Monster(MNST)2023-02-28 16:00Market Overview - The alternative beverage category in the U.S. reached approximately $72.9 billion in wholesale sales in 2022, marking a 10.4% increase from $66.1 billion in 2021[10]. - Net sales outside the United States reached $2.36 billion in 2022, up from $2.04 billion in 2021 and $1.51 billion in 2020, indicating strong international growth[46]. - U.S. full service bottlers/distributors accounted for 48% of gross billings in 2022, down from 51% in 2021 and 56% in 2020[74]. - International full service bottlers/distributors represented 39% of gross billings in 2022, consistent with 2021, and up from 34% in 2020[74]. - Club stores and e-commerce retailers contributed 9% to gross billings in 2022, an increase from 8% in 2021 and 2020[74]. Product Segments - The company has four operating segments: Monster Energy® Drinks, Strategic Brands, Alcohol Brands, and Other, each contributing to its overall revenue[11]. - The Monster Energy® Drinks segment generates higher per case net operating revenues but lower per case gross profit margin percentages compared to the Strategic Brands segment[14]. - The Alcohol Brands segment primarily generates revenues from kegged and ready-to-drink canned beers, hard seltzers, and flavored malt beverages[14]. - The Strategic Brands segment generates revenues by selling concentrates and beverage bases to authorized bottling operations[13]. - The company’s alcohol brands segment includes craft beers and hard seltzers, expanding its product offerings in the beverage market[30]. Product Development and Innovation - In 2022, the company introduced several new products, including Java Monster® Cold Brew Latte and Monster Energy® Ultra Peachy Keen®, enhancing its energy drink portfolio[17]. - The company continues to develop and market a wide range of energy drinks, including new flavors and product lines to meet consumer demand[17]. - The company continues to evaluate and introduce additional products and flavors to complement existing product lines[33]. - The company has discontinued certain products in 2022, but these did not materially impact its financial position or results[17]. - In 2022, new product introductions included 15 new energy drink variants, such as Java Monster® Cold Brew Latte and Reign Total Body Fuel® Reignbow Sherbet[17]. Distribution and Supply Chain - The company continues to expand distribution agreements for Monster Energy® products, with initial terms of up to twenty years[47]. - The company has entered into various distribution agreements with TCCC network bottlers for both domestic and international markets[51]. - The company is actively seeking additional co-packing facilities globally to mitigate production risks and transportation costs[45]. - The company has established purchase agreements with key suppliers to ensure an adequate supply of packaging and ingredients for the next one to four years[58]. - The principal raw materials include aluminum cans, PET plastic bottles, and various flavor ingredients, with costs subject to fluctuations[54]. Marketing and Sales - The company increased expenditures for sales and marketing programs by approximately 11.4% for the twelve months ended December 31, 2022, compared to the previous year[73]. - Coca-Cola Consolidated, Inc. accounted for approximately 11% of net sales in 2022, down from 12% in both 2021 and 2020[75]. - The energy drink category appears to be less seasonal than traditional beverages, with the second and third quarters accounting for the highest sales volumes[77]. Competition - The company competes with numerous brands in the energy drink category, including Red Bull, Rockstar, and various local brands[66]. - The company’s Java Monster® product line competes directly with Starbucks coffee drinks and other coffee brands[68]. - The company’s Reign Total Body Fuel® and Reign Inferno® compete in the performance energy category against brands like VPX Bang and C4[67]. - The company’s CANarchy family of products competes within the FMB, hard seltzer, and craft beer categories against major producers like Molson Coors and AB InBev[69]. Regulatory Environment - The company is subject to various regulations regarding product formulation, labeling, and advertising, including California Proposition 65[85]. - New labeling requirements are being considered in several countries, which may necessitate changes to product labels[88]. - Legislation imposing excise taxes on sweetened beverages has been proposed in the U.S., with taxes generally ranging from $0.01 to $0.02 per ounce[91]. - The company faces increasing regulatory issues in new international markets, which may impact its competitive position[64]. - Specific energy drink standards in markets like Tanzania restrict certain ingredients, which may lead to additional costs for compliance[89]. Workforce and Diversity - As of December 31, 2022, the company has a total of 5,296 employees across 72 countries, with 3,611 in North America and 1,043 in Europe, the Middle East, and Africa (EMEA)[103]. - Approximately 43% of U.S. employees belong to underrepresented groups, and 36% are female[104]. - The company has established an Equality, Diversity and Inclusion (EDI) Leadership Advisory Group to enhance diversity and inclusion efforts[104]. - The company offers various training and development programs, including a mid-level manager development program and a leadership development platform[105]. - Compensation packages are designed to attract and retain talent, with multiple short-term and long-term incentive programs[106].