Monster Energy: the torero against Red Bull

Monster Energy only launched in 2002, fifteen years after Red Bull, but the American Monster Beverage Corporation managed to conquer America in a relatively short amount of time to become market leader. Its next goal: to conquer the world.

Formula 1

It is not entirely by chance that Monster recently announced a partnership with Lewis Hamilton, who is with the F1 Mercedes team, which happens to compete with the Red Bull cars driven by Max Verstappen and Daniel Ricciardo. The deal dates back to 2010, but it has now expanded on that collaboration with a Lewis Hamilton signature drink in its own can.

“I am super excited to announce that I’m going to be partnering with Monster Energy and working with them to bring out my own drink, which is something I’ve wanted to do since we began working together years ago”, Lewis Hamilton said. His enthusiasm was undoubtedly also improved thanks to the fee he will get for this deal.

Lifestyle in a can

MBC’s move in F1 and other action-oriented sports is more or less what Red Bull did as well. Create spectacular sporting events, with track-defying and possibly death-defying stunts, beautiful scarcely-dressed women and of course, energy drinks. This not only appeals to the heavy user target audience, aged 15 to 25, but also to older consumers. A Monster tattoo, with its poison-green claw, can be seen more often, whether it is on arms, shoulders or something else. A Sprite or Nestea logo does not seem too likely in tattoo parlours though…

To differentiate from its competitor Red Bull, Monster has chosen a more aggressive, rebellious position, as if it were Red Bull’s sassy brother. According to several newspaper articles, it has not spent a lot on above-the-line advertising, but targeted the right type of influencers, like athletes or musicians to spread the “message” through their social media. The brand’s motto is “Monster is a lifestyle in a can”.

Awe-inspiring pace

MBC targets brand loyalty and that is why Monster Energy’s loyal fan base is not as easily persuaded by other energy drinks’ pricing. The company also does not need to increase her marketing budget to match its growing turnover, which definitely benefited MBC’s bottom line: in 2016, its profit per employee even outpaced Apple’s.

Operational costs are also manageable because the company does not manufacture anything itself. As contract manufacturers focus on that aspect of the business, MBC can focus on product development, marketing and sales. The company launches flavour and packaging versions (more than 50 SKUs) at an awe-inspiring pace. The move may create a certain level of complexity, but it also revitalizes the brand: change is its constant.

Worldwide growth market

In its home territory, Monster caught up to and surpassed Red Bull in volume. According to Beverage Marketing’s website, it sold 2,400 million liters in the United States, but in dollars, Red Bull is still the largest by far. Monster Energy may have the same retail price, it contains twice as much product for the same price.

The United States are an important market considering its population, but MBC and Red Bull have more to gain from the international market, particularly its emerging economies. This market was valued at 50 billion euro per year (according to BeverageDaily.com) in 2014 and is a growth market, even in established markets. That is in stark contrast to the carbonated sodas that are losing ground in many markets, particularly the United States.
 

Deal with Coca-Cola Company

An important step in MBC’s battle for the worldwide energy drink market’s dominance was taken in 2014, when it announced a deal with the Coca-Cola Company. It was a move where MBC shifted its drinks portfolio (lemonade, fruit juices and everything else) to Coca-Cola and got the energy drink brands (Burn, NOS and Full Throttle) in return.

MBC was also given the opportunity to expand its energy drinks’ reach to interesting growth markets (Asia, Africa and South America) through Coca-Cola’s worldwide distribution channels. For instance, Japan has now become one of its prime markets outside of the United States, with a market share of more than 30 %.

Increased regulation

Red Bull is still the global market leader in euro currency, but Monster is making strides when it comes to liters. Thanks to its attractive volume proposition, it can appeal to less fortunate consumers in the emerging markets.

For the time being, the overall energy drinks market is still expanding, to the benefit of either competitor. Increased legislation could make things harder, because governments want to limit the amount of energy drink people consume. People under the age of eighteen cannot consume energy drinks in Latvia and Lithuania, because they contain a considerable amount of caffeine and taurine. In considerable amounts and with physical exercise, these may cause arrhythmia. This does not help the energy drink’s image, especially with governments.

The worldwide top five

1. Red Bull (30.2 %)
2. Monster (21.1 %)
3. TC (11.8 %)
4. Suntory (4 %)
5. Rockstar (3,6 %)

Source: Euromonitor International