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Cuervo Solidifies Comeback As Premium Tequila Shows Steady Growth

May 27, 2016

Following several challenging years, Jose Cuervo—the U.S. market’s leading Tequila brand—is solidly rebounding in the U.S. After consecutive years of decline from 2007-2013—a period in which the brand ceded nearly 15% of its U.S. volume—Cuervo returned to growth in 2014, and last year advanced by 3% to 3.5 million cases, according to Impact Databank. So far in 2016, Cuervo is up by about 7% in both NABCA and IRI channels, auguring another year of progress under marketer Proximo Spirits.

Jose Cuervo has recently been bolstered by Proximo’s aggressive marketing efforts and robust sales of the core Cuervo Silver label, as well as increased focus on its upscale, 100%-agave Jose Cuervo Tradicional Silver. Based on Cuervo’s original Tequila recipe from 1795, Tradicional Silver is barrel-aged for one month.

Jose Cuervo’s return to health has coincided with rumors that Casa Cuervo’s owners—the Beckmann family—are exploring an initial public offering. Reports surfaced in March that an IPO could be launched later this year or in early 2017, with a share sale expected to total at least $750 million.

Cuervo’s comeback comes as Tequila’s premium segment continues to make solid gains in the U.S. Defined by Impact Databank as the $15-$25 a 750-ml. tier at retail, the premium Tequila segment grew 4% to 6.9 million cases last year, and has increased by nearly 600,000 cases since 2012. The premium segment’s second-ranked brand, Sauza, also has been posting steady single-digit growth, though it remains well shy of Cuervo. Last year Sauza saw a 4.1% increase to 2.1 million cases.

Together, Cuervo and Sauza dominate premium Tequila sales with a combined share of over 80%, but some smaller competitors are rising rapidly, thanks to their focus on 100%-agave offerings. Among them are Brown-Forman’s El Jimador, which grew 16% to 442,000 cases last year, and Heaven Hill’s Lunazul, which surged 17% to surpass the 100,000-case mark.

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