Agreement between FEMSA and Modelo will boost 5% Oxxo sales

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MEXICO — The sum of the portfolio of Grupo Modelo's beers, as well as the extension of the commercial agreement with Heineken, could increase Oxxo's same-store sales by 5.0%.

According to Citibanamex, by offering a larger portfolio of beer brands, the business, which represents around 20% of Oxxo's revenues, should benefit from a greater growth in food traffic, at least 50 basis points. The group indicated as well that that Grupo Modelo's brands are particularly strong in Mexico City, where the Corona brand has the highest market share among all Mexican states.

The financial institution explained that, having two brewers instead of an exclusive one, Oxxo will enjoy greater marketing leverage, so it would not be surprising an increase in commercial revenues this year.

According to Euromonitor, the two brewers cover 98% of the market sales volume in Mexico, which has a value of US$21.5 billion. According to them, Grupo Modelo remains the beer leader in the country, achieving a 57.3% participation in 2017, followed by Heineken, with 40.4%.

In 2014 the Modelo producer had 54.3% of the market, so in these three years it has gained 3.0%; In turn, Cuauhtémoc Moctezuma had 44.5% at the time, representing a loss of 4.1%.

Source: El economista