In a significant turnaround, Uruguay’s Ministry of Labor, the workers' union and Fábricas Nacionales de Cerveza (FNC) have reportedly reached a preliminary agreement to reopen the Minas brewing plant in August. This agreement comes nearly two months after FNC announced the closure of the plant due to an "unsustainable" market situation in Uruguay.
On May 10, 2024, FNC, which is part of AmBev, based in Brazil and a regional subsidiary of AB InBev in Uruguay, decided to shut down its Minas plant and consolidate production in Montevideo. FNC holds a market share of more than 90% in Uruguay and operates two breweries in the country, one in Minas and one in Montevideo.
The decision to close the Minas plant was driven by several factors, including the influx of imported products at competitive prices, high production costs in Uruguay, lower local production scale, and distortive tax pressures. These challenges resulted in the company operating at more than 50% idle capacity, which significantly impacted its efficiency and profitability.
FNC's statement at the time highlighted the growing competition from low-cost imported cans and the inability to match these prices under the current conditions in Uruguay. This led to a substantial migration of demand towards imported products, exacerbating the company's operational inefficiencies.
Two years ago, FNC faced a similar situation where unions successfully stopped the company from importing domestic brands from other AB InBev plants in Argentina, where production costs were about half as much due to the currency exchange scenario. At that time, FNC planned to import the brands Pilsen and Norteña due to rising local costs but reversed its decision following complaints from Uruguayan workers.
FNC produces most of the major beers in the Uruguayan market, such as Pilsen, Norteña, Patricia, Zillertal, and Stella Artois, and also distributes brands like Corona, Budweiser, and Patagonia.
The recent agreement was facilitated by a government proposal that received acceptance from both the company and the workers. According to the new plan, 60% of the workforce will resume activities when the plant reopens in the coming months. The preliminary agreement marks a positive step forward for FNC, its employees, and the local community of Minas.
A representative from FNC expressed optimism about the reopening, stating, "We are grateful for the collaborative efforts of the Ministry of Labor and the union in reaching this agreement. Reopening the Minas plant will help us regain our competitive edge and support the local economy."
