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How America fell in love with Mexican beer

There’s more to the explosive popularity of Pacifico, Corona and other Mexican imports than a growing Hispanic population.
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WEB_20170504_DraftMag_MexicanImportsThis Cinco de Mayo, Americans will mark the Mexican holiday in our typical fashion: scarfing troughs of nachos and downing buckets of lime-garnished Coronas.

But we really need no excuse to reach for a Corona, Pacifico, Tecate or any of its Mexican-made brethren; Americans’ appetites for these imported beers are growing quickly, even as domestic beer’s share of the market slouches. Some observers point to this country’s growing Hispanic population as an explanation for the average 8 percent annual growth in Mexican beer imports between 2009 and 2016, but that’s not the only factor at work.

According to data from Beer Institute, an American beer industry trade group, Mexican beer imports have been on a tear since the end of the Great Recession, increasing their share of the U.S. beer market by 4.4 points. Meanwhile, between 2009 and 2016, domestically produced beer’s share of total U.S. beer volume decreased by 3.7 points; British imports’ share is down 0.2 points and Canadian imports’ portion slumped 0.5 points.

There’s no doubt this is correlated with a growing Hispanic population in the U.S. that, between 2000 and now, has increased from 10 percent to 15 percent of the drinking-age demographic. But more drinkers who identify as Hispanic can’t entirely explain recent double-digit growth for Tecate and Pacifico, or for Modelo’s steady surge over the past decade.

“Growth in the Hispanic population can’t be the only driver,” says the Beer Institute chief economist Michael Uhrich. “Imports very clearly skew toward Millennials and Gen X, and obviously those generations’ share of the drinking-age population has been growing … so those two generations are more than half of all drinking-age Americans. As that continues, more and more people who drink beer are more and more likely to be people who drink Mexican imports.”

Scott Metzger, founder of San Antonio’s Freetail Brewing and the chair of the Brewers Association’s new diversity committee, puts it even more simply: “It’s not just Hispanics drinking Mexican imports.”

According to the results of a fall 2016 study conducted by Simmons Research, while 65 percent of Hispanic beer drinkers say they drink Mexican beer, so do 34 percent of non-Hispanic beer drinkers. (That’s just a few points less than the 43.4 percent of non-Hispanic beer drinkers who say they drink craft or microbrewed beer.) Corona and Dos Equis are the Mexican import brands that the non-Hispanic segment drinks most regularly.

Anecdotally, these lagers have begun to look like the new PBR, which reinvented itself as the hipster’s beer of choice a few years ago. Young people are drinking Pacifico at concerts, or Modelo Negra at backyard barbecues or Tecate alongside a shot of bourbon. Constellation Brands, which distributes and markets Corona, Modelo, Pacifico and Victoria, says Pacifico drinkers are split fairly evenly between Hispanics and non-Hispanics and that while the brand has seen double-digit growth in the heavily multicultural state of California, it has also performed well in beer-soaked markets like Seattle and Denver.

If American beer—craft or otherwise—wants to capture some of the popularity Mexican beer has tapped, it will need to figure out why certain brands are resonating with U.S. drinkers. Does it have to do with the actual liquid?

Many Mexican beers trace their history to Austrian and German immigrants who began brewing in Mexico at the end of the 19th century, mostly replicating the lagers of their home country. Today, there’s still a loosely German heritage to many Mexican beers, if you look hard enough: Modelo’s website, for example, refers to Modelo Negra as a Munich dunkel, while Pacifico’s website makes a passing reference to the three German brewers who established Cervecería del Pacifico in 1900.

But it’s unlikely that American drinkers are tipping back Mexican beer to get a German lager experience; after all, we could just … buy German lagers. It seems more probable that light, refreshing lagers appeal to a pretty wide swath of drinkers, and there’s an X factor in terms of marketing these beers as escapist or vacation-reminiscent (see Corona’s “find your beach” tagline) that’s made them appealing. Jennifer Dohm, spokesperson for Constellation Beer Brands Division, says the company’s research shows that Corona has become “more of a lifestyle brand” for its consumers.

Some American craft breweries have released “Mexican-style lagers” inspired by these beers, including Ska’s Mexican Logger, Oskar Blues’ Beerito, Sun King’s new seasonal Pachanga, SweetWater’s new small-batch series Mexican-Style Lager and Anchor’s new collaboration beer with the San Francisco Giants called Los Gigantes. Freetail has for years brewed a blonde ale that the brewery recently renamed, simply, Cerveza.

“If people didn’t speak Spanish around here, we’d still just call that beer Beer. It’s not trendy, it’s a reflection of our culture,” Metzger says, referring to both his blended German-Mexican heritage and the culture of San Antonio more broadly. “Obviously [these craft, Mexican-style lagers] are a reaction to Mexican imports, and I think it’s a good sign that American craft brewers don’t have their blinders on and think the answer to everything is another IPA. They’re understanding that some of these lighter, more accessible styles can be delicious and people love to drink them.”

“I think it’s a good sign that American craft brewers don’t have their blinders on and think the answer to everything is another IPA. They’re understanding that some of these lighter, more accessible styles can be delicious and people love to drink them.”

Constellation is betting on their increased growth. The company plans to build a new 10 million hectoliter brewery in Mexicali, Mexico, and further expand its primary brewery in the northeastern Mexican town of Nava. A few months ago, Constellation bought Anheuser-Busch InBev’s brewing operations in Obregon, delivering even more capacity and offering “flexibility for future innovation initiatives,” according to Jennifer Dohm.

Constellation will back up that increased capacity with big-dollar media and marketing efforts this year as well. In fiscal year 2018, for the 5th consecutive year, it plans a double-digit increase in media spending for Corona and will debut a fall football campaign that includes TV ads for Corona featuring former Oakland Raiders and the Tampa Bay Buccaneers coach Jon Gruden. Pacifico, which recently debuted 12-ounce cans, will also see its ad budget doubled to support two new TV spots on channels like ESPN, TNT and Comedy Central, while also investing in live sports including the NBA, MLB and NFL.

So are Mexican-made lagers a threat to American beer? Is their popularity going to be sustained long enough that American breweries should try to emulate some of their success?

“The Mexican breweries are just as smart as anyone and they see the opportunities out there. … They can be nimble and go after things, but they’re also really good at staying true to who they are,” Metzger says. “I do see it as a potential threat for American craft brewers, but they key for us is that we’re not simply going to displace all those cases, but how do we become a key part of beer drinkers’ refrigerators?”

While he and the Brewers Association’s nascent diversity committee certainly don’t have that answer crystallized yet, Metzger says there is one option that clearly won’t work: pandering to Hispanic consumers.

“When I hear people talk about how to reach Hispanics, my first impression is always ‘Treat us like human beings, that’s a good start,’” he says. “Understanding what makes up that block of Hispanics is important, because they’re definitely not monolithic. … I wanted to get involved with [the diversity committee] because I know what stands out to me as a Hispanic. Putting a soccer jersey on something, that’s clear pandering.”

It’s a lesson that’s all too visible on Cinco de Mayo, when sombrero-d cartoons and neon “Fiesta!” signs remind us of how ubiquitous this type of messaging can be. To understand the appeal of Mexican beer in the U.S., we need to look at its rise holistically: changing demographics, marketing campaigns and the actual beer itself.

“I think this generally speaks to a trend of lighter lagers and golden ales and blonde ales being popular right now,” Metzger says. “I don’t think that’s unique to Hispanics; that’s just a trend in general.”

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