How Monster Beverage Shares Soared a Monster 100,000% in the Last 20 Years

portfolio you just did, so I guess, I guess. So sorry everyone, Um, this is going to be the first episode of all thoughts that comes with a disclaimer about bad language. The Basic Bitch e t F portfolio has been sort of long running theme on a finance Twitter,

and that's done pretty well, at least in twenties. So things like Pinterest, um, some of the makeup companies, those sorts of things, Starbucks, So I could see I could see the flip side of that being a brose e t F. Sure, Gaming stocks gaming, so we know video games have done extremely well. I mean that's just incredible sector.

Of course, Uh you know, back last summer we did that episode about Domino's Pizza, which I think, like, you know, ordering pizza while you're playing video games, then it's obviously part of it. I imagine there's some like sports element. Oh well, you could certainly put in um DraftKings and some of these online gambling um Penn Gaming, some of

these online gambling names. And uh, there's also a beverage company that I think fits right into the portfolio, and it's done extraordinarily well, So I know which one you're talking about. This has become one of your favorite companies.

Not just because this story around bro culture is quite interesting right now, lots of people are playing more video games, we're all stuck at home, and so maybe you want to drink more of this particular beverage while you're gaming, but also because the returns on this one have just been absolutely stunning. Yeah, exactly right. So the company is a monster beverage. You've almost certainly seen them like at any Delhi or grocery store or anything. They're known for

their big cans of heavily caffeinated drinks sugary. They have like super aggressive label labels on them. It's like this sort of like very like macho frankly Browy Beverage, and the stock has done phenomenally well. But depending on exactly what settings you use, it's it might be the single best performing stock in history, or certainly over the last twenty or so years. I think it's up like five thousand percent over the last twenty years, or at one

point it was like it's just donereal. Like it's like we're talking like bitcoin level returns. Actually could probably put like bitcoin into et F two, um, but we're talking like bitcoin level returns for a company that sells sugary caffeidated beverages, right. And I think when most people think about the best performing stock of the past couple of decades, they're going to think about Amazon or Google or Apple or something like that. Not many people are going to

think about, you know, a consumer facing beverage company. I have to tell you something, so I don't know much about Monster. Um. I've never had one of the energy drinks, although I am very aware of the branding and you know, they're advertising strategy has been a big part of their success, and I'm sure we're going to get into that on the podcast. But I have to say, in the course of doing some research for this episode, I found the most amazing anecdote on Reddit. Of course it came from Reddit,

that's what what the anecdote. So I think it was on the Financial Independence Retirement Early board, but it was some guy who said he invested nine thousand dollars in Monster Energy drinks. Um. I think this was in two thousand and ten. He posted and he said he had invested five years ago. So basically he had a five increase on that nine thousand dollar position, which made him

a millionaire in the space of five years. And the best part of it was so he wrote that in two thousand ten, everyone on the message board basically said, you are absolutely crazy. I can't believe you have this huge chunk of portfolio of your portfolio in a single stock. You need to sell it right now. And of course had he held onto it, I don't know even know

what it would be worth now. But like the big spike in Monster Energy came after two thousand ten, so you can only imagine what invested back in two thousand five would look like after a fifteen year monster run in Monster Energy. It's really incredible. I mean it's like one of these like charts where you just like slice it up and you're like, holy crap, these are amazing returns, and then you zoom out and it looks even more amazing. It's just, uh, it's just incredible. So I want to

get the story. How did this maker of these drinks that I've actually never had one either, I don't think maybe I had one years ago, but you know, I see him everywhere? How did it become this just mammoth player um company? Did I think? Uh? For a billion in revenue last year? In two thousand and four, it was just forty nine million dollars. So the growth of the fundamentals have been incredible. We're going to be speaking with an analyst wh will explain it. Our guest today

is Mark Astracan. He's an analyst at Steeple. He covers consumer goods. He's going to tell us the story of Monster and why it's returns have been so monster. So, Mark, thank you so much for joining us. Yeah, thanks for having me. Where did this company come from? It used to be like it was called something different. It was like some sort of like natural beverage maker. Originally right, yes, it was called Hands and Natural up until a few

years ago. The two guys who are running at the now co CEOs bought the business as an investment or as part of an investment group in the early nineties. It was selling juice at the time Southern California. I think they were living in London at that point to South Africans looking for an investment and yeah, pulled some money together and bought the business, moved to California and started selling beverages. So how did the energy concept come about?

