About Fomento Económico Mexicano, S.A.B. de C.V.

Fomento Económico Mexicano, S.A.B. de C.V. (FEMSA), through its subsidiaries, engages in the beverage, retail, specialized distribution, and other ancillary businesses. The company participates in the following businesses: In the beverage industry, through Coca-Cola FEMSA (Coca-Cola FEMSA, S.A.B. de C.V.), the largest franchise bottler of Coca-Cola products in the world by volume; In the retail industry, through the following divisions: Proximity Americas Division, operating the OXXO small-format store chain in Latin America, Proximity Europe Division, a small-format retail and foodvenience chains in Europe operated by Valora, the Fuel Division, operating the OXXO Gas chain of retail service stations and the Health Division, which includes pharmacy services locations and related operations; In the specialized distribution, facility and packaging supplies and third-party logistics industries through Logistics and Distribution, operated by Envoy Solutions, LLC (Envoy Solutions) and Solística, S.A. de C.V. (Solística), which includes the sale of products in the distribution of supplies and packaging solutions industries, as well as integrated logistics services for third parties; and In other ancillary businesses, through the company’s Other Businesses, including Digital@FEMSA, point-of-sale refrigeration, food processing equipment and plastics solutions. Business Strategy The key elements of the company’s strategy are to continued growth; going digital; think global; and proactive engagement with its audiences. Coca-Cola FEMSA Coca-Cola FEMSA is the largest franchise bottler of Coca-Cola trademark beverages in the world in terms of volume. Coca-Cola FEMSA operates in territories in the following countries: Mexico—a substantial portion of central Mexico, the southeast and northeast of Mexico; Guatemala; Nicaragua; Costa Rica; Panama; Colombia—most of the country; Brazil—a major part of the states of São Paulo and Minas Gerais, the states of Parana, Santa Catarina, Mato Grosso do Sul and Rio Grande do Sul and part of the states of Rio de Janeiro and Goias; Argentina—Buenos Aires and surrounding areas; Uruguay. Coca-Cola FEMSA also operates in Venezuela through its investment in Coca-Cola FEMSA de Venezuela, S.A., or KOF Venezuela. Business Strategy Coca-Cola FEMSA operates with a large geographic footprint in Latin America. To consolidate its position as a global leader in its industry and strengthen its value proposition for its retail clients and end consumers, Coca-Cola FEMSA is leveraging its strengths, working on the following six strategic priorities as its guiding principles: grow its core, become its customers' preferred omnichannel commercial platform, de-bottleneck its infrastructure and digitize the enterprise, make a difference in environmental, social and corporate governance (ESG), strengthen its customer-centric culture and pursue strategic acquisitions. To maximize growth and profitability, and driven by its strategic priorities, Coca-Cola FEMSA plans on continuing to execute the following key strategies: accelerate revenue growth, increase its business scale and profitability across categories, continue its expansion through organic growth, strategic joint ventures, business alliances and mergers and acquisitions, accelerate the digitization of Coca-Cola FEMSA’s processes, develop an agile, digital-savvy culture and create a leaner and more efficient organization focused on value creation. Coca-Cola FEMSA’s Products Coca-Cola FEMSA produces, markets, sells and distributes mainly TCCC trademark beverage portfolio. These include sparkling beverages (colas and flavored sparkling beverages), waters and other non-carbonated beverages (including juice drinks, coffee, teas, milk, value-added dairy, sports drinks, energy drinks, certain alcoholic beverages, such as Topo Chico hard seltzer and plant-based drinks). In addition, through certain distribution agreements, Coca-Cola FEMSA distributes and sells Monster products in all the countries where it operates and Heineken -owned brand beer products, Estrella Galicia beer products, Campari alcoholic beverages and Perfetti confectionary and chewing gum in its Brazilian territories. Since 2021, Coca-Cola FEMSA has been testing distributing alcoholic beverages and consumer products in some of its territories. From its ongoing tests, Coca-Cola FEMSA has been learning new shopper and consumption trends, and gathering necessary insights to strengthen its value proposition for retailers and consumers in the market. This has allowed Coca-Cola FEMSA to complement its reach and joint consumer value proposition and provide its partners with a unique edge to communicate with target consumers. As these are ongoing tests, further details will be provided in due course. The following sets forth the trademarks of the main products Coca-Cola FEMSA distributed in 2022: Colas: Coca-Cola; Coca-Cola Sin Azúcar; and Coca-Cola Light. Flavored Sparkling Beverages: Crush; Kuat; Schweppes; Fanta; Mundet; Sprite; Fresca; Quatro; and Yoli. Still Beverages: AdeS; Fuze Tea; Leão; Cepita; Hi-C; Monster; Santa Clara; Del Valle; Kapo Powerade; and Valle Frut. Water: Alpina; Brisa; Dasani; Shangri-la; Aquarius; Ciel Manantial; Topo Chico; Bonaqua; Crystal; Kin; and Vitale. Packaging Coca-Cola FEMSA produces, markets, sells and distributes Coca-Cola trademark beverages in each of its territories in containers authorized by The Coca-Cola Company (TCCC), which consist primarily of a variety of returnable and non-returnable presentations in the form of glass bottles, cans and plastic bottles mainly made of PET resin. Coca-Cola FEMSA uses the term presentation to refer to the packaging unit in which Coca-Cola FEMSA sells its products. Presentation sizes for Coca-Cola FEMSA’s Coca-Cola trademark beverages range from a 6.5-ounce personal size to a 3-liter multiple serving size. For all of Coca-Cola FEMSA’s products excluding water, Coca-Cola FEMSA considers a multiple serving size as equal to, or larger than, 1.0 liter. Coca-Cola FEMSA offers both returnable and non-returnable presentations, which allow it to offer portfolio alternatives based on convenience and affordability to