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Constellation Brands Reportedly to Build $1.3B Brewery in Mexico

Constellation Brands, producer of Corona beer, in 2020 was forced to close a nearly completed $1.4 billion Mexican facility after local opposition arose.
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Constellation Brands  (STZ) - Get Constellation Brands, Inc. Class A Report has agreed to build a large brewery in southeastern Mexico almost two-years after the alcoholic-beverage maker ran into a big dispute with the Mexican government. 

The Victor, N.Y., company and Mexican President Andres Manuel Lopez Obrador are expected to unveil the plan to build the new brewery as soon as this week with an investment of about $1.3 billion, The Wall Street Journal reported.

This comes after Constellation, which produces Corona beer and other brands, was forced to close its nearly finished $1.4 billion brewery in the city of Mexicali in early 2020, which sits on the U.S. border. 

The Mexican government acted after local residents voted against the project. The local opponents said the factory would use too much water and hurt local farmers, a charge that Constellation at the time denied. 

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Constellation booked a loss of nearly $700 million from the closure of the Mexicali brewery. 

The exact location of the new brewery has not been made public, but Economy Minister Tatiana Clouthier told Mexican lawmakers that the company was planning an important investment in the Gulf state of Veracruz, where it would have access to ample water supplies, the Journal reported. 

Meanwhile Constellation told the Journal that negotiations with the Mexican government "have been productive and remain ongoing."

Development of Mexico's southeastern area is part of the president's plan to deter illegal migration to the U.S. by creating jobs in the largely rural region. 

Constellation shares at last check were higher by 1.1% at $233.41.