Jul 232019

In the last 35 years, no brand has come close to the growth of Corona. The brand went from being in a position of not even having a hand full of distributors who could sell a layer of the beer, must less a pallet, to the current situation of now selling over 150 million cases of Corona.  The beer industry has never seen anything like Corona, though recently Modelo, Michelob Ultra, and perhaps White Claw have given Corona a little run for their money. 

In the early years of Corona’s growth, the brand was distributed by Barton Beers and Gambrinus, each of which had the western and eastern halves of the United States, respectively.  Years ago, Barton Beers acquired the rights to all Models brands for the U.S. at which time the importer became Constellation Brands. Constellation Brands’ timing could not have been better as ABI soon bought the Modelo Brewery and spun off Modelo’s U.S. business to Constellation Brands.

Modelo’s growth continued under the leadership of Constellation Brands, but success subsequently produced changes. Constellation Brands bought Ballast Point and distributed those beers throughout the country. Constellation Brands then introduced a number of line extensions, some of which were successful, including Corona Familiar, and more recently Corona Premier.  But at what cost did these changes come? Corona Premier, Modelo’s answer to the success of Ultra, has cannibalized Corona Light, and in recently published data, even Premier is slowing in growth.

Of course, there is also Constellation’s investment in Canopy, the Canadian cannabis company which, to date, has not been a profitable investment. With a $245 million loss in the U.S., Canopy may never be profitable. 

With Corona Refresca, Modelo now has a new entry into the spiked water and seltzer segment. The new FMB segment that is on fire are those products low in ABV, calories, and carbs.  Yet Modelo’s Corona Refresca is high in calories at 199, which means high sugar and carb content. Is this type of product what today’s consumer is looking for? It does not seem so.

For decades, Barton Beers and Constellation Brands were the industry leaders.  These companies were leaders, not simply in the fact that they produced top selling beers, but also leaders in their program development, marketing, and media productions. Corona was the envy of the industry. It seemed that they could do no wrong and everything they touched turned to gold.

Not anymore! The question becomes:  how many more investments will Constellation Brands make while the recent products and companies struggle? The first indication is what happened to the recent CEO of Canopy, one of their founders, who was asked to leave the company.

In the not too distant future, Constellation’s brand managers will be removed, agencies will be fired, new agencies will be hired, senior management will leave, and new management will realign the structure to “be more responsive and quicker to react to the changing market.” Constellation will follow AB, MC, Heineken, and others. It is not just a matter of if; it is more a question of how much longer?

Sometimes, very competent people make errors!

 Posted by at 6:00 am

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