In 2015, American executives at beverage giant Constellation Brands noticed something unexpected. Canned Modelo Especial is a little-known Mexican beer consumed primarily by Latinos in California but growing in popularity among hipsters in New York’s trendy East Village.
Since then, the mix of Modelo Especial drinkers has shifted from 80% Hispanic and 20% “general market” to closer to 50-50. In less than a decade, sales have more than tripled, from 51 million cases in 2013 to 187 million cases in 2022.
In June, Modelo — whose tagline is “brewed for those with a fighting spirit” — became the best-selling beer in the United States after sales plummeted after a conservative backlash against the brand’s use of transgender influencers sent sales plummeting. Bud Light was knocked off the top spot.
The rise of pilsners in golden top wide bottles reflects the growing cultural influence of Hispanic consumers in the United States, even beyond the Hispanic community, and the decades-long rise of Mexican producers, as well as the success of advertising from Activities started in 2016.
Jim Sabia, Constellation’s executive vice president of beer, said Modelo’s core consumer in the early 2010s was Mexican-Americans in California before it caught on with East Village hipsters. The company also brews Mexican beers Corona and Pacifico for the U.S. market, and once it gained a foothold it expanded its presence in the east of the country and launched a national campaign in 2016.
The brand launched its first English-language ad that year, centering on the “fighting spirit” slogan and touting Modelo as “America’s fastest-growing beer.”
One ad tells the story of a Latino veteran who must fight for U.S. citizenship while putting himself in danger, while another shows a Mexican grandmother running at lightning speed Make tortillas. Both have The Ecstasy of Gold by Ennio Morricone The Good, the Bad and the Ugly Play in the background.
“It’s not like they have a Latino campaign and a non-Latinx (one) . . . it takes courage,” said Alex Lopez Negrete, a Spanish-focused The eponymous company owner of an American advertising agency. “Latinos are so rich, no need to scream — Irish Americans do too, yeah, I get it. I got that grandma.”
Nadine Sarwat, an analyst at Bernstein, said Modelo’s rapid growth “reflects the fact that the U.S. is becoming more Hispanic due to population growth.” . . and how it permeates the culture. Modelo is on a similar trajectory to tequila, which is expected to overtake vodka as the top-selling spirit in the U.S. this year, according to beverage research group IWSR, she added.
By 2022, the country’s Latino population will grow to 19.1 percent of the population, up from 13 percent in 2000, according to the NBS. Latest U.S. Census Data.
“We now have an American Latino identity . . . that’s part of the reason Modelo is successful,” says Lopez Negrete. “I don’t know of a marketer who doesn’t have data on their desk and say, yeah, this is huge.”
A key channel for Constellation to reach the mass market is sporting events, signing a deal with Modelo in 2017 to become the beer partner of the Ultimate Fighting Championship (UFC) and an official college football playoff sponsor in 2021.
While Constellation wants to dominate “the entire market,” Sabia insists Mexico remains the centerpiece of the brand. “The core Hispanic consumer is still critical. Even our innovation strategy is based on that,” he said of the new line of beverages, adapted from traditional Mexican aguas frescas.
Modelo Especial’s success in the US is also the culmination of the decades-long rise of Mexico’s beer industry, which is now the world’s largest beer exporter with 42 million hectolitres exported in 2021, up 11.5% from the previous year. According to Cerveceros de MéxicoNational Brewers Association.
In the 1920s, beer was still a luxury for most people drinking fermented beverages like tequila, which is made from agave sap, according to historian Gabriela Recio products. In 1925, a group of Spanish immigrants opened Grupo Modelo’s first factory, which still stands at a busy intersection in an upscale west part of Mexico City.
Modelo grew steadily throughout the 20th century and surpassed its main competitors in the 1980s, just before the country’s economy opened up with the North American Free Trade Agreement (Nafta) in the 1990s.
“It went from being little known . . . (becoming) a mass consumer product to now being exported all over the world,” Recio said.
By 2000, Grupo Modelo had more than 60% market share, and Mexico’s major brewer grew in popularity in the US and attracted the attention of global giants.
In 2010, Dutch brewer Heineken bought Cervecería Cuauhtémoc Moctezuma from Femsa; in 2012, Belgium’s Anheuser-Busch InBev bought Modelo for $20 billion, the largest ever in Mexico. transaction.
In 2013, AB InBev agreed with U.S. antitrust regulators to sell the Modelo Group’s U.S. operations to Constellation for $4.75 billion — a fact that made Modelo critical of AB InBev’s brew this summer. The eclipse of Bud Light is even more dramatic.
But while Constellation has been given a boost by conservative backlash against Budd’s collaboration with trans TikTok celebrity Dylan Mulvaney, Sabia says Modelo hasn’t actually attracted much attention. Resisters, instead benefit from Bud Light’s vacant retail and promotional space.
“We’re not getting a lot of Bud Light drinkers into Modelo. They’re still in the mainstream.” Without the sparring, he added, the company expects to overtake Bard in two to three years.
According to Sarwat, the billion-dollar question is how much more Modelo can grow.
Constellation and AB InBev, which benefits from the brand’s sales outside the U.S., did not disclose Modelo’s revenue, but Modelo accounted for about 47% of Constellation’s beer volume last year, according to Sarwat. The group had beer revenue of $7.5 billion at the end of November, she added.
“Angry Bud Light drinkers (on transgender collaboration) tend to be white males in conservative, Republican-leaning states. Modelo drinkers still outrank Hispanics,” she said. However, due to Modelo’s high price and relatively low brand recognition, there is still a lot of room for growth in the mainstream market. “Over time, many Americans who drink mainstream brands will want to upgrade,” she said.
According to Constellation Brands, even after years of promotional campaigns, Modelo’s independent awareness (a measure of how many respondents say the name of the beer without prompting) this year is just 10. %.
US commentators noted the irony that a Republican-led backlash against Bud Light helped an imported Mexican beer take the No. 1 spot in the US, especially given that some Republican politicians target Mexican immigrants .
“Consumers are proud that the No. 1 beer in America now comes from Mexico,” Sabia said. “You know, these brands are positioned for everybody. Then some people might say, ‘Oh . . . is this Mexican beer? We don’t deal with that. We focus on what the consumer wants.”
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