US: Monster sales growth to slow, but cola NPD on the way - analyst
Monster is due to launch a new cola product next year
Monster’s sales growth is expected to slow, but still continue at a “strong double-digit pace” helped by new product innovations such as Cuba-Lima, according to an analyst.
In a note entitled ‘the newest monsters’, analysts CLSA said earlier today (12 October) that it anticipates sales growth of 20% in H2 2012 and 2013 growth of 14% for the energy drinks group. In August, Monster reported a 33.5% leap in H1 profits to US$185.9m.
However, the company has faced problems this year, including being issued with a subpoena from a US state attorney general over an investigation into its flagship energy drink.
“While we recognise that the implied sales growth-based target is well below current valuation at 1.25x sales growth, we believe decelerating top-line growth could shift attention to EPS growth,” CLSA said in a note today (12 October).
Cuba-Lima, a non-alcoholic version of the rum and cola 'Cuba-libre', is Monster’s first cola and its “biggest” new product, the analysts said, after attending the National Association of Convenience Stores conference in Las Vegas this week.
“The product is already available in test markets, and some fans have bought cans on eBay to try them and post reviews, which were generally very positive,” the note said. But it added: “The launch poses a dilemma for Coca-Cola, which distributes Monster but may be reluctant to carry a competing cola brand.”
A full roll-out of Cuba-Lima is planned next year.
Monster also has a new flavour for its Absolute Zero brand - the Fresca-like Zero Ultra - and a new “fruit punch variety” of its DUB product, CSLA reported.
Meanwhile, rival Red Bull also has new flavoured varieties - blueberry, lime and cranberry - available in the US on-trade now. These will be rolled out exclusively to 7-Eleven in November before a national launch in March, CSLA said. The variants were launched in the UK earlier this week.
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