Market research
- Q2 sales jump 24.7% to MXN8.69bn (US$389.2m)
- Volumes in three months to end of June rise 10.7%
- Sales in US & Canada soar 50%, Mexico slides by 32.5%
- Jose Cuervo portfolio sees sales climb 25.8% on 1.2% volumes increase
- Six-month sales up 13.5% to MXN13.89bn
Cuervo has reported an incredibly strong set of numbers for the second quarter of 2020, with the group crediting the consumer trend towards established brands during lockdowns.
Cuervo noted a consumer preference for established brand names, such as Jose Cuervo Tequila, in the second quarter
The Mexico-based company, which is listed under the name 'Becle', said late yesterday that sales in the three months to the end of June were up year-on-year by almost 25%. The performance built on the 5.3% top-line increase in Q1, reported in May.
Driving the figures was the 'US & Canada' reporting region, which posted a 50% year-on-year jump in Q2 on a volumes lift of almost 11%. While Cuervo boasted of "the strength of our largest brands within the region", it also noted the depreciation of the Mexican Peso against the US Dollar, year-on-year. Domestic sales were hit hard by the coronavirus pandemic, with sales sliding 32.5% on a 25% decline in volumes. Similarly, the 'Rest of the World' was down markedly (-23.1% in value, -33.5% in volumes), again due to lockdown measures and the closure of the on-premise channel.
Cuervo H1 2020 - Sales by Region
Source: Company results
In category terms, the Jose Cuervo brand was up by just over a quarter in the three months, with volumes inching up by just over 1%. The group's RTD stable stole the show, however, with sales soaring by almost 88% on a 58% volumes rise.
Over in 'Other Spirits', which includes Bushmills Irish whiskey, Kraken rum and Three Olives vodka, sales reversed from the 9.5% fall in Q1, coming in up 3.6% in the three months to the end of June.
Cuervo H1 2020 - Sales by Category
Source: Company results
Cuervo noted in its results announcement that advertising, marketing & promotion spend decreased 14.2% in Q2 thanks to the rephasing of investment as on-premise closures took hold.
Management comments
"During the second quarter of 2020, Becle faced challenges across all regions due to the COVID-19 pandemic, including the shutdown of the on-premise channel, liquor sales prohibitions and restrictions. Despite these challenges, the company benefited from its strong brand portfolio, presence in the right categories, important over-indexing to the off-premise channel and consumer shift from on-premise to 'at home' consumption in key markets.
"The company reacted quickly to this new environment by implementing a contingency plan with firm cost control. The US & Canada region in particular performed remarkably well as consumers have been turning to trusted, well-established brands and formats. We are confident with our ability to maintain our long-term strategy of growth and our ability to premiumise the portfolio of brands."
To access Cuervo's official Q2 results announcement, click here.
Why the spirits category offers hope for the on-premise - Click here for a just-drinks comment
Sectors: Company results, Spirits
