|Innovation at Monster Beverage is driven to broaden the company's consumer base.|
CORONA, CALIF. — On tap from Monster Beverage Corp. this year is a non-caffeinated energy drink called Monster Unleaded. The product was developed to draw new users to the category.
“We believe that Monster Unleaded will appeal to consumers sensitive to caffeine, who until now were not consumers of energy drinks, as well as to consumers who would like to limit their daily consumption of caffeine, but wish to increase their consumption of Monster, particularly later in the day or early evening,” said Rodney Sacks, chairman and chief executive officer, during an Aug. 7 call with financial analysts to discuss second-quarter earnings.
New flavors and products at Monster are created to cater to “the full gambit of consumers,” Mr. Sacks said. Last year, the beverage maker added Muscle Monster protein drinks to broaden its consumer base and consumption occasions. With 25 grams of protein, Muscle Monster is positioned as both a source of pre-workout energy and a recovery drink.
“We think there is a trend for consumers on a broader base than pure sports people or bodybuilders to actually have drinks with protein, in addition to the having the energy component,” Mr. Sacks said. “And that is why we introduced that line.”
Monster credits its wide range of products as a competitive advantage in a market that has recently experienced some softness. The energy drink category posted less robust growth rates both in the United States and in international markets during the past quarter, up only mid-single digits, Mr. Sacks said.
“We obviously see the continued soft trend across beverages in general,” he said. “But we believe that eventually that will settle down and right itself. We think there have been some health concerns about C.S.D.s, and then the C.S.D.s have now translated into the diet C.S.D.s, so, illogically, because of some scares about sweeteners. Again we think this too will pass, and I think things will settle down, but there are certainly some changing consumer trends and preferences. And those are something that I think we will deal with.”
For the second quarter ended June 30, net income increased 32% to $141,003,000, equal to 84c per share on the common stock, which compared with $106,873,000, or 64c per share, in the prior-year period.
Net sales for the quarter advanced to $687,199,000, up 8.9% from $630,934,000.
“The new additions to the Monster family that were introduced during 2013 and earlier this year are continuing to gains in market share and contributing positively to the overall increase in the company’s sales,” Mr. Sacks said.
In the year ahead, Monster plans to expand its successful zero-calorie Ultra line with Ultra Sunrise, a citrus flavor.
“We’re also going to go through a test on a summer promotion with our Ultra Black, test that flavor, see how that flavor, and see how the product does,” Mr. Sacks said. “And either that will be the line extension for next year, or we will have another one, which we have in test at the moment. Internally, we will make a decision on that.”Additionally, the company plans to extend its Java line with a reformulated cappuccino flavor and has repositioned its Juice Monster beverages to contain less juice, “which we believe are far more drinkable and easily drinkable because they are still carbonated,” Mr. Sacks said.