Mexico: Mexico’s leading beer maker Modelo plans capital expenditures of up to $350 million and sales volumes increases this year, Credit Suisse First Boston analyst Tufic Salem said in report released on March 11. Modelo, the manufacture of the popular Corona beer, provided guidance during an analyst meeting in Mexico City this week, Reuters cited Salem.

"Volume increases of 3 % and 5 % are expected in domestic and export sales, respectively," he said and noted they were below his estimates but in line with inflation. Inflation in Mexico was 5.19 percent in 2004 and is seen falling to around 4 percent this year. Rival Femsa, maker of the Sol and Tecate beers, said last month it also planned to increase prices for its brews.

During the meeting, Modelo also said that its Eastern U.S export deal with Gambrinus is expected to conclude by year end. "However, no comment was made on whether they would maintain distribution with Gambrinus (under a new deal) or seek a different distributor," Salem added.

Modelo, half-owned by Anheuser-Busch Cos. Inc., one of the world's largest brewers, is at loggerheads with its East Cost importer Gambrinus. The importer started an arbitration case last year to contest a 2006 termination clause in its contract with Modelo. A change in importer could cost Modelo a hefty termination fee, but could also ramp up cash flow, analysts have said.

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