...Corona Beer: From a Local Mexican Player to a Global Brand Case Analysis Chris Brown, Jennifer Roath, Janissa Pheann BUSA 499 November 30, 2009 Table of Contents: Business Overview............................................................................................................p.3 Products.................................................................................................................p.3 Structure................................................................................................................p.3 Leadership.............................................................................................................p.3 Historic Strategies.................................................................................................p.3 Strategic Issues......................................................................................................p.3 PESTEL Analysis.............................................................................................................p.4 Political.................................................................................................................p.4 Economic..............................................................................................................p.4 Social.....................................................................................................................p.5 Technological......
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...“Corona Beer (Modelo)” Foreign Market Entry and Diversification Richard J. Bradley Professor Brian Grizzell Strategic Management – BUS599 Strayer University February 9, 2012 Abstract This analysis outlines Corona Beer (Modelo) and its current strategy and position amongst the competition in the beer industry. The key question addressed is the ability of Corona Beer (Modelo) maintaining status as an industry leader among beer producers and distributers. The trends within the global beer market are also examined as it impacts Corona Beer (Modelo). A competitor analysis will be discussed and how Corona Beer (Modelo) will need to perform and react in the ever changing international markets. There will also be strategic challenges identified and how the company will handle them while facing various options and recommendations to address such challenges. In addition this analysis will outline and dissect trends affecting global beer markets. My analysis will examine how the international expansion of Modelo was initiated by strategic partnerships with various seasoned beer distributors. The analysis will also focus on Modelo and an effective strategy to enter foreign markets for success. The discussion will cover the varying challenges Modelo may encounter from the competition. By 2010, beer sales dropped some 1.5% in the United States America and slightly higher in western Europe with 2.3% (The Economist, 2011). The amount of beer consumed in blossoming...
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...sells, in Mexico were own by the state or were 100% foreign companies. Is the tenth company were private companies with national participation started to appear, as Cerveceria Cuahutemoc which at that time occupied the twelfth place at a national level. In 1995 as we all know it occurred the “onda salinista” were many companies were affected between them were PEMEX and Altos Hornos de Mexico which are companies that are extremely important for the Mexican economy, but at that bad moment of the country, Fomento Economico Meixano (FEMSA), which is the controller of Cerveceria Cuauhtemoc-Moctezuma and grupo Modelo were achieving an important position between the first 20 places of the best companies. In this last years both companies continue growing and not only their competition is at a national level, now their competition is also in the foreign market. For this, FEMSA join with the foreign beer company Heineken in order to distribute in the United States the products Tecate, Dos Equis, Sol, Carta Blanca y Bohemia. With this both companies will have the 26% of presence of the exported beers in the United States market. Also this will help the company from Monterrey to strength his competition with Grupo Modelo. The main reason for Cerveceria to look forward this types of joints with other companies is to expand their market to other countries and with this over pass their competition. * The beginning of the beer industry in Mexico The beginning of this industry took place...
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...-- Corona Beer History of Corona Beer What’s in a name? Who is Grupo Modelo? What is the company’s mission and vision statement? All this and more will be answered in the literature review. According to an article titled “Mexican Beer” by Buen provecho (2010), “Corona Beer, started in Mexico in 1925 by Grupo Modelo, became a dominant brand by 1996, owning 32.7% of the Mexican beer industry. Before it became popular internationally, it had already established itself as a home-grown success. The name and label make Corona one of the most recognized beers in the United States. Corona, which means crown, was introduced to the world in 1925 at Mexico City by Grupo Modelo. It was produced in celebration of the tenth anniversary of the brewery. This is a light pale lager, at 4.6% alcohol by content. Corona has a mild flavor with very little of the hop bitterness. The color is light yellowish.” Also according to Buen provecho (2010), “Corona is one of the top five selling beers in the world. In the United States, Corona became the number one imported beer in 1997. It is the top selling import beer in Canada. Since its introduction in the US, its market share has consistently grown. It is the number one selling Mexican beer in the world and the fourth best selling beer in the world. It is available in 150 countries worldwide. All Corona beer is brewed in seven breweries in Mexico at Modelo Breweries.” According to Buen provecho (2010), “Anheuser-Busch owns 50% of Grupo Model...
