Corona Beer (Modelo) Corona Beer: Case Study

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Figure 2, 2009 Global beer Products Segmentation provides an analysis of the distribution of 2009 sales of beer by type. Corona is considered a Lager and is in the most crowded area of the market, making differentiation difficult. Grupo Modelo's decision to concentrate on its channel alliances and partnerships is critical for their long-term growth in such a consolidating and challenging market. In a sense Grupo Modelo has chosen to seek out a services-based strategy to gain a competitive advantage by creating such strong alliances in its channels. This is an excellent decision on their part as it is clear the market is consolidating and losing differentiation by product.

Figure 2: 2009 Global Beer Products Segmentation

Product/Services

2009 Global Market Share

Dark beer

12.0%

Lager (standard)

73.0%

Low and non-alcohol

5.0%

Premium lager

8.0%

Stout

2.0%

Sources: (Mayers, 2007) Analysis of SEC Filings by Grupo Modelo (2009 -- 2010)

Defining Market Development Priorities Globally

Grupo Modelo's abilities at channel alliances and partnership creation and mutually shared profitability are evident from the many examples in the case study. The decision of which nation to expand into needs to take into account their existing strengths in channel development and channel management in English-speaking nations. While China appears to have exceptional growth potential, the language and cultural barriers could be quite significant. The recommendation therefore is Australia first, China second. Australia's distribution channels for beer are comparable to North America and the language barrier is significantly less than expanding into China.

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In addition the cultural and political differences between Mexico and China are so significant that the expansion into that nation is going to take an inordinately high level of patience and investment. Due to these factors it is recommended that Grupo Modelo expand into Australia first. The 2009 global share of sales by region is shown in Figure 3.

Figure 3: 2009 Global Region Market Shares

Region

2009 Global Market Share

Europe

39.4

North America

22.2

North Asia

20.4

South America

10.0

South East Asia

3.0

Africa & Middle East

2.0

Oceania

2.0

India & Central Asia

1.0

Competitive Response to InBev

There are a multitude of possible strategies that Grupo Modelo can take in responding to InBev, yet the most lethal would be a price war, the most profitable, a focus on channel management and channel loyalty. For Grupo Modelo the best possible strategy is to continually invest in channel alliances and partnerships, seeking to further differentiate and strengthen the trust they have earned over years of working with these channel partners. Trust is very costly to earn and keep, and for InBev, their approach to en masse distribution has cost them credibility. For Grupo Modelo the best possible strategy is to lock InBev out of their channels and gain channel loyalty to further distance themselves from their largest competitor. Figure 4, 2009 Global Competitor Market Shares shows the dominance of InBev.

Figure 4: 2009 Global Competitor's Market.....

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