Fomento Economico Mexicano S.A.B. de C.V. Annual Report 2019

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FY2019 Annual Report · Fomento Economico Mexicano S.A.B. de C.V.

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A N N U A L

R E P O R T

2019Fomento Económico Mexicano, S.A.B. de C.V., or FEMSA, is a company that creates economic

and social value through companies and institutions and strives to be the best employer and

neighbor to the communities in which it operates. It participates in the following businesses:

In the retail industry, through FEMSA Comercio, comprising:

Proximity Division, which operates the OXXO small-format store chain;

Health Division, which includes drugstores and related activities; and

Fuel Division, which operates the OXXO GAS chain of retail service stations.

In the beverage industry, through Coca-Cola FEMSA, the largest franchise bottler of

Coca-Cola products in the world by volume; and in the beer industry, as a shareholder

of Heineken, one of the world’s leading brewers with operations in over 70 countries.

In other ancillary businesses, through FEMSA Strategic Businesses (FEMSA Negocios

Estratégicos), including logistics, point-of-sale refrigeration solutions, and plastics solutions

for FEMSA’s business units and third-party clients.

FEMSA’s 2019 integrated Annual Report reflects our commitment to strong corporate governance and

transparency, as exemplified by our organizational culture. Our financial and sustainability results are for the

twelve months ended December 31, 2019 compared to the twelve months ended December 31, 2018.

For more information, please see our 2019 Sustainability Content.

FEMSA ATA GLANCEDEAR SHAREHOLDERSFEMSACOMERCIOCOCA-COLAFEMSAFEMSA STRATEGIC BUSINESSESFEMSAFOUNDATIONCORPORATEGOVERNANCEFINANCIALSUMMARYVALUE CREATION HIGHLIGHTSCONTACTANNUAL REPORT20191

T A B L E O F

C O N T E N T S

FEMSA At-A-Glance / 03

Value Creation Highlights / 05

Dear Shareholders / 11

FEMSA Comercio / 14

Coca-Cola FEMSA / 24

FEMSA Strategic Businesses / 32

FEMSA Foundation / 38

Corporate Governance / 44

Financial Summary / 48

Management’s Discussion & Analysis / 50

Contact / 59

Corporate Structure
Equity Stakes and Business Units

Mexico
ll ll ll ll

27.8%
THE COCA-COLA
COMPANY

25.0%
PUBLIC

47.2% *
COCA-COLA
FEMSA

100%
FEMSA
COMERCIO

100%

STRATEGIC
BUSINESSES

14.8%
HEINEKEN

Proximity
Division

Health
Division

Fuel
Division

Solistica

AlPunto

Guatemala
l

Nicaragua
l l

Venezuela 1
l

Costa Rica
l l

Panama
l l

Ecuador
l

Colombia
l l l ll

Peru
l

Chile
l

FEMSA Business Units
employ approximately
300,000 people—and
serve more than 290
million consumers—
in 12 countries.

Brazil
l l l ll

Uruguay
l

Argentina
l

l FEMSA Comercio
l Coca-Cola FEMSA
l Solistica
l AlPunto

* Represents 63% of voting rights.

1 As of December 31, 2017, as a non-consolidated operation, Venezuela is reported as an investment in shares.

FEMSA ATA GLANCEDEAR SHAREHOLDERSFEMSACOMERCIOCOCA-COLAFEMSAFEMSA STRATEGIC BUSINESSESFEMSAFOUNDATIONCORPORATEGOVERNANCEFINANCIALSUMMARYVALUE CREATION HIGHLIGHTSCONTACTANNUAL REPORT20193Countries

Headcount

Business

Plants

Points
of sale

Distribution
centers

Mexico
ll ll ll ll

174,641

FEMSA Comercio

44,577

Coca-Cola FEMSA

Central America*
ll ll

7,985

Coca-Cola FEMSA

5,235

FEMSA Comercio

4,878

Coca-Cola FEMSA

−

21,230

869,918

173,919

501

394,471

Colombia
ll ll ll ll

Brazil
ll ll ll

Argentina
ll

Peru
ll

Chile
ll

Uruguay
ll

Ecuador
ll

21,617

Coca-Cola FEMSA

405,209

2,251

Coca-Cola FEMSA

604

FEMSA Comercio

12,445

FEMSA Comercio

919

Coca-Cola FEMSA

4,485

FEMSA Comercio

−

41,712

960

23,883

634

142

−

A network of
296 distribution
centers and
49 manufacturing
facilities support
our operations
across the countries
where we operate.

l FEMSA Comercio
l Coca-Cola FEMSA
l Solistica
l AlPunto

* Includes Costa Rica, Panama, Nicaragua and Guatemala.

FEMSA ATA GLANCEDEAR SHAREHOLDERSFEMSACOMERCIOCOCA-COLAFEMSAFEMSA STRATEGIC BUSINESSESFEMSAFOUNDATIONCORPORATEGOVERNANCEFINANCIALSUMMARYVALUE CREATION HIGHLIGHTSCONTACTANNUAL REPORT20194

VALUE CREATION HIGHLIGHTS
Economic value

Millions of pesos

Total revenues

2019 1

2019 2

2018 8

%Change

2017 9

%Change

26,867

506,711

469,744

7.9%

439,932

Income from operations 3

2,500

47,152

41,576

13.4%

40,261

Operating margin

9.3%

8.9%

Consolidated net income

1,487

28,048

33,079

Controlling interest net income 4

1,098

20,699

23,990

Controlling interest earnings per BD unit 5

Controlling interest earnings per ADS 6

0.3

3.1

5.8

57.8

6.7

67.0

-15.2%

-13.7%

-13.4%

-13.7%

9.2%

37,206

42,408

11.9

118.5

-43.5%

6.8%

3.3%

-11.1%

-43.4%

-43.7%

4,000

75,440

60,458

24.8%

58,165

3.9%

EBITDA

EBITDA margin

Total assets

Total liabilities

Total equity

14.9%

12.9%

33,804

637,541

576,381

16,532

311,790

240,839

17,272

325,751

335,542

13.2%

588,541

251,629

336,912

23,486

-2.1%

-4.3%

-0.4%

3.3%

96,944

-36.0%

10.6%

29.5%

-2.9%

5.4%

5.7%

Capital expenditures

1,356

25,579

24,266

Total cash and cash equivalents 7

3,476

65,562

62,047

11%

35%

TOTAL REVENUES
BY BUSINESS UNIT
millions of Mexican pesos

Ps. 506,711

5% 1%

37%

35%

37%

17%

TOTAL ASSETS
BY BUSINESS UNIT
millions of Mexican pesos

Ps. 637,541

Short-term debt

Long-term debt

Headcount 8

859

16,204

13,674

18.5%

13,590

5,395

101,747

114,990

-11.5%

117,758

314,656

297,073

5.9%

295,027

0.6%

-2.4%

0.7%

1. U.S. dollar figures are converted from Mexican pesos using the noon-buying rate published by U.S. Federal Reserve Board,

which was Ps. 18.8600 per US$ 1.00 as of December 31, 2019.

2. Starting on January 1st 2019, the Company adopted IFRS16 “Leases” accounting rule using the modified retrospective method

under which the comparative information was not restated.

3. Company’s key performance indicator.
4. Represents the net income that is assigned to the controling shareholders of the entity.
5. “BD” units each of which represents one series “B” share, two series “D-B” shares and two series “D-L” shares. Data based on

outstanding 2,161,177,770 BD units and 1,417,048,500 B units.

6. American Depositary Shares, a U.S. dollar-denominated equity share of a foreing-based company available for purchase

on an American stock exchange.

7. Cash consists of non-interest bearing bank deposits and cash equivalents consist principally of short-term bank deposits and fixed

rate investments.

8. Includes headcount from Coca-Cola FEMSA, FEMSA Comercio and FEMSA Strategic Businesses.
9. The consolidated income statement of 2017 was revised to reflect the discontinued operations of Coca-Cola FEMSA Philippines.

37%

54%

37%

49%

INCOME FROM OPERATIONS 1
BY BUSINESS UNIT
millions of Mexican pesos

Ps. 47,152

EBITDA 2
BY BUSINESS UNIT
millions of Mexican pesos

Ps. 75,440

l Coca-Cola FEMSA
FEMSA Comercio: l Proximity Division l Health Division l Fuel Division l Others *

* Includes FEMSA Strategic Businesses.
1. Company’s key performance indicator.
2. EBITDA equals to Income from operations plus depreciation, amortization and other non-cash items.

FEMSA contributes to the development of the communities
and regions where we have a presence by fulfilling our mission:
to generate economic and social value through companies
and institutions.

Our business units adhere to ethical business practices aligned
with our organizational values. This includes implementing
inclusive labor practices, optimizing the use of natural resources,
strengthening local supply chains, supporting and developing
suppliers, positively transforming communities, and connecting
effectively with customers.

Our business model focuses not only on maximizing financial value
for our shareholders, but also operating in a sustainable way that
makes a positive contribution to society and the environment.
In fact, sustainable development continues to be a key element in
our business model.

In this 2019 integrated Annual Report, we share the ways in which
our business simultaneously generates economic and social
value, including examples of how sustainability is integrated into
our daily operations.

FEMSA’s Strategic Sustainability Framework

FEMSA’s Strategic
Sustainability
Framework focuses
on nine areas of
action, which are
based on the most
relevant issues for
our business and our
stakeholders.

For more information, please see

our 2019 Sustainability Content.

FEMSA ATA GLANCEDEAR SHAREHOLDERSFEMSACOMERCIOCOCA-COLAFEMSAFEMSA STRATEGIC BUSINESSESFEMSAFOUNDATIONCORPORATEGOVERNANCEFINANCIALSUMMARYVALUE CREATION HIGHLIGHTSCONTACTANNUAL REPORT20196
Making our Clean Energy Goal a Reality
By expanding FEMSA’s use of renewable energy, we are
contributing to the climate change solution by replacing
carbon-intensive energy sources and significantly reducing
greenhouse gas (GHG) emissions. With this strategy, we are
contributing to the conservation of natural resources and
supporting the development of stronger communities.

In 2019, FEMSA made significant
progress toward achieving
our corporate goal to source 85% of
the total electric energy demand of our
operations in Mexico from renewable
energy by 2020.

73%

of our electricity
needs in Mexico
came from clean
sources
at year-end 2019

Powering more than
14,000 sites
with renewable energy

FEMSA Comercio

13,437
OXXO stores

13
OXXO
distribution
centers

622
pharmacies

Coca-Cola FEMSA

20
manufacturing
plants

58
distribution
centers

FEMSA Strategic
Businesses

2
Imbera plants

1
PTM plant

The use of these renewable
energy sources contributes to
the avoidance of 623,808 tons
of CO2e emissions per year,
which is equivalent to:

Planting
15,969,481 trees,

powering
651,434
households in Mexico

avoid consuming
1,434,758
barrels of oil

In addition
to creating
new labor
opportunities,
renewable energy
systems require
minimal water to
operate and thus
do not pollute
water resources.

FEMSA ATA GLANCEDEAR SHAREHOLDERSFEMSACOMERCIOCOCA-COLAFEMSAFEMSA STRATEGIC BUSINESSESFEMSAFOUNDATIONCORPORATEGOVERNANCEFINANCIALSUMMARYVALUE CREATION HIGHLIGHTSCONTACTANNUAL REPORT20197

Shaping the Circular Economy
At FEMSA, we are working to find solutions designed to promote
sustainable consumption and production practices, that is, doing
more with less resources. We are adopting and promoting the
principles of the Circular Economy in FEMSA’s business units by
redesigning, reducing, reusing, repairing and recycling.

In 2019, we continued to work toward our corporate goal of
achieving Zero Waste to Landfill (ZWL) status for all FEMSA
operations and facility processes by 2030. This goal does not
include post-consumer waste associated with FEMSA products
and services. A few examples of our efforts to support the
Circular Economy:

We continued to
work toward our
corporate goal of
achieving Zero
Waste to Landfill
(ZWL) status
for all FEMSA
operations and
facility processes
by 2030.*

OXXO
Store employee uniforms are
manufactured with 50% recycled PET
fiber. At the end of their useful life, the
uniforms are recycled and used as raw
material for other products.

AlPunto
A new recycling facility has the capacity
to recover up to 60,000 end-of-life
refrigerators per year and either repair
and reuse them, or recycle up to 90% of
refrigerator components.

Coca-Cola FEMSA
We are redesigning PET bottles to make
them lighter, 100% recyclable, and made
with higher percentages of recycled
material. We are also setting the standard
and global benchmark for our high rates
of PET collection in Mexico.

* This goal does not include post-consumer waste associated with FEMSA products and services that are disposed of outside the boundaries of FEMSA’s control and facilities.

FEMSA ATA GLANCEDEAR SHAREHOLDERSFEMSACOMERCIOCOCA-COLAFEMSAFEMSA STRATEGIC BUSINESSESFEMSAFOUNDATIONCORPORATEGOVERNANCEFINANCIALSUMMARYVALUE CREATION HIGHLIGHTSCONTACTANNUAL REPORT20198Our Social Contributions
At FEMSA, we contribute to the positive transformation of the
communities in the regions where we live and work. Through
dialogue and collaboration, we aim to maximize the impact of
the people, community partners, and organizations with whom
we work. This includes supporting programs and engagement
opportunities related to education, entrepreneurship, science and
technology, social leadership, culture, and citizen participation. In
this way, we multiply the benefits and positive impacts we can make
in the community. For example:

OXXO Customer Ticket Round-Up (Programa Redondeo
Clientes OXXO): Our store cashiers invite OXXO and YZA customers
to donate the cents needed to “round-up” the total value of their
purchase to the next integer amount. The collected amounts are
donated to local charitable institutions on behalf of customers.

Corporate Volunteering: FEMSA offers time off for employees to
participate in community projects during business hours. FEMSA
also promotes and enables volunteer opportunities for employees,
their family, and friends to contribute their time and talents
on weekends.

With the integration of FEMSA’s sustainability strategy as part of our
business model, we contribute to the United Nations Sustainable
Development Goals, an ambitious plan to achieve a more inclusive,
prosperous, sustainable, and resilient world. Joining the efforts
of the 2030 Global Agenda means that we are working to make a
positive impact towards the improvement of the quality of life and
well-being of people, as well as to the sustainable use of
natural resources.

Through dialogue
and collaboration,
we aim to maximize
the impact of the
people, community
partners, and
organizations with
whom we work.

FEMSA ATA GLANCEDEAR SHAREHOLDERSFEMSACOMERCIOCOCA-COLAFEMSAFEMSA STRATEGIC BUSINESSESFEMSAFOUNDATIONCORPORATEGOVERNANCEFINANCIALSUMMARYVALUE CREATION HIGHLIGHTSCONTACTANNUAL REPORT20199
Our business model
focuses on operating
in a sustainable
way that makes a
positive contribution
to society and the
environment.

Sustainable Development Key Performance Indicators

2019

2018

2017

Total hours of training

8,657,577

8,957,257

10,006,244

Accident index 1

Professional diseases rate 1

Organizational climate result 2

Energy intensity
(Gigajoules / Total Revenues in Ps. million)

Greenhouse gas emissions intensity
(Tons of equivalent CO2 / Total Revenues in Ps. million)

Water efficiency
(liters of water used per liter of beverage produced)

2.48

0.069

81.00

2.50

0.017

81.00

2.10

0.03

80.80

34.40

39.95

37.27

1.77

1.52

3.38

1.59

3.27

1.65

Corporate volunteering hours

461,020

593,300

367,796

Percentage of procurement budget
on local suppliers 3

Direct beneficiaries of
FEMSA Foundation programs 4

87%

82%

87%

1,657,786

1,423,985

1,248,123

1. Number of incidents per 100 employees, based on the number of FEMSA direct employees reported to the Occupational Health and Safety

Administration System. Includes information on all countries.

2. According to FEMSA’s Organizational Climate Diagnostic.
3. Local suppliers are defined as suppliers from the country where the purchase is made.
4. The number of direct beneficiaries is accumulated.

In 2019, FEMSA continued to progress in its evolution as an
organization that generates economic and social value through
companies and institutions. We are convinced that long-term
success depends on the balanced execution of meeting our
customers’ daily needs, as well as supporting the well-being of
our employees and communities. FEMSA’s 2019 integrated Annual
Report seeks to illustrate how we are working to grow strategically
and operationally, while also strengthening our organizational
culture and sustainability strategy.

The year was one of great activity in deploying capital to high
growth, high return assets that align with our experience and
capability set.

