Grupo Modelo: Corona is Mexico's best-known export.

Will Corona ever run out of fizz? In the 80 years since the founding of Grupo Modelo, the creators of this wonder beer, it has been one of Mexico's greatest success stories. By the 1950s Modelo was already on top of the domestic beer market (it currently controls 56 percent), so that by the 1980s it was ready to take on the United States--which it took by storm.

Next stop: the rest of the world.

Long before "globalization" became a household word, Corona had become a "global brand," rubbing shoulders with the likes of Coca Cola, McDonalds and Kodak. It is now the fourth most popular beer in the world, sold in 150 countries across five continents.

But the United States remains Grupo Modelo's prime export market, where eight years ago Corona elbowed Heineken out of its top spot as the biggest imported beer, a position it had prized ever since Prohibition.

Last year, Mexico's best-known export sold an estimated 97 million cases in the United States--about 50 percent more than Heineken.

While other brewers have expanded internationally through acquisitions, Modelo's success stems from peddling its own beer in new markets.

Shipments from its seven Mexican breweries grew by over 7 percent in 2004, and now account for over 28 percent of overall sales. 2004 sales climbed by 5 percent to over US$4 billion, boosted by exports which rose by 11.9 percent. This led to a 15-percent increase in operating profits to almost US$1.2 billion--well over double some analysts' forecasts.

If, as Heineken has done, Modelo sets up its own U.S. office and cuts out the middleman fees, margins may be set to rise further still.

Modelo wants to terminate its contract with one of its two U.S. importers, Gambrinus--which imports around 13 percent of Modelo's total volume, and over half of its U.S. exports, mostly to Texas and the east coast. However, analysts estimate it could cost the company up to US$260 million to put an end to the agreement.

Expanding Hispanic Market

Another challenge is to replicate Corona's success with some of its other brands.

The 40-million strong Hispanic market in the United States is there for the picking, and it just happens to be the fastest-growing segment of the population; they also drink more beer per capita than any other racial or ethnic group.

Modelo Especial, its No. 2 beer--the seventh best selling import beer in the United States--is priced similarly to U.S. domestic labels, and is especially popular among Mexican immigrants.

However, Mexicans aren't quite so keen on Corona Light, the low-calorie version of Corona Extra. Despite being Modelo's fastest-growing beer in the United States, it isn't even for sale in Mexico, although it is the 14th biggest import beer in the United States--and counting.

One shrewd move was to sell 50.2 percent of the company to Anheuser-Busch, the biggest brewer in the world and maker of Budweiser and Bud Light, also the two most widely selling beers in the world. This gives Modelo the exclusive right to import and distribute Anheuser-Busch beer in Mexico.

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And its decision not to cut prices has done nothing to dent sales. Because of heavy import duties and transport costs, a bottle of Corona abroad costs roughly double what it costs in Mexico, and about 50 percent more than local beers abroad.

Modelo's success abroad has much to do with its marketing and publicity.

The Corona brand is now the envy of advertisers, many of whom have tried to replicate its extremely successful good life image, associated with beaches, sun and fun. Furthermore, the gimmick of putting lime in beer was unheard of, even frowned upon, before Modelo dreamed it up. But it sure caught on.