Jose Cuervo Owner Becle Sees 85% Profit Plunge as Tequila Demand Weakens

Becle, the Mexican spirits company behind Jose Cuervo and the world’s largest tequila producer, reported an 85% drop in third-quarter net profit as weaker demand and a stronger Mexican peso weighed on its results.

Net profit for the three months ended Sept. 30 fell to 633 million pesos ($35 million), down from the same period a year earlier and well below the 1.07 billion pesos analysts had expected, according to figures reported by The Drinks Business.

Becle’s sales also missed forecasts, falling 15% to 9.25 billion pesos against the 9.96 billion pesos analysts had projected. Total volumes declined 9% to 5.7 million cases.

Jose Cuervo, which accounted for more than one-third of Becle’s total volume during the quarter, saw sales volumes fall 11% year over year.

The United States, Becle’s largest market and Jose Cuervo’s biggest market, recorded a 3% volume decline. The company said performance was improving following its transition away from Republic National Distributing Company (RNDC), a major U.S. alcohol distributor that has faced financial difficulties.

Volumes in Mexico fell 12%, partly following Becle’s sale of its Boost energy drink brand. In other international markets, volumes declined 20%, largely because some shipments were delayed until the fourth quarter.

The results add to questions about the strength of the tequila category after years of rapid growth. Becle’s latest performance reflects pressure from weaker demand across several markets, though delayed international shipments and the U.S. distributor transition also affected quarterly volumes.