implement sales strategies and to target specific distribution channels and population segments in its territories. In addition, Coca-Cola FEMSA sells some Coca-Cola trademark beverage syrups in containers designed for soda fountain use, which Coca-Cola FEMSA refers to as fountain. Coca-Cola FEMSA also sells bottled water products in bulk sizes, which refer to presentations equal to or larger than 5.0 liters and up to 20.0 liters, which have a much lower average price per unit case than its other beverage products. Seasonality Sales of Coca-Cola FEMSA’s products are seasonal in all the countries where it operates, as Coca-Cola FEMSA’s sales volumes generally increase during the summer of each country and during the year-end holiday season. In Mexico, Central America and Colombia, Coca-Cola FEMSA typically achieves its highest sales during the months of April through August, as well as during the year-end holidays in December. In Brazil, Uruguay and Argentina, Coca-Cola FEMSA’s highest sales levels occur during the summer months of October through March, including the year-end (year ended December 31, 2022) holidays in December. Marketing Coca-Cola FEMSA, in conjunction with TCCC, has developed a marketing strategy to promote the sale and consumption of Coca-Cola FEMSA’s products. Coca-Cola FEMSA relies extensively on advertising, sales promotions and retailer support programs to target the particular preferences of its consumers. Retailer Support Programs: Support programs include providing retailers with point-of-sale display materials and consumer sales promotions, such as contests, sweepstakes and the giveaway of product samples. Coolers: Coolers play an integral role in Coca-Cola FEMSA’s clients’ plans for success. Increasing both cooler coverage and the number of cooler doors among Coca-Cola FEMSA’s retailers is important to ensure that its wide variety of products are properly displayed, while strengthening its merchandising capacity in its distribution channels to significantly improve its point-of-sale execution. Advertising: Coca-Cola FEMSA advertises in all major communications media. Coca-Cola FEMSA focuses its advertising efforts on increasing brand recognition by consumers and improving its customer relations. National advertising campaigns are designed and proposed by TCCC’s local affiliates in the countries where Coca-Cola FEMSA operates, with its input at the local or regional level. Point-of-sale merchandising and advertising efforts are proposed and implemented by Coca-Cola FEMSA, with a focus on increasing its connection with customers and consumers. Marketing in Coca-Cola FEMSA’s Distribution Channels: In order to provide more dynamic and specialized marketing of its products, Coca-Cola FEMSA’s strategy is to classify its markets and develop targeted efforts for each consumer segment or distribution channel. Coca-Cola FEMSA’s principal channels are small retailers, ‘on-premise’ accounts, such as restaurants and bars, supermarkets and third-party distributors. Presence in these channels entails a comprehensive and detailed analysis of the purchasing patterns and preferences of various groups of beverage consumers in each of the different types of locations or distribution channels. In response to this analysis, Coca-Cola FEMSA tailors its product, price, packaging and distribution strategies to meet the particular needs of and exploit the potential of each channel. Multi-Segmentation: Coca-Cola FEMSA has implemented a multi-segmentation strategy in all of its markets. These strategies consist of the definition of a strategic market cluster or group and the implementation and assignment of different product/price/package portfolios and service models to such market cluster or group. These clusters are defined based on consumption occasion, competitive environment, income level, and types of distribution channels. Product Sales and Distribution Coca-Cola FEMSA continuously evaluates its distribution model in order to fit with the local dynamics of the marketplace and analyze the way it goes to market, recognizing different service needs from its customers, while looking for more efficient distribution models. As part of this strategy, Coca-Cola FEMSA is rolling out a variety of new distribution models throughout its territories looking for improvements in its distribution network. Coca-Cola FEMSA uses several sales and distribution models depending on market, geographic conditions and the customer’s profile: the pre-sale system, which separates the sales and delivery functions, permitting trucks to be loaded with the mix of products that retailers have previously ordered, thereby increasing both sales and distribution efficiency; the conventional truck route system, in which the person in charge of the delivery makes immediate sales from inventory available on the truck; sales through digital platforms to access technologically enabled customers; the telemarketing system, which could be combined with pre-sales visits; and sales through third-party wholesalers and other distributors of Coca-Cola FEMSA’s products. As part of the pre-sale system, sales personnel also provide merchandising services during retailer visits, which Coca-Cola FEMSA believes enhance the shopper experience at the point-of-sale. Coca-Cola FEMSA believes that an adequate number of service visits to retailers and frequency of deliveries are essential elements in an effective selling and distribution system of its products. As a result of the COVID-19 pandemic, Coca-Cola FEMSA continues to reinforce its presence in its emerging distribution channels, which consist primarily of digital sales channels, such as food aggregators, digital platforms, e-commerce websites and mobile device applications, in an effort to address the growing demand from its business partners through such sales channels. This reinforcement is aligned with Coca-Cola FEMSA’s overall digitization and omnichannel strategies. Coca-Cola FEMSA’s distribution centers range from large warehousing facilities to small cross-docking facilities. In addition to its fleet of trucks, Coca-Cola FEMSA distributes its products in certain locations through electric carts and hand-trucks in order to comply with