Mexico's Modelo, the country's largest brewer and maker of the Corona brand, plans to expand a plant in the south of the country to add beer capacity by 2006. Chief Executive Officer Carlos Fernandez Gonzalez told a news conference Modelo was to beef up its Tuxtepec brewery in the state of Oaxaca by 9 million hectoliters (100 liters) per year to supply beer to southern Mexico and to export to Central and South America, Reuters revealed on February 16.

"We are making an important investment in Tuxtepec in Oaxaca state where the brewery that today produces 7 million hectoliters will be expended to produce 16 million hectoliters," Fernandez said. Tuxtepec, which will be expanded by the end of 2006 to meet a long held goal of Modelo to reach a total capacity of 60 million hectoliters, will become the company's second largest brewery after its 20 million hectoliter Zacatecas plant.

Jose Pares, Modelo's head of investor relations, told Reuters Modelo reached 91 % capacity usage at the end of last year up from 86 percent in 2002. Part of Modelo's business modelo is to expand ahead of increasing demand so as never to be in short supply which would hand market share to its main competitor, the beer arm of beverage giant Femsa.

Pares said capacity usage at Modelo, half owned by U.S. based Anheuser Busch the world's No. 1 brewer, will drop again in 2004 because a fourth upgrade at its Zacatecas plant has been completed and there will be extra unused capacity.

CEO Fernandez said growth for domestic sales volumes this year would be in line with earlier guidance given by Modelo of between 2 percent and 3 percent but he also said it could turn out higher. "The reality is that things are going very much in line with what we announced a few weeks ago," Fernandez said. "Let's remember that (growth) goes very much hand in hand with our economy and where we have a presence, but I'd say the figure of 3 percent is conservative," he added.

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