Case Study on "Corona Beer (Modelo) Corona Beer: From Local"

Case Study 4 pages (1241 words) Sources: 1+

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Corona Beer (Modelo)

Corona Beer: From Local Mexican Player to a Global Brand Case Analysis

Grupo Modelo's greatest strengths are beer and beverage production, and exceptional skills in managing distribution channels and networks location in foreign nations. Founded in 1922, with its first brewery in operation in 1925,

Grupo Modelo over its first six decades of operations became the best selling beer producer and distributor throughout Mexico and the United States. In 1979, Grupo Modelo successfully launched Corona, which quickly became one of the best-selling beers in Mexico. In 1988 the beer was launched into the United States and quickly rose to become the second best-selling imported beer. Grupo Modelo went public in 1994. Anheuser-Busch purchased 50.2% of Grupo Modelo shares that translated into 43.9% voting rights, which assured the Diez family of retaining control of the company. After going public the company invested heavily in creating distribution partnerships in throughout North America which have emerged as one of the company's greatest competitive strengths.

Global Expansion through Alliances, Partnerships and Successful Product Introductions

The investments in channel partnerships and alliances throughout North America paved the way for the Corona brand to be the best-selling import beer in the U.S. between the years of 1997 to 2004. What is noteworthy about this accomplishment is that the Corona brand beat out its closest competitor with 50% greater volume. In addition to its expertise in creating and strengthening channel alliances and partnerships, the company has developed an expertise in branding and product line extensions. The development of the Corona Light, Corona Extra, Pacifico Clara, Negra Modelo and Modelo Especial brands and their successes in key North American markets illustrates this point.

As a result of the company's intensive alliances and partnerships with North American beer distributors and their ability to launch brands successfully both in Mexico and the U.S., the company has experienced profitable growth in both countries. These partnerships have made it possible for Grupo Modelo to move quickly into new urban, suburban and metro areas quickly and profitably. Relying on their alliances and partnerships with distributors and dealers, Grupo Modelo has successfully managed international expansion throughout the nations in North America.

Trends Impacting the Global Beer Market

Branding and pricing are the two most common differentiator used by competitors globally in the beer market. There are also more alliances, mergers, acquisitions and joint ventures being created to mitigate and spread the risk of the global economic downturn. In addition to these macroeconomic factors there is also the redefining of nonalcoholic beverages as being healthy and low in calories. This market trend is aimed at attracting women to beer, which has historically been a low-consumption product for them. The industry globally is in the decline stage of its product lifecycle, and has only seen moderate change to the technologies that brewery operations and channel strategies. As a result Grupo Modelo is competing on the strength of its alliances and channel partnerships and ability to launch new brands successfully throughout North America. Figure 1, 2009 Global Distribution Channel Segmentation, illustrates how traditional retail channels, which are by definition multi-tier, are dominating the market in conjunction with mass merchandisers. Wal-Mart, Costco and other mass merchandisers are changing the distribution channel dynamics and forcing pricing pressure on beer providers including Grupo Modelo.

Figure 1: 2009 Global Distribution Channel Segmentation

Market Segment

2009 Global Market Share

Supermarkets and mass merchandisers

24.0%

Independent grocery stores

22.0%

Hospitality

19.0%

Liquor stores

13.0%

Convenience stores

7.0%

Other

7.0%

Direct sales

4.0%

Discount stores

4.0%

Sources: (Mayers, 2007) Analysis of SEC Filings by Grupo Modelo (2009 -- 2010)

In addition to the consolidation of channels the global market for beer has become standardized on Lagers, followed by dark beers. This… READ MORE

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