Photo credit: www.cnbc.com
Packages of Modelo Especial beer are prominently displayed for sale in a grocery store in Los Angeles, California, highlighting the brand’s increasing visibility.
For many Hispanic consumers, like 35-year-old Rio Riojas from Lansing, Michigan, Modelo has woven itself into the fabric of social gatherings. Riojas, who works as a stand-up comedian, expresses that Modelo has become synonymous with celebrations, whether small get-togethers or larger birthday parties. “It’s definitely the choice of the people,” he remarked, adding that at events like quinceañeras, it’s common to see friends and family sharing Modelo around the table.
This affinity for Modelo among Hispanic consumers has become a crucial focus for Constellation Brands, the company behind a variety of beer labels, including Corona and PacÃfico. This connection with the Hispanic community has fueled a surge in demand, contributing to Modelo rising to become the best-selling beer in the United States.
Recent statistics reveal that Hispanic and Latino customers accounted for a significant 32.5% of Constellation Brands’ sales in 2023, according to consumer research firm Numerator and investment bank Jefferies. This figure stands in stark contrast to the group’s representation in the U.S. population, which was just 19.5% in the same year, according to government data.
The enduring loyalty of these consumers has played a pivotal role in Modelo maintaining its status as the top-selling beer by dollar share. The brand overtook Bud Light, a product of Anheuser-Busch, which has experienced challenges following its controversial marketing campaign featuring a transgender influencer.
“Hispanic consumers are the single most important consumer group for our beer business,” stated Mallika Monteiro, executive vice president and managing director for Constellation’s beer brands. “It has been the foundation of how we’ve been able to drive growth over the last 14 years.”
The ‘fighting spirit’
Constellation Brands first connected with these beers through importing them from Mexico. The company officially took ownership of Grupo Modelo’s U.S. beer business—including Modelo and Corona—from Anheuser-Busch in 2013. This acquisition provided a natural appeal among Hispanic consumers, given the brands’ Mexican heritage. According to Alexandra Aguirre-Rodriguez, an associate professor at Florida International University, Constellation’s thoughtful marketing and social responsibility initiatives have reinforced this connection over time.
Monteiro emphasized that embracing the Hispanic community is central to Constellation’s growth strategy, which includes fostering a diverse workforce and maintaining a multiyear relationship with UnidosUS, the largest civil rights organization focused on Hispanics in the U.S.
With its rights to market these brands in the U.S., Constellation has made efforts to portray them authentically as Mexican imports. Initially targeting Spanish-speaking audiences, the company has since evolved to reach English-speaking demographics. Recent campaigns spotlight significant cultural aspects, such as the role of “abuelas” or grandmothers, who are portrayed as nurturing figures within families. An ad released this year spotlighted women in California involved in the creation of low-rider cars.
The slogan “fighting spirit” resonates positively, representing Hispanic identity and ambition, according to Aguirre-Rodriguez. This branding can also appeal broadly to all immigrants who strive for a better life in the U.S. “There’s a profound emotional connection consumers form with brands,” she noted, stressing the importance of identity in purchasing decisions.
‘A good mark of the culture’
This deep-seated connection might help Constellation navigate a challenging economy characterized by consumer selectiveness, as pointed out by Jefferies analyst Kaumil Gajrawala. While economic indicators like inflation and rising interest rates typically present challenges, Gajrawala believes Constellation’s strong affinity with Hispanic consumers may allow the company to remain resilient. Loyal customers are likely to prioritize spending on Modelo or Corona, even in harder economic times.
“The business is more resilient than it may appear,” Gajrawala conveyed to clients in June.
Read more CNBC analysis on culture and the economy
While Constellation has faced some economic pressures, including a recent rise in Hispanic unemployment rates, CEO William Newlands noted these factors contributed to a dip in performance in the second quarter. Additionally, potential tariffs on imports pose another concern as the presidential election approaches. However, Tom Fullerton, a trade specialist at the University of Texas at El Paso, believes consumers are likely to continue choosing these brands but may experience price increases as a result.
The growing economic influence of Hispanic consumers has not gone unnoticed by various companies vying for their attention. A recent study indicated that if U.S. Latinos were a separate country, they would boast the fifth-largest GDP and the second-fastest-growing economy globally.
Looking forward, Constellation anticipates a rebound in Hispanic employment, which could positively influence consumer spending. Monteiro mentioned that the company is exploring new flavors that resonate with this demographic, including the Modelo Agua Fresca line inspired by traditional Mexican street drinks.
During a recent gathering hosted by Riojas’ family, tables featured Modelo cans alongside an assortment of finger foods, creating opportunities for attendees to craft Micheladas—a refreshing cocktail combining the Mexican beer with various juices and garnishes. For Riojas, bringing a box of Modelo to gatherings has become a customary gesture, and he appreciates the company’s dedication to honoring Hispanic culture. “It was awesome to see us represented,” he shared. “It’s definitely a good mark of the culture and a good representation of our ‘fighting spirit.’
Source
www.cnbc.com