A fascinating story was published in Ad Age yesterday, detailing the rise of the “Modelorama” chain of beer stores in Mexico and the recent efforts of Anheuser-Busch InBev (AB InBev) to encourage Mexican workers, both at home and in the U.S., to either stay in Mexico or return to their native country in order to become franchisees. AB-owned Grupo Modelo, which operates the Modeloramas, has even produced an emotion-laden documentary in praise of the opportunities that the chain purports to create for family-owned and operated franchise businesses. Ad Age seems to suggest that the renewed focus on this Modelorama chain is something of a response to President Donald Trump’s continued anti-immigration statements. To quote the story:
“We said ‘that’s a great opportunity,’ says Daniel Haskell, business unit head of Modelorama. ‘Why don’t we launch the brand through an initiative that lets people know in an impactful way that they don’t have to go to the other side of the wall to find opportunity?”
The choice to describe this as the “launch” of the brand is something of an odd one, considering the Modeloramas have been around for some time—at least since 2013, when AB InBev acquired Grupo Modelo. Oddly, the Ad Age story then immediately goes on to say that at this time, Modelorama was “such a neglected product that no one even remembers when the first Modelorama opened. For a while, the name was changed to Corona, Modelo’s flagship beer. Some outlets used both names, in an excess of confused branding.”
And yet, there are apparently 8,000 Modelorama stores across Mexico representing 15% of Grupo Modelo’s sales, and that number is exploding. Grupo Modelo is reportedly opening “two or three” per day currently, which adds up to 873 new Modeloramas in 2016 and more than 900 so far in 2017. And the cost of getting started with the company is incredibly small, by American standards: Just $5,000 in order to become a Modelorama franchisee, according to Haskell.
In terms of AB InBev’s role, the stores stand to be extremely profitable. With low start-up costs and seemingly nonexistent regulation in terms of distribution, they amount to a series of 8,000 stores that sell nothing but AB InBev products, including Bud Light, Corona, Modelo Especial, Stella Artois and Victoria, along with some partnerships with companies such as Coca-Cola and Nestle water. A small number of “Modelorama Premium” boutiques also exist in higher-income cities and neighborhoods, which would offer “more artisanal and craft beers, and premium brands like Stella.” If these premium locales are successful, could they become a destination for American former-craft breweries acquired by AB InBev? Will the company start shipping cans of Goose Island down to Mexico City, or perhaps a (slightly) closer choice such as Four Peaks? According to the article, “up to 15% of Modelorama outlets” would eventually be under the Modelorama Premium banner, which suggests there will soon be hundreds of these stores in Mexico looking for “artisanal and craft beers” to sell—and presumably they mean those fully owned by AB InBev, unless they’re planning on working with Mexican craft breweries, which certainly seems unlikely. Perhaps Grupo Modelo will begin construction of more faux-craft breweries of its own within Mexico?
Obviously, the Modelorama format will be confined exclusively to Mexico, given currently existing three-tier laws that separate beer producers, wholesalers and retailers. But as the number of locations continues to grow, it looks more and more like a savvy business decision by AB InBev that will allow them to unload a whole hell of a lot of beer in Mexico at a minimum of cost and maximum profit.