Quest for the Crown
Beer importer’s growth vision leverages individual brand strengths
Crown Imports’ portfolio of eight brands captures approximately 42 percent of the volume of the import beer market in the United States, a figure that the Chicago-based company is intent on increasing. In fact, the joint venture between Mexico’s Grupo Modelo, S.A. de C.V. and Constellation Brands Inc., Victor, N.Y., has a goal of becoming the third major U.S. beer company occupying 20 percent per dollar market share.
In order to achieve its vision, the company has redesigned its marketing and sales strategies to play to the strengths of each of its brands, including Corona Extra, Corona Light, Modelo Especial, Negra Modelo, Victoria and Pacifico, across national channels and demographics.
Effective January 2007, Crown Imports became responsible for the Grupo Modelo portfolio as well as the St. Pauli Girl and Tsingtao lineups on a national basis. Prior to that period, Grupo Modelo’s representation in the U.S. market was split between western and eastern territories.
Crown Imports Chief Executive Officer Bill Hackett was previously president of Constellation’s Barton Beers division that was responsible for the portfolio in the western half of the United States. At the time, Barton Beers’ territory consisted of more developed markets, which required a different strategy than the eastern half of the country’s new and expanded markets, Hackett explains. The variation in markets provided initial benefits, but as awareness of the brands increased in the United States, the division complicated relationships, he says.
“As time progressed and the business developed and grew, it really became painful having two suppliers,” he says. “It’s not only just the selling effort across accounts that overlap both territories, but everything from the programming — the programming for Cinco de Mayo in one territory was different than the other and that would drive retailers nuts. Our marketing messages were completely different. The approach to market was completely different. Our messaging and our alignment with wholesalers were different. As the business grew it just became more and more challenging.”
Unification as Crown Imports has been able to fix those issues and address the national market and opportunities for each of its brands, Hackett says.
“If the business ever expected to grow and realize the vision that we’ve defined, it absolutely had to be under one roof,” he says.
Bruce Jacobson, executive vice president of national sales, says the consolidation was advantageous for the sales organization.
“In the past it would have been a different program, different timing, and a different sales rep,” Jacobson says. “It’s all coordinated at this point in time, and it’s really turned into creating more feature opportunities for us, both on- and off-premise, with the key customers. We are much more in tune to their business across the country.”
To complicate matters, the beginning of the economic downturn coincided with the start of the joint venture. Crown Imports employed the mantra that if we’re going to go through these difficult times, we better learn something from them, Jacobson says. The company realigned its sales team’s approach to market and when Chief Marketing Officer Jim Sabia joined the company two and a half years ago, he revamped the framework and structure of the company’s marketing strategy, Hackett explains.
After realizing the synergies of one national organization and posting positive sales figures in a challenging beer market, Crown Imports has taken a proactive step to better leverage its portfolio of brands across the country. The company evolved its marketing strategy from a regional to a national approach, which was a choice based on consumer insights, it says.
Better understanding the beer consumer also has become an integral part of its marketing strategy. The company’s brands often attract both Hispanic and general market consumers, Sabia says, but the ratio depends on the brand. With Corona, Hispanics make up about 35 percent of sales, but with Modelo Especial the demographic occupies 80 percent of sales.
Crown Imports’ consumer research divided its consumers between general market and Hispanic demographics. General market and Hispanic consumers are then each sub-divided into five segments based on attitudinal insights as well as consumer needs and occasions, Sabia explains. Based on those insights, Crown Imports redefined its messaging, mediums and sponsorships to better position the individual brands for the desired demographics.
In addition to better targeting consumers, Crown Imports has paid special attention to making the right packages available in the right channels, which represents a change in strategy, Jacobson says. Two years ago, the company was focused on what Jacobson describes as a flurry of new packages, but now it has switched to design sales and promotions around available packages and leveraging those in the marketplace. Also integral in this approach is proper package placement, he says.
