Monster: Cornered on All Sides, Will the Former "Monster" Turn into a "Sick Cat"?
In the cross - market comparison of beverages between China and the United States, Dolphin Analyst selected Monster Beverage (or "Monster") for comparison some time ago to lead into the upcoming research on its peer, Dongpeng Beverage.
In the previous research, we focused on how Monster, as a late - comer, achieved a comeback through differentiated positioning, community marketing, and leveraging the channels of industry giants.
However, past success does not guarantee a smooth future. Lululemon, which Dolphin Analyst has covered before, is a typical counter - example. As soon as the earnings season ended, Dolphin Analyst wasted no time in researching the next truly crucial core proposition. Standing at the present moment, let's take a look:
1. What will drive Monster's future growth? Are its growth drivers stable?
2. Is it a good investment target? What's its current cost - effectiveness?
1. How is Monster's future growth potential?
1. The rise of niche brands leaves Monster under pressure from both sides
Before analyzing Monster's growth potential, let's first look at the changes in the competitive landscape of the US energy drink industry in recent years.
As shown in the figure below, since 2019, Monster's market share has been declining significantly. As of the end of 2024, Monster's market share in the US has dropped from a peak of 43.6% to 29.2%.
Correspondingly, in terms of Monster's performance, its revenue in 2024 only increased by 4.9%, lagging behind the 7% growth rate of the industry according to Nielsen's statistics.
On the other hand, emerging brands such as Celsius, Ghost, and Alani Nu have been growing rapidly in recent years, with their combined market share rising from less than 5% in 2015 to around 15%. As a result, the concentration of the US energy drink industry has decreased significantly. The combined market share of the duopoly, Monster and Red Bull, has dropped by 10 percentage points from 76% to 66%.
So, the question is, why have the market shares of the former energy drink duopoly been eroded by numerous small and medium - sized brands? Considering that some investors may still be unfamiliar with these emerging domestic energy drink brands in the US, Dolphin Analyst has selected four representative emerging brands that have been growing rapidly in recent years and conducted a detailed analysis from four dimensions: product ingredients & positioning, channel strategies, and marketing methods as a background reference:
By comparing the strategies of these emerging brands with those of traditional energy drink giants like Monster and Red Bull, we can see that the rapid rise of these emerging brands is due to:
(1) The core lies in seizing the trends of health - consciousness and niche demands: As the health awareness of US consumers gradually increases and they become more vigilant about the intake of high - sugar and high - calorie beverages, the most prominent trend in the US soft drink industry in recent years is the slowdown of the growth of traditional high - sugar beverages, replaced by the rapid growth of relatively healthy niche categories such as sugar - free and functional beverages.
This can be confirmed by the fact that the sales of sugar - free Coke in Coca - Cola's earnings reports have been growing at a double - digit rate for four consecutive quarters, while the sales of classic Coke have remained flat.
The energy drink segment is no exception. Compared with the high - sugar + synthetic caffeine combination of Monster and Red Bull, as shown in the table above, the common feature of these emerging brands is the use of a sugar - free + natural caffeine design (natural caffeine contains plant components such as tea polyphenols and chlorogenic acid, which can slow down the absorption of caffeine in the human body and have a milder effect), which is relatively healthy.
On the other hand, from the perspective of product positioning, these emerging brands have targeted consumer groups and consumption scenarios that have not been fully covered by traditional giants. Whether it is fat - burning, muscle - building, or skin - improvement, they have stronger and more focused functionality, creating a "second growth curve" beyond "energy - boosting and refreshing", which better meets the diverse niche demands of consumers.
Although Monster, unlike Red Bull, which relies on a few classic SKUs, has been launching 1 - 4 new products steadily every year since it launched its classic series in 2002 through addition (combining with other soft drinks such as coffee, tea, and juice or directly adding functional ingredients such as protein and electrolytes to obtain new tastes and effects) and subtraction (reducing the sugar and carbohydrate content to launch healthier beverages suitable for obese consumers and those who cannot consume too much sugar), its product line is relatively rich.
