For Corona Beer, Success Story Comes Full Circle
Michael J. Mazzoni won’t soon forget the days of “Corona-mania,” when an obscure Mexican brew became a yuppie status symbol, shattering sales records and flabbergasting an industry.
“The glass manufacturers couldn’t turn out enough bottles,” recalled Mazzoni, vice president of Barton Beers, the major U.S. importer of Corona Extra. “We couldn’t get enough rail cars and trucks to get the stuff out of Mexico.”
Corona-mania came to a crashing finale. Last year, Corona Extra sales plunged 20%, according to Barton, leading some observers to write it off as the beer industry version of the Hula Hoop, an offbeat fancy that had run its inevitable course.
“It’s a story about how a brand can catch a jet stream--and fall off,” said Tom Pirko, a beverage industry consultant in Los Angeles.
Some might say it was pushed. Corona’s descent actually traces to 1987 when a rumor spread--with the help of unfriendly wholesalers--that it was contaminated. But more than the rumor, Corona’s is the tale of how a product can prosper in the glow of a particular time and then struggle as times change.
Even now, it remains a top-selling beer import, second only to Netherlands-based Heineken. In California and throughout the West, Corona sales continue to surpass all its foreign-brewed rivals. And its U.S. importers take heart in recent signs that the sales plunge may be starting to end.
“I know of a lot of importers that would be very happy to sell the amount of beer that Corona does,” said Jerry Steinman, publisher of Beer Marketer’s Insights, an industry newsletter.
There is no denying, however, that fortunes have changed drastically for the light-tasting brew that became so fashionable in the mid-1980s.
Some of the issues facing Corona apply to the beer industry overall. Growing disapproval of alcohol abuse and drunk driving, for example, has hurt beer sales in many bars and restaurants. At the same time, the traditional group of beer drinkers--men age 21 to 35--has shrunk as a percentage of the overall population, intensifying competition among brewers.
Rising awareness of health and fitness also seems to have limited the amount of beer and other alcoholic beverages Americans consume: “The (beer) market has been static for the past couple of years,” said Paul Gillette, publisher of California Beverage Hotline, a trade newsletter.
Overall, sales of imported beer actually fell 8% last year, according to industry sources, reflecting tough competition from the lower-priced, U.S.-made brews. Yet some of the issues affecting Corona are unique to the brand itself.
“There never was a fad like it, a phenomenon like it,” said Steinman, who has followed events in the beer industry for more than 20 years.
To understand the Corona phenomenon, it helps to recall something of America’s social climate in the early 1980s, a time of rising status consciousness, a time when consumer spending was glamorized in the media and fueled by tax cuts.
The U.S. trade deficit was not yet a headline story, but Americans had started to buy more imports than ever--not just beer, of course, but expensive clothes, automobiles, sophisticated electronic equipment. In this environment of status-conscious consumption, Corona’s long-necked bottle and spray-painted label gave it a distinctive look; its import status a certain cachet.
Upscale baby boomers drank it up: “Imported beer allowed people to make a statement about themselves,” said Mazzoni, adding that “the clear bottle with the long neck said to the world, ‘Hey, I’m different.’ ”
Introduced in late 1981, Corona’s light taste dovetailed perfectly with a growing consumer trend toward light-tasting beer.
The combined effect of these elements was volcanic: Without any television ads, Corona sales blazed past such established beer imports as Molson and Labatt’s of Canada and Beck’s of West Germany to capture second place in the category. From 1984 to mid-1987, its sales more than quadrupled.
Remarkably, the upstart Mexican brew seemed to be closing the gap with top-ranked Heineken. U.S. wholesalers sold 22.5 million cases of Corona in 1987, compared to 31 million cases of Heineken, according to Impact, an industry publication.
Demand was almost impossible to meet. Mazzoni had to make emergency visits to California, where retailers threatened a boycott because they thought he was favoring other regions with supplies. Desperate to get out the product, Corona employees loaded the beer onto container ships near Mazatlan where it was hauled up the West Coast by sea.
Nonetheless, U.S. distributors had to be placed on limited allocations. “Logistically, we just couldn’t keep up,” Mazzoni recalled.
And then Corona-mania was over. In mid-1987, a rumor spread that the beer was contaminated with urine. Although the story was unfounded--and a rival wholesaler in Nevada declared so in an out-of-court settlement--the tale apparently took a toll.
Corona’s furious growth rate of 170% in 1986 shrank to 67% the following year. In 1988, sales at the wholesale level slid 7%. The slide reached 20% last year. “Its decline began when the rumor began,” said Steinman. “It’s an amazing bit of American sociology.”
Quickly, other problems followed the rumor. Corona’s distinctive long-necked bottle had not gone unnoticed by major U.S. brewers. By last year, Miller Genuine Draft, Miller Lite, Coors, Budweiser and Michelob Dry all had trotted out new, long-necked bottles of their own. “It took away the uniqueness of Corona,” said Mazzoni.
Meanwhile, the social climate in which Corona flourished was changing. Simply put, the trendy beverage became less trendy. Said Pirko: “It rose like a fad, and it fell like a fad.”
Corona also was affected by the apparent decline in beer drinking at restaurants and bars, where it realizes about 35% of its sales, Mazzoni said.
Although figures are hard to come by, “Anecdotally, all restaurants will tell you that their sales of alcohol are down, down, down,” said Jeff Prince, senior director of the National Restaurant Assn. in Washington.
The recent problems facing the beer industry have hit imports harder than their U.S. rivals, which generally cost less. Domestic beer sales also have been aided by the emergence of such aggressively marketed brands as Michelob Dry and Miller Genuine Draft, as well as the rise of micro-breweries that churn out specialty beers.
Among imports, Heineken, Beck’s, Moosehead, St. Pauli Girl and Foster’s all had sales declines last year, though mostly less severe than Corona’s, according to estimates by Impact.
Will Corona’s slide be reversed? There are few precedents for such a comeback, at least among domestic beers, said Robert S. Weinberg, a professor of marketing management at Washington University in St. Louis.
“These people are fickle people,” Weinberg said of the upscale consumers that grabbed for Corona early on. “They found the product amusing for a while and now they find some other product amusing.”
Yet for all the difficulties, Corona officials say that prospects look bright, that a solid core of support will keep the product strong.
After all, Corona once before stunned the beer industry with a success that no one could have foreseen. Corona Light, introduced last June, vaulted to third place among imported light beers for the year. And slowly, the rumor is fading. In February, sales by Corona wholesalers in California, Nevada and Hawaii rose 9.5% over a year ago, the most significant jump in more than two years.
“It’s the first time we’ve seen this kind of bounce back since the rumor,” said Mazzoni. “Things are looking pretty good.”