local environmental and traffic regulations. In some of its territories, Coca-Cola FEMSA relies on third parties to transport its finished products from its bottling plants to its distribution centers and, in some cases, directly to its customers. Mexico: Coca-Cola FEMSA contracts with a subsidiary of FEMSA, Solística, S.A. de C.V., for most of the transportation of finished products from Coca-Cola FEMSA’s bottling plants to its distribution centers in Mexico. From the distribution centers, Coca-Cola FEMSA distributes its finished products to retailers mainly through its own fleet of trucks. In designated areas in Mexico, third-party distributors deliver Coca-Cola FEMSA’s products to retailers and consumers, allowing Coca-Cola FEMSA to access these areas on a cost-effective basis. In Mexico, Coca-Cola FEMSA sells a majority of its beverages through its traditional distribution channel, which consists of sales at small retail stores to consumers who may take the beverages for consumption at home or elsewhere. Coca-Cola FEMSA also sells products through modern distribution channels, the ‘on-premise’ consumption segment, home delivery routes, supermarkets and other locations. Modern distribution channels include large and organized chain retail outlets, such as wholesale supermarkets, discount stores and convenience stores that sell fast-moving consumer goods, where retailers can buy large volumes of products from various producers. The ‘on-premise’ consumption segment consists of sales through points-of-sale where products are consumed at the establishment from which they were purchased. This includes retailers, such as restaurants and bars, as well as stadiums, auditoriums and theaters. Brazil: In Brazil, Coca-Cola FEMSA distributes its finished products to retailers through a combination of its own fleet of trucks and third-party distributors, while maintaining control over the selling activities. In designated zones in Brazil, third-party distributors purchase Coca-Cola FEMSA’s products and resell them to retailers. In Brazil, Coca-Cola FEMSA sells a majority of its beverages at small retail stores. Coca-Cola FEMSA also sells products through modern distribution channels and ‘on-premise’ consumption. Modern distribution channels in Brazil include large and organized chain retail outlets, such as wholesale supermarkets and discount stores that sell fast-moving consumer goods. Territories other than Mexico and Brazil: Coca-Cola FEMSA distributes its finished products to retailers through a combination of its own fleet of trucks and third-party distributors. In most of Coca-Cola FEMSA’s territories, an important part of its total sales volume is sold through small retailers. Principal Competitors Coca-Cola FEMSA’s principal competitors are local Pepsi bottlers and other bottlers and distributors of local beverage brands. Mexico and Central America: Coca-Cola FEMSA’s principal competitors in Mexico are bottlers of Pepsi products. Coca-Cola FEMSA competes with Organización Cultiba, S.A.B. de C.V., a joint venture formed by Grupo Embotelladoras Unidas, S.A.B. de C.V., the former Pepsi bottler in central and southeast Mexico, a subsidiary of PepsiCo and Empresas Polar, S.A., a beer distributor and Pepsi bottler. Coca-Cola FEMSA’s main competition in the juice category in Mexico is Grupo Jumex. In the water category, Coca-Cola FEMSA’s main competitor is Bonafont, a water brand owned by Danone. In addition, Coca-Cola FEMSA competes with Cadbury Schweppes in sparkling beverages and with other local brands in its Mexican territories, as well as ‘B brand’ producers, such as Ajemex, S.A. de C.V. (Big Cola bottler) and Consorcio AGA, S.A. de C.V. (Red Cola bottler), that offer various presentations of sparkling and still beverages. In the countries that comprise Coca-Cola FEMSA’s Central America region, its main competitors are Pepsi and Big Cola bottlers. In Guatemala, Coca-Cola FEMSA competes with a joint venture between AmBev and The Central American Bottler Corporation. In Nicaragua, Coca-Cola FEMSA's principal competitor is AJE Group. Coca-Cola FEMSA also competes with the joint venture between The Central American Bottler Corporation and AmBev. In Costa Rica, Coca-Cola FEMSA’s principal competitor is Florida Bebidas S.A., subsidiary of Florida Ice and Farm Co. and Cooperativa de Productores de Leche Dos Pinos R.L. in juices. In Panama, Coca-Cola FEMSA’s main competitor is Cervecería Nacional, S.A., followed by AJE Group. Coca-Cola FEMSA also faces competition from ‘B brands’ offering multiple serving size presentations in some Central American countries. South America: Coca-Cola FEMSA’s principal competitor in Colombia is Postobón, a local bottler ( Manzana Postobón, Uva Postobón and Colombiana ), still beverages ( Hit Juice ) and water ( Crystal ). Coca-Cola FEMSA also competes with low-price producers, such as Ajecolombia S.A., the producers of Big Cola, which principally offer multiple serving size presentations in the sparkling and still beverage industry. In Brazil, Coca-Cola FEMSA competes against AmBev, a company that distributes Pepsi brands, local brands with flavors, such as guarana, and proprietary beer brands. In Argentina, Coca-Cola FEMSA’s main competitor is Buenos Aires Embotellador S.A. (BAESA), a Pepsi bottler, which is owned by Argentina’s principal brewery, Quilmes Industrial S.A., and indirectly controlled by AmBev. In the water category, Levite, Villavicencio and Villa del Sur are water brands owned by Danone, which is Coca-Cola FEMSA’s main competition. In addition, Coca-Cola FEMSA competes with a number of producers offering ‘B brands’, low-priced sparkling beverages, as well as many other generic products and private label proprietary supermarket brands that are gaining importance in the market. Manaos, a brand owned by Refres Now S.A. is Coca-Cola FEMSA’s main competitor in this segment. In Uruguay, Coca-Cola FEMSA’s main competitor is Salus , a water brand owned by Danone. Coca-Cola FEMSA also competes against Fábricas Nacionales de Cerveza S.A. (FNC), a Pepsi bottler and distributor that is partially owned by Argentina’s principal brewery, Quilmes Industrial S.A., and indirectly controlled by AmBev. In addition, Coca-Cola