Becle's stock surges after world's top tequila maker profit jumps

Reuters

3 days ago

MEXICO CITY, July 24 (Reuters) - Shares in Becle (CUERVO.MX), opens new tab, the world's largest tequila producer, surged over 7% on Thursday after it reported a quadrupling in its second-quarter profit despite shrinking demand, and as executives indicated signs of recovery in the company's main markets.
Becle, which makes the bulk of its income from Jose Cuervo family tequilas as well as a range of mezcals, vodkas, gins and whiskeys, saw close to 900,000 shares change hands the day after it reported results, which surpassed analysts' forecasts.
Analysts responded positively to better-than-expected profit margins as the company benefited from a weaker peso, which boosted its peso-denominated U.S. sales, lower input costs and a long-standing strategy to position itself in more upmarket brands.
Becle's margin on earnings before interest, taxes, depreciation and amortization jumped to 23.4% from 20.7% a year ago, even as net sales dipped 6% as the Mexican distiller shipped less volumes in all its foreign markets.
"For the longer term, we wonder if the 25% EBITDA margins of yesteryear are a desert mirage or not," analysts at Scotiabank said in a note, pointing out that industry data showed a fast-paced worldwide plunge in thirst for spirits, notably in the United States where trade association numbers "tell a dire story."
Analysts have attributed slowing demand to de-stocking following pandemic stockpiling, customers tightening wallets amid higher costs, a shift to pre-mixed canned options and other trends such as legal cannabis and health concerns.
Becle, which also sells canned cocktails and non-alcoholic drinks, remains "resilient amid industry plunge," Scotiabank said, noting the company was selling off aging spirits it distilled when prices for agave - the spiked plant whose kernels are used to make tequila and smokier mezcal - were higher.
Speaking in a call with analysts, CEO Juan Domingo Beckmann said Becle would focus on speeding U.S. growth in the second half of 2025. Becle makes some 60% of its net sales in the U.S. and Canada, and 25% in Mexico.
"Encouraging early signs of recovery in key markets, alongside sustained demand for high-quality authentic brands, support a more constructive outlook ahead," Beckmann said.
Speaking on the latest U.S. tariff threats, Becle's U.S. and Canada managing director, Mauricio Vergara, said trade remained stable under the existing frameworks and "to date, no significant material regulatory changes have occurred."
Vergara said he still expected "near-term volatility to persist" as the industry adjusts to ongoing challenges.
U.S. Commerce Secretary Howard Lutnick on Sunday signaled that the latest tariff threats should exempt goods covered by the North American free trade pact - such as tequila.
Products named tequila or mezcal are protected by origin, like French Champagne, and must be made in Mexico.
The on-and-off tariff threats have hit small-scale distillers hardest, as potential tariff hikes in a key market threaten long-term hiring and re-stocking plans.
Agave plants take up to 10 years to harvest and higher-end, deeper-flavored aged tequilas can spend years in the barrel.
Though tariff threats battered Becle's stock earlier in 2025, it ended Thursday up 0.55% from January.
($1 = 18.5733 Mexican pesos)