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The Corona coup: How Constellation sells so much bad beer

Kyle Stock
The Corona coup: How Constellation sells so much bad beer
The Corona coup: How Constellation sells so much bad beer

Constellation Brands (STZ), best known as a wine empire, is once again crooning about Corona. Last year it bought all of the Mexican brewery that makes the beer and the company that imports it to the U.S. The results have been intoxicating: Profit in the recent quarter almost doubled because of a surge in Corona sales.

Corona is now the fifth bestselling beer in the U.S., selling more than double the amount of Heineken, the next most popular import. It’s growing while the rest of the beer business is drying up or being siphoned off by new small-batch brewers. Last year, Corona sales rose 4 percent.

Here’s the curious thing: Corona is not very good—at least by most critical accounts.

After 3,200 reviews at RateBeer.com, Corona has a grade of 1.69 out of 10. The Beer Advocate gives Corona an “awful” rating of 55 out of 100 and the following description: “faded aromas of sulphur, faint skunk, mild cooked veggies.”

Not only is Corona not very good—it’s one of the worst Mexican beers. Here’s how the folks at Beer Advocate rank other suds from south of the border.

Bohemia 77
Negra Modelo 77
Dos Equis Amber 72
Victoria 68
Modelo Especial 66
Pacifico 63
Tecate 60
Sol 58

Oddly enough, Constellation makes and distributes four of those brews: Negra Modelo, Victoria, Modelo Especial, and Pacifico.

Granted, American drinkers guzzle a lot of beer that doesn’t draw rave reviews. For example, according to Chicago-based research firm IRI, one in five beers downed in the U.S. is a Bud Light, hardly a go-to for beer snobs. Bud Light and Coors Light are popular in large part because they’re cheap. Corona, at $30 a case on average, is almost twice the cost of Natural Light, the No. 6 selling beer in the country.

So how has Constellation kept the Corona party going? In a word, marketing. Crown always pushed Corona pretty hard, but Constellation has been even more aggressive with its advertising since it took over entirely in June. Specifically, it set out to boost its return in colder months.

Constellation rolled out a campaign in the fall featuring former NFL coach Jon Gruden during Monday Night Football. Meanwhile, the company cooked up a Thanksgiving promotion with Woodbridge and Butterball. The receptionists on Butterball’s turkey hotline were pushing Corona as a logical pairing choice.

Constellation recently has been playing up Cinco de Mayo, a day more than any other that marks the brand’s marketing coup. “We will continue to build our Corona de Mayo equity to reinforce our positioning around summer’s first fiesta,” Chief Executive Officer Robert Sands said during a conference call with analysts this week. Note the not-at-all subtle phrasing, “Corona de Mayo.” That’s like saying the “Fourth of Jack Daniels.”

Of course, an emphasis on marketing isn’t a new strategy in the beer business. Despite bloated advertising budgets, some of the biggest brands in the game have seen sales slip. Constellation’s Corona strategy is different, however, because of its consistency. The ads don’t talk about taste or hops or extra clean water. The image is not seasonal or dark or light. With the exception of the turkey promotion, the formula is simple: sand, sun, and lime wedges.

Corona isn’t selling beer. It’s selling the idea of having a beer on a beachside vacation. And the millions of beer drinkers who’ve taken a spring break trip to Cancun or hit a California taco stand don’t really care what the brew tastes like.

Here’s Sands again discussing that equation during a January conference call.

“We had a very consistent message to the consumer about what these products stand for year in and year out that is resonating with the consumer,” he said. “That’s a differentiating factor versus the competition, which has kind of been all over the place trying to find some hook with the consumer in a market that’s been down overall.”

Over Christmas, the company even rolled out the same tired old ad showing a palm tree strewn with holiday lights.

Much of Constellation’s growth strategy now rests on pushing Corona Light, particularly in kegs to U.S. bars. And the company is thinking about cooking up a new kind of Corona with more alcohol—a Corona Extra Extra if you will. Last week it announced more ambitious expansion plans, including as much as $1.1 billion in spending to double the capacity of its Mexican brewery.

There is some hope, however, for beer snobs. Some of Constellation’s better-rated beers are growing much faster in the U.S. than its other brands. Pacifico, for example, is on more taps than any other Constellation brew. Modelo Especial posted a 20 percent increase in volume last year.

“We firmly believe Modelo Especial is the next Corona,” Ryder said. We can see the tagline now: Modelo de Mayo.

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