What Were the Key Drivers behind Monster’s 2Q16 Sales Growth?



Impressive growth

Monster Beverage’s (MNST) sales grew by 19.3% in 2Q16 to $827.5 million. Analysts expected the company to deliver net sales of $804.2 million in the second quarter. The company exceeded sales expectations in the first quarter as well. Monster Beverage’s sales growth in 2Q16 was higher than the 15.9% growth in 1Q16 comparable sales and the 0.9% growth in 2Q15 sales.

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Sales growth drivers

Monster Beverage’s impressive sales growth in 2Q16 was primarily due to a $92.2 rise in the Monster Energy brand energy drinks net sales driven by higher volumes. The company’s top line also benefitted from the price increase on certain Monster Energy brand energy drinks. This price increase, which became effective on August 31, 2015, is estimated to have contributed $29.9 million to the 2Q16 sales.

Monster Beverage also benefitted from $77.4 million of net sales in 2Q16 from the company’s “Strategic Brands” compared to $13 million in 2Q15. The Strategic Brands include the energy drink brands acquired from Coca-Cola (KO) as part of a strategic deal with Monster Beverage. This deal was completed in June 2015. The 2Q16 sales included $5 million from accelerated recognition of deferred revenue.

Monster Beverage’s sales in 2Q16 were adversely impacted by $4.1 million of currency headwinds. Also, a year-over-year decrease of $29.5 million in 2Q16 net sales resulted from the sale of Monster Beverage’s non-energy drink brands to Coca-Cola. Monster Beverage constitutes 1.7% of the First Trust Consumer Staples AlphaDEX ETF (FXG).

Ahead of peers

Monster Beverage’s sales growth in 2Q16 was better than its nonalcoholic beverage peers. Revenue of soda giants Coca-Cola and PepsiCo (PEP) fell by 5.1% and 3.3%, respectively, in 2Q16, due to the continued impact of currency headwinds. Dr Pepper Snapple (DPS), the third-largest soda maker in the US, reported a 2.4% rise in its 2Q16 sales driven by a favorable product and package mix, higher pricing, and increased sales volumes.

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


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