For example:

• We announced the entry of FEMSA Comercio’s Proximity
Division into Brazil through a joint venture with Raízen
Conveniências, which has more than one thousand franchised
or licensed Shell Select convenience stores within its wide
network of Raízen gas stations. The transaction allows us to
expand into a new territory with a strong local partner while
retaining the flexibility to be able to develop the right value
propositions for the Brazilian consumer.

José Antonio Fernández Carbajal
Executive Chairman of the Board

Miguel Eduardo Padilla Silva
Chief Executive Officer

•

In FEMSA Comercio’s Health Division, we now own 100% of our
health platforms in Mexico and South America. Specifically, we
became the sole shareholder of Grupo Socofar in South America
by completing the acquisition of the 40% interest that was not
previously owned. Socofar also expanded to Ecuador with the
acquisition of Corporación GPF, a leading drugstore operator in
the region. And in Mexico, we also became the sole shareholder
of our drugstore platform following the purchase of its
minority interest.

• Solistica secured another important building block in its growth
strategy through the acquisition of AGV in Brazil, a leader in
value-added warehousing and distribution. The transaction
makes Solistica the first fully integrated third-party logistics
solution provider in the Brazilian market, building a key
differentiating factor among the leading players in the industry.

The year was one
of great activity in
deploying capital
to high growth,
high return assets
that align with our
experience and
capability set.

ANNUAL REPORT2019FEMSA ATA GLANCEDEAR SHAREHOLDERSCOCA-COLAFEMSAFEMSA STRATEGIC BUSINESSESFEMSAFOUNDATIONCORPORATEGOVERNANCEFINANCIALSUMMARYVALUE CREATION HIGHLIGHTSCONTACTFEMSACOMERCIO11the acquisition of Corporación GPF; and the Fuel Division opened
six net new stations. Together, FEMSA Comercio surpassed
24,690 units across formats and markets. FEMSA Comercio
deployed more than Ps. 12,800.0 million (US$ 679 million) in Capital
Expenditures during the year, with more than 85% of that invested
in Mexico, and created more than 21,000 new jobs. Operationally,
the Proximity Division delivered solid results in Mexico as well as
encouraging trends in its fast-growing international operations,
particularly in Colombia and Chile. In the Health Division, we
continued to make steady progress in Mexico; saw dynamic growth
in Colombia, while Chile had a challenging year; and we began
the integration of Corporación GPF in Ecuador. For its part, the
Fuel Division increased its total revenues by 2.0% for the year as
compared to 2018, even as we temporarily slowed down the pace
of station growth.

Coca-Cola FEMSA also saw a resilient consumer environment in
Mexico and solid growth in Brazil, conditions that combined to deliver
positive operating performance and an outlook for continued growth.
To capitalize on future opportunities, we moved forward in 2019 with
unifying the organization under a single “One KOF” business strategy.
This vision aims to ensure that all teams are working together as a
cohesive unit and supported by the competitive advantages we can
gain through digital strategies and sustainability commitments. In this
way, Coca-Cola FEMSA is positioning itself as a resilient, disciplined,
and committed business platform that will ensure the continued
creation of stakeholder value.

We are actively working to build trust and create social value by
living our mission, vision, and values every day.

• We acquired a minority stake in Jetro Restaurant Depot, a

leader in the wholesale business-to-business cash and carry
retail foodservice segment in the United States with more than
130 stores. The transaction allowed us to deploy capital into a
unique opportunity while presenting a compelling potential new
growth avenue for the development of a cash and carry platform
in Mexico and Latin America.

We saw strong consolidated operational and financial performance
across FEMSA business units in 2019.

Total revenues increased 7.9% over the previous year to Ps. 506.7 billion
(US$ 26.9 billion), and income from operations increased 13.4%
to Ps. 47.1 billion (US$ 2.5 billion), while net consolidated income
decreased 15.2% to Ps. 28.0 billion (US$ 1.5 billion). Net majority
income per BD Unit was Ps. 5.8 in 2019 (US$ 3.1 per ADS).

FEMSA Comercio continued to see strong growth in 2019. The
Proximity Division opened 1,331 net new OXXO stores; the Health
Division opened 180 net new stores and added 620 stores as part of

Now more than ever, the business community is being called upon
to take a leadership role in responding to increasingly urgent global
policy challenges that are impacting societies and economies.

We saw strong
consolidated
operational
and financial
performance across
FEMSA business
units in 2019.

ANNUAL REPORT2019FEMSA ATA GLANCEDEAR SHAREHOLDERSCOCA-COLAFEMSAFEMSA STRATEGIC BUSINESSESFEMSAFOUNDATIONCORPORATEGOVERNANCEFINANCIALSUMMARYVALUE CREATION HIGHLIGHTSCONTACTFEMSACOMERCIO12Guided by the principles of the United Nations (UN) Global Compact
and the Sustainable Development Goals, we are focused on how we
can responsibly create value in ways that preserve the planet, give
back to communities, and support people. For example:

Ps. 848.7 million (US$ 45.0 million) has been invested to impact
nearly 2,500 communities in 12 countries. We are also developing
plans to further increase our activity in the Foundation.

• We actively promote the use of renewable energy in our

operations to reduce our environmental footprint and mitigate
against climate change. FEMSA’s corporate goal is to source at
least 85% of the operational electricity demand in Mexico from
renewable sources by 2020—a goal which we are on track to
meet. As of year-end 2019, 73% of our total energy needs in
Mexico came from wind.

• The FEMSA Foundation directly and indirectly impacts the lives
of millions of people in communities across Latin America
by focusing on the areas of sustainable development, early
childhood development, and the arts. In this way, it is a primary
vehicle through which FEMSA contributes social value in line with
the corporate mission. Since its founding in 2008, more than

• With the largest independent Coca-Cola bottling group in the

world and Mexico’s largest proximity store chain, FEMSA was
named the top Latin American employer in Latin Trade’s Top
100 Employers of 2019 list. Approximately 300,000 employees
with diverse backgrounds and abilities bring their talent to
FEMSA every day. We are also proud to support our people
and their families through the opportunities we offer, including
competitive wages, comprehensive training and development,
and a strong organizational culture.

For additional examples of how we are working to stay true to
FEMSA’s mission and vision, we invite you to explore this 2019
integrated Annual Report, where we share the progress made over
the past year on our business strategy and financial performance,
including environmental, social, and governance considerations.
Through industry leadership, innovation in products and services,
and responsible operations, we look forward to contributing to
the ideas and solutions that will be so important to achieving
sustainable growth and continued success in this new decade of the
twenty-first century and beyond. On behalf of everyone at FEMSA,
thank you for your continued support.

José Antonio Fernández Carbajal

Miguel Eduardo Padilla Silva

Executive Chairman Of The Board

Chief Executive Officer

We are actively
working to
build trust and
create social
value by living our
mission, vision, and
values every day.

ANNUAL REPORT2019FEMSA ATA GLANCEDEAR SHAREHOLDERSCOCA-COLAFEMSAFEMSA STRATEGIC BUSINESSESFEMSAFOUNDATIONCORPORATEGOVERNANCEFINANCIALSUMMARYVALUE CREATION HIGHLIGHTSCONTACTFEMSACOMERCIO13The three divisions of FEMSA Comercio
—Proximity, Health and Fuel— deliver
strong economic and social value for all
our stakeholders. Our brands include OXXO
proximity stores; drugstores (under the brands
YZA, Farmacon, Moderna, Cruz Verde, Fybeca,
SanaSana, and Maicao beauty stores); and
OXXO GAS service stations.

COMERCIO

13 million
OXXO
customers
served daily

FEMSA Comercio
is present in
6 countries

In 2019,
FEMSA Comercio
created
21,000+
new jobs

FEMSA Comercio
employs
198,000+
people of which
57% are women

F E M S A AT
A G L A N C E

VA L U E C R E AT I O N
H I G H L I G H T S

D E A R
S H A R E H O L D E R S

F E M S A
C O M E R C I O

C O C A - C O L A
F E M S A

F E M S A S T R AT E G I C
B U S I N E S S E S

F E M S A
F O U N D AT I O N

C O R P O R AT E
G O V E R N A N C E

F I N A N C I A L
S U M M A R Y

C O N TA C T

Proximity Division

FEMSA Comercio’s Proximity Division operates the largest
chain of small-format stores in the Americas and is the
second largest retailer, in terms of revenues, in Mexico.
Under the brand name, OXXO, our aim is to deliver
convenience and simplify the lives of our customers. With an
average of more than 3,200 SKUs per OXXO store, we employ
a variety of strategies that strengthen our value proposition
while driving same store sales and profitability.

0
3
3
9
1

9
9
9
7
1

6
2
5
6
1

2
2
4
,
1

1
3
3
,
1

1
0
3
,
1

FEMSA Comercio’s
Proximity Division
operates the largest
chain of small-
format stores in
the Americas and is
the second largest
retailer, in terms of
revenues, in Mexico.

‘17

‘18

’19

‘17

‘18

’19

TOTAL
STORES

NEW STORES,
NET

Focusing on Sustainability
On an average day in Mexico, OXXO stores will sell more than 850,000 cups of coffee.
OXXO is taking steps to ensure that we are serving those in the most efficient and
sustainable ways we can. First, through the Internet of Things, we are automating and
optimizing coffee sales. Self-serve machines in more than 1,000
OXXO stores are being equipped with digital sensors that alert
employees when coffee quantities are low and need to be
refilled. The devices also send real-time data about product
usage and waste, which is improving productivity and ensuring
the continuous availability of freshly brewed coffee. In the first test
of this system in Hermosillo, Mexico in 2019, coffee sales grew by
more than 10%. Second, we are replacing all single-use disposable
polystyrene coffee cups with cardboard paper cups, a transition that
is expected to be complete across all OXXO stores in 2020. These
steps build on our broader sustainable packaging strategy at
OXXO stores, which includes the use of biodegradable straws,
wooden stir sticks, and the “Sin bolsa, gracias” (“No bag, thank
you)” campaign that was first launched in 2016. As part of this
campaign, we also launched the sale of reusable bags beginning
in 2018. In 2019, we reduced the use of plastic bags in Mexico by
35% compared to the prior year.

Food and Beverage Convenience
Every day, approximately 13 million people make a purchase at an OXXO store in
Mexico, Colombia, Chile, or Peru. One-stop shopping means responding to our
customers’ needs in a fast, simple way—
from grabbing a cup of coffee or a snack
to picking up some grocery essentials.
We know our customers lead busy lives
and increasingly require quick, on-the go
alternatives to have a tasty meal.

In 2010, in Mexico, we began expanding
our fast food variety, offering freshly
prepared foods and complete meals.

19,000 stores in Mexico. In this way, in 2019, OXXO PAY increased the total
number of services that a single OXXO store has to offer more than 700.

Expanding to New Markets
We continue to strengthen our position and leverage our scalable
business platform in new markets. This includes utilizing our expertise
in retail store formats, technology, and operational practices, which
will allow us to continue growing efficiently and profitably.

In 2019, we announced our acquisition of 50% of Raízen
Conveniências, which has more than one thousand franchised or
licensed Shell Select convenience stores within the network of more
than 6,000 Raízen gas stations. Through this joint venture with our
partner, Raízen, we will follow a two-prong growth strategy that will
include increasing the number of Shell Select brand convenience
stores at Raízen gas stations, while also developing the right value
proposition for stand-alone OXXO proximity stores that will best
meet the needs of Brazilian consumers.

This transaction creates a powerful platform for the future growth
of the OXXO brand. Raízen contributes its broad service station
footprint, where current penetration of convenience stores is still
low, and its vast experience operating in Brazil. FEMSA Comercio will
bring to bear its considerable expertise as a developer and operator
of small-format and proximity stores.

We have continued to invest in this capability by developing our
fast-growing prepared food brand, ¡O’Sabor! in Mexico which
includes a variety of specialized items such as tacos, tortas, and fresh
sandwiches. We have also refined the flavors and varieties of these
choices based on the regional preferences of our customers. As of
the end of 2019, 1,271 stores offered the ¡O’Sabor! concept and we
expect to continue its expansion to more stores.

In addition to prepared food, OXXO stores offer a wide selection of
beverages and refreshments. Historically, OXXO stores in Mexico
have only carried beer brands produced and distributed by Heineken
Mexico. Beginning in April 2019, following the start of a new
commercial relationship with Grupo Modelo, the Proximity Division
began adding their beer brands to our beer assortment in select
regions of Mexico, further expanding the beverage selection we can
offer our customers. These brands are expected to gradually become
available at all OXXO stores around the country by the end of 2022.

Digital Proximity Services and Accessibility
In the Proximity Division, we continue to expand and diversify our
value proposition. This constant innovation enables our customers
to satisfy different needs in one single place close to their homes.
One of the advantages OXXO stores have long offered customers is
access to important services, such as utility bill payment, deposits into
bank accounts held at our correspondent bank partners, remittances,
prepayment of mobile phone fees, and other financial services. Currently,
customers have the ability to pay for more than 5,000 services in an
OXXO store, and we expect that offering to continue to grow. In fact, we
know that facilitating access to a wide range of products and services
is a fundamental part of our value proposition. For this reason, we are
evolving our offerings and strengthening our digital strategy. For example,
e-commerce transactions carried through OXXO PAY are able to facilitate
cash payments to affiliated businesses with real-time application in
exchange for their respective purchased digital goods at more than

As of the end
of 2019,
1,271 stores
offered the

concept and we
expect to continue
its expansion to
more stores.

Diversity and Inclusion
Career development

• 8 employment and training centers
• 2,817 senior citizens employed
• 858 disabled people employed

Circular economy
Redesign, reduce, reuse, repair, recover
and recycle

• Reduce-reuse

- OXXO uniforms; contain 50% recycled

PET fiber

- Bags; oxy-biodegradable bags

containing 20% recycled material

• Redesign, recover and recycle

- 8,570 stores with waste separation bins

• Recover

- 844 metric tons of retail and

office furniture

Jobs
A good source of jobs

• More than 160,000 employees

Energy
Efficient use and renewable sources
• 13,437 stores supplied with renewable

electrical energy

• 15,487 stores with smart

energy systems

• 33% energy consumption reduction

per store compared to year 2009

Good Neighbor
Building sustainable communities
• OXXO Customer Ticket Round-Up
- 250 local charitable institutions
- Ps. 79.0 million (US$ 4.2 million) collected

on behalf of customers

• Community actions and volunteer work

- 836 community actions
- 25,921 volunteers
- 77,763 hours of volunteer time

• Food bank

- Ps. 70.0 million (US$ 3.7 million) worth

of food donated
• Urban Tree Planting

- 22,063 trees planted and conserved in

OXXO stores

FEMSA ATA GLANCEDEAR SHAREHOLDERSFEMSACOMERCIOCOCA-COLAFEMSAFEMSA STRATEGIC BUSINESSESFEMSAFOUNDATIONCORPORATEGOVERNANCEFINANCIALSUMMARYVALUE CREATION HIGHLIGHTSCONTACTANNUAL REPORT201917

Health Division

FEMSA Comercio’s Health Division responds to the healthcare
needs of the communities where it operates. Through a growing
network of drugstores and related operations, we distribute and
sell patented and generic pharmaceutical drugs, beauty products,
medical supplies, and wellness and personal care products, among
other categories. In 2019, we continued to expand our presence
in Latin America and consolidate a fragmented industry. As we
standardize our business model across regional brands, we are
building a solid platform for regional growth.

FEMSA Comercio started to build its Health Division in 2012 and,
as of December 31, 2019, the brands that make up the Division
already represent the second largest pharmacy chain in Latin
America, operating a total of 3,161 points of sale.

Ecuador
634

Colombia
401

Mexico
1,256

Chile
870
(including 172 Maicao beauty stores)

HEALTH DIVISION POINTS OF SALE
Latin America

3,161 total

1
6
1
,
3

1
6
3
2

5
2
2
2

0
0
8

5
0
1

6
3
1

‘17

‘18

’19

‘17

‘18

’19

TOTAL
STORES

NEW STORES,
NET *

Strengthening and Scaling Up the Organization
2019 saw several strategic developments for FEMSA Comercio’s
Health Division that have resulted in our ownership of 100% of
our health platforms in Mexico and South America. In Mexico, we
became the sole shareholder of our drugstore platform through
the purchase of its minority interest. In Ecuador, we successfully
completed the acquisition of Corporación GPF, a leading drugstore
operator with attractive growth prospects, operating 634 points of
sale nationwide under the Fybeca and SanaSana banners. And just
before the end of 2019, we became the sole shareholder of our
South American drugstore and distribution platform, Socofar,
by acquiring the 40% stake that we did not own from our
minority partner.

These important developments represent another successful
milestone in our long-term effort to continue gaining relevant
scale and brand recognition by building a leading regional
drugstore platform. We believe this will create more opportunities
for our operations in Mexico and South America to collaborate
and generate value together.

