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Constellation Brands: its expansion in Mexico

Constellation Brands plans to complete the expansion of its beer production in Mexico in 2026, from 39 to more than 64 million hectoliters.

During fiscal year 2022, ended February 28, the company incurred $1,026.8 million for capital expenditures, including $849.5 million for the Beer segment primarily for Beer Projects in Mexico.

In addition, Constellation Brands plans to spend $1.3 billion to $1.4 billion in capital expenditures in fiscal 2023, including approximately $1.2 billion for the Beer segment primarily associated with Mexico Brewing Projects.

The remaining capital expenditures planned for fiscal year 2023 consist of improvements to existing operating facilities and replacements of existing equipment and/or buildings.

Thus, the company expects the Mexico Beer Projects to be substantially completed by fiscal year 2026.

Consequently, for the beer segment, the company projects to spend $5 billion to $5.5 billion between fiscal 2023 and fiscal 2026, with most of the spending expected to occur in the first three fiscal years of that term.

Management periodically reviews the capital expenditure program and modifies it as necessary to meet current and projected future business needs.

Constellation Brands

As of February 28, 2022, the production capacity at its Mexican breweries was approximately 39 million hectoliters.

By the end of fiscal year 2026, it expects to increase its capacity in Mexico to approximately a range between 64 and 69 million hectoliters, to support the growth of its Mexican beer brands.

This includes the planned construction of the Cervecería del Sureste de México, where there is sufficient water and the company has a skilled workforce to meet its long-term needs, as well as continued expansion, optimization and/or construction at its brewing locations. present in Nava and Obregón.

In fiscal year 2017, the company began the construction of the Mexicali Brewery. In March 2020, a public consultation was held on the construction of its Cervecería Mexicali.

Following the negative outcome of the public consultation, the company continues to work with government officials in Mexico to determine the next steps for its suspended Cervecería Mexicali construction project; seek various forms of recovery of capitalized costs and additional expenses incurred in establishing the brewery, however, there can be no guarantee of any recovery, and explore options to add more capacity elsewhere in Mexico, including the construction of the Cervecería del Sureste from Mexico.

 

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