CORONA, CALIF. — Increased costs for ingredients, packaging, manufacturing, freight and fuel, distribution and warehousing, and aluminum cans are pressuring earnings at Monster Beverage Corp. Rodney C. Sacks, chairman and co-chief executive officer, believes some of the strain is temporary.  

“Since the beginning of the COVID-19 pandemic and the subsequent increased demand for the company’s energy drinks, the company prioritized ensuring product availability for its customers and consumers,” Mr. Sacks said during a Nov. 3 earnings call. “This strategic direction has remained in place throughout the global supply chain challenges and disruptions, despite adversely impacting the company's profitability. The company continues to stand by its strategy to ensure product availability and solidify the continued long-term growth of the company’s brands.”

Net income for the third quarter ended Sept. 30 was $322.4 million, equal to 61¢ per share on the common stock, down 4.4% from $337.2 million, or 64¢, in the prior-year period. In addition to increased input costs, the company encountered higher operating expenses due to increased payroll, expenditures for sponsorships and endorsements and expenditures for travel and entertainment.

Net sales totaled $1.6 billion, up 15% from $1.4 billion the year before. Adjusted for foreign currency, net sales increased 20% in the quarter.

Monster Beverage Corp. regained market share leadership in the energy drink category in the United States in the latest quarter, Mr. Sacks said, citing Nielsen data.

“Sales of the company’s energy brands, including Reign, were up 11.2% in the 13-week period,” he said. “Sales of Monster were up 11.2%. Sales of Reign were up 2.9%. Sales of NOS increased 17.2%. And sales of Full Throttle increased 1.7%.”

Meanwhile, sales of competitors Red Bull and Rockstar increased 6.6% and 6.1%, respectively, he said, while the troubled Bang Energy brand saw sales decline 23%. Monster, which sued Bang parent Vital Pharmaceuticals over false advertising claims, on Sept. 29 was awarded $293 million in damages by a California federal jury. On Oct. 10, Vital Pharmaceuticals filed for Chapter 11 bankruptcy protection.

During the quarter, net sales for the company’s Monster Energy Drinks segment, which includes Monster Energy, Reign Total Body Fuel and True North Pure Energy Seltzer brands, increased 13% year over year to $1.5 billion. Net sales for the company’s Strategic Brands segment, which includes the various energy drink brands acquired from the Coca-Cola Co. and the company’s affordable energy brands, increased 19% to $88.8 million.

Net sales for the Alcohol Brands segment, comprising craft beers and hard seltzers purchased as part of the Canarchy Craft Brewery Collective transaction, completed earlier this year, added $26.8 million. Net sales for the company’s Other segment, including certain products of American Fruits and Flavors, LLC, grew 2.1% to $6.4 million in the quarter.

“In addition to price increases or pricing actions taken earlier this year in order to mitigate inflationary cost pressures, the company implemented price increases in the second half of 2022 in certain international markets and will be implementing additional price increases early in 2023 in a number of international markets,” Mr. Sacks said. “The company will continue to review further opportunities for price increases and pricing actions in order to mitigate inflationary pressures.”

Forthcoming product launches include Monster Energy Zero Sugar, set to roll out in January, and Monster Tour Water, an unflavored water line, in still and sparkling variants, packaged in 19.2-oz aluminum cans. Additionally, the company is set to debut four flavors of Reign Storm in 12-oz slim aluminum cans, “in response to certain competitive new entrants in the energy drink category,” Mr. Sacks said.

“We are also planning to launch our first flavored malt beverage alcohol product leveraging Monster’s brand equity in the 2023 first quarter,” Mr. Sacks said. “The Beast Unleashed contains 6% alcohol by volume and will initially be available in four flavors. The Beast Unleashed will launch through certain beer distributors in the United States, utilizing a phased state launch approach, with the goal of being national by the end of 2023.”

Monster’s share price popped in after-hours trading, opening at $97.81 on Nov. 4 after closing at $91.09 on Nov. 3.