This case is about issues Grupo Modelo faced as a result of rapid globalization and changes in the corporate landscape. Modelo partnered with Exports Brands International and Nippon Spirits to export its Corona beer to Japan. After several decades of profitable collaboration, Modelo and EBI/NS are on the verge of significant changes. Entry options to markets used to be limited, but high competition and partnerships with other world-scale brewers provide opportunities that were not available previously. This situation will prove to be challenging to EBI/NS because Modelo will be shifting its focus from Japan to Asia/Pacific as a whole. Word (99)
EBI specifically concentrates on exporting foods and beverages to Japan, which made the company a suitable partner when Modelo first started exporting to Japan. Also, EBI has partners like Nippon Spirits that occupy leading positions in alcohol beverage distribution. Today, however, Modelo is not only a brewing company but also a distributor and has access to Anheuser Busch’s resources, including distribution and marketing capabilities. Modelo’s short-term goals include keeping sales in Japan on a steady level. More specifically, rising competition is of considerable concern to Modelo because the Japanese population is turning to cheaper brands or unique experiences. EBI and NS also have the same goals because profit will be lost if Corona loses the competition.
Modelo, however, wants to shift focus to the Asia/Pacific region as a whole in the long run rather than concentrating solely on the Japanese market. This objective may force Modelo to make changes to its operations, potentially ending the partnership with EBI and NS. The reason is that, at its current state, EBI does not offer capabilities that will allow Modelo to expand to other markets, specifically Asia/Pacific as a whole. These long-term goals do not align with the aspirations of EBI and NS that wish to stay exclusive importers of Corona to Japan.
The key lesson that can be learned from Modelo/EBI/NS partnership is that no collaboration is going to exist forever due to changing markets and corporate landscapes, and companies should always consider future options to stay competitive and profitable. For instance, the reason behind Anheuser Busch’s purchase of half of Modelo might be the company’s desire to expand to the Mexican market, where Modelo has been a sole leader. AB could have started everything from scratch but chose a more viable and faster option.
If EBI wants to continue its collaboration with Modelo and remain its export management company, it should offer them competencies not available to Modelo and Anheuser Busch. EBI will have to gain a competitive advantage over Modelo and AB in terms of marketing.
One option is to start building partnerships with Asia/Pacific wholesalers and developing a marketing strategy that can be offered to Modelo. However, it is very unlikely that EBI will achieve the desired results quickly as expanding the network is time-consuming and expensive. Other opportunities for EBI include, besides consolidating its Corona business, partnering with much cheaper brands and exporting them to Japan. It may result in less profit, but it will mitigate the risk of going bankrupt after losing the primary customer.
Gaining and preserving a competitive advantage is essential for staying profitable and keeping market leadership. Therefore, companies should continuously assess potential market changes that may disrupt their current operations and develop action plans and growth strategies. The case of EBI, possibly losing its significant customer, is an example of what may happen if a company relies on a single market or does not develop long-term strategic plans. EBI has to expand to other markets to stay competitive in the eyes of exporters. Alternatively, EBI may choose to concentrate on serving many but much smaller companies to compensate its losses due to the end of the partnership with Modelo. Markets are changing, and people are getting more interested in cheaper alternatives.