* Includes the acquisition of Corporación GPF in Ecuador.

FEMSA Comercio
started to build
its Health Division
in 2012 and, as
of December 31,
2019, the brands
that make up the
Division already
represent the
second largest
pharmacy chain in
Latin America.

FEMSA ATA GLANCEDEAR SHAREHOLDERSFEMSACOMERCIOCOCA-COLAFEMSAFEMSA STRATEGIC BUSINESSESFEMSAFOUNDATIONCORPORATEGOVERNANCEFINANCIALSUMMARYVALUE CREATION HIGHLIGHTSCONTACTANNUAL REPORT201918

We use loyalty
program data
insights to digitally
deliver customized
promotions to our
customers, thereby
making it easier and
more affordable
for them to follow
their healthcare
treatments.

processed through the loyalty program, which helps us offer
a broader assortment, better options and increased availability
of medicines, personal care, beauty, and health and wellness
products and services.

• Digital strategy: We are developing a digital strategy based on
our customer knowledge and omnichannel marketing insights.
With the use of technological tools, we can anticipate the
needs of our customers so that we can add significant value to
their check-out process. This information becomes very useful
for customers, particularly for patients with chronic ailments.
We can also strategically allocate the distribution of personal
care products by understanding patterns of consumption, or
adapt the value proposition of our pharmacies to the needs of
our customers. Although pharmacies are not the typical retail
environment, we don’t believe they are exempt from the service
expectations that customers have for other types of stores.
For this reason, we offer several customer service conveniences,

We also know these advancements will not be possible without a
strong team of diverse employees. Supported by our inclusive hiring
policy, there are currently more than 7,000 employees within the
Health Division in Mexico, of which more than 75% are women.
In addition, our workforce includes 42 senior citizens.

As we grow our business, we are also committed to powering our
operations responsibly. In line with FEMSA’s corporate commitment
to source 85% of the total electric energy demand of our operations
in Mexico from renewable energy by 2020, the Health Division
currently has 622 stores in Mexico that are powered by wind energy.

Enhancing our Customer Value Proposition
Delivering a consistent level of service across our brands to all
customers in the markets where we operate. In 2019, we did this in
several important ways:

• Building community trust: We pride ourselves on being trusted by
the communities we serve. For cases where healthcare costs are
often out-of-pocket and doctor visits may be unaffordable, visiting
the local pharmacy for over-the-counter medicines and healthcare
advice can be invaluable, and we take this responsibility very
seriously. 100% of our store team leaders and pharmacists across
all markets and brands are fully trained on an ongoing basis to assist
our customers. We also ensure a consistent standard of care across
markets and brands, which allows us to efficiently staff pharmacists
wherever talent is needed in the community.

• Loyalty program: With nearly 5 million members in Chile

and a growing membership in Mexico, our two independent
loyalty programs not only reward customers with significant
product discounts that support health and wellness needs, but
also inform our product sourcing and geographic distribution
decisions. For example, in Chile, more than 80% of all sales are

FEMSA ATA GLANCEDEAR SHAREHOLDERSFEMSACOMERCIOCOCA-COLAFEMSAFEMSA STRATEGIC BUSINESSESFEMSAFOUNDATIONCORPORATEGOVERNANCEFINANCIALSUMMARYVALUE CREATION HIGHLIGHTSCONTACTANNUAL REPORT201919including a “click-and-collect” service (in which customers click
on the products they need via our website or app, and collect
their products at a convenient location); a last mile delivery
service; and full visibility into our prescription inventories. These
advantages not only save our customers time, but allow us to
better serve them by efficiently distributing and transferring
needed inventory between stores.

Supporting our Communities
Another important part of our business strategy is to contribute
to opportunities that make medicines more accessible for lower-
income and underserved populations. One of the key ways we did
this in 2019 was by increasing the number of affordable generics
in our stores. We also produce our own private label medicines
and generics in Chile, and we’re in the process of bringing these
products to other markets pending regulatory approvals. Having
greater control of the production process in Chile allows us to
deliver high quality products at lower prices, since we can work
directly with the laboratories. More than 30% of the generic units
sold in the Chilean market in 2019 were produced by our facility.

We are also committed to giving back to our communities in
other ways. In 2019, Farmacias YZA in Mexico donated more than
Ps. 455,000 (approximately US$ 24,000) to four local non-profit
foundations that provide important health-related support services
to community members in need.

More than 30%
of the generic
units sold in the
Chilean market
in 2019 were
produced by
our facility.

FEMSA Comercio’s Fuel Division operates the OXXO GAS brand of
retail service stations across 17 states in Mexico, offering superior
customer service and selling quality fuels (gasoline and diesel) and
lubes. We continue to participate in the evolution of Mexico’s oil
and gas industry, to a competitive open-market model in recent
years. As of the end of 2019, OXXO GAS remained the largest
participant in the fragmented retail service station market in Mexico,
operating 545 service stations out of a total of approximately
12,500 stations across the country.

Although challenges throughout the year prompted a slower
pace of service stations growth in 2019, the addition of six new
OXXO GAS brand service stations contributed to favorable financial
results and strong margins overall, including an increase in total
revenues of 2.0% for the full year as compared to 2018.

9
3
5

5
4
5

2
5
4

7
8

0
7

‘17

‘18

’19

‘17

‘18

’19

TOTAL SERVICE
STATIONS

NEW STATIONS
NET

Competitive Differentiation
In 2019, new players continued to enter the market, bringing
the total of brands operating in Mexico to more than 75. This
resulted in evolving competitive dynamics and in the Mexican
customer being exposed to new value propositions. To adapt to
this increasingly competitive environment, OXXO GAS remained
clearly focused on adeptly navigating changes to the industry
supply chain while providing superior customer service.

First, we continued our ongoing effort to re-brand our service
stations with the OXXO GAS trademark image, which is
supporting the easier identification of our service stations in the
market. Next, we focused on improving our customers’ OXXO
GAS station experience as a cornerstone of our value proposition.

FEMSA Comercio’s
Fuel Division
operates the
OXXO GAS brand
of retail service
stations across 17
states in Mexico,
offering superior
customer
service and
selling quality
fuels and lubes.

FEMSA ATA GLANCEDEAR SHAREHOLDERSFEMSACOMERCIOCOCA-COLAFEMSAFEMSA STRATEGIC BUSINESSESFEMSAFOUNDATIONCORPORATEGOVERNANCEFINANCIALSUMMARYVALUE CREATION HIGHLIGHTSCONTACTANNUAL REPORT201921

A N N U A L R E P O R T
2 0 1 9

F E M S A AT
A G L A N C E

VA L U E C R E AT I O N
H I G H L I G H T S

D E A R
S H A R E H O L D E R S

F E M S A
C O M E R C I O

C O C A - C O L A
F E M S A

F E M S A S T R AT E G I C
B U S I N E S S E S

F E M S A
F O U N D AT I O N

C O R P O R AT E
G O V E R N A N C E

F I N A N C I A L
S U M M A R Y

C O N TA C T

At OXXO GAS, we differentiate ourselves in several important ways:

• Reinforcing customer trust by keeping extremely reliable
processes for the maintenance and calibration of our gas
pumps, in order to consistently achieve higher accuracy
standards than those required by PROFECO (Procuraduría
Federal del Consumidor), Mexico’s consumer protection agency.
Due to this, our customers can be assured they are receiving
complete liters while achieving better fuel efficiency.

•

Improving the customer experience by focusing in
understanding their needs and aligning our value proposition
to better meet them, while leveraging our technological
infrastructure to improve our offering. We also begun to
implement cross-promotional strategies with those OXXO
Proximity stores that come about to be located with OXXO GAS
stations. For example, in 2019, to reward customer loyalty while
generating additional sales, we offered discounts up to
50% on select OXXO products when refueling at OXXO GAS.

We focused on
improving our
customers’
OXXO GAS station
experience as
a cornerstone
of our value
proposition.

Delivering Efficiency
We focus on customer service and sustainability by
designating green rest areas at 400 service stations
and investing in efficient technologies. Our gas
stations have LED illumination systems and waterless
urinals in restrooms.

To further highlight our customer service commitment, in 2019
we launched a new brand positioning campaign, “Vamos Juntos”
(“Let’s Go Together”), which emphasizes the distinctiveness of the
OXXO GAS brand through a series of engaging commercial spots
—including this video set to music—that have been further amplified
through our social media channels.

2 2

Supporting our Employees
In Mexico, all gas service stations are full service, so we focus to
differentiate OXXO GAS by delivering the industry’s most courteous,
reliable, and efficient service. To ensure that our employees are aptly
trained and fully equipped with the tools they need to succeed,
we implement a variety of programs that support their personal
and professional growth. Through targeted training and coaching
programs—along with above-industry wages and compensation
structures—we support employee development and
reduce turnover.

We also have a strong commitment to labor inclusion, hiring
employees regardless their gender, age or disability. OXXO GAS has
7,862 employees, of which more than 1,700 (24%) are women, 197 are
over the age of 65; and 32 have a disability. In 2019, OXXO GAS won
the Labor Inclusion award from ONEXPO (Organización Nacional
de Expendedores de Petróleo), based on our employee benefits
programs and our policies of inclusion and labor diversity.

Supporting
Education
In 2019, OXXO GAS delivered
school supplies to 4,200 children
of employees, reaching
2,500 families. We also
awarded 236 high school
scholarships and 30 college
scholarships to the children
of employees.

Looking ahead, we are focused on maintaining our status as a
leading brand in the fuel industry in Mexico and to make our
value proposition available to more customers. We aim to grow
our footprint in Mexican states where we already have presence,
consolidating our leading role in the fuel industry while continuing
to create value for all our stakeholders.

1,700
(24%)

WOMEN EMPLOYEES

Total: 7,862 employees

We focus to
differentiate
OXXO GAS by
delivering the
industry’s most
courteous,
reliable, and
efficient service.

FEMSA ATA GLANCEDEAR SHAREHOLDERSFEMSACOMERCIOCOCA-COLAFEMSAFEMSA STRATEGIC BUSINESSESFEMSAFOUNDATIONCORPORATEGOVERNANCEFINANCIALSUMMARYVALUE CREATION HIGHLIGHTSCONTACTANNUAL REPORT201923
With 129 leading brands
produced in 49 bottling plants,
Coca-Cola FEMSA is the largest
franchise bottler of Coca-Cola
products in the world by volume.

COCA-COLA

+261 million
people served in
9 countries

1.9 million
points of sale
through 268
distribution centers

37.2%
of the brands in our
portfolio are
low-or no-sugar
beverages

Covering
70.7%
of manufacturing
energy requirements
from clean sources

FEMSA ATA GLANCEDEAR SHAREHOLDERSFEMSACOMERCIOCOCA-COLAFEMSAFEMSA STRATEGIC BUSINESSESFEMSAFOUNDATIONCORPORATEGOVERNANCEFINANCIALSUMMARYVALUE CREATION HIGHLIGHTSCONTACTANNUAL REPORT2019FEMSA24In 2019, Coca-Cola FEMSA continued to consolidate a leading
total beverage portfolio with options for every consumer
taste and lifestyle. We succeeded in deploying diverse
strategies to create value and produce positive results. More
importantly, we took significant steps forward on our ongoing
transformation into a stronger and more resilient business.

Amidst dynamic macroeconomic conditions in Latin
America, we continue to successfully adapt to ever-changing
landscapes. Coca-Cola FEMSA has a clear objective to
continue growing profitably and sustainably by capturing
opportunities to create value for our stakeholders.

We took
significant
steps forward
on our ongoing
transformation
into a stronger
and more resilient
business.

We launched a set of new initiatives in
2019 to increase agility and efficiency
across our organization—always with
a central focus on putting the needs
of our customers and consumers
first. By leveraging our portfolio and
affordability initiatives, we saw strong
top-line performance in the markets
where we operate, as a result of
our continuous progress, positive
momentum, and encouraging market
trends throughout the year.

Further underscoring our ability to
navigate challenging environments,
in 2019 our volume grew 1.4% to 3.4
billion, transactions growing 2.5% to
20.2 billion, total revenues grew 6.7% to Ps. 194.5 billion
(US$ 10.3 billion) and operating income grew 3.0% to
Ps. 25.4 billion (US$ 1.3 billion).

Sustainability Leadership
In 2019, Coca-Cola FEMSA was one of a
select group of companies recognized for
sustainability leadership by the Dow Jones
Sustainability Emerging Markets Index for the
seventh consecutive year, and by the Dow
Jones Sustainability MILA (Mercado Integrado
Latinoamericano) Pacific Alliance Index for the
third consecutive year.

Our efforts are guided by the affirmation of the strategic mindset that we are one unified company.
The “One KOF” strategy that guides our business approach is made up of four elements.

1. First and foremost, we will maximize value creation for our consumers and customers by

pushing new boundaries.

2. We will fuel growth opportunities through efficiency, productivity and best-in-class capabilities.

3. We will deploy digital tools and adhere to sustainable practices to transform the organization.

4. The attributes of our organizational culture will be reflected in everything we do.

We are
constantly
reinforcing our
motivation for
success, growth,
and profitability.

Consumer focus
Driven by an obsessive consumer focus within our business strategy,
we are constantly reinforcing our motivation for success, growth,
and profitability. With this relentless emphasis on maximizing
value for our customers, we are always thinking about new and
unexpected ways to fulfill their beverage needs. In 2019, we
achieved this in multiple categories through affordability initiatives
and portfolio innovation.

A F F ORDABI LIT Y
We continued to roll out affordability initiatives in our markets
and territories by expanding our single-serve returnable portfolio
strategy and refining the lineup of our offerings. In Mexico, we

FEMSA ATA GLANCEDEAR SHAREHOLDERSFEMSACOMERCIOCOCA-COLAFEMSAFEMSA STRATEGIC BUSINESSESFEMSAFOUNDATIONCORPORATEGOVERNANCEFINANCIALSUMMARYVALUE CREATION HIGHLIGHTSCONTACTANNUAL REPORT201926Through launches like
Coca-Cola Con Café,
Coca-Cola Energy and
Coca-Cola Sin Azúcar,
we are innovating
and complementing
the Coca-Cola brand
portfolio while
expanding it to
more consumption
occasions.

connected with consumers who are economically resilient but
looking for increased affordability. To meet their needs, we identified
opportunities to widen the availability of both smaller and larger
returnable presentations. To target primarily on-premise consumption,
we launched a 235 ml single serve returnable glass bottle for Ps. 5.
We also increased coverage of the 3-liter returnable bottle. In addition
to adjusting size, we introduced sparkling flavors in Mexico at more
affordable prices, including 400 ml presentations of Sprite, Fanta
and Sidral Mundet for Ps. 7.

We also successfully applied the affordability strategy elsewhere
in Latin America. For example, in Argentina, we rapidly adapted
our portfolio to remain close to our consumers. Additionally, our
Brazilian operation continued its impressive turnaround despite slow
economic growth, which has led to market share gains across our
key beverage categories.

PORTFOLIO INNOVATI ON
To support continued diversification of our portfolio through
consumer-oriented carbonated and non-carbonated innovations,
we consider consumption occasions across three tiers of price
accessibility: affordable, mainstream, and premium. We also
continue to satisfy our consumers with low-and no-sugar
beverages. We reinforced these focus areas through several key
product launches.

•

In Mexico, we launched Coca-Cola Con Café and
Coca-Cola Energy to target distinct consumption occasions.

In Brazil, we expanded several affordable and premium sparkling
beverages, including Del Valle Fresh, an affordable fruit-based
sparkling beverage, and YAS, a premium sparkling beverage with
natural sweeteners and flavors. We also launched additional

Magic Price
Points

Our Magic Price Points
strategy draws us
closer to consumers
by offering them an
easy transaction.
Affordable single-
serve beverages
are conveniently
priced at the value
of a single common
coin or bill.

premium offerings by leveraging the
Schweppes brand of sparkling waters,
club sodas, and tonic waters.

•

In Brazil and other markets, we
expanded our premium water
offerings to include enhanced
attributes and flavors, including
the purified, electrolyte-enhanced
Smartwater, and Crystal, available as
either a mineral still water or
carbonated option.

FEMSA ATA GLANCEDEAR SHAREHOLDERSFEMSACOMERCIOCOCA-COLAFEMSAFEMSA STRATEGIC BUSINESSESFEMSAFOUNDATIONCORPORATEGOVERNANCEFINANCIALSUMMARYVALUE CREATION HIGHLIGHTSCONTACTANNUAL REPORT201927
no longer report directly to their Country Managers, but rather to
the Chief Financial Officer of Coca-Cola FEMSA. Changes like this
will allow us to leverage the scale of our entire organization so that
we can better identify inefficiencies and redundancies, standardize
the way we work across territories, and become more aligned as a
single platform.

