Becle, S.A.B. de C.V. (OTCPK:BCCLF) Q2 2021 Earnings Conference Call July 29, 2021 10:00 AM ET
Fernando Suárez - CFO
Juan Domingo Beckmann - CEO
Michael Keyes - President and CEO, Proximo Spirits
Victor Chavez - VP, Commercial Strategy for Proximo
Luis Félix - Managing Director. Mexico and LatAm
Gordon Dron - Managing Director, EMEA and APAC
Mike Keyes - President and CEO, Proximo Spirits
Conference Call Participants
Andrea Teixeira - JPMorgan
Fernando Olvera - Bank of America
Benjamin Theurer - Barclays
Felipe Ucros - Scotiabank
Ricardo Alves - Morgan Stanley
Good morning and thank you for joining Becle's Second Quarter Unaudited Financial Results Call.
During this call, you may hear certain forward-looking statements. These statements may relate to our future prospects, developments and business strategies and may be identified by our use of terms and phrases such as anticipate, believe, could, estimate, expect, intend, may, plan, predict, project, will, goals, target, strategy and similar terms and phrases and may include references to assumptions.
Forward-looking statements are based on our current expectations and assumptions regarding our business the economy and the future conditions. Because forward-looking statements relate to the future, by their nature, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict.
Our actual results may differ materially from those in forward-looking statements. For all the foregoing reasons, you are cautioned against relying on such forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Now, I will welcome Fernando Suárez, Chief Financial Officer, Fernando, you are now on the line.
Good morning, everyone. Thank you for joining us to discuss the unaudited financial results for the second quarter ended June 30, 2021 on Becle, commercially known as Jose Cuervo.
I'm joined today by Juan Domingo Beckmann, Chief Executive Officer; Michael Keyes, President and CEO of Proximo Spirits; Victor Chavez, VP of Commercial Strategy for Proximo; Luis Félix, Managing Director of Mexico and LatAm; and Gordon Dron, Managing Director of EMEA and APAC.
Before we begin, I would like to remind you that the figures discussed on this call were prepared in accordance with International Financial Reporting Standards or IFRS and published on the Mexican Stock Exchange. This information for the second quarter of 2021 is preliminary and is provided with the understanding that once financial statements are available, updated information will be shared in the appropriate electronic format. At this time, I would like to remind participants that your lines will be in listen-only mode until the question-and-answers session.
Now I will pass the call on to Becle’s CEO Mr. Juan Domingo Beckmann.
Juan Domingo Beckmann
Good morning, thank you for joining us today to discuss Becle’s second quarter 2021 results. I hope you and your families are all keeping safe and well and starting to enjoy some more freedom in many regions. As you know, we had a very strong 2020 adapting well to the pandemic conditions and benefiting from our long-term investment in our diversified set of brands.
The second quarter of 2021, our tequila and other spirits portfolios continue to perform well across our different regions. However, as we move on from the pandemic, we're seeing growth normalizing to levels closer to the one seen in 2019 as comparisons become tougher, due to the unprecedented growth seen in the second quarter of 2020. This resulted in net sales increasing by 9.7% in the quarter, and 20.2% in the first half of 2021 compared to the same periods in 2023.
Driven by volume growth and higher premium brand mix, volumes for the second quarter of the year were up 2.7% and by 17% for the first half compared to the same periods in 2020 reflecting the resilience of our brands. This more moderate growth compared to the second quarter of 2020 is due to a normalization in the off premise channel sales and consumption as the on premise channel reopened.
Considering everything I have just mentioned Becle was still able to deliver gross profit year-on-year increase of 9.8% and 10 basis points increase in gross margin. As you have also seen in our earnings release our A&P spend was soft during the quarter as we made strong strategic investments in our brands, taking advantage of opportunities that presented themselves during the quarter as some of our rivals pulled back.
This included forming long-term strategic partnerships. We believe these investments will bring long-term benefits to the company, even if they impacted the margin in the quarter. Some of these A&P cost in the second quarter of 2021 are non-recurring as Fernando will explain further. With the reopening of the on premise, we expect to see our own trade sales continue to increase to offset the reduction in the off-trade consumption.
