It’s not a matter of if but when Modelo Especial will become the nation’s No. 1 beer brand in dollar sales, Constellation Brands Beer Division president Jim Sabia told wholesalers Tuesday during the company’s Gold Network Summit in Las Vegas.
“This is real, it is attainable, and it is going to happen,” he said.
To close the gap between Modelo Especial and Bud Light, Sabia pointed to run room in key markets, such as Texas, which is the country’s biggest beer market, but only the ninth best market for Constellation.
Modelo Especial’s share in California and Nevada, its top two markets, is twice as large as its average share in Constellation’s other top 10 states, CEO Bill Newlands said.
“We still have ample growth opportunities in other states that are still very important to the brand,” he said.
The Gold Network Summit marked the first time leaders of Constellation’s beer division gathered their wholesaler partners since the pandemic upended the American beer industry. A music-filled day of presentations pleaded the case for the company’s products to garner more share of mind and shelf space with distributors and retailers, respectively.
It’s not a hard argument to make. The Constellation beer portfolio – led by popular Mexican imports Modelo, Corona and Pacifico – is one of few bright spots in the U.S. beer category. Last year, the brands contributed 34 million case equivalents of incremental shipments (sales to wholesalers), which accounted for 94% of the category’s shipment growth, beer division chief customer officer Bill Renspie said. Constellation’s portfolio also contributed $684 million in dollar sales growth, 88% of all category dollar growth.
Sabia traced Constellation’s path from importing only Corona Extra, Modelo Especial and Modelo Negra to half the country in the 1980s to owning the Corona, Modelo and Pacifico brand families in the U.S. When Constellation Brands acquired Grupo Modelo’s brands in the U.S. in 2013 due to Anheuser-Busch InBev’s need to gain Department of Justice approval for its acquisition of the Mexican brewer, the company paid $4.75 billion, which Sabia said “looks like the deal of the century.”
At the time, the high end of the beer category held share in the mid-40s and Constellation’s brands accounted for just 16%, Sabia said. A decade later, the high-end is around 60% of total beer with Constellation’s portfolio as the share leader at more than 27%.
To maintain and accelerate the portfolio’s gains, Sabia urged distributors to allocate more room to the company’s offerings.
“Growing brands requires growing space in your warehouses,” he said.
But Constellation didn’t expect the audience to take them at their word. Video interviews with middle-tier leaders were peppered in throughout the day, including Mike McGuire, president and CEO of Dallas, Texas-based Andrews Distributing. Constellation accounted for 42% of Andrews’ revenue in 2022, up from 32% in 2018, and with the strength of the portfolio’s sales, Andrews has become the largest distributor in the Dallas-Fort Worth market, he said.
In every Reyes Beverage Group distributor that sells Constellation products, the company has at least four of the top 10 SKUs, Reyes Holdings president Jimmy Reyes said in a video. He ticked off merits of Constellation’s core offerings: on the West Coast, Pacifico is growing nearly 50%; as “a vacation in a bottle,” Corona continues to grow even 25 years after first finding mainstream success; Modelo Oro, a new low-carb light beer, gives the Reyes Beverage Group “a fighter in that category” it didn’t already have.
“If we weren’t selling Constellation, I’m not sure we’d want to be in the beer business,” Reyes said.
Sabia urged attendees to take pride in belonging to the gold network, rather than viewing the Constellation portfolio as incremental to their other suppliers’ brands.
“Our world has changed; this beer industry has changed,” he said. “You’re not an A-B house with Constellation. You’re not a Molson Coors house with Constellation. You are a Constellation house.”
For its part, Constellation seeks to continue growth by aligning new entrants of its portfolio with two overarching consumer trends: “moderated moderation” and flavor, EVP and chief growth, strategy and digital officer Mallika Monteiro said.
To satisfy consumers seeking products that fit with a healthier lifestyle, Constellation is introducing Corona Non-Alcoholic and expanding Modelo Oro nationwide. Test markets revealed that Modelo Oro converts new Hispanic consumers who were not already purchasing Modelo or Corona offerings, Monteiro said.
For consumers interested in bigger flavors, the company is expanding its Modelo Chelada, Corona Refresca and Fresca Mixed brand families with new offerings and package formats, Monteiro said.
At the heart of its 2023 strategy is Constellation’s focus on consumer understanding, which zeroes in on Hispanic consumers, a community that has contributed about 60% of the country’s population growth in the last five years, she said. By 2030, Hispanic consumers will account for one-fifth of legal-drinking age adults, according to Monteiro.
Brewbound’s coverage will continue tomorrow with 2023 brand plans for the Constellation Brands beer portfolio.