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Monster Beverage Expects Strong Sales Growth in 2015

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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.

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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.

Monster Beverage makes up ~0.1% of the iShares MSCI ACWI ETF (ACWI) and 0.2% of the iShares Russell 1000 Growth ETF (IWF).

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.

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