Current Situation (Ashok Som, case 13, corona beer)•Formed in 1922, 1st brewery in 1925•8 breweries in Mexico•Current chairman – Carlos Fernandez•Listed in the Mexican stock exchange•Considerable stake owned by Anheuser-Busch
• Mexico’s largest beer producer and distributor• Corona extra- world’s fourth best selling beer• Top imported beer in the US market• Among top 10 breweries of the world• Market leader
VisionBy 2015, earn over half of our revenue from Internationalmarkets, and to consistently strengthen our leadership in thedomestic market, while maintaining profitability. Grupo Model’svision consists of three key aspects: to inspire pride, passion andcommitment to the beverage market. Mission StatementTo produce, distribute and sell quality beer, at a competitiveprice, optimizing resources and surpassing customerexpectation, in order to contribute to the economic and socialdevelopment of Mexico as well as growing as a multinationalcompetitor in the beverage market, inspiring pride, passion andcommitment, and generating value for our stakeholders.
POLITICAL FACTORS – An unstable political environment • Corruption • Drug Cartels – Trade Regulations & Tariffs • North American Free Trade Agreement (NAFTA) • Federal excise tax - Absorb the tax rather than passing it to the consumersS, Abhijeet. Management Paradise.com. December 01, 2010.http://www.managementparadise.com/forums/principles-management-p-o-m/208681-pest-analysis-nafta.html (accessed November 09, 2011).
ECONOMICAL FACTORS – 11th Largest Economy – An unpredictable (volatility) Mexican economy • Devaluation of the Peso in 1995 • Expensive to exportBUSINESS, rediff. rediff.com. October 13, 2011. http://www.rediff.com/business/slide-show/slide-show-1-worlds-20-largest-economies/20111013.htm (accessed November 10, 2011).
SOCIAL FACTORS – Birthplace of tequila drinking market – New target segment • attractive women • parties (minimalist and humorous, escape scene rather on the beach) – Changing consumer attitudes-healthier lifestyles
ChartsBin. March 10, 2011. http://chartsbin.com/view/1017 (accessed November 11, 2011)
TECHNOLOGICAL FACTORS – Different Transportations • Maritime (58%) • Air • Terrestrial (75%) – Brewing technologies – New advertising media – Keeping up with technological innovationsCampuzano, Sandra, Lucia Castanedo, Alexandra Bell, Eloise Lill Anderson, Christian Brockschnieder, and Yan Tat Chan.Globalization Seminar: The Success of Corona Beer as a Worldwide Company. Group Analysis, September, 2007
ENVIRONMENTAL FACTORS – Voluntary reporting of carbon emissions
LEGAL FACTORS – Laws controlling advertising – Specifications of the packaging –National Regulations – Increased regulations by governments concerning alcohol distribution and production • Drunk driving • Health effects both short term and long term
Market Development Diversification •Domestic Markets •Sold the same beer but •International Markets diversified by moving into anNew •Distributors international arena and enticed •No Specific Demography the international consumer. •Not targeted at one type of •Made the market crave for its consumer originality rather than change itself to suit the market Market Penetration Product DevelopmentMARKETS •Ad campaigns concentrated on •Started with Modelo the beer only. •Improved to Corona, Corona •Escape from everyday life light, Corona Extra etc •Absorbed tax instead of •Gave allowance to the passing it on to consumers. experienced international •Made strong ties with distributor to handle majority of international players who were international relatedExisting the best in the market in there responsibilities localities. •Acquiring more distributors to •Joined hands with market increase international alliances leader Anheuser Busch. and generate more revenue. Existing Products & Services New
Strengths• Mexico’s Largest Beer production & distribution• Corona Extra – 4th Best Selling beer in volume• Market Leader - No. 1 selling import beer in US• Distributors absorb taxes without passing to consumers
• 62.8% market share in Mexico 2007 (case study)• Brilliant and unique marketing campaign• Distributors in US well established
• Strong brand image• Company has a long and well established history and experience in the beer market• Grupo Models has an extensive network of distribution channels throughout 159 countries and the company is ranked as the 27th On the list of global imported Premium beers• Highly differentiated product
Weakness• Lack of partners in the United States• Distribution costs rising since they refuse to brew in other countries• Small in size compared to revenue, operations compared to major competitors• Missing opportunities with merging with other brewing companies• Product positioning makes the product an occasional drink not a frequent drink in the minds of the consumer
Opportunities• Anheuser-Busch InBev significant interest in the company• Countries like Germany fond of beer• China largest beer market after 2003• Distributors absorb taxes – cost leadership
• Main revenue comes from Mexico and the United States• Major share in Mexico• Establish a JV with Pepsi Co since they have a fabulous distribution and customer relations network• Mexico dominated by only 2 brewing companies
Threats• Heineken is Corona’s main competitor• Increased Government regulations on the industry• FEMSA owns Oxxo, largest chain of convenient stores in Central America• FEMSA major competitor in Mexico
• Rumors of mergers and acquisitions between large players in the beer industry• Beer isn’t considered as a healthy product• Increase in drunk driving and other legal laws can reduce sales in the industry
Product• The product has been modified several times in order to be able to be put on the market in 80 countries• A special aspect is that the Corona logo is engraved on the package.• It has become a tradition to drink Corona straight from the bottle with a wedge of lime inserted into the neck to add flavor.
