A Bitter Brew: The Impact of Droughts on Mexican Beer's Cost in American Markets

A hot summer or fall day undoubtedly begs for a cold refreshment. When I was younger, this took form in a tropical fruit-flavored Capri Sun, a Rhode Island Dels frozen lemonade perhaps, but as my pallet matured in tandem with my age, the docket of refreshments expanded. In the midst of summer, nothing quite trumps the refreshment brought by a cold Modelo, Corona, or whichever beer one fancies. However, as temperatures continue to rise, the desire for a cold drink does, too. Unfortunately, a similar phenomenon explains the relationship between climate and beer production: As Mexico has suffered more droughts than ever in the latter half of 2022 and 2023, the price of beer mirrors the environmental deficits we find ourselves in, exaggerating Mexican communities' access to water. 

It is essential first to consider the climate of beer consumption and its exportation from Mexico to the United States.  It wouldn’t take a cultural anthropologist to recognize the consumption patterns of beer in the United States. In fact, “the United States is the world’s largest beer importer… [and] about 80 percent of that money goes to Mexico,” a figure that’s increased by nearly 20% in the last three decades (Van Dam 2023). This year alone, “Mexican beer imports into the U.S. are up 10.6% in 2023, according to alcohol research firm Bump Williams Consulting” (Sykes 2023). Mexico’s Modelo Especial can now boast a statistic that few others can: it has dethroned Bud Light, “...which held the top spot since 2001” (Sykes 2023). However, while the United States leans on Mexican beer producers for the majority of their beverages, they do still import from other countries. The reasoning and amount of beer they import from elsewhere, though, is less (and intuitively so). In addition to Mexico, the United States also imports beer from “...the Netherlands, Ireland, Canada, Germany, and Belgium”  (Van Dam 2023). Imports from Belgium had been higher on the podium until the expansion to brew Stella Artois stateside was decided upon in 2023. Still, the proportion of exports these latter countries sell to the United States falls relatively short to that of Mexico’s. Just last December, Mexico exported $469 million in beer. Of that, $458 million worth alone was sent to the US, almost 98% of the amount exported (Van Dam 2023). To put this into perspective, the country which the United States buys the second most beer from, the Netherlands, sold more than 2.5 times less to the United States than Mexico ($183 million) (Van Dam 2023). This is due to the cost of importing beer across one small border being more accessible and far cheaper than an entire ocean. 

Now that we understand the relationship between Mexico and the United States as trade partners in a massive global business, we must consider the effects of various climatic disasters. Recent droughts in Mexico have crippled neighborhoods, schools, and, yes, breweries. In Mexico, the latter half of 2022 saw a massive water shortage. So much so that at its worst points, the government was delivering water “daily to 400 neighborhoods” (Rodriguez et al. 2022). The way that ordinary citizens have access to and utilize the available water differs significantly as well, as “...brewers in Mexico obtain rights to gain access to water from the federal government. These water rights can last decades allowing beer companies to keep draining water to make beer…” (Movendi International 2022). Conversely, citizens of drought-stricken cities and towns suffer from water shortages. The Mexican government, privy to the fact that the beer industry is profitable, allows these injustices to continue. In fact, while half of the nation was already suffering a massive drought, Mexican beer companies steadily bolstered their output by 5% during the first three quarters of 2022; meanwhile, others were hurt (Movendi International 2022). Many children were suffering “from parasites due to missing regular baths, small businesses face bankruptcy, and fights are breaking out over water at queues for government water supplies” (Movendi International 2022). While statistics show that beer production is profitable for the country as a whole, its presence and privileges appear harmful and unjust when juxtaposed with people’s living conditions amidst recent droughts. 

