After dominating the American beer market for over 20 years, Bud Light has now slipped from its top position to second place.
According to Nielsen data analyzed by Bump Williams Consulting, Modelo Especial, a Mexican lager, surpassed Bud Light in terms of U.S. retail dollar sales for the month ending on June 3. Modelo claimed 8.4% of sales in U.S. grocery, convenience, and liquor stores, while Bud Light dropped to 7.3%.
This development marks a significant milestone in Bud Light’s decline in sales, which began in early April. The brand received criticism when it sent a commemorative can to transgender influencer Dylan Mulvaney, leading to outrage among some consumers who vowed to boycott Bud Light. Additionally, Mulvaney’s supporters believe that the brand did not adequately support her, further contributing to the backlash.
Dave William, Vice President of Analytics and Insights at Bump Williams, acknowledged that Bud Light has held the title of the best-selling U.S. beer since 2001 and could still maintain that position this year. He pointed out that Bud Light’s year-to-date market share stands at 9%, surpassing Modelo’s 8%. Furthermore, Bud Light continues to sell higher volumes than its competitor.
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However, Modelo seems to have gained an advantage as its dollar sales consistently increased by double-digit percentages each week. The recent launch of Modelo Oro, a new light beer in May, has also contributed to raising brand awareness.
It’s important to note that sales in bars and restaurants, which are more challenging to track, are not included in the retail numbers. Prior to April, Bud Light had a significant lead over Modelo in these establishments. However, David Steinman, the Vice President and Executive Editor of Beer Marketer’s Insights, mentioned that Modelo’s sales in bars and restaurants have been growing rapidly. It is believed that Bud Light experienced an even sharper decline in sales in these venues compared to grocery stores.
According to Dave Williams, Bud Light’s U.S. retail sales decreased by 24% in the week ending June 3, while Modelo Especial saw a 12% increase in sales.
Scott Scanlon, an Executive Vice President at the consulting firm Circana who closely monitors the alcohol market, stated that Mexican imports like Modelo and Corona have been the most promising segments in an otherwise stagnant U.S. beer market for several years.
According to Scott Scanlon, when Modelo initially entered the U.S. market in the 1990s, its primary target audience was Hispanic drinkers. However, in 2015, the brand began running English-language advertisements, which led to a significant expansion of its consumer base. Modelo has particularly gained popularity among younger drinkers who appreciate its richer flavor profile, as mentioned by Scanlon.
Currently, Modelo is already the best-selling beer in markets such as Los Angeles and Chicago. However, there is still substantial potential for further growth, especially on the East Coast of the United States.
Scott Scanlon expressed his belief that Modelo was destined to become the number one beer brand, given the remarkable growth numbers it has been consistently achieving. He stated that the only uncertainty was the timeframe within which it would happen.
Scanlon also noted that the COVID-19 pandemic played a role in accelerating Modelo’s sales in the United States, as the brand relies more on retail stores than bars and restaurants. Additionally, Bud Light’s missteps further contributed to the rapid rise of Modelo.
Grupo Modelo, the Mexican brewer, is owned by Anheuser-Busch InBev, which is also the parent company of Bud Light. Constellation Brands, based in Rochester, New York, has held the license to sell Modelo in the U.S. since 2013 as part of an agreement with antitrust regulators following InBev’s acquisition of Grupo Modelo.
Constellation Brands revealed that it has nearly doubled its marketing spending on Modelo over the past five years and continues to see potential for growth in the U.S. market. However, Bud Light is determined to counter this.
In recent news, InBev announced its plan to triple its marketing expenditure in the U.S. this summer, focusing on sports and music festivals. Bud Light remains a prominent sponsor of LGBTQ+ Pride events as well.
An Anheuser-Busch spokesperson emphasized that Bud Light continues to hold the top position in terms of volume and dollar sales nationally for the year.
