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In the beer business, when the battle is a global Goliath against a local David, the smart money is usually on Goliath. Big beer brewers employ global marketing strategies powered by big budgets. But because their attention is focused on the world market, global competitors may overlook opportunities to court local customers. When this happens they fail to adapt their strategy to meet local preferences. As this case study of the distributor V. Suarez and Company in San Juan, Puerto Rico proves, small savvy competitors can often take advantage of these strategic oversights.
This case study of the current success of Coors Light beer in Puerto Rico really starts in the aftermath of an earlier local marketing battle in the early 1980s that pitted Budweiser, a global Goliath, against the island's favorite, Schaefer, distributed by V. Suarez and Company. Schaefer was Puerto Rico's most popular beer until the mid 1980s. Then Budweiser's aggressive marketing campaign successfully dislodged Schaefer from its leadership position. By 1991, Bud had seized 50 percent of the market, while the Schaefer market share had plunged to just 16 percent. Heineken and the locally produced Medalla held a significant share of the remaining market (Exhibit 1). The big winner a decade ago: Goliath.
But in the business assessment that followed the defeat by Budweiser, Diego Suarez, head of V. Suarez Company, a 45-year-old family-owned distribution company, saw a way to exploit the global approach of his competitor and achieve longer term renewal for the company despite the waning performance of his flagship beer brand, Schaefer.
For this second battle, he decided to bet his marketing dollars on Coors Light, brewed in Colorado and almost unknown in Puerto Rico. The Coors brand seemed an unlikely contender to satisfy the thirsts of local consumers, given the strongly entrenched position of existing brands and the tastes of the Puerto Rico market. The company's Coors Light product was even a less likely candidate for a highly machismo Latin culture. In fact, there had never been a successful light-beer entrant to the Puerto Rican market. Bud Light and Miller Lite (the leader in the US market for light beer at the time) had both failed in their attempts to cultivate a position in Puerto Rico. Even...