Case Study: Modelo

Case Study: Modelo

Introduction

This report analyses the case of Corona Beer of Modelo. 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).

Modelo's international expansion

Modelo has also invested in a state-of-the-art malt plant in Idaho. This facility helps supply the company's needs for malted barley, benefiting regional growers with long-term supply contracts to help meet the yearly demand for 6.5 million bushels of barley. The NAFTA partnership is strengthening the supply chain to and from Modelo's seven brewing plants in Mexico, which have a total annual installed capacity of 60 million hectoliters, and is pushing growers and producers to meet the needs of an increasingly sophisticated world beer market. Modelo's expansion plans across North America include joint business opportunities with other industry leaders. Besides its partnership with Anheuser-Busch, which has created a mutually beneficial gateway to access markets in both the United States and Mexico, in 2007 Modelo entered into a joint venture with Constellation Brands, one of the world's largest international wine and liquor companies, to handle imports into the United States. Likewise, Modelo signed an agreement with Canadian brewery Molson to improve distribution in that country, making Modelo's beers more easily available in all Canadian provinces and territories. Likewise, Modelo imports the Anheuser-Busch brands as well as Carlsberg beer into Mexico. Modelo illustrates how further regional integration empowers companies to produce better foods and to position them as stronger competitors at the world scale. Currently, Modelo's beers are exported to 154 countries; it is the seventh-largest beer producer in the world and is widely perceived as a global leader.

Modelo's next foreign market

For several years, Corona's American sales were sluggish. But during the mid-1980s, one of Modelo's two American distributors, the Chicago-based Barton Beers Ltd., struck on a clever marketing strategy: pitching Corona to young American beer drinkers, many of them veterans of spring break at Cancun or Cabo San Lucas Cabo San Lucas (popularly known as just Cabo) is a small city at the southern tip of the Baja California peninsula Barton devised television ads featuring attractive young people in tropical surroundings - under palm trees on sun-drenched beaches. The ads appealed to the same group of young consumers willing to pay premium prices for clothing from Abercrombie & Fitch.

Separately, Barton and Corona's other importer, the San Antonio-based Gambrinus Co., targeted another burgeoning market: the millions of Mexicans living in the United States. Spanish-language ads play a piece of classical music instantly recognizable to Mexicans, Jose Moncayo's vigorous Huapango suite, as images of Mexico's pastel-color colonial cities and pre-Colombian ruins flash across the ...