Monster Beverage used investor outlook meeting in NY as site for grand reveal of performance energy brand called Reign Total Body Fuel that’s meant to counter Bang, while saying co hasn’t ruled out bringing more overtly Monster-branded entries to fight if needed, too.  And with plant-based energy plays also showing early signs of momentum, MNST also is bringing to market its first overtly tea-based energy play, a 16-oz Monster subline called Dragon Tea.  Those were among innovation slate that chmn/ceo Rodney Sacks and vice chmn Hilton Schlosberg disclosed to investors late yesterday afternoon, along with further details on plans to offer comprehensive suite of concentrate-produced affordable brands in overseas markets where premium plays like Monster and Burn exclude too many potential customers.  Highlights:

Reign Claims 5X BCAAs, CoQ-10 of Bang; Enlists The Mountain, Eva Marie as Endorsers   With co under mounting pressure from Wall Street to respond to Bang entry that’s hit as high as a 10 share in West Coast markets, Monster is creating new brand called Reign Total Body Fuel that contains 5X the branch chain amino acids (BCAA) of Bang, 5X the CoQ10, same 300 mg of caffeine, and meaningful amount of creatine (Monster has sued Bang, contending it contains no creatine despite prominently heralding on pack that it’s Super Creatine entry).  It’s being produced now for launch in Mar in 6 flavors that echo some of Bang’s candy-inflected offerings: Razzle Berry, Sour Apple, Melon Mania, Carnival Candy, Peach Fizz, Lemon.  Front panels prominently show geometric image that melds castle battlements and shielded warrior, with top band heralding presence of “BCAA Aminos.”  Sacks said co’s top 200 accounts have all agreed to pick up Reign, generally offering incremental space either in energy door or alongside that section, often in new performance sets.  Discrete mgmt team assigned to Reign will muster significant sales and marketing effort that he anticipates will expand rather than cannibalize energy category.  Among brand ambassadors being enlisted are wrestler-turned-model Natalie Eva Marie and Game of Thrones figure The Mountain.  Tho analysts have worried that Bang is taking a bite out of Monster sales, Sacks and Schlosberg both emphasized that Monster, and overall category, continue to both grow, so this emerging segment represents “an incredible opportunity that we try to embrace,” in Hilton’s words.  They noted that segment brings different consumer, “not every consumer can have a drink with 300 mg of caffeine.”  Further, so far Bang has tended to follow Monster on pricing, including its recent increases, meaning it’s not draining category profitability either.  As noted, MNST will add entries under core Monster brand if needed down the road.

Context: Performance Sector Includes Bang, C4, Celsius Heat; Bang Under Legal Attack    Tho Bang is making waves, Sacks alluded to pair of other promising brands that are making headway, tho struggling to build distribution: C4, from Cullucor (BBI, Oct 29), and Celsius, particularly Celsius Heat product that boasts 300 mg of caffeine and is targeted at exercise chains and active-use occasions.  Tho Monster brass only alluded briefly to issue, Bang marketer VPX is facing some potentially destabilizing legal challenges.  One is suit filed last fall by Monster Bev that takes issue with claims (Bang is labeled as containing “Super Creatine,” but several who’ve done indie analyses say they fail to detect any meaningful amount of creatine at all).  Also suing VPX is ThermoLife Corp, US licensee for Russian patent holders whose creatine-related IP VPX was found last Feb to have duplicated in its since-revoked patent.  “Contrary to VPX’s false claims, Super Creatine is not creatine and it does not become creatine when consumed,” argues ThermoLife suit, which is seeking to force VPX to stop marketing Super Creatine and to disgorge all profits it’s made on Bang.  (Creatine is coveted by those who work out for its ability to build lean muscle mass and aid in recovery.)  ThermoLife has licensed its IP to C4.

Monster execs have privately expressed consternation over difficulty in formulating competitively priced response to Bang brand they don’t believe carries meaningful efficacy.  Monster suit recently suffered temporary setback when judge ousted its attorney over undisclosed conflicts, but suit will still be moving forward under new counsel.  For their part, VPX execs have been generally dismissive of Monster and ThermoLife contentions but not been willing to discuss them in specific way with BBI or other publications. 

Teas Offered as Easier-Drinking, Lower-Calorie Alternative   Tho Monster has played in teas with its Rehab noncarb line, ingredient plays secondary role there.  More overtly positioned as an energy tea will be Dragon Tea line launching in White Tea, Green Tea and Yerba Mate Tea flavors, as slightly healthier, easier-drinking, lower-calorie alternative to core energy entries.  They’re packaged in 16-oz can with white background and dramatic rendering of Asian-style dragon interweaving with black-hued rendering of Monster “claw” icon.

Affordable Energy to Follow Concentrate Model    One of glories of energy category has been ability to maintain premium pricing more than 2 decades in.  Still, many consumers in developing nations can't afford to spend $1.50-$2 per unit.  Rather than undermine core brands like Monster, Burn and NOS, Monster Bev is taking tack of offering fighter brands, including Mutant in Pakistan, Myanmar, Cambodia and Vietnam in canned and bottled versions, and Predator in Africa and Eastern Europe, with additional countries in those regions, Latin America and Asia being evaluated for launch.  Crucially, those all go out as concentrate brands that local bottler can produce, rather than finished goods produced by Monster and its copackers.  Thus, tho revenues are lower, gross profit is higher.  As result, Sacks doesn’t expect they’ll dilute international margins, a focus of ongoing concern among Wall Street watchers as brand has expanded overseas.  Unmentioned was fact that margin tradeoffs of 3d-party goods model has been source of ongoing tension with Coke bottlers, meaning greater tilt toward concentrate model should improve rapport with important partners.

