Monster Breaks $1 Billion
Monster Beverage Co. is a billion-dollar beast.
According to a press release, the energy drink maker saw net sales rise 12 percent to $1.02 billion in its earnings report for the second quarter of 2018, marking the first time sales have broken the $1 billion barrier in a single quarter. Net income also grew 21 percent.
The brand’s core line continued to lead the way, with year-over-year net sales increasing by 14 percent to reach $815.3 million for the second quarter.
However, net sales for Monster’s strategic brands — which include NOS, Full Throttle and several others included in its 2015 distribution agreement with the Coca-Cola Co. — fell from the same period last year, dropping from $85.6 million to $79.8 million.
In his opening remarks, Sacks cited the strong performance of Monster’s coffee products Caffé Monster, Espresso Monster, and Java Monster, which grew 25.9 percent year-over-year in the quarter. He said that, according to Nielsen data for the five weeks ended June 30, Monster’s share of the energy-plus-coffee category was up to 56 percent.
At a recent shareholder meeting, Sacks spoke about exploring the potential for a new agreement with Coca-Cola for its “super-soda” line, Mutant. In a response to a reporter’s question about those efforts, Sacks said Monster has not made progress in talks with Coke on a “different model” for the product.
Going further, Sacks said the company is reevaluating the future of Mutant in the U.S.
“We think that Mutant in the U.S. is probably something we’re probably going to tailor off and sort of refocus our attention,” Sacks said, according to a transcript of the call.
Noting that the company believes it is spending “too much time and effort on the brand,” Sacks said Monster would instead focus on developing newer products.
“We will continue to have regard to Mutant… internationally as an energy brand and Predator depending on the different markets,” he said.
In his remarks, Sacks noted that Monster is making “good progress” on its strategic alignment with Coke-affiliated bottlers worldwide. The company reached agreements with Coke bottlers in parts of Arkansas in Q2, and plans to complete the transition of operations in the entire state by the close of Q3.
The financial results were consistent with analysts’ predictions.
New KDP Era Off to Solid Start
The newly formed Keurig Dr Pepper (KDP) yesterday issued its first earnings report, noting modest sales gains for both its Keurig Green Mountain (KGM) and Dr Pepper Snapple (DPS) businesses.
Though the merger was closed last month, the company issued separate earnings reports for DPS and KGM. KDP will issue a single combined earnings report at the close of Q3.
For DPS, sales increased by 5 percent in the last quarter, rising to $1.88 billion. In a press release, the company cited a favorable product mix of 3 percent and a 2 percent rise in volume, including in contract manufacturing, as fueling sales growth.
Meanwhile, operating income fell 3.5 percent to $362 million. KDP cited challenges related to higher costs and expenses, mainly in the packaged beverage direct store delivery (DSD) segment.
In a press release, KDP CEO Bob Gamgort said that, following the merger’s close in July, the company will be focusing on “integration, optimization and ensuring delivery of the financial expectations.”
“We are very pleased with the progress to date,” said Gamgort . “The integration [of the two companies], in particular, is well on track, as evidenced by the establishment of the new KDP leadership team, and we remain very confident in our promised synergies and the future of our new Company.
In an email newsletter, Wells Fargo Securities analyst Bonnie Herzog wrote that the firm expects the integration process to continue running smoothly and that it “remains excited about the potential for combined business as well.”