International Marketing Case 9. 1 Unhappy Marriage 1) Anheuser purchases its 17. 7% share in hopes to eventually increasing its shares to 50. 2%. Modelo is the world’s tenth-largest beer producer and holds 50% of the Mexican beer market. They also export to 124 countries in every continent of the world. They viewed this stake in Modelo as profitable, because they could get acquisitions of brands such as Corona, and this also allowed for an increase in Anheuser’s distribution network in Mexico, due to the fact that Mexico’s 20 percent tariffs on imported beer was soon to phase out, meaning U.
S. breweries could invade the market. 2) Grupo Modelo was willing to sell the stake due to the passing of NAFTA (North American Free Trade Agreement), as mentioned before Mexico’s 20% tariffs on imported beer was going to be phased out, meaning that there would no longer be a 20% tariff. This meant Modelo was going to lose money, with competitors entering the market they would lose their large market share in Mexico. 3) Anheuser’s hopes were to gain the Modelo brand for its own U. S. distribution system.
The problem they faced was the management at Modelo decided to renew its ten-year contract with its existing U. S. distributors. The caused Anheuser to increase its stake in Modelo. The reason why they did this was to try to get more seats in the board of directors unfortunately even with 50. 2% stake in Modelo they still only controlled 10 out of the 21 seats. 4) A major lessen Anheuser and any company could use when choosing international partners, is they must have a concise idea of the cons and pros of partnering in the future.
As we saw with Anheuser and Modelo, Anheuser was trying to purchase its shares so it could have a control over the board of directors, Modelo most likely saw this and understood what Anheuser was trying to do, so they renewed their contract for this reason, an important part with all partnerships is to have a good relationship, having a relationship like Anheuser, who was only looking for their best interests and could care less about Modelo, will result in problems like what we saw.