WORTH A SHOT

Now that Trump is settled in, Mexico’s Jose Cuervo is going public

Obsession
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Obsession
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The US election forced Jose Cuervo, the world’s biggest tequila maker, to postpone its IPO twice in 2016. It looks like 2017 is the year the company will finally get its shot.

Despite Trump’s executive order to start his long-announced Mexico border wall project, Reuters has reported that the Mexican spirit producer will go public on Feb. 8. The company will raise $706.5 million, according an investor presentation seen by Reuters, offering 476.6 million shares, priced at between 30-34 pesos per share.

Bloomberg was the first to report on the looming February IPO and its roadshow for investors this week. The Mexico City-based company previously postponed it’s IPOs because of concerns that President Trump’s anti-globalization rhetoric and opposition to the North American Free Trade Agreement would impact the launch.

The day that Trump won the US presidential election, for instance, the Mexican peso plummeted to its weakest level on record against the US dollar. The 15% decline in the peso, however, may benefit Cuervo in the long-run, making its products more affordable in the US, says Bloomberg Intelligence analyst Julie Chariell.

The company is run and owned by eleventh-generation tequila producers, Juan Domingo Beckmann and his family, who are descendants of Don Jose Antonio de Cuervo.

Jose Cuervo has been expanding it’s product lines, and forged a deal with British firm Diageo (the world’s largest liquor company) three years ago, trading full control of subsidiary tequila maker Don Julio in exchange for Bushmills Irish Whiskey.

“We were a company in which 80 percent of our sales were tequila. We wanted to get rid of that dependence,” Beckmann told Latin Trade Magazine. The deal has since given Jose Cuervo more international exposure and supported its non-tequila holdings.

In the US, sales of tequila have more than doubled (pdf) by volume, from 7.2 million cases in 2002, to 14.8 million in 2015, according to the Distilled Spirits Council of the United States. North America makes up about 60% of Jose Cuervo’s sales volume.

The Beckmann family intends to remain majority shareholder after the IPO. The company said proceeds will be used to fund growth, broaden its portfolio and turn Tequila, their hometown in Mexico, into a “ritzy tourist spot” with a five-star hotel and we presume, a bar serving a wide-variety of margaritas.

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