TakeAway: Unimaginative marketing, poor portfolio mix, and inattentive product management have caused Femsa, Mexico’s historic beer market leader, to lose 12% market share and drop to a distant second place in the Mexican domestic beer market.
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Excerpted from WSJ, “Beer’s Glory Days Fade at Femsa,Leaving Brewer Eyeing Options,” By Jose De Cordoba and David Kesmodel, October 19, 2009
The Dos Equis beer ad campaign, “The Most Interesting Man in the World,” has gone viral in the U.S., helping to boost sales of the Mexican import.
But in Mexico, few consumers have ever heard the suave gentleman’s voice … and Femsa’s beer market share has dropped …
Lack of marketing imagination at home is one reason why Femsa, the company that makes Dos Equis, has been overtaken south of the border by archrival Grupo Modelo SAB, maker of Corona beer …
In the past two decades, Femsa—which makes Sol, Tecate, Indio, and Bohemia as well as Dos Equis—has seen its share of Mexico’s beer market fall to 43% from a once-dominant 55%. Modelo overall has a 57% share, with its Corona brand accounting for 31% on its own.
Femsa recently acknowledged it was contemplating selling its beer business or making a strategic alliance with one of the world’s brewing giants …
Analysts say a key reason Femsa is considering teaming up with a bigger brewer is that the landscape of the beer business has changed rapidly. Increasingly, the global market is dominated by giants such as Anheuser-Busch InBev, and SABMiller … Family-run Femsa has annual beer sales of about $4 billion, compared with roughly $35 billion and $21 billion at Anheuser-Busch InBev and SABMiller, respectively.
And last year, when InBev bought Anheuser-Busch … it took over Anheuser-Busch’s 50% non-controlling stake in Grupo Modelo, giving Femsa’s rival a new deep-pocketed uncle …
Femsa has partners of its own, but the scale is much smaller …
Although Femsa’s beer business has been lagging, the company is doing well in its two other main business lines: soft drinks and convenience stores. Last year, it had operating profits of $2B on revenue of $15B … in the last decade, revenue and profits have surged seven fold …
Mr. Fernandez, the current CEO who took the helm at Femsa in 1995 … has placed less emphasis on beer … he has a love affair with his two new babies, Coca-Cola and Oxxo … has put much of his focus on the OXXO convenience stores … It’s by far the largest convenience store chain in Mexico … three times the number of all its competitors combined.
OXXO has played a key role in defending Femsa’s market share, as it provides points of sale for Femsa’s beers. Indeed, some analysts fear Femsa’s share of the beer market would have fallen much more had it not been for the support from OXXO stores and worry Femsa’s share of the beer market could fall further once OXXO reaches a saturation point.
In Mexico, Femsa is known for being efficient in brewing and sales, but has struggled to develop expertise in marketing. “They are still trying to find the right portfolio mix, which brands to push in which markets,” said an analyst with Barclays Capital …
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Full Article
http://online.wsj.com/article/SB10001424052748704112904574477272483981410.html?mod=article-outset-box
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