This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

What U.S. Brewers Could Learn From Mexican Beer

PORTLAND, Ore. (TheStreet) -- Before the World Cup kicked off earlier this month, U.S. team captain Clint Dempsey lent his image to just two beer ads -- produced by Anheuser-Busch InBev  (BUD), one was for U.S. Soccer and World Cup sponsor Budweiser and another for Mexican brand Modelo Especial.

Guess which one is seeing sales explode in the U.S.? We'll give you a hint:

Budweiser has lost about 30% of its sales since the earliest days of the economic downturn in 2007. It has slipped to the No. 3 beer brand in the U.S. with less than 8% of the overall beer market and fewer than 17 million barrels of production. That's massive when compared to the roughly 3 million barrels produced by a small brewer like D.G. Yuengling & Sons, but disappointing compared to the 50 million barrels and 25% market share Budweiser boasted in 1988. Modelo Especial, meanwhile, poured only roughly 3.6 million barrels worth of its beer into the U.S. last year, but that's a 64% increase from 2010 and includes double-digit percentage point increases for every year since.

It's far from alone, either. Stablemate Corona Extra has seen its U.S. production rise slowly but steadily from 7.17 million barrels in 2010 to 7.26 million last year. That's more beer than Yuengling and Samuel Adams producer Boston Beer Company  (SAM) sell in a year combined and is just shy of Heineken's entire U.S. portfolio, which includes Mexican brands Dos Equis, Bohemia, Sol and Tecate. Throw in 435,500 barrels of Pacifico -- which is equivalent to a craft brewer roughly the size of Bend, Ore.-based Deschutes Brewing and Petaluma, Calif.-based Lagunitas combined -- and that makes parent company/importer Constellation Brands the third-largest player in the U.S. beer market. Only A-B InBev and SABMiller/MolsonCoors  (TAP - Get Report) joint venture MillerCoors produce more, though each of those two has seen U.S. sales -- and sales of their light lagers in particular -- fall steadily since the recession.

That success helped push A-B InBev to purchase Grupo Modelo for $20.1 billion last year, but it also prodded the Justice Department into preventing it from importing those products to the U.S. and distributing them here. That task fell to Constellation Brands, which took over a new Modelo brewery near the U.S. border and rode its newfound riches to a nearly $2.3 billion spike in sales.

So what's the takeaway here? Every brewer in the U.S. has something to learn from their large, lager-brewing Mexican counterparts. As we mentioned about a week ago, lager is still a dominant style here and Mexican brewers have managed to expand its popularity while sales of every U.S. lager short of Coors Light and Pabst Blue Ribbon tank. Even craft beer has embraced lager to an extent, but not with nearly as much fervor as the Mexican brewers.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
BUD $121.91 -1.33%
TAP $74.45 -0.37%
STZ $116.21 -0.62%
AAPL $124.43 -1.54%
FB $82.22 -1.18%


DOW 17,776.12 -200.19 -1.11%
S&P 500 2,067.89 -18.35 -0.88%
NASDAQ 4,900.8850 -46.5560 -0.94%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs