How Mexican beer Modelo Especial shot to the top thanks to Bud Light boycott
SIMONE DEL ROSARIO: WHEN BEER DRINKERS SOURED ON BUD LIGHT FOLLOWING A CONTROVERSIAL PROMOTION WITH TRANSGENDER INFLUENCER DYLAN MULVANEY – IT WAS CLEAR BUD LIGHT’S CLOSEST RIVALS WOULD BENEFIT. AND THEY ARE. BUT BEFORE LONG, IT WAS A MEXICAN LAGER ON EVERYONE’S LIPS.
NEWS CLIPS: That is Modelo Especial. Modelo Especial. Modelo Especial. Modelo Especial is the new top-selling beer in America. Who? Modelo Especial.
SIMONE DEL ROSARIO: THE OVERNIGHT SENSATION IS NOT AN OVERNIGHT SUCCESS.
BART WATSON: Modelo has certainly been a rising star in the beer industry for a number of years.
SIMONE DEL ROSARIO: BREWERS ASSOCIATION CHIEF ECONOMIST BART WATSON SAYS MODELO’S BEEN ON BUD LIGHT’S TAIL FOR SOME TIME. BUT MOST IN THE INDUSTRY THOUGHT A TAKEOVER OF THE TOP SPOT WAS AT LEAST A FEW YEARS AWAY.
BART WATSON: I think the timing surprised everyone. The changes in the last six months have been pretty dramatic and not something we’ve really seen before in the beer industry, but the overall trend was clear that Mexican imports, particularly Modelo, have been on the rise for a while, and premium lights have been slowly declining as they’re displaced by higher price beers.
SIMONE DEL ROSARIO: OVER THE PAST 10 YEARS – AMERICANS ARE STEADILY DRINKING LESS BEER PER PERSON.
BUT AT THE SAME TIME, IMPORTED BEER IS ON THE RISE, WITH MEXICAN IMPORTS DOUBLING OVER THAT TIME…PULLING BUSINESS AWAY FROM PREMIUM LIGHTS LIKE BUD LIGHT.
ANSON FRERICKS: I don’t think that it’s any secret that Bud Light has been in decline for a number of years now.
SIMONE DEL ROSARIO: ANSON FRERICKS IS A FORMER ANHEUSER-BUSCH EXECUTIVE.
ANSON FRERICKS: But they were still the number one brand. And there’s no reason that they couldn’t be the number one brand and turn the company around. What it takes is having great people, great marketing campaigns, talking about what the brand is, making sure you hold on to the loyal customers that you do have and make Bud Light approachable for a new generation as well.
SIMONE DEL ROSARIO: BUD LIGHT’S BIGGEST STUMBLE – WAS FAILING TO HOLD ONTO THAT LOYAL CUSTOMER BASE.
BART WATSON: It’s pretty clear there’s been a permanent share loss here.
SIMONE DEL ROSARIO: AND THAT TASTES LIKE OPPORTUNITY FOR MODELO. BUD LIGHT PARENT COMPANY ANHEUSER-BUSCH MOVED TO BUY GRUPO MODELO IN 2012. BUT THE DEPARTMENT OF JUSTICE TRIED BLOCKING THE SALE, SAYING IT GAVE ANHEUSER-BUSCH TOO MUCH CONTROL OF THE U-S BEER MARKET. TO QUASH THE ANTITRUST COMPLAINT, ANHEUSER AGREED TO SELL MODELO’S U-S BUSINESS TO CONSTELLATION BRANDS.
ANSON FRERICKS: So Constellation was handed this brand that really had a lot of momentum already. You had a lot of Hispanic consumers that were coming into the U.S. Those Hispanic consumers, they knew Modelo from being in Mexico. So they had a lot of underlying tailwinds.
SIMONE DEL ROSARIO: REMEMBER FRERICKS’ FORMULA. HOLD ONTO LOYAL CUSTOMERS. AND CONSTELLATION KEPT GOING.
ANSON FRERICKS: Started advertising that brand to people outside that traditional Hispanic consumer base. And a lot of just traditional, call it more Caucasian consumers, more African-American consumers, they started seeing the brand show up at their grocery stores, convenience stores, because it was distributed more broadly. A lot of the marketing campaigns they did were very good.
SIMONE DEL ROSARIO: BUT NO ONE COULD HAVE ANTICIPATED THE FREE ADVERTISING MODELO WOULD GET WEEK AFTER WEEK WITH BUD LIGHT’S TAILSPIN.
ANSON FRERICKS: People have talked about it being the largest brand now in the U.S. That’s something that traditionally would not be covered within the business realm. And now, all of a sudden, every single week, people are talking about Modelo, its growth.
SIMONE DEL ROSARIO: THE QUESTION NOW IS CAN CONSTELLATION BRANDS TURN A SUMMER OF SUCCESS INTO SUSTAINED BEER SUPREMACY? FOR STRAIGHT ARROW NEWS, I’M SIMONE DEL ROSARIO.