Fomento Económico Mexicano, S.A.B. de C.V. (NYSE: FMX) — The Best Real Estate in Mexico, On Sale Because the Consumer Isn’t

An Independent Equity Research Note Sector: Consumer Staples — Proximity Retail (OXXO) + Coca-Cola Bottling (KOF) Listing: NYSE ADR (1 ADR = 10 BD Units = 50 underlying shares) · also BMV: FEMSAUBD Fiscal year: December · Reports in Mexican pesos (Ps.) under IFRS · FY2025 20-F filed 2026-04-24 ADR reference price: ~US$122 (52-week range ~US$83–126) · Market cap ~US$40bn FX anchor: Ps.18.0057 / US$1.00 (YE2025 noon buying rate) Prepared: 2026-06-08

This article keeps its main analysis (Sections 1–15) free of any buy/sell recommendation and any price target. The sole exception is the clearly-labeled “Author’s Take” block below, which is the author’s own subjective opinion. Nothing here is investment advice.

⚡ Author’s Take

This block is the author’s own subjective opinion and general information only. It is not investment advice and not a recommendation to buy or sell any security. The analysis in Sections 1–15 below takes no position and contains no price target.

Verdict: HOLD / accumulate-on-weakness. A quality compounder at a fair-but-not-cheap price, where the discount is real but mostly deserved. Constructive below ~US$115/ADR; patient above it. Conviction: medium.

Tag: “The best real estate in Mexico — on sale because the consumer isn’t.”

FEMSA is two genuinely good assets stapled to three mediocre-to-unproven ones and wrapped in a family-controlled holding-company structure. The crown jewel — OXXO — is one of the cleanest moats in Latin American retail: ~24,300 Mexican stores on irreplaceable street corners, a local-density logistics advantage no entrant can replicate city-by-city, and >10x the footprint of its nearest convenience rival. The anchor — a 47.2% economic stake in Coca-Cola FEMSA (KOF), the world’s largest Coke bottler — is a durable franchise but a structurally capped-return business that the market can value to the penny because it is separately listed. My sum-of-the-parts puts gross asset value around US$52bn (base) against a ~US$40bn market cap, and the stock sits near the 8th percentile of its own ten-year valuation range — cheap versus itself. That is the bull’s foothold: you are effectively buying OXXO at a convenience-store multiple no higher than slow-growth Couche-Tard, with KOF and a fintech option thrown in.

So why only a HOLD? Because the discount is earned, not a mistake. ADR holders own limited-vote D shares and are pure passengers to a Garza Lagüera family trust that controls 76% of the vote through 2030; KOF buys all its concentrate from a co-owner (TCCC) who sits on its board; OXXO’s Mexican same-store sales have decelerated from +14% (2023) to +1% (2025) on falling traffic, remittances down 7.5%, and a soft low-income consumer; the sugar excise in OXXO/KOF’s core market just roughly doubled; and there is a fat left-tail event — the July-2026 USMCA review — squarely in front of us. Reported earnings are also peso-fragile (a Ps.5.7bn non-cash FX loss drove 2025’s optical 22% net-income drop while operating income actually rose 4.7%). This is a “great business, wrong-to-fair price, real risks” situation — the textbook HOLD that becomes a BUY on a peso/USMCA scare. What flips me bullish: OXXO Mexican same-store sales re-accelerating toward mid-single-digits and the stock under ~US$110 (toward my base SOTP less a wide discount, ~bear-case floor). What flips me bearish: a USMCA rupture / sharp peso devaluation, or OXXO traffic staying negative into 2027 (structural share loss to hard-discount, not a cycle) — that would tell me the moat is being breached from below, not merely flanked.

1. Executive Summary

FEMSA is a Monterrey-based consumer holding company built around two scaled platforms — proximity retail (the OXXO convenience chain plus European foodvenience under Valora) and Coca-Cola bottling (a controlling 47.2% economic stake in separately-listed Coca-Cola FEMSA) — supplemented by drugstores (Health), Mexican fuel retail (OXXO GAS) and an emerging fintech (Spin / Digital@FEMSA). In FY2025 it generated total revenue of Ps.840.9bn (~US$46.7bn, +7.6%), consolidated EBITDA of roughly Ps.114bn (~US$6.3bn), operating cash flow of Ps.71.1bn (~US$3.95bn) and free cash flow near Ps.25.8bn (~US$1.4bn).

The investment debate is not about business quality at the top of the house — OXXO is a real, durable moat — but about (i) how much of that quality leaks away through a conglomerate/holdco structure and a controlling-family voting wedge; (ii) whether the Mexican consumer softness and OXXO same-store deceleration (from +14.2% in 2023 to +1.0% in 2025) is cyclical or the leading edge of structural share loss to hard-discount formats; (iii) the structurally capped returns and intensifying sugar-tax headwinds at KOF; and (iv) whether the cash-burning Spin fintech is an option worth paying for or a recurring drain.

Management’s “FEMSA Forward” program (2023–present) has materially de-risked the story: it monetized the ~€6.9bn Heineken stake, exited Envoy Solutions, Jetro/Restaurant Depot, Solistica logistics, Imbera/Torrey and PTM, and returned the proceeds aggressively — ~US$3bn in 2025 dividends-plus-buybacks, with permanent share cancellation (108.8m B + 435m D shares retired in 2025) and a near-net-cash balance sheet (gross debt Ps.147.7bn vs. cash+investments Ps.128.0bn). This is genuine simplification and owner-friendly capital allocation, reinforced by an EVA-based (capital-charge) compensation system that is unusually disciplined for a regional family conglomerate.

Reported FY2025 net income fell to Ps.33.1bn from Ps.40.2bn, but this is almost entirely a below-the-line, non-cash story: a Ps.17.7bn swing in foreign-exchange results (a Ps.5.7bn loss on the USD cash hoard in 2025 versus an Ps.11.9bn gain in 2024) and lower interest income as cash was returned to owners. Income from operations rose 4.7%. The operating businesses are healthy; the income statement is peso-fragile.

On valuation, aggregator EV multiples are unusable (they mismatch the USD ADR price against the MXN balance sheet). On a sum-of-the-parts basis the company looks fairly-to-modestly-cheaply valued — base-case gross asset value ~US$52bn versus a ~US$40bn market cap — and it trades near the cheapest decile of its own ten-year history. The skew is favorable but not a layup: realizing it requires the conglomerate discount to hold or narrow, OXXO to stabilize, and the peso/USMCA backdrop to avoid a tail event. No recommendation or price target follows; the analysis is laid out for the reader to weigh.

2. Business Overview

FEMSA is a holding company that operates through six reporting units (a structure it began reshaping into five segments from Q1 2026; this memo uses the FY2025 20-F’s six-unit presentation, which is the audited basis).

