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Constellation Brand Plans to Buy Brewery in Mexico

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November 1, 2016

Constellation Brands plans to meets its demand for its imported beers from Mexico, including Corona Extra, Modelo and Pacifico, with the purchase of a brewery in Obregon from Anheuser-Busch InBev NV.

Victor, New York - Constellation Brands announced plans to acquire a Mexican brewery for $600 million to meet growing demands of its beer imported south of the border.

Constellation announced Monday it wants to buy the brewery in Obregon from Grupo Modelo, a subsidiary of Anheuser-Busch InBev NV.

Anheuser-Busch InBev NV had to divest assets to get U.S. Justice Department approval for its $20.1 billion takeover of Grupo Modelo in 2013. Also as part of the Justice Department's approval of the deal, Constellation acquired the U.S. distribution rights to Grupo Modelo's beers, including Corona, for roughly $5.3 billion from Anheuser-Busch.

The acquisition in Obregon is also subject to regulatory approved by the U.S. Department of Justice and Mexico.

The brewery is expected to produce 4 million hectoliters a year and Constellation plans eventually to expand it to 20 million hectoliters. The Obregon brewery is on Mexico's west coast in the state of Sonora, and will help service its largest beer markets in the western United States.

Constellation Brands expanded its brewery in Nava and is building out another brewery in Mexicali for $2 billion. In light of the deal, Constellation plans to spend less than previously forecast - $1.4 billion.

"We believe this is the right strategy to provide near-term capacity and greater flexibility to support our growth and innovation plans, while allowing for the build-out of our Mexicali brewery over an extended time period," said Rob Sands, president and chief executive officer of Constellation Brands. "We look forward to welcoming Obregon's talented employees to our Constellation family and working together to continue to capture the ongoing growth opportunities we see in the high-end segment of the U.S. beer market."

Constellation's best-selling imported beer brands include Corona, Modelo and Pacifico.

Sales have been climbing in Mexico, including shipping 13 percent more beer from the same period a year before.

Based in Victor, N.Y., Constellation Brands is the No. 3 beer company in the United States.

On Oct. 5, Constellation Brands entered the high-end whiskey market with the purchase of High West Distillery in Utah for $160 million.

Original article