Growth slows but sales still rise for Proximo Spirits - results data

Three-month sales inch up 1% to MXN8.96bn (US$526.6m)
‘US & Canada’ region up 7.4% in Q1, hitting MXN5.19bn
Brand Jose Cuervo slides 10.4% – in reported terms – with non-tequila spirits falling 11.1%

Three months after posting a 6.2% top-line increase for full-year 2023, the company, which is also know as Cuervo and lists publicly under the name Becle, said this week that its Q1 2024 sales were up by only 1%. The increase in value terms was based on a volumes decline of 4.4%, underlining Proximo’s “premiumisation strategy” narrative.

While all three of Proximo’s largest divisions – ‘Jose Cuervo’, ‘Other Tequilas’ and ‘Other Spirits’ – registered falls from the three months to the end of March, the divisional value figures are set out on a reported basis, which includes fluctuations in foreign exchange rates. That said, the volumes for the three divisions were all down as well, most notably for the Cuervo tequila portfolio (-9.4%) and ‘Other Spirits’ (-9.3%), home to brands including Bushmills Irish whiskey.

Of note in the results commentary was Proximo’s nod to lower input costs, “both agave and non-agave related”: Noises out of Mexico last year forecast that agave is in the process of shifting from a shortage to a surplus as the high rate of plantings in recent years approach harvest maturity.

Geographically, organic sales in the ‘US & Canada’ reporting region were healthy, climbing by 7.4%, while domestic sales slipped 5.2%. Outside of North America, organic sales in the ‘Rest of the World’ fell by double digits (10.2%) on an alarming 22.6% volumes slump. Proximo blamed the non-US, -Canada and -Mexico numbers on “high inventory levels which created a notable disparity between shipments and depletions in the region”.

“We began 2024 with momentum amid challenging macroeconomic conditions and a slowdown in consumption in several of our markets,” the company said in its results announcement. “This is particularly notable as our premiumisation strategy continues to yield positive results.”

Proximo is majority owned by the Beckmann family, which founded Cuervo. Only 13% of the company is available to trade publicly. Last month, shareholder Marathon Partners Equity Management contacted the group with the suggestion that “the most value would likely be created from a strategic merger combination that results in a larger and stronger spirits organisation to better compete on the global stage”.