CORONA, CALIF. — The energy drink market is rebounding, and Monster Beverage Corp. said it is outpacing category growth.
“According to the Nielsen reports for the four weeks ended Jan. 25, 2014, sales of energy drinks in the convenience and gas channel in dollars increased by 6.6% over the comparable period in 2013,” said Rodney Sacks, chairman and chief executive officer, during a Feb. 27 earnings call with analysts. “Sales of Monster increased by 14% of the comparable period last year, while sales of Red Bull increased by 5.4%. Rockstar was up 7.5%, while 5-Hour was down 3.3%. Nos was up 11.7%, and Amp was down 2.8%.”
A harsh winter has hampered Monster’s performance, even interfering with distribution in some regions, but Mr. Sacks believes the energy drink market has weathered a different storm. The company and category have been shrouded in negative publicity following wrongful death suits and federal scrutiny over marketing practices.
“We’re hoping that once we get through the next month or two, weather will start improving all over, and things will return to normal,” he said. “We feel quite good about the category, about the growth, and that it has returned to better levels.”
Consumers may have moved on from the concerns clouding the category, he added.
“It’s been going on now for over a year, so a lot of consumers are basically starting to get tired of it, and it’s becoming old news,” he said. “We still feel very comfortable with the science and the safety of our products.”
For the year ended Dec. 31, 2013, the company had net income of $338,661,000, equal to $2.03 per share on the common stock, compared with $340,020,000, or $1.96 per share, in fiscal 2012. Net sales increased to $2,246,428,000 from $2,060,702,000 the year before. Results were affected by foreign currency transaction losses and litigation costs.
Monster Energy Ultra Red, launched last September, has become one of the brand’s best-sellers, the company said, and Muscle Monster protein shakes, which debuted last March, ranks second in the ready-to-drink protein segment in convenience and gas channels. Strawberry and peanut butter cup varieties will be added to the Muscle Monster line this year.
Net income for Monster’s fourth quarter advanced to $76,105,000, or 46c per share, up from $67,984,000, or 40c per share, in the prior-year period. Net sales for the quarter climbed to $540,849,000, up from $471,517,000 in the same quarter of the previous year.
Monster announced in November it had proposed voluntary guidelines for the marketing of energy beverages, which were 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 American Beverage Association is awaiting a response from certain senators to the proposed U.S. model guidelines for energy drink companies…” Mr. Sacks said. “We continue to support the proposed model guidelines and would be prepared to adopt them if all other major energy drink companies doing business in the U.S. do the same.”