AB InBev bets on Mexican heritage in the US

May 5, 2016
6 min read

Anheuser-Busch InBev (ABI) has introduced a new player into the competitive Mexican beer segment in the US. The brewer rolled out Estrella Jalisco in 10 states in April 2016, with the 4.5% ABV beer described as a refreshing, light-flavored pilsner from Guadalajara.

Estrella Jalisco is one of Mexico’s leading beer brands, and ABI hopes to “reunite” Mexican consumers in the US with a brand that is “a symbol of pride” in their home country. The brand’s red, blue and yellow label is a “nod to the flag of Jalisco,” while the crest on packaging is inspired by the coat of arms of Guadalajara, where it is brewed. ABI is hoping that the brand will have particular appeal among second and third-generation Hispanic Millennials, who the company claims are looking for beers that put them “in touch with their roots.”

ABI is, however, joining a crowded market, with Mexican beer imports enjoying impressive growth in the US. While overall sales in the country’s beer market have recorded little change in recent years, MULO sales of imported beer grew by 7% in 2015, driven by Mexican brands. Constellation Brands currently dominates this segment, having acquired the license to export and market Modelo’s Mexican beers in the US from ABI in 2013. The company’s Corona brand recorded sales of $861.5 million in 2014-15, up 8% in the year; while Modelo has become the third largest imported beer in the US, with sales up 23% to $375 million. ABI, by comparison, has seen its beer sales stagnate, with market share declining 1.3% in 2014-15.

Hispanics offer lucrative audience for beer brands

An increasingly diverse population is clearly having an impact on beer sales in the US. Led by the Hispanic uptake of Mexican beers, volume share of imported beer rose from 13% to an estimated 15.5% of the US retail market 2010-15, according to Mintel research.

Hispanics accounted for 18% of the total US population in 2014, with this figure expected to increase to 19% by 2019, representing 62.4 million consumers, according to the last US census. This demographic is particularly appealing to beer brands as Hispanics over index in their consumption of the alcoholic beverage, with half consuming beer, compared to two in five consumer overall. However, Hispanics are not a homogenous group, and the recent growth of Mexican imports highlights the particular importance of consumers with links to the country.

ABI is clearly re-treading a well-worn strategy for Mexican import brands – targeting Hispanics initially, and then broadening focus out to the rest of the population once it becomes more established. The company already has two Mexican beer brands in the US, but has largely been on the outside looking in as Constellation’s Corona and Modelo, and Heineken’s Dos Equis have driven growth in the import segment. ABI is hoping that Estrella Jalisco’s strong position in Mexico will allow it to succeed where its existing brands have failed.

Modelo Especial Imported Beer: The premium product from Mexico is said to be made to a long-lasting tradition.
Corona Light Beer: The brand has been repackaged in a newly designed pack containing 12 x 12-fl. oz. slim cans.
Dos Equis Special Lager: This product is said to offer just the right balance of flavor and refreshment.









Estrella Jalisco focuses on heritage, but experimentation could also appeal

ABI has launched Estrella Jalisco with a focus on tradition and heritage as it looks to find an audience among Hispanic consumers, who it believes will recognize and be familiar with the brand. Estrella Jalisco is one of the most popular beer brands in Mexico, with ABI claiming that the US launch will bring more than 100 years of Mexican brewing tradition to America.

Jorge Inda Meza, ABI’s West Region Marketing Director, suggested that the brand will invoke “special memories” for consumers who “grew up seeing this beer.” Promotional campaigns will directly appeal to Mexican pride and authenticity, designed to bring Mexican traditions to life and celebrate the customs of the Jalisco region.

This approach has been enhanced after ABI adopted a similar tactic with another beer from the Grupo Modelo portfolio, Montejo. The product was launched adopting a similar “authentically Mexican” positioning. However, the brand’s regional status in Mexico limited this message in the US, encouraging ABI to introduce a more recognizable player to the country.

Younger Hispanics consider it just as important to retain links to their culture and heritage as older generations

Younger Hispanics consider it just as important to retain links to their culture and heritage as older generations, as Mintel’s Hispanic Millennials US 2015 report makes clear. The need to maintain culture and heritage is strong among unacculturated, bicultural and acculturated Hispanic Millennials, indicating that ABI’s focus on tradition will have appeal among both first- and second-generation consumers.

However, ABI might also consider introducing more experimental brews. Hispanic drinkers are more likely than non-Hispanic drinkers to express interest in paying more for innovation, from brews with local ingredients and limited edition flavors, to juice, tea and soft drink blends, and beer with higher alcohol content.

This suggests a potentially lucrative demographic who can be encouraged to trade up through product development. So far, few imported Mexican brands have attempted to tap into this demand, suggesting white space for brands to move into, though Dos Equis did launch an ale in 2014 that claimed to combine two traditional Mexican favorites: margarita and beer.

Beer consumption, by Hispanic origin, US, October 2015

What we think

  • Hispanics are an appealing target for the US beer category as they are more likely than any other American ethnic group to drink beer and are projected to enjoy strong population growth over the next few decades.
  • ABI is hoping that Estrella Jalisco’s focus on tradition and heritage will allow it to tap into the impressive growth recorded by Mexican beer imports in the US during recent years. The brewer hopes that the brand’s strong national profile in Mexico will help it succeed where Montejo has largely failed.
  • Most Mexican beer imports have focused on the same ideas of authenticity and heritage, despite Hispanic consumers over-indexing in their interest in innovative flavours and concepts in the category. This suggests opportunities for innovative brands to invest in product development to reach this demographic.

Jonny Forsyth, Global Drinks Analyst, is responsible for researching and writing all of Mintel’s UK drinks reports. He brings ten years of experience working in the marketing industry, with roles at Starcom Mediavest, AB-Inbev, and Trinity Mirror. He is a regular contributor in global and national media outlets such as BBC, CNBC and Bloomberg.

Jonny Forsyth
Jonny Forsyth

Jonny Forsyth is Associate Director, Mintel Food & Drink, monitoring and engaging with latest innovations and market developments in all alcohol and coffee categories.

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