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Wedgewood Partners Comments on Monster Beverage

April 10, 2013 | About:

Monster Beverage (HNA) drove 15% revenue growth during the fourth quarter as the Company continued to leverage its high-­‐profile brand by aggressively tapping into international markets while expanding into adjacent categories within the domestic alternative beverage market. The Company is the leading U.S. energy drink marketer (in terms of units sold), but they are quickly expanding into the protein drinks and tea-­‐based sub-­‐categories of the alternative beverage segment, rapidly multiplying Monster's total addressable market. The domestic alternative beverage segment opportunity is over $34 billion and we estimate it is roughly the same for international. So while Monster maintains leadership in the domestic energy drink category, the Company still has a low, single-­‐digit share of its total potential markets, and although headline risk for the energy drink category continues, demand for energy drink products continues to take market share from the traditional carbonated soft drink category. As a result, we continue to be very optimistic about Monster's long-­‐term growth potential. During the quarter, the stock did not trade far from where we initiated positions, so we will look to aggressively add on any pullbacks.

From Wedgewood Partners’ first quarter 2013 investor letter.

Rating: 4.0/5 (2 votes)


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