Monster Sees Modest Growth In Q3 Financial Results


As the effects of last year’s long-term strategic partnership with The Coca-Cola Company continue to reverberate, Monster Beverage Corporation reported solid but slower-than-expected growth in its Q3 financial results released last week.

After double-digit growth in Q2, both net and gross sales in Q3 saw modest increases of 4.1 percent and 5.9 percent, respectively, from the same period last year, with the former reaching $787.95 million, lower than the Zacks Consensus Estimate of $817.2 million.

The results are set against the backdrop of Monster’s partnership with Coke; the soda giant purchased a 16.7 percent stake in the Corona, Calif.-based energy brand in June 2015 for $2.15 billion, including a transfer of all U.S. and Canadian distribution to Coke-affiliated bottlers, the first phase of a planned global transition to Coca-Cola distribution. The deal also included a swap of certain brands from each company’s respective portfolios: Coca-Cola agreed to transfer ownership of its worldwide energy brands, which includes the likes of Full Throttle and Burn, while Monster sent its non-energy businesses, such as Hansen’s Natural Soda and Peace Tea, to Coke.

Through the first half of this year, markets responded favorably to the move. First quarter net sales rose 8.5 percent to $680.2 million, beating analysts’ average projection by nearly $24 million. The company’s Q2 financial results were even stronger, with net sales increasing 19.3 percent to $827.5 million from $693.7 million in the same period last year.

Monster noted in the report that the 2015 Q3 gross and net sales figures were slightly higher — estimated between $11 and $12 million each — due to advanced purchases made by customers ahead of an announced price increase effective August 31, 2015.

Net Q3 sales for all of Monster’s energy drinks, including the newly launched Mutant Super Soda, were up 3.4 percent to $710 million from $686 million last year. Monster’s Strategic Brands, which includes brands absorbed by the company from Coke’s energy drink portfolio, increased 3.2 percent to $72.1 million.

The results did not mention some of the negative feedback related to the roll-out of Mutant Super Soda reported in last month’s Wells Fargo “Beverage Buzz” C-Store Retailer Survey, which one participant described as “horrible.” In a press release, Rodney C. Sacks, Chairman and CEO of Monster Beverage Corp., noted Monster had launched Mutant in convenience stores with “encouraging early results.”

This quarter saw further progress in implementing Monster into Coca-Cola’s global distribution system. In a press release, Sacks said Monster’s transition to Coca-Cola bottlers in Chile, Colombia, Mexico, South Africa and Brazil was complete. “We are pleased to report continued progress on the implementation of our strategic alignment with Coca-Cola bottlers internationally,” he said, adding that Monster would continue moving to Coke distribution in Central Asia, Latin America, the Middle East and Africa in 2017.