CORONA, CALIF. — Monster Beverage Corp. posted strong top-line growth in the second quarter, even as continued shortages in aluminum can requirements and delays in procuring ingredients limited the company’s ability to fully satisfy demand.
Net income for the second quarter ended June 30 was $403.8 million, equal to 75¢ per share on the common stock, up 30% from $311.4 million, or 59¢ per share, in the same period a year ago. Quarterly sales grew 34% to $1.46 billion from $1.09 billion the prior year.
Sales in the Monster Energy Drinks segment, which also includes Reign Total Body Fuel, grew 33% to $1.37 billion from $1.03 billion. Sales in the Strategic Brands portfolio, which includes energy drink brands purchased from The Coca-Cola Co., grew 46% to $86.9 million from $59.6 million.
The company delivered record second-quarter results despite significant COVID-related disruption in several areas. The aluminum can shortage and ingredient sourcing issues, particularly for the NOS energy drink line, impacted distribution of certain SKUs in the United States.
“What we’ve tried to do is basically focus on our faster selling and our larger SKUs,” said Rodney Cyril Sacks, co-chief executive officer and chairman of Monster Beverage Corp., in an Aug. 5 conference call with analysts to discuss second-quarter results. “Some of the smaller SKUs, which normally have their own traction and followers, haven’t got on to shelf.”
Labor shortages also negatively affected distribution in the United States, with many Coca-Cola bottlers struggling to keep pace in a tight labor market.
“While one would ordinarily say, ‘Everyone is going to have the same problem,’ I think that where you have Red Bull as our main competitor, they have a dedicated system,” Mr. Sacks said. “They’ve been able to address their labor shortages more efficiently than the larger bottlers with large labor pools. Once things start settling down and get back to normality, that’s something that will in due course right itself.”
While cognizant of the can shortages, Mr. Sacks added that it is important to continue with the company’s innovation plans, including the new Reserve line of Monster Energy drinks. The Reserve line will see the company shift its flavor innovation focus from low-and no-calorie brands such as Monster Ultra and Reign Total Body Fuel to its flagship full-calorie brand, which accounts for around a third of its total sales.
The new Reserve line of Monster Energy drinks will launch in October in watermelon and white pineapple varieties. The company also will continue rolling out its new nonalcoholic pure energy seltzer under the True North brand.
Launched in May 2021, True North is available in cucumber lime, black cherry, grapefruit lemonade, watermelon mist, white peach pear and mandarin yuzu varieties.
“The new line … contains an organic plant-based energy blend and ingredients for immunity support,” Mr. Sacks said. “True North has a limited customer target in 2021 with plans for a full launch into mainstream channels in 2022.”
The launch of a new line of Java Monster cold-brew coffee plus energy drinks, meanwhile, will be deferred until early 2022.