Import’s Spurt in Southland Baffles Analysts : Corona Beer a Crowning Success

Mark Boyd knew something was wacky when a city maintenance worker walked into his Costa Mesa liquor store, grabbed a six-pack of Corona beer and toted it up to the counter.

The thirsty worker didn’t even flinch when the clerk rang up $5.28.

For months, the same worker had religiously stopped into Back Bay Liquor on the way home from work and left with twice as much beer--a 12-pack of Carling Black Label--for a nearly a buck and a half less.

“A year ago I was selling two cases of Corona a week. Now I’m selling 15 cases,� said Boyd, the store’s manager.

The wild success of Corona, a Mexican import that comes in a clear bottle with a painted label, is changing the face of the beer industry throughout the Southland. Although industry analysts and executives are unable to pinpoint the reason for the beer’s success, many say that--taste aside--it is Corona’s unusual bottle and the beer’s popularity with the surfing set that has given it a certain mystique and caught the attention of the mass market.

Big Hit in Orange County

Corona is causing the greatest ruckus in Orange County, where Mexican imported beers command a greater portion of the market than anywhere else in the nation. Total retail beer sales in Orange County exceeded $265 million last year.

Orange County is the headquarters for two of the country’s largest Mexican beer importers--Wisdom Imports Inc. and Moctezuma Imports Inc.--which have been shellshocked by the popularity of Corona. Moctezuma is best known for importing Dos Equis, while Wisdom’s best-selling imports are Tecate and Carta Blanca.

“Corona’s success is unprecedented,� said Ben Steinman, executive editor of Beer Market Insights, an industry newsletter based in West Nyack, N.Y. “It’s the hottest brand in imports today.�

Tustin Distributor

Although Corona’s importer, Barton Beers Ltd., is headquartered in Chicago, one of its largest U.S. distributors, Quality Beer Distributors, is located in Tustin. “I don’t think anyone can account for the popularity of Corona,� said Paul Brethe, vice president of Quality Beer.

Three years ago, Quality shipped 15,000 cases of Corona. This year it will ship 500,000 cases. Retail sales of Corona in the United States nearly tripled last year to $200 million from $70 million in 1984, according to Mike Mazzoni, executive vice president of Barton Beers.

Corona is meeting this success despite being one of the most costly beers on the market. It is among the most expensive brands at Ornelas Beverage Co. store in Corona Del Mar, but one of the store’s best sellers. A six pack of Corona sells there for $5.30, Heineken for$5.29; Dos Equis for $4.56 and Budweiser for $3.18.

Industry executives and analysts are baffled by the beer’s unprecedented rise. But consumers are so enthralled with the light-colored beer in the see-through bottle that it is causing Southland importers and distributors to rethink their entire marketing programs. Some are trying to copy its style, while others have given up altogether and tried to refocus their beers toward new markets.

Other Reactions

Even the Europeans are reacting to the success of Mexican imported beers in California by trying to nudge into the West Coast market. One Belgian brewer, Stella Artois, has snubbed the East Coast and taken the unusual move of introducing its beer in Orange County. An ad campaign for the Belgian brew being imported by Pafco Imports of Newport Beach is expected to get off the ground next month.

Because Orange County has many free-spending young professionals, beer makers say it has emerged as one of the nation’s top spots not only to sell but also to introduce imports. In the past, most European importers concentrated on the East Coast. “Our researchers found that key users of premium imports were no longer just found in New York or Chicago but parts of California (such as) the San Francisco Bay Area and Orange County,� said William Knauer, president of Pafco Imports and its distribution arm, Impact Wines & Spirits Inc.

But so far, no one can catch Corona. Since its U.S. premiere in Orange County four years ago, Corona has given the rest of the importers fits. It is already the top-selling imported beer in Southern California and could be the top seller in the state within the next year. Corona’s sales have rocketed 5,550% during its four-year presence in the United States. Last year, it sold 11.3 million gallons in the United States, compared to a paltry 200,000 gallons in 1982.

Still, imports accounted for only 4.3% of the nation’s beer sales last year, according to industry estimates. And nationally, Corona accounts for about 5% of that import market, compared to Heineken’s estimated 35%. But on the West Coast--the nation’s trend center--the numbers are vastly different. Imports are on the rise and now account for nearly 10% of beer sales in California. Corona ranks as the biggest-selling import in Orange County--with about 30% of the area’s total import market. Heineken has about 20%. The remaining 50% is divided among an estimated 200 imports.

Ranked as No. 5

With the success of Corona in key Southern California markets, the company hopes that the beer eventually will challenge Heineken as the nation’s top-selling import. Corona now ranks as the fifth, according to Barton Beers’ Mazzoni. Behind Heineken, the other top sellers are, in order, Molson, Beck’s and Moosehead.

But the sudden jostling between Corona and other imports has caused a generation gap in the beer market, said Kevin Forth, president of Straub Distributing Co. of Orange. “Heineken is now perceived as the beer that Dad drinks and Corona is the beer that his son drinks,� Forth said.

In an attempt to capture some of Corona’s mystique, and latch on to a shade of its market share, six months ago Moctezuma Imports of Irvine introduced Hussong’s. The brew is named after a colorful cantina in Baja California that is a popular watering hole with American tourists.

