- Net sales for Monster Beverage increased during the third quarter, especially in the company’s Monster Energy Drinks segment, according to its most recent earnings report. Compared to the same period a year ago, gross sales increased 14.1% to $1.04 billion.
- The company saw sales of most of its drinks increase. Compared to a year ago, the Monster Energy Drinks segment had a 16.6% increase, to $827.7 million. The company's Strategic Brands segment — which includes NOS, Full Throttle, Burn, Mother, BU, Gladiator, Samurai, Nalu, BPM, Play and Power Play drinks acquired from Coca-Cola — saw a smaller jump in sales of 6.2% to $76.6 million. The only segment to post a decrease was the Other segment, which includes products acquired from American Fruits and Flavors and sold to third parties. It saw a decrease from $5.7 million to $5.2 million.
- Gross profits as a percentage of net sales decreased when compared to a year ago. They went down from to 63.8% to 62.6%.
At first glance, it would appear Monster Beverage is thriving. Monster Energy Drinks leapt 16.6% in the third quarter, which would have been cause alone to celebrate. But what is not mentioned in the earnings report is if the company has been able to solve it’s production and supply problems that plagued the drink maker. In Monster’s previous earnings report, the company saw supply challenges, and had been unable to produce enough Java Monster and Muscle Monster beverages for its U.S. customer base, creating losses year-to-date then of about $25 million.
In his call to investors following the report, CEO Rodney Sacks said the company has worked through the production capacity shortages for both Java Monster and Muscle Monster.
"We've secured additional production of Java Monster and Muscle Monster in the United States, which came online in the third quarter of 2017," Sacks said in the call transcript. "Those products came off allocation at the end of the quarter. Such production to give additional production available to us in Europe, has eliminated our shortages for Java Monster and Muscle Monster. Together with our bottling partners, we are currently focused on regaining lost shelf space for these products."
In addition to the strong sales for the company’s Monster Energy Drinks segment, net sales to customers outside the United States increased 36.3 percent to $260.1 million in the 2017 third quarter. A relaunch in India is planned for next year.
Looking ahead, Sacks touted plans to start selling Espresso Monster in 8.4 oz. cans in two flavors, as well as NOS Nitro Mango in 16 oz. cans in the United States.
With supply problems in the past and potential new innovations in the future, the company should be able to continue its forward growth. According to Statista, 33 billion gallons of energy drinks have been sold in the U.S. from 2006 to 2016. The segment makes up 4.8% of the total carbonated soft drinks market, and sales volume growth is up 5.13%. And while Red Bull, owned by an Austrian company, has the highest U.S. market share in the segment, Monster is a solid #2, according to IRI data. As long as the segment keeps growing and innovating, Monster is likely to continue growing with it.
Wells Fargo analyst Bonnie Herzog was not as bullish on Monster's growth prospects. Part of this hesitation came from the firm's Beverage Buzz survey, which indicates soft sales growth based on supply problems.
"While we are encouraged by Monster’s future innovation pipeline, we continue to have concerns in the near-term about: (1) Mutant performance, echoed by our retailer contacts; ... (2) Hydro’s growth limited by production and distribution challenges; (3) the Caffé launch, which is up against increased competition in the category," she wrote.