Executive Summary
Cerveceria Modelo S.A. was formed in 1992 focusing on Mexico City’s and surrounding areas’ markets. Its first beer was Modelo followed by Corona. It then started exporting its beers to the US. Corona has become very popular and was positioned as premium import. It got the first rank in imported beer in the US. However, its rivals, domestically and internationally, didn’t let it pass so easily. They reacted quite intensely. Modelo lost the first place position in its local market to FEMSA but it still kept its place in the US market. Its rivals never stop reacting that’s when Modelo’s facing tough times. This report provides analysis, evaluation, and recommendation for Modelo.
Industry competitive environment It is
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As the markets grow, it is harder for Modelo to pursue with the single location brewery strategy because as it is expanding this means higher transportation expense and tax burden.
As for its competitors, Heineken and FEMSA they use a more Global Strategy – not only the production but also marketing and advertising as well are done in one single manner. As a result, both companies are less responsive to local needs.
PROBLEM STATEMENT
“How can Grupo Modelo sustain its success both in the domestic market (Mexico) and international market against the potential merger and acquisitions of big players?”
Challenges
Domestic: how to become a lead player in the beer industry in Mexico?
International: how to expand and survive globally?
Firm: how to compete when other major players are heading to consolidation?
Challenges that should be tackled first are international expansion strategy and consolidation strategy. Recommendations
Domestic: increase in domestic sales by 20% in 5 years by building strong distribution channels.
Since FEMSA has partnered up with Coca-Cola, even if it’s internationally, Modelo should try the same strategy but locally. In return, Modelo should gain access to greater distribution channels. That means low cost in logistic but more effective distributions. However, there is a possibility of negative cooperation.
Since FEMSA has bought OXXO, a famous convenient store, Modelo should try forward vertical integration with one of
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