Corona Essay

1285 words - 6 pages

STRAYER UNIVERSITY

Corona Beer: Modelo

Assignment 3

By: Victor Delvan Brown

02/19/2010

Professor R. Lee Viar IV

BUS599

Introduction

Grupo Modelo (GM) is a Mexican brewer company with more than 50% share in

Mexico. The Mexican beer market was the largest producer and distributor in the ...view middle of the document...

The export sales of beer are coordinated through a set of representative offices around the world.

Corona, the beer brand of Mexico’s Grupo Modelo Company, is the number one imported beer

in the USA since 1977. The brand’s US importers Barton Beers and Gambrinus had played a

vital role in making Corona popular and profitable in the country. In early 2004, the changing

demographics, competition and retail consolidation posed many a challenge to Corona. However,

Carlos Fernandez, Chief Executive Officer of Grupo Modelo reorganized the company’s

marketing strategies and concentrated on the growing Hispanic market through new ads and

promotional offers to improve the sales.

Competitive Challenges

In 1977 Grupo Modelo was the number one selling import in the U.S.; surpassing the

Heineken Brand and while gaining bragging rights (Gamble, Strickland, & Thompson, 2010).

Competitive methods illegal in the United States can be illegal in another country. If you go to

one of the many franchises owned by Tony Roma in Mexico, the only beer you can purchase is

Modelo, brewed by Grupo Modelo SA, maker of the top-selling imported beer in the United

States, Corona Beer. “We used to have 28 different kinds of beer, including American Beers”

says the general manager of Tony Roma’s, “but Modelo gave us money to sell only its beer.”

A Modelo distributor paid one town to ban stores from selling any other beer in exchange for

cash, school uniforms, lighting for public parks, and free beer at city parties

www.koernersbrands.com). That kind of tie-up, illegal in the United States, is common in

restaurants, corner stores, and stadiums throughout Mexico. Such tactics, have given Madelo

and other Mexican market brewers an advantage in the U.S. market, where Corona accounts

for 40 percent of all U.S. beer imports and 11 percent of the over-all U.S. beer market compared

to just 1 percent of the Mexican market for the U.S. beer (www.linkedin.com). Ironically,

Pepsi-Cola and Coca-Cola dominate the Mexican soft drink market and have used similar

tactics to compete with one another; that is, until recent ruling that Coke is no longer allowed to

make such tie-ins because it prevent Pepsi from competing (Luhnow, 2003). Modelo has been

reluctant to sell its remaining stake to Anheuser-Busch. Busch IV wants the company to remain

independent. Modelo board of directors has 19 seats and 9 of them belong to Anheuser-Busch

and the other 10 are held by Modelo’s Controlling Shareholder’s Trust. Modelo, half owned by

Anheuser-Busch, claims it was never consulted by its U.S. partner about InBev’s offer.

International Expansion

Corona’s popularity at home, has enjoyed remarkable success abroad. The international

expansion of Grupo Modelo products spread rapidly following Corona’s immense popularity

in the United States in the early 1980s. The brand then entered Canada in the...

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