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...j This paper will identify the trends in the global beer markets. A discussion on Modelo’s international expansion and its success with strategic partnerships will be performed. A review of the next foreign market that Modelo should enter and the accompanying strategy will be conducted. Additionally, given Modelo’s competitor, InBev, the strategic responses available to Modelo will be identified along with the opportunities and threats facing the firm. Finally, the paper will address whether or not Modelo should diversify its business and if so, what business should it consider and why. Industry trends, Domestic & Global The U.S. brewing industry has experienced considerable consolidation (Baker & Bresnahan, 1985; Elzinga & Swisher, 2005; Gisser, 1999) in response to the threats which the industry has experienced. In order to mitigate eroding market share: given the growth of beer imports, competition from specialty-craft brewers, a decline in sales of the leading domestic premium brands, and competition from new products and marketing methods, the leading breweries actively acquire successful micro-breweries and add its label to their portfolio of beverages (Aaker, 1996; Arens & Bovee, 1982; Belch & Belch, 2001; Elzinga, 2004). Similarly, the industry leaders utilize extensive advertising strategies to save market share and simultaneously attempt to alter their positioning and public perception (Assmus, Farley & Lehmann, 1984; Baker &...
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...Corona Beer: Challenges of International Expansion Corona Extra has been the world’s fourth best selling beer in terms of volume in 2005 due to its strategy in differentiation. Corona marketing campaign of “fun in the sun” and its light and citrus flavor helps products to expand its target customers far beyond its competitors. However due to merger and acquisition that occur in the industry, Corona needs to adjust itself in order to sustain its growth and improve its competitive position. Environmental Analysis PEST Analysis Political Factor: * Government regulation prohibits to import alcohol product in some country. * Tax policies on alcohol beverages may result in higher price of alcohol product in some countries. Economic Factor * Trading agreement such as NAFTA, can help firm to benefit from exports its products into the emerging market, however this might also open up the opportunities for new competitors to come into Mexico‘s beer market as well. * Instability of Mexico economic condition can affect the cost of goods sold of the products that export out of the foreign markets. Social Factor * Some countries or areas might prohibit to sell alcohol beverages. * Differentiation between global preferences. For example, beer might be popular in US and Germany, however in Italy and France, wine is more popular. Technological Factor * Technology can improve product quality and can reduce scrap or it can also improve distribution system with...
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...Merging: Creating economies of scale but allowing for an anti-competitive market Anheuser-Busch InBev Buys Rest of Grupo Modelo, Maker of Corona Beer In an effort to take full control of the maker of Corona Extra beer, Anheuser-Busch InBev agreed to buy the remaining share of Grupo Modelo, a large brewery in Mexico, which it had not already owned. If approved, the deal will finally unite the two companies who have shared a bond since 1993 and it will solidify Anheuser-Busch InBev’s position as the world’s largest brewer in the beer industry. Under the deal, Modelo will absorb several subsidiaries and will continue to be based in Mexico City and have a local board in order to preserve the Mexican brewer’s identity. With operations in 24 countries, the merger is expected to generate about $600 million in annual cost savings and give Anheuser-Busch InBev access to Mexico’s fast-expanding domestic market. As the world’s leading brewing company, Anheuser-Busch InBev produces, markets, distributes, and sells approximately 200 beer brands. The merge with Modelo will encourage growth by continuing to create economies of scale [Figure 1] in production. With Modelo based in Mexico City, InBev will gain new production facilities in a new geographic area after the merge. This will drastically cut costs, seeing that beer is an expensive product to ship relative to its value which causes transportation costs to account for the majority of the overall product cost. The merge will...
