Despite Near-Term Cost Headwinds, Monster's Competitive Advantages Should Endure

After helping pioneer the U.S. energy drink industry two decades ago, Monster continues to extract outsize growth and stellar profitability from this market. We think that despite relying almost entirely on a Monster trademark that is not easily parlayed into other beverage segments, the firm will continue innovating in the energy category and expanding the range of occasions for which the drinks are consumed. This dynamic is evidenced by the recently launched Reign brand, and should support high-single-digit growth longer term.