CONSTELLATION BRANDS BEER BUSINESS HAS ‘EXCEPTIONAL MOMENTUM’

Modelo Especial tipped to topple Heineken as No.2 US imported beer

By Ben BOUCKLEY contact

- Last updated on GMT

Photo: Daniel Lobo/Flickr
Photo: Daniel Lobo/Flickr

Related tags: Modelo especial, Grupo modelo

Constellation Brands announced yesterday that its Mexican beer brand Modelo Especial is poised to overtake Heineken as the No.2 selling imported beer in the US.

“Continued investment in national Hispanic TV helped propel the continued growth of this brand, which posted consumer retail take away volume trends of more than 20% in IRI channels during the quarter,”​ CEO Rob Sands told analysts during an investor call on his firms’ Q3 2015 results.

Net sales rose 7% on a comparable basis to $1.542bn for Q3 fiscal 2015 and net income rose 14% on the same basis to $248m, as Constellation reaped the benefits of what CEO Rob Sands described as “exceptional ongoing momentum for our beer business”.

Modelo Especial expanding beyond Hispanic population

Sands said Modelo Especial had a “huge runway for growth”​ and was currently at about 60% ACV in IRI with the product still skewed from a demographic point of view towards Hispanics, though he believes penetration with this population isn’t what it could be.

“Because the brand is expanding into the general market now so well we’ve introduced general market television advertising which we think is going to accelerate the growth of this product even further.

Glossing a ramp-up in distribution of Modelo Especial to 90% ACV, Sands said: “All these things are going to contribute to Modelo Especial continuing to be really the hottest major beer brand in the market of any significance.

“There’s really nothing of that size that’s growing like Modelo Especial and just even anecdotally…you’re seeing all of a sudden Modelo Especial becoming a popular product in the general market as well as the Hispanic market.”

Corona Light on draft boosts bottle, can sales in area

Last year Sands pinpointed draft beer as one opportunity where the No.1 imported beer brand in the US, Corona Extra, could win, and he said Constellation had seen 40% growth in draft across all its beer brands during the quarter.

“We’ve introduced it with brands like Corona Light and in actuality not only is there not cannibalization, but when we put Corona Light draft in an on-premise establishment we tend to see a pickup in the bottle or can product in the area around it, because it’s really marketing.”

Sands said Constellation had expanded Corona Light draft into three new markets and had also tested Corona Extra on draft again.

The future was equally bright in cans, he said: “Cans – same thing, great can growth, great can opportunity, represents obviously a very large portion of the market that we haven’t participated in.

“Cans are purchased for consumption in cases where glass can’t necessarily be used – boats, beaches, stadiums, etc.,”​ Sands added.

“So that also represents a purchase opportunity that does not result in cannibalization for us. So these package additions are definitely driving growth in the overall beer business,”​ he said.

Mexican beer brands: Feeding Heineken its lunch?

Heineken sales have fallen in the US over the last 10 years, and one beer industry source told us last year that “Corona really fed them their lunch”​ as the premier import brand from the mid-1990s.

Click here to read: ‘Stodgy European Relic or Comeback Kid: Dissecting Brand Heineken’s US Decline’

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1 comment

Corona Extra

Posted by Duncan Carmichael,

I suppose having glass fragments in your bottles would also boost the sales of your canned products.

In marketing language this would be seen as a "Upside material benefit."

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