Modelo Especial: The New King of Beers

For decades, Bud Light has been the undisputed champion of the U.S. beer market. The light lager, owned by Anheuser-Busch InBev (ABI), has dominated the sales charts and the cultural landscape with its catchy slogans, celebrity endorsements and Super Bowl commercials.

But in May 2023, Bud Light suffered a stunning defeat. According to consumer behavior data analytics firm Circana, Bud Light sales plunged by 23% from the same period last year, dropping to $297 million. Meanwhile, Modelo Especial, a pilsner-style lager from Mexico, soared by 15%, reaching $333 million and claiming the title of the top-selling beer brand in the U.S.

How did this happen? How did Bud Light lose its crown to a foreign competitor that has been around for nearly a century? And what does this mean for the future of the U.S. beer industry?

The answer lies in a combination of factors, including changing consumer preferences, aggressive marketing strategies and a controversial promotion that backfired spectacularly.

The rise of Modelo

Modelo Especial is not a newcomer to the U.S. beer scene. The brand was launched in Mexico in 1925 and has been imported to the U.S. since 1990. But it was not until 2013 that Modelo Especial started to gain momentum in the U.S., when Constellation Brands bought the rights to distribute the brand from ABI.

Since then, Constellation Brands has invested heavily in expanding Modelo Especial's distribution and presence at retail outlets, ensuring that stores never run out of stock and that consumers can find the brand easily. The company has also targeted Hispanic consumers, who make up about 40% of Modelo Especial's drinkers, with culturally relevant advertising campaigns that celebrate their heritage and identity.

But Modelo Especial's appeal is not limited to Hispanic consumers. The brand has also attracted a broader audience of beer drinkers who are looking for something different from the mainstream light lagers that dominate the market. Modelo Especial offers a fuller flavor, a higher alcohol content (4.4% vs 4.2% for Bud Light) and a distinctive gold can that stands out on the shelf.

According to Dave Williams, vice president of analytics and insights at Bump Williams Consulting, Modelo Especial has been on the rise for years and has been slowly climbing the ladder of beer rankings. "Modelo's performance is not a surprise," Williams told CBS MoneyWatch. "That's a brand that's been on the rise for years now, and has been slowly climbing the ladder of beer."

The fall of Bud Light

While Modelo Especial was gaining ground, Bud Light was losing it. The brand has faced several challenges in recent years, including increased competition from craft beers, hard seltzers and other alcoholic beverages that offer more variety and flavor to consumers.

But perhaps the biggest blow to Bud Light came in April 2023, when the brand partnered with Dylan Mulvaney, a transgender influencer and actress who has over 10 million followers on TikTok. The partnership was part of a campaign to promote Bud Light's message of inclusiveness and diversity during Pride Month.

However, the campaign backfired when Mulvaney posted a video on TikTok showing an image of a personalized can of Bud Light with her face on it and announcing a giveaway contest for her fans. The video sparked an uproar among conservatives who accused Bud Light of supporting an agenda that goes against their values and beliefs.

Some prominent figures, such as singers Kid Rock and Travis Tritt, called for a boycott of Bud Light and urged their fans to switch to other beers. Some bars and restaurants also pulled Bud Light and other ABI products from their menus in protest.

Bud Light tried to distance itself from the controversy by clarifying that the partnership with Mulvaney was a one-time deal and not a long-term endorsement. But this only angered the LGBTQ+ community, who felt that Bud Light was abandoning Mulvaney and caving in to the pressure from the boycotters.

The result was a massive drop in Bud Light sales in May, which allowed Modelo Especial to overtake it as the top-selling beer brand in the U.S. According to Circana, Bud Light represented 7.3% of U.S. retail-store beer sales in the four weeks ending June 3, compared to 8.4% for Modelo Especial.

The future of beer

What does this mean for the future of the U.S. beer industry? Will Modelo Especial be able to maintain its lead over Bud Light? Will Bud Light be able to recover from its slump and regain its throne? And what about other beer brands that are vying for a share of the market?

According to Williams, the answer is not clear-cut. He said that Bud Light still has a lot of volume and dollar sales, and remains the top-ranking beer brand based on year-to-date performance. He also said that Bud Light could bounce back if it can win back the consumers who have left the brand or attract new ones with innovative products and promotions.

However, he also said that unless Bud Light experiences a "serious course correction" in terms of performance, its grip on the No. 1 rank will loosen more every week. He also said that Modelo Especial and other domestic lagers, such as Coors Light and Miller Lite, will continue to see gains as they appeal to consumers who are looking for more flavor and variety.

The U.S. beer industry is undergoing a major transformation, as consumer preferences shift and new competitors emerge. The battle for the top spot is not over yet, and the outcome will depend on how well each brand can adapt to the changing market and meet the needs and wants of the beer drinkers.

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