Beer Marketer's Insights - FUTURE SMARTS: It's Not Quite A Christmas Carol, but Monster Cofounder Sacks Offers Nostalgic Account of Seminal Moments That Set Hansen-Branded Entry on Way to Becoming Global Energy Juggernaut

As entrepreneurs look toward the coming year with likely mixture of dread and anticipation, it sometimes doesn't hurt to look back at humble beginnings and groping around of brands that are now formidable features in the bev landscape. Last week's Future Smarts conference offered good chance to do that when Monster Beverage cofounder and former CEO Rodney Sacks accepted Visionary Award at Beverage Digest's conference in NY at time he's ceded CEO reins to his founding partner Hilton Schlosberg. Unlike the tite focus other speakers kept on the here & now, South African-born entrepreneur offered soft-focus glance back at the early days when he and Schlosberg acquired modest juice co called Hansen Natural and course-corrected it into the energy juggernaut (market capitalization: $75 bil) that it is today. Given the competitive realities of the energy segment, it's not exactly A Christmas Carol, but Sacks' account can serve as a reminder that even modest, resource-constrained companies like Hansen Natural can grope their way to prosperity and more if they read the right cues from the market and choose the right people to work with. Odyssey began in 1992 when Sacks and Schlosberg, who's also South African-born, acquired Hansen Natural, a family brand positioned to moms and their kids as a healthy offering. The pair came to realize that their slender resources made it difficult to pay slotting and fund marketing. So they took a cue from early new-age players Clearly Canadian and Snapple brands, which were building their brands plying small stores, not chains. "We quickly realized we needed to do that," Sacks reminisced. Among promising parts of portfolio was what Sacks said was first shelf-stable bottled smoothie. The partners figured they'd give an energy sku a try in 1996 and it quickly surged to #2 seller. To really set it on its way, they realized it needed an original can that would appear on shelves as "authentic, different."But they couldn't figure out how to reconcile that mom-friendly Hansen brand with young, aggressive energy consumers. "We found a guy who'd designed some alcohol products in Northern Calif (Ian McLean, in Walnut Creek, we presume) and asked him to do an 8-oz can like in Europe," he recounted, referring to Red Bull pack. The response: "Look, you really don't know bugger-all about the beverage industry."Rather than try to sell an 8-oz can at $2, the partners were coaxed into doing a 12-oz unit at 40% less cost as their vehicle. Further, tho they were trying to move the line thru a warehouse division, Sacks was cautioned, "You don't really get the single-serve convenience channel." So they listened and launched a DSD div. Who to run it? They decided "we don't want anybody coming from big business." Instead, they recruited Mark Hall, a former beer distrib in Detroit who was in sales role at AriZona Iced Tea and intimately knew small-store channel. Hall created his own team. "It was a big leap because the company was still struggling a bit," Sacks said. They went out with a can "with a big black stripe on it." The core line and energy extension were marketed by separate teams. Reflecting the divergence in brands, core line sought to get into moms' good graces with promise to commit 10&cent; per can toward breast cancer research at City of Hope. The energy line? That one worked Tom Leykis' syndicated talk show "How To Get Laid 101," Sacks noted, to ripple of laughter.For all that evolution, Hansen Natural team realized it needed to own the category with something more different, "a product with its own personality" that could strike a contrast with Red Bull's "more yuppie, Euro-centric" positioning. That led to creation of Monster brand as we know it, offering "twice the size with twice the buzz at the same price," as Sacks recalled. (We&#39;ll note that was right out of the AriZona playbook, offering more tea than Snapple at same 99&cent; price.) In contrast to Red Bull, they would go after the blue-collar consumer.That set path to rivalry that would keep Monster and Red Bull neck & neck in US for decades to come. Sacks believes Monster benefited in early days from rival's dismissal of co as it tried to fumble its way to viable strategy. "I think Red Bull was a little arrogant," he reflected. "They took their eye off the ball, thought we wouldn't be able to grow."From there, MNST story takes more orthodox turn as it took steps to broaden brand