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Cuervo Posts 6.2% Increase In North American Sales, But Warns Of Increasing Agave Costs

February 27, 2019

Grupo Cuervo enjoyed solid revenue growth in the U.S. and Canada last year, with its North American net sales up 6.2% to MX$18 billion ($939m), boosted by premiumization within the portfolio. Volume in the region increased 1.4% to 12 million 9-liter cases. Across its global business, Cuervo posted an 8.5% rise in net sales to MX$28.2 billion ($1.5b). While sales growth was robust, operating profit slipped 18% to MX$5.5 billion ($289m) as higher costs cut into earnings.

Cuervo noted that it has seen “increases in third-party agave supply costs and lower production efficiencies, reflecting the impact of higher demand of super-premium Tequila along with the industry-wide sourcing of younger agave plants, affecting our distilling efficiency.”

In the U.S., the core Jose Cuervo Tequila brand was up 2% to 3.7 million cases last year, according to Impact Databank’s estimate, while its higher-priced Tradicional offshoot surged 29% to 200,000 cases. Another strong performer in the portfolio was Pendleton whisky—acquired from Hood River Distillers for $205 million in late 2017—which advanced by 12% to 310,000 cases last year.

The company said Jose Cuervo’s global net sales grew by 1% to MX$9.6 billion ($500m) last year, even as volume declined 0.3% to 6.7 million cases. The group’s other Tequila brands—including 1800, Maestro Dobel, and Gran Centenario—saw global net sales climb 11% to MX$6.6 billion ($344m) for the year, as volume increased 6.3% to 3.3 million cases. Company-wide, volume was up 3.8% to 21.3 million cases, bolstered by a 6% hike in Mexico and a 10% bump in Cuervo’s Rest of World operating region.—Daniel Marsteller

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