Supply Chain Research

Becle SAB, owner of tequila-maker Jose Cuervo has reported second quarter revenues that fell 8.1% on a year earlier. The was 12.6% lower than analysts had expected according to Reuters. Its overseas sales may have lagged its major competitors. Panjiva data shows exports by the Cuervo parent company fell 13.0% in the three months to May 31, whereas other suppliers saw their shipments rise 1.2%. That resulted in its share of exports falling to 27.9% from a peak of 36.2% in June 2015.

Data for Mexican exports of HS 2208.90, segmented based on company name for Jose Cuervo. Figures shown on trailing three month total basis. Source: Panjiva

Cuervo also faces growing competition from global drinks-makers looking to build their tequila brands. The most recent development was the acquisition of the Casamigos brand by Diageo in the premium segment, as outlined in Panjiva research of June 22. U.S. tequila imports have outperformed broader spirits shipments, having increased 6.5% in the quarter to May 31. Imports of all spirits fell 5.4%, led by a 16.3% slide in vodkas.

Chart segments U.S. imports of spirits (HS 2208) by spirit type. Dotted lines indicate monthly value, solid lines the 12 month trailing average. Source: Panjiva

One response to competition in the U.S. market is to look for expansion elsewhere. The Chinese market for spirits imports has grown 13.6% in the 12 months to May 31, with a recovery following a prior anti-extravagance drive by the government. The rate of expansion has accelerated more recently, with a 15.9% growth in the last three months. Tequila has lagged the broader market, however, with a growth of just 1.6% compared to a 20.5% jump for brandies.

Chart shows Chinese imports of spirits segmented into brandy, whiskies, tequilas and others – lower panel shows change on year earlier. Source: Panjiva