After two decades as the top-selling beer in America, Bud Light had achieved mythological status. Launched by Anheuser-Busch (later, AB InBev) in 1982, the adjunct lager became a fixture at barbecues, birthday parties, and even baby showers across the country, outselling its competition by legendary margins. Its champion status was divine mandate — or so it seemed.
In June, a confluence of investment, advertising, PR mishaps, and cultural churn capitulated into a dynastic shift in the beer industry. For the first time since 2001, a new beer took over as the most popular beer tracked in retail channels by NielsenIQ: Modelo Especial.
Everyone from the most vocal pundits to the least articulate drunkles had a take on why the country’s de facto light beer was relegated to second place. There was shock and gravedancing. Floods ravaged Ukraine, wildfire smoke turned the New York skies vermillion, and yet it was the new king of beer sales sitting atop the docket for the national news.
Some saw the news as an indicator of ABI’s inability to keep up with drinkers’ diversifying beer tastes. Some attributed it to demographic shifts in the American drinking public. Even more heralded it as karmic justice for Bud Light’s coziness with trans activist Dylan Mulvaney. The truth is, Bud Light’s downfall has less to do with Bud Light and more with a tactical misjudgment of the import category as a whole.
Yes, Bud Light took an L, but what makes this L legendary is what delivered it: a once second-tier Mexican import from Grupo Modelo that rose to become the new everyday beer of choice for grocery, liquor store, and convenience shoppers in the United States.
A Matter of Great Import
Traditional beer market evaluators divide beer into two main categories: domestics and imports. This is how it’s been for decades, but Especial’s meteoric success highlights a flaw in this industry dichotomy.
Domestics are those American-made and deeply American-identified beers like Coors, Miller, and Budweiser, as well as their many sibling brands. Imports are the beers made outside the United States, often selling themselves on their foreign appeal. While the rise of craft beer in the past 30 years has challenged this paradigm slightly, these are still the predominant silos of beer, with domestics making up roughly 64 percent of the market, imports holding around 22 percent (and “craft” making up the rest).
That ratio nudges slightly in either direction on a year-to-year basis, but domestics have historically outsold imports handily. In 2013, Bud Light alone accounted for 20 percent of volume beer sales, nearly outselling the whole category by itself. Perhaps one of the reasons Especial surprised the beer world is that no one was making an apples-to-manzanas comparison between U.S.-made staple macros and beers of a similar stripe brewed south of the Rio Grande.
Bump Williams, president and CEO of beverage alcohol intel firm Bump Williams Consulting, started noticing Bud Light and Especial’s convergent trends in 2020. At the time, Especial’s sales were climbing by 20 percent due to Covid-19 panic buying, and Williams followed along as they never waned. His firm predicted Especial would pass Bud Light in chain retail dollar sales in the next three to four years. When the Mulvaney fiasco hit, that timeline accelerated.
“There was a $2 billion gap between Bud Light and Modelo Especial in the off-premise arena,” Williams says. “With the double-digit growth rates of Modelo Especial and the single-digit declines in Bud Light, eventually those lines were gonna cross, but we never thought it would happen this quickly.”
“Corona is meant to be drank with a lime at the beach. It is relaxation. Heineken, it’s meant for nightlife. Guinness is meant for pub or bar drinking. These beers have very specific occasional arguments, and Modelo is setting itself up to be what you need wherever you need it.”
There is little parity within the import category. European brands like Beck’s jostle for tenths of percentages against Japanese brews like Kirin Ichiban, while 80 percent of the category is owned by Mexican imports, according to 2023 figures from the Beer Institute. With Stella Artois losing its import status in 2021 and Heineken struggling to maintain its prestige with younger drinkers, the import category is left to Constellation Brands’ Corona and Modelo. Especial has not been pigeonholed as an “exotic” brand like Corona, though. Good Beer Hunting editor and reporter Bryan Roth believes this unique factor gives Especial the ability to transcend the “import” category altogether.