2.1 Coca-Cola FEMSA (KOF) — the bottling anchor. FEMSA owns 47.2% of the economic interest and 56.0% of the full-voting (Series A) shares of Coca-Cola FEMSA, a separately NYSE- and BMV-listed company that is the largest Coca-Cola bottler in the world by volume. KOF produces, markets and distributes Coca-Cola trademark beverages across Mexico, Guatemala, Nicaragua, Costa Rica, Panama, Colombia, Venezuela, Brazil, Argentina and Uruguay. The Coca-Cola Company (TCCC) owns 27.8% of KOF and is simultaneously its franchisor, largest supplier and a board partner with up to five of 21 director seats. In FY2025 KOF generated revenue of Ps.291.7bn (~US$16.2bn, +4.3%) on volume of 4,150.4 million unit cases (–1.8%), with the volume decline offset by a +6.0% increase in average price per unit case (to Ps.68.09). Because FEMSA consolidates KOF (it controls the vote), KOF’s full revenue, debt and a Ps.84.4bn non-controlling interest flow through FEMSA’s statements — a key reason consolidated multiples mislead.

2.2 Proximity Americas (OXXO) — the crown jewel. OXXO is a small-box (~104 m² selling space, ~3,470 SKUs) convenience chain operating 25,587 stores at year-end 2025 — Mexico 24,297, Colombia 597, Chile 236, Peru 217 and the United States 240 (the latter from the October 2024 Delek acquisition). It added 1,125 net new stores in 2025 (1,348 opened, 223 closed). Revenue was Ps.328.8bn (~US$18.3bn, +7.0%) — the single largest revenue contributor in the group. OXXO sells a mix of beverages, beer, tobacco, snacks, prepared food and, increasingly, services: it processes thousands of bill-payment, top-up and financial transactions per store, and its Spin Premia loyalty program now touches up to 49.3% of sales. A large share of OXXO’s profit is “commercial income” — fees from suppliers for shelf space, promotions and the payment-services it brokers as an agent — which is higher-margin than merchandise. Separately, FEMSA assumed full control of OXXO Brazil in February 2026 by unwinding the Grupo Nós joint venture with Raízen (retaining 607+ OXXO stores and a São Paulo distribution center).

2.3 Proximity Europe (Valora). Acquired in 2022 (~CHF/€1.1bn), Valora runs 2,755 points of sale of kiosk and “foodvenience” formats (k kiosk, Brezelkönig, BackWerk, Ditsch, Press & Books, avec, Caffè Spettacolo, ok.—) in Switzerland, Germany, Austria, Luxembourg and the Netherlands, largely in high-traffic transit locations and on an agency model. FY2025 revenue was Ps.57.0bn (+14.6%), helped by a strong Swiss franc and peso translation.

2.4 Health. A Latin American drugstore platform of 4,503 locations (Mexico 1,317, Chile 1,049, Ecuador 1,078, Colombia 1,059) under the Cruz Verde, Fybeca, Sana Sana, YZA, La Moderna and Farmacon banners. FY2025 revenue Ps.88.1bn (+10.5%) with +8.0% same-store sales, but margins compressed (operating margin ~3.6%) on a structurally difficult Mexican market where the division is closing stores.

2.5 Fuel (OXXO GAS). 552 service stations across 17 Mexican states; FY2025 revenue Ps.67.2bn (+2.8%), with +6.9% same-station sales offset by lower-margin wholesale volume declines. Capital-light and modestly profitable (operating margin ~4.4%).

2.6 Spin / Digital@FEMSA. The fintech arm — Spin (a payments wallet, ~9–11m active users) and Spin Premia (loyalty, ~27–28m users) — refocused in 2025–26 on the OXXO Mexico ecosystem (payments, loyalty, data, consumer lending). It is loss-making; FEMSA paused a full banking-license pursuit and cut ~1,300 jobs in March 2026 to contain burn, and brought in QED Investors as a minority equity partner in the lending unit in June 2026.

Revenue model and recurrence. The group’s revenue is overwhelmingly non-discretionary consumer staples sold on a cash or short-credit basis — beverages, convenience merchandise, fuel and pharmacy — which makes the top line defensive and cash-generative but also exposes it directly to the health of the Latin American (overwhelmingly Mexican) low-to-middle-income consumer. 64.4% of total sales are attributable to Mexico; Mexico plus Brazil account for 74.9% of KOF’s revenue.

Verdict: A defensible, cash-generative collection of consumer-staples businesses anchored by one exceptional asset (OXXO) and one durable-but-capped asset (KOF), with three smaller units of mixed quality. The structure is the complication, not the operations.

3. Industry Dynamics

3.1 Mexican convenience retail — a good industry where OXXO is the structure. The Mexican organized convenience channel is an OXXO-led oligopoly sitting atop an enormous informal base of >1 million “tienditas” (mom-and-pop misceláneas). OXXO’s ~24,300 Mexican stores are more than 10x its nearest organized competitor (7-Eleven Mexico ~1,800–2,000; Circle K/ex-Tiendas Extra ~1,100–1,200; plus regional chains Kiosko, Go Mart, Super Q). The structural driver is formalization: as Mexican incomes, urbanization and cold-chain penetration rise, spending migrates from informal tienditas to modern convenience — a multi-decade tailwind that has expanded OXXO’s addressable base. Convenience-store economics are local: the barrier to entry is route density within a city, not national scale, and OXXO’s incumbency lets it amortize distribution, marketing and real-estate scouting across a base no entrant can match corner-by-corner.

The genuine threat is not another convenience chain — it is grocery hard-discount attacking the basket from below. Tiendas 3B (BBB Foods, NYSE: TBBB) reached 3,346 stores at YE2025 (+574 net), FY2025 revenue Ps.78.2bn (+36.1%), same-store sales +18.3%, ~58% private-label, and targets ≥14,000 stores long-term. Hard-discount was only ~3% of the Mexican grocery market in 2023 — a long runway to take price-sensitive share. FEMSA’s defensive counters are its own soft-discount Bara format and Walmex’s Bodega Aurrera Express. This matters because OXXO’s Mexican comp is already soft (+1.0% SSS in 2025, with positive ticket offset by negative traffic), and a weak low-income consumer trading the convenience premium for 3B value could be partly structural, not merely cyclical. Verdict: structurally good industry with a powerful incumbent, but a real and growing flank risk from hard-discount; OXXO’s Mexican unit-growth runway is maturing.

