Monster Energy | Monster Beverage Corp (US)

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Independent drinks company Hansen Natural bowed to public taste in 2012 and renamed itself Monster after its biggest and fastest-growing brand, which has been one of the world's fastest-growing soft drinks since its launch in 2002. Key to that success since 2008 has been a pact with the Coca-Cola bottling system, which now distributes the Monster Energy brand in Europe, Canada and parts of the US. In 2014, Coke acquired an initial 17% stake in the business for a total consideration of $4.2bn, transferring responsibility for its own energy portfolio to the smaller company.

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Recent stories from Adbrands Weekly Update:

Adbrands Weekly Update 21st Aug 2014: Coca-Cola made a long-expected move on Monster Energy, acquiring a 17% stake in the smaller company for $2.15bn in cash. It already handles distribution in selected markets in Europe and the US. Under the arrangement, Coke will transfer management control of its own existing stable of energy brands, such as Burn, Relentless and Full Throttle, to Monster while in return taking over the smaller company's non-energy drinks including Hansen Natural and Peace Tea. It will also gradually assume global distribution duties for the Monster brand, currently divided between several other local partners. The enhanced partnership is widely expected to lead to a full buy-out of the business in due course, a staged acquisition strategy similar to that employed with UK-based smoothie and orange juice producer Innocent, which Coke now wholly owns. More recently Coke acquired what is now a 16% holding in Keurig Green Mountain, the developer of the enormously popular US home drinks system. For now, Monster's board has capped Coke's holding at no more than 25% before 2018, but it can withdrawn that restriction at its own discretion to allow a full buyout. That could be expensive for Coke. Monster's share price rocketed in the wake of this week's deal, pushing its market cap to around $15.5bn. 

Adbrands Weekly Update 3rd Apr 2014: Industry watcher Beverage Digest published a gloomy analysis of the US liquid refreshment (LRB) market, saying that "challenging recent trends... continued and worsened in 2013". Total liquid refreshment volumes, including both still and sparkling beverages, fell for the first time in several years (by 1.6%), and the rate of decline among carbonates increased sharply to 3.0%, almost three times last year's fall. Sales of carbonated soft drinks (CSDs) peaked in 2003 and have been declining steadily ever since. The latest slide returns the sector to volume levels not seen since the mid 1990s. The big three of Coca-Cola, PepsiCo and Dr Pepper Snapple all suffered volume declines in both total carbonated drinks and the wider LRB market, and virtually all the top brands, including Coke, Pepsi, Mtn Dew and Dr Pepper suffered a fall. Of the top ten CSDs, only Sprite enjoyed an increase in volumes, and that by a measly 0.1%. Coke Zero crept into the top ten for the first time, displacing faster-declining Diet Dr Pepper. Coca-Cola's Dasani water was a rare exception in the wider LRB market with an impressive 5% hike in volumes. Rivals such as Nestle Pure Life and Poland Spring managed less than 1% apiece. Energy drinks currently sit just outside the top ten brands in both the CSD and LRB categories, but are likely to force their way in this year or next. Currently Monster Beverage Corp and Red Bull have share of 1.6% and 1.3% respectively, having both grown by 0.2% during 2013. At current rates Monster could take the #10 spot by volumes among CSDs from Coke Zero for 2014.


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Background

Free for all users | see full profile for current activities: The current business has evolved from Hansen's Juices, a small fruit juice company founded in California in the 1930s by Hubert Hansen. For the next 60 or so years the company specialised in fresh non-pasteurised juices, latterly as The Fresh Juice Company. Tim Hansen, one of Hubert's grandsons, set up a separate business in the late 1970s to launch a line of shelf-stable beverage under the name Hansen's Naturals. These used as their selling point the fact that they were made entirely from natural ingredients. Rights to the various Hansen brands were acquired in the 1980s by California CoPackers Corporation, which then adopted the name Hansen Natural Corporation. 

In 1992, two South African businessmen, Rodney Sacks and Hilton Schlosberg, acquired the Hansen Natural Corporation through a publicly traded shell company. The purchase price was just $14.5m, slightly less than Hansen's sales at the time of just $17m. For the next few years the group continued to market its existing range of products. Having noticed the considerable success of Red Bull in Europe, Sacks and Schlosberg decided to jump into the energy market in 1997, the same year that the Austrian brand launched in the US. Their first product was a vitamin and caffeine-enhanced version of Hansen's Naturals, marketed under the Hansen's Energy banner. The Monster brand was launched for the first time in 2002, as the label for a new energy drink packaged in a "monster-sized" 16-ounce can, twice the size of Red Bull. See full profile for current activities


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