O Canada! Red Bull Summer Edition mauls Monster market share in Canada


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Related tags Market share Red bull Caffeine

Monster Energy admits that Red Bull’s successful Summer Edition launch with 7-Eleven meant it lost market share in Canada during Q3 2014, due its distribution partner’s ‘conflicting priorities’.

Rodney Sacks, CEO and president, revealed the news as Monster discussed its quarterly results with analysts on an investor call, with net sales up 7.7% to $636m for the three months ending September 30, while net income rose 31.9% to $121.6m, also on a year-on-year basis.

Nielsen data for convenience and gas Canada, the 12 weeks ending November 18, energy drink category declined 1%, while Monster’s sales fell 11%.

“Our market share decreased 2.7 points to 26.2% over the comparable period last year. Red Bull’s sales increased 3% and its market share increased 1.7 points to 38.9%.

“Monster’s market share was negatively impacted over this period by Red Bull’s [Tropical Fruits] Summer Edition launch with 7-Eleven, and Monster’s failure to have a comparable promotional activity with 7-Eleven, due to conflicting priorities from our distribution partner in Canada,”​ he said.

‘The Canadian impact was not substantial, but it was there’ – Rodney Sacks

Asked by Bill Chappell from SunTrust Robinson Humphry how heavily the 7-Eleven issue in Canada - Red Bull sold its Summer Edition there in July and August - had weighed on the business, Sacks said: “The Canadian impact was not substantial, but it was there during the quarter. You can see for the numbers we showed for North America in October, there was improvement coming through from Canada – due to timing and promotional issues.”

“We will do a promotion, I think, with 7-Eleven, but it didn’t fall in this quarter with Ultra Black, but that is being planned in Canada,”​ he added; interestingly, Coca-Cola Refreshments Canada is Monster’s distribution partner in Canada.

ANALYST INSIGHT:“Despite somewhat softer volume growth, we remain encourage about Monster’s near double-digit net sales growth. Further, with the innovation pipeline loaded, we believe growth will reaccelerate into FY2015 and beyond,”​ (Bonnie Herzog, senior analyst, Wells Fargo Securities)

Nonetheless, Monster’s strong general overall growth trend continues, with volume growth of 5.1% and net price per case growth of 2.5%; international gross sales rose 14.2% in Q3 as key markets in Europe, and also Japan, improved.

Monster moves the needle…New launches

  • Ultra Sunrise – Monster’s fourth permanent line extension is currently gaining distribution
  • Ultra Black – Launched as a limited edition in 7-Eleven, Monster is still considering whether to make it a permanent Ultra line extension.
  • Monster Unleaded – No-caffeine line Monster unleaded still contains taurine, glucuronolactone and guarana, as the company targets new consumers and consumption occasions.
  • Other innovations – Monster Rehab Peach Tea & Energy is in the pipeline for early 2015, as is Ultra Citron and a new Java Monster product, while Monster Valentino Rossi will become a permanent European fixture, and will be rolled out to further markets following its debut in UK and Italy.

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Monster in Canada

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"Anyone who goes up there looking for opportunity is more than awarded." Janine North, CEO

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