Blog: Olly WehringModelo & 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?


BLOG

Normal service to resume on Tuesday

It's a bank holiday here in the UK on Monday (25 August). just-drinks' team will be taking a well-earned lie down. ...

BLOG

Will Russia ban bear fruit for Polish cider?

Poland is hardly noted for its cider consumption, but all this could be about to change. ...

BLOG

"Sell me more, sell me mo[CLICK]" - The Riesling Greasling

Here's a brave move by the folk from Camerata at Paulie's in Houston: a wine-related parody of Summer Nights from Grease....

BLOG

The just-drinks Weekly Round-Up

Here's a round-up of the top stories on just-drinks last week, featuring The Coca-Cola Co and Monster Beverage Corp, Constellation Brands, Anheuser-Busch InBev and Australia's wine producers....

just-drinks homepage



Forgot your password?