The election season is over and America now knows its next president: Donald Trump.
So what does this mean for Mexican beer?
Trump, of course, spoke harshly of Mexico during his campaign for presidency. He disparagingly described Mexicans who illegally entered the country, and called for a wall between our country and theirs. Although his rhetoric has toned down in recent time, Trump stands behind his wall. In an outline of his first 100 days in office, the president-elect proposes a bill called the End Illegal Immigration Act Fully, which “funds the construction of a wall on our southern border with the full understanding that the country Mexico will be reimbursing the United States for the full cost of such wall.”
Unsurprisingly, the peso plunged in value versus the dollar after Trump secured the U.S. presidency.
So how will that affect trade with the country? Initial results are not positive for Mexican beer.
The Wall Street Journal reports today that shares of Constellation Brands Inc. fell 8% following Trump’s victory. The global alcohol company is the largest U.S. distributor of Mexican beer, including Corona, the country’s best-selling imported brew. As the article points out, in addition to selling Mexican brands, “Constellation also owns beer manufacturing in Mexico and is in the midst of a $4 billion-plus expansion push south of the border. On Oct. 31, it announced it would pay $600 million to acquire another brewery in Mexico to meet rising U.S. demand.”
Moreover, Trump has threatened to remove America from the North American Free Trade Agreement. Among other things, this connects our country with Mexico. That, too, could have lasting negative impacts on Mexican alcohol imports. Especially if Mexico refuses to renegotiate the deal.
As the article points out: “U.S. imports of beer from Mexico rose 15% to 531.9 million gallons in the first nine months of 2016, according to the Beer Institute, an umbrella group for U.S. brewers. Mexico represented 67% of U.S. beer imports, which rose 7.4% overall.” The WSJ piece also pointed out that Heineken is America’s second largest importer of Mexican brews, including Dos Equis and Tecate, though that division is not as big within Heineken as with Constellation. Stock of AB InBev also slipped due to the company’s “Mexican exposure.”
It remains way too early to know how imported beer will fare under President Trump. But America’s relationship with Mexico moving forward warrants attention from alcohol retailers, as Mexican imports suddenly face a cloudy future.
Kyle Swartz is associate editor of Beverage Dynamics magazine. Reach him at firstname.lastname@example.org