Other Innovation: Monster Mule Ginger Brew, Ultra Paradise    Among other new items noted in presentation were Paradise extension of zero-sugar Ultra line, due next month.  After successful preview in Dollar General store, Swiss Chocolate flavor of Java Monster rolls out next month too.  And after successful test in Casey’s General Store chain last year, Monster Mule Ginger Brew launches in 2d half of year.  That’s also timing for arrival of Caramel flavor of Espresso canned coffee line.  NOS adds Sonic Aqua and Power Punch flavors.  But wait, there’s more, Sacks promised, saying he’s keeping some close to vest for competitive reasons.

Arbitration over Coca-Cola Energy    Dispute with Coca-Cola over partner’s plans to intro Coca-Cola Energy in some markets has been hard one to read.  Early story in BBI (BBI, Oct 30) drew no unusual reaction, but report by Wall Street analyst prompted massive share selloff and existential questions about health of KO/MNST relationship (BBI, Nov 8).  But after Monster execs aired out issue that’s heading to arbitration, shares recovered.  On yesterday’s call, Sacks addressed issue head-on, saying it’s to be expected that even in healthy corporate partnership there will be issues that partners read differently.  Whether KO is violating contract with Coke-branded energy entry is one of those, and it’s been discussed at highest levels with ceo James Quincey and his team.  “We respectfully have different positions so the right way to do it is to go to arbitration,” Sacks said.  Whatever the result, “We do not believe that this will affect our relationship.”  So arbitration panel is being selected, parties are in discovery process and issue should be wrapped up in a few months.  Should KO prevail, Monster will deal with new rival in the trade and at retail just as it does with other competitive products, he assured listeners.  

Motoring Forward on Coffees (tho Coke Now Has New Platforms Coming)   Tho MNST brass were frank in addressing Coke Energy situation, nothing was said (or asked) about another area where its priorities may be diverging from its distribution partner, on coffee side.  As longstanding alliance with Italy’s Illy faltered and Coke struggled to get a rhythm in RTD coffee, Monster has been methodically building out energy coffee portfolio starting with Java Monster a decade back, and adding Espresso Monster in 2017 (partly as response to retort capacity shortages that made milk-based entries challenging to produce) and then glass-bottle Caffe Monster in 2018.  As Monster execs noted yesterday, these brands have been garnering increasing support as individual brands, not just under broader Monster umbrella; they showed Caffe Monster ad that directly took on Starbucks Frappuccino, positioning Caffe as lower-sugar, more coffee-forward, as well as ad for Espresso.  Still, with Dunkin’ and McCafe RTD coffee brands anchoring mass side of biz, at last fall’s convenience store show Coca-Cola showed prototypes of higher-end coffee it aims to intro under Far Coast brand, then a few weeks later moved to acquire UK’s Costa coffee roaster and café chain with view to using brand for RTD entries in coffee and tea in US.  That might seem to reduce KO’s reliance on Monster as coffee innovator.  As presentation made clear, tho, Monster continues to energetically build that biz.

Winning Verdict in Personal Injury Lifts Cloud over Energy Category   Tho we’re years beyond period when energy industry execs were being hauled to Capitol Hill to defend their products against charges that they pose danger to American youth (gov’t backed off after FDA could find no evidence that they are), occasional lawsuits have continued to be filed vs Monster.  Last night, Sacks described how co decided to take one to trial in court in Riverside, Calif, near its corporate base, before a jury.  Suit was filed on behalf of Texan who’d suffered cardiac arrest, in front of judge who insisted on scientific proof of causal link.  After 2-week trial, jury voted unanimously in favor of MNST.  That victory “established what we’ve known for many years, there’s simply no causal effect between injury the individual suffered (cardiac arrest) and his drinking Monster Energy drink,” Sacks indicated.  Schlosberg noted that jury reached its verdict in less than half hour of deliberation.  Issue “has been a cloud for the whole industry for the past 5 years,” Sacks said.

There’s no resting at New Age Beverages, as co announced partnership with Docklight Brands to produce and distribute line of cannabis-infused drinks under its Marley brand name, after co just completed $85 mil deal to acquire Utah-based Morinda Holdings, that opens co up to 60 global mkts. “This is big,” ceo Brent Willis exclaimed on conf call this morning, noting that even as ink dries on Morinda deal these Marley CBD beverages have potential to have “the biggest impact of all” deals New Age has made to date. Initially, because of obvious regulatory restrictions, Marley CBD line will be avail in just 4 states: Colo, Ore, Wash and Mich, in time for March/April spring break time, noted mkting exec Jay Barrow. Execs noted at recent trade shows they took plenty of orders from retailers in other states that are ready to put them on their shelves once legal issues are cleared. (Line was teased at booth that co nabbed at Fancy Food Show in SF this week - too late to get in show directory, but show floor buzz seemed to direct steady stream of visitors anyway.) Marley drinks with 25 mg of “pharmaceutical grade” CBD will be available in 15.5-oz cans in 3 flavors: Herbal Honey, Lemon Raspberry and Peach Raspberry. They come with 18-month shelf life and SRP of $5-6 per can. There will be more products added to Marley CBD line, Jay made clear, while Brent discussed how the shot segment “is ripe and fertile” and with this product, New Age has a “real opportunity to execute against that.” Execs noted several times they feel they have a “significant” first-mover advantage in CBD segment with these drinks and iconic Marley branding as well as Docklight Brands’ depth of research, and expertise in regulatory, compliance, quality control and ingredients. As New Age rolls out Marley line, Brent assured, “We will never” make any “irresponsible” or “outlandish” health benefit claims on packaging that some smaller players would do, and added that New Age will insist its retailer partners are also responsible and in compliance.