Bad beer sells big: The Corona coup
Beer snobs have nothing but distaste for Corona. So why is Constellation making a killing off of the brew?
Constellation Brands (STZ), best known as a wine empire, is once again crooning about Corona.
Last year it bought all of the Mexican brewery that makes the beer and the company that imports it to the U.S. The results have been intoxicating: Profit in the recent quarter almost doubled because of a surge in Corona sales.
(Post continues below video.)
Corona is now the fifth bestselling beer in the U.S., selling more than double the amount of Heineken, the next most popular import. It's growing while the rest of the beer business is drying up or being siphoned off by new small-batch brewers. Last year, Corona sales rose 4 percent.
Here's the curious thing: Corona is not very good -- at least by most critical accounts.
After 3,200 reviews at RateBeer.com, Corona has a grade of 1.69 out of 10. The Beer Advocate gives Corona an "awful" rating of 55 out of 100 and the following description: "faded aromas of sulphur, faint skunk, mild cooked veggies."
Not only is Corona not very good -- it's one of the worst Mexican beers. Here's how the folks at Beer Advocate rank other suds from south of the border.
Negra Modelo 77
Dos Equis Amber 72
Modelo Especial 66
Oddly enough, Constellation makes and distributes four of those brews: Negra Modelo, Victoria, Modelo Especial, and Pacifico.
Granted, American drinkers guzzle a lot of beer that doesn't draw rave reviews. For example, according to Chicago research firm IRI, one in five beers downed in the U.S. is a Bud Light, hardly a go-to for beer snobs.
Bud Light and Coors Light are popular in large part because they're cheap. Corona, at $30 a case on average, is almost twice the cost of Natural Light, the No. 6 selling beer in the country.
So how has Constellation kept the Corona party going? In a word, marketing.
Crown always pushed Corona pretty hard, but Constellation has been even more aggressive with its advertising since it took over entirely in June. Specifically, it set out to boost its return in colder months.
Constellation rolled out a campaign in the fall featuring former NFL coach Jon Gruden during Monday Night Football. Meanwhile, the company cooked up a Thanksgiving promotion with Woodbridge and Butterball. The receptionists on Butterball's turkey hotline were pushing Corona as a logical pairing choice.
Constellation recently has been playing up Cinco de Mayo, a day more than any other that marks the brand's marketing coup. "We will continue to build our Corona de Mayo equity to reinforce our positioning around summer’s first fiesta," Chief Executive Officer Robert Sands said during a conference call with analysts this week. Note the not-at-all subtle phrasing, "Corona de Mayo." That's like saying the "Fourth of Jack Daniels."
Of course, an emphasis on marketing isn't a new strategy in the beer business. Despite bloated advertising budgets, some of the biggest brands in the game have seen sales slip. Constellation's Corona strategy is different, however, because of its consistency. The ads don’t talk about taste or hops or extra clean water. The image is not seasonal or dark or light. With the exception of the turkey promotion, the formula is simple: sand, sun, and lime wedges.
Corona isn't selling beer. It's selling the idea of having a beer on a beachside vacation. And the millions of beer drinkers who've taken a spring break trip to Cancun or hit a California taco stand don't really care what the brew tastes like.
Here's Sands again discussing that equation during a January conference call.
"We had a very consistent message to the consumer about what these products stand for year in and year out that is resonating with the consumer," he said. "That's a differentiating factor versus the competition, which has kind of been all over the place trying to find some hook with the consumer in a market that's been down overall."
Over Christmas, the company even rolled out the same tired old ad showing a palm tree strewn with holiday lights.
Much of Constellation's growth strategy now rests on pushing Corona Light, particularly in kegs to U.S. bars. And the company is thinking about cooking up a new kind of Corona with more alcohol -- a Corona Extra Extra if you will. Last week it announced more ambitious expansion plans, including as much as $1.1 billion in spending to double the capacity of its Mexican brewery.
There is some hope, however, for beer snobs. Some of Constellation's better-rated beers are growing much faster in the U.S. than its other brands. Pacifico, for example, is on more taps than any other Constellation brew. Modelo Especial posted a 20 percent increase in volume last year.
"We firmly believe Modelo Especial is the next Corona," Ryder said. We can see the tagline now: Modelo de Mayo.
More from Businessweek
I'll keep drinking lighter beers as I sweat outside, changing my own oil, and mowing my own yard.
I guarantee you you'll like a Corona in July after that. (jeezus I sound like my dad)
I love how some people equate being a fan of craft beers to being a "snob" or some kind of "hipster" (possibly the most tediously overused adjective around today, by the way).
I am neither. I'm simply a 52-year-old regular Joe who has learned to appreciate the quality and variety of smaller craft breweries and like the idea of supporting smaller American businesses---especially those that are local. How is any of that snobbish in the least?
Oh, and that "American" Budweiser that so many seem to identify with the good 'ole USA? It's Belgian owned.
As far as Corona, I think it's godawful. But is someone else loves the stuff, go for it! I'm not judging you on your beer. Stop trying to define me by it.
30 years ago we couldn't give it away. Nobody bought it even at $1 a beer in a fine dining restaurant.
Advertisement is so powerful.
Our Mexican employees won't touch it. What does that tell you.
What The Hell Happened?
At a recent trip to Sprouts I mentioned to the beverage manager that if the prices on all of their beers got any higher they would have to put a desk and a bank loan officer in the beer isle. Even some of the most basic domestic brews now run $7.99, $8.99 or more a six-pick and more for most imported brands... what in the Hell happened?
Unless I win the damn Powerball about all I can afford these days is PBR, which actually is not all that bad. Drink and enjoy whatever you like...but after downing the first two brewskies they pretty much all taste the same anyway. Peace to all ~
I hate Corona. It's watered-down bile. Yet, I'm not surprised it's selling well.
I mean, my McDonalds' stock continues to perform. Quality does not correlate to performance.
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
[BRIEFING.COM] The stock market capped the trading week with losses across the major averages. The S&P 500 fell 0.5% to surrender its weekly gain, while the Dow Jones Industrial Average (-0.7%) and Russell 2000 (-0.9%) underperformed. The two indices posted respective losses of 0.8% and 0.6% for the week.
Equity indices were pressured from the get-go after several heavyweights disappointed the market with their earnings and/or guidance, which led to some broader profit-taking. After ... More
More Market News
|There’s a problem getting this information right now. Please try again later.|
MUST-SEE ON MSN
- Video: Easy DIY smoked meats at home
A charcuterie master shares his process for cold-smoking meat at home.
- Jetpacks about to go mainstream
- Weird things covered by home insurance
- Bing: 70 percent of adults report 'digital eye strain'