Commercial 4 Growth: Our vision is to develop
digitally driven capabilities and operating models to
deliver better value for our customers and consumers.
To achieve this, we aim to develop eight core
commercial capabilities: market segmentation; revenue

growth management; demand planning; commercial
execution; route to market; customer service and engagement;
commercial analytics and data management; and digital technology.
One of the highlights of these transformations was the deployment
of a new machine learning prescriptive analytical engine that has
considerably improved the accuracy of our demand forecasting.
Additionally, we fully deployed our Dynamic Initiative Management
tool across Mexico, Brazil, Colombia, and Argentina, which has
allowed us to identify, prioritize, and communicate specific customer
initiatives to our sales force.

Finance 4 Growth: A third priority for fueling our

growth strategy relates to empowering the Finance
function to be the enabler of the organization’s
commercial, manufacturing, and distribution
capabilities. This includes the digitization of

processes and the deployment of our shared service

strategies to unlock further value potential. These initiatives will
strengthen our organization, eliminate redundancies, streamline
our cost base, and free up resources to support our future
business growth.

Fuel 4 Growth
As part of our commitment to strengthen our organization,
eliminate redundancies, and free up resources to support our
growth, in 2019 we embarked on our Fuel 4 Growth program—a
set of initiatives to create a leaner and more agile organization
that is fully focused on its consumers. Through four target areas of
transformation—People, Commercial, Finance, and Supply—we are
fueling new growth opportunities across our business.

People 4 Growth: We are redesigning the
organizational structure of our company to become
leaner and more capable of navigating dynamic
environments. To further emphasize the importance
of operating as “One KOF”, we focused on a series

of functionalization initiatives for key departments,

intended to better align regional strategies and more easily share
best practices. For example, the Finance Directors in each country

We embarked on
our Fuel 4 Growth
program—a set
of initiatives to
create a leaner
and more agile
organization that
is fully focused on
its consumers.

FEMSA ATA GLANCEDEAR SHAREHOLDERSFEMSACOMERCIOCOCA-COLAFEMSAFEMSA STRATEGIC BUSINESSESFEMSAFOUNDATIONCORPORATEGOVERNANCEFINANCIALSUMMARYVALUE CREATION HIGHLIGHTSCONTACTANNUAL REPORT201928We continue
to focus on
developing and
deploying
next-generation
business
capabilities
through the
KOFmmercial
Digital Platform.

Supply 4 Growth: As part of our company´s
transformation, we functionalized our key supply
chain area to advance, optimize, and standardize
our operating models, systems, and processes.
We identified operations with the best practices
and decentralized our distribution and manufacturing

centers of excellence to Brazil and Mexico operations, respectively.
Consistent with our vision, we launched our Supply Chain
Reinvention initiative to collaboratively and systemically share,
adopt, and devise best practices. This is serving to bolster our
talent pool and capture new productivity opportunities across the
company’s supply chain and throughout our 9 operational centers.

Digital and sustainable
An essential part of the Fuel 4 Growth program is an ongoing
strategic focus on our digital capabilities and sustainability
commitments.

KOFmmercial Digital Platform: To strengthen our performance
and boost our competitive advantage, we continue to focus on
developing and deploying next-generation business capabilities
through the KOFmmercial Digital Platform (KDP). Backed by

advanced predictive analytics and digital distribution capabilities,
the KDP supports the development of effective operating models
and seamlessly manages dynamic strategic initiatives. This allows us
to adapt our business toward technology-driven commerce for our
main sales channels and further support consumer and customer
engagement. In 2019, we reached 7,600 pre-sale routes in
nine countries, including Uruguay and Guatemala for the first time.

Sustainability
We continue to strengthen our key performance indicators for sustainability
leadership. In 2019, we:

•

Improved our water-use ratio per liter of beverage produced, from 1.58 liters in 2018 to
1.52 liters. We also continued to return to the environment 100% of the water we use
to produce beverages in Brazil, Central America, Colombia, Argentina, and Mexico.

•

Increased our use of recycled PET from 21% in 2018 to 23.7% in 2019.

• Expanded the use of clean energy in our manufacturing facilities from 50.0%

in 2018 to 70.7%.

These achievements have allowed us to
surpass or be on track to reaching our 2020
sustainability goals that we outlined in 2015.

As a leading bottler, we are committed to
“World Without Waste”, a global initiative led
by The Coca-Cola Company, which includes
2030 targets for collecting and recycling the
equivalent of 100% of the packaging we sell,
as well as integrating 50% of recycled PET
resin into our bottles.

FEMSA ATA GLANCEDEAR SHAREHOLDERSFEMSACOMERCIOCOCA-COLAFEMSAFEMSA STRATEGIC BUSINESSESFEMSAFOUNDATIONCORPORATEGOVERNANCEFINANCIALSUMMARYVALUE CREATION HIGHLIGHTSCONTACTANNUAL REPORT201929
KOF DNA
Finally, ubiquitous to our strategy and mindset (as depicted by the
outer-most circle surrounding our “One KOF” strategy diagram,
page 26), are the values and culture of our organization that are vital
for our success: Operational excellence, Owners mentality, People
first, and Agile decisions. Internally referred to as our “KOF DNA”, this
model guides our people with the tools and capabilities they need
to succeed. Recognizing that our people co-create our culture

and share responsibility for our company’s transformation, our KOF
DNA is helping us to achieve our strategic vision of becoming an
undisputed total beverage leader with sustainable and profitable
long-term growth.

For more information, please visit:

Coca-Cola FEMSA’s 2019 Annual Report.

Ubiquitous to our
strategy and mindset
are the values
and culture of our
organization that are
vital for our success:
Operational excellence,
Owners mentality,
People first,
and Agile decisions.

People
Comprehensive development

• Ps. 416.8 million (US$ 22.1 million)

invested in our people

Water management
Care, efficiency and replenishment

• 1.52 liters of water per liter of beverage
• We return 100% of the water used to

make our drinks in Mexico, Brazil, Central
America, Colombia and Argentina

Circular economy
Redesign, reduce, reuse, repair,
recover and recycle

• Redesign

- 23.7% recycled resin in PET bottles

• Reduce

- 22 manufacturing plants in Mexico

with zero waste certification

- 95.7% waste recycled in
manufacturing plants

Value chain
Integration
• Sustainability evaluation

- 531 supplier evaluations

• 266 suppliers participated in our
SME development program in the
past 4 years.

Healthy habits
We encourage and promote
• Since 2015, we have benefited

7.2 million people with our healthy
habits and nutrition program

Community
Building sustainable communities
• 81.6% of our plants with MARRCO
community management processes
• More than 6,600 activities with the

community

Energy
Efficient use and renewable sources
• 70.7% of manufacturing electric energy

sourced from renewable energy

• We increased our energy efficiency rate by

46% from 2010 to 2019

FEMSA ATA GLANCEDEAR SHAREHOLDERSFEMSACOMERCIOCOCA-COLAFEMSAFEMSA STRATEGIC BUSINESSESFEMSAFOUNDATIONCORPORATEGOVERNANCEFINANCIALSUMMARYVALUE CREATION HIGHLIGHTSCONTACTANNUAL REPORT201931In addition to our core business segments,
FEMSA operates several strategic businesses
that amplify our competitive advantage.
Providing logistics, transportation, cooling
systems, and foodservice solutions
to FEMSA’s core businesses and other
companies, these businesses include:
Solistica and AlPunto.

BUSINESSES

6,000+
vehicles owned

160,000+
delivery points
per week

800,000+
square meters
of warehousing
capacity

4,000+
clients in seven
countries

* Solistica’s data

FEMSA ATA GLANCEDEAR SHAREHOLDERSFEMSACOMERCIOCOCA-COLAFEMSAFEMSA STRATEGIC BUSINESSESFEMSAFOUNDATIONCORPORATEGOVERNANCEFINANCIALSUMMARYVALUE CREATION HIGHLIGHTSCONTACTANNUAL REPORT2019FEMSA STRATEGIC32As the largest company within the FEMSA Strategic Businesses
by revenue, Solistica is a third-party logistics (3PL) provider
that serves more than 4,000 clients in seven countries. Since
our founding in 1998, we have grown and evolved, and today,
our more than 23,000 Solistica employees offer personalized
and comprehensive solutions in Transportation, Warehouse,
and other Value-added Services.

Solistica’s current client portfolio is primarily comprised of
Fortune 500 companies across the following key industries:
pharmaceuticals, automotive, technology, and consumer
goods, among others. In addition, approximately 30% of
our business is made up of the broad range of logistics and
vehicle maintenance services we deliver to fellow FEMSA-
affiliated companies. This includes managing primary
distribution for Coca-Cola FEMSA and Heineken (that is,
transferring beverages from bottling and brewing plants to
distribution centers) and secondary distribution for FEMSA
Comercio’s Proximity Division (that is, delivering products
from OXXO distribution centers to OXXO stores). Solistica
is proud to leverage our world-class logistics expertise and
optimization strengths to be a trusted component of FEMSA’s
supply chain.

Our vision is to continue strengthening our regional focus
to become the leading logistics provider for
Latin America.

Solistica is a
third-party
logistics (3PL)
provider that
serves more than
4,000 clients in
seven countries.

Commitment to Safety
At Solistica, we are committed to ensuring
the safety of all our employees and everyone
connected to the supply chains that we support.
By fostering a culture of safety across the
organization, we strive to eliminate dangerous
working conditions, accidents, and injuries.
In addition to taking steps such as ensuring
vehicles are equipped with advanced collision
avoidance technology, we also implement a variety
of management best practices. This includes regularly
scheduled “safety briefings” to discuss safety issues with employees
and “safety walks” to inspect site surroundings. To continuously
improve performance and monitor safety, we also provide ongoing
employee trainings and regularly conduct site audits.

Consolidating our Capabilities
In 2019, we took bold steps to enhance our
customer value proposition.

•

In recognition of the importance of putting
our clients at the center of everything we
do, we developed a comprehensive Business
Model structured by our three product areas
(Transportation, Warehousing, and Other
Services) which serves to standardize our
offerings across regions. Supported by three
transversal enablers—technology, operational
efficiency, and commercial efficiency—
the model guarantees an integrated and
standardized operation across our regions.
It also helps to ensure the efficiency of
resources through our Global Business Service
(GBS) and business partners.

CUSTOMER

Solistica’s Business Model ensures
cross-functional collaboration and
alignment to deliver a more unified
sales effort as a single team.

FEMSA ATA GLANCEDEAR SHAREHOLDERSFEMSACOMERCIOCOCA-COLAFEMSAFEMSA STRATEGIC BUSINESSESFEMSAFOUNDATIONCORPORATEGOVERNANCEFINANCIALSUMMARYVALUE CREATION HIGHLIGHTSCONTACTANNUAL REPORT201933
In 2019 we focused
on operational
excellence and
created a new
role that oversees
safety, quality,
performance
management,
and continuous
improvement.

• As part of our Global Commercial Model—which aims to move

the company towards a unified sales effort focused on clients
so we can work as a single team—we implemented a Customer
Relationship Management system to enhance team collaboration
and better manage sales leads. We also deployed a commercial
methodology called “COMMET” that focuses on speeding up the
sales cycle to close more high-quality opportunities.

• We integrated new technological tools to operationalize

our Global Commercial Model and strengthen our
competitive advantage.

• We focused on operational excellence and created a new

role that oversees four key operational areas: safety, quality,
performance management and continuous improvement.
Through this role, we aim to create a differentiating
competitive advantage for Solistica.

less-than-truckload logistics platform, the AGV acquisition
makes Solistica the first fully integrated 3PL solution provider
in the Brazilian market. Regionally, the transaction represents a
vital building block in our overall strategy of being a competitive
industry player with both distribution and warehousing
capabilities. AGV will generate new synergies, complement the
existing platform, and significantly enhance Solistica’s customer
value proposition in Brazil and the region.

Sustainable Mobility
As a logistics company, we are highly aware of the environmental
impacts of our operations, including the greenhouse gas (GHG)
emissions that result from the fuel combustion in our vehicles.
Through our Sustainable Mobility program, we strive to reduce our
reliance on fossil fuels by utilizing alternative fuels and optimizing
our transportation routes.

• We completed the acquisition of AGV, a leader in value-added

warehousing and distribution in Brazil, which increases
our warehousing capability by more than 300,000 square
meters in 15 Brazilian states. Combined with our existing

We also optimize our routes using a transportation management
system that automates business processes and integrates all
planning into a single application. With real-time tracking, mapping,
and planning capabilities, we identify inefficiencies and opportunities
to save time, costs, resources, and GHG emissions.

Transporte Limpio
In 2019, for the ninth consecutive year, Solistica was recognized by Mexico’s Ministry of
Environment and Natural Resources (SEMARNAT) and the Ministry of Communications
and Transportation (SCT) with the “Transporte Limpio” (“Clean Transport”) award for
achievements to lower industry fuel consumption and GHG emissions.

Solistica was recognized for its efficient distribution practices in 2017-2018 to
FEMSA-affiliated customers: Coca-Cola FEMSA, HEINEKEN México, and OXXO.
Through its Sustainable Mobility program, it avoided the issuance of 281,975 tons
of CO2 and avoided fuel consumption equivalent to 103,659,386 liters.

People
Career development

• Training and development:
517,470 hours of training

• More than 20,000 jobs

Sustainable services
Integrated logistical solutions

• Legal Compliance

- Zero environmental fines
• Comprehensive safety system
- 70,994 hours of training in

occupational health and safety

• Certifications:

- ISO 9001-2015 *
- ISO 39001-2001 **
- ISO 14001-2015 ***
- Gold seal for good practices and
commitment to safety of children
on the road. ****

Scope for some operations in Brazil,
Colombia and Mexico.

** Scope for some operations in México.

*** Scope for some operations in Colombia

and Brazil.

**** Scope for some operations in Colombia.

Circular economy
Redesign, reduce, reuse,
repair, recover and recycle
• Reduce

- Reduced waste generation by 9%

• Recycle

- Recycled 44% of waste generated

Sustainable actions
Addressing solutions
to global challenges
• Route optimization

- 281,975 metric tons of CO2 avoided
• Environmental impact of transportation

- 9 consecutive years of Clean

Transport Certification

• Water management

- 1,874,993 liters of rainwater captured

and reused for truck washing

FEMSA ATA GLANCEDEAR SHAREHOLDERSFEMSACOMERCIOCOCA-COLAFEMSAFEMSA STRATEGIC BUSINESSESFEMSAFOUNDATIONCORPORATEGOVERNANCEFINANCIALSUMMARYVALUE CREATION HIGHLIGHTSCONTACTANNUAL REPORT201935

In the Mexican state
of Queretaro, FEMSA
Strategic Businesses
represent the second
most important
employer in
the region.

Other Businesses
FEMSA Strategic Businesses also include operations related to the
food service industry, which drive significant economic and social
value. For example, in the Mexican state of Queretaro, FEMSA
Strategic Businesses represent the second most important employer
in the region. Each company serves diverse customer bases and
also supports other FEMSA business units.

AlPunto
A group of companies focused on providing equipment solutions,
material handling and other comprehensive services at points
of sale. In alignment with FEMSA’s mission, AlPunto aims to
create social and economic value in the communities in which
it participates by delivering innovative products and services
that guarantee the highest return on clients’ assets. Four of the
companies that make up AlPunto include:

Imbera
As the world’s largest commercial refrigeration manufacturer with
facilities in Mexico, Colombia and Brazil, Imbera manufactures
equipment for the soft drink, beer and food service industries,
including coolers, food processing, storage and weighing
equipment. As of the end of 2019, Imbera had an annual capacity
of approximately 1 million units, 30% of which were delivered to
Coca-Cola FEMSA, with the remainder being sold on the open
market to customers in 56 countries. Because innovation and
customer satisfaction are strategic priorities for Imbera, we are
committed to developing efficient products that address global
challenges. For example, over the last 10 years, Imbera has reduced
the energy consumption of its coolers by more than 85%.
In addition, Imbera’s coolers use the eco-friendly R290 refrigerant,
which has a low environmental impact.

PTM
Through its state-of-the-art design and manufacturing facilities,
PTM designs, manufactures and recycles plastic products that
support operational and marketing strategies for materials handling,
automobiles and food and beverage production. In addition to
serving diverse external customers across Latin America, PTM also
supports FEMSA’s core businesses.

