Export of Corona Extra to the United States declined
Grupo Modelo, which is 50.2 percent owned by Anheuser-Busch, saw its shipments to the U.S. drop 6 percent during the fourth quarter of 2007 year-on-year. For the full year 2007, global exports barely rose at all.
Mexico’s top brewer Grupo Modelo, the maker of Corona Extra beer, posted a 2.3 percent decline in fourth-quarter net profit as exports slumped and costs soared. Grupo Modelo said on 21 February its October-December 2007 net profit was 1.680 billion pesos (USD 153 million).
Modelo sold 7.7 percent more beer in Mexico during the fourth quarter, which helped drive revenue.
Export volumes, mainly to the U.S., declined 6 percent from a year earlier, hurt by higher prices and a difficult comparison as sales in the final quarter of 2006 were high.
The high drop in export volumes on a year-on-year basis may have been due to the fact that at the end of 2006 the import agreement between Grupo Modelo and the Gambrinus Company for the U.S. had come to an end. Obviously accounts in the U.S. were building up an inventory to cope with any hiccups accompanying the transition to the new importer, Crown Imports.
It will be remembered that the import contract with the San Antonio-based Gambrinus Company was terminated so that Grupo Modelo and its partner Constellation Brands could set up their own import company, Crown Imports, and thus cut out the middle man, the Gambrinus Company.
As said, the transition in importers in 2006/2007 may explain the negative fourth quarter comparison. But what about Grupo Modelo’s poor full year results? Grupo Modelo reported that exports in 2007 were only 0.3 percent higher than in 2006. In volumes that’s barely 50,000 hl. That minimal growth may also have to be attributed to export markets other than the U.S. because, according to U.S. trade reports, exports of Corona Extra to the U.S. declined. It was a small decline – less than 1 percent – but a decline it was. Actually, it is the first such decline in more than 15 years.
Seems like Grupo Modelo will have to do some hard thinking. Tough talking will not get it far. Sales of Corona Extra in the U.S. have defied gravity for so long that one would have thought Crown Imports could not do much wrong. Err, and they had year to prove themselves.
Over the past decade, the U.S. import segment grew to 15.3 million barrels (17.9 million hl), says Beer Marketers Insights, and its market share doubled from 7 percent to 14 percent.
It cannot be that the U.S. market is losing interest in Corona Extra. Admittedly, the import segment in 2007 was struggling. Nevertheless, Modelo’s Mexican rival, FEMSA, did well. FEMSA, which brews Sol, Tecate and Dos Equis brands, saw its sales volume in the U.S. rise 14 percent in 2007.
So what’s going wrong with Corona Extra?
Grupo Modelo’s brands represent about a 40 percent share of the U.S. import beer category. The company is Mexico’s largest brewer, but it has been slow to innovate and diversify its portfolio and may have become too dependent on one or two brands.
