WEBVTT - How Monster Beverage Shares Soared a Monster 100,000% in the Last 20 Years 0:00:10.680 --> 0:00:14.160 Hello, and welcome to another episode of the Odd Lots Podcast. 0:00:14.160 --> 0:00:18.320 I'm Joe Wisenthal and I'm Tracy Alloway. Tracy, I have 0:00:18.600 --> 0:00:21.919 a new idea for an e t F that I 0:00:21.920 --> 0:00:27.360 think we should launch. You and about a gazillion other people, 0:00:27.440 --> 0:00:30.120 but go on. So, I think we should make a 0:00:30.160 --> 0:00:34.000 brose e t F like bro culture. I feel like 0:00:34.120 --> 0:00:37.280 his is a really is a really winning format. So 0:00:37.600 --> 0:00:43.120 I think, Um, I think the basic can you say 0:00:43.280 --> 0:00:45.840 bitch on air? I don't know, Um, the Basic Bitch 0:00:45.880 --> 0:00:49.519 portfolio you just did, so I guess, I guess. So 0:00:50.000 --> 0:00:52.400 sorry everyone, Um, this is going to be the first 0:00:52.400 --> 0:00:54.640 episode of all thoughts that comes with a disclaimer about 0:00:54.840 --> 0:00:59.720 bad language. The Basic Bitch e t F portfolio has 0:00:59.760 --> 0:01:02.680 been sort of long running theme on a finance Twitter, 0:01:02.840 --> 0:01:06.600 and that's done pretty well, at least in twenties. So 0:01:06.760 --> 0:01:11.160 things like Pinterest, um, some of the makeup companies, those 0:01:11.200 --> 0:01:13.720 sorts of things, Starbucks, So I could see I could 0:01:13.720 --> 0:01:15.520 see the flip side of that being a brose e 0:01:15.600 --> 0:01:19.479 t F. Sure, Gaming stocks gaming, so we know video 0:01:19.520 --> 0:01:23.240 games have done extremely well. I mean that's just incredible sector. 0:01:24.040 --> 0:01:26.360 Of course, Uh you know, back last summer we did 0:01:26.360 --> 0:01:29.960 that episode about Domino's Pizza, which I think, like, you know, 0:01:30.080 --> 0:01:33.240 ordering pizza while you're playing video games, then it's obviously 0:01:33.319 --> 0:01:36.040 part of it. I imagine there's some like sports element. 0:01:36.480 --> 0:01:39.880 Oh well, you could certainly put in um DraftKings and 0:01:39.959 --> 0:01:43.840 some of these online gambling um Penn Gaming, some of 0:01:43.840 --> 0:01:48.000 these online gambling names. And uh, there's also a beverage 0:01:48.040 --> 0:01:51.640 company that I think fits right into the portfolio, and 0:01:51.640 --> 0:01:55.120 it's done extraordinarily well, So I know which one you're 0:01:55.120 --> 0:01:58.400 talking about. This has become one of your favorite companies. 0:01:58.600 --> 0:02:02.040 Not just because this story around bro culture is quite 0:02:02.040 --> 0:02:04.960 interesting right now, lots of people are playing more video games, 0:02:05.000 --> 0:02:07.080 we're all stuck at home, and so maybe you want 0:02:07.080 --> 0:02:10.120 to drink more of this particular beverage while you're gaming, 0:02:10.600 --> 0:02:14.200 but also because the returns on this one have just 0:02:14.280 --> 0:02:18.200 been absolutely stunning. Yeah, exactly right. So the company is 0:02:18.280 --> 0:02:21.799 a monster beverage. You've almost certainly seen them like at 0:02:21.840 --> 0:02:25.840 any Delhi or grocery store or anything. They're known for 0:02:25.880 --> 0:02:31.280 their big cans of heavily caffeinated drinks sugary. They have 0:02:31.360 --> 0:02:34.799 like super aggressive label labels on them. It's like this 0:02:34.919 --> 0:02:39.880 sort of like very like macho frankly Browy Beverage, and 0:02:40.000 --> 0:02:43.239 the stock has done phenomenally well. But depending on exactly 0:02:43.480 --> 0:02:47.400 what settings you use, it's it might be the single 0:02:47.480 --> 0:02:51.400 best performing stock in history, or certainly over the last 0:02:51.440 --> 0:02:55.560 twenty or so years. I think it's up like five 0:02:55.680 --> 0:02:58.120 thousand percent over the last twenty years, or at one 0:02:58.120 --> 0:03:00.320 point it was like it's just donereal. Like it's like 0:03:00.480 --> 0:03:03.600 we're talking like bitcoin level returns. Actually could probably put 0:03:03.600 --> 0:03:06.920 like bitcoin into et F two, um, but we're talking 0:03:07.040 --> 