Monster Beverage Corp. has recorded fresh impairment charges on its alcohol business, which is not meeting the company’s projections.
The US group, best known for Monster energy drinks, also has an alcohol division that includes The Beast hard tea.
Go deeper with GlobalData
“We incurred additional impairments within our alcohol brands segment in the quarter due to financial performance, which is being addressed,” Monster Beverage chairman and co-CEO Rodney Sacks said.
The company booked impairment charges of $130.7m for its Alcohol Brands division for the fourth quarter, leading to annual charges of $138.8m.
In 2023, the corresponding figures were $39.9m and $42.7m respectively.
The latest impairment charges cover “reporting unit goodwill, certain non-amortising intangibles, as well as property and equipment”, Monster Beverage said.
“The impairment charges were primarily the result of operating and financial performance not meeting projections due in part to challenges in the category, as well as the decrease in projected ongoing operating and financial performance,” Sacks told analysts on a call to discuss the results.
Monster Beverage reported “excess” inventory of alcohol in the fourth quarter.
Group fourth-quarter net income dropped 26.2% to $270.7m. Excluding items including the alcohol impairment charges, adjusted net income fell 6%.
Fourth-quarter operating income was $381.2m, compared with $434m in the 2023 fourth quarter. Adjusted operating income for the fourth quarter was $517.9m, against $480.1m in the corresponding period a year earlier.
Monster Beverage sees energy-drinks sales rise
Alcohol remains a small part of the group’s business.
Fourth-quarter net sales from alcohol, which also includes craft beers and hard seltzers, decreased 0.8% to $34.9m.
Group net sales increased 4.7% to $1.81bn. Adjusted for exchange rates, net sales were up 7.8%.
Monster Beverage said its fourth-quarter net sales from its Monster Energy Drinks division increased 4.5% to $1.67bn and by 7.6% when excluding exchange rates.
The group has a third division – Strategic Brands – which houses energy-drink brands acquired from The Coca-Cola Co. as well as the company’s “affordable” energy brands Predator and Fury. The unit’s fourth-quarter net sales increased 11.1% to $102m. Removing the impact of exchange rates, the division’s net sales grew 14.7%.
Overall net sales for the year increased 4.9% to $7.49bn. Adjusted for exchange rates, net sales increased 8.4%.
Operating income was $1.93bn, compared with $1.95 billion in 2023. Adjusted operating income hit $2.1bn, versus $2.03bn a year earlier.
Net income decreased 7.5% to $1.51bn. Adjusted net income decreased 0.7% to $1.64bn.
“We continued to see sustained growth in the global energy drink category. In the United States, we are seeing a resurgence of growth in the energy drink category in convenience, as well as in all measured channels reported by Nielsen. Our non-Nielsen measured channels continued to grow,” vice-chairman and co-CEO Hilton Schlosberg said.
“Growth opportunities in household penetration and per capita consumption, along with consumers’ growing need for energy are positive trends for the category.”