“It is an importer’s dream to have a beer take off like Corona,� said Fred Lampe, president of Moctezuma. “We’re basically trying to protect our segment of the market,� said Lampe, whose company posted sales of more than $20 million last year.

Designer Hired

So concerned is the company with mimicking Corona’s unique image that it spent $50,000 to hire a renowned San Francisco designer to create the bottle for Hussong’s beer. Like the Corona bottle, its label is painted on.

But Frank Wisdom, president of Wisdom Imports of Irvine, doubts that anyone will be able to repeat Corona’s success. “It doesn’t happen twice in a row,� said Widsom.

Wisdom Imports, which serves more of an ethnic market, will basically try to avoid Corona’s market segment, Wisdom said. Despite the Corona phenomenon, Wisdom Imports posted a 30% increase in sales in 1985 to $45 million.

But some industry analysts dismiss Corona--and the popularity of Mexican beer--as little but a shooting star. “It’s a fad that will last another year or so,� said Donald W. Rice, senior investment analyst at Blunt, Ellis & Loewi, a Milwaukee brokerage house. “After that, it’ll really be cool to buy some Danish beer.�

Behind it all, Corona’s popularity is as dependent on image as on taste. Rice says that could eventually hurt its sales because image is only important in group gatherings. “When the yuppies in Orange County throw a party, they bring out the Corona. But once their friends go home, they go back to drinking the cheap stuff.�

Corona does appear to be saddled with a very fickle market. Corona is mostly bought by college-aged drinkers in their early 20s. “That is not a very solid, long-range market,� said Paul DeNio, president of the California Beer Wholesalers Assn., a Sacramento-based trade group.

Even the entertainment world has picked up on the Corona image. In a recent issue of Vanity Fair, Sean Penn was photographed sipping on a bottle of Corona. Singer Jimmy Buffett was so frequently seen drinking Corona between songs at his concerts that brewer signed Buffett as its spokesman.

This is not the first time the California beer market has been turned on its head. About 10 years ago, Coors suddenly spurted to the forefront and captured 44% of the California domestic beer market--a figure that has since decreased to about 15%. And Canadian beers, such as Moosehead, and other Mexican imports, such as Dos Equis, have also had their days in the California sun.

Little Advertising

Yet Corona has jetted to success with virtually no advertising. In fact, 1986 will mark the first year that the beer has a designated advertising budget--and that is only $4 million, said Peter Mozina, marketing manager at Barton Brands. Comparatively, St. Louis-based Anheuser-Busch Inc., best known for its Budweiser beer, spent an estimated $185 million for advertising last year. For its money, Anheuser-Busch has amassed a 36.6% share of the domestic beer market.

Among Corona’s few current advertisements is a billboard in southern Texas that graphically illustrates exactly what the beer maker hopes to accomplish. The billboard shows a row of new, shiny Corona bottles being painted over a billboard of old, battered Heineken bottles. Under the picture is a single sentence that reads, “The secret’s out.�

But competitors admit they don’t know that secret.

“Corona is giving everybody fits,� said Wisdom, of Wisdom Imports. “The phenomenon of Corona is something no one foresaw,� he said. Besides Corona’s rise in the California market, the beer is also the top-selling import in Texas and is soon expected to jump into the top spot in Kansas.

“It’s got us scratching our heads,� said Martin Johnson, marketing director at Moctezuma. “When a fad is that strong, there’s no dealing with it. About all we can do is wait for this Corona anomaly to pass through the market.�

The Corona craze began innocently enough four years ago when surfers--the West Coast image makers of everything from beach wear to beverages--took a liking to the brew. Most of these surfers--primarily from Orange County and San Diego--discovered the beer in Mexican coastal cities.

After a day of surfing, they’d head to the local cantinas and drink Corona, the same brew that was popular with the locals. Surfers brought the beer back across the border and shared it with friends who were intrigued by the odd-looking bottle. The surfers started asking for it at many Orange County bars, and owners were forced to order it.

Temporary Phenomenon?

“Just about everyone who lives near the beach drinks Corona,� said Debbie Ten, general manager of Baxter’s restaurant in Huntington Beach. “It’s replaced Heineken as our best-selling beer.� While Corona is also a top seller at Baxter’s two Newport Beach pubs, there is no big calling for it at the chain’s locations in Pomona or Fullerton, she said.

But “once people at the beach see people in Indio drinking Corona, they’ll go with something else,� predicts Martin, Moctezuma’s marketing director.

Despite its current success, Corona fell flat when it first entered the United States. Instead of shipping the beer in the unusual, see-through bottles, its Mexican brewer, Cerveceria Modelo S.A. of Mexico City, thought the American market would prefer brown bottles.

Didn’t Recognize It

Corona’s American fans, however, didn’t even recognize the beer in the brown bottles, and a number of retailers refused to accept the shipments. Soon, the company went back to clear bottles and began to sell the beer in six-packs instead of in individual bottles. Sales took off, and the beer is now sold in 26 states. As capacity increases over the next few years, the company hopes the beer will eventually be available in every state.

Corona is getting a reputation elsewhere, too. Some consumers who can’t get Corona are asking for it. “We used to get phone calls from states like Florida where Corona isn’t available yet,� said Mozina, the marketing manager. “But now we’re getting calls from Poland and Czechoslovakia.