We believe that the strength of our portfolio and the growth of our premium brands across the globe will enable us to keep generating value for our shareholders. On the management front, I would like to mention that Mike Keyes has decided to retire from Proximo. He will be with us until the end of the year, after which he looks forward to spending more time with his family back in Kentucky. We wish Mike all the best in his new endeavors.
And on behalf of the Board of Directors, as well as Becle’s and Proximo employees, thank him for his service at Proximo clearly contributing to build a stronger organization. Luis Félix will be taking over as Proximo’s CEO in an orderly and seamless transition. We wish Luis success in his new role at Proximo and I am confident he will also continue to build the organization further. Mrs. Olga Limon, will be returning to the company and will be taking over Luis Félix responsibilities in the Mexico and LatAm region.
Now, let me turn the call over to Mike Keyes to discuss our U.S. and Canada results.
Thank you and good morning, everyone.
We're pleased with our commercial performance in the United States and Canada during the second quarter, and for the first half of 2021. Given the significant impact of COVID-19 on our 2020 results, we've been looking at our business results on both a prior year and versus a two-year stack.
For example, Nielsen consumer takeaway for our brands in the off premise for the three-month period ended June 19, 2021, over a two-year stack grew by 38% outpacing the total distilled spirits industry which grew by 28% for the same period. Our tequila portfolio was up 42% RTDs were up 47% and our whiskeys were up 30%.Versus 2020 consumer takeaway in the off premise for our brands in the United States, as measured by Nielsen was down 16% for the three-month period ended June 19, 2021.
This compares to an industry contraction of 8% as we lapped our exceptional gains in 2020, which resulted from significant changes in consumer behavior due to the global pandemic, particularly during the second quarter of 2020 when our Nielsen takeaway was up 66%. Proximo’s wholesale depletions were down 11% for the quarter, lapping the second quarter of 2020 where depletions were up 40%.
When compared to the second quarter of 2019 however, depletions were up 26%. On a year-to-date basis depletions were flat compared to 2020 versus a growth rate of 31% for the same period a year ago versus 2019 year-to-date depletions were up 29%. Our tequila portfolio was down 3% for the second quarter however, it's up 5% year-to-date, driven by continued strength in our super premium tequilas, offsetting in part, industry wide production constraints resulting from material and common carrier shortages.
We are working closely with our supply chain team to ensure continuity of key products and to actively mitigate impacts to the broader portfolio as the U.S. logistics and transportation industries normalize. Our ready-to-drink margarita category depletions are down 13% for the quarter, but are up 3% on a year-to-date basis. The quarter is lapping a second quarter in 2020 in which depletions for our RTD brands were up an unprecedented 71% when compared to the second quarter of 2019 depletions were up 50%.
Our whiskey portfolio grew 1% during the quarter, and we're up 10% on a year-to-date basis. Our alcohol-free margarita mix depletions declined 31% for the quarter and are down 26% year-to-date. And this is mostly driven by our focus on allocating constrained resources to deliver premium categories ahead of other product lines. The quarter while experiencing volume contraction of 5% versus the exceptionally strong 2020 off premise business resulted in net sales growth over the same period of 11.3% on a constant currency basis.
This was offset by the 14.2% appreciation of the Mexico peso, resulting in a quarter-over-quarter reduction of 3.8%. On a year-to-date basis however, volume increased 14% over 2020, resulting in 23% net sales growth in the region. This again shows the positive impact of focusing on our highly profitable premium brands, as well as the effect of a - consumer price increase on most SKUs within our tequila portfolio.
This was partly offset by the 6.6% appreciation of the Mexican peso, resulting in a year-to-date net sales gain of 12.4%. Regarding production constraints, we continue to monitor the ongoing issues affecting the U.S. supply chain. As you've heard from other companies, global supply chains are stressed, leading to shortages of raw materials such as glass and cans that are used to package our products.
