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Grupo Modelo Ppt2003

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Grupo Modelo

Grupo Modelo

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  • 1. Justin Scott Newberry MGT 422 Mexican Economy and Markets Dr. Di Gregorio
  • 2.  
  • 3.
    • Deals primarily in export, import, and domestic beer market in Mexico
    • Founded officially in 1922 by Pablo Diez Fernández
      • First brewery opened in 1925 ( Cervecería Modelo)
      • Started with the brands Corona and Modelo
      • By 1960, they had acquired their 4 th additional brewery (total of 5)
      • By 1997, they had their 7 th brewery in Mexico
      • 2007 – Began construction of 8 th brewery (in Nava, Coahuila)
    • Headquarters in Mexico City
    • In 1991, changed name from Cervecería Modelo to Grupo Modelo
  • 4.  
  • 5.
    • Anheuser-Busch owns 50% non-controlling interest in Grupo Modelo
      • As of June 2008, considering acquiring other 50% for controlling interest (Wall Street Journal)
    • Although many grupos are organized and controlled by the founding family generation after generation, Grupo Modelo has had a different history
    • Although it appears Grupo Modelo has followed this trend of passing of control through generations, it hasn’t
      • Founder had no offspring upon retirement, passed controlling shares to salaried managers
      • “ The founder’s nieces hold the post of president of the board, and his son is now the CEO. This son married the daughter of one of the salaried managers to whom part of the shares had been transferred…” (Hoshino 2003:156)
      • Grupo Modelo fell back into the hands of the founding family
  • 6.
    • Production/Distribution Activities and Brands
      • 12 Brands ( Barrilito, Montejo, Modelo Especial , Victoria, Estrella, Negra Modelo , Corona Extra , Pacífico , León, Tropical Light, Modelo Light, Corona Light ) – 5 of which are exported to over 159 countries
      • Also has a strategic alliance with Nestle Waters producing and distributing bottled water (Santa María , Nestle Pureza Vital)
      • Import/Distribution Activities and Brands
      • Exclusive right to distribution of Budweiser , Bud Light , and O’Doul’s, 180 Energy Drink (Anheuser-Busch) in Mexico
      • Also imports Tsingtao (China) and Carlsberg (Denmark), Pellegrino water
    • Like traditional Mexican grupos , Grupo Modelo has a diversified network of subsidiaries
      • 6 Service subsidiaries
      • 1 Bottling/ lid company
      • 1 Machinery manufacturing company
      • 3 Malting facilities
  • 7.
      • 5 Logistics companies
      • 10 International companies
      • 5 Associates
      • 32 Agencies and distributors
      • 7 Breweries
      • 4 Commercial companies
    • As of the end of 2007, Grupo Modelo had 38,402 employees
  • 8.
    • Went public in 1994
    • Traded in the Mexican Stock Exchange under GMODELOC, in the OTC (over-the-counter securities) markets (U.S.) under GPMCY, and in the Latibex (Spain) under XGMD
    • Ranked 21 st in the annual Expansion 500 (2007)
      • 8 th largest net income on the list (15,269,000,000 pesos)
      • 6 th largest nominal increase in net income on the list for 2006-2007 (3,957,300,000 pesos)
      • Ranked as 37 th most profitable operation in Mexico
  • 9.
    • Between 2003-2007, grew exports by 34.85%
    • Between 2003-2007, grew net sales by 53.54%
    • Ever since initial public offering, performance has been strong
      • Initially offered 13% of shares to public
      • Stock’s price rose all through the 90’s, even during recessions and devaluations (1994 and 1998)
        • This was due to virtually no debt and high quantities of dollars and other hard currencies (extensive international trade vs. exclusive trade in Mexican market with falling peso)
        • In 1998, Grupo Modelo’s shares rose 24% while the rest of the market fell by 24%
  • 10.
    • “ To establish the leadership Model in the global beverages and consumer products market”
  • 11.
    • Boasts a 63% share of domestic, export market in Mexico
    • Principal competitors:
      • FEMSA Cerveza (2 nd largest [Tecate, Dos Equis , Sol])
      • FEMSA (Coca-cola, water, juice, other bottled beverage distribution) vs. Grupo Modelo (authorized Nestle water production and distribution, Pellegrino importation, 180 Energy Drink [Made by Anheuser-Busch])
      • SABMiller (Beer [Miller, Miller Light, MGD64], Coca-Cola, other juices/bottled beverages)
  • 12.
    • Strengths
    • Anheuser-Busch gives exclusive right to distribute its products
      • gives Grupo Modelo a knowledgeable, experienced partner in the beer industry
    • Additional alliance with Carlsberg (Denmark)
    • Long, established presence in the market (Advertising slogan in the 1940s : “ Y veinte millones de mexicanos no pueden estar equivocados …”)
    • Large market share
    • Production facilities throughout Mexico
    • Weaknesses
    • Like many grupos , too much company diversification can lead to a loss of core competencies
      • Loss of product quality, loss of focus on what customers actually want
    • Opportunities
    • With significant tourism industry in key locations (Cabo San Lucas, Puerto Vallarta, Cancun, Puerto Peñasco ), Grupo Modelo can expose/test a product with international customers that come to them
      • They don’t have to take a full risk of expanding operations, marketing, logistics to a new international market with uncertainty
    • Threats
    • Along with this opportunity for new international segments simply coming to them at tourist vacation spots comes the threat that Grupo Modelo will become too comfortable with this advantage and lose international market share
      • They might stop doing their own research and miss out on expansion opportunities they would have otherwise missed
  • 13.
    • Fernández González, Carlos, Dr. Juan José Suárez Coppel. “Facing the Future.” Grupo Modelo Annual Report (2007): 2-12.
    • Grupo Modelo. Mexico. “Grupo Modelo, cimientos de una gran familia.” (2000)
    • Grupo Modelo. Grupo Modelo . 1 Mar. 2009 http://www.gmodelo.com/index-1.asp?go=hoy
    • Grupo Modelo. Grupo Modelo . 1 Mar. 2009 http://www.gmodelo.com/index-1.asp?go=historia
    • Hoshino, Taeko. “Family Business in Mexico: Responses to Human Resource Limitations and Management Succession.” Institute of Developing Economies Discussion Paper No. 12 (2004): 8.
    • Hoshino, Taeko. “Ownership Structure of Large-Scale Mexican Enterprises: The Mechanism of Management Control by Owner Families.” (2003): 156.