BLOOMBERG, APRIL 30, 2020
Executives say unclear when Mexico will let breweries open | CEO says government may fear beer’s role as ‘social lubricant’
By Michael O’Boyle for Bloomberg – Fomento Economico Mexicano SAB, which operates Latin America’s largest chain of convenience stores, said its Oxxo stores in Mexico are quickly running out of beer after the government shuttered breweries as non-essential businesses last month.
The company, known as Femsa, told analysts in a conference call on Thursday that it was unclear when Mexican breweries run by Anheuser-Bush InBev’s Grupo Modelo and Heineken NV would be able to start operating again.
“If and when we run out of beer, which could happen in the next couple of weeks, that would be negative for sales,” Juan Fonseca, Femsa’s head of investor relations, said on a conference call with analysts. “I don’t want people to get off the call and run to the store, but right now we are probably looking at about 10 days of inventory.”
Femsa CEO Eduardo Padilla said that running breweries doesn’t represent a significant health risk and he hoped they would find a way to start operations soon. However, he said beer’s role as a “social lubricant” could be seen getting in the way of the government’s call to stay at home.
“I think the government might be afraid if they drink beer, there will be more social interaction,” Padilla said in the call with analysts.
President Andres Manuel Lopez Obrador declared a national health emergency at the end of March and called for a halt to non-essential activities that included most manufacturing. Mexico’s shutdown is causing supply-chain disruptions for U.S. factories that continue to run.
Cuauhtemoc Rivera, head of small merchants’ association Anpec, said that beer prices had risen 30% at family-run shops known as changarros, daily El Universal reported. Beer companies have lobbied the government to restart and have stressed the dependence of small stores on beer sales.
“What really concerns me more is that there are a lot of changarros in Mexico that live by selling beer, and I think the changarros are being hit dramatically,” Femsa’s Padilla said.
Constellation Brands Inc., which makes Corona and Modelo beer for export to the U.S., has continued some manufacturing in Mexico, Barclays analyst Lauren Lieberman said in an April 29 note. She estimated Constellation “has ample supply to meet demand through the end of October.”
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