#121: OXXO Beyond a 'Proximity Store': how the payments vertical is transforming Mexico
W FINTECHS NEWSLETTER #121
👀 Portuguese Version 👉 here
👉 W Fintechs is a newsletter focused on financial innovation. Every Monday, at 8:21 a.m. (BrasÃlia time), you will receive an in-depth analysis in your email.
Lately, it feels like any empty spot on a busy avenue or street quickly transforms into another OXXO — the iconic red and yellow convenience store. Cities like Bogotá, Mexico City, and São Paulo have witnessed this expansion up close. The red and yellow branding became synonymous with the company's aggressive growth strategy.
Small local businesses watched the rise of the OXXO chain with a mix of admiration and resentment — how could they compete with an operation backed by FEMSA, one of the world's largest beverage distributors?
I recently visited Mexico and saw firsthand how a network of stores can drive significant changes in countries grappling with financial inclusion challenges. A few months ago, I wrote about the enormous opportunities Latin America offers for digitalization, but also about how overly rapid digital strategies can alienate users and run into structural barriers.
Brazil, in this regard, is an outlier. Specific reforms and conditions created the perfect environment for the rapid adoption of Pix and other financial innovations. In other countries across the region, the reality has been quite different — or, at best, innovations arrived with high expectations but delivered underwhelming results. It’s precisely in this context that physical retail locations become valuable tools in financial inclusion strategies, blending convenience, modernity, and technology to drive progress.
What OXXO is doing in Mexico is a clear example of this. The chain has been active in financial services for quite some time, creating an ecosystem of products and solutions that include loyalty programs, payment apps, remittance services, and bill payments.
The recent partnership with Nubank, which allows the neobank to use OXXO stores as cash withdrawal and deposit points, highlights the need for gradual transformations that align with local needs and realities. This initiative builds on what the chain has been doing since 2012 with its Saldazo brand.
From a sip of beer to a glass of Coca-Cola: the story of FEMSA
Behind OXXO lies a corporate giant that has mastered the art of testing and adapting its growth strategies over the years — from straightforward moves to bold innovations. FEMSA began as a simple brewery in 1890, a local business with limited expansion prospects.
Among its many strategies, acquiring the Coca-Cola franchise in Mexico in 1979 stands out as one of its most successful moves, becoming a cornerstone in the company’s history. From a sip of beer to a glass of Coca-Cola, FEMSA steadily grew, cementing its significance in the Mexican economy.
Milestones in its journey
Founded as the Cuauhtémoc Moctezuma Brewery, the company spent its first 50 years building a vertical integration strategy. During this time, it expanded its operations by creating a range of complementary businesses, including glass factories, bottle cap production, distribution networks, steel manufacturing, and even a bank. These efforts laid a solid foundation, enabling FEMSA to control every step of the production and distribution process.
The model of not relying on external suppliers made the company nearly unbeatable. This approach not only boosted production capacity but also shielded operations from external fluctuations — a strategy that many major companies have adopted today, such as Amazon, which controls its logistics, or Tesla, which manages its battery supply chain.
In 1936, the company took a strategic step by consolidating its operations under a single conglomerate, VISA, strengthening its focus on the beverage sector while simultaneously pursuing diversification.
To expand more strategically, the company decided to split into two entities: ALFA, which focused on packaging, steel, and chemical products, and VISA, which retained the bank, brewery, and vertical operations. The turning point came in 1979 when VISA acquired the Coca-Cola franchise in Mexico. This move not only expanded the company’s portfolio but also secured its prominent position in the market.
Under the FEMSA name and with control of Coca-Cola, the company became a national benchmark, gaining even greater prominence in the beverage market. However, its foundations were tested in 1982 when the depreciation of the Mexican peso destabilized many companies and forced the sale of non-essential assets. In a landscape where many were desperate to offload their holdings, FEMSA recognized the value of Coca-Cola in its portfolio and decided to keep it — a decision that, over time, proved to be one of the company's greatest assets.