Beer, Wine & Spirits

Modelo Especial beer: The next Corona?

Source: Crown Imports

At a time when the trend in the overall beer industry remains flat, Crown Imports' cup is foaming over.

Its flagship brand, Corona Extra, already the No. 1 imported beer in the U.S., is coming off one of its best summers ever with the Corona Extra and Corona Light brands posting growth in the 4 to 5 percent range.

While Corona gets most of the attention, the sleeper in the Crown portfolio continues to be Modelo Especial. The secret may soon be out though, with the brand posting growth of 17 percent in the second quarter.

"This brand has been growing year after year for many years," said Jim Sabia, chief marketing officer at Crown Imports. "One of the strengths of Modelo Especial is that it is not an overnight success. There are still so many opportunities for this brand."

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The brand will extend its reach a little further with the release of Modelo Especial Chelada, a blend of Modelo Especial beer mixed with tomato, salt and lime. The drink will hit select markets this week before a national roll out next year.

"It's an authentic way they use beer with other ingredients in Mexico," said Sabia. "This is a very traditional Mexican drink that they have enjoyed for many, many years."

Modelo Especial Chelada will seek to expand a brand that despite posting gains for 19-straight years in the U.S. still has plenty of room to grow due to low consumer awareness and limited distribution. According to a 2012 survey, 54 percent of general market beer drinkers ages 21-34 were unaware of the Modelo Especial brand and 77 percent have never tried it.

Drinking in the Great American Beer Festival
Drinking in the Great American Beer Festival

When it comes to a critical target consumer for the brand, U.S. Hispanics, 48 percent of beer drinkers aged 21-34 were unaware of Modelo Especial and 73 percent had never sampled it.

It's this type of upside that recently led Bob Ryder, the CFO of Crown's parent company Constellation Brands, to characterize Modelo Especial on the company's earnings call as "the next Corona."

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Part of the strategy in getting Modelo Especial on the same level as Corona will come through increased distribution. Corona, which was the only imported beer to hit the mark of 100 million cases sold in 2012, is fully distributed across the United States. Modelo Especial, which sold 43 million cases in 2012, has 30 percent to 40 percent less distribution than Corona.

Crown's Sabia said the goal is to grow Modelo Especial to more than 100 million cases. The key to getting it to that level is building on the brand's already strong customer base.

"The core Modelo Especial drinker today in the States is the Hispanic consumer from Mexico," Sabia said. "But as we grow the brand, the number one objective is to increase the awareness and trial with other Latinos and other Hispanics not from Mexico. That's the next evolution, the next stage of growth we are targeting."

—By CNBC's Tom Rotunno. Follow him on Twitter @TomRotunno.