Higher expenses weighed on Monster Energy’s Q3 2024 earnings report this week, but the company says it feels optimistic about future growth opportunities as it takes new pricing action across its core portfolio.
The energy category leader reported net sales growth of 1.3% to $1.8 billion in the third quarter, but gross profits were impacted by increased inventory reserves, as well as legal expenses.
Net sales for its core energy drinks segment (which includes both Reign and Bang) were up 0.8% to $1.72 billion, while its Strategic Brands portfolio of IP originally acquired from The Coca-Cola Company grew 14% to $112.6 million. However, Monster’s emerging alcohol business retreated in the quarter, falling 6% to $39.8 million due to a drop in craft beer volumes.
“The energy drink category continues to grow globally and has demonstrated resilience,” said vice chairman and co-CEO Hilton Schlosberg in a statement. “In the United States, the energy drink category in the convenience channel is beginning to show some improvement in October. A number of other consumer packaged goods companies have also seen a tighter consumer spending environment for certain income groups and weaker demand in the quarter.”
“We believe growth opportunities in household penetration and per capita consumption, along with consumers’ growing need for energy are positive trends for the category,” he added.
On a call with investors and analysts yesterday, co-CEO Rodney Sacks said the business sees opportunities for growth in the near future, including a 5% pricing increase in the U.S. the company implemented on its core brand portfolio – excluding Bang, Reign and Reign Storm – on November 1.
According to Sacks, the company is also continuing to push new innovations globally, with its most recent U.S. launch being Monster Energy Ultra Vice Guava last month.
However, as the energy category has seen a slowdown in recent months, Sacks said during the call’s Q&A portion that it’s still too early to tell if innovation is helping bring the category back to a stronger growth trajectory.
“There has been some benefit from that if you take the one-week numbers, but I think overall, I don’t think that has had much impact,” he said. “I think the overall impact that we’re seeing across a number of our other SKUs has also been trending sort of upwards as well. We see the sales per point just moving in a better direction.”
“Everybody has been seeing the lower traffic and a little bit of a stagnation in the category, but we do see signs of it starting to reemerge and consumers being able to go back into stores and are buying again,” he added.
In its alcohol portfolio, Monster launched a new variety 12-pack of its malt beverage line The Beast (previously called The Beast Unleashed) and the brand is now available in all 50 states via DSD.