When it comes to the best-performing stocks in history, many people immediately think of technology giants like Apple, Amazon, Netflix, and Tesla.
However, in the food and beverage industry, there is also a company with an astounding growth rate, and that is Monster Beverage Corporation.
Data shows that from the beginning of the year 2000 to October 22, 2019, the stock price of Monster Beverage soared by 624 times, making it the highest-returning stock in the past 20 years in the US market.

In other words, if you had invested $100 in Monster Beverage stock in the year 2000, the value of your investment by the end of 2019 would have reached $62,444.
So, what makes this company so special?
The Rise of Monster Energy Drink Company
Monster Energy Drink Company has a fascinating history and has established itself as a prominent player in the energy drink industry.
Company Timeline
In 1935, the predecessor of Monster Energy Drink, Hansen Company, was founded, primarily focusing on selling fruit juice products.
However, in 1998, Hansen Company faced bankruptcy and was acquired by California CoPackers, rebranding itself as Hansen Natural Company.

By 2012, energy drinks became the company’s largest source of revenue, leading to a unanimous decision among shareholders to rename it as Monster Energy Drink.
In 2015, The Coca-Cola Company invested $2.15 billion to acquire a 16.7% stake in Monster Energy Drink. The two companies also embarked on a partial business integration.

Monster Energy Drink transferred its non-functional beverage business, including tea and carbonated drinks, to Coca-Cola, while Coca-Cola handed over its functional beverage products to Monster Energy Drink.
In 2022, the company announced its acquisition of Canarchy Craft Brewery Collective, a craft beer and hard seltzer producer, for $330 million.

Company Culture
The success of Monster Energy Drink Company can be attributed to its unique brand positioning and association with extreme sports. The company primarily targets young, thrill-seeking, and energetic consumers, which is reflected in its product packaging.
For instance, the iconic claw logo on the black beverage cans represents fashion, excitement, and individuality. Monster Energy Drink Company has incorporated these ideas into its corporate values and continuously innovates to meet consumer demands.
Business Model
Company Product
Monster Beverage is a renowned company in the beverage industry, offering a portfolio of 32 brands and an impressive range of 178 products. One of its flagship products is Monster Energy Drink, also known as the popular Monster Claw Energy Drink.

In addition to this, the company produces energy drinks, sodas, and alcoholic beverages under other strategic brands.
The key to Monster Beverage’s success lies in its comprehensive distribution network, which allows them to sell their products in over 157 countries and regions worldwide.
Marketing Strategy
Monster Beverage employs a low-price strategy to attract consumers. Despite providing a 16-ounce can of beverage, their pricing remains on par with Red Bull’s 8.3-ounce can.

Rather than relying on traditional advertising channels such as television commercials, Monster Beverage focuses on sponsoring niche extreme sports events. These events include extreme motocross, surfing, skateboarding, extreme cycling, and more.
Business Segments
In 2022, Monster Beverage achieved a staggering $6.311 billion in revenue, with a net profit of $1.192 billion. The Monster Energy Drink alone contributed $5.83 billion, accounting for 92.43% of the total revenue. In terms of geographical distribution, the United States and Canadian markets contributed $4.12 billion, representing 65.21% of the total revenue.
Financial Performance and Profitability
Revenue
Over the past few years, Monster Beverage has experienced stable revenue growth. In 2022, the company achieved a revenue growth rate of 13.89%.
Gross Profit Margin
In 2022, Monster Beverage’s gross profit margin was 50.3%, which experienced a slight decline compared to 56.1% in 2021. This can be attributed to the increase in raw material prices, particularly aluminum metal used for packaging cans.

Net Profit
The growth momentum of the company’s profitability has slowed down. In 2022, the net profit declined by 13.49% to $1.19 billion, marking a negative growth trend since 2021. This decline can be attributed to factors such as a decrease in gross profit margin and an increase in operating costs.
Monster Beverage has consistently demonstrated a strong revenue performance, although its profitability experienced a decline in 2022. The company will need to address the challenges posed by rising raw material costs and operational expenses to sustain its growth trajectory.
Industry Trends
Market Potential
According to data from Polaris Market Research, the global energy drink market was valued at $45.8 billion in 2020, and it is projected to reach $104 billion by 2031, with a compound annual growth rate (CAGR) of 8.2%.

Industry Comparison
Monster Beverage falls under the non-alcoholic beverage industry. The top four companies in the industry by market value are The Coca-Cola Company, PepsiCo, Monster Beverage, and Keurig Dr Pepper Inc. Here is a comparison of company data within the industry:
Ticker | Name | Mkt Value | P/E | ROE |
---|---|---|---|---|
KO | Coca-Cola Co | 2761 | 28.1x | 12.6% |
PEP | PepsiCo, Inc. | 2691 | 41.0x | 11.3% |
MNST | Monster Beverage Corp | 620 | 48.4x | 5.5% |
KDP | Keurig Dr Pepper Inc | 455 | 34.9x | 1.9% |
Ownership Structure and Key Shareholders
The ownership structure of Monster Beverage Company is quite clear, with its largest shareholder being The Coca-Cola Company, holding approximately 19.51% of the shares.
The second largest shareholder is Vanguard Group, with a stake of around 5.96%.
The largest individual shareholders are the company’s co-CEOs, Hilton Schlosberg (0.14%) and Rodney Sacks (0.14%).

Challenges and Risks of Monster Energy Drinks
Monster Energy Drinks have become a popular choice among consumers, but there are several risks and challenges that the company faces.
Impact of Rising Aluminum Prices
One of the significant challenges for the Monster Energy Drinks company is the rising prices of aluminum, which is the primary material used for their cans. As the cost of aluminum increases, it directly affects the company’s profit margins. This is a crucial aspect to consider as it may lead to higher production costs and ultimately impact the overall profitability of the company.

Intensified Competition in the Industry
The majority of the company’s revenue is derived from the sales of Monster Energy Drinks. However, the industry is witnessing intensified competition, which can potentially affect the company’s market share and profitability. With more players entering the energy drink market, the company needs to strategize and differentiate its offerings to maintain its competitive edge.

Ongoing Strategies
To address these challenges, the company is exploring various strategies such as:
- Diversifying the product range: By expanding their product line to include different types of energy drinks, the company can tap into new market segments and reduce their reliance on a single product.
- Enhancing brand loyalty: Developing strong brand loyalty among consumers can be a valuable asset in a competitive market. The company invests in marketing campaigns that focus on building a loyal customer base and differentiating their brand from competitors.
- Improving cost efficiency: To counter the impact of rising aluminum prices, the company is optimizing its manufacturing processes and explore alternative materials that offer cost savings without compromising the quality of their products.
In conclusion, while Monster Energy Drinks have gained significant popularity, the company faces challenges and risks that can impact its profitability. From its past 20 years performance, obviously it is a good investment to have.