3.2 Coca-Cola bottling — a brilliant system, a mediocre link. The Coca-Cola model deliberately concentrates value at the asset-light, high-ROIC franchisor (TCCC), which owns the brands and sets concentrate prices as a percentage of retail. Bottlers like KOF carry the capital intensity (plants, fleets, coolers, returnable glass, working capital), earn structurally lower margins, and — because concentrate cost rises with retail price — capture only the spread, not the full pricing increment. The economics are visible in peer returns: Arca Continental (the #2 Mexican bottler) has run a five-year consolidated ROIC around 7.6% — barely above its cost of capital — a reasonable proxy for the structural ceiling of a well-run LatAm bottler. KOF’s genuine moat is its exclusive territorial franchise plus unmatched scale (local distribution near-monopoly, real retail pricing power), but the model caps returns. Layered on top is an intensifying regulatory headwind: Mexico’s sugar excise (IEPS) roughly doubled to Ps.3.08/L for 2026 and, for the first time, taxes non-caloric “zero/light” drinks at Ps.1.50/L — blunting the usual reformulation escape route — with Colombia and Brazil adding selective taxes. With volume already down 1.8% and 74.9% of KOF revenue in Mexico+Brazil, the tax regime compounds a volume problem. Verdict: durable franchise, structurally capped ROIC, worsening regulation — a defensive cash cow, not a compounder.

3.3 LatAm fintech (for Spin). Spin competes against scaled, well-capitalized players — Mercado Pago (>120m LatAm users), Nubank Mexico, Clip (merchant acquiring) and incumbent banks. Its one structural edge is cash-in/cash-out distribution: OXXO’s ~24,300 stores are the physical cash on-ramp for an under-banked, cash-heavy population, which is precisely why rivals pay OXXO for deposit/withdrawal access. That is a distribution advantage, not a fintech moat; Spin remains sub-scale in financial-product depth. Verdict: structurally competitive, subsidy-heavy industry where Spin holds a distribution edge but not (yet) a defensible standalone position.

3.4 LatAm pharmacy. Two-speed: consolidated and attractive where 3–4 players hold >75% share (Chile, Colombia), fragmented and competitive where they don’t (Mexico, where Farmacias Guadalajara and others compete hard). FEMSA is the largest LatAm pharmacy operator but its weak link is Mexico. Verdict: mixed; not a wide-moat business for FEMSA.

3.5 Macro framing. Mexico enjoys a genuine but uneven nearshoring/FDI tailwind (USMCA-compliant goods enter the US near-duty-free), yet that investment does not directly reach OXXO’s low-income consumer, who is being squeezed by remittances down ~7.5% (US immigration enforcement) and a soft labor backdrop. The single largest near-term swing factor is the July-2026 USMCA review, where tighter rules-of-origin or a rupture would hit the peso and Mexican demand. Brazil and broader LatAm (where OXXO same-store sales run in the high teens) are the diversification offset and management’s chosen growth vector. Verdict: net-neutral-to-cautious macro with a fat left tail in mid-2026; Mexico is simultaneously FEMSA’s moat and its vulnerability.

4. Competitive Position

4.1 OXXO — name the moat. In Greenwald’s taxonomy, OXXO combines two of the three genuine advantage types: economies of scale (local) and customer captivity (habit), reinforced by an irreplaceable real-estate position.

• Local-density scale. The relevant competitive arena is the city, not the country. OXXO’s density lets a dedicated distribution network, shared marketing and category management spread across a store base an entrant would have to rebuild block-by-block to match unit economics — the canonical scale barrier. Roughly half of OXXO Mexico sales are direct-store-delivery products, underscoring how logistics density is the engine.
• Real estate. Two decades of cherry-picking high-traffic corners have given OXXO a finite, non-replicable location bank. The clearest tell is management’s pivot toward smaller “Nicho” formats and remodels over greenfield — confirming both the durability of the location moat and that the best Mexican sites are largely taken (a growth-ceiling signal).
• Captivity. Proximity/habit plus Spin Premia loyalty create modest stickiness, but convenience is inherently low-switching-cost, so this layer is thinner than the scale/location pieces.

OXXO passes the market-share-stability test: its dominant position has been stable-to-rising for 20+ years and has not been competed away. The advantage is real and durable at the convenience-format level. The honest caveat is that it is being flanked, not breached, by hard-discount, and Mexican traffic is currently negative.

4.2 KOF — franchise plus scale, capped by the concentrate asymmetry. KOF’s moat is a contractual/quasi-regulatory one (exclusive bottler territories) plus scale, delivering local distribution dominance and genuine retail pricing power (price/case +6% in 2025 against a weak consumer). But it is structurally subordinate to TCCC on value capture, and the related-party dependence (KOF buys all concentrate from TCCC — Ps.51.7bn in 2025) means a meaningful share of any retail price increase is recaptured by its franchisor/co-owner. Durable, but a price-taker on its key input.

4.3 Spin, Health, Fuel. Spin’s edge is OXXO’s distribution rail, not product superiority — optionality, not a moat. Health has scale-buying advantages only where the market is consolidated (Chile/Colombia). Fuel is a competent, capital-light operation in a commoditized category. None is a source of durable competitive advantage on its own.

Verdict: FEMSA owns one genuinely durable moat (OXXO) and one durable-but-capped franchise (KOF). The competitive position at the group level is strong but increasingly concentrated in OXXO, whose Mexican engine is maturing and being pressured from below — a position to respect, and to watch.

5. Growth History and Forward Opportunities

5.1 The historical record. Group revenue compounded from Ps.702.7bn (2023) to Ps.781.6bn (2024, +11.2%) to Ps.840.9bn (2025, +7.6%) — solid mid-to-high-single-digit growth, increasingly price- and FX-translation-led rather than volume-led, which is the central quality concern. The clearest deceleration is at OXXO, where same-store sales fell from +14.2% (2023) → +4.2% (2024) → +1.0% (2025) as Mexican post-inflation pricing normalized and the consumer weakened, with traffic turning negative in 2025. KOF volume actually declined 1.8% in 2025 (Mexico –5.2%), with growth manufactured through +6% pricing. So beneath a healthy headline, organic volume momentum has stalled in the two core engines — a flag the bulls must confront.

5.2 Quality of growth. Mixed. The high-quality elements: OXXO’s commercial-income and high-margin service categories are growing share of mix (lifting OXXO’s operating margin even as comps softened); LatAm OXXO comps run in the high teens; Health’s consolidated markets grew well. The low-quality elements: much of 2025’s reported growth was price and currency translation, not units or volume; KOF volume fell; Mexican OXXO traffic was negative. This is defensible but not vigorous growth — staples compounding, not secular expansion.

5.3 Forward opportunities.

• OXXO international. The genuine multi-year growth vector. Mexico is maturing (Nicho/remodel pivot), so unit growth migrates to South America (Colombia, Chile, Peru — currently small, some markets paused to fix economics), Brazil (full control taken Feb-2026; ~1,000 new stores targeted for 2026), and the United States (a 240-store Texas beachhead from Delek, with management signaling further inorganic US expansion). These are real but unproven on OXXO’s unit economics, and the US/European arenas are more competitive and lower-return than Mexico.
• Spin monetization. Layering payments, loyalty, lending and remittances onto ~24,300 stores and a large daily footfall is a credible option; the QED partnership is the key near-term validation. Today it is a cost, not a contributor.
• KOF. Mix toward stills/water, single-serve and digital B2B ordering; modest, not transformational, against the sugar-tax headwind.
• Capital-return-driven per-share growth. With a near-net-cash balance sheet and aggressive buyback/cancellation, FEMSA can grow per-share metrics faster than the underlying businesses — a real, if mechanical, lever.

