Wednesday, May 22, 2024

Constellation Brands confirms plans to construct brewery in Veracruz

A United States company that brews Corona and other Mexican beer brands for the U.S. market will build a new brewery in Veracruz, company officials have confirmed.

Veracruz is a plan B decision for Constellation Brands: its US $1.4 billion, nearly-completed brewery project in Mexicali, Baja California, was halted by the federal government after a dispute over water use and a subsequent referendum in March 2020.

The new plant, which the news website Sentido Común reported is likely to be located in the port city of Coatzacoalcos, is part of an up to $5.5 billion investment plan for 2023–2026 that includes improvements at a brewery in Ciudad Obregón, Sonora, and its state-of-the-art plant in Nava, Coahuila, located across the border from Eagle Pass, Texas. The spending aims to increase beer output by as much as 30 million hectoliters. 

A Constellation representative confirmed that it would be building the new plant in Veracruz, saying that one advantage of the new location in that state would be its shipping connectivity to the United States, offering easy access to Florida and the United States east coast, while the Sonora plant is likely to serve California.

The Coahuila plant will continue to serve Texas, Sentido Común reported.

Constellation Brands Mexicali brewery protests
The Mexicali brewery, which was eventually halted, sparked numerous resident protests over the amount of water it would consume.

Veracruz Governor Cuitláhuac García has proposed the southern port of Coatzacoalcos as an ideal relocation site for the brewery, and Sentido Común reported that it is being considered, although Constellation spokesperson Nina Mayagoitia told the news agency Reuters this week that it has yet to decide on a site in Veracruz or budget for the new plant. 

Constellation hasn’t been compensated for its losses on the 80%-completed Mexicali project that was stopped in mid-construction by the government, company officials confirmed.

“The company continues to work with government officials in Mexico to determine the next steps for our suspended Mexicali brewery construction project and seek various ways to recover the capital costs and additional expenses incurred to establish the brewery. However, there are no guarantees of compensation,” an unnamed company spokesperson told Sentido Común.  

López Obrador has previously said the southeast of the country was more appropriate for a brewery than the arid border city of Mexicali, based on the availability of water.

“It was explained to them that the people had not been consulted, that the population would be affected and that it would be irrational, where there is no water, to put a factory to produce beer and export beer, which is like exporting water. They understood, and now they are going to [build] a brewery, but in the southeast, where there is enough water,” López Obrador said in May 2020. 

The United States is the only country where Constellation can sell many of its beers. Beer giant Anheuser-Bush InBev has commercial rights for the rest of the world, including Mexico. Constellation’s product portfolio includes the beer brands Corona, Modelo Especial, Victoria and Pacífico, as well as Robert Mondavi wines, Svedka vodka and Casa Noble Tequila. It has operations in the United States, Mexico, Italy and New Zealand. 

The company bought Grupo Modelo’s U.S. beer business in 2013 and has invested $9 billion in it. Constellation has annual sales of over $8.5 billion, and its Mexican beer portfolio generates a significant portion of its revenue.

With reports from Sentido Común and Reuters

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