Monster Beverage expects to take another impairment charge on Monster Brewing, the bev-alc division created after it acquired CANarchy, executives shared during a conference call for investors Tuesday.
“We expect to take a further impairment in this division, but we are confident that we’ll be able to use this platform,” co-CEO Rodney Sacks said during the presentation. “It’s premature for us to discuss ideas on the alcoholic and non-alcoholic sides, but we do have new ideas planned to help us become a staple in the business.”
Monster did not reveal how much its impairment charge will be. The company’s Q4 and full-year 2024 earnings are scheduled to be released on February 26.
Monster recorded a $39.9 million impairment charge on its bev-alc business in February 2024. At the time, the company attributed the writedown “to the continuing challenges in the craft beer and seltzer categories.” The company also took an $8.1 million write-down related to brewery closures in August 2024.
The energy drinks producer acquired CANarchy Craft Brewery Collective (Cigar City, Oskar Blues, Deep Ellum, Squatters, Wasatch, Perrin) in January 2022 for $330 million in cash. Monster added The Beast (née The Beast Unleashed) flavored malt beverage (FMB) in 2023 and Nasty Beast hard tea in 2024, both of which lean heavily on Monster Energy’s branding, despite not using its name.
However, the CANarchy brands have been in flux as their FMB siblings have recorded double-digit growth. Year-to-date through December 29, 2024, Monster Brewing (in which market research firm Circana includes the Beast and Nasty Beast) increased dollar sales +19.8%, to $120 million, at multioutlet and convenience stores, compared to the same period the prior year.
Dollar sales of the CANarchy brands, which Circana tracks separately, declined -6.8%, to $83.6 million. The business units were the 19th and 25th largest beer category vendors in 2024, according to Circana.
Bringing on CANarchy, then the seventh-largest craft brewery in the country by volume (No. 10 in 2023) has proved to come with a learning curve, Sacks said Tuesday.
“Monster Brewing was a diversification,” he said. “We acquired the company strategically to enable us to open up an alternative distribution channel that we could use to grow and expand the company in both alcohol and non-alcoholic brands. And we did that. And with that in mind, we worked our way through the existing management, and there were challenges.
“What we found was that craft, while they had a distribution system, the way craft beers really worked, they didn’t really function and go to market the same way that Monster did it, by going down distributor to distributor, working each small store,” he continued. “Although they were craft brands and they were regional, they generally tend to go through the warehouse system, or through the chains, going to the retail grocery [stores]. They don’t really get deep into the distributor convenience set.”
By uniting the CANarchy craft brands and the newer Monster-adjacent bev-alc brands under the same business unit, the company has “streamlined production” with “two facility closures,” according to the slide deck that accompanied the presentation. Those facilities include Deep Ellum and Oskar Blues breweries in Texas. Cigar City’s Tampa brewery was converted to an innovation center, which led to the elimination of 12 employees’ roles in March 2024.
In addition to the R&D facility, Monster operates two primary bev-alc production facilities.
During Monster’s Q3 earnings call in November 2024, leaders announced the company “restructured” the senior management of its bev-alc division and appointed Monster Energy veteran Ray LaRue as its president.
“He’s also now bringing across a number of ex-Monster people who are really focused on growth, focused on working the market store by store, working the distribution system and resetting goals and direction,” Sacks said.
In addition to LaRue, Monster Brewing has also appointed new leaders of sales, marketing and national accounts.
On the production innovation front, the company is prioritizing packages that pull in c-stores, such as 24 oz. single-serve cans for the Beast, which originally launched with 16 oz. single-serve cans.
Cigar City’s Florida Man double IPA will expand with Florida Man Fruit Punched double IPA (9% ABV) and Tropical Punched double IPA (9% ABV).
In October 2024, Dale’s Easy IPA and Designated Dale’s NA Pils were unveiled (revisit prior Brewbound coverage).
Michi, a new craft michelada brand, will roll out “in the next couple of months” with two styles, Sacks said.
“We’re continuing to innovate, try different things and streamline and get the organization more focused, and to start continuing to grow,” Sacks said. “We’re positive about this organization. We’re positive we’ll be able to utilize the system.”
Because the Beast and Nasty Beast “already have the Monster heritage,” the company is going to integrate those brands into Monster’s national sponsorship properties when possible, including NASCAR, the brand’s Outbreak Tour and Up & Up Festival.
Sponsorships and experiential marketing for the Dale’s brand will include partnerships with MLS’ Colorado Rapids and USA Curling, while Jai Alai IPA will partner in some capacity with the NFL’s Tampa Bay Buccaneers, NHL’s Tampa Bay Lightning and the Skatepark of Tampa, according to the presentation. Of note: Monster has elevated the flagship styles’ names (Dale’s, Jai Alai) over the breweries’ names (Oskar Blues, Cigar City, respectively).