These shortages are affecting the industry as a whole and have led us to prioritize our most profitable products. There have also been shipping delays due to high demand and lower levels of inventories, leading to extended logistic issues derived from the pandemic. These constraints primarily affected our tequila portfolio and our non-alcoholic margarita mix. We are working hard to solve these issues and expect the brands to recover when the U.S. transportation and logistics industry return to pre-pandemic levels of service.
Moving on to marketing activities, this quarter, we activated numerous strategic investments against our brands as we identified high value buying opportunities with the reopening of markets and entertainment venues. We've grown our sponsorship and marketing partnerships on a national and on a local level. And we remain committed to making investments that create enduring connections with our consumers.
We continue to monitor the ongoing shifts in consumer behavior and consumption patterns. As we adapt to this changing business environment. We are actively working to optimize our supply chain and we're working with our distributors to meet consumer demand for our products as we continue to address the ongoing effects of COVID-19 on our industry.
I will now turn the call over to Luis Félix to discuss Mexico and Latin America results.
Thank you, Mike and good morning everyone.
The Mexican market recovered in the second quarter compared to the first quarter of the year, as restrictions were eased and businesses were reopened as many states move into the green COVID status. Volume increased 14.7% versus the second quarter of 2020 and if we exclude the boost energy drink, our volume grew 31% versus previous year.
Our net sales for the second quarter increased 69.7% compared to the same period of 2020. Price increases, coupled with a better mix helped to achieve these very positive results. Tequila performed well growing 51% versus second quarter of 2020 again, led by our premium brands. On premise sales in Mexico have recovered promisingly however, the region grew in COVID cases and the appearance of the Delta variant again see that there is a possible recovery in the high season sales.
Tequila category is growing here in the industry representing now 43% of the total market in volume. Depletions are positive in both channels since the month of March. Moving into Latin America, we saw a significant increase of 292% in volumes quarter-over-quarter. This growth is mainly driven by Colombia and markets such as Peru and Bolivia, where we have virtually no shipments in quarter two of last year.
Depletions are significantly higher than 2020 and growing double-digits over 2019 which gave us a good sign to continue this positive trend. We remain optimistic for both regions marketing and promotional activities are ready to be implemented in the second half of the year. Yet we remain cautious on the recovery of the on premise channel towards the second half of the year due to the pandemic third wave.
Now, I will turn the call over to Gordon Dron, Managing Director of our EMEA and APAC regions.
Thank you, Luis Félix and good afternoon from Europe.
The early signs of recovery from the pandemic in the EMEA and APAC regions during the first quarter have continued during the second quarter as the European markets in particular have started to ease out of lockdowns through the gradual reopening of on-trade between mid-April and June. This created significant demand, both because the on-trade required restocking and due to the pent-up consumer demand as customers went back to bars.
In Asia, the situation remains challenging with many of our key tequila markets remaining closed, such as Korea, Japan, India, Philippines and Vietnam. As vaccination penetration in the region remains very low. Overall, there was a mid-40% volume increase versus quarter two 2020 and value increased significantly more driven by price increases, favorable product mix and a positive exchange rate.
Growth was generated across the portfolio but was particularly strong in premium tequila, Irish whiskey and rum. Overall, our first half 2021 performance has increased by almost a third in volume versus in first half of 2020 and there are even larger increases in value. Tequila shipments in the APAC region remains solid, but did slow a little after the very strong quarter one, reflecting the higher inventories of distributors, as the markets are still being impacted by trade closures.
This impacted Cuervo most notably however, the H1 performance remains strong, with the regional recording a double-digit increase over the first half of 2020. Depletions, while are very much in line with our sales expectations improved versus the same period last year, despite the challenges that persist given the on-trade closures in key Asian tequila markets.
In EMEA after a slower quarter one, tequila shipments accelerated in the second quarter, delivering a two-thirds increase versus 2020, ending the first half 13% ahead of the first half in 2020. Depletions in May and June, we're well ahead of expectations, reflecting the trade restocking and consumer demand.
