Jose Cuervo’s $1bn float looks like recent record

Four years after the world’s biggest spirits group, Diageo, gave up on plans to buy it, Jose Cuervo, the world’s number-one tequila maker by volume, is planning to go public.

The company, which has been making tequila since 1758 when the Spanish still ruled Mexico, refused comment, but media reports of an initial public offering of up to $1bn have whetted the appetites of investors who suggest it could be the largest in Mexico in two years.

In a drinks segment dominated by international conglomerates, Cuervo, run by the Beckmann family, is a rare independent for its size. Playing up its traditional heritage and rock-star associations — Cuervo claims to have fuelled the Rolling Stones’ 1972 Tequila Sunrise tour — it has done more than most of its rivals to transform tequila from tipple to tourist experience.

“We are tequila. We are Mexico,” says a promotional video shown to visitors on arrival at its La Rojeña distillery, the oldest working one in Latin America. Tourists can travel there on the Cuervo Express train, lodge in a hotel, eat at restaurants and use a convention centre owned by the group in the picturesque town of Tequila. What it bills as Cuervo World now attracts some 200,000 annual visitors, up from 13,000 in 2003, according to Sonia Espinola, director of the Cuervo Foundation.

When Cuervo intends to launch its offer remains unclear, and the company has kept its options open, saying it plans to use the proceeds to boost growth, either organically or through acquisitions. The company swapped the Don Julio ultra-premium tequila for Bushmills Irish whiskey in a deal with Diageo two years ago.

Cuervo has 27.4 per cent of the US tequila market and 32.6 per cent of the market in Mexico, it said in its filing. First-half sales were up by a third, to 12.2bn pesos ($635m), and 2015 net profits doubled to 7.2bn pesos.

“This IPO is taking tequila to another level — it’s very important for the category,” says one industry figure who knows the company well. “We can write a long, long list of the incredible roles they have played [in the sector] and here they are doing it one more time.”

Cuervo also has widespread social development and philanthropic ventures. “More than a drink, it is history, tequila is a legacy,” says Ms Espinola. “We want to take things further than a shot or a margarita."