Constellation Brands bullish on Mexican beer portfolio; sizes up how to become ‘successful cannabis beverage business’

08-Jan-2018 - Last updated on 08-Jan-2018 at 16:31 GMT

The company's beer business generated 80% of total US beer growth led by Corona, Modelo, and Pacifico brands.

Constellation Brands reported strong performance of its beer portfolio with net sales increasing 7.8% in Q3 2018 as its Mexican import brands have claimed four of the top share gainer positions in the total US beer category.

Modelo Especial, Corona, Modelo Chelada Tamarindo Picante, and Pacifico were top performers of the company’s beer portfolio, a direct result of increased marketing efforts during the Labor Day and Thanksgiving holidays, Constellation Brands CEO Rob Sands said.

According to Sands, Corona Extra has increased relevance with Latino consumers through its partnerships with Latin musical artists including Enrique Iglesias and Mona. The brand also became the official imported beer sponsor of four US National Football League teams.

The Model Especial “Fighting Spirit” campaign continued throughout Q3 including national TV and promotional activities during the NFL schedule adding to consumer recognition.

“Collectively, these initiatives drove depletion (sales to retailers) growth of almost 17% for the Modelo Especial family of brands for the third quarter,” Sands said during the company’s Q318 earnings call.

Pacifico was the fastest growing beer brand with 24% dollar growth, according to 52-week IRI data.

Extending Corona family

The company is in the midst of finalizing launch strategies for its Corona line extensions, Premier and Familiar, set to debut next year.

Corona Premier, a lower-calorie beer, is the first national Corona line extension in more than 25 years and its launch will be supported by a $35m investment and will roll out in “major Hispanic markets, a key demographic for this brand,” Sands said.

“This includes a robust media plan with general market and Spanish language TV advertising beginning in April.”

Cannabis beverage endeavors

Following its 9.9% stake in Canopy Growth, Constellation Brands said it would be working with the largest publicly-traded cannabis supplier to build a “successful cannabis beverage business.”

Canada provides the most immediate opportunity for both companies to collaborate as the country is set to legalize recreational marijuana use this summer and recreational edibles in Summer 2019.

“Our plan is to jointly collaborate with Canopy in a number of areas. Initially, we will be learning the cannabis business and the related consumer space and route to market while building and developing a successful cannabis beverage business,” Sands said.

“We have no current plans to sell cannabis products in the US or any other market and we will not consider doing so until it becomes legal at all levels of government.”