Monster Beverage’s 3Q17 Sales Could Rise on Continued Demand



Sales trend

Monster Beverage (MNST) has exceeded analysts’ sales estimates in five out of the past ten quarters. The leading energy drink maker’s sales grew 9.6% to $907.1 million in 2Q17, ahead of the consensus analysts’ sales expectation of $904.4 million.

Growth drivers in previous quarter

The sales growth in 2Q17 was mainly driven by the strong demand for the Monster Energy brand drinks. The net sales of the company’s Monster Energy Drinks segment grew 9.7% to $815.3 million in 2Q17. This segment accounted for 89.9% of the company’s 2Q17 net sales.

The company’s Strategic Brands segment sales grew 10.6% to $85.6 million in 2Q17. This segment consists of the energy drinks brands that were acquired from Coca-Cola (KO) as part of a strategic deal between the two firms. The segment accounted for 9.4% of Monster Beverage’s 2Q17 sales.

Sales of the company’s Other segment fell 7.0% to $6.2 million in 2Q17. This segment includes certain products sold by American Fruits and Flavors to independent third-party customers. Monster Beverage acquired its long-term supplier American Fruits and Flavors in April 2016. Currency headwinds adversely impacted Monster Beverage’s net sales in 2Q17 by ~$8.2 million.

Sales expectations

Analysts expect Monster Beverage’s sales to rise 14.7% to $903.6 million in 3Q17. Strong demand for Monster energy drink brands in domestic and international markets and continued innovation are expected to drive the 3Q17 sales growth.

PepsiCo (PEP), which sells the AMP Energy drink brand, generated revenue of $16.2 billion in 3Q17. The company’s revenue rose 1.3% in 3Q17 driven by higher pricing.

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

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