Jose Cuervo parent company Becle had a slow start out of the gate in its first year as a public company, but it finished on a high note, reporting full-year sales growth of 2.6% to just over $900 million in the US and Canada. Though volumes were down almost 5% to 11.8 million cases. The company attributes the performance to price increases and a favorable mix toward premium products.
Mark Teasdale, the head of Becle's US subsidiary Proximo Spirits, largely focused on the company's positive fourth quarter results in this morning's earnings call, highlighting that sales were up 10% in US & CAN.
TEQUILA IS ON THE MENU. At the beginning of fiscal 2017, the company took a price increase on Jose Cuervo for the first time in several years, which resulted in volume losses in the first half but didn't cost the brand any of its 73% share in the mixto category, he said. "We are confident we have fully absorbed the price increase."
The 100% agave tequilas, Maestro Dobel and Azul Centenario, were up 16% for the year in sales, boosting 1800's annual US case count over 1 million for the first time.
Luis Carlos de Pablo, who leads Becle's investor relations, reiterated that its vertical integration strategy for agave supplies is on pace to reduce the amount of agave purchased from third parties from its current 30% to just 10% by 2019. He also said that Cuervo closed on some contracts on some favorably priced bulk tequila in Q4 that would ease pressure in F2018 as agave prices are expected to continue to be high.
Looking forward, Cuervo feels "tequila is part of the future both globally and in the US," declared Mark.
WHISKEY HAS STRONG SHOWING. Proximo's whiskey brands (Bushmill's, Stranahan's, Old Camp etc.) grew depletions about 8%-9% in the US for the fourth quarter. Mark emphasized that Stranahan's Tin Cup offering grew depletion by 30% last year, and is expected to reach about 100,000 cases this year.
DISTRIBUTION CHANGES BARE FRUIT. You may recall, Proximo made some distribution changes early last year, moving from Breakthru Beverage Group to Republic National Distributing Co. and Southern Glazer's Wine & Spirits in a total of eight markets.
Mark said after a couple of months of transition, the new distributor network has started to bare fruit. Discussing the rationale behind the change, he said they were able to move up in priority, and got improved terms that "helped a great deal."
PALM BAY GOES TO COURT OF "SHEEP THRILLS," AND "NIRO" BRANDS
Palm Bay International filed a lawsuit last week against its longtime producer partner Consorzio Cooperative Riunite D'Abruzzo (Citra) and The Winebow Group (TWG) over the rights to the trademarks for "Sheep Thrills and "Niro" wine brands.
In its initial complaint, Palm Bay claims that it has had an exclusive contract with Citra to import its brands since 1991. That is, until October 2017, when Citra gave Palm Bay a notice of termination of contract effective April 2018.
The problem now is who owns the trademarks for the two aforementioned terms. Citra believes they own the rights, and Palm Bay believes it owns the rights. Palm Bay claims it is responsible for the conception of the two brand names, and financed the efforts to grow them. The importer claims it has been filing COLA application for the brands in its own name, and registered for the federal trademark for Sheep Thrills.
According to Palm Bay, Citra began working with TWG to file a COLA application for Niro, for which Palm Bay says it owns the US trademark registration.
As such, Palm Bay is looking for declaratory judgement on the matter, as well as attorney's fees and any other relief deemed proper. Neither Citra nor TWG has responded to the initial complaint yet.
Correction: An earlier version of this article listed The Wine Group as one of the defendants in this case, when in fact, it should have been The Winebow Group.
FOLIO FINE WINE TO HANDLE RICASOLI IN US. Luxury Chianti Classico producer Ricasoli has chosen Folio Fine Wines to be its exclusive distribution partner in the US. FFW will represent Ricasoli's: Toscana IGT ($12), Chianti DOCG ($14), Brolio Chianti Classico DOCG ($22), Rocca Guicciarda Chianti Classico Riserva DOCG ($25), Brolio Chianti Classico Riserva DOCG ($30), Castello di Brolio Chianti Classico Gran Selezione DOCG ($70), Colledilà Chianti Classico Gran Selezione DOCG ($70), and Casalferro Toscana IGT ($70).
ACUMEN WINE INKS DISTRIBUTION AGREEMENT IN CA. Napa Valley-based Acumen Wine is transitioning from direct-to-trade distribution in California to a distributor partnership with Authentic Wine Selections. To make the transition easier, Acumen has promoted Carlo Mathosian to western regional manager. He will provide account relationship continuity in California and support Authentic's goals of expanding into new markets in the state, per a release. Carlo will also oversee the company's distributor partnerships with Red Rock Wines in Nevada and The Estates Group in Arizona.
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