Owens-Illinois enters into a joint venture with Constellation Brands to operate a container production plant in Nava, Mexico.
Owens-Illinois (O-I) has agreed to enter into a 50-50 joint venture with Constellation Brands. The joint venture will operate the glass container production plant in Nava, Mexico, which Constellation recently agreed to purchase from Anheuser-Busch Inbev (ABI). The plant will provide bottles exclusively for Constellation’s adjacent brewery, which brews a leading portfolio of Mexican beer brands for export to the United States, including Corona Extra, Corona Light, Modelo Especial, Negra Modelo and Pacifico.
To help meet current and rising demand from Constellation’s brewery, the joint venture plans to expand the plant from one furnace to four over the next four years.
O-I and Constellation will each initially contribute approximately 100 million USD to the joint venture. The capacity expansion, which is expected to cost approximately 350 million USD, will be financed by equal contributions from both partners.
In a related development, O-I has also agreed to enter into a long-term agreement to supply glass containers to Constellation’s Nava brewery. Supply under the agreement, primarily from O-I’s plant in Waco, Texas, begins in late 2015, ramping up significantly in the following year. O-I is expected to supply the output from at least one furnace under this agreement. After the joint venture expansion is complete, supply under the agreements will add the equivalent of approximately 20 percent of O-I’s existing North America production.
“Constellation is an important and strategic customer, so we are pleased to support the expansion of its beer business in these ways,” said Al Stroucken, chairman and CEO of O-I.