FEMSA competes with CCU Inversiones II Ltda, a water, soft drinks and brewery company and finally, with some low-priced regional producers. Suppliers Mexico and Central America: In Mexico, Coca-Cola FEMSA mainly purchases PET resin from Indorama Ventures Polymers Mexico, S. de R.L. de C.V. and DAK Resinas Americas Mexico, S.A. de C.V., which Alpla Mexico, S.A. de C.V., known as Alpla, and Envases Universales de Mexico, S.A.P.I. de C.V. manufacture into non-returnable plastic bottles for the company. Also, Coca-Cola FEMSA has introduced into its business Asian global suppliers, such as Far Eastern New Century Corp., known as FENC, SFX – Jiangyin Xingyu New Material Co. Ltd. and Hainan Yisheng Petrochemical Co. Ltd., which support its PET resin strategy and are known as the top PET global suppliers. Coca-Cola FEMSA purchases all of its cans from Crown Envases Mexico, S.A. de C.V. and Envases Universales de Mexico, S.A.P.I. de C.V. Coca-Cola FEMSA mainly purchases its glass bottles from Owens America, S. de R.L. de C.V., FEVISA Industrial, S.A. de C.V., known as FEVISA, and Glass & Silice, S.A. de C.V., and in 2021, Coca-Cola FEMSA introduced glass bottles from the Middle East suppliers, such as Saudi Arabian Glass Co. Ltd known as SAGCO. Coca-Cola FEMSA purchases sugar from, among other suppliers, Promotora Industrial Azucarera, S.A. de C.V. (PIASA), Beta San Miguel, S.A. de C.V. or Beta San Miguel and Ingenio La Gloria, S.A., all of them sugar cane producers. As of April 8, 2022, Coca-Cola FEMSA held a 36.4% and 2.7% equity interest in PIASA and Beta San Miguel, respectively. Coca-Cola FEMSA purchases high fructose corn syrup (HFCS) from Ingredion Mexico, S.A. de C.V., Cargill de Mexico S.A. de C.V. and Almidones Mexicanos, S.A. de C.V., known as Almex. In Central America, the majority of Coca-Cola FEMSA’s raw materials, such as glass and non-returnable plastic bottles are purchased from several local suppliers. Coca-Cola FEMSA purchases its cans from Envases Universales Ball de Centroamerica, S.A. and Envases Universales de Mexico, S.A.P.I. de C.V. In Costa Rica, Coca-Cola FEMSA acquires plastic non-returnable bottles from Alpla C.R. S.A., and in Nicaragua Coca-Cola FEMSA acquires such plastic bottles from Alpla Nicaragua, S.A. South America: Coca-Cola FEMSA purchases non-returnable plastic bottles from Amcor Rigid Plastics de Colombia, S.A. and Envases de Tocancipa S.A.S. (affiliate of Envases Universales de Mexico, S.A.P.I. de C.V.). Coca-Cola FEMSA purchases all of its cans from Crown Envases Mexico, S.A. de C.V. and Crown Colombiana, S.A. Grupo Ardila Lulle (owners of Coca-Cola FEMSA’s competitor Postobón) owns a minority equity interest in certain of Coca-Cola FEMSA’s suppliers, including O-I Peldar and Crown Colombiana, S.A. In Brazil, Coca-Cola FEMSA also uses sugar as a sweetener in all of its caloric beverages. Coca-Cola FEMSA mainly purchases PET resin from local suppliers, such as Indorama Ventures Polímeros S.A. In Argentina, Coca-Cola FEMSA mainly uses HFCS that it purchases from several different local suppliers as a sweetener in its products. Coca-Cola FEMSA purchases plastic preforms at competitive prices from Andina Empaques S.A., a local subsidiary of Embotelladora Andina, S.A., a Coca-Cola bottler with operations in Chile, Argentina, Brazil and Paraguay, Alpla Avellaneda, S.A., AMCOR Argentina, and other local suppliers. In Uruguay, Coca-Cola FEMSA’s main supplier of sugar is Nardini Agroindustrial Ltda., which is based in Brazil. Coca-Cola FEMSA purchases PET resin from several Asian suppliers, such as SFX – Jiangyin Xingyu New Material Co. Ltd. and India Reliance Industry (a joint venture with DAK Resinas Americas Mexico, S.A. de C.V.), and Coca-Cola FEMSA purchases non-returnable plastic bottles from global PET converters, such as Cristalpet S.A. (affiliate of Envases Universales de Mexico, S.A.P.I. de C.V.). Proximity Americas Division Proximity Americas Division operates a chain of small-format stores under the trade name OXXO. Business Strategy Proximity Americas Division intends to continue increasing its store base in all of its territories while capitalizing on the retail business and market knowledge gained through its existing network of stores. Proximity Americas Division intends to open new stores in locations where it believes there is high growth potential or unsatisfied demand, while also increasing customer traffic and average ticket per customer in existing stores. Proximity Americas Division' expansion focuses on both entering new markets and strengthening its presence in Mexico, Colombia, Chile, Brazil and Peru. A fundamental element of Proximity Americas Divisions’ business strategy is to leverage its retail store formats, know-how, technology, and operational practices to continue growing in a profitable manner. This scalable business platform has provided a strong foundation for continued organic growth in Mexico, improving traffic and average ticket sales at the company’s existing stores and facilitating entry into new small-format retail industries. To further increase customer traffic into Proximity Americas Division's stores, Proximity Americas Division has incorporated additional services to its value proposition in Mexico, such as utility bill payments, deposits into bank accounts held at the company’s correspondent bank partners, remittances, payment of mobile phone fees and charges and other financial services, and it seeks to constantly increase the services it offers. Beyond Mexico, Proximity Americas Division seeks to increase its scale while continuing its expansion in Colombia, Chile, Peru and Brazil. In Brazil, Proximity Americas Division's growth is accelerating through Raízen Conveniências, commercially known as Grupo Nós (Grupo Nós), the company’s joint venture with Raízen Combustíveis S.A., which operates OXXO’s value proposition while continuing to evolve with trends, and which continues to grow its legacy format, Shell Select. Grupo Nós has franchised and self-operated Shell Select locations through Raizen’s service station network. Proximity Americas Division has developed proprietary models to assist in identifying appropriate store locations, store formats and product categories. These