Mexico played a big role in Donald Trump’s bid for the Presidency of the United States. One of Trump’s earliest and most popular schemes involved building a wall between the U.S. and Mexico to curb illegal immigration, and he promised to make Mexico pay for it. But it wasn’t just Trump’s voters who were paying attention to his plans. The stock of Constellation Brands, which imports Corona and other Mexican beers into the United States, was tightly correlated with the US race for the presidency. When the FBI recently decided to look at more of Hillary Clinton’s emails, Constellation’s stock dropped. When FBI Director James Comey announced no charges would be brought, it climbed right back up, surging with the promise of a Clinton presidency.
These trends were actually fairly consistent with the markets overall. But things changed the day after Trump won the election. While U.S. markets rallied to record closing highs on November 9th, Constellation saw its stock collapse, closing down nearly 8%, off of even deeper lows.
Is a Trump presidency going to threaten the U.S.’s access to Mexican beer?
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It would be an ironic twist, since Mexican beer has been enjoying intense popularity in the U.S. in recent years. In 2015, Corona was the most popular imported beer in America. The Mexican beer market — which dominates the beer export market — sends 75% of its exports just north of the border to the United States.
Trump’s most threatening statement to the Mexican beer business came when he considered throwing out the North American Free Trade Agreement (NAFTA). Enacted in 1994 under then-President Bill Clinton, the agreement between Canada, the United States, and Mexico ensured that all three countries could trade beer duty free. If Trump went through with his promise of knee-capping NAFTA and instituting tariffs, it would make it more expensive to bring finished beer into the United States. It would also make it more expensive for companies to make that beer. The Grupo Modelo brewery consumes 6.5 million bushels of barley a year. A large portion of that barley comes cheap from the United States. Barley would become a lot more expensive without NAFTA.
The vice president of communications for Constellation’s beer division, Michael McGrew, was honest when reached for comment. “The reality is that it’s way too early to know how President-Elect Trump’s policies on Mexican trade and immigration will affect our business and industry,” he wrote to VinePair in an email. But he was also hopeful. “Overall, we believe that Republican control of the White House and Congress will be good for business and a positive for Constellation as it relates to taxation, repatriation, deregulation and other economic matters.” He stressed Constellation’s history of working with representatives from both political parties in the U.S.
Others were less enthused to discuss how a Trump presidency might affect the price and availability of Mexican beer. “You’re not serious are you?” Edward Alden, a senior fellow at the Council on Foreign Relations, took the time to write to VinePair via email. “With all the things I am worried about this morning for our country (and we all should be), the impact of Donald Trump on the price of wine and Mexican beer does not even deserve a thought.”
For shareholders, though, and the 9,000 employees at Constellation, Trump’s impact on Mexican beer could go deep if the stock doesn’t stabilize. Mexican beer made up 63% of Constellation’s profits in 2016, according to Benzinga, and trade restrictions or tariffs will cut into that and impact business.
Then there’s the fact that Mexican beer companies took a strong stance against Trump prior to his election. Tecate took a jab at Trump with a wall-based commercial that aired during the first presidential debate. “The time has come for a wall,” a voiceover says in the commercial, mocking Trump’s idea. “A tremendous wall. The best wall. The Tecate beer wall. A wall that brings us together. This wall may be small, but it’s going to be huge. You’re welcome, America.”
Then there was the Mexican craft beer Cucapá, which sold pro-Trump shirts that changed in the sun. A red nose popped up on the shirt over Trump’s face when it was exposed to the Los Angeles sunshine, along with the words “El Que Lo Lea,” which is slang for “Whoever reads this is an asshole.” The money from the T-shirt sales went to a party in Mexico, and the brewery put out a YouTube video about the prank with the caption, “Someone tell Donald he paid for our beers.”
Finally, Corona’s Mexican counterpart (which is owned by AB InBev, not Constellation), took a shot at Trump with an advertisement in Mexico. The opening line of the commercial states, “All of us are angry at the wall that mad man wants to build.”
The ads, obviously, didn’t work out.
John Mahon, a professor at the University of Maine and author of a study entitled “U.S. Beer Flows & the Impact of Nafta,” sees a longterm effect. “The impact might be modest but long lived, as opposed to a sudden large short term drop,” he told VinePair.
But some think the drop in Constellation stock is more of a knee-jerk reaction that will eventually stabilize. “I think they’ll bounce back,” Richard McGowan, a professor at Boston College and co-author of Mahon’s study, tells VinePair. “My guess is anything American isn’t selling real well in Mexico right now either.”