PTM operates a recycling line which can process 2,000
kilograms of material per hour. Learn more in this video

FEMSA ATA GLANCEDEAR SHAREHOLDERSFEMSACOMERCIOCOCA-COLAFEMSAFEMSA STRATEGIC BUSINESSESFEMSAFOUNDATIONCORPORATEGOVERNANCEFINANCIALSUMMARYVALUE CREATION HIGHLIGHTSCONTACTANNUAL REPORT201936
Torrey
Through an extensive distributor specialist network, Torrey delivers
high-quality food processing, preservation and weighing equipment
for butcheries, small retailers, supermarkets, convenience stores,
hotels and restaurants in more than 50 countries worldwide.

Cooking Depot
For 50 years, Cooking Depot has been meeting the kitchen
equipment and accessory needs of the market’s points of sale and
consumption centers through continuous innovation in service
and by making hundreds of useful products available to its customers.

Accelerating the Transition to the Circular Economy
The circular economy promotes the responsible and cyclical use of resources. It is designed to
encourage the reduction and reuse of its supplies and represents an opportunity to reinvent the way
the business finds, uses and disposes the materials it requires to offer its products and services.

At FEMSA, we are developing innovative opportunities in our business model to progress towards
a circular economy. Across the FEMSA Strategic Businesses division, we are rethinking our product
design: recovering waste, increasing recycling and reducing packaging materials. The following are
some of the results:

• AlPunto is committed to supporting measures for the responsible disposal of its equipment. In 2019,
a new recycling plant was opened to collect end-of-life refrigerators and reuse or recycle up to
90% of its components. Once collected, the refrigerators are completely dismantled and all metals,
plastics, electrical components and fuels are carefully separated. A comprehensive monitoring,
tracking and verification program is then employed to ensure that all components are reused or
recycled rather than sent to a landfill.

• PTM plays a key role in finding solutions to the global waste challenge by recovering more than

30,000 tons of plastic annually (equivalent to 66% of the plastic used in PTM’s operations per year)—
including bottle caps collected by Coca-Cola FEMSA that would otherwise be considered waste.
In 2019, 90% of PTM’s manufactured products—including pallets, ice chests, furniture, and plastic
crates, among others—were made from recycled raw materials.

In 2019, a new
recycling plant
was opened to
collect end-of-life
refrigerators and
reuse or recycle
as much as 90% of
their interior parts.

FEMSA ATA GLANCEDEAR SHAREHOLDERSFEMSACOMERCIOCOCA-COLAFEMSAFEMSA STRATEGIC BUSINESSESFEMSAFOUNDATIONCORPORATEGOVERNANCEFINANCIALSUMMARYVALUE CREATION HIGHLIGHTSCONTACTANNUAL REPORT201937The FEMSA Foundation was created
in 2008 on the premise that a
sustainable company can only exist
with sustainable communities.

FOUNDATION

2,462*
communities
benefited through
social projects

US$ 45.8+
million*
invested and
US$ 208.1 million
leveraged

62+ million
people *
positively impacted
directly and indirectly

250 partners*
in 12 countries

12.3 million visitors
to FEMSA Collection
artwork since 2000
250 socios
involucrados
* Data from 2008 to 2019

FEMSA recognizes and embraces the opportunity to take a bold
leadership position on issues for which we can use our platform to
positively contribute to society. We have a long history of actively
working to build trust with our stakeholders through our operations,
policies, and community investments. As such, the FEMSA
Foundation is an important vehicle through which we generate
economic, social, and environmental value.

The FEMSA Foundation’s strategic agenda is organized into
three pillars of impact: Sustainable Development, Early
Childhood Development, and the Cultural Program. For each,
we are facilitating successful models of project implementation,
knowledge exchange, and opportunities to present best practices
from subject matter experts.

FEMSA recognizes
and embraces the
opportunity to take
a bold leadership
position on issues
for which we can
use our platform to
positively contribute
to society.

Partnerships for Green Growth
In September 2019 during the UN Climate Action Summit, The Latin
American Water Funds Partnership received the State-of-the-Art
Partnership Award in the Clean Water and Sanitation category, for
its exemplary alignment with Sustainable Development Goal #6. The
award was presented
by Partnering for Green
Growth and the Global
Goals 2030 (P4G), a
network of global leaders
and innovators from
government, business and
international organizations
working to drive green
growth and impactful
climate action.

Learn more here

Sustainable Development
Over the last 11 years, the FEMSA Foundation has supported environmental value
creation by investing in projects that ensure the sustainable management of water in the
communities where we operate. In 2019, we continued to foster collective action through
strategic partnerships to create greater impact. For example:

• Water Funds: First launched in 2011, FEMSA Foundation is part of the Latin American

Water Funds Partnership (LAWFP), an agreement to contribute to water security in Latin
America and the Caribbean through the creation and expansion of Water Funds–or
organizations that promote sustainable watershed management through stakeholder
engagement, informed decision-making, and responsible governance. To date, 25
Water Funds have been launched in eight Latin American countries, with 15 more in
development. The LAWFP has also created a methodology and is testing a new system for
the development and acceleration of Water Funds throughout the region.

FEMSA ATA GLANCEDEAR SHAREHOLDERSFEMSACOMERCIOCOCA-COLAFEMSAFEMSA STRATEGIC BUSINESSESFEMSAFOUNDATIONCORPORATEGOVERNANCEFINANCIALSUMMARYVALUE CREATION HIGHLIGHTSCONTACTANNUAL REPORT201939In 2019, the LAWFP began to identify strategic ways to
collaboratively multiply its impact at three levels of engagement:
locally, nationally, and regionally. For example, in Colombia, a
recently formed coalition—made up of all nine Water Funds in
the country, along with private sector partners and academia—
are working directly with the national government in support
of a national water security plan. Regional action plans include
collective action by all Water Funds. These and other important
initiatives were discussed at the fourth Water Funds Summit
in July 2019, which was attended by more than 300 relevant
stakeholders to promote knowledge exchange and multiply
collaborative impact. Learn more here

• Lazos de Agua: Originally launched in 2013 to improve

sanitation and access to safe water across Latin America, Lazos
de Agua is now in its second phase with a focus on promoting
behavior change through social art. In 2019, the program
benefited people in five Latin American countries through close
work with our strategic partners—including the Inter-American
Development Bank (IDB), The Coca-Cola Foundation, and One
Drop—to continue improving our community engagement
approach and ensure on-the-ground understanding of pressing
issues and concerns.

•

IDB-FEMSA Award: Under the premise that the biggest
challenges produce the most innovative solutions, the IDB-
FEMSA Award recognizes entrepreneurs and start-ups that are
tackling tough societal problems related to water, sanitation, and
solid waste. On its 10th anniversary in 2019, winners presented
solutions that filter drinking water through a kitchen faucet
attachment; capture and reuse the cold water normally wasted
while waiting for a hot shower; and extract water from humidity
in the air to use for cooking and drinking.
Learn more here

Over the years, the FEMSA Foundation’s environmental
programming has grown from water conservation and access, to
water security and innovation. Recently, we have begun to explore
how to further evolve our platform by focusing not only on water
issues, but more broadly on sustainable development. During 2020,
we will examine the most effective ways that we can further apply
FEMSA Foundation’s successful models of collective action and
knowledge sharing to these topics, including food and plastic waste,
as well as the water-energy-food nexus.

In February 2019, FEMSA Foundation—along with more
than 300 private sector and academic participants—
engaged in a collaborative dialogue with experts
in natural resources management and sustainable
development at the Tecnológico de Monterrey. The
sessions focused on identifying the strategies that will
be needed to address the water-energy-food nexus
challenges of the 21st century.
•

Learn more here

The fourth
Water Funds Summit
in July 2019 was
attended by more
than 300 relevant
stakeholders to
promote knowledge
exchange and multiply
collaborative impact.

FEMSA ATA GLANCEDEAR SHAREHOLDERSFEMSACOMERCIOCOCA-COLAFEMSAFEMSA STRATEGIC BUSINESSESFEMSAFOUNDATIONCORPORATEGOVERNANCEFINANCIALSUMMARYVALUE CREATION HIGHLIGHTSCONTACTANNUAL REPORT201940

Early Childhood Development
FEMSA Foundation has long believed that when children have
the means to harness their full potential, communities can be
transformed. Our strategy to nurture early childhood development
is focused in three key areas:

• Building resilient communities: to support a child’s opportunity

more than 360 educators and nearly 4,440 children in 25
childcare centers in Mexico. In Brazil, we reached nearly 134
educators and more than 3,400 children in 14 childcare centers.
With the distribution of the facilitator’s guide, we reached more
than 10,700 children in Colombia, more than 670 children in
Guatemala, and more than 230 children in Panama.

to become a productive, secure, and economically strong
member of society, we participate in projects across Latin
America that seek to improve the cognitive, linguistic, motor,
and socio-emotional abilities of children in vulnerable
communities. For example, ¡Listos a Jugar! is a cross-platform
educational program—created by Sesame Workshop, with
the support of FEMSA Foundation—which promotes the
development of healthy habits in preschool children related to
eating, playing, and personal care. The program uses technology
to bring useful content to caregivers and educators through
episodes and songs starring Sesame characters, as well as a
microsite and an application for mobile phones and tablets.
In 2019, a community outreach strategy was developed to
extend classroom learning to the home through accompanying
activities that reinforce classroom lessons. In 2019, we benefited

• Helping employers support working parents: in collaboration
with the Mexican Institute for Competitiveness (IMCO by its
Spanish acronym), we supported a first-of-its-kind research
project in Latin America in 2019 to better understand the state
of “family-friendly” policies available to employees of Latin
American companies, such as parental leave benefits,
childcare support, and access to educational information.
Our findings indicate that companies who are investing in
human capital by offering parental benefits not only secure
higher rates of employee satisfaction and retention, but are
also making important contributions to society by helping parents
raise children who will grow up to succeed in a 21st century
workforce. We hosted an event in October 2019 to further
discuss these issues with representatives from more than
40 companies. Learn more here

Supporting Medical Advancements
Since 2008, the FEMSA Foundation has invested more than Ps. 145.2 million (US$ 7.7 million) to promote
applied health research for the early detection and prevention of diseases through the FEMSA Biotechnology
Center at the Tecnológico de Monterrey. In 2019, the Center developed a groundbreaking treatment for severe
skin wounds, including diabetic ulcers, vascular damage, surgical wounds, and burns. The medicated cream is
succeeding in healing the skin and preventing amputations that might otherwise be necessary. In collaboration
with FEMSA Comercio’s Farmacias YZA and the state government, Oaxaca became the first state in Mexico to
receive this technology through an initial donation of 620 doses. We are proud to help strengthen the links
between research institutions, the private sector, and governments in support of positive public health outcomes.
Learn more here

FEMSA Foundation
has long believed
that when children
have the means
to harness their
full potential,
communities can
be transformed.

FEMSA ATA GLANCEDEAR SHAREHOLDERSFEMSACOMERCIOCOCA-COLAFEMSAFEMSA STRATEGIC BUSINESSESFEMSAFOUNDATIONCORPORATEGOVERNANCEFINANCIALSUMMARYVALUE CREATION HIGHLIGHTSCONTACTANNUAL REPORT201941
Cultural Program
An important part of how FEMSA generates social value rests on
the development of projects that engage communities through
encounters with the arts. For more than 40 years, the FEMSA
Collection has showcased more than 1,200 works of Modern and
Contemporary Latin American art through a series of exhibitions
and a loan program. In 2019, the FEMSA Collection organized
twelve exhibitions, which took place in multiple cities in Mexico
and drew more than 100,000 visitors to the museum for various
activities, including 21 workshops and dialogues related to
exhibit programming. We also maintain a large art loan program,
which loaned works in 2019 from our Collection to international
institutions such as Di Donna Galleries in New York City, and the
Museum of Contemporary Art in North Miami, Florida.

• Expanding public policy awareness: in 2019, we continued our
participation—along with more than 440 other organizations in
Mexico—in the Pact for Early Childhood, an advocacy initiative
calling on the government to enact policies that support early
childhood development. As part of this effort, for the second year
in a row, we gathered more than 45 public officials and decision-
makers for the seminar, “Policies for the future: Well-being from
early childhood”, with the goal of creating increased awareness
about the importance of supporting early childhood as a pillar
of success for families in Mexico. Together with the Tecnológico
de Monterrey School of Government and Public Transformation,
LEGO Foundation, the Inter-American Development Bank,
and Harvard University’s Center on the Developing Child, the
September 2019 meeting fostered the creation of a community of
leaders who will be better prepared to strengthen programs and
public policies for the future of all. Learn more here

In October 2019, we opened an exhibition at the Museum of
Contemporary Art of Monterrey (MARCO, by its Spanish acronym), which
featured 67 pieces from the FEMSA Collection by 58 artists. The exhibit
showcased the evolution, plurality, and richness of the FEMSA Collection
through the artistic manifestations of Latin American art during the
twentieth and twenty-first centuries. Learn more here

For more than 40
years, the FEMSA
Collection has
showcased more
than 1,200 works
of Modern and
Contemporary
Latin American art
through a series of
exhibitions and a
loan program.

The FEMSA Biennial continues to gain national and international
recognition for its success as a vehicle for fostering artistic talent. The XIV
edition—which runs from February 2020 to February 2021 in the state of
Michoacán, Mexico—builds on the learnings of past events and will involve
diverse artists from the local community. Learn more here

the former residence of Luis Barragán, one of the most influential
Mexican architects of the twentieth century. After completing the
projected cycle of artistic programming, Estancia FEMSA finalized its
activities in December 2019. During the past three years, thousands of
people have visited this UNESCO World Heritage Site to gain a better
understanding of both art history and modern artistic disciplines.

For more than 25 years, the FEMSA Cultural Program has also
presented the FEMSA Biennial, a unique platform of collaborative
events and exhibitions that recognize, strengthen, stimulate, and
disseminate artistic creation across Mexico. During its latest run
in Zacatecas from 2017 to 2019, the XIII edition of the FEMSA
Biennial evolved from an artistic contest to a curatorial model
that encouraged local artists to collaborate with national and
international peers to produce art around a specific subject. Their
work was then exhibited for four months, during which the host
city celebrated art through exhibitions, performances, publications,
conferences, workshops, and educational events that were open
to the art community and the general public. Looking ahead to
our next edition, we continue to build on our successful model of
engaging with local artists and students, sponsoring artists from
other regions, and offering community seminars and workshops.
During 2019, we organized 26 art residencies, as well as five
discussions with artists and members of the Curatorial Team in
Morelia and Pátzcuaro.

Finally, from 2016 to 2019, the Cultural Program sponsored Estancia
FEMSA – Casa Luis Barragán, an artistic center in Mexico City at

FEMSA seeks to generate profitable, consistent growth year on year
while exhibiting the highest standards of corporate governance and
ethical business principles. As such, we uphold rigorous practices of
transparency, accountability and disclosure for all our stakeholders.

Our corporate practices comply with the laws of all countries
where we operate. In Mexico and the United States, for example,
we comply with all applicable standards, rules and regulations,
including the Mexican Securities Law (Ley del Mercado de
Valores) and the Sarbanes-Oxley Act. Additionally, we observe
the recommendations of the Mexican Code of Best Practices,
issued by the Business Coordinating Council (Consejo
Coordinador Empresarial).

Code of Ethics
Our Code of Ethics forms the basis of FEMSA’s approach to
corporate governance, characterized by a culture of respect,
honesty and integrity. The Code establishes the fundamental
principles and norms that guide us in our ethical behavior in
relation to our shareholders, customers, suppliers, authorities, civil
society organizations, the environment, community and everyone
we interact with. It also indicates the mechanisms to report any
breach, behavior or practice that does not adhere to our Code of
Ethics and corporate policies. The Code, approved by the Board
of Directors, applies to directors and collaborators in all countries
where we operate.

Likewise, we ask our suppliers of goods and services to adhere
to the FEMSA Supplier Guiding Principles, which describe our
expectations as they relate to sustainability, including labor rights,
the environment, community and ethics and values.

4 4

FEMSA’s Board of Directors is
responsible for determining the
Company’s corporate strategy;
defining and supervising the
implementation of its vision and
values, and approving related
operations, including those
outside the ordinary course of
business.

In 2019, the Board of Directors
was made up of 20 directors, of
which 83% were men and 17%
were women, supported by one
Secretary and one Alternate
Secretary, neither of whom
are members of the Board of
Directors. In accordance with
our bylaws and the Mexican
Securities Law, at least 25% of
the members of our Board of
Directors are independent.

