The song was inspired by a day trip the band members (Boon, bassist Mike Watt, and drummer George Hurley) had taken to Mexico on the Fourth of July, 1982. (The same trip also inspired the Mike Watt composition "I Felt Like A Gringo" on Buzz or Howl Under the Influence of Heat.) Moved by some of the more downtrodden elements of the area that he had seen, D. Boon set about writing a song in sympathy with the people of Mexico.
In contrast to the more frantic hardcore punk tempos of the day, "Corona" uses an almost polka-like country swing rhythm for the song. The open chord figures in the song, composed and performed in the key of G major, suggest that Boon may have composed the song on acoustic guitar rather than his trademark electric.
The title comes from the beer of the same name. A poor woman on the beach sees Boon with a bottle of Corona, he can see it in her eyes that she needs the empty bottle just to get the 5 cent deposit.
An early version of the song, as performed by the band on a live video shot by Flipside magazine in 1983, for some reason has the deposit on the bottle being ten cents, not five.