The dissolution of the joint venture between Raízen (RAIZ4) and Femsa, which gave rise to Grupo Nós, left the Mexican company, the world’s largest Coca-Cola bottler, with the task of operating Oxxo in Brazil. Retail experts who spoke with EXAME are divided on the future of the convenience store chain in the country.

The fuel distributor controlled by Cosan and Shell had its reasons for ending the partnership. Indebted, Raízen is shedding assets to reduce leverage and simplify its portfolio, while leaving open the possibility of a capital increase.

"The businesses didn’t have much synergy," says Alberto Serrentino, partner at Varese Retail.

In the partnership with Femsa, Raízen contributed with 1,256 Shell Select and Shell Café convenience stores, which mainly operated under a franchise model. With Femsa, there were 611 Oxxo proximity stores.

The business model of the convenience store chain demands high investment and consumes a lot of cash, explains Serrentino.

Standing on Its Own

Oxxo works with fractional logistics, where the same transportation method delivers goods to different units. This creates the need for a store on every corner, ensuring a delivery "corridor."

And because the stores are located only in urban centers in the state of São Paulo, the company is exposed to the highest rental costs in the country.

Serrentino reminds that Oxxo’s plans in Brazil are long-term, and the chain still has an aggressive expansion plan.

However, he believes that Femsa can continue expanding the business, even after Raízen’s departure. "They have strong backing to sustain investments."

The logistics that Grupo Nós built, including a distribution center in Cajamar, in Greater São Paulo, will continue to serve Shell Select and Café stores.

Additionally, Femsa will inherit the cash and the debt left by Grupo Nós.

Oxxo’s financial figures are closed, and its last public records are from a 2023 prospectus when the joint venture went to market to raise R$300 million (approximately US$54.95 million) through an issuance of CRAs (Agribusiness Receivables Certificates).

In the first quarter of that year, Grupo Nós registered a loss of R$166 million (US$30.39 million). The gross debt of the joint venture was R$411 million (US$75.45 million), and the net debt was R$253.4 million (US$46.45 million).

During those three months, Nós used R$115.1 million (US$21.08 million) in net cash from operations and spent R$189 million (US$34.61 million) on investments (capex).

Without updated public data, there is no visibility on the maturity of the stores.

The Challenge of Bringing the Mexican Model to Brazil

In Mexico, its country of origin, Oxxo has more than 23,000 stores spread across the country. But there, it’s not just a "convenience store"; it also functions as a bank correspondent where customers can make payments and even withdraw money.

It even has its own payment method, the "Spin by Oxxo" app, with its "Spin" card.

"It’s hard to replicate in Brazil what was done in Mexico because we already have a different competitive landscape. They created this market there and implemented financial services that made the stores very popular," says Serrentino.

Mauricio Grandeza, a retail consultant who was previously the operations director at Carrefour Brazil and head of marketplace at Mercado Livre, believes that Oxxo has suffered a blow by leaving the umbrella that also included over 1,200 Shell convenience stores.

While part of Grupo Nós, Oxxo was part of a national business. On its own, it is a network operating only in São Paulo, mainly in the capital, and seems to be struggling to expand beyond this territory, says Grandeza.

"Until now, the strategy hasn’t seemed to have been enough to attract a good volume of customers. In addition to opening many stores, maybe Oxxo will have to bring financial services to Brazil, which is what draws people to their stores in Mexico," he says.

"In Brazil, that's the secret. Mercado Livre differentiates itself from other marketplaces, for example, with its bank [Mercado Pago], which has millions of users. This creates loyalty and builds an ecosystem."

Grandeza, who is now president of the Retail Professionals Association (Aprovare), says he wouldn't be surprised if Oxxo were to shut down its operations in Brazil. "It’s a small player compared to Oxxo in Mexico."

But, apparently, these are not Femsa’s plans. Executives from the Mexican company went to social media to say that Brazil remains a strategic priority for the business and represents a significant growth opportunity.

"We are moving forward with optimism, committed to excellence, expansion, and creating value in the long term, consolidating ourselves as the fastest-growing retail network in the country," wrote Constantino Spas, CEO of Femsa in the Americas, on his LinkedIn profile.

The text was translated with artificial intelligence. If you have any questions or corrections, please write to rafael.balago (at) exame.com.