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News Briefs for October 31, 2016

October 31, 2016

•Constellation Brands has agreed to purchase Grupo Modelo’s Obregon Brewery from Anheuser-Busch InBev (ABI) for $600 million. The brewery, located on Mexico’s west coast in the state of Sonora, currently has annual production capacity of roughly 4 million hectoliters, but Constellation is planning a expansion expected to tack on at least 10 million additional hectoliters of capacity. The first 5 million hectoliters of that buildout are expected to be completed by the end of 2019. The Modelo portfolio, which Constellation markets in the U.S., is thriving. The Mexican range grew by 11.5% in the U.S. in 2015, according to Impact Databank, with Corona Extra, Modelo Especial, Corona Light, Negra Modelo and Modelo Chelada all enjoying significant gains.

•Anheuser-Busch InBev (ABI) has become even more of a global force via its recently-completed acquisition of SABMiller, but its struggles continue in the U.S. market. ABI saw U.S. sales to retailers decline 3.8% in the three months through September, marking its fiscal third quarter, compared with an industry-wide decrease of 2.6%. Michelob Ultra and ABI’s above-premium stable showed low single-digit growth during the period, contributing to net revenue per hectoliter growth of 2.3% and an EBITDA gain of 0.9%. But the ongoing struggles of the Bud Light franchise continued to weigh down overall volume, with the company noting a 0.3% decline in revenue for the quarter. Through the first nine months of its fiscal year, ABI’s U.S. volume fell 1.1% to 83 million hectoliters, while revenue grew 0.7% to $10.7 billion and EBITDA rose 2.6% to $4.3 billion. While ABI has acquired SABMiller, in the U.S. the SABMiller portfolio is part of MillerCoors.

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