USA & Mexico: Constellation Brands moving forward with plans to build a brewery in Mexico despite opposition

Plans by a U.S. company to construct a state-of-the-art brewery in the Baja California capital of Mexicali are moving forward — despite opposition of a group of local farmers and the cancellation of a state aqueduct project to supply water to the future facility, The San Diego Union-Tribune reported on July 19.

A spokesman for Constellation Brands, which supplies Mexican-made Corona and Modelo beers to the U.S. market, said on July 19 that the company is building its own water delivery system to the plant, located south of Mexicali off the road the San Felipe.

The project, set to launch operations in late 2019, represents an investment of more than $1 billion. Though endorsed by the Baja California state government, the project has been fiercely opposed by a group of Mexicali farmers who say the water is earmarked for agricultural use, and should not be diverted to industry.

The group, Comité Ciudadano de Defensa del Agua en Baja California, claims that the water targeted for Constellation Brands would have come from an aquifer that is overdrawn. “The aquifer needs to recover before these investments can be approved,” said Rigoberto Campos, the committee’s leader.

Constellation Brands said it is undeterred by the cancellation of the state’s 30-mile aqueduct project, and is proceeding with its own plans. The company expects to use about 7 million cubic meters of water per year once the plant is at full capacity, and says that the volume represents less than one percent of the supply for the Mexicali Valley, an important agricultural region that produces alfalfa, cotton, and winter vegetables.

Constellation Brands’ vice president for corporate communications, Michael McGrew, said the project promises significant economic benefits to the Mexicali region with the creation of 750 permanent jobs and 3,000 to 4,000 more while the facility is under construction.

“We are one of the biggest investors in Mexicali, if not the biggest investor,” McGrew said.

By the end of 2019, Constellation Brands expects to open the plant with a capacity for producing five million hectolitres per year, he said; that is the equivalent of 58 million cases of beer, with each case representing 24 12-ounce bottles.

McGrew said the plan is to double that capacity to 10 million hectolitres, with the possibility of producing up to 20 million hectolitres annually.

Based in New York state, Constellation Brands is the third largest U.S. beer producer, with facilities in two other northern Mexico border states—Coahuila and Sonora. Mexicali’s proximity to the U.S. border was an important factor in the company’s decision to locate there, as all of its product will destined for the U.S. consumers.

Opponents of the state’s planned aqueduct filed suit to block construction of the aqueduct, alleging that the government had not obtained an environmental permit for the project.

It was cancelled last month by the Baja California Water Commission. Gov. Francisco Vega de Lamadrid said Tuesday that the cancellation was as a result of “the company’s lack of a water quota,” but added that “I imagine there has to be other alternatives to supply water” to Constellation Brands and other companies in the area.

“But it is a federal issue,” he said, adding that the state does not determine water quotas.

The state’s cancellation of the aqueduct “has no bearing on the project,” McGrew said.
Constellation Brands “is investing its own funds” to build the needed infrastructure, he said, and has a commitment for the water from the Baja California Public Service Commission for Mexicali, an agency known as CESPM.

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