models utilize location-specific demographic data and Proximity Americas Division's experience in similar locations to fine-tune store formats, product price ranges and product offerings to the target market. Market segmentation is becoming an important strategic tool that is expected to allow Proximity Americas Division to improve the operating efficiency of each location, cover a wider array of consumption occasions and increase its overall profitability. Proximity Americas Division continues to improve its information-gathering and processing systems to allow it to connect with its customers at all levels and anticipate and respond efficiently to their changing demands and preferences. Most of the products carried through OXXO stores are bar-coded, and all OXXO stores are equipped with point-of-sale systems integrated into a company-wide computer network. Proximity Americas Division created a department in charge of product category management, for products, such as beverages, fast food and perishables, responsible for analyzing data gathered to better understand the company’s customers, develop integrated marketing plans and allocate resources more efficiently. This department utilizes a technology platform supported by an enterprise resource planning (ERP) system, as well as other technological solutions, such as merchandising and point-of-sale systems, which allow Proximity Americas Division to redesign and adjust its key operating processes and certain related business decisions. Proximity Americas Division maintains innovative promotional strategies in order to increase store traffic and sales. In particular, OXXO stores sell high-frequency items, such as beverages, snacks and cigarettes at competitive prices. Proximity Americas Division's ability to implement this strategy profitably is partly attributable to the size of the OXXO chain, and its ability to work together with its suppliers to implement sales strategies, such as differentiated promotions. OXXO stores’ national and local marketing and promotional strategies are an effective revenue driver and a means of reaching new segments of the population while strengthening the OXXO brand. For example, the organization has refined its expertise in executing cross promotions (discounts on multi-packs or sales of complementary products at a special price) and targeted promotions to attract new customer segments by expanding the offerings in the grocery product category in certain stores. Another fundamental element of Proximity Americas Division's strategy consists of leveraging Proximity Americas Division's reputation for quality and the position of the OXXO brand in the minds of its customers to expand its offering of private-label products. Proximity Americas Division's private-label products represent an alternative for value-conscious consumers, which, combined with its market position, allows Proximity Americas Division to increase sales and margins, strengthen customer loyalty and bolster its bargaining position with suppliers. Finally, Proximity Americas Division seeks to leverage its scale and customer knowledge to develop innovative value propositions to address the needs of the traditional trade channel in Mexico while simultaneously offering end customers price conscious retail formats, such as ‘Bara’ and ‘Pronto’. Store Locations Proximity Americas Division operates the largest small-format store chain in the Americas. It operates OXXO stores in Mexico, Colombia, Chile and Peru. Proximity Americas Division expanded its operations by opening new OXXO stores in Mexico, Colombia, Chile and Peru during 2022. Additionally, Grupo Nós operates OXXO stores and Shell Select locations in Brazil, and manages Shell Select stores operated by independent franchisees. Competition Cadena Comercial OXXO, S.A. de C.V. (OXXO) stores face competition from small-format stores, such as 7-Eleven and Circle K in Mexico, Tiendas D1, Ara and Tostao in Colombia, upa! in Chile, and Tambo Mas in Peru, as well as from other numerous retail and grocery chains (such as Wal-Mart, H-E-B, Soriana, La Comer and Chedraui, among others) to small informal neighborhood stores across the markets where they operate. Additionally, OXXO competes with delivery aggregators and express delivery services, such as Rappi, Uber Eats, JOKR and PedidosYa, among others. In Brazil, Grupo Nós competes in a fragmented traditional market and with institutional convenience store operators, such as BR Distribuidora and Ipiranga, among others. Advertising and Promotion Proximity Americas Division's marketing efforts for OXXO stores include both specific product promotions and image advertising campaigns. These strategies are designed to increase store traffic, increase sales and continue to promote the OXXO brand and market position. Proximity Americas Division manages its advertising for OXXO stores on three levels depending on the nature and scope of the specific campaign: local or store-specific, regional and national. Store-specific and regional campaigns are closely monitored to ensure consistency with the overall corporate image of OXXO stores and to avoid conflicts with national campaigns. Proximity Americas Division primarily uses point-of-purchase materials, flyers, handbills and print and radio media for promotional campaigns, although television is used occasionally for the introduction of new products and services. OXXO stores’ image and brand name are presented consistently across all stores, irrespective of location. Seasonality OXXO stores in Mexico traditionally experience periods of high demand in December, as a result of the holidays, and in July and August, as a result of increased consumption of beer and soft drinks during these hot summer months. The months of November and February are generally the weakest sales months for OXXO stores. In general, the colder weather during these months reduces store traffic and cold beverage consumption overall. Proximity Europe Division Proximity Europe Division has two main businesses, retail and food service. Proximity Europe Division operates multi-format outlets in Switzerland, Germany, Austria, Luxembourg and the Netherlands, with thirteen different sales formats. Most