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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 & Bresnahan, 1985; Grabowski, 1977; Kelton & Kelton, 1982; Nelson, 2005). In order to maintain their market share, the major breweries keep discount famous-name beers while introducing new styles of beer (light, ice, non-alcoholic) as well as employing various packaging innovations (Berger, 1988; Seiler, 2002). On a global scale, a number of European breweries have moved into markets in