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Cuervo maker’s Q4 net profits rise 41%

Mexican drinks group Becle, which owns Tequila brand Jose Cuervo, has reported a nearly 41% income increase for the final three months of 2023.

Jose Cuervo’s owner saw profits rise despite falling volumes and revenue

Its net sales reached MXN1,963 million pesos (US$114,732) for the fourth quarter (Q4) of 2023, with a net margin of 14.9%, which was an increase of 4.8 percentage points on the previous year.

Its total revenue for Q4, however, was 13,164 million pesos (US$769,547), a drop of 4.6% from 2022.

Becle attributed its gross margin decrease to the appreciation of the Mexican peso against the US dollar and higher input costs, indicating the “transition through older inventory produced with higher-cost materials”.

In Q4, the company’s total volume of nine-litre cases was 7,945 million, which marked a 2.9% year-on-year drop. For the full year, volumes decreased by 1.4% to 27.1 million nine-litre cases.

The company said it remained “optimistic about its growth trajectory” and that it believes the volume declines are due to the market normalising after “two years of exponential growth” owing to the pandemic.

In the US and Canada, Q4 sales dropped by 12.2% to 7,444 million pesos (US$435,127).

In Mexico, however, revenue grew by 10.2% year on year. Becle said this was mainly driven by ‘pricing initiatives and premium tequila brand sales’.

Category results for Q4

For Jose Cuervo, volume was down by 1.6% in comparison with 2022, falling from 2,797 million nine-litre cases to 2,743m. Its net sales decreased by 5.8%.

Sales for its non-alcoholic/other category were up 18.8% year on year, with volumes up 5.6%.

The company’s ‘other spirits’ category, which includes Kraken rum, Three Olives Vodka and Bushmills Irish whiskey, saw Q4 sales fall by 7.2%.

Net sales of its RTDs also fell by 20.7%.

For the full fiscal year, net sales dropped in all categories, with RTDs falling 23.5% and Jose Cuervo falling 1.6%.

Becle said its strategic focus was on premiumisation, which has helped it to maintain favourable market share in key regions.

In a statement, the company said: “The enduring resilience and continued demand for our brands underline our confidence in regaining momentum as we progress through 2024.

“We also anticipate cost tailwinds for the year, deriving from supply chain pressures easing and lower input costs, resulting in margin expansion opportunity.”

Jose Cuervo is the world’s biggest-selling Tequila brand.

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