“There’s something there about this brand in particular that resonates with beer drinkers who are looking for something a little bit more,” Roth says. “Corona is meant to be drank with a lime at the beach. It is relaxation. Heineken, it’s meant for nightlife. Guinness is meant for pub or bar drinking. These beers have very specific occasional arguments, and Modelo is setting itself up to be what you need wherever you need it.”
Ten years before they flip-flopped, in 2013, Bud Light and Modelo Especial were already entangled. That year, Bud Light sold 294 million cases, a beefy figure when compared to Especial’s roughly 50 million in the same year. But Grupo Modelo was aggressively pricing Especial to compete with Bud Light and Miller Lite rather than other imports. ABI already owned a non-controlling stake in Grupo Modelo, so it took the chance to gobble up the rest, completing a $20.1 billion merger with Grupo Modelo.
The deal would’ve given ABI a 46 percent share of all beer sales nationwide. Regulators balked, filing an antitrust suit stating the merger would eliminate price competition in the beer space and “diminish ABI’s incentive to innovate with respect to new brands, products, and packaging.” After months of legal volleying, ABI agreed to sell off the rights to Grupo Modelo’s brands in the United States to Constellation Brands.
Fully in the hands of Constellation, Especial continued its upward trajectory, making inroads into territory previously reserved for Bud Light and its ABI peers. Constellation immediately launched Modelo Cheladas nationwide to compete with the Budweiser and Bud Light versions that owned the market. Especial continued double-digit growth year-over-year as Mexican imports to the U.S. were on track to double in a single decade.
In 2018, it surpassed Corona to become the top-selling import. In 2021, Especial ran its first Super Bowl ad, advertising its “fighting spirit” in the very same advertising channel that had launched Bud Light to its eminence way back in 1987. The gold-foil-wrapped beer now routinely shows up in places ABI and MillerCoors once held exclusivity, like MLB stadiums, making it all too clear where Constellation thought its acquisition was headed.
“We tend to code beer by where it’s produced as opposed to who’s drinking,” Williams says. “Modelo Especial has just appealed to every single demographic out there. It’s one of those iconic beers that people just want to have in their hand.”
Bud Light’s Fabled Fumble
You don’t lose an anointed position without some fault, and Bud Light’s errors were numerous in its decade-long decline.
Originally positioned as a no-frills “beer of the people,” Bud Light used its position as the sport-affiliated cheapo drink to create a lineage of advertising campaigns that became bona fide pop culture moments. Who could forget the “Real Men of Genius” radio spots that kicked off in 1998 and continue as a TikTok meme to this day? Or the 2017 “Dilly Dilly” campaign that rattled in the national consciousness like a pebble in the heel bubble of a cross-trainer?
But ABI is a gargantuan company, and its tone deafness has scaled as the company has grown, and it has been losing touch with the average American drinker at an accelerated rate. Since the millennium, Bud Light has moved away from schlubby football fans as the face of its brand and more toward celebrity endorsements. Now, T-Pain, Don Cheadle, and Post Malone hock the beer’s less filling refreshment, elevating it to something aspirational rather than ordinary.
“I cringe every time people say, ‘The Dylan Mulvaney incident was the downfall of Bud Light.’ This has been happening for years. That was a tipping point that just pushed it over the edge towards a decline.”
Their foray into the more targeted, fragmented world of influencer marketing was a spectacular rake-stepping that cost ABI a reported $395 million and sent a pair of execs packing. The Mulvaney incident and the ensuing boycott cut the brand deeper than even its “The Perfect Beer for Removing ‘No’ from Your Vocabulary” snafu in 2015, but it is really just a symptom of Bud Light’s waning ability to connect to a drinking population that is evolving at a pace it can’t begin to fathom.
“I cringe every time people say, ‘The Dylan Mulvaney incident was the downfall of Bud Light,’” says Julie Rhodes, a beer marketer and consultant with Not Your Hobby Marketing. “This has been happening for years. That was a tipping point that just pushed it over the edge towards a decline.”
