Jose Cuervo owner suffers 10% profit drop
Becle, the world’s largest Tequila producer and owner of the Jose Cuervo stable, has seen a 10% fall in its first-quarter net profits.
The Mexican company reported a net profit of 1.22 billion pesos (US$67.9 million) for the first three months of 2023.
It blamed the decline on being unable to impose high enough price increases to combat price inflation plus negative currency effects.
Although overall revenues rose by 5.7% compared with the same period in 2022, the key problem was that in Becle’s largest market, the US and Canada, it was unable to increase prices by as much as in the rest of the world.
Becle has targeted the surging demand for Tequila in the US and hopes it will become the country’s most valuable spirit this year, superseding vodka.
But the appreciation of the Mexican peso against the dollar as well as fewer sales of its “ready-to-drink” cocktails in the US and Canada saw both volumes and net sales slip over the quarter in the region.
Globally, Jose Cuervo Tequila volumes jumped by 8.5% from a year earlier, while Becle’s other Tequila brands put on 25%.
On the downside, however, its ready-to-drink lines fell by 19% overall while non-alcoholic drink volumes fell some 9%.
In February this year, Becle predicted that its 2023 sales would grow by “high single digits to low teens” this year, while US and Canada volumes should grow by a “mid single-digit.”