Monster: So far, so good

Published: 2025-07-11 05:51:35 ET MNST

Published on 07/11/2025 at 05:51

By Adrien Chavanne

For a long time, investors have questioned the viability and relevance of the energy drink model. And quite rightly so. Market trends show that traditional soda sellers (Coca-Cola, PepsiCo, etc.) are getting in on the act, while new players are flooding supermarket shelves with new products.

However, the pessimistic frenzy seems to have subsided. Monster has just reached new all-time highs, even though the stock was depressed in 2023 and 2024.

Pessimists predicted the end of the golden years for Monster. However, the group has just completed a phenomenal decade. Between 2014 and 2024, revenue and profits almost tripled. The balance sheet is debt-free and cash flow from operations is very healthy. But with competition intensifying, how can this momentum be maintained?

Energy drinks are appealing to an increasingly wide audience. Their "utilitarian" aspect—they are no longer perceived solely as pleasure drinks—and their image closely linked to performance, fitness, and health have made them particularly sought-after products. All of this is gradually becoming embedded in an urban, extreme and rebellious culture, driven by immersive marketing focused on certain disciplines. As such, Monster and Red Bull are particularly present in Formula 1, skateboarding and BMX, combat sports (UFC), motorcycle racing, several mountain sports (Freeride World Tour, base jumping, paragliding, downhill mountain biking) and numerous music festivals.

A joint study by Euromonitor and Wells Fargo Securities shows that the energy drink market has grown by an average of 9.6% p.a. since 2010, with a more marked acceleration since the Covid period.

For all these reasons, long-standing soda companies such as Coca-Cola and PepsiCo have rushed to fill the gap (with the Coca-Cola Energy range for the former and Rockstar Energy for the latter). The market has also been boosted by the emergence of new players such as Celsius, which is listed on the stock exchange. Supermarkets now regularly stock brands such as C4, Prime (owned by American YouTubers), Ragnarok and Tiger Energy Drink.

This suggests that Monster's market share could come under pressure in the coming years. Analysts specializing in the company and the sector agree that its market share in the United States is likely to decline. However, the global market is expected to continue growing at a rapid pace. And Monster remains a rare asset, already firmly established (strong brand image, prestige, cultural roots in many activities, as seen above). Only Red Bull (not listed) has a comparable global reach. As a result, Monster's growth should remain particularly strong. Revenue is expected to reach $16.2bn by 2035, more than double the $7.5bn estimated this year. Margins should continue to improve, albeit at a more moderate pace given the costs associated with international expansion, which is seen as the main lever to offset any potential stagnation in the US.

Monster is one of the few players in the consumer staples sector to offer such visibility, despite new customs duties on aluminum, which are pushing up the price of cans. Its valuation has returned to a historical multiple of 31.5x earnings (P/E), in line with the average since 2017. Double-digit growth is still expected this year, helped by a further increase in volumes and prices – the last widespread price increase was implemented in November 2024. Despite this, Monster products are still perceived as affordable, with a narrower price gap compared to traditional sodas (only 5% premium today compared to 20% historically). While the stock appears to be fairly valued at present, a pullback would undoubtedly represent an opportunity.

Adrien Chavanne