The Hispanic and Latino population of the United States has doubled in the past decade, and many have focused on ABI’s inability to access the ascendant Hispanic and Latino demographic. The U.S. working class is increasingly non-white, and 65 percent of Hispanics are millennials and Gen Z, leading some to declare that Mexican beer should be considered domestic going forward. In the wake of losing out on Grupo Modelo’s brands, ABI has tried with Estrella Jalisco and Montejo to attract this growing population of young American drinkers, but they have not been able to get traction.
Rhodes says it’s not as simple as “a bigger Hispanic population means more Modelo sales.” Roth says he would’ve subscribed to this logic a decade ago, but recent data analyzed by Good Beer Hunting indicate that more non-Hispanic households buy Modelo than Hispanic households. The fact is that ABI doesn’t know how to sell Bud Light in this diversified dynamic, and its attempts to gin up an import competitor within have failed because of its lack of connection to the Hispanic and Latino drinkers it explicitly targets.
Drinkers have evolved as well, outpacing the idea that there can be one monolithic beer to satisfy all comers. In a bid to maintain its position at the top, Bud Light has sacrificed its identity. The mid-aughts saw a dizzying slew of line extensions that drew the once utilitarian beer into odd, incongruent new forms. Bud Light Lime and the aforementioned cheladas were followed by Bud Light Orange, Ritas, Lemonade, Lemon Tea, Blends, Seltzer, Seltzer Hard Soda, and the zero-carb Bud Light Next.
“You try really hard not to have all your eggs in like one or two baskets. But at the same time when you start adding, that’s when you start losing identity to your original brand.”
What’s left is a brand that feels lost beyond its sheer popularity. Bud Light’s selling point going into 2023 was its ubiquity. People drink it because it’s what you drink and have always drunk. That is still a very powerful drive (Bud Light remains the second best-selling beer by dollar sales and the best-selling by volume), but it’s not one that resonates on a personal level anymore.
“The tyranny of Bud Light as the most popular, most accessible choice to drink alcohol has declined because there are just way more options of things to drink,” Roth says. “You have the most diverse collection of characters in the country’s history, choosing from the most diverse collection of brands that have ever existed in the country’s history; people can find the thing they want to drink really easily.”
The New Throne Is No Throne
In August, Constellation beer division president Jim Sabia told CNBC that the company plans on Especial being the top-selling beer for “three, five, seven, 10 more years.” Sales numbers have thus far supported Sabia’s prediction, as the gap between Especial and Bud Light has continued to widen since the brands first traded places three months ago. Constellation’s most recent earnings, released late last week, show an unabated upward trendline for Modelo, growing 9 percent in the last quarter.
Roth doesn’t see Bud Light reclaiming its throne, nor does he see Especial passing Bud Light in volume sales. But perhaps the concept of a singular mandate is the most outdated myth in this whole scenario.
“For anybody who’s running a business or that has a product portfolio, diversified revenue stream is great,” Rhodes says. “You try really hard not to have all your eggs in like one or two baskets. But at the same time when you start adding, that’s when you start losing identity to your original brand.”
The market factors that have led to Bud Light’s flop era have also led to a complete redesign in how big beer companies address the market. Another thing that the Mulvaney controversy illuminated is that most drinkers, not even elected officials, do not know which parent companies own which brands. Even while Bud Light has been getting embarrassed politically, ABI had plenty of safety bets in Michelob Ultra, NUTRL, Cutwater, and Kona Big Wave, all of which are surging below the surface of their multinational operation.
“Bud Light was the brand that kept the lights on, it was the brand that kept the canning and packaging lines efficiently moving, it was the brand that appealed to the vast majority of consumers in America, so it’s not like it was a burden,” Williams says. “But all the money that they’re putting behind Bud Light now, it’s not going to get a return on investment, because the Bud Light consumer just isn’t listening.”
Constellation is hardly a model of revenue diversity. Its other flagship, Corona, is committing a lot of the same celeb marketing and brand-extension-gone-berserk faux pas as Bud Light did in recent years. Which is why it’s hard to believe Especial’s moment is anything less than miraculous. If Bud Light’s odyssey can impart one lesson, it’s that a branded house can’t stand. Two decades of success can buy you plenty of esteem, but you can’t be everything to everyone.
Not forever, at least.
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