Becle’s third-quarter results showed further sequential improvement in its US and Canada business. Shipments fell 3%, a sharp improvement from the declines of 23.8% and 8.7% in the first and second quarters. Depletions turned positive, rising 0.3%, with transition markets up roughly 4.6% while non-transition markets declined about 3.1%. Inventory rebalancing is largely complete, and the gap between shipments and depletions continues to narrow. Management expects the two to stay closely aligned in the fourth quarter and into 2027.
Group net sales still fell 15.3% as reported and 10.3% in constant currency. Even after adjusting for the sale of b:oost, the decline was 9.6%. Lower volumes, unfavorable regional price/mix and heavier promotional activity weighed on performance. Gross margin contracted 330 basis points in constant currency to 52.8%, reflecting the impact of sales mix and promotions rather than higher input costs. Advertising, marketing and promotion (AMP) expenses rose to 21.5% of net sales in the quarter, up from 19.5% a year earlier, even as absolute spending declined 6.6%.
Jose Cuervo absorbed a disproportionate share of the pressure. Volume fell 11.0% and net sales declined 21.3%, compared with a 0.6% volume decline and 6.7% sales decline for other tequilas. The flagship accounted for 35% of total volume and 32% of net sales. The wider tequila portfolio held volume nearly flat while still facing price/mix headwinds. The divergence points to uneven pressure across the portfolio rather than a uniform category slowdown. In a more competitive market, the flagship’s relative position becomes a clearer test of the portfolio’s resilience.
Performance elsewhere was selective. Mexico recorded a 0.3% organic volume increase across the broader portfolio. Within spirits, volume declined 2.5%, compared with a 6.6% contraction in the domestic industry. Organic net sales declined 6.4%, reflecting a less favorable brand mix and a more promotional environment. Rest-of-world shipments dropped 19.9% on phasing, while depletions rose 2.9%. In the United States, Becle said its pricing approach remained unchanged, with no frontline price resets and promotions focused on depth and frequency. Its portfolio continued to outperform the broader full-strength spirits market, even as that market contracted.
Channel adjustment is approaching its end. The company has revised full-year guidance to a mid-single-digit decline in constant-currency net sales. A return to normal operating cadence does not, by itself, imply a return to growth. The next challenge is to stabilize volume without further sacrificing price/mix, while restoring the relative strength of its flagship brand. With distribution effects receding, performance will increasingly depend on how consumers respond to Becle’s brands, pricing and portfolio.
