Sales Slump for Corona

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Sales Slump for Corona

MEXICO CITY, Mexico -- Corona Extra, the best-selling imported beer in the U.S., is suffering lower year-over-year sales due to the economic downturn, a poorly times price increase and rising competition, the Wall Street Journal reported.

The brewer of Corona, Grupo Modelo SA, shipped 1.7 percent less Corona to the U.S. last year than a year earlier -- the first such decline for the brand since 1991, the report stated, citing industry newsletter Beer Marketer's Insights.

Through Feb. 23, 2008, Corona's sales by volume at food, drug and convenience stores are down about 5.9 percent compared with a year earlier, the Journal reported, citing research firm Nielsen Co., and parent to Convenience Store News.

The housing-market crisis in southern California and Arizona -- areas with high populations of Mexican-Americans -- has contributed to a sharp decline in sales of Corona at grocery stores, as the housing downturn brought job losses in construction and related sectors, analysts told the newspaper.

Also hurting sales was a 4 to 5 percent price increase for the brand early last year by its importer, Crown Imports LLC, while rival brews stayed put in their pricing, the report stated.

Other beers appear to be taking sales away from Corona, including sister brand Modelo Especial and Miller Chill, a Mexican-style beer from domestic beer-maker, Miller Brewing Co., according to analysts cited by the newspaper.

In addition, Dos Equis and Tecate, two Mexican imports owned by Fomento Economico Mexicano SA, also known as Femsa, posted strong sales growth in shipments of 17 percent and 8 percent respectively, the report stated, citing Beer Marketer's Insights.

But Crown Imports president, Bill Hackett, told the newspaper the brand's troubles are temporary. "We are confident that Corona remains very relevant across a wide range of consumers," he wrote in an e-mail to the Journal.

Opinions vary whether the Corona brand is still relevant. Past advisor for advertising strategies to Anheuser-Busch, John Greening, who is also a professor of marketing communications at Northwestern University, told the Journal the brand may become "your big brother's beer" if Crown Imports doesn't come up with a new marketing theme.

"They have stayed with the whole resort and relaxation theme," he told the newspaper. "But today it's kind of yesterday's news."

Conversely, Nielsen Co. vice president, Nick Lake, contends the brand remains strong, according to the report. A Nielsen survey of 21-to-30-year-old beer drinkers released last fall found that the brand ranked No. 1 among imports, both when participants were asked to name any beer brands that came to mind and when they named their favorite beers, the report stated.

"These are the beer drinkers of the future, and they are giving Corona high marks," he told the newspaper.
Hackett of Crown Imports contends that Corona's sales will increase at a faster rate than the industry's in 2008, the report stated.

"The entire industry is being impacted by the current economic situation," he told the Journal. "But this is the time when having such an iconic, relevant brand image pays off."