The Mexican voted against Constellation’s plant development in Mexicali on fear it would use too much water (it had all the approvals/permits/testing done prior) but local groups pushed for a vote.
The stock is down 8% on the news.
The Mexican government will compensate STZ for the loss, but we do not know yet the terms, and if STZ will recover the $ it put in (total investment was to be $2.5B for the brewery to open in 2021). Constellation will now have to go look elsewhere for its expansion project. The Mexicali plant was being built to support future growth demand for its beer.
This does not affect the current production plant that is located elsewhere (see map).
I’ll send more news once the company communicates its next step.
Julie S. Praline
Director, Equity Analyst
Direct: 617.226.0025
Fax: 617.523.8118
Crestwood Advisors
One Liberty Square
Suite 500
Boston, MA 02109