Because I think around that time there was already a very well known energy beverage with loads of caffeine in the form of Red Bull. And I have to declare my interest here. I'm half Austrian. Red Bull comes from Austria. Lots of people don't know that, and so you know, my loyalty and the energy drink markets are already committed to red Bull. But I'm curious, like there was an incumbent with a strong brand, why did they decide to

to take on that particular sector. Well, maybe just to take a step back, because I think it's it's interesting and importance. So the Austrian comment, you know, the guy who's running red Bull rebel versus a private company, So there's not a whole lot of information out there, but having studied this sector for far too long and finding it as interesting as it is. Um the guy who's running Red Bull, the CEO, actually only owns about half

of the company. He was a consumer executive in the world before starting Red Bull, and he was traveling to Southeast Asia a lot and finding that he's has travels from Europe to Southeast Asia retiring and was in Thailand and found this drink called Creighton Dang, which is translated into Red Bull the days, and he decided he wanted to bring this back to Europe with him, so he actually created a joint venture with the family of the founder of this this business, and so what we know

of Red Bull today actually originated as a tie beverage which is still sold in a can that looks like it did in the early eighties in a bunch of places around the world, mainly in that that part of the world China as well, but that's an aside. He brings it back to Europe and starts selling it as Red Bull in these sleek cans as the first energy drink, and so that is is kind of where the monster

story begins. So Rodney and Hilton the co c e O s. We're living in London, and I saw that Red Bull was starting out in Europe around the same time that they moved there and could see that this

was obviously doing really well. So I had nothing to do with buying the hands and Natural juice business, but having seen the growth of the energy category, they thought it would be a good thing to try when they were running their their beverage business in the US, So before they launched Monster, they actually had some energy drink brands under the Handsome Natural portfolio. I think it was

Blue Sky Beverage. There were a few other ones, but they were launched in maybe the mid to late nineties, and the fact that you haven't heard from him suggests

that they were probably a little bit too early. So they were always interested in the energy category, but it wasn't until I think two thousand and two or so that they and one of their partners, a guy named Mark Hall who now is a board member and also one of the chief innovators of the company, decided to create this this thing called Monster, this edgeyear product than than Red Bull, and the rest is sort of history.

So basically, Red Bull we sort of at the time and still is it's you know, highly caffeinated, it's associated with extreme sports. I know they sponsor a lot of that stuff. Monster is basically like, we're just gonna go more extreme. Yeah, I think that's probably fair. Maybe starting with the sixteen ounces can, I think if you were to think about the energy drink consumer, I believe I think history kind of bears out, as well as sales trends that the Red Bull and Monster consumers are unique

in that. Red Bull sure when after that extreme consumer, but it also early on focused on on premise so bars and restaurants, and it, as a result or maybe coincidentally, morphed into what I would consider more of a white collar beverage. And it was partly because it was sold at a premium, partly because it was a smaller can.

Now you have a whole bunch of other packages for Red Bull twelve O, sixteen ounts and the like, but the original can is an eight point four ounce can, and so was small in volume and expensive in dollars

or euros or whatever it was at the time. And so Monster decided they were gonna come out with the sixteen ouns to basically sell the same volume or the same value, same price for twice the volume, and they also started to market it a bit more towards blue collar workers, construction workers, the like they flavored the product I think to be a little bit more unique than

Red Bull. Red Bull was never something that I think people wanted to really enjoy drinking, and the folks at Monster really focused on on palatability and something that they thought would would appeal and it especially from a very sweet standpoint of the core. Green Monster, which was the original product, really did that to a certain unique set

of consumers. But then they added on that with a focus on much more of the the I don't know if he'd be a blue collar type of extreme sport, but but red Bull was focused more on on mode or sport and on well known athletes and music, and and Monster went a bit kind of next level two younger generations as well, focusing on early on like X games, but focusing on things like video games which really weren't a focus at that point for Red Bull, focusing on

Moto GP, focusing on supercross, you know, things that that RedBull not wasn't necessarily focused on at the time, and probably still to a large degree really really isn't focused on and so they were able to bring in a completely different consumer. So you have you've they've done a really good job of retaining that blue collar consumer, which yeah,

I think it's pretty important. You can look to see the the green can, which is still their biggest best selling product, but also that they've now skewed I think a bit younger than Red Bull as well. Maybe their core consumer is kind of late teenager to thirty Rebels consumer probably come in in mid twenties and and up,

and so they've really segmented the energy drinking category. And as I said at the outset of the question, I think if you you asked the consumers, they would largely tell you they're they're a drinker of one and not the other. And so I think that has really led to the success of both businesses. And interesting, I mean, we can get into the international expansion for for Monster,

which has been quite successful. But it's interesting that both businesses as best we can tell, because as I said before, Rebels private, so you don't have as much information, but they're they're both still growing it unbelievably strong rates in the case of Monster, almost twenty years after the product was created. In the case of red Bull almost thirty

