Modelo sales may fare better vs economy

By Cyntia Barrera Diaz and Adriana Barrera

MEXICO CITY (Reuters) - Grupo Modelo, maker of the popular Corona beer, sees sales in Mexico declining less than the economy's expected contraction of 4.1 percent as it prepares to launch a new plant to serve U.S. and Canadian markets.

"Beer consumption has always been tied to gross domestic product growth," Chief Executive Carlos Fernandez told the Reuters Latin American Investment Summit in a phone interview on Monday. "We think (sales) decline won't be as sharp as the GDP's."

Fernandez, responsible for taking Mexican beers to far-away markets like Australia and China, said the country is much better prepared now than years ago to face a financial crisis but acknowledged Mexico is not immune to the U.S. slowdown.

Mexico ships around 80 percent of its exports, from autos to electronics, to the United States.

Fernandez said Grupo Modelo is working hard to strengthen brand awareness and find new ways to reach to customers -- including direct-to-home beer delivery -- to keep sales from declining.

Modelo (GMODELOC.MX) is investing some $600 million in a new plant in the northern state of Coahuila that is set to launch operations in March of next year.

The facility will produce an additional 10 million hectoliters by the end of 2010.

"The plant is focused on exports, mostly to supply the United States and Canada," Fernandez said.