Please ensure Javascript is enabled for purposes of website accessibility

After Mexicali Voters Reject Its Billion-Dollar Brewery, Constellation Brands Wants to Meet With Mexico's President

By Asit Sharma - Updated Mar 24, 2020 at 2:09PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The diversified alcoholic beverage maker isn't ready to give up on its planned new plant.

A day after residents of the Mexican border city of Mexicali voted by a wide margin to reject the completion of a $1 billion brewery under construction by alcoholic beverage giant Constellation Brands (STZ 0.34%), management has stated that it still wants to invest in Mexico and is open to meeting with President Andres Manuel Lopez Obrador to discuss how to proceed, according to Reuters.

Voters in the desert city are concerned that Constellation's plant will deplete already-scarce water supplies. According to Alfonso Cortez Lara, a water expert at the College of the Northern Border who was quoted in U.K. newspaper The Guardian, the brewery would have consumed more water than all other industrial users in Mexicali combined -- 25% of the municipality's reserves at peak use.

The manufacturer, however, has denied that its operations will significantly impact water availability. Reuters reported Monday that less than 5% of residents out of a population of 1 million voted in the referendum. However, though groups opposed to the brewery has been pushing for a plebiscite for two years, the vote itself was only announced two weeks ago. Pro-business groups panned the way the referendum was conducted as both disorganized and designed to promote a negative result.

10 beer taps with long wood handles mounted on a grey slate wall.

Image source: Getty Images.

In a statement issued Tuesday, Constellation Brands vowed that it would keep working with local authorities, community members, and government officials in Mexicali to try to advance the project, but would also be exploring options elsewhere in Mexico.  

"In the meantime," stated CEO Bill Newlands, "it's important to note that we have ample capacity, based on current growth forecasts and production capabilities at our Nava brewery and soon to be completed expansion in Obregon, to continue fueling the growth of our beer business in the medium-term."

Constellation Brands says it is eager to engage all stakeholders, as the Mexicali plant is key to the company's long-term production needs. Its Mexican beer portfolio, which includes top-selling brands such as Corona, Modelo, and Pacifico Claro, continues to function as its core growth engine. Even as sales in its wines and spirits business declined by nearly 10% last quarter, Constellation's larger beer segment achieved year-over-year sales growth of roughly 8%, allowing total company revenue to advance by 1%.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Constellation Brands, Inc. Stock Quote
Constellation Brands, Inc.
$246.36 (0.34%) $0.84

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/29/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.