Modelo Especial has grasped the growing power of the Latino consumer. Read how:
That is the cheer ringing through drinking dens this summer as Bud Light, America’s self-styled “king of beers” for 22 years, is dethroned by Modelo Especial, a Mexican brew. Spare a thought for the vanquished. Rarely has an effort to rejuvenate a brand gone as spectacularly wrong as when Bud Light’s marketers entered into a liaison with a transgender social-media star, only to fall victim to America’s culture wars. On the bright side, it offers a chance to examine a little-known success story.
The Modelo Especial story starts with antitrust. Not the newfangled sort in which size itself is considered taboo, but the old-school idea that buying a competitor can lead to higher prices. It dates back to 2013, whenInBev, the Belgium-based owner of Budweiser, paid $20bn to take control of Grupo Modelo, Mexico’s largest brewer, whose brands such as Corona and Modelo Especial were rivals to Bud Light north of the border. America’s Justice Department intervened.
Its priority was to ensure that supply met demand. That involved making a huge bet on Mexico. When Constellation acquired the brands, it resolved to brew them south of the border. Since then it has increased its production capacity in Mexico fourfold, at a cost of $6.4bn—more than the $4.8bn it paid for the brands in 2013. It is not stopping there. It plans to invest up to a further $4.5bn over the next three fiscal years, boosting capacity by more than 70%.
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