Defying the predictions of many industry analysts, Monster Beverage Corporation offered no official confirmation of nor announcement for its rumored alcoholic hard seltzer product during its 2021 Virtual Investors Meeting on Thursday.
Over recent months, speculation has been rising that Monster was preparing to enter the $3.6 billion U.S. hard seltzer market. CEO Rodney Sacks said the company was “close” to launching a product in the space this summer, and a January report from Goldman Sachs Equity Research noted that Monster had filed for trademarks for the names Trident and Hydra in December, which it suggested could be associated with the launch. According to Goldman Sachs, a Monster-owned hard seltzer brand could generate up to $800 million in incremental net sales by 2025.
Yet Sacks did not provide any further detail on Thursday’s call. He noted that there were two additional products that will be introduced this year, but for “competitive reasons” the company is not ready to discuss them. A potential announcement could come with Monster’s Q4 and full year earnings report next month.
However, the company did announce Thursday that longtime president, CFO and COO Hilton Schlosberg has been named co-CEO of the company, serving alongside Sacks. Monster’s EVP of finance Thomas Kelly was named CFO, succeeding Schlosberg.
Schlosberg spent 23 years in the CFO role and although Sacks noted on the company’s 2021 Virtual Investors Meeting call on Thursday that the co-CEO dynamic is “unusual,” particularly for a company of Monster’s size, the two have long worked hand-in-hand as partners on operations and strategy.
“Ultimately Hilton really functions as my partner, we’ve operated together,” Sacks said on the call. “We just felt that going forward it would better reflect how we function as business partners and how we run the company.
Monster also announced multiple new products expected to launch in 2021, including 12 oz. slim cans of top selling Monster SKUs, extensions to the Hydro, Rehab and Ultra lines, and redesigns for several existing products.
Though a date was not given, Monster will launch this year a line of 12 oz. slim cans of some of its best-selling SKUs, including original, Lo-Carb, Zero Ultra and Zero Ultra Paradise. The new packaging format is intended to compete more directly with Red Bull in the convenience and food service channels. According to Sacks, 18 of the top 20 convenience retail chains have already allocated shelf space for the products.
Sacks also rejected concerns that the line could cannibalize Monster’s core 16 oz. products, stating he expected incremental growth and that the smaller format may help bring in more female consumers.
“Red Bull sells $2.1 billion worth of 12 oz cans in convenience retail, and we don’t participate in that part of the business at all,” Sacks said. “So we see it as an opportunity.”
Monster will also introduce a new Ultra Gold flavor to its zero sugar Ultra line, a Strawberry Lemonade variety for Monster Rehab, and Killer Kiwi and Macho Mango flavors for Hydro Super Sport. As well, the company’s Extra Strength SKU has been repositioned from a 12 oz. can to a 16 oz. can under the name Monster Nitro.
Reign will receive new Cherry Lime and White Gummy Bear flavors, as well as new variety Watermelon Warlord under the Reign Inferno subline.
The company also announced refreshed packaging designs for several products, including Rehab, Assault and most notably Hydro, which now features solid color sleeves instead of see-through packaging and a new cap. The Hydro line has also been more clearly split into two sublines — Energy Water and Super Sport.
“I think [Hydro] struggled a little bit to have shelf presence and to be visible on shelf,” Sacks said. “We created a package that will have a sleeve around it which will be much brighter and we’ve repositioned it as Energy Water. So there is a full line of Energy Water products, which will complement the Super Sport products that we have in the bottles.”
Facing lagging sales, Full Throttle will receive a brand refresh with a new packaging design, including potential changes throughout the year, Sacks said.
Sacks also addressed the announcement of ZOA Energy — a new better-for-you energy drink backed by Molson Coors Beverage Company and actor Dwayne “The Rock” Johnson launching in March — noting he believed the market for healthier energy products was still too small for Monster to worry about taking away market share. However, he said the company is exploring potential options for a healthier energy drink, including through the Reign brand.
“Those products, if you do look at them and some others that have come up that are around, they’re still very small,” Sacks said. “We don’t want to overplay it, we don’t believe that the market for something like ZOA will be very big. … But we are certainly looking at that and we are evaluating how to address that perceived clean energy or healthier energy sort of focus.”
Though full year results for 2020 will not be available until February, Monster reported net sales growth of 6.9%, to $3.4 billion, in the first nine months of last year. Net income increased 10%, to $937.9 million, in the same period and diluted earnings per share were up 12.7% to $1.75.
Total company dollar sales across all channels were up 9.5%, to $1.4 billion, and volume sales grew 8.2% in the 13-week period ending December 26, the company reported. Dollar sales for Monster branded products increased 10.7% to $1.2 billion and volume was up 9.7%. NOS grew 1.3%, to $106 million, and performance energy line Reign improved 7.4%, to $98 million. Sales of Full Throttle, however, were down 0.7%, to $22 million.
Monster’s growth was largely on track with total energy drink category growth, which increased 10.9%, to $3.7 billion, in the 13-week period. However, the company was outpaced in dollar sales growth by brands such as Red Bull (up 18.8%), Starbucks (15.7%), CELSIUS (up 71.5%) and C4 (up 84.1%).
On Amazon, Monster reported 131.1% dollar sales growth in the 13-week period to $30.7 million. Monster branded products were up 117.7%, to $26 million, and Reign jumped 287.5%. NOS (21%) and Full Throttle (65.7%) saw more muted velocities.
Comparatively, competing brands saw similar dollar sales growth rates on Amazon — Red Bull (113.3%), CELSIUS (146.3%), Bang (167.3), Rockstar (201.7%) and C4 (270.2%) all grew triple digits.
At the opening of trading today, Monster stock was down 1.13% to $90.33 per share.