Mexico Deems Alcoholic Beverages Unessential (Apparently)
Last night your fearless editor tweeted a cryptic passage about Mexico shutting down beer production. We’d hoped it was just a rumor, but in this crazy time of containment, it appears to be true.
We stress that this is a developing story. But it appears that the March 31 edition of Mexico’s Diario Oficial de la Federacion (basically, their daily briefing) outlined “extraordinary actions in the affected regions of the entire national territory” to combat “the serious disease of priority attention generated by the SARS-CoV2 virus (COVID-19).”
Much as we have here in the United States, Mexico has suspended all but essential operations in the country through April 30, “in order to mitigate the spread and transmission of the SARS-CoV2 virus in the community.”
Those essential operations are things like:
“Those of the fundamental sectors of the economy …” including “generation and distribution of drinking water, food and non-alcoholic beverages industry, food markets, supermarkets, self-service stores, grocery and prepared food sales…”
BEVERAGE ALCOHOL DOES NOT SEEM TO BE PROTECTED. Notice, beverage alcohol and beer do not seem to be protected.
This story is still developing. We’d been holding for official comment, but at this time we haven’t heard from affected breweries. Constellation’s Nava brewery would obviously be immediately affected; of course, Heineken has operations there as well.
CAVEATS. If there is already a month or more of inventory here in the states, and with the on-premise slowing the throttle a bit, if the order indeed lasts only a month, maybe we can avoid a shortage here in the states. We’re also not sure whether any breweries have actually shuttered in Mexico at this point (although Constellation’s note to partners as of March 31 about extended code dates seems particularly convenient now).
POLITICAL BACKLASH? If we’re all understanding this decree correctly and Mexico indeed intends to suspend bev alc production, several have pointed out to BBD that the Mexican president will face huge pressure to reverse, considering global demand for Mexican beer.
As RBC just noted in a nod to the news: “Recall that on March 20th the U.S. government finalized agreements with Canada and Mexico to put in place the toughest travel restriction we’ve ever had” — BUT “with the understanding that we are all each other’s critical trade partners. With this as a backdrop, we feel it is very unlikely that Mexico will be able to interfere with STZ’s production and shipments to the U.S. “
Harry, Jenn and Jordan
“The future ain’t what it used to be.”
– Yogi Berra
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