Monster Beverage Corp (NASDAQ:MNST) finds itself at the center of much debate, mostly pertaining to drink safety. However, despite any potential health concerns, the company continues to grow its top and bottom lines in the face of a difficult macroeconomic environment. We’ll take a look at how, as well as if, this trend is likely to continue.
Company strategy
Monster Beverage Corp (NASDAQ:MNST) aims to be different than its peers. Its marketing approach is to expose the company’s products to young consumers through radio and T.V. personalities, and by making appearances at concerts, extreme sporting events, and college campuses. Monster Beverage Corp (NASDAQ:MNST) will sometimes hand out free beverages at events in order to increase brand visibility. And if you happen to be near a college campus, or a location where concerts and/or events that attract young people are held, then you might have seen Monster-branded vehicles driving around.
Monster Beverage Corp (NASDAQ:MNST)’s growth strategy is twofold. One, it’s continuously looking to expand internationally. Monster Beverage Corp (NASDAQ:MNST) already has a strong domestic presence, as well as in Australia, Japan, and South Africa, but it wants more, which should continue to boost top-line performance. Two, it looks to grow through innovation. For example, Monster has introduced several new beverages over the past six months:
Monster Minis (12-packs in 8oz. cans)
Peace Iced Tea
Muscle Monster Energy Drinks
Monster Rehab Tea + Pink Lemonade + Energy
Java Monster Kona Cappuccino
Hansen’s Sparkling Beverages (10-calorie beverages with all-natural sweeteners)
Peace Tea Peach & Sno-Berry (ready-to-drink iced teas)
(Source: 10-Q)
Several of these products have the potential to increase the company’s targeted customer base. It should also be noted that Monster Energy Zero Ultra Blue, launched in Q3 2012, has been one of the company’s best sellers. Therefore, Monster is likely to market it more going forward.
Another strategy for Monster Beverage Corp (NASDAQ:MNST) is to alter its labeling and graphics. However, this isn’t likely to play as much of a role as international expansion and innovation.
Recent results
In the second quarter, Monster had to deal with a $3.6 million loss related to foreign currency transactions, a $5.0 million loss for litigation services related to the marketing and safety of its products, and a $2.0 million loss due to distribution transitions. Despite all of this, Monster still managed to deliver a record quarter, with gross sales jumping 6.6% year over year to $732.9 million. Gross sales are an important stat for Monster because they exclude promotions. Diluted earnings per share also increased 3% to $0.64. Monster attributed the improved performance to increased consumer demand on a global scale, as well as international expansion.
Monster vs. peers
If you’re an investor, then when you think of Monster, you might also consider The Coca-Cola Company (NYSE:KO) and PepsiCo, Inc. (NYSE:PEP). Of course, due to its youth, Monster is going to offer more growth potential than The Coca-Cola Company (NYSE:KO) or PepsiCo, Inc. (NYSE:PEP), but that doesn’t mean it’s likely to be a better long-term investment.
