Monster Beverage Corp (MNST)’s Troubling Future You Must See

To its benefit, Monster is currently in an international expansion mode. The company entered Romania and Albania last month and is gearing up to enter India shortly. Energy drinks are a relatively new concept in a number of markets, and the company has a huge growth potential while expanding there.

Sales from Europe, the Middle East and Africa grew 34% year-over-year in dollar terms. The company is currently building plants in Japan, Korea, and India, with Japan being a focus area for the company as a result of growing sales volumes.

Bigger players on the smaller turf

Coca-Cola (NYSE:KO) and PepsiCo (NYSE:PEP) are also trying to expand their presence in the energy drinks arena. Both companies are developing their alternate beverage businesses to help counter falling soda sales volumes in the US. Energy drinks have always been a good opportunity on account of its growth potential, so they are natural expansion targets.

PepsiCo’s Amp energy drink has around 3% market share, while Coca-Cola’s Full Throttle has around 1%. Both brands are currently experiencing lower sales in dollar terms as a result of the US sales slump, though it is more pronounced in case of AMP, which saw a 20% decline during the 13-week period ending Apr. 27, while Full Throttle only saw a 3% fall.

Coca-Cola has recently reported earnings of $0.46 per share on revenue of $11.04 billion, while PepsiCo has earned $0.77 per share on revenue of $12.58 billion. Both companies fared better in newer markets than in the home turf.

Last thoughts

Energy drinks have always been a high-growth sector, and even now industry researchers like Packaged Facts estimate that the $12.5 billion energy drink market will grow to about $21.5 billion by 2017. Investors should be careful, however, and need to keep an eye on how the demand scene actually progresses. If Monster’s trends continue along the lines of what we saw in the first quarter, the stock may quickly lose its appeal.

The article Is Monster Losing Its Energy? originally appeared on Fool.com.

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