0:03:13.960 like bitcoin level returns for a company that sells sugary 0:03:14.160 --> 0:03:17.399 caffeidated beverages, right. And I think when most people think 0:03:17.600 --> 0:03:21.040 about the best performing stock of the past couple of decades, 0:03:21.080 --> 0:03:24.520 they're going to think about Amazon or Google or Apple 0:03:24.760 --> 0:03:26.840 or something like that. Not many people are going to 0:03:26.919 --> 0:03:31.280 think about, you know, a consumer facing beverage company. I 0:03:31.360 --> 0:03:33.919 have to tell you something, so I don't know much 0:03:33.960 --> 0:03:37.240 about Monster. Um. I've never had one of the energy drinks, 0:03:37.320 --> 0:03:41.320 although I am very aware of the branding and you know, 0:03:41.400 --> 0:03:44.680 they're advertising strategy has been a big part of their success, 0:03:44.720 --> 0:03:46.320 and I'm sure we're going to get into that on 0:03:46.440 --> 0:03:49.120 the podcast. But I have to say, in the course 0:03:49.280 --> 0:03:53.000 of doing some research for this episode, I found the 0:03:53.080 --> 0:03:58.360 most amazing anecdote on Reddit. Of course it came from Reddit, 0:03:59.640 --> 0:04:02.240 that's what what the anecdote. So I think it was 0:04:02.320 --> 0:04:07.000 on the Financial Independence Retirement Early board, but it was 0:04:07.160 --> 0:04:11.120 some guy who said he invested nine thousand dollars in 0:04:11.320 --> 0:04:16.960 Monster Energy drinks. Um. I think this was in two 0:04:17.120 --> 0:04:19.400 thousand and ten. He posted and he said he had 0:04:19.440 --> 0:04:23.080 invested five years ago. So basically he had a five 0:04:23.880 --> 0:04:27.240 increase on that nine thousand dollar position, which made him 0:04:27.279 --> 0:04:30.000 a millionaire in the space of five years. And the 0:04:30.120 --> 0:04:32.360 best part of it was so he wrote that in 0:04:32.440 --> 0:04:36.159 two thousand ten, everyone on the message board basically said, 0:04:36.240 --> 0:04:38.400 you are absolutely crazy. I can't believe you have this 0:04:38.520 --> 0:04:41.599 huge chunk of portfolio of your portfolio in a single stock. 0:04:41.720 --> 0:04:44.440 You need to sell it right now. And of course 0:04:44.520 --> 0:04:48.240 had he held onto it, I don't know even know 0:04:48.400 --> 0:04:50.800 what it would be worth now. But like the big 0:04:50.880 --> 0:04:54.000 spike in Monster Energy came after two thousand ten, so 0:04:54.120 --> 0:04:57.359 you can only imagine what invested back in two thousand 0:04:57.440 --> 0:05:01.240 five would look like after a fifteen year monster run 0:05:01.520 --> 0:05:04.800 in Monster Energy. It's really incredible. I mean it's like 0:05:04.880 --> 0:05:06.800 one of these like charts where you just like slice 0:05:06.839 --> 0:05:09.600 it up and you're like, holy crap, these are amazing returns, 0:05:09.839 --> 0:05:12.239 and then you zoom out and it looks even more amazing. 0:05:12.480 --> 0:05:15.520 It's just, uh, it's just incredible. So I want to 0:05:15.600 --> 0:05:19.719 get the story. How did this maker of these drinks 0:05:20.120 --> 0:05:22.200 that I've actually never had one either, I don't think 0:05:22.279 --> 0:05:24.600 maybe I had one years ago, but you know, I 0:05:24.600 --> 0:05:27.679 see him everywhere? How did it become this just mammoth 0:05:27.920 --> 0:05:31.799 player um company? Did I think? Uh? For a billion 0:05:31.839 --> 0:05:33.640 in revenue last year? In two thousand and four, it 0:05:33.760 --> 0:05:36.240 was just forty nine million dollars. So the growth of 0:05:36.360 --> 0:05:39.520 the fundamentals have been incredible. We're going to be speaking 0:05:40.080 --> 0:05:42.719 with an analyst wh will explain it. Our guest today 0:05:42.839 --> 0:05:46.040 is Mark Astracan. He's an analyst at Steeple. He covers 0:05:46.400 --> 0:05:49.720 consumer goods. He's going to tell us the story of 0:05:50.560 --> 0:05:54.400 Monster and why it's returns have been so monster. So, Mark, 0:05:54.480 --> 0:05:56.680 thank you so much for joining us. Yeah, thanks for 0:05:56.760 --> 0:05:59.360 having me. Where did this company come from? It used 0:05:59.400 --> 0:06:01.600 to be like it was called something different. It was 0:06:01.680 --> 0:06:06.080 like some sort of like natural beverage maker. Originally right, yes, 0:06:06.839 --> 0:06:10.440 it was called Hands and Natural up until a few 0:06:10.560 --> 0:06:14.800 years ago. The two guys who are running at the 0:06:15.240 --> 0:06:20.960 now co CEOs bought the business as an investment or 0:06:21.000 --> 0:06:23.760 as part of an investment group in the early nineties. 