Thanks to President Trump the topic of international trade has been on the minds of a lot of folks recently. Per his campaign promise, the President has hiked tariffs on goods imported from countries near and far. This includes our southern neighbor, Mexico. At the time of writing, imports from Mexico are subject to a 25% tariff. Beer, of course, is a major Mexican export to the United States. I am not an international trade expert, however, so I am not going to use this blog entry to examine the impact of the President’s tariffs on the price and sales of Mexican beer imported into the United States. Besides, per this piece in the Mexico News Daily, the whole issue of beer tariffs is more nuanced than meets the eye. Rather, I want to use it to talk a little about the history and current status of the Mexican brewing industry. It is a topic that I actually became interested in and was working on quite some time before the November 2024 elections in the United States.

While barley and wheat-based beers were introduced into Mexico by the Spanish in the 16th century, indigenous Mayans and Aztecs were already making a type of beer using corn, water, and occasionally honey. Despite this early beer production, the indigenous inhabitants exhibited a preference for drinks such as pulque, mezcal, and tequila which were derived from the native agave plant, and it would be several centuries before beer became a mainstream beverage.

Indeed, it was not until the late 19th century, beer can be said to start on its path to popularity as wealthier segments of society discovered the beverage. An 1890 report published by the U.S. Department of State described beer in Mexico as an “aristocratic drink” consumed primarily by wealthy Mexicans, Americans, and Europeans living in large cities and northern states bordering the U.S. According to Steven B. Bunker in a paper published in the journal Mexican Studies/Estudios Mexicanos the late 19th century was a period of modernization in Mexico, and beer was one of a number of products marketed as delivering an “ideal lifestyle” and being indicative of “social success”. During this period much of the beer consumed in Mexico was imported from Germany and the United States, with domestic production limited to a handful of small-scale breweries owned and operated primarily by German immigrants.

Concerned about the volume of imported beer, the Mexican government imposed high duties on bottled beer imported from the United States. These import duties added 75% to the price of a bottle of American beer. As a result, between 1890 and 1910 beer imports into Mexico fell by 70% and imported beer soon accounted for only 5% of Mexican beer consumption. While there was a drop-off in demand for imported beer, the demand for beer in general continued to rise. This necessitated the construction of new domestic breweries. In effect, the Mexican government had pursued an import substitution policy, which had its desired effect (replacing imported beer with domestically-produced beer). If you are unfamiliar with the practice of import substitution, it refers to local production and consumption of goods and services, rather than importing them from other places.

By 1900, six firms dominated Mexican beer production. All served regional markets, It was not until technological advancements such as the growth and evolution of the country’s rail system that brewers were able to distribute their beer nationally. Further consolidation occurred in the Mexican brewing industry and by 1930, three firms dominated – Cervecería Cuauhtémoc, Cervecería Moctezuma, and Cervecería Modelo.

The popularity of Mexican beer received a significant boost during Prohibition in the United States (1920–1933), as Americans crossed the border to legally enjoy alcoholic beverages, including Mexican beer. As a result, new breweries were built near Mexico’s border with the United States. As noted in a recent paper I co-authored on this topic “as Mexico entered the second half of the 20th century, beer emerged as the country’s most popular alcoholic beverage, and Mexico could be accurately characterized as a country of beer drinkers.”

Fast forward a hundred years and today, three firms dominate Mexican beer production – Grupo Modelo, Constellation Brands, and Cervecería Cuauhtémoc Moctezuma. All three are owned by companies located outside of Mexico. Grupo Modelo is owned by Belgium-based AB InBev as a result of an acquisition by the latter in 2013. It owns and operates eight industrial breweries and two craft breweries in Mexico. Included among its most recognized brands are Corona, Pacifico, and Modelo. Cervecería Cuauhtémoc is owned by the Dutch brewing giant Heineken, who acquired it in 2010. It owns and operates seven industrial breweries in Mexico with an eighth scheduled to become operational in 2026. Its brands include Dos Equis, Tecate, and Sol.

