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Why Monster Beverage Is Eyeing Further International Growth


Nov. 16 2015, Updated 1:06 p.m. ET

New international markets

Monster Beverage (MNST) is now seeking further international expansion. In the conference call for 3Q15, which ended September 30, 2015, Rodney Sacks, Monster Beverage’s chairman and chief executive officer, disclosed the company’s plans to enter Russia, China, and Nigeria.

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International expansion plans

Monster Beverage plans to launch its products in Russia before the end of 2015. The company plans to enter the Russian market through the Coca-Cola Hellenic Group. In Part 2 of this series, we discussed Monster Beverage’s agreement with Coca-Cola Hellenic Group in connection with the transfer of distribution rights in some countries. The company also plans to launch its energy drinks in Nigeria in 2016 through Coca-Cola Hellenic.

Monster Beverage’s CEO also disclosed the company’s plans to launch Monster energy drinks in China in the first half of 2016. The company has filed applications for product approval and has begun negotiations with Coca-Cola bottlers for production and distribution of its brands in China.

Monster Beverage and Coca-Cola together account for 1.7% of the holdings in the iShares Russell 1000 Growth ETF (IWF).

International sales in 3Q15

In 3Q15, Monster Beverage’s international net sales increased by 25.2% to $170.6 million from the comparable quarter of the previous year. The company’s net sales in Asia-Pacific rose 42.6%. Japan sales rose 11.0%. Mexico, Central and South America, and the Caribbean sales rose 45.7% in dollar terms.

The company’s sales in Brazil were affected by difficult economic conditions and uncertainty resulting from the Coca-Cola strategic deal. The company’s net sales in Mexico rose 48.8%.

The transition of distribution rights to Coca-Cola also affected the company’s sales in Spain and Italy. Monster Beverage’s sales in Europe, the Middle East, and Africa were up 19.9% on a year-over-year basis.

International markets are key growth avenues for other nonalcoholic beverage companies like PepsiCo (PEP), Coca-Cola (KO), and Keurig Green Mountain (GMCR). In fiscal 2014, Coca-Cola and PepsiCo derived 57% and 49%, respectively, of their net revenue from markets outside the United States. International markets accounted for 13.4% of net sales for Keurig Green Mountain in fiscal 2014.

We’ll discuss Monster Beverage’s segment performance in the next part of this series.


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