US liquid refreshment beverages
Data provided by Beverage Marketing Corporation in March 2015 indicates that the volume of CSDs (carbonated soft drinks) declined by 1% in 2014. CSDs are the largest category of the US liquid refreshment beverage market. CSDs form a major part of the sales of beverage companies such as Coca-Cola (KO), PepsiCo (PEP), and Dr Pepper Snapple (DPS). The sluggish demand for CSDs has pushed these companies to expand into still beverage categories.
Strong demand for energy drinks
According to Beverage Marketing Corporation, US volumes of liquid refreshment beverages grew by 2.2% in 2014 to 30.9 billion gallons. This volume growth was particularly strong in the ready-to-drink coffee, bottled water, and energy drink categories. Volumes in these categories grew by 10.7%, 7.3%, and 6.4%, respectively, in 2014 compared to the previous year. Monster Beverage (MNST) and its closest rival, Austria-based Red Bull, are well positioned to take advantage of this strong demand.
What the market expects
Monster Beverage net sales grew by 12% in 4Q14 to ~$605.6 million, up from the same quarter a year ago. For the full-year 2014, net sales increased by 9.7% to $2.5 billion.
The Monster Beverage deal with Coca-Cola, which is likely to close in the second quarter of 2015, should further boost the company’s sales once Coca-Cola’s energy brands are added to its own already robust portfolio. Analysts expect 1Q15 net sales to be $597.5 million, which would reflect a 11.5% rise over the company’s reported net sales in 1Q14.