Mexican President Andres Manuel Lopez Obrador says beer production in northern Mexico is affected by climate change and drought

Mexico, the world’s top beer exporter, should stop making the drink in the north of the country as the region faces severe water shortages, President Andres Manuel Lopez Obrador said on Monday.

Citizens of drought-stricken Monterrey, the country’s industrial heartland where brewers like Heineken NV have facilities, suffered from water shortages for months as dams emptied. Lopez Obrador said the government would support companies that want to produce beer in the south or southeast.

“It doesn’t mean we won’t produce beer anymore, it means we won’t produce beer anymore in the north, it’s over,” Lopez Obrador told a daily press conference. “If they want to continue producing beer, increase production, then all support for the south or the southeast.”

Alongside Heineken, Mexican beer giant Grupo Modelo, controlled by AB InBev, the world’s largest brewer, has facilities in the north. Lopez Obrador cited the case of Constellation Brands as an example of what a policy should look like for one of Mexico’s major industries. The company had planned a beer factory in the border town of Mexicali, but in 2020 Lopez Obrador ordered the project halted over water issues after consultation with local citizens.

The company has since said it will build in the southeastern state of Veracruz. However, nine months after the announcement, the company had still not built anything on the site, as it is still awaiting permits, the El Financiero newspaper reported last week.

At the end of July, Heineken offered to cede 20% of the rights it holds to water in Monterrey, and to donate a well, while the city copes with the crisis. Lopez Obrador had previously enlisted beer companies to help him.

The companies produce household names in the beer industry. Grupo Modelo owns the Corona, Modelo Especial and Pacifico brands, among others, while Heineken produces the Dos Equis, Tecate and Bohemia brands, among others. Imported beer accounts for nearly 18% of all beer consumed in the United States, according to the Beer Institute, which works with the U.S. Department of Commerce to track beer volumes in the United States.

Mexico supplied 76% of all beer the United States imported last year, according to Commerce Department figures cited by the Beer Institute.

“You cannot give permits in places where there is no water,” said Lopez Obrador, known as AMLO. “So we’re going to intervene and that’s what the state is for.

Heineken, Grupo Modelo and Constellation Rands did not immediately respond to requests for comment. The Mexican presidency did not respond to a request for comment to expand on Lopez Obrador’s remarks.

As the pandemic has trapped beer supply, demand has also increased in Mexico as beer vendors have run out of popular bottles. The price of Victoria and Corona beers, both made by Grupo Modelo, rose 24% from late May to early June.

Heineken Mexico announced in June that it would invest 1.8 billion pesos ($89 million) in a can manufacturing plant in Meoqui, Chihuahua, near the US-Mexico border, due to growing demand. . It’s unclear if Lopez Obrador’s announcement will affect those plans.

–With help from Maya Averbuch and Brendan Case.

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