SERIES B DIRECTORS
José Antonio Fernández Carbajal C
Executive Chairman of the Board
of Directors of FEMSA
Elected in 1984
Alternate: Federico Reyes García C

Javier Gerardo Astaburuaga Sanjines C
Vice-President of Corporate
Development of FEMSA
Elected in 2006

Bárbara Garza Lagüera Gonda
Private investor and president of the
acquisitions committee of the FEMSA
Collection
Elected in 1998
Alternate: Mariana Garza
Lagüera Gonda

Eva María Garza Lagüera Gonda
Private investor
Elected in 1999
Alternate: Othón Páez Garza

José Fernando Calderón Rojas
Chief Executive Officer and Chairman
of the Board of Directors of Franca
Servicios, S.A. de C.V., Servicios
Administrativos de Monterrey, S.A. de
C.V., Regio Franca, S.A. de C.V., and
Franca Industrias, S.A. de C.V.
Elected in 1984
Alternate: Francisco José
Calderón Rojas

Alfonso Garza Garza
Vice President of
FEMSA Strategic Businesses
Elected in 2001
Alternate: Juan Carlos Garza Garza

Maximino José Michel González
Chief Executive Officer of 3H Capital
Servicios Corporativos, S.A. de C.V.
Elected in 1996
Alternate: Bertha Paula
Michel González

Francisco Javier Fernández Carbajal C
Chief Executive Officer of Servicios
Administrativos Contry, S.A. de C.V.
Elected in 2004

Alberto Baillères González
Chairman of the Board of Directors of
Industria Peñoles, S.A.B. de C.V., Grupo
Nacional Provincial, S.A.B., Fresnillo Plc,
Grupo Palacio de Hierro, S.A.B. de C.V.,
Grupo Profuturo, S.A.B. de C.V. and
subsidiaries, Controladora Petrobal,
S.A. de C.V., Energía BAL, S.A. de C.V.,
Energía Eléctrica BAL, S.A. de C.V., and
Tane, S.A. de C.V.
Elected in 1989
Alternate: Alejandro Baillères Gual

Ricardo Guajardo Touché B, C, I
Chairman of the Board of Directors of
Solfi, S.A. de C.V.
Elected in 1988

Alfonso González Migoya A, I
Chairman of the Board of Directors
of Controladora Vuela Compañía de
Aviación, S.A.B. de C.V. and managing
partner of Acumen Empresarial,
S.A. de C.V.
Elected in 2006

SERIES D DIRECTORS
Armando Garza Sada I
Chairman of the Board of Directors of
Alfa, S.A.B. de C.V., Alpek, S.A.B. de C.V.
and Nemak, S.A.B. de C.V.
Elected in 2003
Alternate: Enrique F. Senior Hernández C, I

Paulina Garza Lagüera Gonda
Private investor
Elected in 2009

Ricardo Ernesto Saldívar Escajadillo B, C, I
Private investor
Elected in 2006

Alfonso de Angoitia Noriega I
Co-Chief Executive Officer of Grupo
Televisa, S.A.B.
Elected in 2015

Miguel Eduardo Padilla Silva
Chief Executive Officer of Fomento
Económico Mexicano, S.A.B. de C.V.
Elected in 2014

Moisés Naím B, I
Honorary member of the Carnegie
Endowment for International Peace;
producer and host of Efecto Naim;
author and journalist
Elected in 2011
Alternate: Francisco Zambrano
Rodríguez A, I

Michael Larson I, C
Chief Investment Officer for William H.
Gates III
Elected in 2010

Robert Edwin Denham B, C, I
Partner at Munger, Tolles & Olson LLP
Elected in 2001

Víctor Alberto Tiburcio Celorio I, A
Independent consultant
Elected in 2018

Non-Member Board of

Directors Positions

Carlos Eduardo Aldrete Ancira
Secretary of the Board of Directors

Alejandro Gil Ortiz
Alternate Secretary of the Board of Directors

Key:
Audit Committee A
Corporate Practices Committee B
Strategy and Finance Committee C
Independent Director I

4 5

FEMSA ATA GLANCEDEAR SHAREHOLDERSFEMSACOMERCIOCOCA-COLAFEMSAFEMSA STRATEGIC BUSINESSESFEMSAFOUNDATIONCORPORATEGOVERNANCEFINANCIALSUMMARYVALUE CREATION HIGHLIGHTSCONTACTANNUAL REPORT2019

Board Committees

The members of the following
committees support the Board
of Directors by analyzing
strategic issues critical to the
success of the business.
They provide recommendations
related to the focus areas
shown below, including
economic, social and
environmental matters.

Audit Committee*

Corporate Practices Committee*

Strategy And Finance Committee

Responsible for:

•

Receiving, preserving, and
resolving the accuracy and
integrity of quarterly and annual
financial statements in accordance
with accounting, internal control
and auditing requirements,
including the presentation of
confidential and anonymous
reports by employees regarding
accounting practices or doubtful
audits;

Reviewing the appointment,
compensation, retention, and
oversight of the independent
auditor, who reports directly to the
Audit Committee; and

Identifying and following-up
on contingencies and legal
proceedings.

•

Preventing or reducing the risk of
operations carried out that could
damage the value of the Company
or benefit a particular group of
shareholders;

•

Evaluating the investment and
financing policies of the Company;

Assessing the risk factors to which
the Company is exposed, as well as
evaluating its management policies;

Approving policies related to
the use of Company assets or
transactions with related parties;
approving the compensation
scheme for the Chief Executive
Officer and key executives; and

Supporting the Board of Directors
in the preparation of reports on
accounting practices.

• Making recommendations on the

Company dividend policy;

•

Analyzing the Company’s business
units and strategic alternatives for
growth; and

• Making recommendations to the
Board of Directors on annual
operation plans and strategic
projects for the business units.

* All committee members are
independent directors, as required by
the Mexican Securities Law, applicable
U.S. Securities Laws and applicable
NYSE listing standards.

4 6

Our management team drives business growth by creating
economic, social, and environmental value for all our stakeholders.
Each of our executive leaders has significant professional experience
within the industries where our businesses operate.

José Antonio Fernández Carbajal
Executive Chairman of the Board of
Directors of FEMSA
Mr. Fernández began his career at
FEMSA in 1988, serving in various
positions, including CEO of OXXO.
He was appointed CEO of FEMSA in
1995 and Chairman of the Board in
2001, serving in both positions until
January 2014. He is also Chairman of
the Board of Coca-Cola FEMSA. In
2010, he was appointed Vice-President
of Heineken Holding NV’s Board of
Directors and Chairman of Heineken’s
Americas Committee. Since 2012, Mr.
Fernández has been Chairman of the
Board of Tecnológico de Monterrey,
where he has served as Vice Chairman
since 1997. In 2017, he was elected as
a full-term member of Massachusetts
Institute of Technology (MIT)
Corporation, where he contributes to
the Dean for Student Life and Dean for
Undergraduate Education committees.
Currently, he also participates as a
board member of Industrias Peñoles.
He holds a degree in Industrial
Engineering and Systems from
Tecnológico de Monterrey, where he
earned an MBA in 1978 and has been a
professor for more than 20 years.

Miguel Eduardo Padilla Silva
Chief Executive Officer of FEMSA
Mr. Padilla joined FEMSA in 1997 and
was named to his current position in
January 2018. Previously he served as
Chief Financial and Corporate Officer
of FEMSA, CEO of FEMSA Comercio,
CEO of FEMSA Strategic Businesses,
and FEMSA’s Planning and Control
Officer. He earned a Bachelor’s degree
in Mechanical Engineering from ITESM
and an MBA from Cornell University.
He also completed executive
management studies at IPADE
Business School.

Javier Gerardo Astaburuaga Sanjines
Vice President of Corporate
Development of FEMSA
Mr. Astaburuaga joined FEMSA in
1982. Among other positions in the
Company, he has held the position of
co-CEO of FEMSA Cerveza, Director
of Sales for Northern Mexico, CFO of
FEMSA Cerveza, and Chief Financial
and Corporate Officer of FEMSA. He
has held his current position since April
2015. He studied Public Accounting
at ITESM.

Alfonso Garza Garza
Vice President of Strategic Businesses
of FEMSA
Mr. Garza joined FEMSA in 1985
and held various positions including
CEO of FEMSA Empaques. In 2009
he was appointed to his current
position. He is President of the
Monterrey Metropolitan Water Fund,
Vice-Chairman of the executive
commission of the National President
of the Employers Confederation of
Mexico (Coparmex). He is a member
of the Board of Directors of FEMSA,
ITESM, Grupo Nutec, S.A. De C.V.
He is also an alternate member of
the Board of Directors of Coca-Cola
FEMSA. He graduated from ITESM in in
Industrial Engineering and completed
postgraduate coursework at IPADE
Business School.

Roberto Campa Cifrián
Vice President of Corporate Affairs
of FEMSA
Mr. Campa joined FEMSA in 2019, after
a long career in the public, private,
and social sectors. He has served in
the federal government of Mexico
as Secretary of Labor and Social
Welfare, Undersecretary of the Interior,
and Head of the Federal Consumer

Protection Agency. He has also served
as a representative in the Mexico City
Legislative Assembly and as a federal
congressional representative. He
holds a law degree from Universidad
Anáhuac, where he is also a professor
of “Macroeconomic Theory” and
President of the Federation of
Student Societies.

José González Ornelas
Vice President of Administration and
Corporate Control of FEMSA
Mr. González joined FEMSA in 1973 and
assumed his current position in 2001.
His previous roles have included CFO
of FEMSA Cerveza, Director of Planning
and Corporate Development of FEMSA,
and CEO of FEMSA Logística. He serves
as Secretary of the Audit Committee
of both FEMSA’s and Coca-Cola
FEMSA’s Boards of Directors, and is a
member of the Board of Productora de
Papel, S.A. He holds a Bachelor of Arts
degree in accounting from Universidad
Autónoma de Nuevo León, and he
completed postgraduate studies in
Business Administration at IPADE
Business School.

John Anthony Santa Maria Otazua
Chief Executive Officer
of Coca-Cola FEMSA
Mr. Santa Maria was appointed to his
current position in 2014. He joined
Coca-Cola FEMSA in 1995 and
served in several senior management
positions since then, including COO of
the Company’s Mexico Division, and
Strategic Planning and Commercial
Development Officer. He earned a
Bachelor’s degree and an MBA with
a major in Finance from Southern
Methodist University.

Daniel Alberto Rodríguez Cofré
Chief Executive Officer
of FEMSA Comercio
Mr. Rodríguez joined FEMSA in 2015 as
Chief Financial and Corporate Officer,
and was named to his current position
in January 2016. Prior to joining the
Company he was CFO and CEO of
CENCOSUD (Centros Comerciales
Sudamericanos, S.A.), among other
senior finance and management
positions in Latin America, Europe,
and Africa. He is an alternate member
of the Boards of Coca-Cola FEMSA
and FEMSA. He holds a forest
engineering degree from Austral
University of Chile and an MBA from
Adolfo Ibáñez University.

4 7

FEMSA ATA GLANCEDEAR SHAREHOLDERSFEMSACOMERCIOCOCA-COLAFEMSAFEMSA STRATEGIC BUSINESSESFEMSAFOUNDATIONCORPORATEGOVERNANCEFINANCIALSUMMARYVALUE CREATION HIGHLIGHTSCONTACTANNUAL REPORT2019

FINANCIAL SUMMARY

Amounts expressed in millions of Mexican pesos (Ps.) as of December 31, 2019.

INCOME STATEMENT

Ps.

Net sales
Total revenues
Cost of goods sold
Gross profit
Operating expenses
Income from operations 3
Other non-operating expenses (income), net
Financing expenses, net
Income before income taxes and share of the profit

of equity accounted investees

Income taxes
Share of the profit of equity accounted investees,
net of taxes
Net income from continuing operations
Net income from discontinuing operations 2
Consolidated net income
Controlling interest
Non-controlling Interest
Financial ratios (%)
Gross margin
Operating margin

Consolidated net income

Other information
Depreciation

Amortization and other non cash charges to income
from operations

Operative Cash Flow (EBITDA)
Capital expenditures 4

2019 1

504,059
506,711
315,230
191,481
144,329
47,152
1,573
13,492

32,087
10,476

6,437
28,048

28,048
20,699
7,349

37.8%
9.3%
5.5%

Ps.

2018

468,894
469,744
294,574
175,170
133,594
41,576
874
7,380

Ps.

2017 2

439,239
439,932
277,842
162,090
121,828
40,262
1,285
3,302

33,322
10,169

6,560
29,713
3,366
33,079
23,990
9,089

37.3%
8.9%
6.3%

35,674
10,213

8,021
33,480
3,726
37,206
42,408
(5,202)

36.8%
9.2%
7.6%

Ps.

2016

398,622
399,507
251,303
148,204
110,777
37,427
4,208
4,619

28,600
7,888

6,463
27,175
-
27,175
21,140
6,035

37.1%
9.4%
6.8%

23,344

14,698

13,799

12,076

4,944
75,440
25,579

4,184
60,458
24,266

4,104
58,165
23,486

5,484
54,987
22,155

2015

310,849
311,589
188,410
123,179
89,444
33,735
954
7,618

25,163
7,932

6,045
23,276
-
23,276
17,683
5,593

39.5%
10.8%
7.5%

9,761

3,130
46,626
18,885

1. Starting on January 1st 2019, the Company
adopted IFRS16 “Leases” accounting rule
using the modified retrospective method
under which the comparative information
was not restated.

2. The consolidated income statement of 2017
was revised for the discontinued operations
of Coca-Cola FEMSA.

3. Company’s key performance indicator.
4. Includes investments in property, plant and
equipment, as well as deferred charges and
intangible assets.

FEMSA ATA GLANCEDEAR SHAREHOLDERSFEMSACOMERCIOCOCA-COLAFEMSAFEMSA STRATEGIC BUSINESSESFEMSAFOUNDATIONCORPORATEGOVERNANCEFINANCIALSUMMARYVALUE CREATION HIGHLIGHTSCONTACT48ANNUAL REPORT2019

Amounts expressed in millions of Mexican pesos (Ps.) as of December 31, 2019.

Ps.

BALANCE SHEET

Assets
Current assets

Equity accounted investees
Property, plant and equipment, net 3
Intangible assets,net
Right-of-use assets

Other assets, net
Total assets

Liabilities

Short-term bank loans and current portion
of long-term bank loans and notes payable

Current maturities of long-term leases
Other current liabilities

Long-term bank loans and notes payable
Long-term lease liabilities
Employee benefits
Deferred tax liabilities
Other non-current liabilities

Total liabilites

Total equity
Controlling interest
Non-controlling interest
Financial ratios (%)

Liquidity
Leverage
Capitalization
Data per share
Controlling interest book value 4
Net controlling interest income 5
Dividends paid 6

Series B shares
Series D shares
Number of employees 7
Number of outstanding shares 8

172,579
97,470
114,513
146,562
52,684
53,733
637,541

16,204
7,387
112,943
101,747
47,292
6,347
6,946
12,924
311,790
325,751
251,989
73,762

1.336
0.957
0.28

14.085
1.157

2019 1

2018

2017 2

2016

2015

Ps.

177,607
94,315
108,602
145,610

50,247
576,381

Ps.

181,188
96,097
116,712
154,093

40,451
588,541

Ps.

117,951
128,601
102,223
153,268

43,580
545,623

Ps.

86,723
111,731
80,296
108,341
-

22,241
409,332

13,674

87,790
114,990

4,699
5,886
13,800
240,839
335,542
257,053
78,489

1.750
0.718
0.29

14.368
1.341

13,590

91,432
117,758

5,373
6,133
17,343
251,629
336,912
250,291
86,621

1.725
0.747
0.29

13.990
2.370

0.431
0.538
295,027
17,891.13

7,281

79,008
131,967

4,447
11,037
25,713
259,453
286,170
211,904
74,266

1.367
0.907
0.33

11.844
1.182

0.417
0.521
266,144
17,891.13

5,895
-

59,451
85,969
-
4,229
6,230
5,702
167,476
241,856
181,524
60,332

1.327
0.692
0.28

10.146
0.988

0.366
0.458
246,158
17,891.13

1. Starting on January 1st 2019, the Company
adopted IFRS16 “Leases” accounting rule
using the modified retrospective method
under which the comparative information
was not restated.

2. The consolidated income statement of 2017
was revised for the discontinued operations
of Coca-Cola FEMSA.

3. Includes bottles and cases.
4. Controlling interest divided by the total

number of shares outstanding at the end of
each period.

5. Net controlling interest income divided by
the total number of shares outstanding at
the end of the each period.

6. Expressed in nominal pesos of each period.
7. Includes incremental employees resulting
from mergers & acquisitions made during
the period.

8. Total number of shares outstanding at the
end of each period expressed in millions.

0.483
0.604
314,656
17,891.13

0.460
0.575
297,073
17,891.13

FEMSA ATA GLANCEDEAR SHAREHOLDERSFEMSACOMERCIOCOCA-COLAFEMSAFEMSA STRATEGIC BUSINESSESFEMSAFOUNDATIONCORPORATEGOVERNANCEFINANCIALSUMMARYVALUE CREATION HIGHLIGHTSCONTACT49ANNUAL REPORT2019

MANAGEMENT’S DISCUSSION & ANALYSIS

Audited Financial Results for the twelve months ended December 31, 2019. Compared to the twelve months ended December 31, 2018.