Our Irish whiskey portfolio led by Bushmills and Proper No. Twelve 12 continued to accelerate reflecting strong off-trade demand with these brands benefiting from their off-trade bias. First half 2021 the one finished with these brands and almost double the first half of last year. Net sales continue to grow strongly boosting growth slightly higher than volume, again driven by volume, positive mix and favorable exchange rates.
Our whiskey portfolio is growing across both EMEA and APAC regions. However, most of the sales remain within EMEA. The rum category which is - traditionally been a more evenly split between off-trade and on-trade surged back into high growth during the second quarter, and finished the first half almost 50% ahead of the same period in 2020. This reflects the reopening of the on-trade within EMEA.
In APAC, the category recovered well during the second quarter, but still remained behind last year - at the end of the first half, reflecting a slowdown in the overall consumer sales in Australia. As the pandemic continues to ease we feel confident about the recovery of our business during 2021.
I will now hand over to Fernando to talk you through our financial results at a consolidated level.
Thank you, again.
Let me walk you through the second quarter financial results. During the second quarter, the company reported a 9.7% increase in consolidated net sales to MXN 9.531 billion. As Juan Domingo mentioned, the slowdown versus 2020 growth was due to the very difficult comps against last year and was more in line with a still robust growth we were seeing in 2019.
During the second quarter gross profit increased 9.8% to MXN 5.0 billion and gross margin increased to 53.2% in Q2, 2021 from 53.1% for the second quarter of 2020. This was particularly due to the price increases carried out so far in 2021 in various regions, and a better category and product mix while agave prices remained largely stable, and was partly offset by the appreciation of the Mexican peso against the U.S. dollar.
A&P expenses normalized for the Eire Born Spirits expenses, which include are non-recurring or one-off A&P accrual of MXN 373 million resulting from the Eire Born Spirits acquisition in April as a percentage of net sales increased to 20.8% from 15.8% in the second quarter of 2020. This was mainly due to the establishment of new strategic partnerships, particularly related to sporting events, and the implementation of new advertising campaigns across our brands and regions.
Distribution expenses increased 60.6% to MXN 461 million, mainly driven by higher volume, and increased logistics costs to which Mike Keyes alluded to earlier. As a percentage of net sales, distribution expenses increased to 4.8% from 3.3% in 2020. However, SG&A expenses increased only 1.2% year-on-year during the second quarter, representing 8.4% of net sales, compared to 9.1% in the second quarter of 2020.
This was mainly driven by firm cost control and supported by an acceleration in sales. Pro forma operating income decreased 17.1% and the pro forma operating margin decreased to 18.9% compared to 25.0% in the same prior year period. Pro forma EBITDA for the second quarter decreased 14.9% quarter-over-quarter to MXN 2.004 billion with a pro forma EBITDA margin up 21.0%.
Net financial results for the quarter were a loss of MXN 234 million mainly derived from the exchange rate loss, given the year-over-year appreciation of the Mexican peso and net interest expenses. Second quarter pro forma consolidated net income decreased 19.4% to MXN 1.2 billion and the pro forma net margin was 12.3% compared to 16.7% in the second quarter of 2020.
Earnings per share on a pro forma basis were MXN 0.33 per share for the quarter. As of June 30, 2021, cash and cash equivalents were MXN 7.0 billion and total debt was MXN 12.8 billion. We continue to maintain a strong balance sheet with conservative financial leverage and ample liquidity to execute our long-term growth strategy.
As announced in the company's capital allocation program, during the Annual General Ordinary Shareholders’ Meeting, held on April 27, 2021 our cash dividend payment will be made on August 5, 2021 in an amount of MXN 0.43039 for each outstanding share representing the capital stock of Becle.
The company has also summoned for an extraordinary General Shareholders Meeting to be held on August 2, in order to amend Article 2 of the bylaws, referring to the corporate purpose as a result of the implementation of the Mexican labor reform.
Now, I will turn the call back to the operator for questions-and-answers.
Thank you. [Operator Instructions] Thank you. Our first question comes from the line of Andrea Teixeira with JPMorgan. Please proceed with your question.
