Mexican Beers Jump the Border

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Mexican Beers Jump the Border

Imported Mexican beer has taken the limelight in American consumers' tastes as these imports are increasingly stealing away market share from domestic companies, according to a report by MarketWatch.

The brewer of Tecate and Dos Equis -- Fomento Economico Mexicano S.A. -- recorded a 42 percent increase in export volume in the first quarter of 2006, attributed to strong U.S. sales. More than 17 million gallons of beer were exported that quarter, an increase from the 12 million gallons exported the first quarter of 2005, MarketWatch said.

Meanwhile, Grupo Modelo, maker of the Corona line, saw exports jump 20.5 percent in the first quarter of 2006 and 7.8 percent in the second, reported MarketWatch.

Domestic volumes for that same time period were in sharp contrast to the Mexican brewers. Anheuser-Busch and Molson Coors reported less than 5 percent growth in this year's first quarter. Anheuser-Busch, which owns 50 percent of Grupo Modelo, reported a 2.2 percent increase in domestic beer volume for the second quarter of 2006.

As the numbers show promise, Mexican brands are looking to expand northward.

"Mexican brewers had focused on the south [of the United States] and now they are looking to encompass more territory," Luis Martinez, Standard and Poor's Latin American beverage-sector analyst, told MarketWatch.

Mexican brewers currently hold more than 50 percent of the import market share, and the convenience store and grocery channels have seen sales of Mexican beer increase by 11 percent from last year, according to ACNielsen.

To aid in their U.S. expansion, Mexican brewers have enlisted new distributors, MarketWatch said. Femsa dropped InBev's subsidiary, Labatt USA, for Heineken USA, and has seen an increase in sales. Modelo has also switched distributors and teamed up with Constellation Brands for distribution into the U.S.

Both brewers market five different brands in the U.S., while other imports only import one or two, MarketWatch reported. "Mexican breweries have focused on reaching all types of consumers with different products: premium products, low price products … Now the results are really starting to show," Martinez said.