Corona, Modelo Brewer To Build $2B Baja California Brewery

The maker of popular Mexican beers Corona and Modelo plans to build a new brewery near the California border.

Constellation Brands' $1.5 billion facility in Mexicali will be able to sustain 5 million hectoliters of production capacity by the end of 2019. Once fully completed, the plant will be able to produce 10 million hectoliters and would be able to scale up to 20 million hectoliters if needed.

Constellation will also spend another $250 million on the ongoing expansion of its brewery in Nava, near the border with Texas.

The company is already spending $2 billion to increase its capacity at Nava from 10 million to 25 million hectoliters. The newly announced expansion would increase that cap to 27.5 million.

Constellation — which formerly focused on wine — took over the U.S. distribution rights to Corona, Modelo, Pacifico and Victoria following a merger between Anheuser-Busch InBev and Grupo Modelo in 2012.

The Mexican beer segment subsequently took off in the U.S. as the overall domestic beer market stagnated. The company's profit increased 22 percent according to quarterly numbers released this week, while its stock price grew by some 40 percent over the past year.

The growth in the market — along with a Justice Department directive that Constellation assume AB InBev's production of those brands — prompted the wave of new construction.

"We anticipate these capacity investments will equip us with the production necessary to continue to be a leader in the high-end segment of the U.S. beer market," said CEO Rob Sands.