Hello, thank you good morning. So you took pricing back in May in the U.S. in particular. So did you see any pre-buy at all has happened in the past? And if so, our inventories walk through in a normalized level. So how has been the last 50 sorry that you've seen so far against historical levels? And then if you can also kind of elaborate a little bit on the RTDs obviously, how sales have been seen a material deceleration in U.S. and as off premise?
You know kind of like as a beneficiary has been, obviously decelerating. So can you talk about your thoughts in spirits based RTDs? And are you seeing the same a similar dynamic playing out, not only in the U.S. but also globally? So if you can help us, kind of bridge that? Thank you very much and congrats Mike.
Yes, hi Andrea this is - oh thank you so much. This is Mike, thank you, the first question yes there is always a limited buy-in before any price increase. And there was, you know a 60-day or so buy-in free price increase, but most of that took place in the last quarter. And so, I think we're fairly normalized now. And Victor, I don't know if you want to comment more specifically on that. And then I can maybe address some of the other questions.
Yes, I would echo that sentiment, I would say that the impact of that anticipated buy-in, which as we have before expected, mainly impacted our first quarter because of the timing. And this mitigated within the impact of the second quarter at this point. So we haven't seen any particular aspects of that.
And then the second question okay…
Yes fine, you feel like just as a follow-up, you feel like inventories that the trade now you're shipping according to the consumption?
Mike, I can I can address that of course.
I would say that right now. We're seeing shipments marginally lagging, the depletion trends. And that's mainly a result of the supply chain limitations that we've had over the last quarter, which as you have heard, from not just our company, but others I'm sure, our industry wide. But I think the strength of our depletions is obviously demonstrated by the performance even against the second quarter of 2020, which was tremendous in growth.
And our shipments are lagging - it was target as a base on an inventory and the trade. But we're working with our supply chain team, to basically make sure that we have our core SKUs available, and obviously mitigate the impact to the broader portfolio.
Yes and Andrea, I think the second question has to do with RTDs and what do we see with RTDs? You know RTDs, are probably one of the most dynamic areas in the alcohol beverage industry right now. And as you know, it started with seltzer. And now it's included, wine-based, malt-based and spirit-based RTDs. We are the largest spirit-based RTD company we are continuing to grow our business.
The second quarter was rough just because the comps were so high. So I think, I think our performance is largely what we call comps and comp, right. So we're going up against the big comp. And I read an article I don't know it to be factual so you guys can check it, but that there's been 220 new RTDs introduced in the last few years.
And so, I do believe as the leader that we’ll continue to invest and we've some new brands like Playamar will continue to support those brands. And I believe there's going to be a shakeout sometime, potentially in the not too distant future. And obviously, as the leader we want to be very strong in that category when that happens.
That sounds great. And thank you again, for all the patience and for teaching us all about what they call bogie here in Proximo in the U.S. and wish you the best?
Our next question comes from a line of Fernando Olvera with Bank of America. Please proceed with your question.
Hi, good morning everyone and thanks for taking my questions. Since I have two if I may, the first one is related to the U.S. Can common house the on premise channel debate during the quarter given the reopening of bars and restaurants and how far is from returning to pre-COVID level? Also, if you can comment what is your outlook on this channel in coming quarters would be great. And I have a second question?
Fernando I'm sorry, you kind of broke up was the question about on versus off?
Well, basically on premise I mean, what was the performance on premise and how far is from returning to pre-COVID levels and what is your outlook in coming quarters?
Yes, I think yes, thank you. I think it's different on - the U.S. we tend to look as one homogenized market. And as you know, with our laws and the three tier system, I don't think you can look at it as one picture. But in general, I would say it is returning, at least as of now, to pre-pandemic levels. And I don't think we're quite to the level that we were pre-pandemic, but I think we're getting closer every day.
I find myself talking sometimes about pre-pandemic, pandemic, and post-pandemic. And lately, I've been catching myself, because I don't know what post-pandemic is, right? I don't know that we're through the ups and downs of this crisis. And we're going to have to wait and see. But I think as of now, the bars and restaurants are returning, if they're having issues. Sometimes the issues are the same issues that we were talking about with regard to supply chain, just getting enough people to work and to drive those businesses.
