Jose Cuervo owner reports 25% profit fall

Mexican drinks group Becle, the maker of Jose Cuervo Tequila, saw its 2018 third quarter net sales increase by 11.1%, but its operating profit fell by almost 25%.

Jose Cuervo represents 24% of total net sales

In the three-month period to 30 September 2018, Mexico-based drinks group Becle saw its net sales reach P$6.4 billion pesos (US$326m).

Net sales in the US and Canada grew by 8.9%, while Mexico witnessed a double-digit growth of 23.7% due to “volume growth, favourable sales mix toward premium Tequila products and higher average pricing”. Net sales for the rest of the world region grew by 1.2%.

However, operating profit for the period decreased by 24.4% to P$863m pesos (US$43.9m).

In terms of brands, Jose Cuervo, which represented 31.4% of net sales, saw its sales drop by 3%.

The firm’s other Tequila brands – which included 1800 Tequila – saw net sales increase by 13.4% and represented 24% of net sales.

Other spirits brands, including Irish whiskey Bushmills and Three Olives Vodka, grew by 28.4% and represented 23.1% of total net sales.

Ready-to-drink (RTD) brands represented 7.7% of total net sales and reported an increase of 15.1%.

During the third quarter, advertising, marketing and promotion spend increased 19% to P$1.5 million pesos (US$76,412).

“Depletion growth was strong across all regions during the third quarter, including the second consecutive quarter of 5% depletion growth in the US and Canada region,” the company said in a statement.

“We also continued to generate significant market share gains in Tequila in Mexico and are expanding our exposure to the premium Tequila category with the launch of Jose Cuervo Tradicional Cristalino to drive additional market opportunity and market share gains.

“Despite cost pressures resulting from increase in third-party supply, we are enjoying favourable trends across our portfolio and geographical regions and remain well positioned in each of our markets and categories.”