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?
It seems even 250-year-old Cognac houses want to be like Google these days....
It's not even available on pre-order yet, but Apple's latest piece of kit has already got a breathalyser app....
just-drinks is now closed for the Easter weekend....
Last year was tough for The Coca-Cola Co. So staff in Atlanta won't be pleased to read that Pepsi has overtaken Diet Coke as the no. 2 soda brand in the US. ...
- Is Diageo on the Brink of a Brain Drain?
- SABMiller edges Diageo as beer trumps spirits
- Stagnant wine growth a concern for Constellation
- Comment - Heineken's move for Pivovarna Lasko
- Will Keurig Kold come to Coca-Cola Co's Rescue?
- Rémy Cointreau eyes recovery after Q4 bounceback
- Chateau Bastor-Lamontagne's So Sauternes
- Bacardi cuts jobs at Global Brands unit
- Carlsberg exec joins Diageo as Africa chief steps
- Diageo targets Millennials with DeLeon ads