Energy drinks firm Monster Beverage achieved record sales of $1.66bn in its second quarter, 13.2% higher than the same period last year. Excluding the foreign currency effect, the figure was up 16.9%.
Sales in the company’s core Monster Energy Drinks division, which primarily includes the Monster, Reign Total Body Fuel, and True North energy drinks, increased 12.5% to $1.54bn.
Meanwhile, sales for the company’s Strategic Brands segment, which primarily includes the various energy drink brands acquired from Coca-Cola, as well as its affordable energy brands, decreased 9.0% to $79.1m.
Monster highlighted that sales to customers outside the US jumped 18.8% to $649.0m. Such sales were approximately 39% of total net sales in the second quarter, compared with 37% last year.
The company noted that it had experienced a “significant increase” in cost of sales, resulting in gross profit margin falling from 57.2% to 47.1%. The higher costs were primarily due to increased freight rates and fuel costs, including costs relating to the importation of aluminium cans, increased ingredient and other input costs, including secondary packaging materials and increased co-packing fees, increased aluminium can costs attributable to higher aluminium commodity pricing, geographical and product sales mix and production inefficiencies. The decrease in gross profit was partially offset by price rises.
Vice Chairman and Co-Chief Executive Officer Hilton H. Schlosberg said: “We are pleased to report continued strong revenue growth, driven by consumer demand. Ensuring product availability for our customers and consumers remains a priority.
“Following many quarters of supply chain challenges, we have been able to rebuild inventories on a global basis, while at the same time meeting strong customer demand, despite operating in an extremely challenging, unprecedented and costly supply chain environment.”
He added: “Significant increases in freight-in and fuel costs, including costs relating to the importation of aluminium cans, as well as other input costs continue to impact costs of sales. We believe that some of the increased costs that we are experiencing are likely to be transitory, as we begin to decrease our reliance on the use of imported aluminium cans, as well as increase our inventory levels in closer proximity to our customers. Furthermore, the sharp run-up in aluminium commodity pricing appears to be currently moderating.
“Increases in distribution costs, particularly freight and fuel, continued to adversely impact operating expenses.
“We have implemented measures to mitigate the impact of increased costs experienced in our supply chain through reductions in promotions and other pricing actions in the United States and in EMEA. In the United States, we are implementing a market-wide increase in pricing, effective September 1, 2022. In certain international markets, price increases will also be implemented in the second half of 2022, some in addition to price increases or pricing actions already taken earlier in 2022.”
