Tuesday, October 20, 2009

Beer's glory days fade

Lack of marketing imagination at home is one reason why Femsa, the company that makes Dos Equis, has been overtaken south of the border by archrival Grupo Modelo SAB, maker of Corona beer. But some industry watchers also say Femsa—whose formal name is Fomento Economico Mexicano SAB—has lost its love for the beer business, with its convenience stores and Coca-Cola bottling business moving front and center.

There are tiendas, convenience stores, everywhere in the Mexico I've seen: Ajijic, Melaque and Guadalajara, in Jalisco state; Zihuatanejo, Troncones and Taxco in Guerrero state; Oaxaca City and Puerto Escondido in Oaxaca state.

In the past two decades, Femsa—which makes Sol, Tecate, Indio, and Bohemia as well as Dos Equis—has seen its share of Mexico's beer market fall to 43% from a once-dominant 55%. Modelo overall has a 57% share, with its Corona brand accounting for 31% on its own.

This caught my eye in this story: Femsa has 43% market share, Modelo 57% market share; that adds up to 100% of the market.

Femsa is one of Mexico's storied companies. The city of Monterrey grew up around Femsa's predecessor company, Cerveceria Cuauhtémoc, founded in 1890. Most of Monterrey's modern companies are offshoots of Femsa, whose name translates as "Mexican Economic Development Inc." —a name that hints at the company founders' ambitions and purpose.

Femsa has been partners with Coca-Cola Co. since 1993. That relationship was strengthened in 2003, when Femsa acquired Panamerican Beverages Inc., in the process becoming Coke's second largest bottler world-wide, and the largest soft drink company in Latin America.

Soda in Mexico is far sweeter than in the US.

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