of Proximity Europe Division's outlets are organized as franchises. Business Strategy A fundamental element of Proximity Europe Division ’s business strategy is to provide the best comprehensive ‘foodvenience’ and convenience retail concepts offering in the geographies where it operates: nearby, quick, convenient and fresh products and services. Proximity Europe Division intends to move closer to its vision of having the best food and convenience concepts, focusing on five strategic pillars: growth, efficiency, innovation, performance-oriented culture and sustainability. Growth: Proximity Europe Division seeks to further expand its network of sales outlets, focusing on growing both its retail and food service network, leveraging its strong brand portfolio to expand in selected geographies while constantly evolving its value proposition to increase the contribution of higher-margin food categories, especially fresh products. Additionally, Proximity Europe Division aims to further expand its range of digital and other services. Efficiency : Proximity Europe Division seeks to continue increasing its efficiency through automation, retail analytics and efficient working procedures, as well as enhanced cooperation within its operations, in addition to enabling know-how transfer with Proximity Americas Division and other FEMSA businesses. Store Formats Proximity Europe Division uses thirteen sales formats, which are principally small-scale points of sale that Proximity Europe Division seeks to locate at highly frequented locations. Retail k kiosk is a market leader in the convenience kiosk business, mainly supplying tobacco, lottery products, snacks and press. It also has a growing share of food, fresh products and a varied range of digital services offerings. k kiosk has sales outlets in Switzerland, Germany and Luxembourg, including own outlets, agencies and franchise stores. cigo is a tobacco retailer also offering press products and a range of services for people on the move. cigo has sales outlets in Germany, including own outlets and franchise stores. avec provides a modern convenience format at highly frequented locations, for example train or service stations, with an extensive offering of fresh food and regional products. avec has sales outlets in Switzerland and Germany, including own outlets, agencies and franchise stores. ServiceStore DB and U-Store are convenience formats located at Deutsche Bahn and U-Bahn (underground), as well as in major bus stations. ServiceStore DB and U-Store has sales outlets, both of them operated in Germany as own and franchise stores. Press & Books is a market leader in the German railway station bookshop market with an extensive press and selected book offering complemented by a range of services for people on the move, including an online shop with store pick up. Press & Books has sales outlets in Switzerland, Germany, and Luxembourg and Austria, including own outlets and agencies. Food Service BackWerk (which includes Back-Factory) is Germany's largest food service bakery concept with a broad and flexible range of snacks and a growing offering of fresh products. BackWerk (including Back-Factory) has sales outlet in Switzerland, Germany, Austria and the Netherlands, which are mainly franchise stores. Ditsch provides pretzels and other snacks at highly frequented locations in Germany. Brezelkönig sells high-end lye bread products, such as pretzels, baguettes, croissants, hot dogs and selected sandwich snacks. Super Guud provides a small snacking concept for the urban commuter. Ditsch has sales outlets in Germany, mainly in agency format; Brezelkönig has sales outlets in Switzerland and Austria, in agency and franchise format; and Super Guud has own sales outlets in Switzerland. Caffè Spettacolo is an Italian-themed coffee bar concept with its own locations and an integrated coffee module concept for other Proximity Europe Division formats. Caffè Spettacolo has sales outlets in Switzerland and Luxembourg. Frittenwerk is a leading fast-casual dining format in Germany focusing on modern interpretations of Canada’s snack bar classic, poutine, with a fully developed self-service concept. Frittenwerk has sales outlets in Germany, including owned outlets and franchise stores. Proximity Europe Division is also one of the world’s leading producers of pretzels. It operates sixteen production lines in Germany, the U.S. and Switzerland. It primarily supplies a number of third-party food service customers, as well as the retail and wholesale markets in addition to its own Ditsch, BackWerk and Back-Factory sales outlets in Germany, Brezelkönig branches in Switzerland and other Proximity Europe Division formats. Seasonality Given the number of formats and locations in which Proximity Europe Division operates, the business has not historically experienced significant seasonality. Typically, between 40% and 45% of Proximity Europe Division's net revenues are generated in the first half of the year, while the remaining 55% to 60% is typically generated in the second half of the year. Health Division The Health Division operates pharmacy services locations and related operations with points of sale in Mexico, Chile, Ecuador and Colombia. Business Strategy The Health Division’s vision focuses on two main priorities. First, the Health Division aims to gain relevant scale by building a Latin American vertically-integrated health platform, operating across several countries and markets. Second, the Health Division strives to constantly improve its value proposition and service by being closer to its customers through more stores and distribution agreements, a digital platform and customer loyalty programs, and by giving its customers access to a broader assortment, better options and availability of medicines, personal care, beauty and relevant health and wellness products and services. Locations The Health Division operates locations in Mexico, Chile, Ecuador and Colombia. During 2022, the Health Division expanded its operations by additional locations. The Health Division expects to continue implementing its expansion strategy by emphasizing growth in markets where it operates and by expanding in underserved and unexploited