Price• Premium pricing strategy in the US to position as an Imported beer• Advantage over competitors like Heineken as distributors absorb taxes
Place• To reach customers most effectively, they rely on an extensive distribution network and services-oriented sales force that ensures the company’s products are available in the right time at the right place.• Provides a high level of service to each point of sale with segmentation by type of clients and by having differentiated execution. Domestic distribution also includes the Extra chain of proprietary convenience stores.
Promotion• Corona’s advertising theme had emphasized the “fun, sun, beach” theme since its inception. The original “vacation in a bottle” Ads was filmed in Mexico and kept simple and clear with a beach environment, with little music.• Promotion is done at high-level sponsor events such as racing car events, world football matches, the Paris – Dakar racing challenge, major exhibitions and international fairs around China and the US.
Process 1. Malting 12.Continenal Airlines 2. Soaking 3. Wort11.Wholesale Filtration Process 4.Wort Boiling10.Bottling 5. Separation 9.Filteration of regs 6.Wort 8.Ripening Cooling 7.Fermentation
People• The company has developed its own integrated system of continuous employee training and development through which employees are able to increase their skills.Physical Evidence• Billboards, Posters, broachers and other props.• Bottle and canned packaging in supermarkets.
CompetitorsDomestic Competitor:FEMSA : Significant competition due to high quality and its top‘6 best-tasting beers in Mexico. It also entered into marketing partnership with Heineken to grow its share in USAInternational Competitors:• Anheuser-Busch: 50% shares in Grupo Modelo and partnered with it to distribute its products in Mexico.• Heineken: Main import competitor in US, & plan to be the market leader through aggressive marketing campaigns.
Total Imported beer in the US2005-2006 (Thousands of cases) 2005 2006 Change Corona Extra 104,815 115,295 10.0% Heineken 64,350 69,050 7.0% Modelo Especail 14,635 19,757 35.0% Tecate 15,800 16,906 7.0% Labatt Blue 13,315 13,715 3.0% Corona Light 9,610 11,147 16.0% Heineken Light 7,500 Source : Grupo Modelo 2006 Annual Report
Market SegmentationTarget Market• Developed an image of a beer that would attract everyone• Enticed non beer drinking population to drink beer specially females• Targeted on the working class as an escape from reality• Targeted on people who appreciates an adventurous life style (Surfers)
Demographics Psychographics GeographicsPrimary Target The weight and image Entire US, Urban centersCharacteristics: conscious mature upper- of 500,000 or moreAge: 35 & above middle class who mightGender: Male & Female see a rejuvenation effectIncome: $60,000 by associating with thisLifestyle: Semi- new hip and healthierProfessional, Professional beer.Secondary Target Consumers who engage in Entire US, EspeciallyCharacteristics: leisurely activities, such as Southwestern USAge: 21 to 34 lounging, socializing, andGender: Male & Female vacationing in tropicalIncome: Low to Middle destinations, whom valueLifestyle: Blue Collar / relationships, relaxation,Retail / Semi Professional and individualityLanguage: Englishspeakers, Spanish spokenin the home
Demographics 80.00% 70.00% 60.00% 50.00% 40.00% Age between 21-34 30.00% Age 35 & Above 20.00% 10.00% 0.00% Buds Coors Miller Lite Corona Light Light LightSource: The demographics of beer. - Free Online Library. (n.d.). Retrieved 11 08, 2011, from FreeNews, Magazines, Newspapers, Journals, Reference Articles and Classic Books - Free Online Library:http://www.thefreelibrary.com/The+demographics+of+beer.-a0134384833
Market Strategies• Brilliant and unique market campaigns which was a direct result of the internationalstrategy.• Distribution contracts with companies that had local knowledge of the market s and gavethem autonomy to market the product fittingly yet, maintained an active involvement in thedecision making.• Developed an image of a beer that would attract everyone.“Fun in the sun” campaigns it sold the idea of escape and the idea of leaving behind everydaylife for one that is relaxing.• Modelo set up Procermex Inc, a subsidiary whose purpose was to coordinate, support andsupervise the two distributors. Which proved to be a further strength.
Product Development• Sugar free beer for the health conscious consumer.• Corona mainly into lager, huge potential in stout beers that GroupoModelo has not looked into• Ladies for instance a pink light beer• Flavored beer
Positioning Strategy• Corona’s position is all about the fantasy that drinking the beer will transport you to a tranquil sandy beach where all your stresses of the modern world are washed away.
Value Proposition• In the US, Canada, Australia and UK Corona Beer have become increasingly popular among “trendy” or fashion conscious consumers.• It’s viewed a cool and stylish “designer” beer.
Recommendations• Increase Marketing budget and engage in focused advertising towards specific target segments such as Young people, Women, Health-conscious consumers etc.• Develop efficient supply chain to better manage the inventory and increase availability of its product in stores.• Expand in International market especially China & Australia which are the leading consumers of beer.• Expand its portfolio of “malternatives" in light of the social changes leading to increased popularity of low calorie drinks and flavored alcoholic beverages.
Thank You Enjoy your weekend with a Corona Beer.