Cuervo’s Sales Rise In First Quarter, Despite Macro Challenges

Grupo Cuervo has posted sales up 13% on a pro forma, constant currency basis to $532 million for its first quarter ended in March on a 3.9% volume increase to 5.6 million nine-liter cases. Currency fluctuations and higher costs ate into the bottom line, as EBITDA slipped 18% to $100 million.

U.S. and Canada net sales were up 3.4% to $297 million on a pro forma, constant currency basis, but on a reported basis declined 5.9% year on year, “primarily reflecting foreign currency effects from the appreciation of the Mexican peso against the U.S. dollar, partially offset by product mix skewed towards higher sales per case brands and price increases,” the company noted. Volume in North America fell 5.4% to 3 million cases, which Cuervo said was mostly due to challenges in the RTD category. Globally, Cuervo’s RTDs declined 19% to 800,000 cases, while Jose Cuervo grew 8.5% to 1.96 million cases and its other Tequila brands jumped 25% to 1.2 million cases over the three-month period.

“We initiated 2023 with good momentum amid challenging macroeconomic conditions, inflationary environment, and exchange rate headwinds,” the company stated. “Despite the environment, we have been increasing prices across our regions, in order to offset input cost inflation. Our strategy to focus on our premiumization continues to pay off with increasing overall volume and net sales value growth.” Cuervo added that its advertising, marketing, and promotion expenses ramped up 17% to $109 million during the quarter “due to increased investment opportunities across our regions and our brands.”—Daniel Marsteller

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