However, its core business remains the classic high - sugar and high - caffeine energy drinks. The product system has not been adjusted in a timely manner in response to this wave of health - consciousness, which is the core reason for the erosion of Monster's market share.
(2) Increase investment in new media to achieve efficient and accurate reach of the target audience. In terms of marketing, although these emerging brands generally adopt the KOL + community marketing strategy, they take it to a more extreme level compared with Monster.
According to research information, the proportion of marketing expenses on new media for these emerging brands generally exceeds 80% (less than 30% for Monster), and they rarely sponsor large - scale events or place large - scale TV advertisements. By focusing on KOLs in niche segments, creating social activities and topics to interact with consumers, although their marketing reach is not as wide as that of giants like Monster and Red Bull, they have the advantage of higher efficiency and stronger stickiness in reaching their target audience.
(3) Leverage the channels of industry giants. As Dolphin Analyst mentioned in "Monster: How Did the 'Monster' That Grew 100 - fold in 20 Years Defeat Red Bull?", the distribution channels for non - alcoholic beverages in the US are mainly dominated by three giant beverage companies: Coca - Cola, PepsiCo, and KDP (accounting for nearly 80%).
As shown in the table above, compared with Monster, which relies on Coca - Cola's distribution network, these emerging brands have partnered with PepsiCo and KDP for large - scale distribution.
Take Celsius as an example. After PepsiCo invested in Celsius in 2022, Celsius quickly accessed PepsiCo's distribution network in North America. The coverage rate in convenience stores and restaurants increased from less than 10% to over 95% rapidly, and its market share in the US energy drink market also increased from less than 1% to 10% rapidly, making it the third - largest energy drink player after Monster and Red Bull.
This also shows that due to the high degree of chain - store operation in the US retail terminals, which rely on a standardized supply - chain system and have long - standing in - depth cooperation with giants like Coca - Cola and PepsiCo, small and medium - sized brands can quickly expand their channels by leveraging these giants. In other words, the channel is not a core barrier in the US market.
In summary, the core reason why these emerging energy drink brands can erode the market shares of Monster and Red Bull is that they have seized the major trends of consumers' health - consciousness and niche functional demands. The increased investment in new media and the leveraging of giants' channel networks have accelerated the catching - up process.
In the absence of significant differences in channels and marketing, the competition in the energy drink market will ultimately boil down to brand perception. For a giant like Monster, years of marketing and promotion have created a "wild and rebellious" brand perception in consumers' minds, which is difficult to associate with health. This has also given small and medium - sized brands an opportunity to make a comeback.
Therefore, from the perspective of the US domestic market: First, at the industry level, according to Nielsen data, after more than 20 years of development in the US, the penetration rate of energy drinks among the core consumer group, men aged 18 - 34, has exceeded 85%, almost reaching the level of "one can per person".
On the other hand, as analyzed above, the increasing health awareness of consumers, who are gradually shifting to lower - sugar, sugar - free, and functional beverages, has had a certain substitution effect on traditional high - sugar and high - caffeine energy drinks. Therefore, Dolphin Analyst believes that at the industry level, the energy drink category in North America will gradually enter a period of slow and stable growth.
Based on GlobalData data, Dolphin Analyst expects the growth rate of the North American energy drink market to be between 7% - 8% from 2025 - 2029.
From the perspective of the competitive landscape, although Monster launched its sugar - free Zero Sugar series in 2023 and expanded the Zero Sugar product line by introducing different flavors to fill the gap in its health - conscious product portfolio, in an attempt to attract more consumers.
However, according to research information, since the launch of the Zero Sugar series, although its growth rate has been higher than Monster's core business, its performance has still been weaker than that of emerging brands such as Celsius and Alani Nu (according to Nielsen's data in Q1 2025, the growth rate of the Zero Sugar series across all channels was 3.4%, lower than the 13.5% growth rate of the sugar - free energy drink category).
