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 Entertainment | May 2005 
Hot Mexican Beers Mean Cool Millions
 Lynn Brezosky - Associated Press
| | Shaun Flower, 38, left, Raymond Culley, 35, center, and Josh Suttles, 21, drink Corona, a Mexican beer and eat boiled shrimp at Wahoo Saloon in South Padre Island on Tuesday. The friends, who are from the U.K., enjoy the taste of Corona and feel it is trendy to drink it. (Photo: AP) |
South Padre Island - Few Americans can tell you about the 1862 battle commemorated today on Cinco de Mayo, the Mexican holiday. But they'll probably have no problem thinking of a Mexican beer to help their southern neighbors celebrate with.
Whether the blockbuster Corona or emerging brands like Dos Equis, Tecate or Modelo, it's a familiarity that hasn't been lost on economists.
While the jury's still out on the overall effects of relaxing tariffs under 1994 North American Free Trade Agreement, Mexican beer has clearly been a winner.
Grupo Modelo's Corona ranks seventh in U.S. beer shipments, long outranking Heineken as America's top imported beer. And Modelo has been increasing its exports to the United States at a rate of 30 percent a year. Fomento Economico Mexicano SA, Mexico's other main beer company, is gaining market share with brands including Dos Equis, Tecate and Bohemia.
During the past decade, yearly U.S. malt beverage imports from Mexico rose from $36 million to $162 million. Beer and tequila make up 22 percent of Mexico's $1.5 billion in food exports to the United States, and the breweries now employ 88,000 people in 11 Mexican states.
Analysts attribute the success to strategic pre-NAFTA alliances with U.S. beer giants and marketing that seems to promise a Mexican beach in each lime-enhanced sip.
"Like everything, it started out with lack of availability; that right there gives it cachet," said Juli Niemann of RT Jones Capital Management in St. Louis. "When you get better availability, then it becomes largely a marketing thing. Corona — who do you have marketing it? Jimmy Buffett."
Considered a working-class beer in Mexico, Corona for Americans and other foreigners was something largely experienced on vacation. Like leading American brews, it is pale and served cold, a summertime beer.
In anticipation of the beers entering the U.S. market without import taxes, Budweiser maker Anheuser Busch Cos. in 1993 invested heavily in Grupo Modelo, essentially buying into the competition.
That not only gave Modelo access to Anheuser Busch's U.S. marketing and distribution know-how, but also to huge infusions of capital, said Marc Scheinman, a professor of international marketing at Pace University.
Fomento Economico Mexicano developed a similar agreement with Belgium's Interbrew, but last year announced it would instead align itself with Dutch Brewer Heineken.
Meanwhile, the wave of immigration from the south and the population growth of Hispanics in the U.S. has made for a growing awareness of all things Latino. The timing has been right for South of the Border beers to take off, Scheinman said.
"Latin beer is hot," he said. "Tequila is hot, beer is hot."
Fariborz Ghadar, director of the center for global business studies at Pennsylvania State University, agreed.
"Mexican beers started by being a niche player, but have really begun to grow and become a pretty dominant position in the marketplace," he said. "What you're going to see in the United States is really sort of a shift ... to be more conscious of what is Spanish and what is Mexican."
As they enjoyed some Dos Equis at a South Padre Island bar, Le May, 42, and Belinda Morgan of San Antonio, 34, said they liked the taste, and the vacation-time feeling, the beer delivered.
"If you'd knocked me on the head, I'd wake up and think I was in Mexico," Morgan said. |
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