Production Complications Delay Monster's New Product Launch
CORONA, Calif. — Retailers will have to wait a little longer to add Monster Beverage Corp.'s Hydro to its beverage mix.
The enhanced water energy product has run into unforeseen production complications and its launch has been delayed anywhere from "indefinitely" to up to 90 days, retailers told Bonnie Herzog, managing director of tobacco, beverage and convenience store research at Wells Fargo Securities LLC.
According to Herzog, a third retailer reported that Monster informed them that they "won't guarantee consistent product flow over the next couple months."
"Given that we are approaching the key summer selling season, we have concerns about the ability for Monster's new innovation to have any meaningful impact on sales this year, suggesting the recent slowdown in the energy category may persist," she said.
In addition, Wells Fargo Securities remains concerned about soft energy trends at retail, higher marketing spend to drive top-line to attract and retain consumers, and margin dilution from ongoing negative channel, product, and geographic mix shift, she explained.
The delays, she said, appear to be placing further strain on Monster's relationships with many retailers. According to Herzog, issues with the launch of Mutant and production of Java have been reported.
One suggested that "Monster is developing a track record of delaying new items" which may hurt its ability to successfully launch new products going forward, she said, adding several retailers reported they chose not to include Hydro at all given its original scheduled launch was too late for planning purposes.
"New products are the fuel that drives Monster's growth in the United States. Without the benefit of strong working relationships with all of its retail partners, we have concerns about Monster's ability to gain incremental shelf/cooler space for its new products going forward to drive a reacceleration of growth,' Herzog said.
Corona-based Monster Beverage Corp. is a holding company and conducts no operating business except through its consolidated subsidiaries. The company's subsidiaries market and distribute energy drinks, including Monster Energy, Monster Energy Extra Strength Nitrous Technology, Java Monster, M3 Monster Energy Super Concentrate, Übermonster, NOS, Full Throttle, Burn, and Relentless energy drinks.