Monster Beverage Corp. receives the 2011 NBJ Stock Award

Monster Beverage Corp. receives the 2011 NBJ Stock Award

The company formerly known as Hansen Natural stays energized

 As of January 9, 2012, Hansen Natural Corp.—the 80-year-old beverage company behind such legacy brands as Hansen’s Natural Soda and Blue Sky—received the go-ahead from shareholders to change its name to Monster Beverage Corp., better reflecting the identity of its major breadwinner, Monster Energy Drink. It began trading under its new ticker, MNST, on January 9.

“Hansen is an energy drink company, period,” says Scott Van Winkle, managing director at Canaccord Genuity, who notes that about 95% of the company’s sales come from Monster and its various permutations. At an estimated $1.7 billion in 2011 sales, that’s a whole lot of energy drinks.

And though the HANS ticker may now fade away, the stock attached to it has done anything but. In 2011 the company’s stock price climbed 72%, up a solid 171% over a five-year period. The price peaked at just shy of $100 by the end of the year, prompting a two-for-one stock split slated for February 15. At that point, Monster anticipates a total of 174.3 million shares outstanding.

According to Van Winkle, there are no financial nuances to this impressive stock performance. “This is a top-line-salesdriven story,” he says. Hansen, which grew sales 14% to $1.3 billion in 2010, grew another 31% in 2011, according to preliminary estimates from Cannacord. All the more impressive for being well above the 15% growth of the overall U.S. energy drink market in 2011, according to preliminary data from Nutrition Business Journal.

Outgrowing its own category speaks to Hansen’s out-innovation of its competitors. Though the company is still runner-up to category leader Red Bull, it’s been more mobile with new products. Its Monster Rehab line, made with tea and juice, is performing well, with four new SKUs due out soon. Java Monster, its coffee/energy drink combo is doing well too. And for 2012, the company plans on launching Ubermonster, a non-alcoholic, fermented malt beverage, which may muscle its way into the kombucha set. “I would say that they’re undoubtedly the most innovative energy drink company,” says Van Winkle.

Other competitors include Rockstar; Amp from PepsiCo; Full Throttle and NOS from Coca-Cola; and shot category leader 5-Hour Energy from Living Essentials. Monster does offer a line of shots, but 5-Hour Energy dominates the market by wide margin.

The company’s outsized growth is no new trend, evident from its meteoric rise in stock appreciation and gross sales over the last five years. In fact, Hansen received NBJ’s Large Company Growth Award in 2007 and won the Stock Award in both 2004 and 2005.

There aren’t a lot of large public companies dedicated to the nutrition and functional foods industries, and the steady progress of Hansen over the last decade deserves attention. Often, a breakout MLM will post huge growth one year and a massive slump the next, but Hansen has kept an even keel for some time. It’s grown out a strong international business over time, and Monster boasts status as the No. 1 energy drink in Mexico and No. 2 in France and the U.K., according to Van Winkle. The company plans to move into Asia in the next six months.

Monster’s growth also speaks to the screaming popularity of energy drinks, a market that grew at nearly 40% CAGR from 2000 to 2010, according to NBJ estimates. And the market is primed for continued growth, since the young folks drawn to energy drinks today are likely to keep drinking them down the road. “A whole new generation of young adults is growing up with energy drinks, similar to the way that my generation grew up drinking soda,” Van Winkle says. One of the beauties of energy drinks, at least from a marketing standpoint, is that they do as advertized. The simple concept of immediately feeling a product’s intended effect plays a significant part in repeat sales.

Of course, Monster is bound to (and already has) run into opposition from critics who argue that the company contributes to the escalating number of children ingesting unhealthy levels of caffeine. Company heads do have the ready retort that Starbucks has a store on every corner ready to serve anyone an equal dose of caffeine, though they may require a more responsible comeback in the near future.

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