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Constellation Brands has announced that it will invest around $1.5bn in the construction of a new brewery in northern Mexico.
The facility in the border town of Mexicali will initially be able to provide 10m hectolitres of production capacity, with the ability to scale to 20m hectolitres in the future. Constellation Brands claimed that the site was ideally located near the US state of California, which is the company’s largest beer market.
Additional investments in land, water rights, infrastructure and other site requirements at Mexicali are expected to approximate $500m in order to accommodate scalability to a 20m hectolitre capacity.
The facility will boast similar technological and operational advancements as the company’s brewery in Nava, Mexico, designed to ensure consistency in brewing and production processes as well as the highest level of product quality between the two sites, Constellation Brands said.
The US brewer has also revealed plans to expand its plant in Nava, which is 23 miles from Mexico’s border with Texas. Incremental expansion at the Nava brewery to increase output to 20m hectolitres has already begun, and the company is now seeking to increase the site’s capacity from 27.5m hectolitres. The work is expected to be completed in early 2018 at a cost of approximately $250m.
Constellation Brands president and chief executive officer Rob Sands said: “We are investing in infrastructure that will provide long-term flexibility and capacity needed to support the expected future growth of our high-end Mexican beer portfolio. Our Mexican beer business continues to significantly outperform the US beer market and is exceeding our sales volume and depletion expectations, driven by strong consumer demand. We anticipate these capacity investments will equip us with the production necessary to continue to be a leader in the high-end segment of the US beer market, which has consistently grown in the mid to high single digit range and is expected to continue to grow at these levels into the foreseeable future. We are absolutely committed to satisfying growing consumer demand for our iconic brands, including Corona, Modelo, Pacifico and Victoria, by increasing supply for the US market, and we are pleased to be in a position to continue investing in Mexico and enhancing our operational platform.”
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