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...Case Analysis for Corona Beer (Modelo) BUS599 Identify and discuss the trends in the global beer markets There is a common item found at sporting events, entertainment venues, restaurants, bars, and mainly in the refrigerators of Americans. This item is beer. Of the 67% of Americans who consume alcohol 42% prefer beer (Frank Newport, 2010). Beer consumption is continuously increasing not only in the United States but also globally. There are several trends within the global beer market which accounts for the potentials seen throughout the industry. One of the main trends of the global beer industry is the growth rate. The growth rate globally over the past five years is reported at 3.5%. “The largest contributors to this growth have been China (now the world's largest beer market), Africa and Eastern Europe” (SABMiller Investors, 2011). Another trend seen in the industry is consolidation. At the beginning of the twenty first century there were ten major brewers accounting for one third of the beer sales. Today there are four top brewers which include “Anheuser-Busch InBev, SABMiller, Heineken and Carlsberg – accounting for almost 50% of beer sales volumes and up to 75% of the global profit pool” (SABMiller Investors, 2011). This is due to the increase in consolidation. Another trend in the beer industry is premiumisation. This term refers to the sales of premium beer brands. “As economies improve, the trend towards premium will resume as consumers become...
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...Entry and Diversification: Corona Beer (Modelo) Case Analysis Shirley Saucer Strategic Management BUS 599 Strayer University Professor Petty Introduction Corona Beer is the flagship for the Modelo Company brand. With ninety years of relevance in the alcohol beverage industry, undoubtedly Modelo has set certain standards and criteria, which many have taken notice. The Modelo Company has easily earned its stake within this industry, persevering through strife’s such as the prohibition era. In operation since March of 1922, Modelo has solidified what it means to be a top contender in the imported beer market. In fact they are one of the only brewing companies that are still family owned and operated. Within this paper we will discuss the trends in the global beer market, Modelo's international expansion, as well as challenges that they face from competitors such as the InBev Company and whether or not they should diversify their business strategy which has made them so successful. Beer has been brewed since around the 14th century when it got its beginnings in Europe. Beer comes in many flavors and shades and is varied depending on regional brewing methods. A lot has changed since the humble beginnings of beer brewing as a craft. With that being...
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................................................................................................Pg.7 Weaknesses.....................................................................................................Pg.7 Opportunities..................................................................................................Pg.7 Threats............................................................................................................ Pg.7 Recommendations................................................................................................................Pgs.8-9 Exhibit 1: Financial Ratios......................................................................................................Pg. 10 Exhibit 2: Top USA Beers by Brands 2009..............................................................................P.11 Income Statement………………………………………………………………………………………………………………Pg.12 Balance Sheet……………………………………………………………………………………………………………………..Pg.13 Cash Flow……………………………………………………………………………………………………………………………Pg.14...
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...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 beer market. The company is also an important player in the United States premium beer segment with a market share of about 6%. Three of its brands Corona Extra, Modelo Special and Corona Light are among the top ten highest selling imported beers in the US. One of the most important trends in the beer market is the volume growth which has primarily come from emerging markets. Since 2000, the compound annual growth rate (CAGR) has been 2.8% for the global beer market. However, CAGR has seen 5.1% in Asia, 3.9% in Africa and the Middle East, and a substantial 6.2% in Eastern Europe. Grupo Modelo has a distribution system covering over more than 122 countries, with its flagship brand, Corona, being the fourth largest selling brand in the world. Grupo Modelo operations...
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...CORONA BEER: CHALLENGES OF INTERNATIONAL EXPANSION Corona Beer, produced in Mexico by Grupo Modelo since 1922, entered the United States beer market in 1979, and by 2007, was the number one imported beer in the United States (with 1.9% market share of the global beer industry) having recently taken that position from Heineken, a rival (with 1.6% market share of the global beer industry). Corona used a broad differentiation strategy with a “fun in the sun” marketing image. It also achieved strategic success by using a distinctive glass bottle and providing a light-tasting beer that attracted a broader market. Problem identification: The global beer industry was experiencing increasing competition due to the new and potential mergers and acquisitions of its competitors. One example was the partnership between Heineken and FEMSA, which was formed in an attempt to dethrone Corona as best-selling imported beer in the United States. In addition, with the introduction of NAFTA, Canadian and U.S. competitors were slowly beginning to penetrate the Mexican market, while FEMSA continued to experience steady growth and increase its local market share. Analysis: Financial analysis indicated that costs were increasing for Grupo Modelo, while competitive analysis indicated that Anheuser-Busch spent $192M on U.S. marketing in 1985 compared to a mere $5.1M spent by Grupo Modelo. This emphasizes the financial weakness of Corona and Grupo Modelo, yet underscores what the brand was...