We are seeing, obviously, more liter business we're seeing a little bit in the mix, a little bit less of the 175, which tells us that that is in fact taking place. And we're seeing some of our really strong on premise brands growing very, very nicely.
Great, thank you. And my question related to Mexico, how do you expect consumption to behave also in coming quarters? The different trade channels given the unfortunate increase of COVID cases right, although mobility restrictions, say not to be tightening as it happened at the beginning of the pandemic? Thank you.
Thank you, Fernando this is Luis. I think what we're seeing in consumption, there are two things we're seeing more consumption of premium products. And it's clearly in the tequila category, where the comparison against last year, the tequila volume is declining. But the growth in value is more than 6%. So it's clearly and we have seen in our brands that tequila, premium tequila is coming back.
During the pandemic, there was more trend on our low priced, low priced products. And I think that is changing. And that is a consequence of the reopening of the on premise, clearly. The concern is that and with the new third wave that we have seen now, yesterday in Jalisco there were some closures on bars and [indiscernible]. So that will certainly affect, but I think overall we're seeing a better, much better trend right now than last year at this time.
Right, thank you so much.
Our next question comes from the line of Ben Theurer with Barclays. Please proceed with your question.
Hi, good morning, everyone. And thanks for taking my question also Mike, congrats on the retirement. Hope you enjoy down in Kentucky. Quick question, its mainly related around the A&P and the extraordinary part in what you all got with it those close to MXN 400 million. And if you could elaborate a little bit on where you're targeting right now, the investments I mean, was clearly seen an increase?
And I understand it's about positioning the brands, but would be great to get a little bit of a breakdown from a regional perspective where you're focusing on and what's your main focus right now on promoting A&P and I assume we're going to be back in the low 20s as percentage of sales for the year if you could confirm that? Thank you.
So this is Mike, Ben I'll start with just the U.S. commentary on a quarter-versus-quarter 2021 versus 2020. We are spending much more money in 2021, but it's as much a story of what we didn't spend or what wasn't available to us last year as it is about what we're spending this year. If you look at the history of Proximo, we've always invested behind our brands, if not the highest, one of the highest on a percentage of net sales value versus others in our industry.
Proximo and Becle are known as brand building companies and that's the case here. So the story to me a little bit less about the increase in 2021 over 2020 and more about the opportunity. And we're investing those dollars, many of those dollars behind our premium, premium plus portfolios and we saw great opportunity as others were getting out of some really enduring consumer partnerships, we saw the opportunity to get in.
And I would say a lot of that money is against our premium plus tequilas and against our premium plus whiskey brands. And you know, just in a broad stroke, I mean we're invested against major sporting leagues, and local sporting teams probably drive a great deal of that increased investment.
Okay, that makes sense. I guess in other regions, it's similar, right?
Ben, let me follow-up on Mike on the specific one-time A&P accrual this MXN 273 million A&P expense is a non-recurring one-off or extraordinary accrual related to promotional activities already rendered in connection with the acquired intellectual property as part of the Eire Born Spirits acquisition back in April of this year.
We do encourage you to consider this accrual as a non-recurring or one-off item. And I have already observed that many of you have adjusted for this in your pro forma figures or numbers, which we fully agree with. Thank you, Ben.
And then just one follow-up maybe you have a little more commentary around what you're seeing in the agave markets, you've now multiple quarters, talked about stabilization on the prices. Is that been really the case also on a sequential basis at this elevated level? And are you in the future seeing prices maybe come down a little bit so we could potentially assume some cost pressure easing?
Ben, in connection with the agave pricing market, we continue to see on a quarter-over-quarter basis, stable agave pricing. And going forward again, it is too early for us to assess or represent any change to that agave pricing environment at this stage.
Okay perfect, thank you comrades.
Our next question comes from the line of Felipe Ucros with Scotiabank. Please proceed with your question. Thank you.
Thank you, good morning, Juan Domingo, Fernando and team, thanks for the special questions. Maybe my first ones on EBS, you exercised another option on EBS ownership so a few questions on those. What percentage ownership are you on that right now? And then as a follow-up to that, you know, I know you haven't shared a lot of information on the investment?
