Maker of Corona, Modelo to build $1.3B brewery in Mexico

Deal comes two years after Mexico forced Constellation to abandon a project

Maker of Corona, Modelo to build $1.3B brewery in Mexico
Constellation CEO Bill Newlands and Mexican President Obrador (CBrands, Wikipedia)

The company behind Corona and Modelo’s U.S. beers has agreed to build a brewery in southeastern Mexico.

Constellation Brands’ project is valued at around $1.3 billion, according to the Wall Street Journal.

The Mexican government two years ago ordered the company to shutter a nearly complete plant in the northern border city of Mexicali because locals voted against the brewery in a referendum. Construction was well underway and the project was valued at $1.4 billion, but opponents claimed it threatened the local water supply.

The Victor, New York-based company officially walked away from the project in May at a cost of around $700 million.

Constellation purchased Grupo Modelo’s U.S. beer business in 2013. The company brews Modelo, Corona and Pacifico beers for U.S. customers.

Opponents of the Mexicali brewery argued the project would harm the environment and use up precious water resources needed for local farmers, according to Mexico Now. They said the project prioritized U.S. beer consumers over locals.

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The exact location of the new Constellation brewery has not been announced, but the company appears to be targeting the southeastern Gulf state of Veracruz.

Economy Minister Tatiana Cloutier recently said that Constellation was planning an investment there and Veracruz Governor Cuitláhuac García said earlier this year that the firm was considering a project near the port of Coatzacoalcos.

Port accessibility is key for exporting its beers into the United States and the area has water supplies capable of supporting a brewery.

The party of President Andrés Manuel López Obrador is popular in the country’s southeast. Obrador took office in 2018 and has focused on boosting the economy in the region to deter migration to the United States.

An investment from Constellation could be a major victory for Obrador. Direct foreign investment in Mexico fell 19 percent to $27.6 billion last year, largely because of the pandemic.

[WSJ] — Dennis Lynch