Whoa! The Best Beer Importer Sells You the Worst Beer

Constellation Brands’ Mexican beer portfolio is on a tear.

Apr 25, 2014 at 6:05PM

The Mexican beer portfolio of Constellation Brands (NYSE:STZ) and the American beer portfolio of Boston Beer (NYSE:SAM) are both seeing rapid growth due to expansion of their popular product lines and their clever marketing campaigns. However, Constellation Brands seems to have a leg up in regard to convincing you to sip its brews.

G
Source:  Wikimedia Commons

Constellation's results point north
On April 9, Constellation Brands reported its fiscal fourth-quarter results. Its beer segment saw its sales pop 13%. Rob Sands, CEO of Constellation Brands, credited the gains to strong consumer demand, competent wholesalers who were able to handle the uptick in volume, and "creative, new marketing and advertising programs."

Modelo Especial, said Sands, is the fastest-growing major beer brand. Constellation Brands is so confident that its beer sales will expand even further that it is investing between $900 million and $1.1 billion into its Nava, Mexico brewery expansion.

Corona domination
On the conference call, Sands pointed out that Corona Extra is the best-selling imported beer in the United States. It is now selling at the rate of 100 million cases per year. No other import can even come close to touching that and the number two sells about half of that.

It's now the fifth best-selling beer overall. Sands credits Corona's success to "designed marketing campaigns and leveraging its brand equity." Apparently its "Find Your Beach" campaign, which screams "refreshing," is working.

G

Source: Wikimedia Commons

Compare that to the results from the largest craft brewer, Boston Beer. Last year, Boston Beer's portfolio of Sam Adams beers sold 3.4 million barrels for a 24% increase from the 2012 figure. At around 13.6 cases per barrel, Boston Beer sold around 46 million cases last year. This means that its more than 50 brand extensions didn't even equal half of the volume of just Corona Extra alone.

Meanwhile, Corona Light is now the best-selling imported light beer at 13.5 million cases. Corona Light dollars now make up 50% of imported light beer dollars. Sands once again pointed out that this resulted from "creative advertising that is driving consumers to trade up from domestic lights."

Light not just on calories
What's really baffling about these numbers is the fact that Corona, and much more so Corona Light, consistently fail in beer taste tests. For example, Consumer Reports taste-tested and ranked a number of beers and it referred to Corona Light as "a bitter brew with traces of tinny and sulfury off-notes was the worst."

I report on this as a both a big Corona light fan and a Sam Adams fan. Maybe I drink Corona Light for the same reason I light coconut candles: It mentally takes me away to the beach.

Nothing looks more refreshing than that clear bottle which shows a bright green lime floating in liquid gold bubbles. The marketing is just genius. I know deep down that the flavor is mostly in the lime itself. Not only do Corona and Corona Light typically fail taste tests, they tend to be much more expensive than similarly popular domestic beers Budweiser and Coors Light.

Meanwhile, Boston Beer's Sam Adams consistently ranks high in taste tests. Once again it is not surprising to me. You could pour me a Sam Adams into any mug. However, for some reason if you pour a Corona out of its bottle it seems to lose some of its magic. Keep it in there.

Get ready for another hot summer
Boston Beer has been kicking up its advertising spend. Last year it shelled out around $221 million on advertising, promotional, and selling expenses, up 26% from 2012. For the fourth quarter alone, this category was up 39%. Boston Beer plans an additional increase of between $34 million-$42 million for 2014, or 15%-19%.

Constellation Brands will be busy with taking you to the beach all summer with its "120 Days of Summer" Corona campaign. Each week the company will have a different theme. Constellation Brands and Corona have a goal of "owning the summer."

Cl

Source: Constellation Brands

On this end its Corona Light will have a flood of 15-second TV spots for "high profile sports programs that position the brand as a light beer with taste." Smart move. The beer with no taste (say the tests) is continually convincing everybody that it is the brand with taste. How ironic.

Can Constellation Brands continue to lean and thrive on marketing or will Boston Beer's superior flavor eventually pull it over the top? For now they have both won my heart, and my mouth, even if for different reasons. 

Grab a beer out of your fridge, sit down on the couch, and take a look around
The war for your living room has begun.  Your cable company is scared, but you can get rich.  You know cable's going away. But do you know how to profit? There's $2.2 trillion out there to be had. Currently, cable grabs a big piece of it. That won't last. And when cable falters, three companies are poised to benefit. Click here for their names. Hint: They're not Netflix, Google, and Apple. 

 

Nickey Friedman has no position in any stocks mentioned. The Motley Fool recommends Boston Beer. The Motley Fool owns shares of Boston Beer. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers