Tag Archives: retail

OXXO – What’s Behind the Ox in the Room?

By Brooke Gazer

With eight locations in Huatulco, OXXO signs seem to be multiplying like a squad of bunnies all across Mexico. Who are they and where are they from?

In 1977, the first OXXO stores opened in Monterrey, selling mainly beer, snacks and cigarettes. The name originated with a stylized logo that resembled a shopping cart. Two diagonally stacked XX’s formed the frame of the cart, and the O’s on either end looked like wheels. Before long OXXO expanded its inventory to compete with the 7-Eleven international chain, which had opened its first Mexican store in Monterrey in 1971.

Brandishing a simplified logo, OXXO now boasts in excess of 18,000 convenience stores across Mexico, and the chain is rapidly expanding throughout Latin America. It is estimated that OXXO serves 13 million customers daily. If convenience stores were part of a farm, OXXO would be the Ox – the biggest animal and the one who controls the most pasture.

The OXXO brand is owned by FEMSA (Fomento Económico Mexicano, S.A.B. de C.V.), the fifth-largest company in Mexico. FEMSA has far-reaching tentacles into a vast number of other companies in Mexico and throughout much of Latin America. It is the second-largest Coca-Cola bottler in the world; Del Valle fruit juice is also bottled under the Coca-Cola brand. FEMSA owns 20% of The Heineken Company’s international operations, including Cervecería Cuauhtémoc Moctezuma, a major Mexican major brewery, which means FEMSA controls sales and operations of not only Heineken Beer, but Dos Equis, Sol, Tecate, Bohemia, Superior, Carta Blanca Indio, and Noche Buena. It might be safe to assume that all the beverages inside the refrigerated wall of the OXXO stores are controlled by FEMSA. But this mega corporation also has a refrigeration division, so it is likely that the coolers belong to FEMSA as well.

Solistica, another branch of FEMSA, controls much of the beverage distribution in Mexico, moving its brands from production to warehouse to point of sale locations such as OXXO and its competitors.

A favored location for OXXO stores is adjacent to gas stations, so FEMSA has been a major franchisee of Pemex stations. When Mexico reformed the laws that ended Pemex’s monopoly on petroleum, FEMSA began investing in this sector as well. OXXO Gas has yet to arrive in the state of Oaxaca, but there are over three hundred OXXO gas stations dotting the rest of the map of Mexico. In the past, the government set the price of fuel through Pemex, but could FEMSA trucks buy their own fuel at a discount?

The little beer store OXXO has come a long, long way in just over forty years, and they continue to expand their services. It is estimated that about sixty percent of Mexicans have no bank account – OXXO saw a tremendous opportunity. They introduced computer scanning software that allows anyone to plunk down cash and pay for goods bought online, partnering with retailers like Amazon and Mercado Libre. Like VISA, OXXO charges a percentage to the merchant, and they add ten pesos to the buyer’s purchase price. Even those with bank accounts might find this service useful. You can deposit cash into someone’s bank account simply by giving the receiving person’s bank card number. For a mere ten pesos, it’s quicker, easier, and more accessible than going to the bank.

Without question, OXXO is a convenient place to stop for a snack or a drink. It is easy to spot these ubiquitous outlets and they have so much to offer. I’ve used the payment option myself when my bank card was being uncooperative. But I worry, just a bit, when one firm has so much control over a market. It’s practically impossible for independently owned stores to compete with these clean, well-lit, well-stocked convenience stores. But when the company also controls the product and its distribution, it is no longer an even playing field. Yes, the customer wins – at the moment. But what if they became the only game in town?

Brooke Gazer operates Agua Azul la Villa, an ocean-view B&B in Huatulco (www.bbaguaazul.com).