Because obviously when in the past, you just didn't have enough ownership and you didn't want to affect the transactions. But just curious if you're in a position now where you can share a bit more color on how EBS is performing? Thanks.
Juan Domingo Beckmann
Yes, Felipe I’ll take the first part of the question. And then I'll ask Mike to comment very qualitatively on the rest. But what we can say on the increase in the equity stake in Eire Born Spirits. We cannot disclose the exact percentage that we increase. We can only say that we went above the 49% hence consolidating the results. And we can say as well that the celebrity Conor McGregor will continue to be engaged with actively promoting the brand. That's as far as we can disclose on the transaction, unfortunately.
And this is Mike, Felipe with regard to performances, as you can see from Nielsen and NABCA data. It is the fastest growing best performing whiskey in the Irish category and continues to do quite well.
Thanks and if I could do a follow-up. Just wanted to see if you guys had any commentaries about the amount of new ventures that have been coming up in tequila it seems like every day that we wake up, there's a new tequila brand and then you start backing the brand. So just wondering what your thoughts are about that and whether you're starting to see a shakeup of those brands in Mexico or not? Thanks.
Felipe, can you repeat what type of brands, are you referring.
Start-up brands in tequila and in general in agave products?
Just this is Mike from a U.S., Canada perspective, it isn't just tequila as we just chatted, you know, the RTD business is also going through a tremendous amount of innovation and consolidation as well. I think anytime you have incredibly successful category, people try to figure out how to become a part of it.
And my feeling always with celebrity brands in any category, it's directly proportional to how good the product is, and to how hard the celebrity is willing to work to help get that message out there. And so, I think a lot of it remains to be seen.
So I would take it from that comment Mike that you're still not seeing a shakeout and I'm talking particularly about tequila innovation?
Yes, I’m not seeing a shakeout. I mean, just like you I can see how the products are doing. Some of them seem to be gaining a little momentum, and some of them seem to not yet be gaining momentum, but I haven't seen a shakeout I wouldn't say.
Okay, thanks for the color.
This is Luis Félix in Mexico we haven't seen any significant growth of celebrity tequila in our market.
Our next question comes from the line of Ricardo Alves with Morgan Stanley. Please proceed with your question.
Good morning, everyone. Thanks for the call. I wanted to take the opportunity also to thank you, Mike, for the insightful color and all the interaction over the past few years. And to congratulate Luis as well wish you all the best. So just a quick question on U.S. pricing, quite impressive unit revenue this quarter, can you just go into a little bit more details on the pricing effects specifically, just so separate a little bit from the mix issue?
You know when we go back to the pandemic, we appreciate - the brand equity story and the market share gains and so forth. But when you look today, considering the price increase you implemented? And do you actually see a more benign pricing backdrop in the marketplace, when you look at your peers. I don't know, maybe reflecting any inflated costs in the industry or capacity constraints, so any thoughts on the competitive landscape/pricing in the U.S.?
Yes, well as I said, we took price across most of our tequila SKUs in May. And we do that when we see an opportunity. And we measure that against the consumer okay we have the ability. And that’s in our best interest to do so as the leader in tequila. We do it - we do it when we think that the consumer is ready to yes offset costs and to premiumize our business.
And so, we've done it and some competitors also looked like they had taken a little and it seems like more in the $15 to $20 categories some people have taken some price doesn't look like in the 20 plus category that other than our brands that many people have taken price. And then it's really confusing when you get to the super premium, ultrapremium in any given month.
It looks like maybe they did and then the next month, it looks like well maybe they went the other way. So I think you see it the most right now in that $15 to $20 segment.
Got it. Appreciate the color thanks, Mike.
Thank you. Thank you.
We have no further questions at this time. Mr. Domingo, I'd now like to turn the floor back over to you for closing comments.
Juan Domingo Beckmann
I would like to thank you again for your continued interest in Becle. We remain extremely confident in our family of brands and our prospects for long-term growth. Have a great day.
Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.