Grupo Cuervo Posts Sales And Volume Rises In The U.S. Market As Operating Profit DipsOctober 26, 2018
Grupo Cuervo’s volumes in the U.S. and Canada rose by 4.6% to 2.8 million cases in its third quarter ended September 30, 2018, the company reported today. Sales in those two key markets jumped 8.9% to nearly MXN$4 billion ($203m), compared to the year-earlier period, while operating profit dipped 24.4% to MXN$836 million ($44.3m). The company attributed the sales increase to an ongoing consumer shift to premium products and 100% blue agave Tequilas.
Grupo Cuervo’s gross profit increased 2.1% in Q3 to MXN$3.34 billion ($172m), though gross margin fell to 52.5% (from 57.1%) because of lower production efficiencies. The company explained that higher demand for 100% agave Tequila has Tequila producers using younger agave plants whose yields are less efficient than those of mature plants.
Global sales of Cuervo’s namesake brand dipped 3% to MXN$2 billion ($103m) while volume grew 1.7% to 1.6 million cases. Jose Cuervo has been performing better in the U.S. market, however, rising by 4% to 439,000 cases in IRI channels in the 36 weeks through September 9. Globally, Grupo Cuervo’s other Tequilas continued to grow, showing an aggregate 10.4% volume increase to 814,000 cases and a 13.4% rise in sales to MXN$1.5 billion ($77m).
Other spirits brands in the portfolio saw their total sales grow by 28.4% to nearly MXN$1.5 billion ($77m) in sales and 13.8% by volume to 956,000 cases. In the U.S. market, the company’s strongest growth brand in both NABCA and IRI channels is Canadian whisky brand Pendleton, which was up 7% to 67,000 cases in control states and up 9% in IRI channels to 28,000 cases.—Shane EnglishSubscribe to Shanken News Daily’s Email Newsletter, delivered to your inbox each morning.