Jose Cuervo distiller’s profit drops slightly amid North America headwinds
2023.07.27 18:54
© Reuters. Bottles of Jose Cuervo Tequila rest on a shelf in Mexico City, Mexico, February 8, 2017. REUTERS/Edgard Garrido
MEXICO CITY (Reuters) – Mexican distiller Becle, the world’s largest tequila producer, on Thursday posted a 5% drop in second-quarter net profit off the back of decreased volumes and sales in its largest market, the United States and Canada.
Net profit reached 1.33 billion pesos ($77.5 million), down from the 1.40 billion pesos reported in the year-ago quarter.
The Mexico City-based firm, which sells Jose Cuervo family tequilas as well as mezcal, whiskey and other liquors, reported revenues down 2.4% over April to June, landing at 11.06 billion pesos.
The North American region saw volumes sink 5.6% after price increases, which, combined with the appreciation of the Mexican peso against the dollar, caused sales to drop nearly 13%, Becle said.
The peso has strengthened around 13% versus the dollar since the beginning of the year. On a currency-neutral basis, sales in the U.S. and Canada would have only dropped 1.4%, the distiller said.
“The prevailing theme throughout this year has been the pressure on profitability, primarily driven by exchange rate appreciation, input cost inflation and region mix headwinds,” Becle managament said in a statement.
Volumes also dipped slightly in Mexico, which Becle attributed to energy drink distribution changes, though sales were up from price hikes.
In the rest of the world, Becle was able to shift nearly 18% more drinks volumes, with sales up around 8%.
($1 = 17.1156 pesos at end-June)
