Monster Energy Company unveiled its full 2023 innovation pipeline during its annual investor meeting webcast on Wednesday, showcasing its ambitions in the better-for-you energy, alcohol, and canned water categories.
In a presentation hosted by Monster co-CEOs Rodney Sacks and Hilton Schlosberg, Monster discussed a variety of new lines and flavor extensions planned to launch in the upcoming months, including Monster Zero Sugar and malt beverage alcohol line The Beast Unleashed, which is being managed by Monster subsidiary CANarchy, both of which were previously announced at the National Association of Convenience Stores (NACS) 2022 show in October.
An analysis of the presentation by Goldman Sachs Equity Research noted that convenience channel retailers are broadly optimistic about the Zero Sugar launch, with several stating during the firm’s most recent Beverage Bytes survey that they intend to give the line incremental shelf and cooler space.
For The Beast Unleashed, Sacks said during the presentation that the line is rolling out this month in six states and will expand nationwide in waves, with additional activations expected to grow the footprint in March and April followed by subsequent launches in the summer. The 6% ABV drinks will be available in three flavors in individual 16 oz. cans – Mean Green, White Haze and Peach Perfect – as well as a fourth flavor, Scary Berries, available in 12 oz. variety 12-packs, targeted toward grocery and big box accounts. Sacks said Scary Berries “will probably” launch in a 16 oz. can in the future.
“For the moment we’re focusing on getting shelf space for the three main SKUs and then the variety pack,” he said.
Marketing for The Beast Unleashed will include event marketing, including NASCAR promotions, as well as influencer and digital marketing campaigns.
The company is also continuing to push its non-energy innovations with Tour Water, which Monster has produced since 2003 as an exclusive for its athlete and musician partners. As a retail product. The brand will be managed by CANarchy’s non-alc division, Sacks said. Tour Water will be available in 19.2 oz. cans targeted to the convenience channel and in 12-packs of 16 oz. cans, which will launch in grocery and big box stores. Schlosberg noted that the water launch “has the blessing of the Coca-Cola Company,” and that it could potentially be distributed through the Coke network at some point in the future.
New products are also coming to the company’s Reign performance energy brand with Reign Storm, a “Clean Energy” line with flavors including Valencia Orange, Peach Nectarine, Kiwi Blend and Harvest Grape available in 12 oz. cans.
Reign, which launched in 2019, was seen as an answer to the rise of Bang Energy – even leading Bang-owner VPX to file a trade dress infringement lawsuit against Monster. Now, as newer performance energy brands have brought more female and health-conscious consumers into the energy category, Sacks said that Storm features a “less aggressive” can design with a white background intended to broaden Reign’s consumer demographic reach.
Reign will also add a Tropical Storm flavor, previously announced at NACS 2022, in 16 oz. cans on its core Total Body Fuel line.
Other 2023 innovations include new flavors across existing lines including Monster Reserve Kiwi Strawberry, Monster Ultra Strawberry Dreams, Java Monster Cafe Latte, Monster Energy Nitro Cosmic Peach, and Monster Rehab Wild Berry Tea.
While Goldman Sachs was bullish on Monster’s broad innovation pipeline, the report expressed concern that the “sheer quantity” of new products this year could be potentially too much.
“Overall while we see some potential execution risk given the sheer quantity of innovation this year, on top of a business that has gotten increasingly complex over the last few years, we are optimistic that the company should be able to mitigate some of this risk as some of this innovation will be managed by it is new Monarchy Beverage Company which will leverage several seasoned [Monster] employees and via CANarchy which manages and fulfills the bottling of The Beast Unleashed,” Goldman reported.
In the 13-weeks ending December 31, Monster reported total sales up 11% to $1.73 billion, with the Monster brand growing 10.6% to $1.48 billion while the NOS (+17.3%) and Reign (+9.2%) saw positive growth as well. Full Throttle declined -0.6%, accounting for just $26.2 million in sales.
Beyond the innovation pipeline, Monster also projected a positive outlook for manufacturing expenses, stating that input costs for packaging and other raw materials are coming under control. Goldman noted that this “suggests Q4 gross margins should sequentially improve yet again.” While costs of aluminum and freight are easing, the company did note that the prices of other key supplies, including sugar, are rising.
On retail pricing, the company said it will explore more potential price raises later this year. Despite price increases last year, Goldman noted that most retailers said they have seen little pushback from consumers.
“That said, however, a number of retailers did note decreased demand for multi-packs, and conversely increased demand for smaller can sizes and singles, as consumers are looking to minimize their total cost outlay in the challenging economic environment,” Goldman stated. “All in, 33% of respondents have seen volume impacts related to the recent price increases.”