Cruz Blanca: Domestic Mexican

A couple of weeks ago the news sort of broke: Molson Coors planned to buy the small Chicago brewery Cruz Blanca. “Sort of” because aside from two reports, I’ve seen no further news on the sale—nor an acknowledgment from either of the breweries involved. The reporting seems solid enough, though, so let’s assume it’s true. On the surface it does seem a little weird. Molson Coors never went on the kind of acquisition spree AB InBev pursued, and seemed to be liquidating the assets it did have.

But from another angle, it makes more sense: Cruz Blanca is a Latino-owned brewery with a flagship “lager especial” called Mexico Calling. Mexican imports have been the one consistent bright spot over the past decade, so acquiring a small brewery with a local spin on the trend makes sense. While other categories have bounced around (craft beer, hazy IPAs, seltzers, RTDs), Mexican imports have just grown and grown. Mexican beer accounted for 59% of all imports in 2014; today it’s a whopping 84%. Mexican imports have more than doubled over a decade, and famously, the number one selling beer in the US is Mexican-made (Modelo). Mexican beer has at least two advantages over domestic beer: it communicates a sunny, beachy lifestyle that appeals to Americans across demographics, and it is on-trend for people who are moving toward unfussy, traditional beer.

Molson Coors isn’t buying a craft brewery, they’re buying a domestic brewery that may have all the advantages of a Mexican import.

Doug Veliky had a nice piece about the sale in his Beer Crunchers Substack last week. He lives in Chicago where his day job is the CMO for Revolution brewing, so this is a hometown story for him. He captures the main reasons why this makes sense: it’s an organic, established (if small) brand that has lots of room to grow; Molson Coors can position it among the Pacificos, Modelos, and Coronas rather than craft breweries, expanding its audience; it makes sense as a hedge against possible high tariffs on Mexican imports in the Trump administration; MC is in a position to super-size the brand if it goes that way based on its national distributor network. Where our thinking diverges is that, if anything, I am more bullish about the brand’s potential than Doug. He figures it’s just a trial balloon, but I think it might be a major move.

Almost a decade ago—maybe 2016?—I was doing some consulting for breweries. My expertise is messaging and communications, not business, but I did see potential for a very similar idea back then. I even pitched it to a large, regional brewery. At that time, there weren’t many Latino-owned breweries around, and I suggested a start-up brand headed by a Latino team. That was in the midst of a growth spurt within beer, and the brewery never pursued it. I wasn’t confident enough to press the issue.

Rather than focusing on the hard craft vs non-craft dichotomy, at the time I was thinking about demographics. Hispanics, a category that includes culture and race, are a large group, 62 million, and the fastest-growing. Small breweries have become a lot more diverse in recent years, but “craft” as a category is coded heavily White, and that was always going to be a barrier to reaching much of our diverse country. It seemed clear that reaching more Americans meant different kinds of appeals. And, while Craft failed to appeal to many non-White drinkers, the reverse isn’t true, as we can see from the growth of imports: White Americans are happy to drink Mexican beer.

When I was musing about these things, there was no precedent, but now there is. Molson Coors—the European one, anyway—has already worked with a brand that broadcasts foreign but is made locally: Madrí. Launched in the UK in late 2020, everything about it looks like sunny Spain, from the name (Madrid) to the font to the man in the checked vest on the label—but it’s brewed in Yorkshire.

Madrí is priced at a premium, but below Peroni. At 4.6% abv it’s not too weak and not too strong. It’s not as flavourful as craft, but more so than mainstream lagers. Struggling pubs have been given all sorts of incentives to stock it. And when it appeared on the bar, drinkers who were happy to get out of the house but still couldn’t get a flight to Spain or Italy closed their eyes and drank Madrí instead.

Madrí Excepcional is all over the UK. It is the most successful new alcohol brand launch in the 16 years that analyst CGA has been measuring such things. After a soft launch in October 2020, in 2022 it exploded. It’s gone from nowhere to become a top 10 lager brand.

That positioning is key. Molson Coors could scale up a local brand easily enough and charge a premium in pricing. Modelo already commands a higher price, and it’s the number one beer in America. As a brand, Cruz Blanca would sit in that sweet spot of larger margins and a much larger potential audience. Doug suggests that Molson Coors doesn’t have immediate plans to launch the brand nationally, and I believe him. But that doesn’t mean they won’t, nor that they haven’t considered the steps to do so. Put it another way: if a large brewery wanted to launch a domestic brand of Mexican lager, how would they pull it off? Buying an established, Latino-owned brand noted for quality seems like a pretty good first step.

We’ll see what happens. But I wonder if this is an American hack to fight back against the inexorable encroachment of brands from the South. Big breweries never understood how to sell craft beer to a mass market—and frankly, they never wanted to. But Miller Coors knows a lot about selling light lagers, and if their customers want something with a Mexican flair, why wouldn’t they expand the brand?