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Cuervo Q1 volume and net sales slide
Jose Cuervo parent company Becle saw its 2018 first quarter net sales fall by 12.7%, impacted by declines in the US and “negative” foreign exchange rates.
Jose Cuervo owner Becle saw its net sales slip by 12.7% in Q1
The Tequila-maker saw its net sales fall to P$4,307 million pesos, while volume sales decreased by 3.9% to 3.4m nine-litre cases, offset by “strong” growth in Mexico and the rest of the world.
The volume decline in the US was affected by the price increase on 1 January 2018, which impacted the company’s forecast depletions, leading to volatility in shipments.
Operating profit during the first quarter decreased 36.1% to P$957m pesos, impacted by the company “utilising a lower percentage of internally sourced agave, the change in treatment of certain promotional and sales support expenses as a reduction of sales and the unfavourable impact of foreign currency”.
Volume growth in Mexico was boosted by “favourable promotions” during the first quarter and growth across all channels.
Net sales of the rest of the world region increased by 18.2% over the first quarter of 2018.
In terms of brands, Jose Cuervo accounted for 31.2% of total net sales, yet saw a 21.2% net sales decrease during the first quarter.
The wider Tequila portfolio – which includes 1800 Tequila – decreased 9.5% compared to the same period the previous year and represented 21.1% of total net sales.
Other spirits brands, including Irish whiskey Bushmills and Three Olives Vodka, represented 25.7% of total net sales in the period and reported a 17.4% increase in net sales.
During the first quarter, the company invested P$34m pesos in capital expenditures and used P$335m pesos for share repurchases.
“The quarter ended with strong depletion growth in March and we expect future quarters will no longer be impacted by the comparisons to last year’s price increase,” the company said in a statement.
“Our strong momentum in Mexico continued during the first quarter and we continued to expand our market share leadership. The short-term impact on US volume led to pressure on first quarter earnings, which is expected to recover as volume trends return to normal. We remain confident in achieving our 2018 goals.”