USA: Modelo Especial’s ascent to top selling US beer reflects nation’s shifting demographics and tastes, experts say

A marketing blunder may have helped upset Bud Light’s standing as the top selling U.S. beer, but a dark horse, or caballo oscuro, has long been on its heels, the Courthouse News Service reported on July 14.

Modelo Especial usurped its domestic rival in sales in May, the capstone on an unlikely ascent for the Mexican lager that reflects the nation’s shifting demographics and tastes, experts say. The cerveza has been sold in the U.S. since the early 1980s, but it was an antitrust case in 2013 that turned the beer into a mainstay at Los Angeles cantinas and Chicago dive bars.

Bud Light’s sales began to fall in March after transgender influencer Dylan Mulvaney posted a picture on social media of a personalized can the company sent her as a gift. Outrage among conservatives caused the company to backtrack, which itself sparked a liberal uproar, leading to a double-digit decline in sales.

Modelo crept past its rival amid the controversy. Modelo made up 8.4% of U.S. retail-store beer sales in the four weeks that ended June 3, compared with 7.3% for Bud Light, according to Bump Williams’ analysis of Nielsen data.

News of Modelo’s dominance likely bewildered some beer drinkers. Ten years ago, the lager didn’t even crack the top 10 in sales and it remains less well known today than many of its competitors, according to data from Statista.

Scott Taylor Jr., an assistant director for the Wine & Beverage Institute at the University of South Carolina, said in an email the beer’s success can be traced back to the decade-old antitrust case against Bud Light’s owner, Anheuser-Busch InBev.

In 2012, Anheuser-Busch announced it planned to acquire Grupo Modelo, Mexico’s largest brewer responsible for beers that included Modelo, Corona and Pacifico. The U.S. Justice Department filed a lawsuit to block the deal over concerns the acquisition would stifle competition and lead to higher prices for consumers.

To satisfy regulators, Anheuser-Busch agreed to sell the U.S. licensing rights to Grupo Modelo’s beers to Constellation Brands while it retained the international rights. The deal transformed the Victor, N.Y.-based company, which at the time sold only wine and liquor, into the third-largest beer supplier in America.

Corona was seen as the jewel of the acquisition at the time. Iconic marketing campaigns featuring lounging beachgoers had helped establish Corona as the fifth-largest beer brand in the U.S. market by 2014.

Yet Modelo came to dominate the company’s portfolio.

Taylor said the brand’s appeal may have come from its relative obscurity as consumers searched for something different. But it’s not too different. The cerveza has the light and refreshing taste of a Mexican lager, but its flavor is more similar to American light lagers than Corona.

Cortney Norris, an assistant professor at Oklahoma State University who researches consumer alcohol trends, offered a more blunt assessment of Corona.

“In the last 20 years, we’ve seen craft beer explode,” Norris said. “Customers are becoming more discerning in their tastes and Corona is not good.”

Norris acknowledged it was only her opinion, but taste matters. Modelo, Tecate and Dos Equis are all better examples of the style. Corona is also perceived as more Americanized than its upstart rival, Norris said.

“Modelo comes across as more authentic, I think,” she said. “It’s got the heritage on its side and it sits in this intersection where it’s still a mega-national beer but it kind of feels more craft.”

Advertising has played a significant role in shaping perceptions of Modelo, Taylor said.

Constellation Brands sells Modelo as a blue-collar beer with a “fighting spirit.” Bartenders, small-business owners and actual fighters are lionized in advertisements that often prominently feature Latino and Latina actors.

In 2018, Modelo scored a significant coup when it ousted Bud Light as the official sponsor of the UFC mixed martial arts league. By then, Modelo ranked as the fastest-growing beer in the U.S. and was second only to Corona among import beer sales. Sports Business Journal noted at the time Modelo was following the brand-building strategy built by Corona, a longtime sponsor in boxing.

Bart Watson, chief economist for the Brewers Association, said Constellation has done a “great job” of growing its major brands, but changing demographics play a role, too.

“At the same time, they’ve also benefited from the tailwinds of a growing Hispanic population in the United States and the wider incorporation of Hispanic and Mexican culture in the wider U.S. melting pot,” he wrote in an email.

Between 2010 and 2020, the U.S. Hispanic population grew from 50.5 million to 62.1 million, or 23%, according to the Pew Research Center. A Constellation spokesman told The Wall Street Journal last month that Modelo was a top seller among Hispanics even as it grows in popularity among non-Hispanic consumers.

Craft brewing companies have responded to Modelo’s rise by releasing their own Mexican-style lagers, including Dogfish Head’s Un Poquito Grande and New Image’s Tigre Especial.

Norris said the craft brewers are known for their originality, but influence is often a two-way street.

“They still need to make money,” she said. “So follow the trends.”

17 July, 2023