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?

By MSN Money Partner Apr 14, 2014 1:00PM
By Kyle Stock, Businessweek

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.


Bohemia 77
Negra Modelo 77
Dos Equis Amber 72
Victoria 68
Modelo Especial 66
Pacifico 63
Tecate 60
Sol 58


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. Corona Extra beers, sporting lime wedges, on the bar at Rick's Cafe in Chagrin Falls, Ohio (© Amy Sancetta/AP Photo)


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.


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589Comments
Apr 14, 2014 3:33PM
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You hipsters keep ranking the beers to pair with your overpriced entrees in the trending restaurant.

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)

Apr 14, 2014 3:03PM
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i'm a bit of a beer snob but not obnoxious..it's good for what it is...sort of a refreshing kind of watery beer that goes down easy when you're eating some mexican food.  hell of a lot better than budweiser lol

Apr 14, 2014 4:05PM
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Bad stuff sells great all the time, ie Nikki Minaj and the Beibs. doesnt make it any good.
Apr 14, 2014 4:42PM
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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. 

Apr 14, 2014 3:37PM
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Nobody blamed the taste on Obama.  What's up today??


Apr 14, 2014 4:11PM
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"Corona isn't selling beer. It's selling the idea of having a beer on a beachside vacation."  

All beers do this. Whats the deal with the Coors mountain climbers (and now divers)?  

Snobs are snobs.  Whether it beer or anything else.  Heck with 'em.  Drink what you want.  
Apr 14, 2014 3:23PM
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Corona is good when it is ice cold and with a twist of lime.  That's the only way I'd drink it.
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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.

Apr 14, 2014 3:21PM
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Corona is my "go to" beer on a hot, summer day.  It's always very refreshing, pending the season.  is it the best beer?  Not by far.  But the advertisements and displays definitely give the drinker the feeling of being whisked away to something tropical.  Apparently, their marketing department is doing a very good job. 
Apr 14, 2014 6:19PM
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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 ~

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Once you get to the halfway point on a bottle of Corona it gets very skunky. The 7 ounce Corona's are a little better but it's still not a great beer. I will say they do have the best commercials though.
Apr 14, 2014 4:45PM
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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.

Apr 14, 2014 4:42PM
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 ...... ah a nice cold Corona with lime goes great with my big fat doobie...... aint life great ?
Apr 14, 2014 4:01PM
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I like the taste, especially on a hot afternoon by the BBQ.
Apr 14, 2014 4:50PM
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I like Corona. I couldn't care LESS about what someone at "Beer Advocate" thinks. I make up my own mind when it comes to Beer, Food, My Friends, Books, Movies, Television and Politics.
Apr 14, 2014 3:25PM
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Of course, Modelo Especial deserves an ice box all to itself too...
Apr 14, 2014 4:18PM
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I don't like it, always had a distinct skunky smell and taste to me. Maybe its the lime?? 
Apr 14, 2014 2:02PM
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It's not that bad at all especially for the type of beer it is. Hipsters are extra critical of everything that is not craft nowadays. Yes, its not Pliney the elder, but that style beer has its place and its certainly better than PBR, despite what they tell you
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