See you in court
The Gambrinus Co., U.S. importer of Corona, has taken Mexican brewing giant Grupo Modelo to an arbitration court to block the loss of its agreement to import the brewer’s beers. According to the San Antonio-based Gambrinus, Grupo Modelo attempted to buy the importer last year, but when it was rebuffed, Grupo Modelo and its U.S. arm, Procermex, notified Gambrinus that its rights to import Corona and other Modelo brands would not be renewed after 2006.
A decision by the International Court of Arbitration of the International Chamber of Commerce is expected this autumn, according to a Gambrinus statement.
Carlos Alvarez, a former Modelo executive and CEO of Gambrinus, has helped build the Corona brand in the United States over more than two decades.S. sales of the brands.S.S.S.S.S..
Gambrinus imports Grupo Modelo’s products to the eastern half of the United States and accounts for about 52 percent of the U. Constellation Brands’ subsidiary Barton Beers represents the Modelo beers in the other half of the country. Corona has been the number one imported beer in the U. for eight years running, with an estimated 97 million cases sold in the U. last year – about 50 percent more than Heineken. However, U.-bound shipments of Corona, which grew in the double digits throughout the 1990s, rose by less than 2 percent last year – a sign that U. thirst for premium imports may be becoming sated. Meanwhile, competition is heating up in the United States’ import market for beer. Mexico’s number two brewer FEMSA has inked an agreement with Heineken USA to distribute its Dos Equis, Sol, and Tecate brews in the U.
Perhaps Grupo Modelo wants to cut out the middlemen to drive its own profits higher? Heineken, the second-best-selling imported beer in the United States, has gone down that road a few years ago when it formed Heineken USA to do its own importing. By cutting out Gambrinus, Grupo Modelo could add about 5.6 percent to overall operating income, or about USD64 million annually it was reported.
Whatever reason Grupo Modelo had had to opt for a full frontal collision with its importer – Anheuser-Busch probably was one. Beer giant Anheuser-Busch owns 50.2 percent of Grupo Modelo. Ever since Anheuser-Busch has bought its stake in Grupo Modelo its wholesalers have been grumbling over why they could not have the successful Corona brand instead of Gambrinus and Constellation. Perhaps the termination of the contract in 2006 was the signal Anheuser-Busch needed to persuade Grupo Modelo not to renew its contract with Gambrinus.
While the arbitration proceeds, Constellation Brands and Anheuser-Busch could try to cut the best deals for themselves. Constellation Brands through its subsidiary Barton Beers could angle for an exclusive importation agreement for all of the U.S. while Anheuser-Busch and Grupo Modelo could be looking at forming their own importing company.
Gambrinus’ loss of the Modelo account would leave it with the somewhat lacklustre Canadian import Moosehead beer and its wholly owned brands Shiner, Pete’s Wicked and BridgePort. The Shiner beers, made in Texas, do well, but are far behind the 65 million cases of Modelo products the company now imports.
