Tecate: Beer Import That’s Not Flat : Retailing: Sales of the Mexican brew are up 12%. Demand for foreign beverages overall has leveled.
These are tough times for beer importers, but one Mexican beer is bucking the trend. And no, it doesn’t come in that familiar clear glass bottle.
After years of growth, sales of imported beer slowed for the first time in 1989, and industry analysts are predicting a continued decline in 1990.
An exception to the declining popularity of imports is Tecate, a Mexican lager beer that saw its sales jump 12% last year to $32 million. Tecate’s growth came at the expense of its once-trendy rival, Mexico’s Corona beer, which saw its sales plunge 23% in 1989.
Tecate has benefited from its popularity with Latinos consumers, according to executives of Wisdom Import Sales Co., an Irvine firm that distributes Tecate and several other brands of Mexican beer--not including Corona--in the United States.
Wisdom executives said Tecate is particularly popular among new immigrants from Mexico, and the company targets promotions to the Latino community.
“The Hispanic community in Southern California drinks Tecate because it is a national brand in Mexico--a brand many Mexican immigrants are familiar with,” said John Lennon, Wisdom’s marketing manager. “When they move to the United States, it is something they can identify with life at home.”
Another important factor in Tecate’s success has been the growing buying power of Latinos in the United States. “The more they earn, the more they tend to consume products from Mexico,” said Manuel Rubiralta, the Mexican-born president of Wisdom.
Tecate’s growth has made it one of the 10 best-selling imported beers in the nation. Of the top 10 imported beers, however, only Tecate, Labatt’s Blue of Canada and Amstel Light of the Netherlands managed to post sales increases in 1989.
In the first five months of 1990, beer imports were down 2.7% from the same period last year, according to the National Beer Wholesalers Assn. in Falls Church, Va.
Industry analysts say a weak dollar has raised the price of imported beers for U.S. consumers. Meanwhile, importers and distributors have responded to shrinking sales by trimming their advertising budgets.
According to Michael Mazzoni, vice president of Chicago-based Barton Beer Ltd., which is one of two Corona importers in the nation, sales of Corona beer nationwide are expected to drop between 6% and 10% by year-end.
Tecate’s sales, in contrast, were up 18% during the first six months of 1990, the company says.
While Corona gained wide popularity among beer drinkers in the 1980s, analysts say the brand failed to catch on with Latino consumers. Mazzoni blamed the sales decline on more aggressive marketing efforts by U.S. beer makers and a nine-week strike by Corona employees in Mexico City. But Peter Reid, editor of the trade publication Modern Brewery Age, faults Corona for failing to step up its marketing when its customers were defecting in droves to domestic labels.
Another reason for Tecate’s sales growth, analysts say, is price and packaging. A six-pack of Tecate currently sells at wholesale for about $4.50, compared to $5 or more for a six-pack of Corona. Analysts also note that canned beer has been growing in popularity, while sales of bottled beer have declined. Tecate is sold in both cans and bottles, while Corona is available only in its distinctive bottles.
Analysts also praise Wisdom management for making a far-sighted decision in the mid-1980s to expand distribution beyond 13 Western states to all 50 states. The move was intended to capture the Latino market as well as convert others at a time when Mexican food was gaining popularity.
“There’s more acceptability of Mexican brands in the American market and, with that in mind, we decided to distribute nationwide,” Rubiralta said. “We found that when people eat Mexican food, they inevitably drink Mexican beer.”
Rubiralta, 46, is seen as another reason for Tecate’s success.
In a bid to become one of the nation’s top beer importers, Rubiralta engineered the merger in 1987 of his company with Cibco Importer Inc. of Houston, which owns the distribution rights of Tecate beer in the East Coast.
At the time, the move made Wisdom the third-largest beer importer in the nation. Following the merger, Frank Wisdom, the company’s chairman, promoted Rubiralta to president of the firm, the first non-family member to run the company. Wisdom, which was sold three years ago to Grupo Visa S.A. of Monterrey, Mexico, is currently the country’s fifth-largest beer importer.
Besides Tecate, Wisdom’s list of Mexican imports include Carta Blanca, Bohemia and Chihuahua beers. Last year, the importer sold 6 million cases of beer in the United States, worth about $60 million. This year, the company expects sales to reach about $72 million.
But while sales are up, Rubiralta is troubled by some recent developments.
“There’s a trend among beer wholesalers to merge, which makes it difficult for us to distribute our beers,” Rubiralta noted. With 410 foreign brands competing and a shrinking number of distributors, wholesalers are swamped, sometimes delaying deliveries of the beers to retailers, he added.
10 BEST-SELLING IMPORTED BRANDS
Country Market Rank Brand Importer of Origin Share 1.Heineken Van Munching & Co. Netherlands 26% 2.Corona Extra Barton Beers Ltd & Gambrinus Mexico 13% Importing Co. 3.Molson Golden Molson Breweries USA & Martler Canada 12% Importing Co. 4.Beck’s Dribeck Importers West Germany 9% 5.Labatt’s Blue Labatt’s USA Canada 6% 6.Moosehead All Brand Importers Canada 5% 7.Tecate Wisdom Importing Co. Mexico 3% 8.Amstel Light Van Munching & Co. Netherlands 3% 9.Foster’s All Brand Importers Australia 3% 10.St. Pauli Girl Associated Importers West Germany 2%
Sources: Modern Age Brewery and Impact Databank.
