CONSTELLATION TO EXPAND PRODUCTION

CONSTELLATION BRANDS WILL EXPAND CANNED BEER PRODUCTION IN SONORA

Constellation Brands announced that it will expand Mexican beer production in Sonora. This campaign aims to help the Mexican beer market grow, which is a boost to anticipate major plans.

This venture represents an investment by the company of approximately US$1.5 billion, which, according to estimates, will allow it to have a higher production capacity in the coming years.

By 2022, Modelo plans to increase its annual production from 8.5 million hectoliters to 11 million hectoliters. With this increase, they expect to reach 17 million hectoliters per year in 10 to 12 months.

The expansion is the second for this restaurant in four years. The previous one was made for close to US$900 million and cost twice as much as it costs to make an investment of 3.5 million hectoliters per year.

In addition, the largest brewery in Mexico, Constellation Brands, a U.S. company with 156 brands sold in 120 countries and whose Mexican subsidiary is Grupo Modelo, announced that it was buying the Obregon Brewery from the Anheuser-Busch InBev subsidiary. The first, the Piedras Negras brewery in northern Mexico, was acquired as part of Constellation’s agreement to purchase AB InBev’s U.S. rights to Grupo Modelo’s brands.

The Constellation group plans to spend a total of US$5-5.5 billion in the country during fiscal years 2023-26, including the expansion of the business in Mexico. “The company plans to invest in the upcoming capacity increase in Mexico that will provide the long-term flexibility needed to support the expected future growth of its high-end Mexican beer portfolio,” Constellation noted after announcing its second-quarter results in October.

Investments are expected to total 30 million hectoliters, including the construction of a new brewery in the Mexican state of Veracruz. Corona then proceeded with the project after plans for the same site in the Mexican state of Baja California were cancelled following adverse local referendum votes.

In recent years, Constellation Brands has had considerable growth thanks to the Mexican state that has helped the group to have more money and also to other countries. However, analysts are concerned that it is too reliant on brewing bullets as trends are volatile.

“Constellation’s beer business largely comprises two brand families that cannot expand outside the U.S. and, as U.S. alcohol consumption cycles have shown us for decades, at some point Mexican imports will fall out of favor,” he concluded.