Extreme drought in northern Mexico has triggered a water crisis. President Andres Manuel Lopez Obrador has asked the region's beer industry to move production elsewhere for sustainability reasons, Bloomberg reports.
The water crisis is particularly critical in Monterrey, one of Mexico's most important economic poles and home to some of the largest breweries in the world, such as Heineken NV.
Some Monterrey neighborhoods have been without water for nearly three months and the Heineken plant has suffered from the drying up of the waterways. Residents protested the commercial districts because of their excessive demand for water from the beer industry which produces it not only for Mexico, but also for the US.
Monterrey Mexico is having a water crisis. Protestors blocked traffic. Looks like America will need more warehouses. International supply chains are not predictable. pic.twitter.com/olKErrFRpP
– Daniel Spenrath (@Daniel_Spenrath) June 24, 2022
Lopez Obrador said the government will support the transition of the brewing industry from the drier northern part of the country to the southern or southeastern part of the country, where water supplies are more abundant and a tropical climate.
" This does not mean that we will no longer produce beer, but that we will no longer produce beer in the north of the country: it is over ," the president said Monday during a daily press conference. " If they want to continue brewing, increasing production, then all the support for the south or the southeast ."
Lopez Obrador said Constellation Brands is the perfect example of how his administration ordered the brewer to stop construction of a beer plant in the border town of Mexicali due to water shortages. He said the company had designed a new brewery in the southeastern state of Veracruz, although local news outlet El Financiero said building permits are still pending.
Constellation is one of the leading brewers in Mexico and has a portfolio that includes Corona Extra, Corona Light, Modelo Especial, Modelo Negra and Pacifico among others.
Monterrey's water crisis is so severe that Heineken has offered 20% of its water rights to the drought-stricken city and even offered to donate a well to support the municipality. Lopez Obrador called on beer companies to assist cities with water shortages.
There is no significant news of beer production outages yet. It is important to note that Mexico is responsible for 76% of all beer imported from the United States last year, according to Department of Commerce data cited by the Beer Institute. Should production disruptions emerge, American beer drinkers could be faced with soaring prices, limited supplies and, at worst, a beer shortage: A beer shortage.
"Permits cannot be given in places where there is no water," the president said. "So, we will intervene and this is what the state is for."
In addition to Heineken and Constellation, Grupo Modelo, owned by Ab InBev, is another large brewer in the northern part of the country.
Although Lopez Obrador has only encouraged brewers to shift production south, the next move could be to limit water production and create a beer shortage in the United States.
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/senza-acqua-niente-birra-il-messico-chiede-ai-produttori-si-spostarsi-dallarido-nord-gli-americani-rischiano-di-restare-a-secco/ on Thu, 11 Aug 2022 14:58:55 +0000.