Mexico: Constellation Brands secures water rights of new Mexico brewery

Constellation Brands, whose US$1.4bn brewery project in Mexico’s Baja California state was canceled midway through construction in 2020, has secured water rights for a new US$1.3bn plant that it will build in Veracruz state, bnamericas.com reported on August 6.

The US beer giant has obtained all the necessary permits to extract water from a state aquifer once the plant begins operations, Bernardo Martínez, a company executive in charge of the project’s investments, told Mexican daily Milenio.

Besides the plant, the project also includes building highway and railway accesses to Veracruz’s port, Martínez said.

The Baja California project was canceled in March 2020 after President Andrés Manuel López Obrador (AMLO) decided to hold a referendum with residents of state capital Mexicali to decide its fate due to water-related concerns. The majority of people who participated in the consultation voted against the project.

The public consultation was controversial since less than 5% of eligible voters turned out. It also marked the first time that a Mexican government had held a referendum on a major foreign investment project.

In December last year, Mexican officials disclosed that Constellation had agreed to relocate the project to an unmade location in the country’s poorer southeast region.

Representatives from the company presented the new Veracruz-based project to AMLO in April, who then said: “The brewery will be built in Vargas, which is in the municipality of Veracruz. Local authorities have helped to issue all required permits and [the company] has already started: they have purchased 300ha and are polishing the construction project.”

Constellation said in June that it plans to invest up to US$5.5bn in Mexico over the next four years.

“Total capital expenditures for the beer business are expected to be $5bn to $5.5bn over fiscal 2023 to fiscal 2026, with the majority of the spend expected to occur in the first three years of that timeframe,” the company said in its first quarter fiscal 2023 financial results report.

07 August, 2022