Now we come to Constellation brands who are based in Rochester, NY. Originally a wine and spirits company, Constellation entered the world of beer following the 2013 acquisition of Grupo Modelo by AB InBev. An antitrust decision by the US Department of Justice, prohibited AB InBev from distributing and selling Grupo Model beer brands in the United States. The Justice Department felt that the acquisition “would substantially lessen competition in the market for beer in the United States as a whole and in at least 26 metropolitan areas across the United States” alleging that “the transaction would result in consumers paying more for beer and would limit innovation in the beer market.” Enter Constellation brands who purchased the right to do distribute Grupo Modelo brands in the United States. Constellation own two breweries in Mexico, with a third under construction. So if you purchase a Corona in Mexico it was produced in a brewery owned by AB InBev; purchase a Corona in the United States and it was produced in a brewery owned by Constellation Brands.

Mexico is a major player in the global beer market. In 2023, the country produced 152 million hectoliters of beer. This represented 7.6% of all the beer produced worldwide, making it one of world’s largest producers of this much enjoyed beverage. Only China, the United States, and Brazil produced more. Much of the beer produced by Mexico is exported. Indeed, Mexico exports more beer than any other country. The United States is a critical market for beer produced in Mexico. In fact, eighty percent of the beer it exports is sent to the United States.

Mexican beer is very popular in the United States. Five of top ten most popular imported beers among American consumers are Mexican brands – Modelo, Corona, Dos Equis XX, Pacifico, and Tecate. Indeed Modelo is the most popular beer in the United States, having ousted that honor from Bud Light in May 2023. While this ousting coincided with conservative consumers boycotting Bud Light following the latter’s collaboration with transgender influencer Dylan Mulvaney, it should be noted that Modelo was already well on its way to eclipsing Bud Light. The Mulvaney incident simply sped it up by a few months.

The popularity of Mexican beer is driven by several trends. One has been the growth of America’s Hispanic/Latino population. Between 1980 and 2020, the share of the U.S. population who identified as Hispanic increased from 7% to 19%. Today, Hispanic consumers account for about half of Constellation’s beer sales. Th fact that the other half is made up of non-Hispanic Americans suggests that Mexican beer has broad appeal. Indeed, recent on-premises sales of Mexican beer have been growing in states bordering Canada, which have smaller Hispanic populations.

The premiumization trend, which has impacted all segments of the American alcohol market, has also aided sales of Mexican beer. Premiumization refers to the growing preference of American consumers to purchase alcohol that has a higher price point and is perceived to be of higher quality. Premiumization is not a new trend with respect to beer. Indeed, Bart Watson, President and CEO of the Brewers Association, points out that the American beer market has experienced different waves of premiumization going as far back as the 1950s, with the emergence of craft beer being the most recent example. It is a trend that has drawn consumers to imported beers, “which are often perceived to be of higher quality“, notes Grace Wood, senior analyst at market research firm IBISWorld. This includes Mexican beers such as Corona and Modelo.

While Mexican beer is very popular in the United States it does face some challenges. Earlier this month, Constellation Brands noted falling demand among U.S. consumers. A multitude of factors are contributing to this downturn. These include reduced alcohol consumption among health conscious younger age-groups who are increasingly eschewing alcohol, general economic uncertainty, and higher grocery bills (a particular concern among Hispanic consumers). Some of these concerns are related to President Trump’s tariff policies, while others are not. This is a challenging time for the beer industry. However, evidence suggests that large brewing companies are sufficiently flexible and creative to respond to such challenges.

Further Reading:

Wang, Haoying, Rafael Garduño-Rivera, and Neil Reid. 2025. Economic geography of beer production in the context of trade liberalization and economic nationalism: The Mexican experience. Applied Geography https://doi.org/10.1016/j.apgeog.2025.103589.