Corona is considered a Lager and is in the most crowded area of the market, making differentiation difficult. Grupo Modelo's decision to concentrate on its channel alliances and partnerships is critical for their long-term growth in such a consolidating and challenging market. In a sense Grupo Modelo has chosen to seek out a services-based strategy to gain a competitive advantage by creating such strong alliances in its channels. This is an excellent decision on their part as it is clear the market is consolidating and losing differentiation by product.
Figure 2: 2009 Global Beer Products Segmentation
Product/Services
2009 Global Market Share
Dark beer
12.0%
Lager (standard)
73.0%
Low and non-alcohol
5.0%
Premium lager
8.0%
Stout
2.0%
Sources: (Mayers, 2007) Analysis of SEC Filings by Grupo Modelo (2009 -- 2010)
Defining Market Development Priorities Globally
Grupo Modelo's abilities at channel alliances and partnership creation and mutually shared profitability are evident from the many examples in the case study. The decision of which nation to expand into needs to take into account their existing strengths in channel development and channel management in English-speaking nations. While China appears to have exceptional growth potential, the language and cultural barriers could be quite significant. The recommendation therefore is Australia first, China second. Australia's distribution channels for beer are comparable to North America and the language barrier is significantly less than expanding into China. In addition the cultural and political differences between Mexico and China are so significant that the expansion into that nation is going to take an inordinately high level of patience and investment. Due to these factors it is recommended that Grupo Modelo expand into Australia first. The 2009 global share of sales by region is shown in Figure 3.
Figure 3: 2009 Global Region Market Shares
Region
2009 Global Market Share
Europe
39.4
North America
22.2
North Asia
20.4
South America
10.0
South East Asia
3.0
Africa & Middle East
2.0
Oceania
For Grupo Modelo the best possible strategy is to continually invest in channel alliances and partnerships, seeking to further differentiate and strengthen the trust they have earned over years of working with these channel partners. Trust is very costly to earn and keep, and for InBev, their approach to en masse distribution has cost them credibility. For Grupo Modelo the best possible strategy is to lock InBev out of their channels and gain channel loyalty to further distance themselves from their largest competitor. Figure 4, 2009 Global Competitor Market Shares shows the dominance of InBev.
Figure 4: 2009 Global Competitor's Market Shares
Competitor
2009-2010 Global Market Share
Anheuser-Busch InBev
18.0% (2010)
SABMiller plc
15.4% (2010)
Heineken N.V.
9.2% (2009)
Carlsberg a/S
6.1% (2010)
Asahi Breweries, Ltd.
3.0% (2009)
Other
48.3% (2009)
Sources: (Mayers, 2007) Analysis of SEC Filings by Grupo Modelo (2009 -- 2010)
Diversification
Today the company is diversified into sports teams and is attempting to create vertical integration throughout their supply chains. What the company needs to do in the future is focus on creating more efficiency in collaborative planning and forecasting with its channel partners and consider how diversifications can strength channel alliances first. The diversifications for branding alone will have long-term impacts, yet the company must focus on how to diversify to strengthen its channel alliances first. This could be in the form of additional product lines that are designed primarily to give channel partners more of an opportunity to earn gross margins, thereby making them more profitable -- and loyal -- over time.
Reference
Michael Mayers. (1 August). Global market review of premium beer - forecasts to 2013: 2007 edition: The leading international brewers. Just - Drinks: Global market review of premium beer - forecasts to 2013:,9-31.