0:06:23.960 --> 0:06:29.160 It was selling juice at the time Southern California. I 0:06:29.200 --> 0:06:30.920 think they were living in London at that point to 0:06:31.080 --> 0:06:34.600 South Africans looking for an investment and yeah, pulled some 0:06:34.680 --> 0:06:38.240 money together and bought the business, moved to California and 0:06:39.480 --> 0:06:46.200 started selling beverages. So how did the energy concept come about? 0:06:46.240 --> 0:06:49.760 Because I think around that time there was already a 0:06:49.960 --> 0:06:53.640 very well known energy beverage with loads of caffeine in 0:06:53.960 --> 0:06:56.560 the form of Red Bull. And I have to declare 0:06:56.640 --> 0:07:00.440 my interest here. I'm half Austrian. Red Bull comes from Austria. 0:07:00.600 --> 0:07:02.760 Lots of people don't know that, and so you know, 0:07:03.000 --> 0:07:06.159 my loyalty and the energy drink markets are already committed 0:07:06.160 --> 0:07:08.800 to red Bull. But I'm curious, like there was an 0:07:08.880 --> 0:07:12.840 incumbent with a strong brand, why did they decide to 0:07:13.520 --> 0:07:17.600 to take on that particular sector. Well, maybe just to 0:07:17.680 --> 0:07:20.560 take a step back, because I think it's it's interesting 0:07:20.600 --> 0:07:24.320 and importance. So the Austrian comment, you know, the guy 0:07:24.360 --> 0:07:27.280 who's running red Bull rebel versus a private company, So 0:07:27.360 --> 0:07:29.200 there's not a whole lot of information out there, but 0:07:29.280 --> 0:07:32.200 having studied this sector for far too long and finding 0:07:32.240 --> 0:07:35.480 it as interesting as it is. Um the guy who's 0:07:35.520 --> 0:07:39.920 running Red Bull, the CEO, actually only owns about half 0:07:39.960 --> 0:07:44.840 of the company. He was a consumer executive in the 0:07:45.200 --> 0:07:48.240 world before starting Red Bull, and he was traveling to 0:07:48.320 --> 0:07:51.400 Southeast Asia a lot and finding that he's has travels 0:07:51.400 --> 0:07:55.000 from Europe to Southeast Asia retiring and was in Thailand 0:07:55.040 --> 0:07:59.000 and found this drink called Creighton Dang, which is translated 0:07:59.000 --> 0:08:02.960 into Red Bull the days, and he decided he wanted 0:08:03.000 --> 0:08:05.080 to bring this back to Europe with him, so he 0:08:05.160 --> 0:08:09.240 actually created a joint venture with the family of the 0:08:09.360 --> 0:08:12.200 founder of this this business, and so what we know 0:08:12.360 --> 0:08:17.120 of Red Bull today actually originated as a tie beverage 0:08:17.120 --> 0:08:19.720 which is still sold in a can that looks like 0:08:19.800 --> 0:08:22.120 it did in the early eighties in a bunch of 0:08:22.200 --> 0:08:24.600 places around the world, mainly in that that part of 0:08:24.640 --> 0:08:27.960 the world China as well, but that's an aside. He 0:08:28.080 --> 0:08:30.320 brings it back to Europe and starts selling it as 0:08:30.360 --> 0:08:34.880 Red Bull in these sleek cans as the first energy drink, 0:08:36.000 --> 0:08:38.720 and so that is is kind of where the monster 0:08:38.840 --> 0:08:42.360 story begins. So Rodney and Hilton the co c e 0:08:42.520 --> 0:08:46.480 O s. We're living in London, and I saw that 0:08:46.600 --> 0:08:49.040 Red Bull was starting out in Europe around the same 0:08:49.120 --> 0:08:51.959 time that they moved there and could see that this 0:08:52.080 --> 0:08:54.640 was obviously doing really well. So I had nothing to 0:08:54.720 --> 0:08:58.280 do with buying the hands and Natural juice business, but 0:08:58.400 --> 0:09:02.200 having seen the growth of the energy category, they thought 0:09:02.320 --> 0:09:04.439 it would be a good thing to try when they 0:09:05.440 --> 0:09:08.480 were running their their beverage business in the US, So 0:09:09.240 --> 0:09:12.320 before they launched Monster, they actually had some energy drink 0:09:12.400 --> 0:09:16.439 brands under the Handsome Natural portfolio. I think it was 0:09:16.520 --> 0:09:19.040 Blue Sky Beverage. There were a few other ones, but 0:09:19.200 --> 0:09:22.160 they were launched in maybe the mid to late nineties, 0:09:22.960 --> 0:09:24.960 and the fact that you haven't heard from him suggests 0:09:25.000 --> 0:09:27.520 that they were probably a little bit too early. So 0:09:27.840 --> 0:09:30.079 they were always interested in the energy category, but it 0:09:30.160 --> 0:09:32.880 wasn't until I think two thousand and two or so 0:09:33.920 --> 0:09:37.400 that they and one of their partners, a guy named 0:09:37.440 --> 0:09:40.240 Mark Hall who now is a board member and also 0:09:41.160 --> 0:09:44.559 one of the chief innovators of the company, decided to 0:09:44.679 --> 0:09:49.680 create this this thing called Monster, this edgeyear product than 0:09:50.120 --> 0:09:53.520 than Red Bull, and the rest is sort of history. 0:09:55.480 --> 0:09:58.760 So basically, Red Bull we sort of at the time 0:09:58.880 --> 0:10:03.160 and still is it's you know, highly caffeinated, it's associated 0:10:03.240 --> 0:10:06.559 with extreme sports. I know they sponsor a lot of 0:10:06.600 --> 0:10:10.000 that stuff. Monster is basically like, we're just gonna go 0:10:10.600 --> 0:10:14.880 more extreme. Yeah, I think that's probably fair. Maybe starting 0:10:14.920 --> 0:10:17.960 with the sixteen ounces can, I think if you were 0:10:18.000 --> 0:10:22.120 to think about the energy drink consumer, I believe I 0:10:22.160 --> 0:10:24.160 think history kind of bears out, as well as sales 0:10:24.240 --> 0:10:27.360 trends that the Red Bull and Monster consumers are unique 0:10:27.920 --> 0:10:32.240 in that. Red Bull sure when after that extreme consumer, 0:10:32.880 --> 0:10:35.480 but it also early on focused on on premise so 0:10:35.640 --> 0:10:42.120 bars and restaurants, and it, as a result or maybe coincidentally, 0:10:42.200 --> 0:10:44.320 morphed into what I would consider more of a white 0:10:44.360 --> 0:10:47.960 collar beverage. And it was partly because it was sold 0:10:48.000 --> 0:10:50.240 at a premium, partly because it was a smaller can. 0:10:50.480 --> 0:10:52.520 Now you have a whole bunch of other packages for 0:10:52.559 --> 0:10:56.040 Red Bull twelve O, sixteen ounts and the like, but 0:10:56.120 --> 0:10:59.000 the original can is an eight point four ounce can, 0:10:59.520 --> 0:11:04.240 and so was small in volume and expensive in dollars 0:11:04.400 --> 0:11:06.760 or euros or whatever it was at the time. And 0:11:06.840 --> 0:11:09.719 so Monster decided they were gonna come out with the 0:11:09.760 --> 0:11:12.679 sixteen ouns to basically sell the same volume or the 0:11:12.720 --> 0:11:17.000 same value, same price for twice the volume, and they 0:11:17.080 --> 0:11:20.080 also started to market it a bit more towards blue 0:11:20.320 --> 0:11:24.640 collar workers, construction workers, the like they flavored the product 0:11:24.679 --> 0:11:26.320 I think to be a little bit more unique than 0:11:26.360 --> 0:11:28.520 Red Bull. Red Bull was never something that I think 0:11:28.559 --> 0:11:31.480 people wanted to really enjoy drinking, and the folks at 0:11:31.559 --> 0:11:35.520 Monster really focused on on palatability and something that they 0:11:35.559 --> 0:11:38.520 thought would would appeal and it especially from a very 0:11:38.800 --> 0:11:41.160 sweet standpoint of the core. Green Monster, which was the 0:11:41.200 --> 0:11:45.600 original product, really did that to a certain unique set 0:11:45.640 --> 0:11:50.280 of consumers. But then they added on that with a 0:11:50.559 --> 0:11:54.760 focus on much more of the the I don't know 0:11:54.800 --> 0:11:57.520 if he'd be a blue collar type of extreme sport, 0:11:57.600 --> 0:11:59.960 but but red Bull was focused more on on mode 0:12:00.080 --> 0:12:06.480 or