Beer Marketer's Insights - Walmart Offers Modelo Especial for $24 Per Case as Loss Leader

Nation's largest retailer is offering low prices of Modelo Especial, at $24 per case for both bottles and cans, reportedly in over 40 states. Program started in a handful of states in Mar, expanded in Apr and as of mid-May, it's in most of US. Walmart is selling Modelo Especial below cost in many areas and that's creating lots of ripple effects. Modelo Especial averages $36/case across all packages in natl Circana multioutlet + convenience data. Walmart reportedly undertook this initiative to grab share, and this is not pricing that Constellation sought. The largest retailer's ostensible objective is to close gap it had in share of its biz that was high end. In order to do so, it's leaning into Modelo Especial. And it dramatically lowered the price of the #1 high end brand to attract new consumers, especially Hispanic consumers. Now some other retailers seek to get in on the low-price action. Some, like TX powerhouse H-E-B, "price match" Walmart, according to sources.Walmart's lower pricing for Modelo also causing consternation, upset for other suppliers. This move controversial and reportedly led to some heated discussions between Walmart, some suppliers and some distribs. Walmart's top alc bev guy reportedly championed this move, but just changed roles at Walmart and there was more turnover on team. Even for Constellation, lower pricing may fuel additional short-term boost to already-growing Modelo Especial sales, and Walmart is a top customer, but co can't want below-cost pricing that often bedeviled the biggest beer brands and arguably commodified their biz.Important Context for Walmart's Move But this move is bigger than beer. "To cater to price sensitive shoppers," wrote CNBC late last week, Walmart "is coming out with more price rollbacks&mdash;temporary price cuts&mdash;and that is keeping store traffic and sales strong." This sounds very much like what largest retailer is doing with Modelo Especial. Meanwhile, on May 16, Walmart reported overall "strong first quarter driven by consumers seeking bargains with inflation still an issue," headlined CNBC. "There are signs that shoppers are pulling back under the growing weight of higher prices and the higher costs of carrying debt," CNBC added. Walmart revs up $9 bil, 6% in latest qtr to a whopping $161.5 bil and profits hit $5.1 bil, triple last yr's. Stock jumped 6% that day. Is this another example of Walmart flexing its muscle, like its recent push to go direct with some hot smaller NA suppliers?

Walmart Offers Modelo Especial for $24 Per Case as Loss Leader

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