five years now, still growing at an amazing rate. I think that customer segmentation is really interesting because you know, as I mentioned, I have had red Bull throughout my life. One of the worst cocktails I've ever had involved um. I think it was red Bull vodka and gummy bears and it was absolutely disgusting. UM. But I haven't had a Monster energy drink of any kind. But I am aware of the advertising campaign, uh, the very distinctive can

with the green claw marks. I think a lot of people have probably seen hats and T shirts and things like that over the course of their lives. But one thing I wanted to dive in, so we spoke a little bit about how the marketing was important here, the advertising, how the brand set itself apart from red Bull. Can you talk well, you started to touch upon this with the international expansion mentioned, but could you talk about the

distribution network here? And um, I guess the deals that Monster struck with um first a b in bev and then Coke. Yeah, and and it's it's important from just a beverage standpoint to understand that that basically what you try to do as a brand owner is to put uself in a position to be distributed by the biggest

and the best distributor over time. And so you know, success sort of breaths success in that regard, meaning that you've got to get out there and kick the tires and sell the product to retailers to distributors on a single case basis at the beginning. But as you get more success, you attract more attention, and the result is you have these networks of distributors of beverages who ultimately

want to put more product on the truck. And the idea, of course, is to find the product that sells the fastest and also provides you the best profit in doing so. And so as the energy category accelerated is monster share accelerated. You started to see Monster get proposition by a lot of distributors because of the success, and you think about it too, you're taking a step back. The biggest non

alcoholic beverage categories carbonated soft drinks. Energy at the time fifteen years ago was a pimple of a pimple of size, and this behemoth of carbonate of software was out there. If you look to day a fast forward fifteen years in a lot of convenience stores which accounts for about of energy drink sales. You've got a full door, maybe even two doors, depending on the store selling energy drinks.

And you've seen at the same time the amount of space dedicated to carbonated soft drinks shrinking and basically giving share away to energy drinks because it's growing faster and it's allowing for more profit margins from both the distributor as well as the retailer. So it creates this opportunity for itself. And obviously it starts with the consumer wanting the product. But if you're able to have higher velocity and greater value in your your rings, it's it's a

self fulfilling prophecy. So you go back to mid two thousands and Monster were starting to gain this traction. So Ant hazer Bush, not a non alcoholic company but a company that still has trucks and distributors that goes in services grocery stores and convenience stores and the like, said hey, you know we we want to put you in our trucks. And so I think the original agreement was for about

half of the US. The other half of the US was a bit of a hodgepodge of distribution from a Monster standpoint, and slowly the distribution progressed, where in the early two thousand tents the distribution had evolved into about half Anheiser Bush and half Coke. Because Coke saw the opportunity there, they had been a partner in international starting in the UK. It was actually the first distribution partner

that Monster had outside of the US. Monster was doing a little bit on their own, but really it started to accelerate with Coke's help in the UK, and eventually that morphed into Coke I think in two thousand and fourteen announcing it was going to take at the time, I think a fifteen or steak in Monster, which is now close because Monster has brought back a lot of stock, increasing Coke's ownership. And at the same time that agreement made Coke the global distributor of of Monster, with a

couple of exceptions at certain countries. And so basically Monster kicked again has a Bush out and is now fully distributed at least domestically through Coke and as I said, through probably something like of the world. And so if you think about distributors out there of size on a global basis, ant Hazard Bush is a very good distributor globally and has a bushing a very good distributor Pepsi,

very good distributor. But I think many people believe the Coke is the creme de la creme, and so Monsters really positioned itself with the best distributor, the one with the global reach to put you into every single bodega on the planet if need being. Importantly, if Monster wants to launch a new product, the Coke system can get that onto store shelves virtually the next day. How much

do you know? It seems like there must be like a real chicken and egg problem for any upstart consumer food or beverage company because obviously you need these distributor relationships to get to get out there. They're not easy to get. There's limited, uh, there's limited shelf and truck space. On the other hand, you also presumably need to have a pretty big marketing efforts so that people actually buy it.

But if you don't have the distribution, then you can have all the marketing and brand in the world, but no one can get it. How do they sort of navigate that simultaneous challenge of raising the brand awareness becoming an entity that people knew, while also making sure that once people became aware of the brand, they were able to find it. Yeah, it's it's it's actually interesting to Monster if you just take a look at marketing or

advertising expenditure. Despite it being a marketing company, it's not even a company that manufactures its own product. It outsources on manufacturing to third parties, so it's really just a brand manager. Despite being a brand manager, it's it's marketing expenditures is actually pretty low as a percentage of sales. It's not a traditional I'm going to watch an add on TV and want to go out and buy a Monster.

