Blog: Modelo & Constellation - Everyone's a winner, baby?
Olly Wehring | 24 July 2006
The news last week that Grupo Modelo has teamed up with Constellation Brands to beef up its presence in the US has been greeted positively by industry observers.
The two companies have signed a 10-year agreement to form a joint venture that will import and distribute the Modelo stable across the US. The venture will go live from the beginning of next year.
Modelo has a golden goose on its books in the form of the Corona brand. In as consolidated a beer market as the US, imported bottled beer is bucking the trend and performing startlingly well. This category is led by Corona to such an extent that one analyst maintains that “Grupo Modelo is one of the finest operating stories in global beer.”
The joint venture provides a favourable outcome for the Mexican brewer. Modelo has a strong brand but limited operational capability in the US on its own, but can now look forward to additional post-tax profit from the move of around US$150m. At the same time, the two can focus on gaining national scale for Modelo’s brands while making the most of back office synergies.
Everyone’s a winner then, right? Constellation - who previously had held the distribution contract for only the west of the country - certainly seems to think so. “It provides Constellation with a guaranteed profit stream from the western US states for 10 years and, from its position in the joint venture, provides us with potential incremental profits from the growth of the brands in the east,” a spokesperson said last week.
While Modelo is probably the happier of the two, it seems that everyone’s pretty chirpy. Including, I presume, Anheuser-Busch, which owns half of Modelo. However, while I’m certain A-B would have known what was going on before the deal was sealed, could this not be seen as an opportunity missed for the US brewing giant?
Could it happen? According to this report, a section of the beer community wants to ditch the word craft. They prefer instead the term “Indie” for brewers they believe follow the enlightened path of t...
The global elite were in Switzerland last week for the World Economic Forum in Davos, the annual corporate huddle for the rich and powerful. The CEO of The Coca-Cola Co, Muhtar Kent, was there too, de...
With The Coca-Cola Co stealing yesterday's limelight with its new united marketing strategy for brand Coke yesterday, a Forbes interview with PepsiCo North America Beverages' new CMO, Seth Kaufman, sl...
It is a bold attempt to regain a measure of control in the ever-spiraling debate about sugar. But will The Coca-Cola Co's new marketing strategy - which for the first time ties all of the Coke family ...
- What's so special about Islay anyway? - Comment
- Six key trends for alcoholic drinks in 2016
- What do Bourbon and craft beer have in common?
- Aus wine industry pays price for past failures
- Ten things to know about spirits in the US
- Alcohol industry warning over Kroger plan
- SABMiller hits back in UK corporation tax row
- Diageo's Orphan Barrel The Gifted Horse - NPD
- Suntory bids for Lucozade, Ribena Nigerian network
- American rye whiskey sales leap 600% in five years
- What Next for Beer and Brewers Following the MegaBrew Deal?
- Global travel retail insights - market forecasts, product innovation and consumer trends
- Global Beer Trends 2015 : Global Beer Trends and Long-term Forecasts
- Global Whiskey Market 2016-2020
- Global sparkling wine insights - market forecasts, product innovation and consumer trends research