Cuervo’s North America Sales Rise 2.6% On Price Increases, Improved MixFebruary 28, 2018
Price hikes and an improved product mix drove Jose Cuervo owner Becle’s sales up 2.6% to $900 million in the U.S. and Canada in 2017, despite a 4.9% decline in volume to 11.8 million cases. The company, whose brands are handled in the U.S. by subsidiary Proximo Spirits, noted that U.S. volume was soft in the first half of the year following price increases in late 2016, but that the higher positioning paid off in the latter part of the year, particularly in the fourth quarter, when North American revenue grew by nearly 10%.
According to Impact Databank, the core Jose Cuervo Tequila brand was down about 1.5% to 3.7 million cases in the U.S. last year, following a 5% gain in 2016. However, the higher-priced, 100%-agave Jose Cuervo Tradicional offshoot has been strong, more than doubling in size over the past three years to surpass 200,000 cases. Meanwhile, the 1800 brand, which sells above 1 million cases, saw volume climb 6.5% in Nielsen channels last year. The Jose Cuervo Authentic Margarita and Golden Margarita premixed cocktails were also on the rise, both up about 4% according to Impact Databank, to 1.4 million cases and 585,000 cases, respectively.
Elsewhere within the Proximo Spirits portfolio, while Three Olives vodka has struggled and is now below 1 million cases, the company is on the move in the whisk(e)y category, both through innovation and acquisition. Most recently, Proximo acquired the Pendleton whisky label, a Canadian offering, from Hood River Distillers for $205 million. Pendleton has enjoyed double-digit growth each of the past three years and looks poised to cross 300,000 cases in 2018. American whiskies Tin Cup, Old Camp, and Stranahan’s have also been on the rise for Proximo, while Irish whiskey Bushmills declined in Nielsen channels last year. Proximo debuted a new single malt Irish whiskey brand, The Sexton ($28), last fall.
Globally, Becle posted volume up 0.3% to 20.5 million cases last year, as net sales climbed 6.4% to $1.4 billion and operating profit rose 20% to $358 million. The Jose Cuervo brand accounted for about 37% of the company’s sales last year and roughly 33% of volume. —Daniel MarstellerSubscribe to Shanken News Daily’s Email Newsletter, delivered to your inbox each morning.