CORONA, CALIF. — The Monster Beverage Corp. has proposed voluntary guidelines for the marketing of energy beverages. The company would not make the guidelines available for review, but said they had been shared with the American Beverage Association and the four senators that are agitating for energy beverage makers to halt the marketing of their products to children.
“The company is hopeful that under the auspices of the A.B.A. all major energy drink companies will adopt these guidelines with regard to their U.S. activities,” said Rodney C. Sacks, chairman and chief executive of Monster Beverage, in a conference call on Nov. 7. “The company supports the proposed model guidelines and would agree to adopt them if all other major energy drink companies doing business in the U.S. also adopt them. In that fashion the company believes that the concerns expressed by the senators and others would be addressed without putting the company at any material competitive extensive disadvantage.”
In late September, four U.S. senators sent letters to 17 energy drink manufacturers requesting that the companies adopt voluntary guidelines to avoid marketing their products to children. In the letter, which was signed by Senators Richard Durbin of Illinois, Edward Markey of Massachusetts, John D. Rockefeller of West Virginia, and Richard Blumenthal of Connecticut, the senators noted that at a hearing before the Senate’s Commerce, Science and Transportation Committee on July 31 that medical professionals and public health officials raised concerns about the risks associated with the consumption of energy drink products by children and teenagers. The hearing also included specific examples of energy drink companies marketing their products to children.
“ … we can’t speculate as to whether what we have suggested would be completely satisfactory to senators or regulators,” Mr. Sacks said. “We’ve just, from our assessment of the questions that we’ve got and the requests for commitments that we have from the senators, we believe this goes a pretty far way to dealing with them.
“There are some issues that we have still and don’t believe we should agree to and won’t voluntarily agree to, and they may remain outstanding contentious issues, but we do believe that pretty much by and large, we think that this will resolve or certainly alleviate to a large measure some of those headwinds.”
For the third quarter ended Sept. 30, Monster Beverage net income was $92,187,000, equal to 55c per share on the common stock, up from the third quarter of fiscal 2012 when the company earned $86,142,000, or 49c per share. Sales for the quarter were $686,623,000, which compared with sales of $632,290,000 for the third quarter of 2012.
Citing data from the market research firm Nielsen, Mr. Sacks said sales of Monster products in the United States in all retail channels, including convenience, grocery, drug and mass merchandisers, grew 9.3% in the 13 weeks ended Sept. 28. The results compare favorably to such competitors as Red Bull North America, which saw its sales increase 7.4% during the same period.
Despite the sales growth in the United States, Mr. Sacks said the company is still feeling the effects of the negative publicity that has followed the energy drink category throughout the year.“We think that there is still some impact, but we think that it is being, (it) is lessening as time goes on,” he said. “So we do believe there has been lesser of an impact, and eventually we believe it will get, it will eventually will be eliminated and go away.”