Oxxo stores in Mexico will quickly run out of beer due to brewery closings

Fomento Economico Mexicano SAB, which operates Latin America’s largest convenience store chain, said its Oxxo stores in Mexico are quickly running out of beer after the government shut down breweries as non-essential businesses last month.

The company, known as Femsa, told analysts in a conference call Thursday that it was not clear when Mexican breweries managed by Grupo Modelo of Anheuser-Bush InBev and Heineken NV could start operating again.

According to Juan Fonseca, Femsa’s head of investor relations, running out of beer would hurt the company’s sales. In a call with analysts, he said the company is looking at about 10 days of inventory.

Femsa CEO Eduardo Padilla said managing breweries does not pose a significant health risk and hopes they will find a way to start operations soon. However, he said beer’s role as a “social lubricant” could hinder the government’s call to stay home.

“I think the government could be afraid that if they drink beer, there will be more social interaction,” Padilla said in the call with analysts.

President Andrés Manuel López Obrador declared a national health emergency in late March and called for non-essential activities to stop, which includes most manufacturers. The closure of Mexico is causing disruptions in the supply chain for US factories that continue to operate.

Cuauhtémoc Rivera, head of the small business association Anpec, said that beer prices had increased 30% in family stores known as changarros. Brewing companies have lobbied the government to restart and have emphasized the dependence of small shops on beer sales.

Padilla, from Femsa says that what really worries him is that there are many changarros in Mexico who live from the sale of beer and are being dramatically beaten.

Constellation Brands Inc., which makes Corona and Modelo beer for export to the United States, has continued some of the manufacturing in Mexico, Barclays analyst Lauren Lieberman said in a note on April 29. He estimates that Constellation “has a wide offer to satisfy demand until the end of October.”