Based in California, Monster Beverage Corporation (MNST, Financial) is a leading marketer and distributor of energy drinks and alternative beverages. The company markets and distributes Monster Energy brand energy drinks, Monster Energy Extra Strength Nitrous Technology brand energy drinks, Java Monster brand non-carbonated coffee + energy drinks, X-Presso Monster brand non-carbonated espresso energy drinks, etc.
Its products are offered across six continents and sold in more than 144 countries. It has a formidable position in the energy drink segment and is reputed for its continued prosperity.
Strategic partnership with Coca-Cola
In August 2014, Monster Beverage and the Coca-Cola Company (KO, Financial)Ă‚ entered into definitive agreements for a long-term strategic partnership to accelerate growth for both companies in the global energy drink category. Under the agreements, Coca-Cola will acquire an approximate 16.7 percent ownership interest in Monster (post issuance) and will transfer ownership of its worldwide energy business to Monster, which, in turn, will transfer its non-energy business to The Coca-Cola Company. Monster and The Coca-Cola Company will amend their current distribution agreements in the U.S. and Canada by expanding into additional territories. Additionally, upon closing, The Coca-Cola Company will become Monster's preferred distribution partner globally, and Monster will become The Coca-Cola Company's exclusive energy play. The transaction, which is subject to customary closing conditions, is expected to close in early 2015.
This partnership is important
MNST is a very recognized and lovable product. The transaction will combine the two companies’ complementary resources and assets. Monster will benefit from Coke’s global distribution footprint and operational expertise. Coke’s global energy brands, meanwhile, will benefit from Monster’s expertise as a leading energy player. Monster’s brand portfolio is anchored by Monster Energy, the No. 2 energy drink brand globally. It will expand MNST’s geographical reach.
Growing international business
MNST is seeking for international expansion beyond U.S. Global per capita consumption of energy drinks is expected to double by 2019. It is already launching energy drinks in Asia and Africa. It is in plans to start production in India and Korea. Rising disposable income, higher population will drive towards its growth in the emerging markets.
To end
Launched in 2013, Monster Beverage’s “Monster Energy Ultra Red” has registered its mark among the top sellers. The alternative drink industry is worth $38 billion and counting. It can be rightly said that MNST has made a mark and carved out a niche for its products in this huge industry. It is already expanding into new markets and continually spending for innovation as innovation plays a key role in any company’s success. MNST stock has appreciated by 480% since 2010.
MNST has already become a big name in the energy drinks sector and is continuing to grow further. It is expected to create shareholder returns. An increasingly evolving middle class, higher disposable incomes and changing lifestyles are key factors that will fuel growth of this company in the beverage industry.
There is an ever increasing popularity for the energy drinks sector. Energy drink volumes grew by 5.5% in the U.S. in 2013. It is expected to grow by 52% by the end of 2018. Margins for energy drinks are higher when compared to carbonated sweetened beverages. U.S. remains the leader in terms of market and volume. The emerging markets like India, Mexico and China are also witnessing a rise in energy drinks. The energy drinks sector is managing to expand with its attractive packaging and use of low sugar.