“It doesn’t do us or the distributor network any good to put brands and packages in places where the consumer is not looking for them or not going to find them,” Jacobson says. “So we’ve taken this very targeted approach to the market and we’re working with them specifically by package to say, ‘Where is the most success going to happen? Where’s the best return on their efforts of their organization to drive success over the course of time?’ Then let’s work on getting the right packages and the right brands into the right accounts, and that right account is determined by the consumer.”
Hackett agrees, “We’ve been far more aware and responsive to opportunities across channels, whether it’s convenience stores, club stores or independents. All these different channels are used by consumers differently and they have packages of reference that work better than others.”
One example of this is the rollout of Corona Familiar, a 32-ounce bottle of Corona Extra that is the top-selling SKU in Mexico. Corona Familiar debuted in the U.S. market 14 months ago and the company will expand the family-size package nationally in 2012. The target consumers are Hispanics of Mexican descent who recognize the package from their home market, Sabia says. Aligning with its overall strategy, placement remains a key concern for Corona Familiar.
“We’re being cautious with it,” Jacobson says. “You’re not going to find it in every single 7-Eleven across the country and you’re not going to see it in every on-premise location, but you will find it in the places that it needs to be because of the consumer base. Then you’ll start to see it sprinkle in other places.”
Getting off the beach
To grow Corona Extra, which is the No. 1-selling import beer in the United States, and No. 1 light import brand Corona Light, the company wants to increase the occasions when consumers choose the brands.
“We realized that [Corona] lovers would drink us everywhere, but the occasional drinkers would say to us, ‘I love it in the summertime on the beach,’” Sabia explains. “We knew that we had to get those occasional drinkers to drink us in more occasions. This whole brand is about this beach state of mind and we needed to communicate to consumers that ‘Look, it is great in the summertime. It is great on the beach. However, here are all these other occasions that are perfect for a Corona.’”
The evolution began with the 2010 TV commercial titled “Moments.” The ad showed people consuming Corona in different occasions off the beach and ended with the tagline “Find your beach.”
“‘Find your beach’ is a call to action for consumers,” Sabia says. “It says to consumers, ‘Your beach is different than my beach, however, Corona is the brand that can get you to your place. Whether it’s literal or a state-of-mind, Corona’s the brand to help you find your beach.’”
Crown Imports continued this theme with its “Commuters” advertisement that featured an urban rush- hour setting transitioning onto the beach through an after-work gathering of friends around Corona. In October, the company debuted the “Snow Sand” advertisement that blurs the lines between beach and snowy mountainside.
Corona’s “Find your beach” campaign, which also includes a Facebook page and mobile elements, has been successful in driving new consumer purchase occasions, Sabia says. The company has aligned its sales and marketing strategies to better leverage the brand at retail. Marketing also collaborated with sales to solve a particular seasonal issue.
“We do a great job [with] Cinco de Mayo,” Jacobson says. “The wholesalers and distributors are on top of what’s going on and they get activity out there. A combination of our chain team and the distributors’ chain teams get activity in key retailers and we do a great job. Then when Cinco de Mayo’s over, it became someone else’s summer.”
To ensure Corona continued to sell between Memorial Day and July Fourth, the teams created the “Win the Beach” campaign. Part of the success of the program, which is in its second year, was that the TV promotions for the contest gave consumers the cue to look for a particular display at retail.
“The feedback from retailers was outstanding, ‘Wow, you guys get it. You guys understand what I’m looking to get done,’” Jacobson says. “Now all of a sudden, we’re not only coordinated between sales and marketing, but we’re coordinated between Crown Imports and the retailers, and that was the objective.”
In January, Corona’s evolution will continue with the introduction of new secondary packaging designs for Corona Extra and Corona Light. Described as an “evolutionary change” by the executives, the main logo and graphics remain the same on the new packages that now feature callouts of the primary packaging — either glass bottles or cans — contained within the package. The packages also more strongly identify the Corona brands through color. Corona Extra features blue coloring and Corona Light has yellow highlights.
Portfolio of opportunity
The company also has aligned to promote its portfolio beyond the Corona brands, which together make up three-quarters of Crown Imports’ volume.
