Beer Giants Maintain Operations SuspendedBy Jan Hogewoning | Tue, 04/21/2020 - 19:21
On April 5, Cuauhtémoc Heineken announced it was going to halt beer production at its seven nationwide plants as well as distribution to points of sale. The group produces beers including Dos Equis, Indio, Tecate and Heineken and employs 16,000 people in the country. At the time, the company said its beer brands would continue to be available at a range of points of sales including supermarkets and convenience stores, carrying out a special distribution of products to provide grocers with extra supplies.
Grupo Modelo, in the same week, suspended all production and distribution. This group, owned by beer giant Anheuscher-Busch InBev produces Corona, Pacifico and Modelo. In their suspension announcement, Grupo Modelo pointed out that 15,000 families benefit in Mexico from the sowing of 150,000ha a year of barley. In addition, there are around 800,000 shopkeepers and grocers who get 40 percent of their income from the sale of beer. Grupo Modelo appealed directly to the government, stating that if the government were to assign beer production as an agro-industrial production, therefore falling under essential activities, it would be ready to execute a plan to continue production but with 75 percent of the workforce working from home.
While production and distribution operations are impeded due to the ongoing contingency, beer consumption has seen recent spikes in other markets. In the US, statistics gathered by Nielsen showed a 34 percent rise in beer sales compared to the same week of March in 2019. As Americans were forced to retreat into their homes, they went out to stack up on their beer supply. In Mexico, a similar situation emerged with social media trends speculating a dry law situation. While people may have been storing more beer, sales volume is likely to drop as the contingency carries on. As bars and restaurants have closed, a large destination for beer has dried up. According to Statista statistics, beer consumption out of home represented 28 percent of total beer consumption in Mexico in 2019. In addition, a longer contingency could potentially dry up storage in convenience stores and supermarkets.