Corona Beer Case Study
EXECUTIVE SUMMARY
Introduction: Corona Beer, produced in Mexico by Grupo Modelo since 1922, entered the United States beer market in 1979, and by 2007, was the number one imported beer in the United States (with 1.9% market share of the global beer industry) having recently taken that position from Heineken, a rival (with 1.6% market share of the global beer industry). Corona used a broad differentiation strategy with a “fun in the sun” marketing image. It also achieved strategic success by using a distinctive glass bottle and providing a light-tasting beer that attracted a broader market.
Problem identification: The global beer industry was experiencing increasing competition due to the new and potential mergers and acquisitions of its competitors. One example was the partnership between Heineken and FEMSA, which was formed in an attempt to dethrone Corona as best-selling imported beer in the United States. In addition, with the introduction of NAFTA, Canadian and U.S. competitors were slowly beginning to penetrate the Mexican market, while FEMSA continued to experience steady growth and increase its local market share.
Analysis: Financial analysis indicated that costs were increasing for Grupo Modelo, while competitive analysis indicated that Anheuser-Busch spent $192M on U.S. marketing in 1985 compared to a mere $5.1M spent by Grupo Modelo. This emphasizes the financial weakness of Corona and Grupo Modelo, yet underscores what the brand was able to achieve with the relatively minimal funds it spent. In addition, exporting costs increased due to the unstable peso, coupled with the fact all production occurred in Mexico, indicating the opportunity to produce/move operations.
Alternatives: The use of franchising in the domestic market was considered in order to expand domestically while minimizing costs and risk for the company, however this feat may be difficult to achieve successfully. A second alternative is to merge with a large, powerful, global
Introduction: Corona Beer, produced in Mexico by Grupo Modelo since 1922, entered the United States beer market in 1979, and by 2007, was the number one imported beer in the United States (with 1.9% market share of the global beer industry) having recently taken that position from Heineken, a rival (with 1.6% market share of the global beer industry). Corona used a broad differentiation strategy with a “fun in the sun” marketing image. It also achieved strategic success by using a distinctive glass bottle and providing a light-tasting beer that attracted a broader market.
Problem identification: The global beer industry was experiencing increasing competition due to the new and potential mergers and acquisitions of its competitors. One example was the partnership between Heineken and FEMSA, which was formed in an attempt to dethrone Corona as best-selling imported beer in the United States. In addition, with the introduction of NAFTA, Canadian and U.S. competitors were slowly beginning to penetrate the Mexican market, while FEMSA continued to experience steady growth and increase its local market share.
Analysis: Financial analysis indicated that costs were increasing for Grupo Modelo, while competitive analysis indicated that Anheuser-Busch spent $192M on U.S. marketing in 1985 compared to a mere $5.1M spent by Grupo Modelo. This emphasizes the financial weakness of Corona and Grupo Modelo, yet underscores what the brand was able to achieve with the relatively minimal funds it spent. In addition, exporting costs increased due to the unstable peso, coupled with the fact all production occurred in Mexico, indicating the opportunity to produce/move operations.
Alternatives: The use of franchising in the domestic market was considered in order to expand domestically while minimizing costs and risk for the company, however this feat may be difficult to achieve successfully. A second alternative is to merge with a large, powerful, global
Bibliography: Thompson, Jr., Arthur A., Strickland III, and A. J., Gamble, John E. (2010). Crafting and Executing Strategy: The Quest for Competitive Advantage: Concepts and Cases (Seventeenth Edition). New York, NY: McGraw-Hill/Irwin, pg C248-258. Thompson, Jr., Arthur A., Strickland III, and A. J., Gamble, John E. (2010). Crafting and Executing Strategy: The Quest for Competitive Advantage: Concepts and Cases (Seventeenth Edition). New York, NY: McGraw-Hill/Irwin, pg 206-234. http://www.anheuser-busch.com/index.php/our-heritage/history/ http://www.gmodelo.com.mx/repository/boletines/eng1340951005523.pdf http://www.bing.com/images/search?q=corona+images&id=1B27F224D911A15A2894501C171AC84C3CC8A314&FORM=IQFRBA http://www.gGM.com.mx/repository/boletines/eng1340951005523.pdf