Verdict: moderate-quality growth. The defensive base compounds at mid-single digits; the upside optionality (OXXO international, Spin) is real but early and execution-dependent. This is a compounder whose Mexican core is maturing and whose next leg depends on less-proven geographies and a fintech bet.

6. Financial Quality

6.1 Revenue, margins and the optical earnings drop. FY2025 revenue of Ps.840.9bn (+7.6%) carried a gross margin of 40.6% (down ~50bps, partly an expense reclassification). Consolidated EBITDA was roughly Ps.114bn, and income from operations rose +4.7%. Yet reported consolidated net income fell to Ps.33.1bn from Ps.40.2bn, and controlling net income to Ps.19.4bn from Ps.26.7bn. The decline is almost entirely below the line and non-cash:

• A Ps.17.7bn swing in FX results — a Ps.5.7bn loss in 2025 (peso appreciation marking down FEMSA’s USD cash pile) versus an Ps.11.9bn gain in 2024.
• Higher net interest expense (Ps.13.6bn vs. Ps.8.1bn) as interest income fell — the predictable cost of returning the cash hoard to shareholders.

Normalizing out the FX swing lifts controlling net income back toward the mid-Ps.20bn range. The operating businesses did not deteriorate; the income statement is simply peso- and treasury-sensitive. This is the single most important quality nuance in the file — and a reason headline P/E (~24–26x trailing) overstates the true multiple.

6.2 Segment economics. Derived operating margins (gross profit less administrative and selling expenses) reveal where the money is made:

KOF is the highest-margin unit but the lowest-return (capital-heavy); OXXO is the highest-quality economic engine (asset-light at the store level via leases, high return on capital employed, commercial-income tailwind). The smaller units are margin-thin.

6.3 Cash generation and earnings quality. Operating cash flow was Ps.71.1bn against consolidated net income of Ps.33.1bn — an OCF/NI ratio of ~2.1x, confirming heavy non-cash drag (D&A ~Ps.44bn, FX losses) and high underlying earnings quality. Free cash flow (OCF less Ps.45.3bn capex) was ~Ps.25.8bn and improving (vs. ~Ps.20.4bn in 2024). The one blemish was a Ps.26.4bn working-capital drag (receivables growth and a payables reversal) — worth monitoring but not alarming for a growing retailer.

6.4 Balance sheet — a fortress. Gross financial debt of Ps.147.7bn against cash and investments of Ps.128.0bn leaves the company near net-cash excluding leases (net debt ~Ps.19.6bn). Including the Ps.109.9bn of (largely store-lease) liabilities, lease-adjusted net debt/EBITDA is a comfortable ~1.1x. Debt is ~93% fixed-rate and carries a top domestic (AAA/Mexico) rating. This is one of the strongest balance sheets in LatAm consumer staples and underwrites both the dividend and the buyback.

6.5 Returns on capital. ROE was a depressed 7.9% (controlling NI ÷ parent equity), held down by the FX loss; normalized, it sits in the high-single/low-double digits. ROIC, normalizing out the cash hoard, is ~10–11% — respectable but not spectacular, dragged by the equity-method portion of the KOF stake and the large rented-asset base. This is a good business, not a high-return compounder at the consolidated level; the high-return engine (OXXO) is partly masked by the capped-return bottler and the holdco cash.

Verdict: high-quality cash generation and a fortress balance sheet, with reported earnings made volatile by FX translation on the cash pile. Economics improve with scale at OXXO; they are structurally capped at KOF. Look through the FX noise to operating income and cash flow.

7. Capital Allocation

7.1 The “FEMSA Forward” de-conglomeration. Since early 2023 management has dismantled a sprawling conglomerate and returned the cash. It monetized the Heineken stake (~€6.9bn across 2023, with a residual sale in May 2025), exited Envoy Solutions (merged into Brady, rolled into Imperial Dade in March 2026; FEMSA retains ~18.75%), and divested Jetro/Restaurant Depot, Imbera/Torrey, Solistica and PTM. This is a genuine refocusing on two cores (Proximity and KOF) plus Health and Spin — not cosmetic.

7.2 Capital returned — large, accelerating, and permanent. In 2025 FEMSA declared Ps.47.5bn of dividends (ordinary Ps.14.8bn plus an extraordinary Ps.32.7bn, roughly 3x the prior year’s extraordinary) and repurchased 46.1m BD Units for Ps.12.4bn at an average of Ps.195.31, on top of US$-denominated ASRs (US$250m in May-2025, US$260m in Dec-2025, up to US$300m launched in Mar-2026). Crucially, the shares are permanently cancelled, not parked in treasury — 108.8m Series B and 435.0m Series D shares were retired at the April-2025 AGM. A new Ps.34.0bn buyback reserve was authorized for 2026. Roughly US$3bn was returned in 2025, and the share count is genuinely shrinking.

7.3 Buyback discipline. Repurchases were executed at an average ~Ps.195/BD Unit and ASRs at ~US$102–104/ADS — below the post-FEMSA-Forward peaks — i.e., not buying at the top. The honest caveat: the company discloses a buyback budget (a Ps.34bn reserve), not an explicit intrinsic-value-versus-price gate, so discipline is demonstrated by behavior rather than by a stated framework.

7.4 M&A track record (Greenwald/Marathon lens). Mixed-to-fair:

• Valora (2022, ~€1.1bn) — diversified the proven Mexican model into a structurally lower-growth, higher-cost, more competitive European market. Three years on it gets thin standalone disclosure and is FEMSA’s main Russia/Ukraine-adjacent risk exposure. Jury still out; watch for impairment.
• Delek US (Oct-2024, ~US$385m) — a small, sensibly-priced US beachhead with rich optionality; the right adjacency (proven format, Hispanic demographics). Management signals a larger inorganic US follow-on — the price of which is the thing to watch.
• Grupo Nós/Brazil (Feb-2026) — rational simplification of a JV that had been bleeding equity-method losses; takes full control to fix or scale Brazil. Still sub-scale. The Marathon read is favorable in direction (exiting mature, capital-heavy, low-return positions; concentrating into proximity retail) but carries redeployment risk: the geographies being bought into (Europe, US) are more capital-attracting and lower-return than Mexican OXXO.