“When I talk to any new hire group, I say that I would believe that Corona is the brand that brought you here,” Jacobson says. “Then after you spent some time here, you realize the strength of this portfolio is so much deeper than that, and that the general consumer doesn’t understand. You’ll see brands like Tsingtao, Modelo Especial, Negro Modelo or Pacifico and you’ll say, ‘Wow, there’s so much potential for these in our portfolio.’ These secondary brands have so much upside that it really is engaging to our distributor network.”
As the business begins to connect consumers with more of its brands, Crown Imports is seeing an effect on sales, Hackett says.
“As you look at the overall mix of the business, the mix of Corona is continuing to decline as the overall business grows because the growth is being driven by other members of the portfolio as they start to realize their opportunity,” he says.
Modelo Especial is the fastest-growing brand in the company’s portfolio, according to the company. To continue its growth, the marketing goal is to increase awareness of the brand thereby driving more households to purchase Modelo Especial, Sabia says. The brand is on track to sell 34 million cases this year and ranks as the No. 3-selling import brand.
This year, the company ran its first general market TV advertisement for Modelo Especial featuring international soccer star Clint Dempsey. The advertisement was the first outreach beyond the Hispanic demographic, who make up 80 percent of Modelo Especial’s sales. Hackett notes that introducing new consumers to Modelo Especial remains a goal for the company.
“Our challenge and our opportunity, really, is to build on that and continue to expand the awareness of the brand, a lot of which is coming through the draft beer that we recently introduced,” Hackett says. “[Draft beer] gives us a great platform to go and talk to general market consumers.”
Draft beer is seen as one of the company’s biggest opportunities overall, Hackett says. He attributes some of the popularity of draft selection in on-premise locations to the growing craft beer movement, which often targets draft as its point of entry.
“Clearly, the craft beer phenomenon has been a driver of draft selection, affinity and for consumers to have the ability to sample different beers,” he says. “It’s been an area that we felt we absolutely had to play in and Grupo Modelo has supported us with their investment in this package.”
Within on-premise accounts, the company’s Corona Extra and Corona Light bottles are popular, but Jacobson says the company’s research indicated that many consumers prefer not to drink packaged beer in on-premise locations. Instead, on-premise consumers often make beverage choices based on what’s on tap.
“We weren’t even in that brand set,” he says. “So now, not only are we in that brand set, we have brands that are interesting and maybe even unknown to [consumers]. That creates an opportunity for them to create an affinity for that brand through draft. We’re excited about what Negra Modelo, Modelo Especial, Pacifico and Victoria can do for us on draft and for that business across the board.”
Negra Modelo was the company’s first brand available on draft, and Crown Imports has since expanded availability with Pacifico and Victoria brands.
The company promoted the availability of Pacifico on draft during the U.S. Open of Surfing, which was July 30 through Aug. 7 in Huntington Beach, Calif. Draft serves as a catalyst for consumer discovery of Pacifico, which is successful in California and along the West Coast. Crown Imports is expanding markets for Pacifico and getting good traction, Jacobson says.
“What we’re finding with [Pacifico] is a high level of velocity, meaning with that tap, how much beer is going through it?” he explains. “It’s becoming one of our highest velocity brands per tap that we have, that’s why we’re so encouraged by taking it to new places.”
Draft also is providing an opportunity to introduce new consumers to Victoria, which is the oldest and second best-selling beer brand in Mexico, Sabia says. Due to its popularity in Mexico, Victoria, an amber beer that Hackett describes as having a complex front-end with a clean finish, is already popular with Hispanic consumers of Mexican descent.
Crown Imports sees a lot of potential for Victoria, which made its U.S. debut in Chicago in June 2010, but the introduction has been a challenge as demand for the brand exceeds the company’s strategy.
“When we rolled out Victoria, one of the hardest things that we had to do was keep the package in the right places because we have retailers, distributors and consumers wanting it everywhere,” Jacobson says.
