Monster, Fever Tree & Non-Alcoholic Beverage Distribution

In Practise Weekly Analysis

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In October 2008, Hansen Natural Corporation, now Monster Beverage, signed a 20-year agreement with Coca-Cola for the distribution of Monster’s energy products across EMEA and certain US territories. This deal complemented the company’s existing distribution agreement with Anheuser-Busch. Since the deal was signed, Monster’s sales have increased by 5x, gross margin has expanded from ~52% to over 60% and the EBIT margin has increased ~600bps to ~35%.

What's even more impressive is that over the last 20 years, FCF per share has compounded at 33% per year.

We interviewed an executive with experience distributing Monster Energy and Fever Tree in Europe to better understand the distribution strategies of these two businesses and Fever Tree’s growth opportunity in Europe.

The Coca-Cola distribution deal catapulted Monster globally. This was Rodney Sacks, Monster’s CEO, in the earnings call after the deal in 2008:

"We believe that on an overall basis CCE has a very extensive network of salesmen, merchandisers, trucks and a very professional selling organization behind them. They have got very deep reach; they reach a large number of additional accounts that have not really been available to us through an alcoholic system, because in many cases they just do not go to the same universe of accounts. There are many areas in the US where there are dry areas or the alcoholic and non-alcoholic systems do not line up." - Rodney Sacks, Monster Beverage CEO, 2008,

The distribution networks of alcoholic and non-alcoholic drinks is different given not all retail points of sale own liquor licenses. Monster was injected into Coca-Cola’s non-alcoholic distribution system which expanded the reach of the brand into areas that Anheuser-Busch didn’t cover.

This fundamentally changed Monster’s growth trajectory and built a distribution moat that smaller energy brands couldn’t compete with.

Once defined as a fad, the energy category consistently grows at high-single digits per year and is estimated to reach over $85bn in 2026. Market share is also relatively stable with Red Bull having ~41% share, Monster ~39%, and Rockstar (recently acquired by Pepsi) ~10%.

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