CORONA, CALIF. — Monster Beverage Corp. dealt with continued weakness in the convenience store channel, an unfavorable impact from foreign currency exchange rates and excess inventory in its alcohol business segment in the third quarter.

Net income in the third quarter ended Sept. 30 decreased 18% to $371 million, equal to 38¢ per share on the common stock, from $453 million, or 43¢ per share, in the previous year’s third quarter. Net sales increased 1.3% to $1.88 billion from $1.86 billion.

“Our third-quarter financial results were again impacted by unfavorable foreign currency exchange rates in certain markets,” said Rodney Sacks, co-chief executive officer, in a Nov. 7 earnings call. “Net changes in foreign currency exchange rates had an unfavorable impact on net sales for the 2024 third quarter of $62.8 million.”

An increase in inventory reserves due to excess inventory levels in the alcohol brands business segment was $10.6 million, which negatively impacted gross profit. A $16.7 million provision and company-incurred legal expenses of $1.2 million adversely impacted operating expenses. The legal expenses were connected to an intellectual property claim brought by the descendants of Hubert Hansen in relation to Monster Beverage Corp.’s use of the Hubert Hansen name prior to the close of the 2016 transaction with the Coca-Cola Co.

In the Monster Energy drinks business segment, net sales increased 0.8% to $1.72 billion from $1.71 billion in the previous year’s third quarter despite an unfavorable impact of $52.8 million in foreign currency exchange rates. The segment primarily includes Monster Energy drinks, Reign Total Body Fuel high-performance energy drinks, Reign Storm total wellness energy drinks and Bang Energy drinks.

“The energy drink category continues to grow globally and has demonstrated resilience,” Sacks said. “In the United States, the energy drink category continued to experience slower growth rates. However, in all measured channels, excluding convenience, the energy drink category is growing at a faster rate. In the United States, the energy category in the convenience channel is beginning to show some improvement in October.”

Monster Beverage Corp. is talking to retailers and receiving input from third-party market research companies about foot traffic in convenience stores, said Hilton Schlosberg, co-chief executive officer.

“I think we have — and it’s, again, a personal view — I think we’ve reached the bottom, and or very close to the bottom, and I think here, in Monster anyway, we actually feel good about things coming back,” Schlosberg said.

In the strategic brands segment, net sales jumped 14% to $112.6 million from $98 million. The segment includes various energy drinks acquired from The Coca-Cola Co. and affordable energy drink brands Predator and Fury.

In the alcohol brands segment, net sales fell 6% to $39.8 million from $42.3 million, primarily due to decreased sales by volume in craft beers. The segment is comprised of The Beast, Nasty Beast, hard tea, and various craft beers and hard seltzers.

In the alcohol segment, the company’s brewery in Brevard, NC, closed for a week due to flooding from Hurricane Helene, Sacks said. The brewery now is partially operational and should be fully operational by mid-November.

In the Other segment, net sales dropped more than 11% to $5.9 million from $6.7 million. The segment primarily includes products of American Fruits and Flavors, LLC, a wholly-owned subsidiary, sold to independent, third-party customers.

Monster Beverage Corp. in the United States raised prices by 5% on brands and packages, excluding Bang, Reign and Reign Storm, effective Nov. 1, Sacks said.

“We are continuing to monitor opportunities for further pricing actions in our international markets,” he said.

Schlosberg said the end of presidential election in the United States and the Federal Reserve making a rate cut on Nov. 7 should give consumers more confidence, but he said additional import taxes on aluminum would raise input costs for Monster Beverage Corp.

“There’s already a tariff on aluminum, and we’re hoping that the tariff will not increase, but there is really a ton on aluminum,” he said.