Mexico President Andres Manual Lopez Obrador has finally heeded the call of the people to halt the construction of Constellation Brand's facility in the border city of Mexicali. The US brewer had planned to invest more than $1 billion to put up a new brewery but was met with opposition from the activist and locals from the building site.
Obrador announced on Saturday that the government will comply with the public consultation, added that the decision made by the citizens of Mexicali will be honored. The majority of them voted in the border city had rejected the construction of the massive facility, which would have been located in an arid region already suffering from water shortages.
The decision is a milestone victory for the farmers and their families, who would have been greatly affected by the brewery if it were allowed to be built. The weekend plebiscite in Mexicali resulted in over 76.1 percent of the voters casting ballots against the construction of the billion-dollar brewery. Constellation Brands intended for the brewery to produce its Pacifico, Modelo, and Corona beverages for export.
Protests against the establishment of the facility have been ongoing for two years, with people and organizations protesting on the streets and taking the issue to court. Protesters have alleged that Constellation Brands had paid off politicians and local leaders with massive bribes to get approval for the project.
Environmental experts had revealed that Constellation Brands' brewery could use more water than all of the industrial facilities in the city combined. This would result in the consumption of more than 25 percent of the city's water reserves based on the brewery's peak water use.
The decision to halt construction on the facility is a big blow to the region's economy, which is already struggling to cope with the negative effects of the viral epidemic. Investor confidence in the region is already at an all-time low with the economy stagnating and its currency continuing its free fall.
Mexico is currently the largest exporter of beer with income from the sector accounting for a good portion of the country's economy. However, the industry has recently been the subject of criticism over the potential environmental impact of these facilities, particularly in arid regions where water is already scarce.
Following the announcement of the decision, Constellation Brands share price dropped by more than 10 percent. Company lawyers had stated that the issue will likely be taken to court as it goes against an investor protection provision outlined in Mexico's free trade agreements with Canada and the United States.
