What’s Behind Monster Beverage’s 1Q15 Sales Growth?



Sales up in 1Q15

Monster Beverage’s (MNST) 1Q15 net sales increased by 16.9% to $626.8 million, from the comparable quarter of the previous year. The quarter included revenue of $39.8 million from the acceleration of deferred revenue related to the termination of distribution agreements.

Excluding the impact of deferred revenue, Monster Beverage’s 1Q15 comparable net sales were up 9.5% to $587.0 million on a quarter-over-quarter basis, missing consensus Wall Street analysts’ sales estimates of $597.5 million.

Article continues below advertisement

Currency headwinds impacted Monster Beverage’s 1Q15 net sales by $12.0 million. The company’s Monster Green Energy Drink and Ultra product line continued to perform well in the quarter. However, sales of the Muscle Monster product line declined substantially due to quality issues, which the company stated has been addressed.

In its conference call, Monster Beverage mentioned that there were quality issues related to the texture of its Muscle Monster product line. The company also stated that the concerned product line has been reformulated and that it is also refreshing the packaging of that line.

The company launched Ultra Citron, under its Ultra product line and Rehab Peach Tea + Energy in the first quarter of 2015. The company also stated that its repositioned juice and punch products are showing healthy gains.

Monster Beverage expects its Monster Unleaded, Ultra Sunrise, and Ultra Citron lines, as well as Rehab Peach Tea + Energy, to perform well in 2015.

Peers’ performance

Coca-Cola’s (KO) 1Q15 revenue increased to $10.7 billion, compared with $10.6 billion in 1Q14, due to a 1.0% growth in overall volume as well as higher pricing. PepsiCo (PEP) reported a 3.2% decline in its first quarter revenue due to currency headwinds.

Dr Pepper Snapple’s (DPS) 1Q15 net sales were up by 3.8%, driven by higher sales volumes as well as a favorable segment and product mix. Unfavorable currency movements impacted 1Q15 revenues of Coca-Cola, PepsiCo, and Dr Pepper Snapple by 6.0%, 8.0%, and 1.0%, respectively.

The iShares Core S&P 500 ETF (IVV) invests ~9.6% of its portfolio holdings in the consumer staples sector, which includes beverage makers.


More From Market Realist