Corona Beer



Abstract

Corona is a Mexican beer brewed by the company Grupo Modelo, first established in 1925. At first, the beer started off as a thirst-quencher for mainly manual labourers. It became quite appealing to southwestern “Yuppies” in the USA, and later asked the brewers from Mexico to continue focusing on producing the beverage. Today, this well-known lager is one of the most famous alcohols being sold internationally (the 5th largest-selling brand in the world, sold over 150 countries).

Corona Beer

Introduction

Grupo Modelo is the number one beer producer in Mexico and the producer of Corona, one of the leading import beer brands sold in the United States. Since its formation in 1922, the company has been family-operated and focused on becoming a leader in the Mexican beer production and distribution markets. More recently, they have evolved this strategy to include export markets such as the United States and Canada.

BODY

Strategies

Grupo Modelo was formed on March 8, 1922 and officially opened its first brewery three years later. In 1936, the Fernandez family became the sole proprietor and has maintained ownership of Grupo Modelo ever since. Grupo Modelo first introduced Corona in 1979 and by 1988 it had become the second most popular imported beer in the United States. Antonino Fernandez, former CEO of Grupo Modelo, listed Corona on the Mexican Stock exchange in 1994 (www.sec.gov). Upon its entrance to the market, Anheuser-Busch purchased 50.2 percent of Grupo Modelo's shares. Although it had over half of the outstanding shares, Anheuser-Busch held only 43.9 percent of the voting rights so ownership by the Diez family was maintained. In 1997, Corona achieved its goal and surpassed Heineken as America's top imported beer. In that same year, Carlos Fernandez was appointed as the CEO of Grupo Modelo (www.reuters.com). Since 1997, Corona has been the best-selling import beer in the United States and in 2004, it outsold the former number one by a 50 percent margin. Throughout the remainder of this case analysis, we will analyze Grupo Modelo's current strategy and its position within the competitive beer industry. The key question this case analysis addresses is whether Grupo Modelo will be able to maintain its status as one of the market leaders in beer production and distribution even as competition in the industry increases. Although the case largely concentrates on the export strategy to the U.S., we have also incorporated information pertaining to Mexico's domestic market in order to understand the specific opportunities and threats that stem from the home market. We will conclude by offering recommendations for continued success in the global beer market (www.sec.gov).

Financial Analysis

Grupo Modelo's financial situation is very different than its competitors. Grupo Modelo and its competitors are quite different from the beverage industry and brewing sector averages given by Yahoo! Finance (2009). In general, Grupo Modelo has a stronger balance sheet and income statement than its competitors, industry, and sector (Som, 2007).

Profitability ratios indicate how a business's expenses and other costs compare to its ...