So what they do is is what I was saying before, You go out and sponsor athletes, events, video games, rock festivals, sporting events and the like, and that creates the lifestyle image of the brand and becomes that that self fulfilling prophecy. I mean Red Bulls kind of done the same thing. They do a little bit of TV advertising, but the bread and butter is really that you're you're sponsoring these athletes and events, and so that relies a bit more

on a guerilla marketing proposition. What Monster is really good at. Originally it was just feed on the streets, sampling and kind of showing up at the right place to create the image that they wanted for the brand, and that continues, believe it or not to this day. They've evolved, as everybody has, from traditional or more traditional kind of advertising in at least in their sense of course of brick and mortar. But we're a real visible in real world

advertising to now digital and social media. But they're still doing it in kind of that same way, appealing to the same consumer. And it's not going to be something that you're gonna find on a Jeopardy advertisement for examples, And I think he is probably gonna be something that continues for the foreseeable future. And so I think that's a bit different than kind of the rest of the world that I spend time analyzing, the proctors and gambles,

rested laws, loreals of the world. They are doing more traditional advertising. So I'm curious. You know, you've laid out the sort of history of the company, what made it different from its major competitors, how it was doing some things rather unusually. So for instance, in marketing, it wasn't spending a ton of money buying traditional ads. Instead it was going through these sort of grassroots efforts or sponsorships.

How did the streets approach Monster in its early days, Like, how are analysts actually viewing the company and its potential and how did that evolve over time? It's it's it's a good question. Frankly, I'm still not sure the the street fully understands what they're they're doing or what they've created. No no offense to the guys running the company, but

but it is interesting. They don't even have an in sourced investor relations functions, So management uniquely here doesn't really even talk to investors, don't talk to analysts, don't talk to investors. They hold for earning his calls a year and allow people to ask probably on the very minimal side of questions to three four five per quarter. They do a couple of investor events a year outside of that, but but that's really it. There's no real outreach on

their part. And so that's actually what to me has created such an interesting proposition from an analyst standpoint to covering it. And if you think about it, yes they're a public company, but they almost treat themselves as a private company as a result of what I just said, and you couple that with Red Bull being an actual private company and that Coke and PEPSI. Yes, they distribute energy drinks, but don't have really any of their own

and have never really had any success doing that. That there's almost no information out there from an energy drink company standpoint, so you're left to really do a lot of feed on the street kind of thinking about how how these businesses work and what has driven the success, which I think is fun and it creates an opportunity to really do unique analysis. In my opinion, I think one of the things that we've done a good job of historically is that is looking at things in a

way that people haven't looked at it before. I mean, ultimately, I see my job is trying to help investors make decisions and help them make money. And I think in a company like this, where they give more information and regulatory filings but not necessarily something that you have an investor relations person or kind of directing people to find that it creates an opportunity to do that. And so if you go back fifteen years ago, there there was

none zilch, you know, zilch. There was just very little information whatsoever. Is also a smaller company at the time, and so it was probably something that really just felt through the cracks. If you are lucky enough to cover it, maybe it was one that you give less focus to than covering some of the bigger companies like a Copa Pepsi within your your coverage universe, and it was just

there because you thought it was interesting. And so in the early days, I mean, I can remember just making phone calls to private beer distributors and asking how sales are going and what they're seeing from a category standpoint, is there any are there any other brands that are coming up Because of the time, if you go back to the mid two thousands, Coke and Pepsi were both

trying to compete in this. They saw what was happening from an energy standpoint, they saw the share shift commencing, even early days at that point, and so they were all trying this and and I think the fear amongst investors was these are the behemous, the under pound guerrillas, and they're gonna come in and they're gonna they're gonna kill Monster and they're gonna hurt Red Bull. And it just never materialized like that. And as I said, you

started getting bigger and bigger from a distribution standpoint. I think these these big beverage companies ultimately decided if you can't beat them, you join them, or from this case, if you can't kill them, you distribute them. And so you still make a piece of the distribution or the profit that's out there, but you can't own the brand Fulegus unless you go out and want to buy it. And it's it's it's just very fascinating from that standpoint.

I mean, I think you didn't ask the question, but there is clearly this dynamic that's still at play here that Coke owns close to the company, but monsters still

like public companies. If at these two companies that are public answering to their own shareholders, and so you can't be fully aligned with with one another as a result of that, And so I described it as almost a healthy tension where I think if Coke were to ultimately by this company, you would probably see some of that tension go away, and you probably actually see better execution because you have more streamlined focus from a organizational standpoint

on selling Monster so coaxed on a good job, I think they could do a better job. Is that something people uh talk about? I mean, do people speculate that at some point Coke just might buy the whole thing. Yeah, there's there's a lot of speculation on that. I mean I could probably spend an hour answering that question alone. But in terms of the specifics, yeah, Coke Is has done what it's done. They've never increased their stakes since

the original purchase. They, if you pay attention to current news, have some tax issues which ultimately could result in them having to write a big check, and so that probably prevents things from from happening nearer term. Their stock, which I would think they could use in a potential deal, is also down off of high Is given the whole impact to their business from from COVID, and so their their equity is a little bit depleted relative to historical levels.