7.5 Incentives. Compensation is anchored on Economic Value Added (EVA) — a capital-charge metric that penalizes empire-building and rewards capital efficiency, with bonuses paid in shares vesting over three years. This is unusually good design for a regional family conglomerate and is coherent with FEMSA Forward. Magnitudes are modest (executive aggregate ~Ps.4.9bn; SBC ~Ps.1.1bn on ~Ps.700bn revenue); the dominant alignment force is the family’s ~40% economic stake.

Verdict: B+. Disciplined, owner-friendly capital allocation that has narrowed (not eliminated) the conglomerate discount. Genuine simplification, permanent share cancellation, sensible buyback levels, and a best-in-class incentive metric. The reservations are structural (the control wedge, TCCC dependence) and prospective (European/US redeployment risk, the cost of carrying un-deployed cash) — not evidence of incompetence.

8. Changes and Headwinds — Last Two Years

8.1 Strategic and portfolio changes.

• FEMSA Forward executed in full: Heineken fully exited (final residual May-2025); Envoy → Brady → Imperial Dade merger closed Mar-2026 (FEMSA ~18.75%); Solistica, PTM, Imbera/Torrey, Jetro all divested.
• OXXO Brazil: Grupo Nós JV with Raízen unwound Feb-2026; FEMSA took full ownership of the Brazilian OXXO stores and the Cajamar DC.
• US entry: Delek 240-store Texas acquisition consolidated through 2024–25; a stated pivot to inorganic US expansion.
• Spin reset: refocused on the OXXO Mexico ecosystem; banking-license pursuit paused and ~1,300 jobs cut (Mar-2026); QED Investors took a minority stake in the lending unit (Jun-2026).

8.2 Leadership change. A next-generation family handoff: on Nov-1-2025, José Antonio Fernández Garza Lagüera (son; former head of Proximity & Health) became CEO; his father, José Antonio Fernández Carbajal, remains Executive Chairman. A father-son Chairman/CEO pairing concentrates family control at the top — continuity, but a governance consideration.

8.3 Recent results momentum. After a soft first half of 2025, operating momentum improved sharply: 4Q25 (reported Feb-2026) showed adjusted EBITDA +14.9% and net income +33.6%, with Proximity Americas operating margin reaching 12.0%; Q1-2026 (reported Apr-2026) beat, with net income +97.3%, OXXO Mexico revenue +8.3% and operating income +20.9%. The stock made new 52-week highs (~US$126) in April 2026. UBS maintained a Buy and raised its target.

8.4 Headwinds.

• Mexican consumer softness / negative OXXO traffic, compounded by remittances down ~7.5%.
• Sugar-tax escalation (Mexico IEPS ~doubled to Ps.3.08/L for 2026 plus a new Ps.1.50/L on non-caloric drinks; Colombia/Brazil selective taxes), pressuring KOF volume and margin in its core market.
• Peso/FX volatility driving non-cash earnings swings.
• July-2026 USMCA review — the principal macro/policy tail risk.
• Rising short interest (+76% month-over-month in May-2026, off a small base) — a building skeptic cohort.
• Spin cash burn / strategy retrenchment — the fintech is harder and costlier than first framed.

Verdict: net-strengthening on strategy and recent operating momentum, but with a thickening set of macro and regulatory headwinds. The portfolio is cleaner and the recent quarters are good; the consumer, the peso, sugar taxes and USMCA are the offsetting weights.

9. Risk Analysis

Overall risk read: The risks are predominantly macro/structural and earnings-optical rather than existential. There is no credible path to catastrophic loss given the diversification and balance sheet. The live, thesis-relevant risks are the Mexican consumer/OXXO-traffic question (is it cyclical or structural?), the peso/USMCA tail, and the permanent governance/TCCC discounts.

10. Valuation Discussion (Embedded Expectations)

10.1 Why aggregator multiples are useless here. FMX is a Mexican ADR: data aggregators mismatch the USD ADR price against the MXN balance sheet, producing nonsense (a reported “EV” of ~US$651bn, an “EV/EBITDA” of ~6x, a “P/S” of ~0.05). These must be discarded. Two things are reliable: (i) the FY2025 20-F itself (IFRS, pesos), and (ii) the company’s own-history valuation percentile, which sits near the 8th percentile of its ten-year range — i.e., cheap versus itself.

10.2 Sum-of-the-parts (the right framework for a holdco). Because KOF is separately listed, a large part of FEMSA can be marked to market:

The standout: OXXO alone is worth roughly 80% of FEMSA’s entire market capitalization, valued at a convenience-store EBITDA multiple no richer than slow-growth Couche-Tard — so the “stub” (OXXO plus everything except KOF) is the real purchase, and KOF is close to a free, mark-to-market option. The base case (~US$44bn net, ~US$135/ADR) sits modestly above the ~US$40bn market cap; the bear case requires both an EM de-rating of OXXO toward 9x and a wide 25% discount.

10.3 Embedded expectations. At ~US$122/ADR the market pays ~23x forward / ~24–26x trailing earnings — but trailing earnings are depressed by the Ps.5.7bn non-cash FX loss, so the “true” operating multiple is lower than it looks. The price implies the market expects OXXO to keep compounding high-single-to-low-double-digit revenue with stable-to-expanding margins, ascribes only modest value to Spin, and assumes the conglomerate discount does not widen. Notably, the disconnect — strong recent operations (OXXO Mexico operating income +20.9% in Q1-2026), rising estimates, yet a bottom-decile own-history multiple — suggests the market is applying an elevated Mexico/EM risk premium (peso, USMCA, FX losses) rather than questioning the franchise. That is the crux of the variant case.

10.4 Comps (look-through, not consolidated).

*Consolidated FMX EV/EBITDA is neither computable from aggregators nor meaningful for a holdco with a 47%-consolidated listed sub. †The ~5%+ headline yield is inflated by a non-repeatable 2025 extraordinary dividend; the recurring yield is ~3–3.5%.

Verdict (no recommendation, no target): On a sum-of-the-parts and own-history basis, FEMSA looks fairly-to-modestly-cheaply valued with a favorable skew — you are buying OXXO at a non-premium convenience multiple with KOF and Spin as low-cost options, near the cheap end of the company’s own range. The catch is that the discount is earned (governance, TCCC dependence, peso, OXXO deceleration), so realizing the upside depends on the discount holding/narrowing and the macro avoiding a tail event, not on a re-rating that the structure resists.

11. Variant Perception

11.1 Consensus. A roughly balanced Buy/Hold split treats FMX as a “core LatAm quality hold”: a high-quality Mexican staples compounder, OXXO a structural winner on retail formalization, KOF a stable cash cow, a clean balance sheet, and shareholder-friendly capital returns. Consensus is constructive but not emphatic — which is exactly why a Buy-rated stock can sit at the bottom decile of its own valuation range.

