Execs Admit Competition to Blame for Flat Corona Sales

Predicted Summer Surge Never Happened, but No Change in Ads Planned

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CHICAGO (AdAge.com) -- When Corona Extra last year suffered its first sales decline in 16 years, executives at the brand's U.S. importer said a price increase, not stronger competition, was to blame. If history was any guide, the executives said, sales would surge back to their usual robust pace as soon as the competition's pricing caught up to Corona's.
Corona Extra sales halfway through the summer selling season are basically flat due, in part, to new domestic competitors such as Bud Light Lime and Miller Chill.
Corona Extra sales halfway through the summer selling season are basically flat due, in part, to new domestic competitors such as Bud Light Lime and Miller Chill.

But halfway through the pivotal summer selling season, sales are basically flat, and some of those same executives are now acknowledging that the increased competition -- both from new domestic competitors such as Bud Light Lime and Miller Chill, as well as stronger import brands -- are taking a toll on the leading import beer.

There has been "some impact from new competitive product introductions," Rob Sands, CEO of Constellation Brands, recently told Wall Street analysts. (Constellation Brands owns 50% of Corona importer Crown Imports.) That's a significant change from Mr. Sands' tune two months earlier, when he said that "our people have said that they didn't think that the Bud Light with Lime introduction hurt Corona at all. These products tend to be more like coolers or alcopops."

A look at the ad budgets
Mr. Sands' earlier sentiment was informed by watching many would-be Corona killers come and go over the years. But Bud Light Lime and Miller Chill have already made a much bigger dent in the marketplace than Tequiza and its ilk ever did, thanks in part to their nine-figure advertising budgets.

A-B has vowed $35 million of support for Bud Light Lime this year, and has since added fourth-quarter national TV to that plan. Miller spent $25 million on Chill last year, a figure expected to rise because the brand has been national for a full year. By comparison, Corona was supported by $53 million in measured media, according to TNS Media Intelligence.

Since Bud Light Lime's early May launch, the two brands have accounted for as much as 2% combined market share of total beer in some off-premise channels by some measures. And while they undoubtedly do appeal to some drinkers who would otherwise be reaching for Bacardi coolers or Mike's Hard Lemonade, analysts say it's clear they've made inroads with some Corona drinkers, particularly women, during the summer season that's particularly crucial to a seasonal brand like Corona.

Only scratching surface
"Their competitive dynamic has changed," said analyst Kaumil Gajrawala, who covers the beer sector for UBS. "As a seasonal drink, these flavored beers ... have only scratched the surface so far."

Corona faces additional competition from Femsa Cerveza's resurgent U.S. portfolio of brands, including Tecate and Dos Equis, which has grown rapidly under the marketing hand of Heineken USA. A Heineken spokeswoman declined to comment, but earlier this year the importer's top Mexican-beer executive said it was clearly sourcing some of its growth at Corona's expense. And the same can be said of some of Corona's own siblings, such as Modelo Especial, Negro Modelo and Pacifico, which have all seen more marketing attention of late.

Corona Extra, however, is still a juggernaut: It sold 8.3 million barrels last year, making it the largest import, according to Beer Marketers Insights. By comparison, Dos Equis sold 655,000 barrels and Tecate 1.4 million. Comparable figures are not available for Bud Light Lime or Miller Chill, which were not in national distribution for the full year.

So what's an import under siege to do?

'Vacation' will remain
People familiar with the matter say what Corona won't do is fathom leaving its "vacation in a bottle" positioning. Its current ads -- from longtime agency Cramer-Krasselt, Chicago -- are barely distinguishable from those that ran a decade ago. And there's no hint of any changes to come.

The executives expect the brand to pound the sand harder through packaging innovations similar to the "cold" emphasis Coors has employed via color-changing labels and cooler boxes to emphasize its "Rocky Mountain refreshment."

They also expect greater emphasis going forward on Corona Light, which is the largest imported light beer despite being something of an afterthought in Corona's messaging. A hint of what's to come, perhaps, is a scheduled August launch of "Coronita Light," a 24-pack of 7 oz. Corona Light bottles ideal for beach usage.

"The brand still owns a very viable position, and they haven't deviated from it, to their credit," said one marketing consultant who has worked on Corona. "It's just that the manner they're communicating it is not connecting as well at the moment."
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