Dolphin Analyst believes that the core reason is that Monster's Zero Sugar series is still associated with Monster's "rebellious culture" non - mainstream label, which is in fundamental conflict with the positioning of a "healthy lifestyle".
Therefore, assuming that Monster cannot get rid of its current label and successfully transform into a health - conscious brand, Dolphin Analyst expects that Monster's market share in the domestic market will continue to be eroded by emerging brands in the next five years. The overall growth of its sales volume will be weaker than the industry average, with a CAGR of 6.3% in the next five years.
2. The core growth engine lies in the international market
We have analyzed Monster's growth potential in the US domestic market above. So, what is the growth potential of the international market when its domestic growth is hindered?
International market: Similar to Coca - Cola, due to the different stages of economic development in different countries, the demand for energy drinks also varies. Generally speaking, in developing countries and emerging markets, the proportion of the labor - intensive population is relatively high, and the demand for energy drinks is relatively rigid. Therefore, the growth rate is generally higher.
So, the growth of Monster's international sales volume largely comes from emerging markets such as Latin America, Africa, and the Middle East (EMEA). By leveraging Coca - Cola's global network for continuous channel penetration, it is still in a stage of rapid growth, enjoying the channel dividend.
In terms of the competitive landscape, currently, there are not many players with a certain scale in the international market, and the market is still dominated by Monster and Red Bull.
Although other brands have also started to expand overseas in recent years (Dongpeng Beverage has entered Southeast Asia, and Celsius has entered Canada, the UK, and Australia), overall, they are still in the early exploration stage, with a small scale and have not yet established international influence.
In the medium term, as brands such as Dongpeng and Celsius accelerate their overseas expansion, Dolphin Analyst believes that the competition in the energy drink industry will likely become more intense. Since Monster expanded overseas earlier and achieved internationalization by leveraging Coca - Cola's global network, it has enjoyed a certain first - mover advantage. Therefore, the threat from other brands to Monster in the international market is relatively small at present.
Considering that Coca - Cola's international market accounts for nearly 60% of its total business, Dolphin Analyst assumes that Monster's international market share will increase by 10 percentage points from the current 40% to 51%, with a CAGR of 16% in international sales volume in the next five years.
Based on the above analysis, Dolphin Analyst assumes that the overall CAGR of Monster's sales volume in the next five years will be 12.4%.
In terms of price, although the increasing proportion of Monster's health - conscious and more functional products has gradually pushed up the overall product price range, due to the higher growth rate in the international market, where the unit price is generally half of that in the domestic market, the overall price range will gradually decline from $8.9 to $8.6, with a CAGR of - 0.7%.
Based on the forecasts of volume and price, we can see that the compound growth rates of Monster's sales volume and price in the next five years will reach 10% and - 0.7% respectively, corresponding to an overall revenue growth rate of 11.1%.
In terms of gross profit margin, as shown in the figure below, since Monster's pricing in overseas regions is only half of that in the domestic market, and currently, its overseas production is mostly outsourced to Coca - Cola's bottling plants, with a relatively high production commission, and the costs of raw material procurement, logistics, and warehousing are all higher than those in the US domestic market, Monster's gross profit margin in overseas regions is nearly 20 percentage points lower than that in the domestic market.
In terms of pricing, since Monster's pricing in the overseas market is usually 80% - 90% of Red Bull's, in order to maintain its market share, Dolphin Analyst believes that the probability of Monster taking the initiative to raise prices is relatively low when Red Bull does not raise prices (especially in markets dominated by Red Bull such as Western Europe and the Asia - Pacific region). Therefore, the only way to improve the gross profit margin in overseas regions is to reduce costs.
In fact, as analyzed above, since 2023, Monster has significantly increased the construction of its own supply chain, and the proportion of fixed assets has soared for two consecutive years, including building production plants in Brazil and Ireland and warehousing facilities in multiple regions around the world. Therefore, Dolphin Analyst assumes that in the next five years, as Monster increases the proportion of its self - built supply chain and reduces production costs, its gross profit margin will gradually increase from 54% to 58%.