It probably makes it harder. But the flip side to it is the two guys who are running Monster Odney just turned seventy end of last year. Hilton is sixty seven. He'll be sixty eight the middle of this year. They're not They're not young. They've been running this company for a long time and uniquely each of them own about five of monsters. If you think about that, on a roughly fifty billion dollar company. They're worth an awful lot of money, and so they're not getting younger. They are

worth a ton of money. I think they want to spend more time doing other things at some point than just running Monster. They both have grandkids, they're both enjoying spending more time with them. I think they would like to travel more, assuming that one could ever actually leave their house, and so yeah, there's this question of kind of what happens from there. In my humble opinion, I'm sure they would disagree with this, but I think the bench strength is at least lacking as far as visible

facing folks to the street. And it's not obvious to me who would necessarily run and the company should they both get hit by a bus tomorrow, God forbid. In fact, I don't think there is somebody internally who would make sense to do that, and I think it's a very unique organization, and I think that creates a bit of a question mark about what happens. But but obviously it

takes It's kind of like firing nuclear weapons. I guess it takes two people to turn the key or two sides to do that, and so you need to have a willing buyer as well as a willing seller. I'm not sure that they necessarily are willing sellers, but but the right offer comes along, who who isn't. But I think as as they get older, I think that becomes more more reasonable. But then the question is who who

ultimately would buy them? And I think the distribution arrangement and the equity ownership would put Poke in that position. I just think at president it's probably a little harder to pull off. So what we'll see how that goes. I have long thought that there could be some others out there, kind of dark horses that aren't really talked about, that could potentially be buyers in the business. But what

will ultimately see how that plays out. But for the time being, I think they're they're very happy, and they're they're obviously very successful in doing what they're doing. What we'll see what happens in time. So Joe mentioned in the intro that we did a previous episode on Domino's Pizza, which was another stock that had a stellar performance, perhaps um unexpectedly, and we also did a podcast about tobacco companies,

again a similar story. You would have expected that an industry that's been under a lot of pressure over the years might have suffered, but actually they've generated pretty consistent returns. Are there any parallels between I'm trying to think how to phrase this. Are there any parallels between tobacco and energy drinks here? I mean, ultimately, you're selling a product that a lot of people would classify as unhealthy and addictive. Is the business model as simple as that? Well, I

think the differences. Energy drinks don't kill people, and I think there has been a question historically about the health of of these products. If you go back, I think it's now sevent eight years ago, it had come to the attention of various political folks in Washington, who ultimately put it to the f d A too figure out whether these products were healthy. We're not and whether they

should be sold. And Rodney her Monster and the then CFO at rock Star and a senior marketing executive a red Bull, We're pulled in front of I think a Senate committee to talk about the health of energy drinks, and ultimately the FDA said the amount of caffeine in

this product was well within our daily limits. The other stuff that helps to make it an energy drink, things like touring or guarana gin seeing are all what would be considered generally regarded as safe meeting that they're all okay to go into the body, and there's nothing that we can say or do that should change how these

things are are sold. But ultimately the energy drink companies had come to an agreement to kind of have this this go away, which is that they just put more explicit messaging on the cans to say, pregnant women shouldn't drink these, you shouldn't drink more than one a day, and here's the amount of caffeine that's in the can. And you've seen over the years, various countries that have tried to do similar things have tried to ban sales

to minors. Monster also agreed not to market two kids under twelve, whatever that means, because they don't really market anyway. So I'm not sure how a twelve year old er younger could be differentiated from those that are older from that, but you know that the point is it's been vetted, It's been vetted all over the place, and it effectively still has less caffeine than a espresso at Starbucks or thinking about a frappuccino that has a lot of calories in it. It's no, it's no worse for you than

kind of anything else that's out there. I mean, I'm not arguing these are good for you. I'm not arguing cargnate soft drinks are good for you. But it's it's in that same vein and it's not something, as I said, that will ultimately link to cancer, I think pretty definitively. And so it is what it is. I think it's interesting too, just stepping back. It's never been perceived is good for you, and the world seems to evolve into

more helpful products. And yet while the consumer says on one hand that that's what they want to consume, whether it's eat or drink, that they want things that are cleaner label and more natural, organic and whatnot, the actions to sales, the volumes, the accelerating growth globally of energy drinks would speak otherwise. And I think ultimately, like coffee, sure, caffeine is an addictive drug to some extent, but this

