Patience is paying off for Pacifico.
Constellation Brands is giving its third-largest beer brand the time and space it needs to grow, Beer Division president Jim Sabia said during the annual Beer Industry Summit last week.
“We’re taking our time and being very disciplined,” he said.
Pacifico finished 2023 as the 22nd largest beer category brand family – ahead of Molson Coors’ Blue Moon, Mark Anthony’s Mike’s Hard Lemonade, and Sierra Nevada – in multi-outlet retailers and convenience stores (MULO+C) tracked by market research firm Circana. In its first appearance on Circana’s top 25 beer category brand families list, Pacifico’s dollar sales increased +28.8%, to $349.6 million, accounting for 0.76 share of total beer dollars (+0.16 share points compared to the prior year).
Pacifico gained +5.3 points in ACV in the 52-week period ending December 2, according to NIQ data provided by 3 Tier Beverages. At 35.3% ACV, it has a lot of runway compared to its elder siblings Modelo (76.9% ACV) and Corona, which has an ACV in the high 90th percentile where distributed and in the mid-80s overall, according to NIQ data and 3 Tier consultant Stephanie Roatis.
“If we nurture it properly, it’s going to be a big brand,” Sabia said.
About seven years ago, Constellation made a push into Florida with 24 oz. single-serve Pacifico cans, assuming the nautical brand would resonate with Sunshine State drinkers. But after a year of sluggish sales, “retailers kicked us out,” Sabia said.
Constellation retrenched the brand and focused on growing it in core markets. This disciplined approach has resulted in a dotted map with deep pockets of support that is strongest in the west.
In Los Angeles, Pacifico was the third-largest beer brand in dollars sales for the 52-week period ending January 7, according to Circana data shared by a Constellation spokesperson. Pacifico’s dollar sales increased +15% in Los Angeles between March 1 and December 31, 2023 (the first three quarters of its fiscal year, or FYTM), according to NIQ data shared by the company.
Pacifico is a top-nine beer brand in Salt Lake City for the same period, according to Circana data.
As Constellation applies learnings from past launches to current ones (“We’re not going with 10, 15 SKUs – we’re only going with four or five,” Sabia explained), Pacifico is experiencing “rapid growth,” a spokesperson told Brewbound.
The brand has “double-digit growth in the majority of states,” but its growth is particularly strong in Florida’s coastal markets (+83% in dollar sales FYTM, per NIQ), the Jersey Shore (+52%) and Houston (+46%).
“We have upside everywhere, so [we] plan to continue to invest in the west, and methodically grow in the east,” a spokesperson said.
This process could take more than a decade, Sabia said.
“Could Pacifico be a lot bigger? Absolutely,” he said. “We have a lot of energy for it. We think it’s a great brand, the emotional connection we have with Gen Z consumers – it’s that lifestyle.
“But it’s not going to happen in the next three to five years,” Sabia continued. “It’s going to be, we believe, seven, 10, 12 [years]. This is one of those brands that we have that we nurture properly.”
Sabia also pointed to the slow and focused growth of Modelo Chelada. The brand extension launched 13 years ago, and finally hit its stride in recent years, recently passing 20 million cases, Sabia said. Constellation is intentionally being disciplined with the expansion of the brand, with only six offerings in the Chelada lineup despite more than a decade in the market, and the rapid innovation trends of other beer-adjacent segments.
Other highlights Sabia shared include that Constellation Brands Beer Division has now posted 55 consecutive quarters of growth, in large part due to the health of its two largest brand families, Modelo and Corona.
The secret to its brands’ success, Sabia said, is that Constellation has invested a lot of time distilling each brand down to its essence: the fighting spirit of Modelo Especial and Corona’s “beach state of mind.”
Another weapon in Constellation’s armory is its SKU efficiency. The company brings about 150 SKUs to market, resulting in an average of $54 million in sales per SKU, Sabia said. Its nearest competitor operates with about 10 times more SKUs, with an average of $10 million per SKU.
“Think about the efficiency too with our distributor network,” he said. “We’re out there putting pallets on trucks, not a couple of cases here, a couple cases there.”
Constellation ended 2023 as the second-largest beer category vendor in MULO+C stores, with $8.446 billion in dollar sales, according to Circana. Find further Brewbound coverage of the year in scan data here.