1st BATCH OF FILES AVAILABLE NOW!

Since yesterday afternoon Wall Streeters have been groping for superlatives. "King Monster," headlined Wells Fargo's Chris Carey. "Unleash the Beast," per Stifel's Matthew Smith. They were riffing on monster performance by Monster Beverage, which handily outgrew robust energy category in Q1, reporting gains across most of its global markets, both bricks & mortar and ecomm channels, sugared and zero-sugar segments, even coffee/energy hybrids that have been down in dumps for a while. It brought first $2 bil sales number in non-peak Q1 period, just as it did in Q4 a little while ago. True, its alc arm reported another down qtr. But at time few investors seem to be focusing much any more on the big bevcos' forays into alcohol, the continued futility drew no questions on investor call late yesterday afternoon and couldn't have taken much air out of soaring shares today. Overall, it was "quite an incredible quarter," as CEO Hilton Schlosberg enthused. As trading drew to a close, shares had rocketed up nearly 13%. That's market cap of $84 bil, one-fourth that of its strategic partner Coca-Cola. We'd reported the key numbers late yesterday afternoon. Net sales soared 26.9% to $2.4 bil, +27.5% excluding alcohol segment. Gross margin contracted to 55% from 56.5% in part because booming sales required production pivots that moved some items "out of orbit," per CEO. But the planets are aligned again, he indicated. Operating income rose comparable 28.1% to $730 mil. Net sales to customers outside US rose 44.9% to $1.06 bil and now account for 40% of total. One notable development there: acquired Bang Energy, Monster's one-time nemesis, is suffering another indignity with new role as fighter brand, starting in Spain. Like most bevcos, MNST is grappling with oscillating impact of tariffs, energy prices and other externalities but so far they've been manageable and co isn't committed to taking any pricing this year. "We continue to review opportunities for price increases both domestically and internationally," is all Schlosberg would say on topic. He invited his domestic and int'l leaders to weigh in but they said no more, albeit with a lot more words. Watching and waiting, in essence.Per Schlosberg, growth was balanced across all key channels and segments. Tho MNST lately has been in a scramble to build out its zero-sugar offerings as category has tilted that way, it managed to grow on both sides of sugar divide. Ultra subline grew 20% in Q1, per Nielsens cited by CEO, with flagship Ultra White up 34%. (No word on more recently added Monster Zero that more closely mimics flavor of full-sugar core brand.) But full-sugar offerings still grew 8.5%, nearly at overall category's 10% growth rate, and accounted for one-third of co's overall gains, "highlighting the depth of the portfolio," per Hilton. Among other segments, Juice Monster popped 26% and Java Monster, including Killer Brew addition, edged up 5.2% in otherwise soft coffee/energy segment where it wars with Pepsi/Starbucks alternative. Among innovations contributing to gains were Monster Ultra Punk'd Punch, Juice Monster Voodoo Grape, Monster Energy Strawberry Shot (both sugared and zero-sugar versions) and nationwide expansion of Lando Norris Zero Sugar. One key effort to reach more females, FLRT, had limited debut in late Mar and is "performing in line with our expectations," whatever those are. In Europe, Viking Berry addition to juice line "was our most successful innovation ever in the region," said overseas leader Guy Carling.Packaging innovation also is key, from graphics riffing on America's 250th birthday to expansion of 12-oz cans, now available in singles, 4-pks and club-targeted 24-pks for core Monster and Ultra sublines.Restaged Storm Gets Separation from Performance Forebear Back in days when Bang and its performance peers were viewed as serious threat, Monster launched Reign with view to establishing lucrative new platform or, at minimum, disrupting Bang's own sharp upward ascent. From that was spun off the more Celsius-like Reign Storm as a fitness/wellness extension with thermogenic component that might recruit more gender-balanced consumer base. But that identity was undermined by overt connection to Reign. "Storm really suffered, we believe, from its association with Reign Storm because Reign is a performance energy product," as Schlosberg explained yesterday. Now it's getting out of the Reign and relaunching as just plain Storm, aiming to check a lot of boxes: 200 mg caffeine, burns body fat, hair and skin health, immunity support and focus. Energizing blend includes green tea extract, ginseng, guarana and guayusa. Sweetening is via erythritol and sucralose. "Energy for life" is mantra. As before, branding carries no obvious hint that it's a Monster-affiliated line. It's out in Guava Strawberry, Tropical, Valencia Orange and Harvest Grape flavors. A cadre of influencers is out promoting revamped elixir, including tennis aces Taylor Fritz and Sloane Stephens, NBA guard Quentin Grimes, singer Maren Morris and Renaissance man Morgan Riddle.To-Do List: NOS, Full Throttle, Bang, FLRT On investor call yesterday, one questioner invited Schlosberg to pat himself on back and explain how MNST outgrew category. For driven CEO, such an extended victory lap apparently would stick in his claw, so to speak. So Schlosberg instead responded with extensive to-do list for balance of year and beyond. "A lot of work to do" on strategic and "peripheral" brands like NOS, Full Throttle and Bang, he sighed. "Bang has been suffering a little bit" so a strong marketing program has been set to relaunch that brand. MNST also needs to make FLRT work as a female-oriented brand that might counter Pepsi-aligned Celsius and Alani Nu and KDP-aligned Bloom Energy. "The initial offtake seems to be good," he reported. "What we're hearing in the market and social media seems to be good." So finally "we're addressing the female energy category, which we wanted to do for some time." (Recall that an earlier try under True North brand name didn't get far.) Between FLRT and revamped Storm, "what we have now is a much better product group to address the wellness category."Does Anyone Care About Continued Alc Sales Decline, Even Within Monster? Net sales for co's alcohol brands fell another 5.9% to $32.7 mil. And MNST took another $51 mil impairment charge on its acquisition of CanArchy in Q4 of last yr, bringing total writedowns to $235 mil outta the $330 mil it spent in 2022 on collection of brands like Oskar Blues and Cigar City. So it's fair to say Monster team hasn't distinguished itself with its alc foray. Still, does anyone, even within MNST, really care? For starters, it was inconsequential purchase price, less than that quarter's earnings at time deal was done. For another, deal was struck mainly so MNST might win access to an independent distribution network not just for alc brands but for NAs that it might want to move outside system of its minority investor and strategic partner Coca-Cola. This was period, recall, of some disillusionment after KO had done a 180 on RTD coffees it encouraged Monster to develop (it bought Costa instead) and had devised an energy extension of Coca-Cola trademark (Monster lost arbitration challenge on that but brand failed anyway). These days, as both partners have prospered in segment, Monster brass has been effusive about its ally. "We are proud of our relationship with the Coca-Cola system and the opportunity this presents to us," Schlosberg reiterated yesterday. So Monster may have less reason to want to incubate NAs outside red system than it did at time of CanArchy deal. As for the promise of alc biz, that's lost considerable shine since 2022 - to the extent that Schlosberg lately has salivated to investors over opportunities for energy drinks to grab shelf and cooler space from declining alc categories, including those it participates in. (We got assist from Investing.com transcript in writing this story.)

Monster Bev's 27% Topline Gain Was Balanced Across Geographies, Segments, Sweetener Profiles; Storm Comes Out of the Reign to Strike H&W Cues

Publishing Info