sport and on well known athletes and music, and 0:12:06.760 --> 0:12:09.080 and Monster went a bit kind of next level two 0:12:09.160 --> 0:12:13.920 younger generations as well, focusing on early on like X games, 0:12:14.000 --> 0:12:16.920 but focusing on things like video games which really weren't 0:12:17.480 --> 0:12:20.599 a focus at that point for Red Bull, focusing on 0:12:22.160 --> 0:12:25.839 Moto GP, focusing on supercross, you know, things that that 0:12:25.960 --> 0:12:29.360 RedBull not wasn't necessarily focused on at the time, and 0:12:29.480 --> 0:12:32.480 probably still to a large degree really really isn't focused 0:12:32.520 --> 0:12:35.360 on and so they were able to bring in a 0:12:35.440 --> 0:12:39.120 completely different consumer. So you have you've they've done a 0:12:39.120 --> 0:12:44.680 really good job of retaining that blue collar consumer, which yeah, 0:12:44.679 --> 0:12:46.400 I think it's pretty important. You can look to see 0:12:46.440 --> 0:12:49.320 the the green can, which is still their biggest best 0:12:49.400 --> 0:12:52.920 selling product, but also that they've now skewed I think 0:12:52.960 --> 0:12:54.839 a bit younger than Red Bull as well. Maybe their 0:12:54.880 --> 0:12:58.920 core consumer is kind of late teenager to thirty Rebels 0:12:58.960 --> 0:13:01.960 consumer probably come in in mid twenties and and up, 0:13:02.040 --> 0:13:06.160 and so they've really segmented the energy drinking category. And 0:13:06.240 --> 0:13:09.000 as I said at the outset of the question, I 0:13:09.080 --> 0:13:12.280 think if you you asked the consumers, they would largely 0:13:12.320 --> 0:13:14.880 tell you they're they're a drinker of one and not 0:13:15.480 --> 0:13:17.880 the other. And so I think that has really led 0:13:17.920 --> 0:13:21.120 to the success of both businesses. And interesting, I mean, 0:13:21.160 --> 0:13:24.400 we can get into the international expansion for for Monster, 0:13:24.520 --> 0:13:28.680 which has been quite successful. But it's interesting that both 0:13:28.760 --> 0:13:31.400 businesses as best we can tell, because as I said before, 0:13:31.440 --> 0:13:33.640 Rebels private, so you don't have as much information, but 0:13:34.679 --> 0:13:38.400 they're they're both still growing it unbelievably strong rates in 0:13:38.480 --> 0:13:40.560 the case of Monster, almost twenty years after the product 0:13:40.640 --> 0:13:43.400 was created. In the case of red Bull almost thirty 0:13:43.559 --> 0:13:47.719 five years now, still growing at an amazing rate. I 0:13:47.840 --> 0:13:51.520 think that customer segmentation is really interesting because you know, 0:13:51.640 --> 0:13:54.959 as I mentioned, I have had red Bull throughout my life. 0:13:55.000 --> 0:13:58.000 One of the worst cocktails I've ever had involved um. 0:13:58.040 --> 0:14:00.679 I think it was red Bull vodka and gummy bears 0:14:00.840 --> 0:14:05.080 and it was absolutely disgusting. UM. But I haven't had 0:14:05.120 --> 0:14:07.760 a Monster energy drink of any kind. But I am 0:14:07.840 --> 0:14:12.520 aware of the advertising campaign, uh, the very distinctive can 0:14:12.720 --> 0:14:15.040 with the green claw marks. I think a lot of 0:14:15.080 --> 0:14:17.800 people have probably seen hats and T shirts and things 0:14:17.880 --> 0:14:21.840 like that over the course of their lives. But one 0:14:21.880 --> 0:14:23.600 thing I wanted to dive in, so we spoke a 0:14:23.680 --> 0:14:27.120 little bit about how the marketing was important here, the advertising, 0:14:27.200 --> 0:14:29.880 how the brand set itself apart from red Bull. Can 0:14:29.960 --> 0:14:32.440 you talk well, you started to touch upon this with 0:14:32.560 --> 0:14:36.400 the international expansion mentioned, but could you talk about the 0:14:37.000 --> 0:14:40.760 distribution network here? And um, I guess the deals that 0:14:40.880 --> 0:14:44.160 Monster struck with um first a b in bev and 0:14:44.280 --> 0:14:49.560 then Coke. Yeah, and and it's it's important from just 0:14:49.680 --> 0:14:52.440 a beverage standpoint to understand that that basically what you 0:14:52.760 --> 0:14:55.880 try