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Price increases hit Jose Cuervo Q2 sales

Mexico-based drinks group Jose Cuervo has reported an 8.1% net sales decline in its 2017 second quarter, caused by the company’s January price increases.

Jose Cuervo saw its Q2 net sales fall by 8.1% following the firm’s January price increases

The Tequila-maker reported its net sales had fallen to 6,924 million pesos (about $US38m) compared to the same period in 2016.

While price increases negatively impacted Jose Cuervo’s sales and volumes, the action – along with inventory transfers from Mexico to the US and a favourable product mix – boosted gross profit by 4.3% to 7,960 million pesos (US$44m).

In terms of brands, Jose Cuervo accounted for 39.5% of total net sales with a 2.1% decrease compared to the same period in 2016.

The company’s other Tequila brands represented 19.6% of total net sales, and witnessed a 1% increase in Q2.

Other spirits brands, including Irish whiskey brand Bushmills, represented 16.9% of total net sales, with a 12.6% decrease.

Net sales in the US and Canada fell by 12.2%, with the region representing 73.4% of total sales. According to Jose Cuervo, sales fell due to the impact to volumes of the January price increases, which were partially offset by favourable effect of foreign exchange.

Net sales in Mexico, which represents 15.3% of total sales, increased by 7.2%. Sales in the rest of the world increased by 2.7%.

“Sales volumes continued to be pressured by the impact of the January price increase,” the company said in a statement.

“However, strong volumes in Mexico, along with a favourable gross margin and spending levels on target with plan drove an 18.2% increase in EBITDA during the second quarter. We remain confident with our growth plan and opportunities for 2017.”

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