PACRIM's Summary for Beer in Mexico
HEADLINES
In 2019, beer records total volume growth of 9%, to reach 8.6 billion litres
Value per volume offerings drive growth in 2019
Domestic premium lager records the strongest total volume growth of 13% in 2019
The average unit price increases by 6% in current terms in 2019, largely due to inflationary pressures
Beer remains highly concentrated in 2019, with the two leading companies, Grupo Modelo and Heineken México, accounting for a combined 98% total volume share
Beer is expected to see a total volume CAGR of 4% over the forecast period, reaching 10.6 billion litres in 2023
PROSPECTS
Innovation and Product Development Are Set To Drive Sales
The entry of new brands and players in the beer category over the review period is likely to encourage the more dynamic development of new products in the future. Small independent brewers are likely to launch innovations more frequently in an aim to attract consumers, whilst already positioned brands might prefer limited editions to boost their positioning. In 2018, the brand Modelo launched Modelo Noche Especial for the Christmas and New Year’s Eve celebrations, and the brand Minerva did something similar with Minerva Navideña. A coffee beer was launched by Modelo for the FIFA World Cup, and the brand Victoria launched a special packaging edition for Day of the Dead with augmented reality.
The Evolution of Craft Beer
Craft beer is expected to gain popularity over the forecast period, as consumers look for new experiences and companies become increasingly creative. However, there is an ongoing debate about what makes a craft beer. Small independent brewers might not be able to compete with the craft beer brands that have been either acquired completely, or just a stake, by the stronger beer corporations in the country. This has already been observed in the price difference between craft beers, which range from MXN18 to MXN55 in retail channels. Distribution is also a challenge for smaller independent brands, and over the forecast period is likely to remain both a challenge, and the trait that makes independent craft beers exclusive.
Creativity in Advertising To Boost Consumption
Beer brands are well-known for their massive advertising campaigns and the sponsorship of cultural and sporting events. In 2019, major events sponsored by beer brands included the Corona Capital and Vive Latino music festivals, and a wide range of sports events, such as the Formula One car racing event. This is expected to continue over the forecast period, with companies investing in creative campaigns that connect with consumers. Environmental, political and social issues are likely to become popular causes for brands to make statements and bond with consumers.
COMPETITIVE LANDSCAPE
Craft Beer Producers Encourage Consumers To Try New Flavours
The retail channel has proved to be a challenging space for craft beer brewers, as they have to compete with lower-priced products. Logistics and distribution are also weaknesses for small independent producers, which might not have the resources to compete with better-positioned brands. However, over the review period craft beer brands leveraged their popular beers to encourage consumers to try new flavours by offering three packs of beer which contain one unit of the most popular type and two units of other types or flavours. In 2019, this strategy was used by several craft beer brands, such as Alimaña, Albur, Berber, Tempus and Söhnfeld, amongst others.
Companies Drive Volume Sales by Offering Bigger Packs and Price Promotions
Over the review period, beer saw dynamic growth in total volume terms, which was driven by the shift towards bigger multipacks of standard beer brands, and by constant price promotions conducted by the leading companies to increase their shares. Whilst 6-packs are still the most popular in retail channels, the offer of 12-packs noticeably increased over the last couple of years. In 2019, price promotions were constantly observed, with brands such as Heineken and Stella Artois being offered at discount prices; sometimes encouraging volume purchases by adding extra discounts on the purchase of two 6-packs.
Soccer Drives Growth
In 2018 and again in 2019 (anniversary), the FIFA World Cup (a soccer tournament held every four years) was held in Russia during the months of June and July. This is usually a strong driver of beer consumption, as people gather with friends and family to watch the matches. This year was no exception, as beer saw more dynamic growth in 2018 compared with the previous year. However, the increase in consumption was moderate compared with other World Cup years, due to the schedule of the matches, which were mostly broadcast live in the morning. Beer brands launched creative advertisements and products, including a coffee beer by Modelo (AB InBev), launched specifically for the event.
CATEGORY BACKGROUND
Lager Price Band Methodology
Mid-priced lager is the biggest price segment in beer in Mexico, thanks to offering the most popular brands, such as Corona, Victoria and Modelo from Grupo Modelo, and Tecate, Sol and Dos Equis XX from Heineken México. Economy lager has a much weaker presence, due to significantly fewer brands, with Estrella and Barrilito being the most popular. In premium lager, the variety is much wider. Demand for premium lager is driven mostly by young adults seeking aspirational products, and by the evolution in the offer of craft beers. Premium brands available in the Mexican market include Heineken and Bohemia, offered by Heineken México, Miller Genuine Draft from Miller Trading Co and Budweiser and Stella Artois, offered by Grupo Modelo. Artisanal or craft beers are usually positioned as premium offerings, with popular brands including Minerva (Cerverceria Minerva) and Tempus (Andreu Primus), amongst others.
In 2019, artisanal brands stood out through offering an alternative to long-standing and well-known mid-priced beer brands. Although artisanal beers are usually higher in price, their main point of differentiation is their exclusivity. Made by small brewers, the availability of these brands is very limited, and they are mostly distributed through foodservice. Artisanal producers often choose creative names that include the names of the cities or towns where the beers are produced. They also make references to Mexican culture to emphasise the origin of their brands.
Premium - 45.00+ per litre
Mid-Priced - MXN 25.00 to 44.99 per litre
Economy - MXN 17.00 to 24.99 per litre