to do as a brand owner is to put 0:14:55.960 --> 0:14:57.760 uself in a position to be distributed by the biggest 0:14:57.760 --> 0:15:01.040 and the best distributor over time. And so you know, 0:15:01.120 --> 0:15:03.760 success sort of breaths success in that regard, meaning that 0:15:04.480 --> 0:15:06.200 you've got to get out there and kick the tires 0:15:06.240 --> 0:15:10.000 and sell the product to retailers to distributors on a 0:15:10.520 --> 0:15:14.080 single case basis at the beginning. But as you get 0:15:14.160 --> 0:15:18.040 more success, you attract more attention, and the result is 0:15:18.120 --> 0:15:21.840 you have these networks of distributors of beverages who ultimately 0:15:21.920 --> 0:15:25.320 want to put more product on the truck. And the idea, 0:15:25.360 --> 0:15:27.240 of course, is to find the product that sells the 0:15:27.320 --> 0:15:31.080 fastest and also provides you the best profit in doing so. 0:15:32.040 --> 0:15:36.000 And so as the energy category accelerated is monster share accelerated. 0:15:36.920 --> 0:15:41.480 You started to see Monster get proposition by a lot 0:15:41.560 --> 0:15:45.080 of distributors because of the success, and you think about 0:15:45.120 --> 0:15:48.240 it too, you're taking a step back. The biggest non 0:15:48.320 --> 0:15:53.280 alcoholic beverage categories carbonated soft drinks. Energy at the time 0:15:53.360 --> 0:15:56.160 fifteen years ago was a pimple of a pimple of size, 0:15:56.920 --> 0:15:59.320 and this behemoth of carbonate of software was out there. 0:15:59.360 --> 0:16:01.560 If you look to day a fast forward fifteen years 0:16:02.040 --> 0:16:04.520 in a lot of convenience stores which accounts for about 0:16:05.320 --> 0:16:08.800 of energy drink sales. You've got a full door, maybe 0:16:08.840 --> 0:16:12.120 even two doors, depending on the store selling energy drinks. 0:16:12.200 --> 0:16:13.800 And you've seen at the same time the amount of 0:16:13.960 --> 0:16:17.280 space dedicated to carbonated soft drinks shrinking and basically giving 0:16:17.320 --> 0:16:22.440 share away to energy drinks because it's growing faster and 0:16:22.600 --> 0:16:25.280 it's allowing for more profit margins from both the distributor 0:16:25.360 --> 0:16:28.600 as well as the retailer. So it creates this opportunity 0:16:28.720 --> 0:16:31.800 for itself. And obviously it starts with the consumer wanting 0:16:31.840 --> 0:16:35.360 the product. But if you're able to have higher velocity 0:16:35.520 --> 0:16:39.720 and greater value in your your rings, it's it's a 0:16:39.760 --> 0:16:43.120 self fulfilling prophecy. So you go back to mid two 0:16:43.240 --> 0:16:46.600 thousands and Monster were starting to gain this traction. So 0:16:46.680 --> 0:16:50.240 Ant hazer Bush, not a non alcoholic company but a 0:16:50.280 --> 0:16:52.920 company that still has trucks and distributors that goes in 0:16:53.040 --> 0:16:57.080 services grocery stores and convenience stores and the like, said hey, 0:16:57.200 --> 0:17:00.360 you know we we want to put you in our trucks. 0:17:00.400 --> 0:17:02.240 And so I think the original agreement was for about 0:17:02.280 --> 0:17:05.119 half of the US. The other half of the US 0:17:05.240 --> 0:17:07.960 was a bit of a hodgepodge of distribution from a 0:17:08.040 --> 0:17:13.359 Monster standpoint, and slowly the distribution progressed, where in the 0:17:13.400 --> 0:17:18.840 early two thousand tents the distribution had evolved into about 0:17:18.840 --> 0:17:22.440 half Anheiser Bush and half Coke. Because Coke saw the 0:17:22.520 --> 0:17:26.960 opportunity there, they had been a partner in international starting 0:17:27.000 --> 0:17:29.520 in the UK. It was actually the first distribution partner 0:17:29.560 --> 0:17:32.400 that Monster had outside of the US. Monster was doing 0:17:32.400 --> 0:17:33.879 a little bit on their own, but really it started 0:17:33.880 --> 0:17:37.760 to accelerate with Coke's help in the UK, and eventually 0:17:37.840 --> 0:17:40.000 that morphed into Coke I think in two thousand and 0:17:40.160 --> 0:17:43.120 fourteen announcing it was going to take at the