The company has measured plans for Victoria’s rollout; since its mid-2010 launch, it’s still only available in 12 states. Even with limited availability, the brand is already the No. 20 imported beer brand in the United States, according to SymphonyIRI data cited by Sabia.
“[Victoria is] just a jewel that we are excited about, but we’re also realistic in our approach,” Hackett says. “It’s not about driving overwhelming volume year in and year out. We know that this is a brand that can be built for the long-term so that’s the approach that we’re taking and that’s why we haven’t gone across the country. It’s building the business and affirming that business in each market as we roll out, and that takes resources and we are going to move relatively slowly in terms of expansion of the product.”
In addition to the Grupo Modelo brands, Crown Imports also represents European brand St. Pauli Girl and Chinese beer Tsingtao.
“More important than the business they drive, it’s an important message that Crown Imports has a diversified portfolio and desires to be a representative of a range of products, not just one group from one country of origin,” Hackett explains.
St. Pauli Girl has featured model Jennifer England as the personified ambassador of the brand, which provides the European import with a point of differentiation, Hackett says. England represents the brand at events and recently was featured on the cover of the September/October issue of Beer Magazine. Although the non-alcohol offering of St. Pauli Girl has particular traction on-premise, the brand struggled in the last few years as demand for European beers overall has waned, Hackett says.
“We are evaluating how we can support this business and continue to create a niche for St. Pauli Girl,” he says. “It continues to be very good beer. It’s authentic. It is a classic European style and one that we certainly have an affinity for.”
In September, Crown Imports subsidiary Monarch Import Co. extended its agreement with Tsingtao International to be the exclusive importer of Tsingtao in the U.S. market as well as Bermuda and the U.S. Virgin Islands. Already popular in Chinese food restaurants, the company sees opportunity to expand the Tsingtao brand as a complement to all Asian food styles, Hackett explains. In addition, Sabia says the company’s plans continue to ensure Tsingtao’s availability at hotels and locations that cater to Chinese tourists and traveling businesspeople.
Partnering for possibilities
In addition to increasing consumer connections, Crown Imports has seen its new strategies create payoffs within its relationships with its partners, including Grupo Modelo and its wholesalers.
Hackett says the relationship with Grupo Modelo has strengthened through the years as the U.S. market has grown from importing 1 million cases of Grupo Modelo brands to 160 million cases.
“Grupo Modelo has come so far in their understanding of the U.S. market and their requirements of the U.S.,” Hackett says. “They have worked with us, especially over the last three to five years, in helping us access opportunity with new packages and new brands, which are not easy for them to do. Their whole market is dramatically different and has far fewer SKUs and they scratch their heads every time we come to them with, ‘Well, now we need an 18-pack and a 24-pack, etc.’ They understand our challenge and our business and they have responded, and that’s really helped us through the challenging times. They’ve been a terrific partner for us.”
Last year, Grupo Modelo inaugurated its eighth brewery in Piedras Negras, Mexico. The new plant is located 10 miles from the western Texas border and was built primarily to supply brands for U.S. distribution, Hackett says.
Crown Imports also has found that its targeted strategies are presenting advantages for its wholesaler network.
“[Our wholesaler relationships] are as strong as they’ve ever been because we’ve engaged them and they’re a critical part of the mix,” Hackett says. “They are a critical part of who we are and what we do. We are absolutely interdependent — they are not going to be successful without us and we are not going to be successful without them. It’s clear that we both recognize that and we admit it, and therefore we work together to achieve win-win situations, and it’s working for us.”
With its partner relationships strong, Crown Imports plans to maintain its strategic plans for U.S. growth.
“We are planning on growing both volume and bottom line even as the environment is very challenging,” Hackett says. “Our expectation is that we’re going to do that with a very limited plan of package expansion. In fact, it’s really going to be Corona Familiar rolling that out nationally. … There’s opportunity gaps that we have across the market, each package and each channel. That’s really what we’re doing is affirming where we have opportunities or identifying them and then filling those gaps.” BI