markets. Most of the pharmacy services-related real estate is operated under lease agreements. Competition The biggest chains in Mexico competing with the Health Division are Farmacias Similares, Farmacias Guadalajara, Farmacias del Ahorro and Farmacias Benavides, while in Chile, the biggest chains are Farmacias Ahumada and Salcobrand. In Colombia, La Rebaja, Unidrogas, Olimpica, Cafam, Colsubsidio and Farmatodo are relevant players. In Ecuador, Grupo Difare and Farmaenlace are the main competitors. Seasonality Revenues from the Health Division's operations in Chile, Colombia and Ecuador tend to be higher during December, mainly due to an increase in the purchase of beauty and personal care products for gift-giving during the holidays; otherwise, early in the year during January and February, revenues tend to fall slightly after the holiday period. Fuel Division The Fuel Division operates retail service stations for fuels, motor oils and other car care products. The Fuel Division operates service stations in 17 states throughout Mexico, concentrated mainly in the northern region of Mexico. Business Strategy The Fuel Division intends to strengthen its services in its retail gas stations in Mexico to fulfill consumers’ needs and increase traffic in those service stations while developing and maintaining an attractive value proposition to draw potential customers in a competitive environment. Furthermore, although Proximity Americas Division and Fuel Divisions operate as separate businesses, the Fuel Division’s service stations often have an OXXO store on the premises, strengthening the OXXO brand and complementing the value proposition. The Fuel Division also seeks to increase its exposure to institutional customers to supply fuel and related products to third-parties. Competition The biggest chains competing with the Fuel Division in terms of number of service stations are regional chains, such as Petro-7 (operated by 7-Eleven Mexico), Corpo Gas, G500, Hidrosina, international players operating in Mexico, such as British Petroleum, Mobil, Repsol and Shell and hard discount chains, such as Good Price, Cargo Gas and Gulf. Seasonality Traditionally, the Fuel Division experiences especially high demand during the months of May and August. The lowest demand is in January and December due to the year-end holiday period, because most service stations are not located on highways to holiday destinations. Logistics and Distribution This segment consists of FEMSA’s Logistics and Distribution operations in the United States and Latin America. In the United States, Logistics and Distribution operates through Envoy Solutions, a diversified distribution company for facility supplies, packaging solutions and equipment, food service disposables, and specialty products. In Latin America, Logistics and Distribution operates through Solística, a leading third-party logistics solutions provider supporting FEMSA operations and logistics of third-party and FEMSA-related customers. Services in the United States Logistics and Distribution designs and executes customer-specific supplies distribution solutions that include forecasting and planning of customer-specific requirements, inventory management, product use training, and fulfillment schedules for each of its customers’ locations in two main product categories: Facility Supplies Distribution and Packaging Solutions. Through the Facility Supplies Distribution category, Logistics and Distribution distributes both janitorial and sanitation products and food service disposables. Janitorial and sanitation supplies include every-day hygiene, janitorial supplies and related equipment and products, such as sanitary paper, floor care products, cleaning chemicals and dispensing equipment. Food service disposables include take-out containers and related food service disposables for the restaurant industry. Product examples include paper and plastic cups, plates, straws, paper take-out boxes, among others. Through the Packaging Solutions category, Logistics and Distribution provides packaging supplies and equipment, as well as packaging equipment maintenance directly in its customers’ sites. Product examples include plastic wraps and films, corrugated cardboard, packaging tape and bags, packaging equipment, among other related categories. Services in Latin America Logistics and Distribution provides services to its customers through its two main product categories in Latin America, Transportation and Warehouse Management, and a third category that Logistics and Distribution refers to as Other Services. As part of its Other Services category, Logistics and Distribution provides comprehensive fleet maintenance solutions and related services. Within the Transportation category, there are three sub-categories of services: full truckload, less than truckload and dedicated fleet services. Through its full truckload service, Solística contracts with independent motor carriers or a self-operated fleet and connects its customers with contracted motor carriers specializing in their transportation and product types. Through its less than truckload service, Solística consolidates and ships single or multiple pallets from different customers into one single freight or truckload. Through its dedicated fleet services, Solística manages different types of transportation for large customers using a dedicated fleet of transport equipment. Some of Solística’s customers in this segment include Coca-Cola FEMSA and Heineken. Within the Warehouse Management category, Logistics and Distribution provides management of warehouse operations for third parties, including dry, multi-temperature and bonded warehouses. Solística also offers services through its managed warehouses, such as labeling, packing and co-packing, reverse logistics, palletizing among others. Business Strategy Logistics and Distribution focuses on two main strategies. First, increasing its relevance and scale in the United States by playing a leading role in the continuous consolidation of the janitorial and sanitation and specialized distribution space while expanding its footprint, and second, becoming the leading multi-vertical and multi-industry, fully integrated third-party logistics