Oct 022018
 

Grupo Modelo was founded in Mexico in 1922, and within just three short years the Mexican brewery introduced Corona and Modelo Especial.  Now, 93 years later, Grupo Modelo maintains a more than 60% market share in Mexico and is part of ABI.  In the U.S., Constellation Brands now owns Modelo, with Corona and Modelo Especial being the number one and number two imported brands, respectively, in the U.S.

In the last fifty years, perhaps only the success of Bud Light, Miller Lite, and Coors Light, equals that of Corona.  In the early 1980s, Corona was packaged in a stubby brown bottle and was predominantly sold in border cities, sales, however, sky-rocked when Grupo Modelo began packaging Corona in a clear long neck bottle.  For decades, the brand grew at double-digit rates.  Fueling Corona’s growth were the sales teams of Barton Beers and Gambrinus. The relationships developed with wholesalers, and increased package additions, which included 12-packs, seven-ounce bottles, cans, single serve, and draft, all added to Corona’s sales explosion.

Modelo Especial’s growth, however, was much slower, taking years to establish a foothold.  Part of that sluggish growth was due, in part, to the poor quality of Modelo’s packaging, but also because both importers’ primary emphasis was on the growth of Corona.  In recent years, however, Modelo has caught fire with some truly effective advertising and support.

Modelo and Corona are the two great success stories of the beer industry.  Wholesalers who have had Modelo for years are envied by their competitors.  While Modelo Especial continues to produce double-digit growth, the recent scan data proves that something is happening to Corona.  Corona and Corona Light are beginning to show a decline in sales.  In fact, Corona Light is down as much as -13% in the recent four-week period.

Much of Corona’s waning can be attributed to Constellation’s roll-out of new products, including Corona Familiar, and the very successful Corona Premier, targeted at Michelob Ultra.  The beer industry has historically shown that when a successful product produces offshoots, the flagship brand begins to lose volume. Or can Corona’s slow decline be attributed to the much-discussed product lifecycle?  After over 35 years of growth is the consumer looking at Corona as another product of the past generations?

Many brewers’ brand-marketing groups view line extensions as an easy way to add instant volume and increase the brands’ retail space.  But perhaps the question is: what is the real cost of line extensions?  The argument can easily be made that if the overall portfolio grows, then the brewer wins!  The real cost of these extensions, however, might be paid by the wholesaler considering the warehousing, logistics and manpower investments that have to be made.

The industry can only wonder what other future line extensions are being planned by Constellation brands.  Perhaps wholesalers will see Corona Lime, Corona Light Lime or Orange in the coming years?  Why not?  It seems to be working for Bud Light.

The next five years will be interesting for the Corona family.  Success is a lousy teacher.  It seduces smart people into thinking they can’t lose!

 

 Posted by at 6:00 am

  One Response to “Success is a lousy teacher. It seduces smart people into thinking they can’t lose.”

  1. Good stuff, perfesser…………….

    Like Joe Willie Namath once said (and it seems to apply to the Grupo Modelo brands)” nothing hurts when you’re winning.”

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