Association. The Sustainability Linked Bond Framework includes certain Sustainability Performance Targets of the Company, which are aligned with its overall sustainability strategy priorities for 2030. Per the terms of the Notes, the satisfaction of the Sustainability Performance Targets will be verified by an accredited external party, and in the event that such targets are not satisfied by certain dates, there will be an interest rate step up of 25 basis points. In addition, the Company obtained a Second-Party Opinion from Sustainalytics in accordance with industry best practices.

This issuance received credit ratings of A- from Standard & Poor’s and A from Fitch Ratings.

The proceeds from this issuance were used to redeem FEMSA’s EUR €1 billion 1.75% Euro-denominated Senior Notes due 2023, pursuant to the terms of the indenture under which such existing Notes were issued, and the remainder was used for general corporate purposes.

Coca-Cola FEMSA and Coca-Cola Andina confirm acquisition of Brazilian beer brand Therezópolis
On August 11, 2021 Coca-Cola FEMSA confirmed that in conjunction with Coca-Cola Andina, had reached an agreement to acquire Brazilian craft beer brand “Therezópolis”. This agreement is part of the long-term strategy to complement its beer portfolio in Brazil.

FEMSA expands its distribution footprint in the East Coast of the United States
On August 31, 2021 FEMSA announced that Envoy Solutions, FEMSA’s specialized distribution subsidiary in the United States, reached an agreement to acquire Daycon Products Co. (“Daycon”), an independent specialized distribution company based in Upper Marlboro, Maryland. Daycon will further expand and strengthen FEMSA’s distribution footprint along the East Coast of the United States, including Washington D.C. and the states of Virginia, West Virginia, Maryland, Delaware, New Jersey and Pennsylvania. This transaction represents another important step in FEMSA’s strategic path to build a leading national distribution platform in the United States. Revenues of the acquired business for the last twelve months as of June 2021, were approximately US$ 75 million.

FEMSA’s Envoy Solutions to acquire Penn Jersey Paper Co., further expanding its footprint in the Mid-Atlantic region of the United States
On September 8, 2021 FEMSA announced that Envoy Solutions, FEMSA’s specialized distribution subsidiary in the United States, reached an agreement to acquire Penn Jersey Paper Co. (“PJP”), an independent specialized distribution company based in Philadelphia, Pennsylvania. PJP fits well with FEMSA’s distribution footprint along the East Coast, expanding its coverage to include the Philadelphia metro area and New York City. This transaction represents another important step in FEMSA’s strategic path to build a leading national distribution platform in the United States. Revenues of the acquired business for the last twelve months as of June 2021, were over US$ 200 million.

Coca-Cola FEMSA and the Coca-Cola System announce distribution agreement with Estrella Galicia in Brazil
On September 16, 2021 Coca-Cola FEMSA announced that its subsidiary Spal Indústria Brasileira de Bebidas S.A. and the Coca-Cola System in Brazil have signed an agreement to distribute Estrella Galicia beers in the country. This agreement is consistent with the Coca-Cola System’s long-term strategy to complement its beer portfolio in Brazil.

Coca-Cola FEMSA announces successful pricing of the first sustainability-linked bonds in the Mexican market
On September 21, 2021 Coca-Cola FEMSA announced the successful pricing of the first sustainability-linked bonds in the Mexican market for a total of Ps. 9,400 million.

The Company priced bonds at a fixed rate of 7.36% (Mbono+0.34%) for an amount of Ps. 6,965 million due in 7 years, and bonds at a variable rate of TIIE + 0.05% for an amount of Ps. 2,435 million due in 5 years. Both pricings received a credit rating of HR AAA by HR Ratings de México, S.A. de C.V. and Aaa.mx by Moody’s de México, S.A. de C.V.

The net proceeds from these pricings will be used for debt refinancing.

In a sustainability-linked bond, the issuing company commits to achieve certain targets related to its sustainable initiatives, however unlike a green bond, the net proceeds are not limited to finance these objectives.

As part of its strategy, the Company currently achieved a water use ratio of 1.49 liters of water used per liter of beverage produced, and as part of these bonds, the Company commits to achieve a water use ratio of 1.36 by 2024 and 1.26 by 2026. The bonds are subject to the achievement of these sustainability key performance indicators, which will be verified by an independent third party, and in the event that such indicators are not met by the dates established in the pricing documents, the interest rate will increase by 25 basis points to remain at 7.61% and TIIE + 0.30% respectively.

With this sustainable financing strategy, Coca-Cola FEMSA aims to address one of the most important issues where it considers that it can generate the most positive environmental impact: the efficient and sustainable use of water. The sustainability-linked bonds will allow Coca-Cola FEMSA to complement the financing alternatives with high environmental standards, enhancing the investments previously committed in the Company’s green bond issued in international markets.

FEMSA Announces Senior Leadership Succession Plan
On October 15, 2021 FEMSA announced that in accordance with its senior leadership succession planning process, and consistent with previously established timeframes, Eduardo Padilla will retire from his position as FEMSA’s Chief Executive Officer on January 1, 2022. Accordingly, FEMSA’s Board of Directors appointed Daniel Rodríguez Cofré, CEO of FEMSA Comercio, to become FEMSA’s Chief Executive Officer as of January 1, 2022.

FEMSA’s Envoy Solutions to acquire Next-Gen Supply Group, further expanding its footprint in the Northeast region of the United States
On November 16, 2021 FEMSA announced that Envoy Solutions, FEMSA’s specialized distribution subsidiary in the United States, reached an agreement to acquire Next-Gen Supply Group Inc., (“Next-Gen”), an independent specialized distribution company based in Mansfield, Massachusetts. Next-Gen will expand Envoy’s footprint in the Northeast by including Massachusetts and Connecticut. This transaction represents another important step in FEMSA’s strategic path to build a leading national distribution platform in the United States. Revenues of the acquired business for the last twelve months as of October 2021, were over US$ 90 million.

FEMSA’s Envoy Solutions reaches agreement to acquire Johnston Paper, expanding its footprint in the Northeast region of the United States
On November 18, 2021 FEMSA announced that Envoy Solutions, FEMSA’s specialized distribution subsidiary in the United States, reached an agreement to acquire Johnston Paper Company, Inc., (“Johnston Paper”), an independent specialized distribution company based in Auburn, New York. Johnston Paper will enhance Envoy Solutions’ existing footprint in the Northeast by increasing its reach into the Upstate New York area. This transaction represents another important step in FEMSA’s strategic path to build a leading national distribution platform in the United States. Revenues of the acquired business for the last twelve months as of October 2021, were over US$ 90 million.

Coca-Cola FEMSA reaches an agreement to acquire CVI Refrigerantes in Brazil
On December 17, 2021 Coca-Cola FEMSA announced that its Brazilian subsidiary Spal Industria Brasileira de Bebidas S.A. (“Spal”) has reached an agreement to acquire 100% of Brazilian Coca-Cola bottler, CVI Refrigerantes Ltda. (“CVI”). The parties agreed to an all-cash transaction for an enterprise value of R$ 632.5 million.

On an estimated proforma 2021, CVI’s volume is of approximately 30.9 million unit cases, not including beer.

CVI operates one bottling facility and three distribution centers in the state of Rio Grande do Sul, serving more than 13,000 points of sale and more than 2.8 million consumers. Its footprint borders Coca-Cola FEMSA’s operations in the south of Brazil and Uruguay, bolstering Coca-Cola FEMSA’s leadership position in the region and allowing Coca-Cola FEMSA’s volume to reach 52% of the Coca-Cola System’s volume in Brazil.