11.2 The bull case. OXXO is mispriced inside the holdco — a faster-growing, higher-return convenience retailer valued at or below the multiples of slower global peers once KOF is stripped out; base SOTP ~US$135 vs ~US$122, bull ~US$190. Spin is a near-free option (now externally validated by QED) on monetizing ~24,300 cash points and a large daily footfall. The conglomerate discount narrows as FEMSA Forward simplification, buybacks/cancellation and further monetizations (the ~18.75% Imperial Dade stake, potential KOF trims) compound per-share value. Mexican formalization and nearshoring structurally expand OXXO’s runway.

11.3 The bear case. It is still ~half a Mexican Coca-Cola bottler plus a single-country convenience chain — heavy peso/EM exposure, with recurring FX losses a live earnings drag and a tell on currency risk. OXXO’s Mexican engine is saturating (Nicho/remodel pivot) while international expansion is small, early and capital-hungry (Brazil has been a years-long grind). Spin is a cash sink, not a profit center — the pause, layoffs and shelved banking license show the fintech moat is unproven against Nu and Mercado Pago. The conglomerate discount is structural (family control, KOF cross-holding, TCCC dependence) and may persist or widen. Rising short interest signals a growing skeptic cohort.

11.4 The assumptions that matter most.

1. OXXO’s durable EBITDA multiple (9x bear vs 15x bull) — the single biggest SOTP swing (~US$16bn).
2. Mexican consumer + peso trajectory — drives OXXO same-store sales and the recurrence of FX losses.
3. Spin monetization — option value vs. cash drain; the QED round is the key near-term data point.
4. Conglomerate-discount direction — narrows (buybacks, monetizations) vs. persists (structure).
5. KOF’s own value — ~a quarter of SOTP, and it has been sliding in 2026.

11.5 Falsification. The bull is falsified if OXXO same-store sales decelerate to durably low-single-digits or margins stall, Spin losses widen, the peso devalues into sustained FX losses, or the discount widens despite buybacks. The bear is falsified if OXXO sustains double-digit revenue with 12%+ operating margins and international units inflect to profit, Spin reaches a credible standalone valuation, or a visible monetization event (a KOF trim, an Imperial Dade sale) narrows the discount.

12. Fact vs. Interpretation

13. Open Questions

1. Is OXXO’s negative Mexican traffic cyclical or structural? The single most important unknown. A consumer-cycle trough recovers; durable share loss to Tiendas 3B/hard-discount does not. Watch 2026–27 traffic and basket trends.
2. What is OXXO’s true standalone value and unit economics by geography? FEMSA does not disclose average daily customers or ticket; international unit economics (Brazil, US) are opaque and unproven.
3. Can Spin ever earn its keep? Is the QED partnership the start of a credible lending business, or a way to share an ongoing drain? What is the path to breakeven?
4. How aggressive — and at what price — will the signaled US M&A be? A large, pricey US c-store deal would test the disciplined-allocation thesis.
5. Will the conglomerate discount narrow or persist? Does management contemplate further structural simplification (e.g., trimming or separating KOF) to close it?
6. KOF concentrate economics: how much of KOF’s pricing power is recaptured by TCCC over time, and how will the dual sugar-tax (caloric + non-caloric) reshape volume and mix?
7. Peso/USMCA: how exposed is the dividend and the USD-translated earnings stream to a 2026 peso shock?

14. What Must Be True

For the bull case to be right (and its falsification test):

1. OXXO’s Mexican deceleration is cyclical, and same-store sales/traffic re-accelerate as the consumer recovers. Falsified if SSS stays at/below ~+1% with negative traffic into 2027 (structural share loss).
2. OXXO holds a convenience-grade EBITDA multiple (~12x+) and international units (Brazil, US) inflect toward profitability. Falsified if international stays loss-making and the implied multiple compresses toward the 9x bear.
3. The conglomerate discount narrows via continued buybacks/cancellation and monetizations. Falsified if the discount widens despite ~US$3bn/yr of capital return.
4. The peso/USMCA backdrop avoids a tail event, so FX losses normalize and reported earnings recover. Falsified if a 2026 peso devaluation/USMCA rupture drives sustained FX losses and demand weakness.

For the bear case to be right (and its falsification test):

1. The Mexican core is structurally maturing/losing share, and OXXO’s growth permanently shifts to lower-return geographies. Falsified if OXXO sustains double-digit revenue growth with 12%+ operating margins.
2. KOF’s capped returns plus sugar taxes durably cap group ROIC and weigh on the multiple. Falsified if KOF sustains pricing/mix gains that hold margins despite the tax regime.
3. Spin remains a recurring drain with no standalone value. Falsified if Spin reaches breakeven or a credible external valuation (further QED-type rounds) crystallizes.
4. The governance/structure discount is permanent and caps any re-rating. Falsified if a visible structural simplification (KOF trim, Imperial Dade monetization) durably narrows the discount.

Source appendix follows as a separate section (Appendix B in the combined report). All financial figures are from FEMSA’s FY2025 Form 20-F (filed 2026-04-24, SEC EDGAR CIK 0001061736) unless otherwise noted; segment operating margins are derived (gross profit less administrative and selling expenses) as the 20-F does not publish an operating-income subtotal. Management commentary is treated as a hypothesis and validated against filings and external data throughout.

APPENDIX A — Standard Diligence Questionnaire

Supplemental to the main article. Grounded in the FY2025 20-F and primary public filings; Fact/Interpretation/Assumption labels applied where it matters. Sector analogs substituted where a question does not map to a consumer-staples holding company.

General

What thoughtful questions have other investors asked about this company? The recurring institutional questions: (1) Is OXXO’s Mexican slowdown cyclical or the start of structural share loss to hard-discount? (2) What is OXXO worth standalone, and how much value leaks through the holdco/conglomerate structure? (3) Why hold a 47%-consolidated, separately-listed bottler inside the parent — will FEMSA ever separate or trim KOF to close the discount? (4) Is Spin an option worth paying for or a perpetual cash drain? (5) How exposed are reported (USD) earnings to the peso, given the recurring non-cash FX losses? (6) Will the proceeds from FEMSA Forward be redeployed wisely, or chased into low-return US/European retail M&A?

Cyclicality & Earnings Nature

Are earnings at a cyclical high or low? Interpretation: Operating earnings are near a cyclical mid-to-low for the Mexican consumer businesses — OXXO same-store sales decelerated to +1.0% (from +14.2% in 2023) on negative traffic and weak remittances, and KOF volume fell 1.8%. Reported net income is artificially depressed by a Ps.5.7bn non-cash FX loss (a Ps.17.7bn swing versus 2024), so headline EPS understates normalized earnings power.

Driven by the external environment or internal actions? Both. Externally: soft Mexican consumer, falling remittances, peso moves, sugar taxes. Internally: aggressive capital return (which lowered interest income), OXXO commercial-income/mix gains (which lifted margins), and FEMSA Forward portfolio surgery. The 2025 NI drop is external/non-cash; the operating improvement (+4.7% op income, OXXO margin expansion) is internal.