operator in Latin America. Geographic Footprint In Latin America the company operates in Mexico, Brazil, Colombia, Costa Rica, Guatemala and Panama. In the United States the company operates in all 50 states, with strong presence in the West Coast and the Northeast and the Mid Atlantic regions. Competition In Latin America, Logistics and Distribution faces competition from institutional and independent players, which include a fragmented man-truck market. Additionally, Logistics and Distribution faces competition from global competitors serving several verticals, such as DHL Supply Chain, XPO Logistics, CEVA, Ryder, Castores, Traxion and Penske. Logistics and Distribution also faces competition from small to medium institutional players, such as Bomi, Almaviva, Blu, NTA and other local players with significant expertise in specific sectors. Logistics and Distribution's main competitors in the United States are Imperial Dade, Bunzl, Brady, Veritiv, Grainger, among others. Customers In the United States, this business segment serves a diverse group of more than 67,000 institutional customers across different industries, such as retailers, hospitality, healthcare, education and government institutions, among others. In Latin America, Logistics and Distribution serves 4,228 customers and it also serves FEMSA’s related parties, such as Coca-Cola FEMSA and OXXO. Digital@FEMSA Digital@FEMSA is FEMSA’s tech and innovation business unit focused on building a value-added digital and financial ecosystem for end customers and businesses, while enabling and leveraging the strategic assets of FEMSA’s core business verticals. Digital@FEMSA’s value proposition aims to help people?and businesses to solve their daily needs and do more with their money, through hyper-personalized products, services, and experiences. This includes solutions, such as: Fintech for Consumers: Spin by OXXO is a digital wallet that seeks to offer frictionless payments solutions to Mexicans, making their day-to-day transactions seamless and efficient. This product provides a wide variety of payments solutions, enabling customers to be efficient and providing them with financial control on a daily basis. Digital Solutions for Businesses: Payment method solutions for micro, small, and medium sized businesses and independent merchants in Mexico. Such solutions to be offered in addition to value-added financial services to consolidate and develop an holistic value proposition based on client needs. Loyalty: The company’s strategy seeks to further develop the OXXO Premia program by building a coalition program between FEMSA’s main businesses, like OXXO and OXXO GAS, and other external businesses, rewarding their millions of customers for their day-to-day spending across this network of affiliated partners. Furthermore, Digital@FEMSA actively explores other related tech-enabled business and innovation opportunities that strengthen its ecosystem. Refrigeration The company’s refrigeration business is also included in its Other Businesses for 2022 and manufactures vertical and horizontal commercial refrigerators for the soft drink, beer and food industries, with an annual capacity of 705,000 units on December 31, 2022. In 2022, this business sold 614,507 refrigeration units, 35% of which were sold to Coca-Cola FEMSA, and the remainder of which were sold to other clients. Also, this business includes manufacturing operations for food processing, storage and weighing equipment. Heineken Investment FEMSA owns a non-controlling interest in Heineken, one of the world’s leading brewers. On December 31, 2022, the company had 14.76% economic interest in Heineken (includes Heineken Holding N.V. and Heineken N.V.). In 2023, the company reduced its combined economic interest in Heineken to 8.13%. Proximity Americas Division had a distribution agreement with subsidiaries of Heineken Mexico, part of Heineken, pursuant to which OXXO stores in Mexico only carried beer brands produced and distributed by Heineken Mexico. In 2019, Proximity Americas Division agreed to an extension of its existing commercial relationship with Heineken Mexico with certain important changes and entered into a new commercial relationship with Grupo Modelo. Under the terms of both agreements, Proximity Americas Division sells the beer brands of Grupo Modelo in certain regions of Mexico and as of March 31, 2023 sells to the entire country. The company’s logistic services subsidiary also provides certain services to Heineken Mexico and its subsidiaries. Coca-Cola FEMSA also continues to distribute and sell Heineken beer products in Coca-Cola FEMSA’s Brazilian territories pursuant to Coca-Cola FEMSA’s distribution agreement entered into in 1993 with Heineken Brazil. In February 2021, Coca-Cola FEMSA entered into a new distribution agreement with a five-year term, which is subject to automatic renewal subject to certain terms and conditions. Pursuant to this new distribution agreement, Coca-Cola FEMSA continues to sell and distribute Kaiser, Bavaria and Sol beer brands in Brazil and has added the premium brand Eisenbahn and other premium international brands to its portfolio and has ceased to sell and distribute Heineken and Amstel beer brands in most of its territories. In addition, Coca-Cola FEMSA has the right to produce and distribute alcoholic beverages and other beers in Brazil based on a certain proportion of Heineken’s portfolio in Brazil. Acquisitions In January 2022, Coca-Cola FEMSA, through its Brazilian subsidiary, acquired CVI Refrigerantes Ltda (CVI), a Brazilian bottler of Coca-Cola trademark products with operations in the state of Rio Grande do Sul in Brazil. In February 2022, FEMSA Comercio (FEMSA Comercio, S.A. de C.V.) acquired the OK Market store chain, with 134 locations, from SMU, S.A., a leading Chilean retailer. In April 2022, Envoy Solutions acquired Sigma Supply of North America Inc., an independent specialized distribution company based in Hot Springs, Arkansas. In October 2022, the company acquired Valora Holding AG, a European leading public company in the foodvenience market. History Fomento Económico Mexicano, S.A.B. de C.V. was founded in 1890. The company was incorporated under the laws of Mexico in 1936.