Becle suffers 18% fall in profits

Becle, the world’s largest tequila producer, suffered an 18% fall in its first-quarter net profits compared with the same three months in 2023.

Profits for the first three months of 2024 were just more than 1 billion pesos ($61million), as core earnings slipped by 1% on sales falling by 7% to 8.96 billion pesos.

Nevertheless, despite the lower volumes and the negative effect of the strength of the peso against the US dollar, the group, whose prime label is Jose Cuervo Especial, easily beat analysts’ forecasts.

Their consensus view was that Becle’s profits for the three months from January to the end of March would be about 900 million pesos even though sales fell beneath their average estimate of 9.29 billion pesos.

“We entered 2024 with momentum despite challenging macroeconomic conditions and slowing consumption in several of our markets,” Becle said in a statement.

The company, which is majority controlled by the Beckmann family, has been driving to encourage consumers up the quality spectrum and in a note accompanying the results it said that this strategy of premiumisation was having positive results.

Becle increased its volumes in its largest markets, the US and Canada, by 5% but in its home Mexican market volumes fell by 10% and by 23% elsewhere in the world.

Jose Cuervo and other tequilas comprise the lion’s share of Becle’s sales, though it also has invested heavily in Irish whiskey, first by buying Bushmills from Diageo, and then in 2021 striking a US$600m deal with fighter Conor McGregor for Proper No. Twelve Irish.

Its portfolio also includes Kraken rum and Boodles gin. Non-alcoholic drinks made up just 3% of sales in the quarter.

Becle has been struggling with the strength of the peso against the US dollar, which affects its profits.

It said that revenues from North America in the first three months of this year were again hit as the dollar weakened by a further 8%.