Cuervo Reports Strong Double Digit Growth in Q1

Dear Client:

Grupo Cuervo started 2019 on the right foot, with net sales up 22.5% and volumes up 13.1% globally in the first quarter ended March 31. US subsidiary Proximo Spirits accelerated further in the period with sales up over 30% and volumes up 20.5%.

“Our results were led by another strong performance in the US and Canada, where depletion trends further accelerated during the quarter, contributing to double digit volume and net sales gains,” said Cuervo ceo Juan Domingo Beckmann on this morning’s earnings call.

The US and Canada represent more than half of total sales (64%) and volumes (56%). Performance in the region was driven by strong depletions and favorable sales mix toward premium spirit brands, per the earnings release.

Depletions in the US were up 9% for the quarter, driven by double digit growth in premium tequilas, according to Proximo chief Mike Keyes. You may recall, Mike was named president and ceo earlier this year and officially took on the role February 4 [see WSD 01-30-2019].

GLOBAL BRAND PERFORMANCE. The entire portfolio reported strong growth in the quarter. After ending 2018 flat, Jose Cuervo net sales were up 22.3% globally and volumes were up 8%. Other spirits brands (Pendleton, Tincup, Bushmills, The Sexton, Three Olives etc.) reported even higher growth rates, with net sales up 25.3% and volumes up nearly 11%.

Other tequilas (Maestro Dobel, Gran Centenario) reported a global net sales increase of 14.1% with volumes up 8.5% for the period.

TAKING STEPS TO LESSEN AGAVE PRESSURES. When it comes to agave pricing pressures, Cuervo is playing the long game.

“We are taking necessary measures to deal with the industry-wide sourcing agave situation,” said Juan, adding that “actions taken will take time to yield tangible results and cost pressures are expected to continue in the short term.”

For instance, the company has been stepping up its plantation efforts, but, again, “this may take time to see the results,” said Juan.

LOOKING AHEAD. Cuervo brass are feeling confident about the future as the company is on track to deliver targets for 2019. For the US, that’s 6%-7% growth.

STE. MICHELLE AND TORRES DISSOLVE US PARTNERSHIP

Ste. Michelle Wine Estates and Familia Torres have mutually agreed to “wind down” their US business, effective May 31, per a release. Torres will establish its own import business in the US for their portfolio of Spanish and Chilean wines.

Ste. Michelle began importing the Torres portfolio in 2014. Though Ste. Michelle will no long import Torres in the US, the two companies will continue to work together in several international markets.

“We are proud to have represented the Torres portfolio in the US, and proud of our work together to advance the Torres brand in the world’s most important wine market,” says Ste. Michelle chief Jim Mortensen. “We wish the Torres family continued success in the US market, and we look forward to continuing our relationship internationally.”

NIELSEN CGA: HOTELS ARE A “HOTBED” FOR GROWTH

Hotels are growing faster than traditional on-premise establishments in the US when it comes to alcohol sales, according to Nielsen CGA’s recent Hotel Report. Part of the reason is that consumers tend to drink more at hotels compared to drinking at a non-hotel bar.

Top reasons for visiting the hotel bar include:

  • Wind down/chill out, 45%
  • Catch up with friends 35%
  • Night life 29%
  • Treat/reward 26%
  • Regular/ every day drink, 25%

The business traveler is the most common visitor to the hotel bar. (Your editor can attest to this.) When consumers travel for business, they visit the hotel bar 67% of the time and, on average, have three drinks per sitting.  

“Today’s consumers are constantly on the move, yet their appetite for a drink remains regardless of where they are,” says Nielsen CGA client solutions director Matt Crompton. “Hotels are no longer just stopover spots. They have the opportunity to increasingly become a destination for drinking occasions.”

WSD BRIEFS:

WENTE FAMILY ESTATES TO IMPORT BODEGA CUARTO DOMINIO WINES. Wente Family Vineyards has partnered with Argentina’s Bodega Cuarto Dominio to be the designated US importer, sales and marketing agent for the Argentinian wines. The portfolio focuses on malbec and Wente Family will launch four malbecs in the US including the flagship, two small lots from the family’s La Consulta vineyard and the Chento, a single vineyard selection. “We are honored to represent the wines from Bodega Cuarto Dominio and are excited to grow these brands in the US market,” says Wente Family president Amy Hoopes.

BIAGIO CRU WINES & SPIRITS RELEASES ROSE ALL DAY IN A CAN. Biagio Cru Wine & Spirits’ Rose All Day Bubbly is now available in cans. “We are leveraging the huge success of our Rose All Day brand to the three most exciting categories in the wine world; sparkling wine, wine in a can, and of course rose wine,” says Biagio Cru principal Darren Restivo. Rose All Day Bubbly is now available in 750 ml at $13 and four-pack of cans for $15. The Rose All Day brand line also includes Rose All Day Beaujolais and Rose All Day Sparkling.

TATTERSALL DISTILLING TO LAUNCH BOOTLEGGER. Minnesota-based Tattersall Distilling announced the launch of their latest addition to the portfolio: Bootlegger. Bootlegger is an “almost” ready-to-drink bottled cocktail. It’s a blend of lemon, lime, mint and Tattersall vodka. Bootlegger will be available starting next month at a suggested retail price of $30 a 750 ml.

JACK DANIEL’S AIMS TO BRING IN NEW CONSUMERS WITH NEW TV SPOT. Brown-Forman is launching a new TV campaign today for Jack Daniel’s, positioning the brand as the “Whiskiest Whisky.” The campaign still celebrates the distillery’s process and whiskey makers but also brings in drinkers enjoying Jack Daniel’s in varied situations. The goal of the new campaign is to broaden the brand’s fan base, per a release. “While we have long celebrated Jack Daniel’s makers, we also appreciate the drinkers too,” says Jack Daniel’s svp managing director Matias Bentel. “Out in the world, folks are drinking Jack in their own, unique way. This new spot is all about what makes Jack Daniel’s so special, unique and loved by millions of folks around the world.”

Until tomorrow,
Sarah

“Age is not important unless you’re a cheese.” – Helen Hayes

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