Monster Energy and Other Brands to Increase Prices by 5% Starting November 2024

Monster Energy and other major energy drink brands under its umbrella in the US will raise prices by 5% starting in November 2024.

Decrease in Foot Traffic to Convenience Stores in the US

In the US, foot traffic to convenience stores has decreased by 3–3.5% (one major convenience store chain reported a 4% decline in same-store sales), and at the same time, there has been a slowdown in personal consumption (with some pointing to reduced purchases of expensive energy drinks). This has impacted the US energy drink market, which is showing signs of slowing down.

In this environment, the second-quarter net sales of energy drink brands under Monster Energy's umbrella increased by about 5.9% year-over-year, but this result fell short of analysts' forecasts.

The slowdown in the overall US energy drink market growth may have contributed to this lower-than-expected result. In fact, the number of energy drink brands in the US has exploded in recent years, with almost all of them being sugar-free products.

Compared to 10 years ago, the number of options has increased several times, and the rising health consciousness may also be slightly affecting the sales of Monster Energy.

Monster Energy and Other Brands to Increase Prices by 5%

In response, Monster Energy announced that it will raise the prices of energy drink brands by 5% starting in November 2024. It seems that the decision was made after considering the strength of Monster Energy and other brands, the high popularity of energy drinks, and price increases of other products, making the November price hike reasonable.

However, several analysts have warned that this price increase could backfire, lowering sales growth forecasts and target stock prices. They commented, "The energy drink market may weaken," and "Monster Energy's growth in the US may have reached its limit."

Personally, as mentioned earlier, in a US energy drink market with more options, I believe consumers may choose brands other than Monster Energy as prices rise. Some will choose cheaper alternatives, while others will opt for a similar-priced brand if it's a better fit.

Monster Energy's stock price has fallen by 21.9% since the beginning of 2024.

Alcoholic Beverages Only See a Decline

In contrast to the energy drink segment, the alcoholic beverage division saw a decrease of about 31.6% year-over-year. This decline is mainly attributed to reduced sales of flavored malt beverages.

It is unclear whether "The Beast Unleashed" series, which was touted as the best-selling new brand in the beer industry in 2023, underperformed, or if other products were struggling.

The demand for flavored malt beverages, which had skyrocketed in popularity a few years ago, has already started to decline, and this has likely affected Monster Energy as well. It will be interesting to watch how this trend evolves.

Expansion of Alcoholic Products

In the third quarter of 2024, the following products, including alcoholic beverages, were launched:

• Monster Energy Ultra Vice Guava
• The Beast Unleashed Gnarly Grape
• The Beast Unleashed Killer Sunrise
• The Beast Unleashed Pink Poison

In the past 5–6 years, the new alcoholic drinks in the US have tended to have a bright, refreshing image (similar to CELSIUS, which has become a top 3 energy drink). In contrast, Monster Energy has taken a classic energy drink approach, releasing products with a more traditional feel.

It will be interesting to see how this strategy, including the promotion, plays out and achieves results.

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