International beverage giant Constellation Brands announced Thursday it will pour $1.5 billion into building a massive brewery in Mexico near the California border to fuel the growth of its Mexican beer portfolio.
Constellation, which produces Modelo and Corona beer, says the brewery will be built to have a 10 million hectoliter production capacity, with the ability to scale to 20 million hectoliters. An additional $500 million will be spent on land, water rights, infrastructure and other requirements at the location which was chosen for its proximity to California, the company’s largest beer market. The project is targeted to be completed in the next four to five years. The first 5 million hectoliters is scheduled to be produced by the end of 2019.
“We are investing in infrastructure that will provide the long-term flexibility and capacity needed to support the expected future growth of our high-end Mexican beer portfolio,” says Rob Sands, president and CEO, Constellation Brands.
Sands says the company anticipates this investment will yield the production necessary to be a continuing player in a growing US beer market. According to The Wall Street Journal, Constellation is currently the third-largest US brewer by volume and has enjoyed growing profits since it purchased the rights to 10 Mexican beer brands and a brewery from AB InBev in 2013.
The Mexicali location is ideal for the company, given its close proximity to California, providing a new avenue to better service the western US. The facility will use similar technological and operational advancements as the company’s brewery in Nava, Mexico to ensure consistency in brewing and production processes at the two facilities.
The company also has plans to expand the Nava brewery capacity from 25 to 27.5 million hectoliters. The estimated cost of this project is expected to be $250 million; it will be completed in 2018.
Constellation made headlines last year when it announced it will acquire San Diego-based Ballast Point Brewing and Spirits for $1 billion.