Coke bottler wants to combine distribution of beer and soft drinks
MONTERREY, Mexcio -- Mexican brewer and bottler Femsa, soon to become the largest Coca-Cola bottler in Latin America, is looking at combining its beer and soft drink operations in various Latin American markets.
Femsa is in the midst of a previously announced $2.7 billion purchase of Panamerican Beverages of Miami.
Femsa's purchase of Panamco via subsidiary Coca-Cola Femsa, which operates in Mexico and Argentina, will give the Monterrey-based company a growth platform for Femsa's beer division in the markets of Panamco.
"Integration is a real possibility in some of the markets where we operate currently and where we hope to operate in the future once ther acquisition of Panamco is completed," Femsa's chairman Jose Antonio Fernandez said in a recent annual report.
Femsa said it clinched a deal with Coca-Cola to analyze "market by market" the degree of integration of its beer and soft-drinks businesses, which could include sharing administration and marketing expertise and joint distribution.
The strategy would allow Femsa to compete on a level playing field with Brazil's Ambev, the world's fifth-largest brewer and also a major regional bottler, which combines beer and soft drinks in its units in Brazil, Argentina, Uruguay and Venezuela.
Inside Mexico, joint distribution of beer and soft drinks is seen more tricky because of the fragementation of the retailers -- mom and pop stores are the main vendors.
But combining operations in Mexico would help Femsa face up to stiff competition from the No. 1 brewer Grupo Modelo.