“When a consumer brand does a really good job, it becomes a cultural icon, and that’s what Corona has done.” “We have to keep up the image of the good life that other brands have tried to get into.”
– Rohit Deshpande, Professor, Harvard Business School 1 – Fernandez, CEO of Grupo Modelo2
Corona Extra (Corona), the beer brand of Mexico’s Grupo Modelo (Modelo) Brewing Company had been the number one imported beer in the United States since 1997. Modelo’s US importers, Barton Beers Ltd. (Barton) and Gambrinus Inc. (Gambrinus), played a vital role in promoting the brand and selling around 97 million packs (one pack equals 12 units) by 20033 . But in early 2004, Corona faced challenges due to changing demographics such as the increasing young adult population, the growing Hispanic community, changing lifestyles and increasing incomes.Also, retail consolidation, which decreased the number of wholesalers and retailers distributing the brand, compelled distributors to stock too many brands at one outlet. Consequently, Modelo’s US bound shipments of the brand, which grew in double digits through the 1990s increased by less than 2% in 20044 . Furthermore, apart from the brands in the US like Heineken and Budweiser, other imported brands from Mexico like Tecate brewed by Formento Economico Mexicano (FEMSA), also gave Corona a stiff competition. Carlos Fernandez (Fernandez), the CEO of Modelo, reorganised the company’s marketing strategies in the US to overcome the challenges. Modelo introduced new television ads targeted at the growing Hispanic consumers and introduced promotional offers. Acquiring an import contract from one of its two importers in the US and establishing its own distribution network, was also being considered as a part of the reorganising process. This was to minimise the middleman fees and improve profits. But, the idea of setting up its own distribution network in the United States carried the risk of undermining the relationships with the importers who contributed to the brand’s success.
Corona in USA: The Challenging Times
The growth in the US beer industry was triggered by the introduction of lager beer5 between 1840s and 1850s. Since then, the country was known to be the largest beer consuming market in the world. Beer accounted for 67% of alcohol consumption in the United States6 . The market for beer in US consisted of essentially three segments-domestic, imports and speciality beers. Bud light, Budweiser, Coors light, Miller lite and Natural light etc were the top selling beers in the domestic beer category. Major drivers of the beer sales in the US included demographics, pricing, and product innovation. 1 2 3 4 5 6
Geri Smith, “Life’s A Beach for Corona—or is It,” www.businessweek.com .com, February 7th 2005 Ibid. Ibid. Ibid. A general term for beer made with bottom fermenting yeast Center for science in the public interest, “Beer consumption in the United States”, www.cspinet.org, October 2001
This case study was written by Sujatha under the direction of T Phani Madhav, IBSCDC. It is intended to be used as the basis for class discussion rather than to illustrate either effective or ineffective handling of a management situation. The case was compiled from published sources. © 2005, IBSCDC. No part of this publication may be copied, stored, transmitted, reproduced or distributed in any form or medium whatsoever without the permission of the copyright owner.
Corona: The Mexican Beer’s Marketing Strategies in USA
MKS0030 Corona: The Mexican Beer’s Marketing Strategies in USA
To supply to the eastern United States, Modelo appointed a second importing agent, Gambrinus Inc. in 1986 headed by Carlos Alvarez, a former in-charge of Modelo’s export department. With this, the sales of Corona increased by 170% by 19867 and by 1988, the sales throughout the United States reached 20 million packs. With increased sales Corona became the number two imported...