How stable are revenues? High stability — overwhelmingly non-discretionary staples (beverages, convenience merchandise, fuel, pharmacy) sold for cash. Revenue grew every year through COVID and the inflation cycle. The vulnerability is volume, not revenue continuity: pricing can carry the top line even as units soften (as in 2025).

Outlook for products/services? Defensive and growing low-to-mid-single-digit in real terms, with OXXO international and services/fintech the swing factors. Sugar taxes pressure KOF volumes.

How big will this market be — growing, shrinking, domestic or international? Mexican convenience and formalization are structurally growing but maturing for OXXO domestically; the growth frontier is international (Brazil, US, Andean) — early and unproven. KOF’s beverage markets are mature/regulated. The business is overwhelmingly Latin American (64% Mexico) with a small, lower-growth European footprint.

Business Quality & Competitive Moat

Is the industry getting more or less competitive? More at the margins: hard-discount (Tiendas 3B +36% revenue) is flanking OXXO from below, and fintech is a crowded land-grab. Core convenience and bottling remain concentrated/oligopolistic.

How profitable is the business (ROIC, ROE)? Fact: FY2025 ROE 7.9% (FX-depressed; normalized high-single/low-double digit); ROIC ~10–11% normalized for the cash hoard. Interpretation: good, not exceptional — the high-return OXXO engine is diluted by the capped-return KOF stake and the rented-asset base. By segment, OXXO is the quality engine (~9% operating margin, asset-light at store level, high capital turns); KOF is high-margin (~14%) but low-ROIC (capital-heavy).

How profitable is the industry — how many competitors, what barriers to entry? Convenience: oligopoly, high barriers (local density + real estate). Bottling: regional near-monopoly territories, high contractual barriers, but capped returns by the concentrate model. Pharmacy/fintech: more competitive, lower barriers.

Can the business be easily understood? The pieces yes; the consolidated entity is complicated by the holdco structure, the consolidated-but-listed KOF, IFRS hyperinflation accounting (Argentina), and FX-translated reporting. SOTP is required to value it sensibly.

Can it be undermined by foreign low-cost labor? No — proximity retail, bottling and fuel are inherently local/physical and non-tradable.

Do brands matter? Yes — OXXO (a category-defining brand in Mexico) and Coca-Cola (licensed, the strongest beverage brand globally) are central; the Coca-Cola brand value, however, accrues largely to TCCC, not the bottler.

What is the nature of competition? Convenience: location, density, assortment, service breadth, price-on-staples. Bottling: distribution coverage, cooler placement, price/pack architecture. Fintech: scale, subsidy, product depth.

Customers’ switching costs? Low at the individual transaction level (convenience is habit, not lock-in); the moat is on the supply/distribution side (density, real estate), not customer switching costs.

Financial Condition & Balance Sheet

Assets not fully recognized on the balance sheet? The OXXO real-estate/location bank and brand are not carried at economic value; the 47.2% KOF stake is consolidated (not marked to its ~US$22bn market value); the ~18.75% Imperial Dade stake is equity-method and illiquid. These are hidden value, partly offset by hidden complexity.

Off-balance-sheet liabilities? Largely captured — store leases are on balance sheet under IFRS 16 (Ps.109.9bn). No material undisclosed off-balance-sheet exposure identified; the Ps.84.4bn non-controlling interest (mostly KOF minorities) is a key claim on consolidated assets to remember.

How conservative is the accounting? Reasonably conservative IFRS; the notable complexities are IAS 29 hyperinflation restatement for Argentina and FX translation. No aggressive revenue recognition flagged (OXXO books payment-services revenue net, as agent). Operating-income subtotal is not disclosed, requiring derivation.

How CapEx-hungry is the business? Moderate and bifurcated: KOF is capital-intensive (plants, fleet, coolers); OXXO is capital-light at the store level (leased, but funds new-store build-out). Group capex Ps.45.3bn (~5.4% of revenue); FCF positive (~Ps.25.8bn). Not capex-starved, not capex-trapped.

Capital Allocation & Management

How much FCF does the business generate, and how is it used? ~Ps.25.8bn FCF (after Ps.45.3bn capex); cash flow plus FEMSA Forward divestiture proceeds were returned via ~US$3bn of 2025 dividends-plus-buybacks (including a large extraordinary dividend and permanent share cancellation), with the balance held as a near-net-cash position. Philosophy: simplify, return capital, retain a fortress balance sheet.

Significant acquisitions recently? Delek US (Oct-2024, ~US$385m, US c-store beachhead); full takeover of OXXO Brazil (Feb-2026, Grupo Nós unwind). Earlier: Valora (2022, ~€1.1bn, Europe — underwhelming so far).

Buying back shares? Yes, materially — 46.1m BD Units (Ps.12.4bn) in 2025 plus US$-ASRs, with permanent cancellation (108.8m B + 435m D shares retired) and a Ps.34bn 2026 reserve. Interpretation: genuine per-share value creation, executed below peak prices.

Issuing large amounts of new shares to insiders? No — share-based compensation is modest (~Ps.1.1bn/yr) and share count is shrinking, not diluting.

Compensation policy of directors/management? Anchored on Economic Value Added (EVA) — a capital-charge metric — with bonuses paid in shares vesting over three years. Unusually disciplined for a regional family conglomerate. Director comp is modest (~Ps.39m aggregate).

Motivations of management? The controlling Garza Lagüera/Garza Sada family (76% of the vote via the Banco Invex trust, ~40% economic, control through 2030) plus a father-son Chairman/CEO since Nov-2025. Alignment with per-share value is real (large economic stake, EVA comp); the risk is family priorities diverging from minority (limited-vote D-share/ADR) holders.

Valuation & Market Data

Is the stock an ADR, MLP, or K-1 issuer? A sponsored ADR (1 ADR = 10 BD Units = 50 underlying shares; BNY Mellon depositary). Not an MLP; no K-1. Note: ADR holders predominantly own limited-voting Series D shares. Mexican dividend withholding applies; no US K-1 complexity.

Dividend policy? Annual dividend (ordinary plus, recently, large extraordinary distributions funded by asset sales). Headline 2025 yield ~5%+ is inflated by a non-repeatable extraordinary; recurring yield ~3–3.5%.

How profitable is the business? See ROIC/ROE above — good, capped by the bottler and structure.

Is net income diverging from cash from operations? Yes — OCF (Ps.71.1bn) is ~2.1x consolidated NI (Ps.33.1bn), reflecting heavy non-cash D&A and FX losses. The divergence is benign/quality-positive (cash exceeds accounting earnings), not a red flag.

