U.S. Market Drives Cuervo Sales Up 3% In Second Quarter
July 26, 2024Rising Tequila sales in the U.S. and Canada propelled Grupo Cuervo to 3% growth in the second quarter of the year, with net sales reaching $606 million. EBITDA was up 26% at constant currency to $125 million, with margins boosted by sales of higher-priced brands and price increases across the portfolio.
“The U.S. and Canada reported solid growth in volume and value driven by the strong performance of key Tequila brands,” Cuervo CEO Juan Domingo Beckmann told analysts. “Our efforts to standardize inventory at the distributor level and enhance brand positioning have helped us successfully navigate the region’s economic challenges and fluctuations in consumer spending.”
Cuervo’s sales in the U.S. and Canada grew 15% at constant currency to $359 million on a shipment increase of 5% to 4.1 million 9-liter cases, driven by 16% growth for the Tequila portfolio. The solid gains are “primarily reflecting a product mix skewed towards higher sales per case brands and year-over-year price increases,” according to the company. Cuervo’s upscale Tequila stable includes 2-million-case label 1800—which leads the fast-rising $25-$40 segment in the U.S., according to Impact Databank—as well as Gran Centenario, Maestro Dobel, Gran Coramino, and Reserva de la Familia.
While shipment growth was strong, Proximo Spirits CEO Luis Felix noted an “ongoing slowdown in consumption” in the North America market, with inflation still holding back consumer spending. The conditions, combined with “continued retail destocking,” resulted in depletions dipping 5.2% for the quarter. “Moving into the third quarter we expect depletions to accelerate ahead of shipments as we work to attain optimal inventory levels,” he added.
Globally, the flagship Jose Cuervo brand was down 7% to 2.3 million cases in the second quarter, but the group’s other Tequilas combined for 6% growth to 1.5 million cases. The shipment gains at Tequila’s premium end also helped counter a double-digit decline for Cuervo’s RTD labels, which fell 16% to just over 1 million cases.
According to Impact Databank, Grupo Cuervo ranked 10th among all spirits marketers globally last year with volume of 24.2 million cases, up from 20.3 million cases in 2020. The U.S. accounts for more than half the company’s global volume, and continued to outperform Cuervo’s other global business units in the latest three-month period, as its Mexico sales fell 11% and its Rest of World region was down 10%.
The company also addressed the fire this week at its La Rojeña Factory, located in Tequila, Jalisco, which reportedly claimed the lives of six people. Cuervo said it’s “in the process of assessing the damages and is working in collaboration with the authorities to address and investigate the causes of the incident.”—Daniel Marsteller
| Proximo Spirits—Key Brands in the U.S. (thousands of 9-liter case depletions) |
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| Brand | Origin/Type | 2022 | 2023 | Percent Change1 |
|---|---|---|---|---|
| Jose Cuervo | Tequila | 5,060 | 5,020 | -0.8% |
| Jose Cuervo Margaritas | Pre-Mixed Cocktail | 2,750 | 2,570 | -6.5% |
| 1800 | Tequila | 2,025 | 2,110 | 4.2% |
| 1800 Ultimate Margarita | Pre-Mixed Cocktail | 1,190 | 1,040 | -12.6% |
| Pendleton | Canadian Whisky | 499 | 522 | 4.6% |
| The Kraken | Imported Rum | 380 | 378 | -0.5% |
| Proper No. Twelve2 | Irish Whiskey | 276 | 309 | 12.0% |
| Gran Centenario | Tequila | 230 | 242 | 5.0% |
| Bushmills | Irish Whiskey | 195 | 185 | -5.1% |
| Maestro Dobel | Tequila | 135 | 140 | 3.6% |
| Total Key Brands3 | 12,740 | 12,516 | -1.8% | |
| 1 Based on unrounded data. 2 Includes Apple. 3 Addition of columns may not agree due to rounding. Source: IMPACT DATABANK © 2024 |
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