Beer in Mexico

International Competitiveness

Universidad Iberoamericana

SECTOR: Beer in Mexico

Jorge Taylor

Sebastian Velazquez

Index

Introduction: Purpose of the investigation…………………………………………..3

History: Grupo Modelo and Cuauhtemoc Moctezuma…………………………..4

Location……………………………………………………………………………………………….5

How much is this industry worth???...................................................................6

Creation of jobs……………………………………………………………………………………8

Competitive strategies…………………………………………………………………………8

Inputs………………………………………………………………………………………………….9

Conclution………………………………………………………………………………………….11

Bibliography………………………………………………………………………………………12

Introduction: Purpose of the investigation

The main purpose of this investigation is to learn about the alcoholic beverage sector in Mexico, specifically about beer, being the most important and sold across the country. The two main beer breweries in Mexico are internationally known and are leaders in the global market. This represents a huge income to the country as well as job creation for many Mexicans.

In Mexico, most of the beer is produced by two large conglomerates, the first one is Cervecería Modelo/Grupo Modelo and the other one is Cervecería Cuauhtémoc-Moctezuma/FEMSA. These two companies control almost 90% of the total beer market in the country. This industry is one of the most prevalent in the country, with over 63% of the population buying one brand or another. Beer is also a major export for the country, with most going to the United States, but it is available in over 150 countries in the world.

Just after the war for independence in Mexico ended, breweries started to pop up in Mexico because people realized it was a good way to earn some money, up to the point that in 1918 there were almost 40 different breweries across the country. After some years, most of them disappeared or became very small and couldn’t compete with the two big ones that we know in the present.

In this investigation we will describe everything related to the beer sector in Mexico and the impact it has both nationally and internationally, as well as explaining the impact it has in different economic, logistic and strategic sectors of global competitiveness.

History: Grupo Modelo and Cuauhtemoc Moctezuma

In 1925, Grupo Modelo was launched in Mexico City with only two beers: Corona and Negra Modelo. In just 3 years the company had recorded an amazing 8 million bottles sold in the country. By 1933, Grupo Modelo decided to expand its horizons and that is when they first exported their products to the United States. In the next 20 years, Grupo Modelo bought out about 10 different micro breweries to make them part of their big company and expand their line of products and their distribution systems. The first canned beer was introduced by Grupo Modelo in 1966. By 1985, the brand Corona was known all around the world because there were exports to Japan, Australia, New Zealand and some of the most important countries in Europe, besides the United States which got the product years earlier. Around that same year, Corona it ranked the second best beer in the US and also the one with the most imports in the country. About 5 or 6 years later, Corona was being exported to almost every beer-consuming country in the world, and by 1994, Grupo Modelo managed to go public in the stock market. Nowadays, Corona is the biggest and most recognized beer brand worldwide. Also, Mexico proudly owns the most modern brewery in the whole world, located in Coahuila.

Cuauhtémoc Moctezuma Brewery Group is the most traditional in Mexico: it operates six plants spread out across the country and has around 18,000 employees. This company was founded in 1890 and has kept growing ever since.

This brewery owns the most varied portfolio of beer in the country. Together with Heineken, the brewer with greater presence in the world, Cuauhtémoc Moctezuma forms one of the largest groups in its industry in terms of volume and profitability. In 2010, Cuauhtémoc Moctezuma strategically joined Heineken, making Mexico the largest market globally in terms of volume for the Dutch company.

Location

The next map shows where the breweries and factories of both these companies are located across the country as well as the ones that are currently under construction or in plans of being started soon.

As we can see, both companies are currently building a new brewery just next to the border to the United States, because of the very lucrative market that the country offers.

A 2005 report from the national beer industry claims that the average annual consumption of beer in Mexico is 50 liters per adult, a figure that has not changed significantly in the last 20 years. The equivalent figure in Germany is 123 liters a person, so there is still considerable potential for growth. Mexico’s breweries provide about 80,000 jobs directly and a further 800,000 indirectly.

How much is this industry worth???

Total beer sales each year in Mexico are worth 6 billion dollars, equivalent to 1.6% of the GDP. The value of sales has risen a lot lately, at about 5% a year, this is mainly because of the increase in exports. Mexico has become the world’s second largest beer exporter, after the Netherlands.

The USA is by far the main export market for Mexican beer. Five of the 25 most popular brands in the USA are Grupo Modelo beers: Corona, Modelo Especial, Corona Light, Pacífico and Negra Modelo. This has helped Grupo Modelo become the world’s sixth largest brewer. Modelo’s Corona beer became the #1 imported beer in the USA in 1997. One of Modelo’s fastest growing export markets is China, where it has rapidly become the second most popular imported beer.

Beer market value in Mexico rose by 5.4% in 2009. It was expected to rise by 8% in 2010 and then by between 6% and 7.5% annually up to 2014, which should

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