Risks & Downside

What factors would cause the stock to decline? A peso devaluation / USMCA rupture (July-2026 review); OXXO Mexican traffic staying negative (structural share loss); sugar-tax-driven KOF volume erosion; a value-destructive large US acquisition; widening conglomerate discount; Spin losses escalating; a KOF de-rating (it has slid in 2026).

Risk of a catastrophic loss? Low. Diversified staples, fortress near-net-cash balance sheet, multiple independent cash engines. A scenario that permanently impairs the franchise is hard to construct short of a systemic Mexican collapse.

Chance of a total loss? Negligible. This is a defensive, cash-generative, investment-grade consumer holding company; the realistic downside is multiple compression and peso translation, not insolvency.

Recent News & Events

Has the business environment changed recently? Yes — improving operationally (4Q25 EBITDA +14.9%, Q1-2026 net income +97.3%, OXXO Mexico operating income +20.9%) after a soft 1H25; worsening on policy (sugar-tax escalation, USMCA review ahead, remittance decline).

Significant acquisitions/divestitures? Full OXXO Brazil control (Feb-2026); BradyPLUS/Imperial Dade merger closed (Mar-2026, FEMSA ~18.75%); final Heineken residual sold (May-2025); Solistica/PTM divested (2025).

Change in accounting policies? Reclassification of certain distribution expenses (selling → COGS) at Health/Europe and admin→selling reclassifications in 2025 (affecting segment margin optics, not totals); transition to a five-segment reporting structure from Q1-2026.

Recent changes — new markets, facilities, management? US market entry (Delek/Texas); CEO succession (José Antonio Fernández Garza Lagüera, Nov-2025); Spin banking-license pause and ~1,300 layoffs (Mar-2026); QED Investors into the lending unit (Jun-2026).

APPENDIX B — Source Appendix

Primary sources first. All figures in the memo trace to these. Accessed 2026-06-08 unless noted. Management commentary treated as hypothesis and validated against filings/financials/external data per the firm’s research standard.

A. Primary filings (SEC EDGAR, CIK 0001061736)

1. FEMSA FY2025 Form 20-F (filed 2026-04-24; fmx-20251231.htm) — the primary anchor. Consolidated IFRS financial statements (statements of financial position, comprehensive income, changes in equity, cash flows), MD&A (Item 5), business description (Item 4), risk factors (Item 3), governance/ownership (Items 6–7), related-party transactions, segment note, capital-expenditure and capital-return disclosures, regulatory/tax detail (sugar excise, USMCA context), dividend and buyback tables. https://www.sec.gov/Archives/edgar/data/1061736/000162828026027231/fmx-20251231.htm
2. FEMSA FY2024 Form 20-F (filed 2025-04-24; fmx-20241231.htm) — prior-year comparatives, FEMSA Forward divestiture detail.
3. FEMSA FY2023 Form 20-F (filed 2024-04-23; fmx-20231231.htm) — Heineken divestiture accounting, discontinued-operations detail.
4. Coca-Cola FEMSA (KOF) FY2025 Form 20-F (filed 2026-04-16; kof-20251231.htm, CIK 0000910631) — bottler-level detail, TCCC concentrate economics, KOF volume/territory data.
5. FEMSA 6-K quarterly earnings releases (2023–2026) — quarterly segment results, OXXO/KOF KPIs, OXXO Brazil (Grupo Nós) and capital-return announcements. Includes 4Q25 (Feb-2026) and Q1-2026 (Apr-2026) releases.
6. Insider & ownership filings (2026): Form 3 cluster (Mar-2026, Section 16 re-registration of the post-CEO-change board/officer slate); Form 4 (Alfonso Garza Garza, Mar-25-2026, small direct sale); Schedule 13D/A No.2 (Cascade Investment / William H. Gates III, 2026-04-02) — percentage increase from buyback-driven share-count reduction, not new acquisition.

B. Company materials & investor disclosure

7. FEMSA Investor Relations (femsa.com) — 4Q25 and Q1-2026 results presentations/releases; segment reporting transition; capital-allocation and buyback (ASR) disclosures.
8. Coca-Cola FEMSA IR (investors.coca-colafemsa.com) — 4Q25/Q1-2026 results, volume and pricing detail.

C. Industry, peer and macro sources (public)

9. BBB Foods / Tiendas 3B SEC filings (6-K 3Q25/4Q24, F-1; CIK via TBBB) — hard-discount store counts, same-store sales, private-label penetration, expansion target.
10. Arca Continental investor materials (arcacontal.com, 1Q25/3Q25) — peer bottler margins and ROIC benchmark (~7.6%).
11. Alimentation Couche-Tard (ATD) and Seven & i Holdings (3382/SVNDY) public valuation data — convenience-peer EV/EBITDA and P/E benchmarks.
12. Walmex public valuation data — Mexican retail benchmark.
13. 2026 Mexican sugar-tax (IEPS) reform — coverage of the excise increase to Ps.3.08/L and the new Ps.1.50/L non-caloric levy (Mexican trade/financial press; corroborated in the FY2025 20-F tax-reform section).
14. Mexico macro — FDI/nearshoring data, remittance trend (≈−7.5%), peso outlook, USMCA July-2026 review (CSIS, Mexican financial press, central-bank/Hacienda references).
15. Mexican convenience-channel structure — OXXO vs. 7-Eleven/Circle K store counts and the informal “tiendita” base (trade press, IADB references).
16. Spin / Digital@FEMSA — user metrics, banking-license pause and layoffs (Mar-2026), QED Investors minority stake in the lending unit (Jun-2026) (company releases, fintech press).
17. BradyPLUS–Imperial Dade merger (closed Mar-2026; FEMSA ~18.75%) — transaction announcements.

D. Quantitative helpers (reconciled to filings)

18. Market data aggregators — ADR price (~US$122), 52-week range, share count. Caveat: aggregators mismatch the USD ADR price against the MXN balance sheet, so their EV, total debt, EV/EBITDA and P/S figures are unit-garbled and were discarded; only price and 52-week range were used.
19. Own-history valuation signal: FMX trades near the cheapest decile of its own ~10-year valuation history — used as an own-history signal only, not a cross-sectional comparison.

E. Analytical frameworks

20. Greenwald & Kahn, Competition Demystified (moat taxonomy: local economies of scale + customer captivity at OXXO; franchise/territory + scale at KOF; the concentrate-pricing asymmetry; the market-share-stability test) and Chancellor / Marathon Asset Management, Capital Returns (capital-cycle lens on the FEMSA Forward de-conglomeration and the European/US redeployment risk).

Note on derived figures: FEMSA’s 20-F does not publish an “income from operations” subtotal. Segment and consolidated operating margins in the memo are derived as gross profit less administrative and selling expenses; the company separately states income from operations rose +4.7% in 2025. The sum-of-the-parts in Section 10 is internal analytical scaffolding (the KOF stake marked to its public market value; other segments on peer EBITDA multiples) and is not a price target.