Essay on Corona Beer Case Study

3584 Words Nov 11th, 2012 15 Pages
EXECUTIVE SUMMARY
Introduction: Corona Beer, produced in Mexico by Grupo Modelo since 1922, entered the United States beer market in 1979, and by 2007, was the number one imported beer in the United States (with 1.9% market share of the global beer industry) having recently taken that position from Heineken, a rival (with 1.6% market share of the global beer industry). Corona used a broad differentiation strategy with a “fun in the sun” marketing image. It also achieved strategic success by using a distinctive glass bottle and providing a light-tasting beer that attracted a broader market.
Problem identification: The global beer industry was experiencing increasing competition due to the new and potential mergers and acquisitions of
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As was well put by Michael Foley, Heineken’s president, in 1993: “Beer is all marketing. People don’t drink beer, they drink marketing.” Therefore, the continued strong marketing to promote its broad differentiation was important for GM to continue its global market success.

ANALYSIS AND EVALUATION

Financial Analysis
As shown in the chart below, between 2004 and 2005, GM’s sales volume increased by 6.14%, with the export market growing by 0.3 million hectaliters more than the domestic market. This reflected growth of 4.0 percent in the domestic market and 12.3 percent in the export market. Export sales comprised 30.2 percent of total volume for the year, compared to 28.6 percent in 2004. Revenues increased by 7%; however, the gross profit rate decreased from 56.3% to 54.0%, indicating that costs had increased more than revenues. In addition, earnings per share increased by 14.1%, propelling the closing stock price up by 25.6% from 30.66 pesos to 38.50 pesos, an indication that the company did better than investor predictions. Despite its growth in 2005, the company employed 3,974 people less than in 2004, a possible indication that high employee costs may have been a factor in increased production costs and reduced gross profits, leading to a decision to reduce staff numbers. Selected performance indicators | 2005 | 2004 | Variance % | Sales volumes- millions of hectaliters: | | | | Domestic | 31.80 | 30.59 | 4.0 | Export | 13.74 |

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