Modelo Innovation Slate Targets Consumer Trends with Chelada Line Extension, Ranch Water and More

The Modelo brand family tree sprouted some new branches this month as the top-selling beer in Constellation Brands’ portfolio pushes further into the beyond beer segment and seeks to expand its consumer base.

Modelo has added one new flavor – Naranja Picosa – to its Chelada line extension nationwide, added 12-packs of Limón Y Sal Chelada, and released three regional plays: Ranch Water, Oro and Cantarito-Style Cerveza. The products are designed to capture share in the growing “fourth category” segment or appeal to consumers’ interest in health and wellness.

“We’ve just found three very interesting consumer driven insight trends, one of those obviously being ABAs [alternative beverage alcohol], no surprise,” senior brand manager Saúl Trejo told Brewbound. “Hard seltzer has really, really rocked the alcohol beverage industry in the last couple of years.”

Each regional launch is available in no more than three markets with the goal of collecting enough data to make a decision to scale up in time to sell into national accounts in late summer to secure placement in spring 2023 resets.

“We still have a lot of headroom to grow,” Trejo said. “We’ve only been talking to our English language audience for a little bit less than five years, and we want to make sure we don’t clip our wings early there. So, the idea around these test markets is, let’s learn, let’s ensure that these offerings are incremental.”

Modelo is the second-best selling brand family in the beer category, far outpacing the industry with +13.1% growth in dollar sales at off-premise retailers for the 52 weeks that ended February 20, according to market research firm IRI. Year-to-date though February 20, the brand’s dollar sales have accelerated to +14.5%, and it accounts for 7.93% of beer category dollars in the same time period.

“We have a lot of momentum going behind it,” Trejo said of the brand. “It gives us a great opportunity to innovate from a position of strength.”

With five new products – and three in just regional trial runs for now – Modelo will be able to choose among the most promising for wider launches.

“We’ll be selective and take on the biggest opportunity – what can we scale up? And that scale up will happen either regionally or nationally,” Trejo said. “And if some of them fail, that’s fine. We’re OK to fail forward, take those learnings and apply them to building a new wave of innovation pipeline to ensure that we future-proof our growth.”

Chelada Line Extensions

For the first time ever, Constellation is offering a product in its Chelada line in a multi-pack. Chelada Limón Y Sal is sold in 12 oz. can 12-packs, as well as the line’s standard 24 oz. single-serve cans. The lime-and-salt-flavored beer checks in at 120 calories and 3.5% ABV per 12 oz. serving.

“We’re also tapping into new occasions and, Chelada as an example, tapping into new points of distribution,” Trejo said. “All of that business is all in 24 oz. single-serve, so we have a huge opportunity to be able to tap into more social drinking occasions.”

Modelo introduced the Chelada line in 2013 with Chelada Especial, a ready-to-drink version of the traditional Mexican beer cocktail of lager, tomato, lime and salt. Since then, it has expanded the line to include more fruit-forward flavors without tomato to appeal to a broader audience, including Tamarindo Picante, Piña Picante and Mango Chile. In the same vein as its fruit-plus-spice siblings, new Naranja Picosa combines orange, lime, salt and spice and is available nationwide in 24 oz. single-serve cans.

“We believe it’s no longer a niche business and opportunity,” Trejo said of the Chelada line. “Our push is, let’s get broad distribution in not only Hispanic accounts, but across the total U.S. as consumers are looking for flavor but also cultural connections. So, they like the cultural connection of being inspired by the traditional micheladas with a little bit of fruit flavor behind it.”

Modelo Ranch Water

Constellation is wading into the growing ranch water showdown with Modelo Ranch Water, a hard sparkling water flavored with Mexican lime juice and “a hint of 100% blue agave,” according to a product fact sheet. The drink is modeled after a Texas-born cocktail of the same name made from tequila, soda water and lime.

“What we love about it is it has real Mexican ingredients,” Trejo said. “It has a little bit of simplicity behind it, a little bit of humbleness behind it, but the Mexican ingredients and heritage story we thought is a nice authentic way in for the Modelo brand name.”

Constellation produces a hard seltzer line within the Corona brand family, but research revealed that consumers liked the idea of a ranch water under the Modelo brand.

“We know there’s other ready-to-drink ranch waters out there in the marketplace,” Trejo said. “But what we’ve heard from consumers is that they’re not necessarily from brands that they trust and when they look at Modelo, Modelo is a very trusted brand when it comes to quality.”

Modelo Ranch Water is available in Texas and New Mexico to start. Each 12 oz. serving checks in at 100 calories and 4.5% ABV. The product is available in 12 oz. can 6-packs and 24 oz. single-serve cans.

Modelo Oro

Playing on consumer trends of premiumization and health and wellness, Modelo is launching Oro, a lower-calorie, lower-carbohydrate light beer.

“We want to make sure that we kept some essence of Modelo there, so [we] absolutely want to make sure that it stands for quality,” Trejo said. “It’s a golden liquid. We want to make sure that we kept that intact. But we’re also bringing in just a very well-balanced, crisp, clean finish to it that we think is a differentiator between the light beer category.”

With 90 calories, 4% ABV and 3 grams of carbohydrates, Modelo Oro has specs similar to Anheuser-Busch InBev’s Michelob Ultra, the third-best selling beer in the country behind Modelo Especial. Although Michelob Ultra has sent several of its contenders packing (Molson Coors’ Saint Archer Gold and Boston Beer’s Marathon Brewing Co. 26.2 Brew, among others), none of those launched with an established brand name.

Modelo Oro has rolled out to test markets in Charlotte, North Carolina; Fresno, California; and Houston, Texas.

Modelo Cantarito-Style Cerveza

Similar to Modelo Ranch Water, the brand has introduced another new product modeled after a popular cocktail: Modelo Cantarito-Style Cerveza, inspired by cantarito cocktails made popular in Jalisco, Mexico.

Like the cocktail, Modelo Cantarito-Style Cerveza is made with juice from three citrus fruits: grapefruit, orange and lime. Each 12 oz. serving checks in at 100 calories and 4% ABV, aligning with consumers’ desire for beverages that won’t bust their caloric budget.

“We’ve also learned from consumers that they’re redefining betterment,” Trejo said. “They’re not just looking for the lowest calories, the lowest carbs – they’re finding that those functional offerings are also hollowing out their flavor profile behind it.

“So, what we’re promising here is consumers can have a flavor-forward light beer also made with real fruit juice. That was something that was very attractive to our consumers, that we’re bringing a splash of real lime juice, grapefruit and orange juice,” he continued. “And then again, at 100 calories, so you get the betterment and you get the flavor. And that’s something that we’re hearing back from consumers. It’s something they don’t want to give up. They want betterment, but they don’t want to give up the flavor, and this hits the space very squarely.”

Modelo Cantarito-Style Cerveza is available in 12 oz. can 12-packs and 24 oz. single-serve cans in Arizona; Atlanta, Georgia; and San Diego, California.