without losing its authenticity, adding platforms like Juice Monster, coffee/energy hybrid Java Monster and tea-based Rehab. To soften the male cues and recruit more females to franchise, it offered Ultra in a white can. Tho wildly successful, that still turned out to be a miscalculation as the gender mix proved to be 50-50. Inevitable conclusion: "We can't be everything to everyone . . . Sometimes you've got to accept that the brand can't stretch indefinitely." That led co in direction of offering new lines not closely identified with Monster brand: Reign as performance entry at time Bang was starting to ignite, lately FLRT line intended to go directly into female space owned by Alani Nu and its fast-growing challenger Bloom Energy. "You have to have different brands to fight all these brands," he advised. "You can't do it with one or two brands."For all that activity, Monster and Red Bull still own the "lion's share" of category, and "we're seeing others reaching points where they're having trouble broadening their own consumer base," Sacks said.Sacks' discussion with Bev Digest owner/editor Duane Stanford didn't look entirely to the past. As co has been doing at recent investor events, he emphasized the deep mgmt bench it has at time that Sacks, Schlosberg and Hall are all in their 70s. Prompted by Stanford, Sacks also addressed issue of affordability that seems to loom large as concern of American consumers. In his view, Monster isn't in a bad spot given how price increases of that c-store mainstay, 20-oz soda, have continued to narrow the gap vs energy drinks like Monster. That's "making energy drinks much more affordable" in US, he said. Overseas, Monster needs to make distinction between premium energy brands like Monster and Austrian-style Red Bull and affordable tier that MNST works with entries like Predator, offered not only in cans but also in cheaper PET bottles. Those packs carry narrower margins, so they can't be marketed in same way as core brand. And, as Sacks reminded, in many markets spanning India to Nigeria, it wields both to play at both tiers.Having taken a step back, Sacks was asked, does he miss the day-to-day grind? With the business in good hands, "I'm still having fun, running the family business" but able "to do things I haven't been able to do." And "I can still do innovation. The last year or two were the best we've ever had" for novelties that hit the mark.Iteratin' Innovation: The Cases of Bad Apple, Agent Orange Reinforcing some of Sacks' views on course-correcting one's way to success, svp global innovation Geoff Bremmer just posted brief account of evolution of Juice Monster Bad Apple extension as example of "local adaptation, global collaboration." Concept goes back about a decade, sparked by Monster co-creator Mark Hall. The item was launched last year in EMEA (Europe, Middle East, Africa) region via bottling partner Coca-Cola Europacific Partners and duly won Product Launch of the Year nod at Bestway Retail's Retail Industry Awards. But winning awards doesn't equate with success: while brand's packaging drove trial, flavor feedback was polarizing. "So we iterated," Geoff explained. After rounds of taste optimization and localized sensory testing, MNST tuned different versions to match preferences across Europe, Asia and North America. That seems to have done the trick: in core US market, Bad Apple already is among highest‑velocity new items, "proof that listening, iterating and partnering wins." Can graphics are strikingly dominated by image of tangled-hair Eve figure brandishing apple engraved with Monster claw emblem to signal Fuji apple flavor that's "sinfully smooth, dangerously crisp."As an example of Monster responding to cues it got from trade channel, we'll reach deep into our own memory bank to recall launch of Juice Monster a couple decades back. From what we heard back then, for orange-juice-based line, marketing team had idea of using Agent Orange moniker to capture OJ identity in aggressive way suited to Monster brand identity. Agent Orange, of course, was cancer-causing defoliant notoriously used in Vietnam War to remove jungle cover from enemy. Fortunately, before greenlighting launch, MNST team shared concept with c-store buyers. Turned out that significant proportion of them were Vietnam vets who didn't cotton kindly to name. So it was abandoned and potential pratfall averted.

FUTURE SMARTS: It's Not Quite A Christmas Carol, but Monster Cofounder Sacks Offers Nostalgic Account of Seminal Moments That Set Hansen-Branded Entry on Way to Becoming Global Energy Juggernaut

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