We're gonna turn now to the battle of the beers.

The Wall Street Journal reported that Modelo has overtaken Bud Light as America's top beer.

You may think Modelo dethroned Bud Light after this.

And Bud Light sent me possibly the best gift ever, a can with my face on it.

Led to this.

The Bud Light boycott.

Well that's partly true, but it's not the whole story.

It's also thanks to this guy.

I had the privilege of being President Obama's antitrust chief.

He filed a lawsuit that changed everything for the brand, putting the imported Mexican beer on the path to take down the king of beers, Bud Light.

This is the economics of Modelo.

It's a world that changes all the time, but what's important never changes.

But change came in 2012 when Anheuser-Busch InBev looked to merge with Grupo Modelo, the brewer of Modelo Especial and Corona.

I started at the Justice Department in early January of 2013, and the biggest first matter before me was an investigation the staff had into the effort by AB InBev to acquire the worldwide rights to Modelo.

That year, AB InBev, maker of Bud Light, along with Miller Coors, made up about 65% of the U.S. beer market.

What our investigation found was that every year InBev, ABI, and Miller Coors would raise prices.

Modelo kept their prices stable and began to grow market share.

They were competing on the merits and they were winning, and it appears that AB InBev didn't like that idea at all.

So the government's antitrust lawyers advised the world's biggest beer maker it'd have to sell the U.S. rights to Modelo Especial before buying the company.

We said, you need InBev to completely divest any interest in Modelo as it relates to the United States.

They thought I was crazy.

And I said, well, I may be crazy, but if you don't agree to that, we're going to sue.

And they hemmed and hawed, and so I sued them.

After that, AB InBev agreed to sell the U.S. rights to Modelo Especial to Constellation, a third beverage company that mostly sold wine and spirits, but also imported Modelo Especial to the U.S.

We knew with them as an independent owner of Modelo, they'd have every incentive to grow the brand, maintain the quality, introduce new brands, incentives that InBev just would not have had at all.

Modelo and its new parent company had a long way to go to dethrone Bud Light.

So Constellation began looking at its marketing.

It starts with creating that universal broad appeal across all types of consumers and then expanding our investment and moving into English language and telling that story to more people.

They launched a new campaign running ads like this.

Modelo, the mark of a fighter.

During live multicultural sporting events to reach new audiences.

The fight clock is brought to you by Modelo.

Sales ticked upwards as more people drank Modelo.

And that data was presented to retailers using a Constellation program called Shopper First Shelf.

We do a lot of research behind the scenes.

We lay out the optimal flow of the beer aisle that will maximize retail sales for the retailer, which then also helps our distributor partners and helps grow the overall beer category.

They said stores could increase sales by arranging Modelo in a vertical line with Corona to the left.

What's interesting is Modelo, despite as big a brand as it is, the brand awareness of Modelo is actually much, much lower than of Corona Extra.

The idea was that consumers would see Corona first and then intuitively look to the right and find Modelo.

They also recommended that Modelo be shelved in the refrigerators since most imported beer is purchased to be consumed within six hours.

So shoppers needed it cold.

Inside the refrigerators, Constellation recommended it be placed at eye level and near the door handle to maximize visibility.

They found beers that moved from hinge to handle position increased sales by 8%.

Modelo Especial has enjoyed really high velocities for a long time.

When we have really high velocities, what's important is that we get enough space on the shelf so that we have enough inventory so the shelf isn't empty.

Constellation pushed retailers for more shelf space for Modelo because it was selling so quickly.

Sales rose.

By the end of the 2021 calendar year, Modelo Especial had passed AB InBev's Michelob Ultra to land the number two spot by retail store dollar sales.

That jump was partially fueled by a push to shift Modelo's consumer base.

In the 2019 fiscal year, Modelo's consumers were about 70% Hispanic.

And that population has been growing, helping to drive sales.

But Constellation was really pushing to give the brand a mass market appeal.

It worked.

Now, about 45% of Modelo's consumer base is non-Hispanic.

Both have driven more market share.

With all of that growth, analysts projected that Bud Light was on track to lose its top spot to Modelo as early as 2024.

But they probably didn't anticipate Bud Light's sales falling as dramatically as they did.

Anheuser-Busch says Bud Light's U.S. market share has stabilized and that it will win back drinkers by staying away from controversial topics.

Since the boycott, the company has worked on new Bud Light ads like this, emphasizing ties to football and country music.

AB InBev also said, Let's not forget millions of people still choose Bud Light each day.

And year to date, Bud Light remains number one in volume sales.

Modelo's rise is really the result of changing demographics, changing consumer tastes and savvy marketing on the part of Constellation.

And then to sort of top it all off, this Bud Light boycott blew it out of the water.

We expected we would be in this position maybe a year or two from now.

So it did happen a little bit earlier than expected.

But it's a great place to be.

But what we're focused on now is how do we maintain this position going forward?

Now Modelo is on track to have greater dollar sales for the full year of 2023.

So it looks to be solidifying its place as the top beer in America.

To give the American consumer choice is what competitive markets is all about.

And it's up to Constellation to keep going.

They clearly have the momentum and the consumer demand on their side.