Constellation brews beers including the Modelo range at its three Mexico breweries

Constellation brews beers including the Modelo range at its three Mexico breweries

Constellation Brands is to increase capacity at the Obregon Brewery in Mexico with a near US$1bn investment.

The owner of the US rights to the Corona and Modelo beer brands said yesterday it will boost production at the plant by 5m hectolitres over the next three to four years. The capacity upgrade, which more than doubles the plant's existing 4m-hectolitre capacity, is expected to cost about $900m.

The company said the investment will "optimise its production footprint and expand its brewing and packaging capabilities in Mexico". The move will create 450 new permanent jobs at the site in the northern Mexican state of Sonora.

Constellation agreed to buy the Obregon Brewery from Anheuser-Busch InBev subsidiary Grupo Modelo in 2016. It was the second Mexico brewery Constellation acquired from AB InBev. The first, the Piedras Negras brewery in northern Mexico, was taken over as part of Constellation's deal to purchase AB InBev's US rights for the Grupo Modelo brands. Constellation has upped capacity at this site as well.

Vivian Azer, an analyst with Cowan & Co, said Constellation is in line to have a total capacity of 36.5m hectolitres across its three Mexican breweries. According to the analyst, an upgrade at the Mexicali site has been postponed to push through the Obregon build. "The Obregon facility is a focus of the company, given it has outperformed margin expectations," Azer explained.

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