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 Strategic Businesses unit, it
provides logistics, point-of-sale refrigeration solutions and plastics
solutions to FEMSA’s business units and third-party clients. The
consolidated financial information included in this annual report
was prepared in accordance with International Financial Reporting
Standards (“IFRS”) as issued by the International Accounting
Standards Board (“IASB”). Beginning on 2019, we adopted the
International Financial Reporting Standard 16 – “Leases” (“IFRS 16”)
across all our business units.

The 2019 and 2018 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 31, 2019, which was 18.8600 pesos
per US dollar. This report may contain certain forward-looking

statements concerning 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
2019 amounts in millions of Mexican pesos

Total
Revenues

% Growth
vs’18

Gross
Profit

% Growth
vs’18

FEMSA Consolidated

506,711

7.9%

191,481

9.2%

Coca-Cola FEMSA

194,471

6.7%

87,507

4.2%

FEMSA Comercio
Proximity Division

FEMSA Comercio
Health Division

FEMSA Comercio
Fuel Division

184,810

10.4%

75,099

14.6%

58,922

13.9%

17,645

11.2%

47,852

2.0%

4,775

12.9%

FEMSA’s consolidated total revenues increased 7.9% to Ps. 506,711
million in 2019 compared to Ps. 469,744 million in 2018. Coca-Cola
FEMSA’s total revenues increased 6.7% to Ps. 194,471 million, driven
mainly by healthy pricing, revenue management initiatives across
our territories, volume growth in Brazil, the consolidation of recently
acquired territories in Guatemala and Uruguay, and a favorable
mix effect driven by transactions outperforming volumes in Brazil,
Argentina, and Uruguay and an extraordinary income related to an

FEMSA ATA GLANCEDEAR SHAREHOLDERSFEMSACOMERCIOCOCA-COLAFEMSAFEMSA STRATEGIC BUSINESSESFEMSAFOUNDATIONCORPORATEGOVERNANCEFINANCIALSUMMARYVALUE CREATION HIGHLIGHTSCONTACT50ANNUAL REPORT2019entitlement to reclaim tax payments in Brazil, recognized in the third
quarter. FEMSA Comercio – Proximity Division’s revenues increased
10.4% to Ps. 184,810 million, driven by the opening of 1,331 net new
OXXO stores combined with an average increase of 5.0% in same-
store sales. FEMSA Comercio – Health Division’s revenues increased
13.9% to PS. 58,922 million, driven by the acquisition of Corporación
GPF, and the addition of 800 net new stores, including the
aforementioned acquisition, partially offset by an average decrease
of 3.7% in same-store sales. FEMSA Comercio – Fuel Division
revenues increased 2.0% to Ps. 47,852 million in 2019, driven by
the addition of 6 total net new stations in the last twelve months,
partially offset by a 4.2% decrease in same-station sales.

Consolidated gross profit increased 9.2% to Ps. 191,481 million in 2019
compared to Ps. 175,305 million in 2018. Gross margin increased 50
basis points to 37.8% of total revenues compared to 2018, reflecting
gross margin expansion at FEMSA Comercio´s Proximity and Fuel
Divisions, partially offset by gross margin contractions at Coca-Cola
FEMSA and FEMSA Comercio’s Health Division.

Consolidated operating expenses increased 8.0% to Ps. 144,329
million in 2019 compared to Ps. 133,594 million in 2018. As a
percentage of total revenues, consolidated operating expenses
increased from 28.4% in 2018 to 28.5% in 2019.

Consolidated income from operations increased 13.4% to
Ps. 47,152 million in 2019 as compared to Ps. 41,576 million in 2018.
As a percentage of total revenues, operating margin increased
40 basis points, from 8.9% in 2018 to 9.3% in 2019 reflecting margin
expansion at FEMSA Comercio’s Proximity and Fuel Divisions,
partially offset by an operating margin contraction at Coca-Cola
FEMSA and FEMSA Comercio’s Health 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 increased to Ps. 13,492 million from
Ps. 7,380 million in 2018, reflecting the effects of the adoption
of IFRS16 accounting rule across our businesses, coupled with a
foreign exchange loss related to the effect of FEMSA’s US Dollar-
denominated cash position, as impacted by the appreciation of the
Mexican peso during 2019, partially offset by an interest income
increase of 11.9% to Ps. 3,168 million in 2019, compared to Ps. 2,832
million in 2018.

Consolidated administrative expenses increased 15.1% to
Ps. 19,930 million in 2019 compared to Ps. 17,313 million in 2018. As
a percentage of total revenues, consolidated administrative expenses
increased 20 basis points, from 3.7% in 2018, to 3.9% in 2019.

Income before income taxes and share of the profit in Heineken
results decreased 3.7% to Ps. 32,087 million in 2019 compared with
Ps. 33,322 million in 2018, reflecting an increase in our income
from operations, which was more than offset by the increase in net
financing expenses described above.

Consolidated selling expenses increased 6.4% to Ps. 121,871 million
in 2019 as compared to Ps. 114,573 million in 2018. As a percentage
of total revenues, selling expenses decreased 20 basis points, from
24.3% in 2018 to 24.1% in 2019.

Our accounting provision for income taxes in 2019 was Ps. 10,476
million, as compared to Ps. 10,169 million in 2018, resulting in an
effective tax rate of 32.6% in 2019, as compared to 30.2% in 2018,
slightly above our expected medium-term range of 30%.

FEMSA ATA GLANCEDEAR SHAREHOLDERSFEMSACOMERCIOCOCA-COLAFEMSAFEMSA STRATEGIC BUSINESSESFEMSAFOUNDATIONCORPORATEGOVERNANCEFINANCIALSUMMARYVALUE CREATION HIGHLIGHTSCONTACT51ANNUAL REPORT2019
Consolidated net income was Ps. 28,048 million in 2019 compared
to Ps. 33,079 million in 2018, reflecting a non-cash foreign
exchange loss related to FEMSA’s U.S. dollar-denominated cash
position as impacted by the appreciation of the Mexican peso,
coupled with a demanding comparison base in 2018, driven by
the results of discontinued operations related to the sale of the
operations of Coca-Cola FEMSA’s in the Philippines. This was
partially offset by growth in our income from operations.

Controlling interest amounted to Ps. 20,699 million in 2019
compared to Ps. 23,990 million in 2018. Controlling interest in
2019 per FEMSA Unit 1 was Ps. 5.78 (US$ 3.07 per ADS).

Coca-Cola FEMSA
Coca-Cola FEMSA total revenues increased 6.7% to
Ps. 194,471 million in 2019, compared to Ps. 182,342 million in
2018. Total revenues were driven mainly by healthy pricing, revenue
management initiatives across our territories, volume growth in
Brazil, the consolidation of recently acquired territories in Guatemala
and Uruguay, and a favorable mix effect driven by transactions
outperforming volumes in Brazil, Argentina, and Uruguay. This
figure includes extraordinary other operating income related to an
entitlement to reclaim tax payments in Brazil recognized in the third
quarter. These factors were partially offset by the negative translation
effect resulting from the depreciation of most of our operating
currencies as compared to the Mexican Peso, combined with
volume declines in Argentina, Colombia, and Mexico. On a organic 2
basis, total revenues would have increased 5.0%.

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, 2019 was 3,578,226,270, equivalent to the total number of FEMSA
Shares outstanding as of the same date, divided by 5.

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

Coca-Cola FEMSA’s gross profit increased 4.3% to Ps. 87,507 million
in 2019, compared to Ps. 83,938 million in 2018, with a gross
margin contraction of 100 basis points. More stable sweetener and
declining PET prices were offset by: i) the reduction of tax credits on
concentrate purchased from the Manaus Free Trade Zone, coupled
with our temporary decision to suspend such tax credits; ii) higher
concentrate costs in Mexico; and iii) the depreciation in the average
exchange rate of most of our operating currencies as applied to our
U.S. dollar-denominated raw material costs. Gross margin reached
45.0% in 2019.

The components of cost of goods sold include raw materials
(principally concentrate, sweeteners and packaging materials),
depreciation costs attributable to our 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 4.8% to Ps. 62,085 million in 2019,
compared to Ps. 59,265 million in 2018. Administrative expenses
increased 5.4% to Ps. 8,427 million in 2019, compared to Ps. 7,999
million in 2018. Selling expenses increased 4.4% to Ps. 52,110 million
in 2019 compared with Ps. 49,925 million in 2018.

Income from operations increased 3.0% to Ps. 25,423 million in
2019 compared to Ps. 24,673 million in 2018. On an organic basis,
income from operations grew 2.0%.

FEMSA ATA GLANCEDEAR SHAREHOLDERSFEMSACOMERCIOCOCA-COLAFEMSAFEMSA STRATEGIC BUSINESSESFEMSAFOUNDATIONCORPORATEGOVERNANCEFINANCIALSUMMARYVALUE CREATION HIGHLIGHTSCONTACT52ANNUAL REPORT2019
FEMSA Comercio - Proximity Division
FEMSA Comercio – Proximity Division total revenues increased
10.4% to Ps. 184,810 million in 2019 compared to Ps. 167,458 million
in 2018, primarily as a result of the opening of 1,331 net new OXXO
stores during 2019, together with an average increase in same-store
sales of 5.0%. As of December 31, 2019, there were a total of 19,330
OXXO stores. As referenced above, OXXO same-store sales increased
an average of 5.0% compared to 2018, driven by a 6.1% increase in
average customer ticket, partially offset by a 1.0%. decrease in store
traffic. On an organic 3 basis, total revenues grew 10.1%.
Cost of goods sold increased 7.6% to Ps. 109,711 million in 2019,
compared to Ps. 101,929 million in 2018. Gross margin increased
150 basis points to reach 40.6% of total revenues. This increase
reflects; i) the sustained growth of the services category, including
income from financial services; ii) healthy trends in our commercial
income activity; iii) increased and more efficient promotional
programs with our key supplier partners and iv) the consolidation of
Caffenio, our sole coffee supplier in Mexico, which we now control
with 50% share ownership. As a result, gross profit increased 14.6%
to Ps. 75,099 million in 2019 compared with 2018.

Operating expenses increased 11.8% to Ps. 57,527 million in 2019
compared to Ps. 51,452 million in 2018. The increase in operating
expenses was driven by: i) our continuing initiative to strengthen our
compensation structure of key in-store personnel in a tight labor
market, including the gradual shift from commission-based store
teams to employee-based teams; ii) higher secure cash handling costs
driven by increased volume and higher operational costs including
fuel prices; iii) the consolidation of Caffenio; and iv) organic growth of
OXXO’s international operations that achieved healthy sales levels per
store, but have yet to reach sufficient scale to better absorb overhead.

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

Administrative expenses increased 28.0% to Ps. 4,590 million in
2019, compared to Ps. 3,587 million in 2018; as a percentage of
sales, they increased to 2.5% in 2019, from 2.1% in 2018.

Selling expenses increased 10.4% to Ps. 52,545 million in 2019
compared with Ps. 47,589 million in 2018; as a percentage of sales
they reached 28.4%.

Income from operations increased 24.8% to Ps.17,572 million
in 2019 compared to Ps. 14,077 million in 2018, resulting in an
operating margin expansion of 110 basis points to reach 9.5% as a
percentage of total revenues for the year, compared with 8.4% in
2018. This increase reflects better operating leverage and the effect
of the adoption of IFRS16 accounting rule, partially offset by higher
operating expenses as described above. On an organic 3 basis,
income from operations grew 24.1%.

FEMSA Comercio - Health Division
FEMSA Comercio – Health Division total revenues increased
13.9% to Ps. 58,922 million compared to Ps. 51,739 million in 2018,
reflecting the consolidation of Corporación GPF and the addition
of 800 net new stores during 2019. As of December 31, 2019,
there were a total of 3,161 drugstores in Mexico, Chile, Colombia
and Ecuador. This was partially offset by a same-store sales
decrease of 3.7%, reflecting stable trends in Mexico and positive
trends in Colombia, that were more than offset by soft trading and
operational disruptions in Chile, coupled with a negative currency
translation effect related to the appreciation of the Mexican peso
compared to the Chilean and Colombian pesos in our operations in
South America. On an organic 3 basis, total revenues grew 0.9%.

Cost of goods sold increased 15.1% to Ps. 41,277 million in
2019, compared with Ps. 35,874 million in 2018. Gross margin
decreased 80 basis points to reach 29.9% of total revenues.

FEMSA ATA GLANCEDEAR SHAREHOLDERSFEMSACOMERCIOCOCA-COLAFEMSAFEMSA STRATEGIC BUSINESSESFEMSAFOUNDATIONCORPORATEGOVERNANCEFINANCIALSUMMARYVALUE CREATION HIGHLIGHTSCONTACT53ANNUAL REPORT2019This was mainly driven by; i) new pricing regulations in Colombia;
ii) increased promotional activity in Chile; and iii) the consolidation
of Corporación GPF. These were partially offset by improved
efficiency and more effective collaboration and execution with our
key supplier partners in Mexico. Gross profit increased 11.2% to
Ps. 17,645 million in 2019 compared with 2018.

Operating expenses increased 11.7% to Ps. 15,360 million in 2019
compared with Ps. 13,750 million in 2018. This increase was partially
offset by cost efficiencies and tight expense control throughout
our territories.

Administrative expenses increased 31.8% to Ps. 2,709 million in
2019, compared with Ps. 2,055 million in 2018; as a percentage of
sales, they reached 4.6% in 2019. Selling expenses increased 7.8% to
Ps. 12,462 million in 2018 compared with Ps. 11,557 million in 2018;
as a percentage of sales, they reached 21.1% in 2019.

Income from operations increased 8.0% to Ps. 2,285 million in 2019
compared with Ps. 2,115 million in 2018 while operating margin
contracted by 20 basis points to 3.9% as a percentage of total
revenues for the year, compared with 4.1% in 2018, which reflects
the effect of the adoption of IFRS16 accounting rule coupled
with cost efficiencies and tight expense control across our legacy
territories, being more than offset by: i) the loss of operating
leverage driven by reduced sales in Chile; and ii) the consolidation
of Corporación GPF, which has a relatively higher operating
expense structure. On an organic 4 basis, income from operations
increased 0.3%.

FEMSA Comercio - Fuel Division
FEMSA Comercio – Fuel Division total revenues increased 2.0% to
Ps. 47,852 million in 2019 compared to Ps. 46,936 in 2018, primarily

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

as a result of the opening of 6 net new OXXO GAS service
stations during 2019, partially offset with an average decrease in
same-station sales of 4.2%. As of December 31, 2019, there were
a total of 545 OXXO GAS service stations. As referenced above,
same-station sales decreased an average of 4.2% compared to
2018, as the average price per liter increased by 6.0%, while the
average volume decreased by 9.6% reflecting consumer reaction
to the higher prices, and increased competition.

Cost of goods sold increased 0.9% to Ps. 43,077 million in 2019,
compared with Ps. 42,705 million in 2018. Gross margin increased
100 basis points to reach 10.0% of total revenues. This increase
reflects improved supply terms. As a result, gross profit increased
12.9% to Ps. 4,775 million in 2019 compared with 2018.

Operating expenses decreased 4.8% to Ps. 3,591 million in
2019 compared with Ps. 3,773 million in 2018. The decrease
in operating expenses reflects an undemanding comparison
base in 2018 driven by provisions related to certain unprofitable
institutional clients, partially offset by: i) higher wages
implemented to reduce turnover in a tight labor market and;
ii) expenses related to the remodeling of our stations and the
installation of new environmental controls.

Administrative expenses decreased 11.2% to Ps. 215 million in
2019, compared with Ps. 242 million in 2018; as a percentage
of sales, they decreased 10 basis points to 0.4% in 2019. Selling
expenses decreased 6.9% to Ps. 3,281 million in 2019 compared
with Ps. 3,526 million in 2018; as a percentage of sales, they
decreased 60 basis points to 6.9% in 2019.

Income from operations increased significantly to Ps. 1,184 million in
2019 compared with Ps. 458 million in 2018, resulting in an operating
margin expansion of 150 basis points to 2.5% as a percentage of

FEMSA ATA GLANCEDEAR SHAREHOLDERSFEMSACOMERCIOCOCA-COLAFEMSAFEMSA STRATEGIC BUSINESSESFEMSAFOUNDATIONCORPORATEGOVERNANCEFINANCIALSUMMARYVALUE CREATION HIGHLIGHTSCONTACT54ANNUAL REPORT2019total revenues for the year, compared with 1.0% in 2018. This increase
reflects the effect of the adoption of IFRS16 accounting rule, coupled
with better operating leverage that more than offset higher personnel,
remodeling and expansion related expenses.