is something that fills it needs to eight. Consumers are sleeping, less, working more, want more focus, and this is what it offers. But but as I said, interestingly, it still has less caffeine in it than an equivalent cup of coffee. Yes, there's more caffeine in it, but I wouldn't say it's materially more. It's kind of four times the amount of caffeine is a can of coke. But what does that really do necessarily from a body standpoint, I don't think

it's all that significant. So it's along when it answers saying not healthy hasn't seemed to have an impact, doesn't really harm you. It's been vetted across various regulatory bodies, and um, I think at this point, and knock on wood, but it seems like most of have generally accepted what I just said. So I want to like look into the future a little bit. I mean, you mentioned that outside of the current management, there's not an obvious replacement

perhaps a reason for them to sell. Talk to us about like where has the growth been lately and what are the opportunities going forward? Like where will you know we're theoretically well the next ten years of growth come from for a company. Yeah, it's it's a good question. And I'll start by saying in the US, which is still two thirds of revenue, it's still growing at at least a high single if not a low double digit rate.

So here here is a business fin around in the US now for nineteen years and still growing at that rate. And they don't really take price, so it's almost all volume that's that's driving it, just more incremental cans being consumed. The US is a bigger profit center than than the international piece. They just have higher margins here and so it probably accounts for ninety percent of global profit and

it produces just massive cash flows. So you've got this business just before I answer the question on where does it go? Yeah, you know, you talked about it being a great stock. It's just the greatest business ever invented. I mean, these guys don't produce anything themselves. There's no real capital expenditures. They spend a percent of sales or

less per year. There's no debt on the balance sheet, so it's just mints money a billion dollars plus in free cash flow a year that they use to basically just buy back stock. So you've got this business that's growing domestically at a call it a high single digit rate. I think can grow at that rate for at least the foreseeable future. Here and we didn't touch on it,

but Ken if you want to later. I think they've done a really good job of expanding usage occasion, so you keep the core consumer and you innovate into new product categories, and that has really driven interest and incrementality of purchases, and it has contributed to the consistent growth in the US. And in the US they have around a forty share or so on a dollar basis of

the energy drink category, about the same as Red Bull. Volumetrically, they're actually higher because they sell, as I said, twice the volume for the same price, So they are the leader from a volume standpoint on a market share basis in the US. If you take that and look at it globally excluding the US, our best guess, because there's really not good data, is that they're probably somewhere in the low to mid teens as a percentage of global share.

Red Bullet somewhere around a fifty share. So if you think about what they've been able to do in the US, starting at zero and now being a volume share leader in the US, if they can have that kind of success outside of the US, you go from a twelve or thirteen global share to a forty share in a category that's growing at a I don't know, ten percent

or more rate on a global basis. You get a business it's three or four times the size of what you have today on an outside the US basis, which today is roughly a third of the business, and you have a business that's growing in the US at a high single digit rate. You've got a really long growth rate for for the revenues of this company. To put in perspective, best we can tell, Monster will do about five billion dollars lars and revenue globally. I would guess

Red Bulls probably twice that size. You're talking about a ten billion dollar company. So Monster can easily see its sales double from here over a long period of time, just based on the math that I just outline. And so it's partly just this getting more distribution, increasing brand awareness, and expanding usage occasions through innovation and the Coke system. This is where the Coke system is really coming and

done a good job. I think in the US Monster didn't need Coke, but outside the US, I think Coke has really been helpful in just getting the product to market in an efficient, effective manner and really getting more product on shelf. And I think that's also an opportunity beyond just category growing. If you think about a typical seven eleven cooler in the US, you could have twelve the fifteen Monsters sitting in that cooler. If you go outside the US, on average, you're probably seeing three to

five per cooler. So there's also an opportunity to just add more products, and those incremental products that have expanded the usage occasions and brought in more consumers to the Monster business, and that has been one of the big things that has driven out performance relative to Red Bull in my opinion that Red Bull has been more about just adding different packaging sizes and until more recently just not really wanting to add flavor extensions. And Monster beyond

just flavor extensions, has created new sub brands. They've created juice, energy plus Juice, They've created coffee plus Energy and it sounds almost like an oxymorn, and yet they've created a multibillion dollar business globally that they're the day along with Starbucks and others are competing in and so they they've created this, I mean when they launched that in two

thousand five or six, this job a Monster product. I'm sure I wrote something obnoxious at the time like, oh my god, how could you possibly be successful with doing that? And sure enough, here we are. So they've just done a really good job of kind of going to where the consumer is going to be. I think, you know, the thing that you can't over emphasize enough is that the management here, back to the beginning of what you said about what has made this so successful, they've just

