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  1. #1
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    Default New Lemonade Stand on 9th Street

    New Lemonade Stand on 9th Street
    September 3, 2008 · No Comments

    Anheuser Busch (BUD), a major distributor of Monster Energy in the U.S. announced on Tuesday that it will create a new business unit , called 9th Street Beverages, focusing on growing their non-alcoholic beverage operations (waters, energy drinks, including Monster Energy). The St. Louis, MO – company is in the process of being taken over by beer major Inbev.

    An interesting development, since it was expected that in the whole takeover reshuffling, attention for e.g. Monster Energy might take a backseat. But the economics for a brand like Monster are just too compelling, in terms of growth and margin. And the fact that such a strategic move is made as the ink isn’t even dry yet, tells me Inbev sees that too.


    For Monster this all looks like a net-positive:

    -By setting up a stand-alone unit for non-alcoholic beverages, internal advocates are created (within Inbev-BUD), with their own targets and incentives for growth, who will put up a fight for their own shop and line-up. Fact is though that Monster does have competition from Anheuser’s own energy brand 180;

    -As this - emphasizing the non-beer side - is apparently part of Inbev’s strategic reorientation, further international expansion of Monster Energy (broader and faster) must have crossed their mind.


    New Lemonade Stand on 9th Street «

  2. #2
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    I actually interviewed for a Regional Key Account Manager position for the new undertaking. I was so disappointed I didn't get it.
    I have known for years that AB needed somthing to grow their business and non alcoholic was the way. Given their strong distribution, name recognition, assets, and ability to land major drinks it seems only natural.
    I see this being HUGE for AB and its distributors.
    Whether you think can or think you can\'t, you\'re probably right!

  3. #3
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    Hi Greg,

    Sorry you didn't get the job. How do you see the potential for Monster Energy (even perhaps international through Inbev) from this move? As you are apparently someone who knows the industry, what's your general take on Monster and energy drinks? Thanks in advance.

    Jay

    monsterfinance.wordpress.com

  4. #4
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    Quote Originally Posted by Jay01 View Post
    Hi Greg,

    Sorry you didn't get the job. How do you see the potential for Monster Energy (even perhaps international through Inbev) from this move? As you are apparently someone who knows the industry, what's your general take on Monster and energy drinks? Thanks in advance.

    Jay

    monsterfinance.wordpress.com
    I have said repeatedly on this board that Monster did essentially the same thing Pepsi did years ago. In order to get people to buy a "new" brand of the same drink they just gave you twice the amount of product for the same price. This is what set Hansens/Monster apart and created a real threat to RB.
    When Monster first came out the only other 16oz at the time was a little known drink named Rockstar. Monster had way better( yet simple) graphics and the taste was relatively close to that of the market leader RB. When a consumer chose to "try" Monster they felt like if they didn't like it they didn't lose anything because they payed the same price as they would have for an 8oz drink.

    I think the InBev deal is great for Hansens. Considering that AB makes a $1 commission on each case of Monster they sell( plus their own profit) I am sure InBev, in a way to start buying down the debt to purchase AB, wants every bit of extra margin it can get and will move Monster into other markets as well.
    The relationship seems to be strong between Hansens and AB so why would InBev mess with something that makes them money?

    What do I think of Energy Drinks??? I think they are the savior for the Beverage industry right now. They are the only ones maintaing any significant growth year after year. CSD is down, Beer is flat, Spirits are flat and wine is tapering off. The high margins plus volume keep some smaller distributors afloat.
    The Energy drink is the new coffee. Of course coffee still sells but people like me have dropped their coffee for a better tasting alternative such as a Redline or a Spike. It will continue to grow and with regards to Mr. Zabe, it is not a fad.

    I have loved ED's since their inception in the bodybuilding community. I used to drink a 16oz ephedra drink pre-workout and have more than enough energy to last the rest of the day.

    The only thing I see slowing growth in energy drinks is regulation for all consumers to be at least 18 yrs old to purchase.
    Whether you think can or think you can\'t, you\'re probably right!

  5. #5
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    Thanks Greg, appreciate your insights.

  6. #6
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    Default "It's a business, not an empire... "

    International - Monster Energy vs Rockstar Energy

    It’s a business, not an empire… «

  7. #7
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    Beverage world would disagree with your claims of spirits and wine tapering off greg..many articles have established how well those two particular beverages are coming along as opposed to beer.

  8. #8
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    Quote Originally Posted by lordmadone View Post
    Beverage world would disagree with your claims of spirits and wine tapering off greg..many articles have established how well those two particular beverages are coming along as opposed to beer.
    Just my arm chair two cents. Back in my day ( nearly 30 years ago) IMO
    mostly guys would take a shot of whisky with their beers, when partying at bars and parties.
    Now, at least from watching TV, it appears that both guys and gals are putting back shots of booze
    like crazy. Beer sales seem flat, shots and mixed drinks appear to the be what the drinking crowds
    are into.
    Last edited by Mr Zabe; 09-10-2008 at 01:03 PM.
    Don't worry, be happy. Meher Baba

  9. #9
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    Quote Originally Posted by lordmadone View Post
    Beverage world would disagree with your claims of spirits and wine tapering off greg..many articles have established how well those two particular beverages are coming along as opposed to beer.
    From marketingcharts.com:
    ....Moreover, in 2007, distilled spirits volume increased 2.4%, to 181.5 million cases, DISCUS said (via MediaPost).
    The Council also forecast that despite a weakening economy the growth would continue for a ninth year in 2008, projecting sales growth of 4.6%, to $19 billion, and a volume increase of 1.9%, to 185 million cases.


    Even though growth is projected it is at 1.9%, which in the beverage business is kind of flat.


    Keep in mind many of these articles that we both have cited were written pre-$100 bbl oil. Transportation cost as well as production cost rise significantly with the rise of raw material to operate production plants and logistics. Add on the fuel/oil charges with a Weakening dollar throughout the year for most of the summer the cost are even higher.
    Beer slowed in 2007 and is expected to take a hit in 2008 due to a shortage of hops. Spirits also have to contend with "luxury item" label hurting sales in a weaker economy as well as more governmental regulation being adopted in 2008.

    My point is that I think that AB/InBev making a seperate entity to raise revenue is an excellent move considering their portfolio has growth challenges ahead.
    Last edited by greg; 09-10-2008 at 04:37 PM.
    Whether you think can or think you can\'t, you\'re probably right!

  10. #10
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    Valid point..but an increase is an increase ESPECIALLY in this current economy.

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