Energy’s MVP

Playing the beverage game isn’t easy. Especially in today’s marketplace where the challenges companies face include a laundry list of items that range from economic conditions to government regulations to changing consumer demands to social media to an increasingly fragmented industry.

Becoming a dominant player is an even more difficult task as very few new brands find their way to the top of the pack, leading and driving category growth. One of those dominant players, and Beverage World’s Liquid Refreshment Company of the Year, is Monster Beverage Corp., formerly known as Hansen Natural Corp. It wasn’t an overnight success story for the company’s core Monster Energy Drink brand, but since it first hit the market in April of 2002, the energy drink has been making plays that has led it to be one of the dominant brands in the category, taking eight of the top 20 selling energy drink slots for 2011, according to the SymphonyIRI Group.

Last year, Monster Energy Drink increased unit sales by 25.2 percent and dollar sales by 23.4 percent in the supermarket, drugstore, gas/c-stores and mass-merchandiser channels (excluding Walmart), according to SymphonyIRI.

Now ranking second to Red Bull in dollar sales, Monster Energy Drink has played a different game and carved out a niche for itself that has paved the way for its extensive line of products centralized around the need-state of energy consumption. This year, Rodney Sacks, chairman and CEO of Monster Beverage Corp. and Hilton Schlosberg, vice chairman, president, CFO and COO of the company were honored with the Beverage Forum’s 2012 Lifetime Achievement Award for their accomplishments.

“Monster put itself on the map by offering the 16-ounce can, which became a significant point of difference,” says Gary Hemphill, managing director and chief operating officer, Information Services, Beverage Marketing Corp. (BMC). “It took a product category that had basically become identified with an 8-ounce slim-can and broke the mold with the new package; and then it had very effective marketing and great distribution. They built huge brand success in a category that has really had the wind behind its back.”

The energy drink category in the United States has seen positive volume growth for the past 10-plus years, according to BMC data. Last year the category returned to double-digit volume growth, outperforming all of the liquid refreshment segments by more than double.

Monster Beverage Corp. reports a similar growth trend for its energy brand increasing sales year after year for the past decade. Sacks believes that Monster has been able to continue growing for a number of reasons including authenticity within its marketing, its attitude, its taste and essentially, sticking to a formula that has worked. As the Monster Energy brand has continued to innovate, with products like Java Monster, Absolutely Zero (zero calories and zero sugar) and Rehab, it has maintained its messaging and positioning.

Says Sacks: “People have different tastes, different choices and different use occasions at different times of the day. We’ve seen opportunities to deliver the image and personality of Monster to other consumers broadening the consumer base and the use occasion. And that’s what’s also been important in being able to continue to grow the brand.”

Rehab, introduced in 2011, is a non-carbonated, low-calorie, tea-based energy drink that is inspired by the Rehab pool party in Las Vegas. Available in five flavors—Rojo, Protean, Orangeade, Green Tea and Tea+Lemonade—Rehab has seen an impressive start as a rookie. Electrolyte- and antioxidant-rich Rehab ranks at No. 9 among the top 20 energy drinks in the U.S. for 2011 with $125.8 million in sales, according to SymphonyIRI.

The other new star player in the company’s portfolio outside of the core energy brand is Peace Tea, an RTD tea packaged in a 24-ounce can, which retails for 99 cents and is sold predominantly in c-stores. Peace Tea is a feel-good brand that has made a strong consumer connection in this time of ongoing conflict, the company says. Only two years on the market, Peace Tea is No. 11 among the top-selling RTD tea bands in the U.S., showing 60 percent growth last year, according to SymphonyIRI. While Peace Tea doesn’t have that energy element, it does have something that Monster has, and that’s personality, says Sacks.

“There’s a personality with Peace Tea; there is a vibe to it. It’s not just a product in a can. Anyone can just put liquid in a can, but that’s not going to be enough. There is a lot of competition out there and you’ve got to have a reason, you’ve got to get consumers to feel good about the product they are buying,” he says.

Mark Hall, president of the Monster Energy division, adds: “There has to be some connection with the consumer—they have to feel good about what they hold in their hand and that’s the elusive part of marketing.”

Monster’s marketing efforts have steered clear of traditional advertising outlets and have focused on making connections with its consumers where it matters most to them and that is at the ground level. The company has focused on building relationships by investing in extreme sports and music its fans follow. Monster has built a strong presence in motor sports, action sports and most recently professional bull riders. For the fifth consecutive year, Monster Energy has been the title sponsor of the 16-event Monster Energy Supercross series, and this year it began its sponsorship of Kyle Busch Motorsports Nationwide Series NASCAR program. Monster also supports artists including Korn, Guns N’ Roses and Hinder and music events like the Carnival of Madness Tour and this year’s first Monster Energy Aftershock concert presented with California radio station 98 Rock slated for September.

It’s that close consumer connection that also has led to Monster’s product innovation. The company offers 27 different drinks under the Monster umbrella in North America including its core Monster Energy line, Java Monster, Extra Strength, Import and Rehab. (Expect more products coming to market this year and next, notes Sacks.)

“It’s really been proven that consumers want variety and different products and companies that are smart innovators are going to be the companies that succeed,” notes Hemphill. “And their innovation track record has been very good in an industry where it is difficult to innovate and succeed.”

That pipeline of innovation is one that is well thought out, taking the “word on the street,” if you will, and delivering products that consumers are asking for. Hall recounts: “Our research, if one can call it that, is more street based. It comes from our gut feeling. But those gut feelings are constantly checked against the data that we bring in from the street with our employees, our distributors’ employees and targeted consumers in our neighborhoods. We just feel like we are closer to the consumer at the purchase level, not at the focus group level.”

The Monster playbook has been paying off. While Hall admits the company has taken its fair share of “black eyes” on the playing field, it’s come out a winner more times than not. Backed with a solid team of employees, salespeople, distributor partners and retailers, Monster Beverage Corp. posted another positive year of growth reporting $1.7 billion in net sales in 2011, landing it at No. 25 on Beverage World’s Global Liquid Refreshment 40.

As the company continues to work to grow its market share in the U.S., it’s also looking at opportunities abroad. Earlier this year the Monster Energy brand gained distribution in Hong Kong and Macau as well as Japan and Ecuador, according to the company. And Sacks says there are plans to launch in additional international markets later this year—the brand is now sold in more than 70 countries.

“It’s helpful when you have that winning culture,” says Hall. “When we take our offerings to our distributor partners and our retailers we generally receive a good reception because we have a decent track record. I remember when we started it was much harder, and when I say started I mean 15 years ago. We just didn’t have the credibility or the track record that we do today. No one is going to win every game, but we are going to try and win every game—I can tell you that.”

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