Key Events during 2019
The following text reproduce our press releases as they
were published.

• Coca-Cola FEMSA announces stock split and

listing of shares in the form of units

On January 31, 2019, Coca-Cola FEMSA announced that it held an
Extraordinary General Shareholders’ Meeting (the “Shareholders’
Meeting”) that resolved the following: (i) An eight-for-one stock
split (the “Stock Split”) of each series of shares of the Company; (ii)
The issuance of Series B ordinary shares with full voting rights; (iii)
The creation of units, comprised of 3 Series B shares and 5 Series
L shares, to be listed for trading on the Mexican Stock Exchange
(“BMV”) and in the form of American depositary shares (ADSs) on
the New York Stock Exchange (“NYSE”); and (iv) Amendments to the
Company’s bylaws mainly to give effect to the matters approved in
paragraphs (i), (ii), and (iii), described above.

“As part of a thorough and disciplined long-term planning process,
and aware that the existing capital structure of Coca-Cola FEMSA
has limited capacity to issue Series L shares, we proposed to our
shareholders a stock split and the issuance of Series B shares to be
listed together with Series L shares in the form of units, to allow
the Company to increase its capacity to issue new equity, which
may be used as consideration in future share-based acquisitions,
as well as for general corporate purposes ”, said John Santa Maria
Otazua, Coca-Cola FEMSA’s Chief Executive Officer. He added:
“It’s important to stress that these adjustments do not change
the percentage of ownership currently held by the Company’s

shareholders; in addition, the Series B shares comprised in the
units will provide additional voting rights to minority shareholders.
We will continue to leverage on a disciplined approach to capital
allocation and we feel confident that the listing of Series L shares
and Series B shares in the form of units will help unlock value for
our shareholders and position Coca-Cola FEMSA for new
growth opportunities.”

• OXXO and HEINEKEN Mexico extend their

commercial relationship

On February 26, 2019, FEMSA announced that its subsidiary Cadena
Comercial OXXO, S.A. de C.V. (“OXXO”) had signed an agreement with
Cervezas Cuauhtémoc Moctezuma, S.A. de C.V. (“HEINEKEN Mexico”),
and both companies had agreed to an extension of their existing
commercial relationship, with certain important changes. The current
successful commercial relationship between OXXO and HEINEKEN
Mexico began in 2010 and has been conducted under a ten-year
agreement, whereby the only beer brands sold by OXXO have been
those of the HEINEKEN Mexico portfolio. This announcement represents
an early renegotiation of the agreement with HEINEKEN Mexico.

Under the terms of this agreement, starting in April of 2019 and
following a gradual process, OXXO started selling the beer brands of
Grupo Modelo in certain regions of Mexico, and will cover the entire
Mexican territory by the end of 2022. As an example, the markets
where OXXO will start selling both brand portfolios simultaneously
during 2019 include Guadalajara and Mexico City.

The new commercial agreement will increase the productivity of
the beer category within OXXO stores and will contribute to the
growth of the beer industry in Mexico. Furthermore, the agreement
is consistent with OXXO’s permanent efforts to evolve its value
proposition, committed to its consumers and offering more and
better solutions to their daily needs.

new commercial relationship

On February 26, 2019, FEMSA announced that its subsidiary Cadena
Comercial OXXO, S.A. de C.V. (“OXXO”) has signed an agreement
with Grupo Modelo containing the terms for a new commercial
relationship to sell the beer brands of Grupo Modelo at OXXO stores.

Currently, OXXO sells only the beer brand portfolio of HEINEKEN
Mexico. Under the terms of the agreement announced today,
starting in April of 2019 and following a gradual process, OXXO will
also start selling the beer brands of Grupo Modelo in certain regions
of Mexico, and will cover the entire Mexican territory by the end of
2022. As an example, the markets where OXXO will start selling both
brand portfolios simultaneously during 2019 include Guadalajara
and Mexico City.

• FEMSA Comercio completes acquisition

of Corporación GPF in Ecuador

On April 30, 2019, FEMSA announced that FEMSA Comercio through
its majority-owned subsidiary Socofar, had successfully completed
the acquisition of Corporación GPF (“GPF”). GPF is a leading
drugstore operator based in Quito, Ecuador, with almost 90 years
of solid trajectory, which operated more than 620 points of sale
nationwide mainly under the Fybeca and SanaSana banners.

This transaction represents a new building block of FEMSA
Comercio’s drugstore strategy in South America, following its

successful acquisition of a controlling stake in the drugstore
and distribution platform of Chile-based Socofar in 2015. This
announcement marks another important step for FEMSA Comercio
as it brings its considerable retail expertise and Socofar’s deep
industry knowledge to the Ecuadorian market and its more than 16
million consumers. GPF is a strong local operator with attractive
growth prospects, and it will help Socofar as it continues to build a
robust base from which to expand further in the region.

• FEMSA Comercio enters Convenience sector
in Brazil through Joint Venture with Raízen

On August 6, 2019, FEMSA announced that it had reached an
agreement to enter into a 50-50 Joint Venture with Raízen.
Through this agreement, FEMSA Comercio acquired a 50%
interest in Raízen Conveniências. The full Enterprise Value of
Raízen Conveniências for the purpose of this transaction was
R$1,122 million, free of any debt or cash, and FEMSA Comercio’s
50% interest was therefore valued at R$561 million. Raízen
itself is a 50-50 Joint Venture between Cosan and Shell. Raízen
currently operates more than 6,200 Shell service stations in Brazil,
and approximately one thousand of them have a Select brand
convenience store today. The stores are franchised or licensed
by Raízen to independent operators. This Joint Venture is limited
to the convenience store business and excludes the fuel service
station operations. The transaction will create a powerful platform
for future growth. Raízen contributes its broad service station
footprint, where current penetration of convenience stores is still
low, and its vast experience operating in Brazil. FEMSA Comercio
will bring to bear its considerable expertise as a developer and
operator of small-format proximity and convenience stores.
Potential growth avenues include increasing penetration of Select
convenience stores at Raízen service stations, as well as developing
successful value propositions for stand-alone stores under the
OXXO brand.

FEMSA ATA GLANCEDEAR SHAREHOLDERSFEMSACOMERCIOCOCA-COLAFEMSAFEMSA STRATEGIC BUSINESSESFEMSAFOUNDATIONCORPORATEGOVERNANCEFINANCIALSUMMARYVALUE CREATION HIGHLIGHTSCONTACT56ANNUAL REPORT2019

Daniel Rodríguez Cofré, FEMSA Comercio’s CEO, commented:
“We have been looking at Brazil as a compelling market for small-
format retail for a long time. The transaction announced today
combines the right asset and the right partner for us, with the right
structure and the right timing. We welcome the opportunity to join
forces with a world-class company like Raízen, and we are excited
by the potential and the challenge that this new venture represents
for FEMSA Comercio.”

This transaction was successfully closed on November 1, 2019.

• FEMSA to invest in US cash and carry leader

Jetro Restaurant Depot, creating a Joint Venture
for Latin America

On September 26, 2019, FEMSA announced that it had signed a
non-binding Memorandum of Understanding (“MOU”) to acquire a
minority stake in privately-held Jetro Restaurant Depot (“JRD”). The
MOU also contemplates that FEMSA and JRD will enter into a Joint
Venture to take JRD’s business model to Mexico and other Latin
American markets. The amount of FEMSA’s investment as per the
MOU is US$ 750 million.

Jetro Restaurant Depot
JRD is a leader in the wholesale business-to-business cash and
carry retail foodservice segment in the United States. Founded in
1976, JRD today operates over 130 stores across the United States
with two formats, Jetro Cash and Carry and Restaurant Depot, with
revenues exceeding US$ 10 Billion in 2018.

Transaction Rationale
We believe the transaction fits well with our strategic intent to invest
in growth opportunities that can leverage our capability set across
different markets, while providing the opportunity for attractive risk-
adjusted returns. The transaction allows FEMSA to gain exposure

to the US wholesale cash and carry segment by investing with a
formidable partner, and at the same time creates the platform for
a new Joint Venture to develop and grow this business in FEMSA’s
core markets.

This transaction was successfully closed on November 8, 2019.

• Coca-Cola FEMSA announces favorable resolution

of arbitration on beer distribution in Brazil

On October 31, 2019, Coca-Cola FEMSA announced that the
arbitration tribunal in charge of the process to resolve disagreements
between Cervejarias Kaiser Brasil, S.A. a subsidiary of Heineken, N.V.
(“Kaiser”), and the Coca-Cola System in Brazil, in connection with the
distribution of Kaiser’s portfolio including Heineken beer, had issued
an award confirming that their distribution agreement shall continue
in full force and effect until and including March 19, 2022. We will
continue distributing Kaiser’s portfolio, performing and executing at
our customary levels of excellence.

• Solistica announces the acquisition of AGV, leader in
value-added warehousing and distribution in Brazil

On November 8, 2019, FEMSA announced that Solistica, FEMSA’s
logistics subsidiary, had reached an agreement to acquire AGV, a
leader in value-added warehousing and distribution in Brazil with
gross annual sales approaching R$650 million.

About AGV
Founded in 1998, AGV operates a value-added warehousing and
distribution platform with more than 300,000 m2 of warehousing
space located across 15 states in Brazil and over 2,600 employees.
Within its broad platform, AGV has built a particularly strong position
in Brazil’s health and nutrition-related sector, as well as in fast-
moving consumer goods, which fit well with Solistica’s existing
capabilities and customer focus.

FEMSA ATA GLANCEDEAR SHAREHOLDERSFEMSACOMERCIOCOCA-COLAFEMSAFEMSA STRATEGIC BUSINESSESFEMSAFOUNDATIONCORPORATEGOVERNANCEFINANCIALSUMMARYVALUE CREATION HIGHLIGHTSCONTACT57ANNUAL REPORT2019

Transaction Rationale
This transaction represents an important new building block for
Solistica’s strategy in Brazil. Solistica will now become the first
fully integrated Third Party Logistics (3PL) solution provider in the
Brazilian market, building a key differentiating factor among the
leading players in the industry. Since the acquisitions of Expresso
Jundiai and Atlas in 2013 and 2015, respectively, Solistica has
developed its portfolio of services to become a major player in Less
than Truckload (LTL) logistics in Brazil. AGV will generate synergies,
complement the platform and significantly enhance Solistica’s
customer value proposition, allowing it to provide integrated
logistics solutions to its clients in the key Brazilian market.

This transaction was successfully closed on December 27, 2019.

• FEMSA Becomes Sole Shareholder of Grupo Socofar
On December 23, 2019, FEMSA announced that its minority partner
in Grupo Socofar (“Socofar”) had notified to FEMSA Comercio the
exercise of its put right to sell its remaining 40% interest in Socofar.
Upon closing of this transaction, FEMSA, through its subsidiaries,
would become the sole shareholder of Socofar. Per the terms of the
put option, the valuation for Socofar was determined through a fair
market procedure carried out by independent investment bankers,
and the final price to be paid for the 40% interest is subject to local
currency exchange adjustments to be made at closing.

This transaction was successfully completed on January 9, 2020,
and it represents another successful milestone in FEMSA Comercio’s
long-term effort to build a leading regional drugstore platform, and
it will create more opportunities for the operations in South America
and Mexico to collaborate and generate value together.

FEMSA ATA GLANCEDEAR SHAREHOLDERSFEMSACOMERCIOCOCA-COLAFEMSAFEMSA STRATEGIC BUSINESSESFEMSAFOUNDATIONCORPORATEGOVERNANCEFINANCIALSUMMARYVALUE CREATION HIGHLIGHTSCONTACT58ANNUAL REPORT2019CONTACT

FEMSA Corporate Offices
Monterrey
General Anaya Nº 601 Pte. Col. Bella Vista
Monterrey, Nuevo León, Mexico C.P. 64410
Phone: +52 (81) 83 28 60 00
Fax: +52 (81) 83 28 60 80

Mexico City
Lago Alberto 442
Col. Anáhuac II Sección
Miguel Hidalgo
Mexico City, Mexico C.P. 11320
Phone: +52 (55) 52 49 68 00

FEMSA Comercio
Edison Nº 1235 Nte. Col. Talleres Monterrey,
Nuevo León, Mexico C.P. 64480
Phone: +52 (81) 83 89 21 21
Fax: +52 (81) 83 89 21 06

Coca-Cola FEMSA
Mario Pani N° 100 Col. Santa Fe Cuajimalpa
Mexico City, Mexico C.P. 05348
Phone: +52 (55) 15 19 50 00

FEMSA Negocios Estratégicos
General Anaya Nº 601 Pte. Col. Bella Vista
Monterrey, Nuevo León, Mexico C.P. 64410
Phone: +52 (81) 83 28 66 00
Fax: +52 (81) 83 28 6601

FEMSA Foundation
General Anaya Nº 601 Pte. Col. Bella Vista
Monterrey, Nuevo León, Mexico C.P. 64410
Phone: +52 (81) 83 28 60 00
Fax: +52 (81) 83 28 60 80

General Counsel
Carlos E. Aldrete Ancira
General Anaya Nº 601 Pte.
Colonia Bella Vista Monterrey,
Nuevo León, Mexico,
C.P. 64410
Phone: +52 (81) 83 28 61 80

Investor Relations
Juan Fonseca Serratos
Enrique Manero Martínez
Phone: +52 (81) 83 28 61 67
Fax: +52 (81) 83 28 60 80
e-mail: investor@femsa.com.mx

Corporate Communications
Mauricio Reyes López
Phone: +52 (55) 52 49 68 43
Fax: +52 (55) 52 49 68 61
e-mail: comunicacion@femsa.com.mx

Sustainability
Víctor Manuel Treviño Vargas
Gabriel Adrián González Ayala
Phone: +52 (81) 83 28 60 00
e-mail: sostenibilidad@femsa.com

Independent Accountant
Mancera, S.C.
Integrante de Ernst & Young Global Limited
Av. Ricardo Margain Zozaya 335, Floor 14
Col. Valle del Campestre,
San Pedro Garza García,
Nuevo León, Mexico, C.P. 66265
Phone: +52 (81) 81 52 18 00

Depositary Bank and Registrar
BNY Mellon Shareowner Services
PO Box 505000 Louisville, KY 40233-5000
Direct Mailing for overnight packages:
BNY Mellon Shareowner Services 462 South 4th Street,
Suite 1600 Louisville, KY 40202
Toll free number for U.S. calls: +1 888 269 2377
International calls: +1 201 680 6825
www.mybnymdr.com
shrrelations@cpushareownerservices.com

Stock Markets and Symbols
Fomento Económico Mexicano, S.A.B. de C.V. stock trades on the Bolsa Mexicana de Valores
(BMV) in the form of units under the symbols FEMSA UBD and FEMSA UB. The FEMSA
UBD units also trade on The New York Stock Exchange, Inc. (NYSE) in the form of ADRs under
the symbol FMX.

We are members of the Dow Jones Sustainability MILA Pacific Alliance Index, the FTSE4Good
Emerging Index and the Mexican Stock Exchange Sustainable IPC, among other indices that
evaluate our performance in sustainability.

For more extensive information, including the Audited Financial Statements, please visit us at:
www.femsa.com
https://femsa.gcs-web.com/
investor@femsa.com.mx

General Anaya Nº 601 Pte. Colonia Bella Vista

Monterrey, Nuevo León, Mexico, C.P. 64410
Phone: +52 (81) 83 28 61 80

The FEMSA 2019 Annual Report may
contain certain forward-looking
statements concerning FEMSA and
its subsidiaries’ future performance
and should be considered as good
faith estimates of FEMSA and its
subsidiaries. These forward-looking
statements reflect management’s
expectations and are based upon
currently available data. Actual
results are subject to further events
and uncertainties which could
materially impact the Company’s
subsidiaries’ actual performance.

5 9

FEMSA ATA GLANCEDEAR SHAREHOLDERSFEMSACOMERCIOCOCA-COLAFEMSAFEMSA STRATEGIC BUSINESSESFEMSAFOUNDATIONCORPORATEGOVERNANCEFINANCIALSUMMARYVALUE CREATION HIGHLIGHTSCONTACTANNUAL REPORT2019FEMSA ATA GLANCEDEAR SHAREHOLDERSFEMSACOMERCIOCOCA-COLAFEMSAFEMSA STRATEGIC BUSINESSESFEMSAFOUNDATIONCORPORATEGOVERNANCEFINANCIALSUMMARYVALUE CREATION HIGHLIGHTSCONTACTANNUAL REPORT201960