Monster Beverage (MNST.US) faced both blue-collar pressure and competition, resulting in a double decline in revenue and sales in Q2.
Monster Beverage (MNST.US) latest earnings report showed that the company's revenue and drink sales growth slowed to its lowest level since the outbreak of the COVID-19 pandemic, causing its stock price to fall. The report showed that the company's revenue only grew 2.5% to $1.9 billion in the second quarter, below the market's expectation of $2.02 billion. Although its net income rose from $414.39 million to $425.4 million, and its earnings per share rose from 39 cents to 41 cents, it still fell short of analysts' expectation of 44 cents. Moreover, Monster Beverage sold 212 million cases of drinks in the quarter, below the average expectation of 215 million cases.
From a business segment perspective, Monster Beverage's energy drink segment saw a 3.3% increase in sales to $1.74 billion, but this growth was impacted by the fluctuation of foreign exchange rates. Its strategic brands segment, which mainly includes the energy drink brands it acquired from The Coca-Cola Company, saw a 9.6% increase in sales to $109.2 million. However, the company's liquor portfolio segment saw a 32% decrease in revenue to $41.6 million, reflecting a decrease in sales volume.
It is understood that Monster Beverage's growth slowdown was partly due to its main consumer group, the blue-collar workers, facing increasingly rising inflation and interest rate pressures.
Rodney C. Sacks, the co-CEO of Monster Beverage, said in the earnings call: "We are a blue-collar brand, and our consumers are facing more pressure than consumers in other categories."
Moreover, the company is facing fierce competition from rivals such as Red Bull GmbH, which has already taken some of Monster Beverage's market share in the past four weeks, ending on July 20.
Its rival Celsius Holdings Inc. (CELH.US) also claimed that it took market share from Monster Beverage in the quarter. It is worth noting that analysts have lowered their target price on Celsius Holdings after Monster Beverage's announcement of the growth slowdown.
In the after-hours trading on Wednesday, Monster Beverage's stock price fell as much as 9% to $46.04, down more than 12% from the beginning of this year.