Constellation Brands is to launch a new beer - Corona Premier - in 2017

Constellation Brands is to launch a new beer - Corona Premier - in 2017

Following a recent panel discussion, CLSA analyst Caroline Levy outlined the current state and future opportunities for Constellation Brands and Anheuser-Busch InBev in the US market. The 'Drinks with Caroline' panel featured beer experts Harry Schuhmacher of Beer Business Daily and Bump Williams of Bump Williams Consulting. Here, just-drinks takes a look at Levy's key takeaways: 

Constellation highs

  • Constellation's 2017 initiative to target large retailers and become "category captain" for high-end beer will be a success, according to Levy's panel 
  • The company's cross-category approach - in beer, wine and spirits - will prove an advantage over large brewers, the experts said
  • "The category captain has the ability to influence the decisions of large retailers," said Levy. "Constellation's triple-threat advantage (beer, wine, and spirits) provides it with a significant competitive advantage that could help continue strong yearly growth trends."

Constellation risks

  • According to Levy, Constellation is set to launch Corona Premier next year, to "compete with low-carb/low-calorie Michelob Ultra". Panellists warned that the launch may lead to cannibalisation of the flagship brand
  • Constellation is seeing a negative mix shift, due to lower-priced Modelo Especial and Pacifico growing ahead of Corona. "Constellation will likely focus on price increases on Modelo," she reported. 

AB InBev highs

  • The mega brewer's "ability to adapt" was singled out as a strength by Levy and the panellists. "After the acquisition of its ninth craft brewery in November, AB InBev has learned from the success of the 'Brewpub,'" said Levy. "The launch of a handful of Budweiser Brew Houses has created a new enjoyable experience for beer consumers."
  • Craft beer prices are likely to come down next year, according to CLSA, as craft brewers that invested in larger breweries face pressure to fill capacity. Panellists said AB InBev will have the opportunity to corner the craft market "because of its ability to drop pricing quicker than smaller craft brewers without it affecting their overall growth strategy"
  • Of course, the company's scale is a "massive competitive advantage".

AB InBev risks

  • Panellists did not have much confidence in Bud Light, asserting that it may never reach the success of its past "glory days". 
  • AB InBev decided against retaining many of SABMiller's senior management team, following its acquisition of the company. Panellists said the move could prove "chaotic" as some country and brand knowledge is lost.

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