After Long Decline, Jose Cuervo Finds Silver Lining To Achieve TurnaroundNovember 16, 2015
After years of struggle while the Tequila category achieved some of the most impressive growth in the spirits business, Jose Cuervo is again on the rise.
Following a half-decade of decline, Cuervo, the category leader, eked out a 0.9% depletions increase to 3.35 million cases in the U.S. last year, its first full year under stewardship of Proximo Spirits. This year, the brand’s progress looks to be more significant.
Through the first nine months of 2015, Cuervo (about $19 a 750-ml.) was up 6% in control states, according to NABCA. Meanwhile, it advanced by 9.1% in IRI channels for the 52 weeks ending October 4.
While Cuervo’s Gold line ($19) has achieved only modest recent growth—it was up just over 1% in control states through September—its Silver range (also $19) has taken off, climbing by more than 25% during in control channels during that same period.
In 2014, Silver accounted for less than 20% of Cuervo’s total control state business. This year, its share is approaching 25%. And while Gold still accounts for the vast majority of the Tequila leader’s sales, Proximo has focused its marketing efforts—including its extensive TV ad campaign—on Silver.
The emphasis on Cuervo Silver follows the playbook that Proximo—a subsidiary of Casa Cuervo—used for 1800 Tequila ($27) when it began handling that brand in 2008. At the time, 1800 (also produced by Casa Cuervo) was a 500,000-case brand that had enjoyed solid growth under its former marketer, Skyy Spirits, with its Gold variants accounting for most of the brand’s volume.
However, with Patrón riding its silver range to lofty heights, Proximo shifted its focus to 1800’s Silver segment, whose $27 core offering was a more affordable alternative to Patrón ($55). That strategy seemed to work, as 1800 actually outgrew its competitor from 2008-2014, with its yearly depletions advancing by 525,000 cases, according to Impact Databank, while Patrón tacked on 365,000 cases during that period. Silver currently accounts for the majority of 1800’s business.
While 1800 is now a million-case brand, there’s no question that Cuervo has been Proximo’s flagship brand since it moved from Diageo North America in mid-2013. The switch was a marked contrast for Cuervo, which had been just one of a number of top-selling brands in the Diageo lineup.
With the recent influx of high-profile, high-end players like Avión ($53), Casamigos ($55) and DeLeón ($60), the Tequila category appears more competitive than ever. But after losing nearly 15% of its U.S. volume from 2007 to 2013, Jose Cuervo is now headed in the right direction.Subscribe to Shanken News Daily’s Email Newsletter, delivered to your inbox each morning.