Monster takes share in energy drink segment while Bang Energy sees double-digit sales declines
Net sales for Q3 2022 increased 15.2% to $1.62bn, up from $1.41bn in the same period last year.
Sales of the company's energy brands were up 11.2% in the 13-week period through Oct. 22, 2022, according to Nielsen data for all outlets combined (i.e. convenience, grocery, drug, mass merchandisers).
By individual brand within Monster's portfolio, sales of Reign increased 11.8% sales of Monster increased by 11.4% over the same period, NOS was up 13%, and Full Throttle increased by 7.1% for the 4-week period through October 2022.
By comparison, sales of competitor Red Bull were up 6.2%, Rockstar was up 8.1%, and 5-Hour Energy dropped 2.2%. Sales of Bang Energy registered the steepest declines dropping 27.3% for the 4 weeks ended Oct. 22, 2022, compared to the same period last year.
In terms of actual market share, Monster's share of the category increased from 30.8% one year ago to 31.1% presently. Competitors Red Bull, Rockstar Energy, and Bang Energy, saw market share declines with Bang declining by 2.5% to command 4.8% of the total energy drink market, according to Nielsen data for the four weeks ended Oct. 22, 2022.
"The company has regained market share leadership in the energy drink category in the United States," said CEO Rodney Sacks on the company's Q3 2022 earnings call.
Monster Energy vs. Bang Energy
Earlier this year, Monster Energy won its case against Bang Energy's parent company Vital Pharmaceuticals (VPX) which ordered VPX to pay $175m and $9.3m in attorney's fees and costs as well as an ongoing 5% royalty on all future sales of VPX Bang's energy drinks and other Bang-branded products.
In September 2022, a California court awarded Monster Energy an additional $293m in damages on its claims against VPX for false advertising, misappropriation of trade secrets and interference with Monster's contracts over shelf space with certain key retailers.
Sacks would not comment on Bang Energy's Chapter 11 bankruptcy filed in October 2022.
Further pricing actions likely
In order to mitigate inflationary pressures, Sacks said the company will continue to review pricing actions which included a recent 6% market-wide price increase in the US which went into effect on Sept. 1, 2022.
"During the 2022 third quarter, the company experienced a significant increase in cost of sales relative to the comparative 2021 third quarter, primarily due to increased ingredient and other input costs, including secondary packaging materials and increased co-packing fees, increased logistical costs, increased aluminum can costs and geographical and product sales mix," said Sacks.
However, the company has stabilized its supply chain and turned to local sourcing of its aluminum cans which will help drive down its operations cost in the long term, noted Sacks.
"We continue to believe that some of these increased costs we are experiencing are likely to be transitory. We have decreased our reliance on imported cans and are currently purchasing aluminum cans from local sources globally. We have seen a reduction in cost of sales through increased use of domestic cans as we continue to cycle through existing inventories of imported cans over the next few quarters," he added.
New product innovation in the form of its highly teased alcohol launch, Beast Unleashed, and a new zero-sugar product, Monster Energy Zero Sugar, are planned for January 2023, and will help drive new consumer usage occasions, claimed Sacks.
"Monster Energy's Zero Sugar was specifically developed as an indistinguishable zero sugar analog of our original unique Monster Energy Green flavor. We are excited about the opportunities that this product will provide to our Monster consumers who have come to enjoy the unique taste profile of our original Monster Green flavor, which remains our leading flavor," he said.
Sacks added, "Our alcohol innovation pipeline is robust. In addition to The Beast Unleashed, we will relaunch Wild Basin Hard Seltzer with new packaging and great new flavors and taste profiles. The Dale's beer family will get a refresh, including the introduction of Dale's American Light Lager, an easy-drinking lager with 4.2% alcohol by volume, 95 calories and 2.5 carbs per 12-ounce serving. We also have several additional innovative alcohol beverage products under development and look forward to sharing use of those products at a later date."