been the management here. Rodney, Hilton, Mark, those three guys have just been brilliant at figuring out where the puck was going and trying to figure out how to expand those used occasions for the consumer and the Red Bull maybe being a big, fat, happy private company never had to do that, and Monster was given the opportunity and clearly capitalized on it. I'm curious. We've talked a lot about the success of Monster, and you seem pretty optimistic

about its future. What, in your opinion, is the biggest threat to the company. I think the biggest threat at this point the thing, I guess there's probably two things. The two biggest things we hear are one, how long can category growth continue? Because that's most important if they can retain their share or even grow their share of a category. And it's growing at that rate, I think they're they're gonna be pretty happy. The second would be, you know, and sort of related to that, what about

new entrance into the category. And so if you go back twelve to eighteen months ago, there was a new entrant or relatively new enter into the category in the US called Bang, which is selling what is called performance energy, which is basically selling, if you can believe it, twice the caffeine in a same sixteen ounts can as Monster, and that was something that started to resonate with consumers.

And like Monster, they moved from smaller distribution into antiser bush district distribution and they're now actually distributed by Pepsi. And so there's questions about whether the share that they were able to get to fairly quickly, which was made the high single digits, and it's it's since stopped and moved backwards. But that share they got fairly quickly, it wasn't as hard to get is maybe some people thought.

And so digital social media new age marketing can allow or potentially allow new entriest to come in and reduce the barriers to entry. You see a few smaller companies like Celsius and C four also seeing very strong growth at this point off of admittedly a very small base, but you're seeing more competition in the space. So the question is how relevant can Monster be within that? And so it's just not one of these things that I think they can sit there and rest on their laurels.

It's always about constant innovation and tweaking the image and the products that they're offering and to monsters credit. For example, when the world started focusing on this or the the energy can world, I suppose the subset of losers like me to focus on the beverage industry. When people started focusing on this Bang product taking share fall two thousand eighteen, Monster was able to get a product out to market within six months called Rain that allly got to a

three share of the category stopped. The growth of Bang has done quite well considering it was a brand nobody ever heard of two years ago. That brand, I think at this point could be doing something on order of hundreds of millions of dollars in revenue at retails. So they've done a really good job of creating something out of nothing. So but that's the question. It's how can you continue to growth and how you can sustain the

share you have. I mean, I'm curious bigger picture, I mean, beyond Monster, you cover consumer brand um overall, this question of the degree to which new new avenues for promotion social media Instagram, and new avenues for distribution the whole director consumer phenomenon. How much space for that is. We have another conversation actually the timing wise, I think it's going to come out right after this episode where we

talk a little bit about that. But from your perspective, you know, you mentioned the importance of these distribution deals, the Coke network, that sort of the oligopoly of distribution, and in the US and globally, how much under threat is that from the Internet, from new stuff or how much Canada withstand um these sort of these changes. I

don't want to understate the importance. But in a category like beverages, where as I said at the beginning, energy drink sales are done a convenience store, meaning is an impulse by It's going to be pretty hard to see

that materialize. Monster and others are selling more online and on Amazon than they ever have, but those numbers are how would estimated probably something like two percent of sales at this point so it's it's still pretty small and the idea of shipping heavy cases of beverage, it's still not something that necessarily appeals or that I think will get traction like it could in selling sneakers or in

selling pet food or something like that. So I think in this category in particular, it's probably a little bit harder. I won't say that it will be impossible, but I think that's an advantage of of where we are historically speaking, at least so far. You just you haven't seen any brands like that game traction, partly because you want to be where the consumers are and they need to see the product want to buy it. I think that's a

good place to stop it. Do you have any other It's sort of like anything we missed in terms of like understanding the story and where it's going that we should think about. It's worth pointing out and making it making it important that this innovation thing is really what has driven success, and the guys that this company are

are very good at understanding what consumers want. And I think they're still despite being a company that will do five billion in revenue this year, operating like a company that's going to do a couple hundred million in revenue.

Like I mentioned with the rain product, I couldn't even imagine how long it would take a product like that to come to market at Coke or something equivalent to Procter and Gamble, but it would take probably two years of market research and consumer testing, and these guys were able to get it done in months. And early last year, Red Bull launched a watermelon flavor which sounds simple, but

it just killed it. It did. I'm sure Tracy would love that in the country, probably very good with I've done a little bit of sprig of basil or something that sounds good joke, But now that you say, at Red Bull watermelon with a sprig of basil, well but but but if you don't want the full sugar products.