time, 0:17:43.160 --> 0:17:46.119 I think a fifteen or steak in Monster, which is 0:17:46.160 --> 0:17:49.560 now close because Monster has brought back a lot of stock, 0:17:49.640 --> 0:17:54.879 increasing Coke's ownership. And at the same time that agreement 0:17:55.320 --> 0:18:00.080 made Coke the global distributor of of Monster, with a 0:18:00.119 --> 0:18:03.960 couple of exceptions at certain countries. And so basically Monster 0:18:04.080 --> 0:18:06.480 kicked again has a Bush out and is now fully 0:18:06.480 --> 0:18:09.280 distributed at least domestically through Coke and as I said, 0:18:09.320 --> 0:18:13.040 through probably something like of the world. And so if 0:18:13.119 --> 0:18:16.119 you think about distributors out there of size on a 0:18:16.160 --> 0:18:20.240 global basis, ant Hazard Bush is a very good distributor 0:18:20.280 --> 0:18:22.879 globally and has a bushing a very good distributor Pepsi, 0:18:23.000 --> 0:18:25.040 very good distributor. But I think many people believe the 0:18:25.080 --> 0:18:27.160 Coke is the creme de la creme, and so Monsters 0:18:27.160 --> 0:18:29.800 really positioned itself with the best distributor, the one with 0:18:29.840 --> 0:18:32.320 the global reach to put you into every single bodega 0:18:32.480 --> 0:18:36.480 on the planet if need being. Importantly, if Monster wants 0:18:36.520 --> 0:18:38.600 to launch a new product, the Coke system can get 0:18:38.640 --> 0:18:42.639 that onto store shelves virtually the next day. How much 0:18:42.640 --> 0:18:44.159 do you know? It seems like there must be like 0:18:44.240 --> 0:18:48.480 a real chicken and egg problem for any upstart consumer 0:18:48.520 --> 0:18:52.919 food or beverage company because obviously you need these distributor 0:18:53.000 --> 0:18:57.120 relationships to get to get out there. They're not easy 0:18:57.200 --> 0:19:00.679 to get. There's limited, uh, there's limited shelf and truck space. 0:19:01.119 --> 0:19:03.159 On the other hand, you also presumably need to have 0:19:03.440 --> 0:19:07.600 a pretty big marketing efforts so that people actually buy it. 0:19:08.200 --> 0:19:10.760 But if you don't have the distribution, then you can 0:19:10.840 --> 0:19:13.040 have all the marketing and brand in the world, but 0:19:13.200 --> 0:19:15.680 no one can get it. How do they sort of 0:19:16.040 --> 0:19:20.840 navigate that simultaneous challenge of raising the brand awareness becoming 0:19:20.920 --> 0:19:24.159 an entity that people knew, while also making sure that 0:19:24.240 --> 0:19:27.360 once people became aware of the brand, they were able 0:19:27.400 --> 0:19:30.399 to find it. Yeah, it's it's it's actually interesting to 0:19:31.200 --> 0:19:33.879 Monster if you just take a look at marketing or 0:19:33.960 --> 0:19:39.760 advertising expenditure. Despite it being a marketing company, it's not 0:19:39.840 --> 0:19:42.639 even a company that manufactures its own product. It outsources 0:19:42.680 --> 0:19:45.240 on manufacturing to third parties, so it's really just a 0:19:45.320 --> 0:19:50.879 brand manager. Despite being a brand manager, it's it's marketing 0:19:50.920 --> 0:19:54.040 expenditures is actually pretty low as a percentage of sales. 0:19:54.119 --> 0:19:56.160 It's not a traditional I'm going to watch an add 0:19:56.240 --> 0:19:58.080 on TV and want to go out and buy a Monster. 0:19:58.200 --> 0:20:01.200 So what they do is is what I was saying before, 0:20:01.280 --> 0:20:05.640 You go out and sponsor athletes, events, video games, rock festivals, 0:20:05.720 --> 0:20:11.080 sporting events and the like, and that creates the lifestyle 0:20:11.160 --> 0:20:15.680 image of the brand and becomes that that self fulfilling prophecy. 0:20:15.680 --> 0:20:17.359 I mean Red Bulls kind of done the same thing. 