• Group hails rebound in US demand
  • Price rises boost net sales
  • Profits fall on tax charges
Grupo Modelo upbeat on US beer market

Grupo Modelo upbeat on US beer market

Grupo Modelo has highlighted rebounding demand for its beer in the US as a key driver of its third quarter sales increase.

Modelo's export sales rose by 14% in volume for the three months to the end of September, helping the firm to offset a near-2% drop in volumes in its native Mexico, it said on Friday (22 October). Total volumes rose by 3%.

Price increases buoyed net sales, which increased by 5% on the same quarter of last year, to MXN23.2bn (US$1.88bn).  
The Corona lager brewer offered hope to the depressed mainstream beer sector in the US by attributing its strong export sales to distributor demand in the country. "This growth is the result of the increase in sales to retailers in the US and the inventory replenishment in the distribution channel," said the firm, which operates in the US via Crown Imports, a 50-50 joint venture with Constellation Brands.
Modelo's statement will raise hopes that the recession-hit US beer market is picking up after a series of low-single-digit volume declines. The group, in which Anheuser-Busch InBev holds a 50% non-controlling stake, also registered strong export volume growth in Latin America and Australia.

In Mexico, where the brewer is the market leader in a virtual duopoly with Heineken's FEMSA, Modelo was more downbeat. It said that its decline in volume sales was "driven by the weakness in consumption that persists in the country, adverse weather, as well as a difficult comparison base since, in the same quarter of 2009, volumes increased 7.6%". Price rises ensured that domestic net sales rose by 2.4% for the quarter, however.

Tax charges caused Modelo's net profits to fall by 15% for the quarter, to MXN2.5bn. Operating profits fell by nearly 3% on the third quarter of last year, to MXN6.2bn.

The performance means that, for the first nine months of 2010, Modelo's total beer volumes fell by 2%, despite a 4% rise in exports. But, the group's net sales in the year so far were up by 4% to MXN64bn. Operating profits slipped by almost 1%, although net profits rose by nearly a quarter due to lower financial charges compared to the first nine months of 2009.

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