So that product did really well. Monster put a product in the market on their zero calorie line in September, so within months of seeing the success, they were able to get that product the formulation correct, the taste profile right, and they were able to get it to market. I will say, if I'm able to do anything here, it's it's to at least get you to try a Monster. At this point, feel like both of you have never

tried one, which what's your favorite? What's your favorite? Uh, your favorite one to try and I'll get that one. What's your favorite flavor? I think you should try one of the Ultra lines, try Ultra Sunrise, which is the orange flavor, or Ultra Paradise, which is there. I don't know, i'd call it like an apple key cucumber kind of thing, um, but it's those are probably the ones that I would try first. All Right, I'm gonna I'm looking up, I'm gonna test the what were you going to test the

watermelon with vodka? Obviously? Obviously, but I was gonna say, I'm going to test the strength of Coke's distribution network and see if I can actually find a monster product in Hong Kong. That's job number one. You will definitely be able to find a Monster in Hong Kong. I'm just I'm just envisioning Tracy on a rooftop in Hong Kong. It's some you know where they apparently like they have the virus under control, drinking a out monster watermelon basil cocktail.

And I'm very jealous of that. I'm very jealous of that moment right now. I don't think you're gonna find a watermelon ultra in Hong Kong, unfortunately. But Jill, they actually are expanding in China at this point, to which they're even a slightly different product offering there than they do in the rest of the world. But they have three three of their mainstream products and two non carbonated tea products there, so I'm confident you'll be able to find at least a couple of those on shelves. I'm

on it before this episode comes out. I'm gonna I'm gonna get one, all right, Mark, thank you so much for joining us. I've been so curious about this company for a long time, and I feel like you you told its story extremely well, so I really appreciate you joining up. Yeah. Absolutely, thanks for having me. That was great, Mark, Thank you, thanks Mark. Yeah, Tracy, I am kind of

embarrassed that I've never had one. I I think I probably have like two thousand and four, two thousand five, Like I have like some memory of like going to the bagel store on Bedford Avenue in Williamsburg, and I remember like seeing them, Like I have this vague memory of like the first time I saw them proliferate. But it's definitely been a been too long since I've had a Monster beverage, But that's kind of an interesting thing, right, So I have a feeling that even for most people

who haven't actually tried Monster, they're aware of the branding. Um. Yeah, because it became such a big thing and it was so distinctive. I do think that whole conversation was obviously fascinating. The strength of management, this idea that they're able to respond to the market very very quickly, that their advertising has been different to other traditional drinks companies. The fact that they have zero debt on their balance sheet is

absolutely amazing in the current environment. But one thing I found really interesting was, you know, Mark was kind of hinting at this, but it was the way the street approached the company. Um, they didn't really understand it. Monster was kind of unique in the sense that it was a public company, but it acted a bit like a

private company. And I suspect also, and Mark didn't go into this directly, but I suspect that there is also a little bit of I guess like arrogance or classism towards the product, Like Monster was always the blue collar product for a less well off market. I suppose whereas Red Bull was the sort of white collar one, and I wonder how much of that fed into people's um

investment decisions or analysis. The it's just no question, like if I have to in my mind's eye, and again it's it's my own biases and judgment, and but like in my mind's eye, you know, like if I have if I imagine someone drinking Red Bull, it's like some like you're a guy who's like six ft one, wearing a white shirt and a club and you know, like super fit, And if I imagined what I would have assumed as like a monster drinker, it's like someone playing

video games in the US and Florida and having a headset on talking, you know, like whatever game they're playing with a baseball cap backwards and everything. Like it's just like I hadn't I hadn't, you know, in my mind, I was like, oh, yeah, they're competitors. But then as soon as you said that, it's like so clear to me, like how I've long like stereotyped the to uh the consumers.

So but I guess it's kind of accut, you're going to get a lot of angry Monster fans coming after you now I know, but you are definitely uh the red Bull demotrazy. I would not like to put myself in that category. I support it because Austria has very very few things of which to be proud, and probably our most famous export is something that you wouldn't want

to take credit for. So you know, we latch onto what we can and red Bull is one of them, even though, as Mark pointed out, the actual recipe came from Thailand. But I'm going to convert, or at least I'm going to try monster. I'll try to find it in Hong Kong and uh, you know, we can talk on Twitter or somewhere else about how we feel about it.

Do the review sounds good? I'm looking forward to our our review and I'll take that selfie when I'm you know, on the roof deck drinking some sort of monster based cocktails to Instagram. Okay, this has been another episode of the All Thoughts podcast. I'm Tracy Alloway. You can follow me on Twitter at Tracy Alloway and I'm Joe Why Isn't All? You can follow me on Twitter at the Stalwart. Hello.

Our producer Laura Carlson. She's at Laura M. Carlson. Follow the Bloomberg head of podcast Francesco Levi at Francesco Today, and check out all of our podcasts at Bloomberg onto the handle at podcasts. Thanks for listening.