Monster Beverage (MNST): Pandemic does not dampen growth in energy drinks

Several food and beverage companies have seen their sales in the foodservice channel take a hit due to the COVID-19 pandemic but this decline has mostly been offset by strength in at-home consumption. For Monster Beverage Corp. (NASDAQ: MNST), growth in the energy drinks category helped generate strong results for its most recent quarter and beyond.

The company saw sales and market share gains in many of its markets especially outside the US. Monster also continued to roll out new products and remains optimistic about the prospects of its affordable energy drinks portfolio overseas. The stock has gained 29% since the beginning of this year.

Market share gains

Based on data from Nielsen, Monster saw market share gains in the US for its Reign and Red Bull brands during the four weeks ended October 24, 2020. For the 12 weeks ended Oct. 3, 2020, in all measured channels across Canada, the company’s market share in energy drinks rose 1.3 points to 39.7%. Red Bull’s market share increased by 2.1 points to 38.8% during this 12-week period.    

In Mexico, during the month of September, Monster saw increases in market share for its Volt and Amper brands. Volt’s market share now stands at 18.5% while Amper increased its market share by 6.1 points to 14.8%. Predator, which was rolled out this March, gained a market share of 1.8%. In September, Monster’s retail market share rose to 44.1% in Argentina, 33.3% in Brazil and 45.6% in Chile.

During the 13-week period to the end of September and beginning of October, Monster saw its retail market share increase in Belgium, Great Britain, Italy, Poland and Spain. In South Korea, Monster’s market share grew to 54.8% during the third quarter of 2020.

Regional performance

Monster has seen strong sales growth in international markets. Net sales in EMEA rose nearly 16% during the third quarter with market share gains in regions like Denmark, Norway, Ireland, South Africa and Sweden. Sales increased 23.1% in Asia-Pacific with increases in Japan, China and South Korea. In Oceania, sales rose 38.1% while in Latin America, sales grew 6.1%.    

New products

Monster has rolled out several new products such as Reign Total Body Fuel, Ultra Watermelon, and Juice Monster Papillon in the US, and Ultra Paradise in Brazil, Chile and Argentina. Juice Monster Pacific Punch was rolled out in Norway and Poland while Juice Monster Pipeline Punch was launched in Czech Republic and Slovakia.  Juice Monster Pacific Punch is available in 12 markets across EMEA and the company plans to expand this to five more markets later this year.

Strong Q3

Monster saw consolidated sales for the third quarter of 2020 increase 9.9% to $1.25 billion helped by sales growth across all its segments. Net income rose 16% to nearly $348 million while EPS increased nearly 20% to $0.65. Net sales to customers outside the US rose 17% during the quarter.

The company saw growth in its ecommerce, grocery and club store channels but foodservice remained weak. Foodservice forms a small part of the business so the softness in this space was overshadowed by momentum in other channels.

Monster has a strong line of products ready for launch for the remainder of this year and the company expects the momentum in its affordable energy drinks portfolio, particularly in overseas markets, to continue going forward.

Click here to read the full transcript of Monster Q3 2020 earnings conference call