CORONA, CALIF. — Building on the recent launch of Mutant Super Soda, Monster Beverage Corp. plans to unleash several additional products later this year, said Rodney C. Sacks, chairman and chief executive officer. Among them are Hydro, a non-carbonated energy drink, and White Lightening, a zero-calorie carbonated soft drink.
“We have a robust innovation pipeline and further launches such as Mango Loca, a new flavor in our Monster Energy juice family, which is planned for a third-quarter 2017 launch, and the new X-Presso Monster Energy drink in 8-oz slim cans in two flavors planned for launch before year-end,” Mr. Sacks said during a May 4 earnings call with investment analysts.
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| Rodney C. Sacks, chairman and c.e.o. |
Expansion into international markets helped Monster Beverage Corp. deliver growth in the first quarter despite category weakness. Net income in the three months ended March 31 was $177,980,000, equal to 31c per share on the common stock, up 9% from $163,877,000, or 27c per share, in the prior-year period. Net sales of $742,146,000 were up 9% from $680,186,000.
“Sales continue to be challenging in the beverage industry in the first quarter and remain weak,” Mr. Sacks said.
Monster’s results also were adversely impacted by foreign currency movements, production shortages of Java Monster and Muscle Monster products, and distributor terminations as part of the company’s recent deal with the Coca-Cola Co.
Net sales for the company’s Monster Energy Drinks segment, which includes Monster and Mutant beverages, increased 8% to $668.6 million in the quarter, while net sales for the company’s Strategic Brands segment, which includes the energy drink brands acquired from the Coca-Cola Co., increased more than 16% to $68 million. The company also recorded net sales of $5.5 million for its Other segment, which includes certain products of American Fruits & Flavors sold to independent third parties.
Citing Nielsen data, Mr. Sacks said retail sales of Monster products grew 1.8% in the 13 weeks ended April 22, while competitor Red Bull grew 5.3%. During the last four weeks of that period, Monster’s market share of the energy drink category in the convenience and gas channel decreased by 0.4 points to 35%, and Red Bull’s share increased 1 point to 36%.
To reduce production capacity shortages for Java Monster and Muscle Monster, the company began manufacturing certain flavors in Europe and procured additional production in the United States, Mr. Sacks said.
“As a result, we anticipate that it will still be a number of months before production availability allows us to restore normal supply patterns and fully meet consumer demand that exists for these products,” Mr. Sacks said. “We estimate that net sales in the quarter were negatively impacted by approximately $12 million as a result of such production capacity shortages.”
The company also plans to expand distribution of Mutant in the U.S. and international markets. Introduced last September, Mutant extends Monster’s product portfolio beyond energy beverages and competes directly with PepsiCo’s Mtn Dew brand.
“We remain confident about the potential of this brand,” Mr. Sacks said.