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...income in Mexico is significantly lower than in the United States. In 2011, Mexico’s per capita GDP in purchasing power parity was $17,040, or 64% lower than U.S. per capita GDP of $47,190 (see Table ?). Ten years earlier, in 2001, Mexico’s per capita GDP in purchasing power parity was $10,653, or 70% lower than the U.S. amount of $36,082. Although there is a notable income disparity with the United States, Mexico’s per capita GDP is relatively high by global standards and falls within the World Bank’s upper-middle income category. Mexico’s economy relies heavily on the United States as an export market. Exports accounted for 32% of Mexico’s GDP in 2011 and over 80% of Mexico’s exports are headed to the United States. (Villarreal 2012) Up until the 1980’s Mexico followed strict protectionist policies to protect their domestic industries from being overwhelmed by unfair competition of other countries. As expected, the protectionist policies worked in the short run but after decades of this policy Mexico suffered a tremendous economic collapse. Many of the industries that Mexico was trying to protect became less competitive in the marketplace. This collapse started the framework for the North American Free Trade Agreement (NAFTA) that ultimately went into effect in 1994. Gauging the effect that NAFTA had on the U.S economy is difficult. Positively or negatively Mexico’s trade with the United States is only 2% of U.S GDP. Thus, changes to trade agreements with Mexico would...
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...1. What are the dominant business and economic characteristics of the global beer industry? * Market Size and Growth Rate * The size of the global beer industry approximated $385.5 in 2005 and $376.7 in 2004. This is a growth rate of 2.3% during the year 2005. * This is a mature industry with slowing growth, but it will continue to grow at a small rate. * Number of Rivals * During its early development and rapid growth stage, there were many rivals and the industry was very fragmented. * The lack of a transportation network made exportation impossible for centuries and brewing was a local, then a national domain. * Mergers and acquisitions are beginning to increase in frequency and the industry is experiencing a period of consolidation. * A determining factor of beer is that it has different national tastes based on different countries. Specialty beer-makers can find niche markets to sustain themselves without economies of scale. * Scope of Competitive Rivalry * The largest producers compete on global levels with strategic alliances set up to distribute the beer in other countries. * Most companies started out on a local or regional level, and then changed the company’s focus to incorporate a multinational or global perspective. * While many companies have exported products, most companies still use the production capabilities in their native country. * Having a presence in foreign country...
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...Case 13: Corona Beer: From a Local Mexican Player to a Global Brand 05/17/12 Identify and discuss the trends in the global beer markets. The global trends in beer markets once were to brew, market, and sell locally. Now, in the global world we live in, the trends are to expand worldwide. International beer sales have shown a steady growth in consumption and sales. With a small downturn in 2009, due to the economic crisis, sales in 2010 have seen increase once again. Global beer market trends also indicate consolidation is a major factor. The four largest brewers produce about half of all beer and claim almost 70% of profits. Africa, Asia, and Latin America have experienced smaller consolidations. (SABMiller, 2011) The global beer market has expanded into other countries with China seeing the largest increase. Until 2003, the United States had the largest beer market in the world, then China gained a larger percentage of the market, even though America recorded six times the consumption rate per capita than did China. (Thompson, 2009) “Beer consumption continues to rise in Africa, Latin America and Asia, driven by growth in population and incomes and improvements in beer quality and appearance.” (SABMiller, 2011) In these emerging countries, commercial beers are seeing an increase in market share over home or local brews. Despite the economic downturn, “over the past five years, the global beer category has maintained an average...
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