Worse yet, the beer-making process requires mass amounts of water from start to finish. “To make beer — about two and a half liters of water are needed to produce one liter in Mexico…” (Shortell & Ríos 2022). This, coupled with the fact that rights to water access by big beer companies last decades, can brew (no pun intended) some issues. Some areas are affected more adversely than others, too. In Mexico, the North appears to be most affected by the recent climatic changes, and regrettably so. The North is also the most densely populated part of the country, where more economic activity occurs and where the majority of beer is produced. María De Los Ángeles, a resident of a town near Monterrey, shares, “‘I have to buy a water tank every week that costs me 1,200 pesos (equal to $60, equating to about half of one’s weekly income, $120) from a private supplier,’” with the New York Times (Rodriguez et al. 2022). In 2020 a “Constellation Brands” brewery was under construction in Mexicali, an area occupying the northwest part of the country. Since the drought has affected this area of the country the worst, decision-makers are inclined to build the plant in the southern state of Veracruz. In theory, this is a great idea: continue producing beer without the same magnitude of environmental impact. This, however, would be far too naive an outlook on how it might unravel in practice. “‘The south of the country doesn’t have the infrastructure that the North has,’ said Raúl Rodríguez, a former Modelo executive whose organization, the Water Advisory Council, works with brewers and the government” (Shortell & Ríos 2022). As I write this on October 31, 2023, just one week ago today, Constellation Brands released their ESG Impact Report 2023. In it, they share that they are indeed building a new brewery in the South in Veracruz, in which they have “...presented 1,500 scholarships split equally between the communities in Sonora, Coahuila, and Veracruz” (Constellation Brands 2023). Though there’s surely more nuance involved, it appears that allowing for the genuine possibility of long-term devastation in the South of the country to be assuaged by scholarships, amounting to just a portion of the destruction that could strike in the near future if weather continues to be unfavorable and manufacturing practices don’t change, would have a disastrous effect. 

What does this mean for the US? Could potential relocations for breweries imply changes in the beer trade with the United States? The North’s proximity to the US favors the trade routes and shipping costs. A move to the South inevitably makes trading a longer, more arduous task, as well as increases the price of shipping the beer to the United States and elsewhere. Perhaps we’ll see an increase in the price of Mexican beer in the US, perhaps an influx in non-Mexican foreign beer, but nothing is certain. I’m curious as to whether or not our actions will remain as they are now (that is, continue to consume despite the price and ethical repercussions), or will we indulge in another country’s beverages instead, exhibiting the substitution effect? The issue at large has led me to more questions than conclusions about the future of beer consumption. 

References

Constellation Brands. “ESG Impact Report 2023.” Shopify, October 24, 2023.

https://cdn.shopify.com/s/files/1/0614/2797/4201/files/2022-ESG-Impact-Report_48ffda6b-7c14-40b8-9cf3-86bd93c7fa7f.pdf. 

Movendi International. “Big Alcohol’s Water Footprint in Mexico: Beer Production Fuels Water,

Climate Crisis.” Movendi International, November 16, 2022. https://movendi.ngo/news/2022/11/16/big-alcohols-water-footprint-in-mexico-beer-production-fuels-water-climate-crisis/. 

Rodriguez, Cesar, Maria Abi-habib, and Bryan Avelar. “Mexico’s Cruel Drought: ‘Here You

Have to Chase the Water.’” The New York Times, August 3, 2022. https://www.nytimes.com/2022/08/03/world/americas/mexico-drought-monterrey-water.html?action=click&module=RelatedLinks&pgtype=Article. 

Shortell, David, and Lorena Ríos. “How Droughts in Mexico Could Shape the Future of the Beer

Industry.” The New York Times, November 13, 2022. https://www.nytimes.com/2022/11/13/world/americas/mexico-beer-climate.html#:~:text=As%20northern%20Mexico%20this%20year,world%27s%20largest%20exporter%20of%20beer. 

Sykes, Stefan. “Mexican Liquors and Beers Are on the Rise in the U.S. - Here’s What’s Driving

The Torrid Growth.” CNBC, October 8, 2023. https://www.cnbc.com/2023/10/08/mexican-tequila-and-beers-don-julio-modelo-boom-in-the-us.html. 

Torrebiarte, Adrian. “Could Mexican Drought Change Flow of Beer to Us?” Czapp, August 18,

2022. https://www.czapp.com/analyst-insights/could-mexican-drought-change-flow-of-beer-to-us/. 

Van Dam, Andrew. “The Real Reason Mexico Suddenly Dominates Global Beer Exports.” The

Washington Post, July 19, 2023. https://www.washingtonpost.com/business/2023/04/28/mexican-beer-rules-america/.