Analysis - Monster Beverage on track for bounce from Coca-Cola Co deal
The deal is due to complete next year
Now that both companies have released third-quarter results - with Monster last week posting a solid performance - that verdict remains unchanged.
According to Stifel's Mark Swartzberg, the combination of the Coca-Cola deal and accelerating growth in energy drinks will safeguard Monster's future for the next two-to-three years. He adds that in the short-term, too, the situation is rosy as latest figures show strong October sales in the US that are likely to carry through to next year.
Wells Fargo's Bonnie Herzog says that the Coca-Cola tie-up will be a shot in the arm for Monster's international performance on top of already accelerating overseas sales. Herzog says she is “particularly enthusiastic” about the long-term prospects of Coca-Cola's involvement with Monster.
CLSA's Caroline Levy believes that Monster has a “long runway for growth” in the Coca-Cola system, but adds that the key to its future is penetrating the CSD category. Energy drinks equal just 4% of global CSD volumes, which means great potential still remains. Coca-Cola's energy drinks brands, which Monster will control once the partnership completes, are an “underrated asset” that can further drive growth, Levy adds.
But there are still some unknowns surrounding the deal.
Swartzberg highlights a price increase for Monster due to come in around the completion of the Coca-Cola deal early next year. The anticipated 4-6% rise will match one from Red Bull due for 1 January and Swartzberg believes the price boost will further gild profits growth.
It's shaping up to be a successful 2015 for Monster Beverage.
The Coca-Cola Co has opened a US$5m PET bottling line in Liberia. ...
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