0:20:17.440 --> 0:20:19.399 They do a little bit of TV advertising, but the 0:20:19.440 --> 0:20:22.760 bread and butter is really that you're you're sponsoring these 0:20:22.880 --> 0:20:27.320 athletes and events, and so that relies a bit more 0:20:27.359 --> 0:20:30.119 on a guerilla marketing proposition. What Monster is really good at. 0:20:30.160 --> 0:20:32.720 Originally it was just feed on the streets, sampling and 0:20:32.800 --> 0:20:34.760 kind of showing up at the right place to create 0:20:34.840 --> 0:20:39.320 the image that they wanted for the brand, and that continues, 0:20:39.680 --> 0:20:42.520 believe it or not to this day. They've evolved, as 0:20:42.600 --> 0:20:47.320 everybody has, from traditional or more traditional kind of advertising 0:20:47.359 --> 0:20:49.200 in at least in their sense of course of brick 0:20:49.280 --> 0:20:53.200 and mortar. But we're a real visible in real world 0:20:53.359 --> 0:20:57.080 advertising to now digital and social media. But they're still 0:20:57.160 --> 0:20:58.960 doing it in kind of that same way, appealing to 0:20:59.080 --> 0:21:00.880 the same consumer. And it's not going to be something 0:21:00.960 --> 0:21:04.280 that you're gonna find on a Jeopardy advertisement for examples, 0:21:04.400 --> 0:21:06.560 And I think he is probably gonna be something that 0:21:06.600 --> 0:21:11.120 continues for the foreseeable future. And so I think that's 0:21:11.119 --> 0:21:13.240 a bit different than kind of the rest of the 0:21:13.359 --> 0:21:16.600 world that I spend time analyzing, the proctors and gambles, 0:21:16.800 --> 0:21:19.560 rested laws, loreals of the world. They are doing more 0:21:19.600 --> 0:21:39.960 traditional advertising. So I'm curious. You know, you've laid out 0:21:40.880 --> 0:21:42.879 the sort of history of the company, what made it 0:21:43.040 --> 0:21:47.200 different from its major competitors, how it was doing some 0:21:47.400 --> 0:21:51.800 things rather unusually. So for instance, in marketing, it wasn't 0:21:51.920 --> 0:21:55.560 spending a ton of money buying traditional ads. Instead it 0:21:55.680 --> 0:21:59.680 was going through these sort of grassroots efforts or sponsorships. 0:22:00.440 --> 0:22:05.280 How did the streets approach Monster in its early days, Like, 0:22:05.400 --> 0:22:09.120 how are analysts actually viewing the company and its potential 0:22:09.320 --> 0:22:14.160 and how did that evolve over time? It's it's it's 0:22:14.200 --> 0:22:17.359 a good question. Frankly, I'm still not sure the the 0:22:17.520 --> 0:22:21.680 street fully understands what they're they're doing or what they've created. 0:22:22.359 --> 0:22:25.680 No no offense to the guys running the company, but 0:22:25.840 --> 0:22:28.600 but it is interesting. They don't even have an in 0:22:28.760 --> 0:22:33.680 sourced investor relations functions, So management uniquely here doesn't really 0:22:33.760 --> 0:22:36.399 even talk to investors, don't talk to analysts, don't talk 0:22:36.480 --> 0:22:39.560 to investors. They hold for earning his calls a year 0:22:39.640 --> 0:22:43.399 and allow people to ask probably on the very minimal 0:22:43.520 --> 0:22:47.399 side of questions to three four five per quarter. They 0:22:47.440 --> 0:22:51.320 do a couple of investor events a year outside of that, 0:22:51.480 --> 0:22:54.280 but but that's really it. There's no real outreach on 0:22:54.359 --> 0:22:58.760 their part. And so that's actually what to me has 0:22:58.840 --> 0:23:03.000 created such an interesting proposition from an analyst standpoint to 0:23:03.119 --> 0:23:05.640 covering it. And if you think about it, yes they're 0:23:05.640 --> 0:23:07.639 a public company, but they almost treat themselves as a 0:23:07.760 --> 0:23:09.640 private company as a result of what I just said, 0:23:10.359 --> 0:23:12.760 and you couple that with Red Bull being an actual 0:23:12.840 --> 0:23:16.359 private company and that Coke and PEPSI. Yes, they distribute 0:23:16.440 --> 0:23:18.320 energy drinks, but don't have really any of their own 0:23:18.359 --> 0:23:20.720 and have never really had any success doing that. That 0:23:20.800 --> 0:23:23.080 there's almost no information out there from an energy drink 0:23:23.080 --> 0:23:27.200 company standpoint, so you're left to really do a lot 0:23:27.280 --> 0:23:29.280 of feed on the street kind of thinking about how 0:23:29.560 --> 0:23:33.360 how these businesses work and what has driven the success, 0:23:33.400 --> 0:23:35.400