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Why Monster Beverage is the best-performing stock of the last 30 years

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  • MNST

The best-performing stock of the past three decades is not one of the tech titans you’d assume.

It’s actually an energy drink company: Monster Beverage

Monster’s stock has climbed for decades, along with sales, which have grown consistently for 31 years straight. 

Between Feb. 14, 1994, and Wednesday, Monster’s stock appreciated by about 200,000%. That means that if a consumer had invested $1,000 in 1994, the stake would be worth about $2 million today. 

Analysts say several factors have driven Monster’s success. But a lot has to do with its leaders, co-CEOs and South African billionaires Rodney Sacks and Hilton Schlosberg, who capitalized early on a rather new market.

“Some of it is clearly right place, right time,” said Stifel consumer and retail managing director Mark Astrachan. “I think there’s an element to it as well of being really good at what you can do, because you can’t be as lucky as they’ve been for as long as they’ve been, without being really good at running a business.”

Monster Beverage is a holding company composed of subsidiaries that produce and manufacture drinks including energy, alcohol, teas and coffees. 

In the third quarter of last year, the company posted net sales of $1.86 billion, a 14.3% increase from the same period a year prior. Its Monster Energy segment accounted for $1.71 billion of that.  

Monster Beverage was founded as a family juice company, Hansen’s, in 1935. It was later named Hansen Natural Corporation.

Sacks and Schlosberg acquired it and took it public in 1990, after it had filed for bankruptcy in 1988. The company has since seen a complete transformation. Where it was trading for just pennies at that time, it closed at $55.02 a share on Friday. 

Monster launched a few energy drinks in the 1990s under its previous name. But analysts said the company didn’t really take off until establishing an eponymously named drink in 2002. 

“They built it the right way,” said RBC Capital Markets Managing Director Nik Modi. “They were very slow and methodical in how they built the distribution of the brand, making sure it was strong in every market that it was in, and every retailer that was in it was getting good velocity.”

Analysts said the leaders were good at knowing their customers, focusing on action sports and other events such as motocross, UFC, bullfighting and Nascar instead of traditional TV or magazine ads. It resonated with the younger blue-collar workers who attended those events.

“People are so passionate about this brand,” said Modi.

The company attracted the attention of beverage giant Coca-Cola, which entered into a strategic partnership with the company now called Monster Beverage in 2015. 

At the time, Coke purchased a 16.7% stake in the company for more than $2 billion. That stake has grown to about 20% today. 

Coke agreed to become Monster’s preferred global distribution partner, and the two companies traded the ownerships of several brands. Monster got energy drinks such as NOS, Full Throttle, Burn and Relentless, while Coke got Hansen’s Natural Sodas, Peace Tea and Hubert’s Lemonade. 

“They’ve obviously been showing that they can grow globally,” said Modi. “And that’s effectively what they’ve been doing and what’s been driving most of the growth in the outperformance in the stock.”

Watch this video to learn more. 

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