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US-based Monster Beverage Corp is poised to expand internationally following its June 2015 strategic partnership with The Coca-Cola Co (TCCC). The strategic agreement gives Monster Beverage access to TCCC’s extensive global distribution network and transferred TCCC’s energy drinks brands such as Burn, Mother, and Relentless to Monster Beverage. Brazil is an important market for Monster because the country is the fifth largest energy drinks market with total sales of US$2.3 billion in 2014, up 197% in total value terms from 2009 and projected to grow by another 115% from 2014 to 2019. Adding in the newly acquired TCCC Burn brand, Monster Beverage becomes the second leading player in Brazil energy drinks with a 10% value share in 2014. Monster Beverage has a great opportunity in Brazil through the successful Burn brand but may need to revise the Monster brand’s positioning to grow here. Though Brazil offers strong growth potential, Monster will need to undertake many product and marketing initiatives to compete against market leader Red Bull GmbH as well as local players.
Though the strategic partnership with TCCC, Monster Beverage now controls Coca-Cola Indústrias Ltda’s Burn brand which held an 8% off-trade value share in 2014. Burn’s off-trade value sales have grown rapidly, from US$25 million in 2009 to US$96 million in 2014, making it the number two energy drinks brand. In contrast, Monster Beverage’s Monster brand is in seventh place with a 1.5% off-trade value share in 2014. Both Burn and Monster have been able to chip away at Red Bull’s dominance, which saw its off-trade value share decline from 54% in 2009 to 52% in 2014. Coca-Cola has been able to grow the Burn brand through low prices and extensive marketing efforts.
Burn filled a gap in the market, with an energy drink that still has a very strong appeal to young people and a consolidated brand image with lower prices. Coca-Cola has been using a lower unit price strategy with Burn to reach more lower-income and middle-income Brazilian consumers while Red Bull is targeted at higher-income consumers. Burn currently costs around R$3.99 for a 260ml can in comparison to R$6.49 for a 250ml can of Red Bull. Burn introduced one litre bottles in 2013 to better compete against local players which have launched one and two litre bottles. To create an appealing brand image, Coca-Cola began its sponsorship of the Formula 1 racing team Lotus in 2012 and sponsors skateboarding and snowboarding personalities. Burn is also reaching young Brazilians who love electronic dance music through its Burn Residency international DJ competition. The company has been marketing Burn as an energy drink to be consumed throughout the day, not only at parties, in order to increase the consumer base and the frequency of consumption. The Burn brand already benefits from Coca-Cola’s strong distribution network in Brazil.
Coca-Cola’s Burn has made strong inroads with low- to middle-income consumers in Brazil by offering a high-branded but lower-cost alternative to Red Bull through Burn’s sponsorship of music and sports events. Monster Beverage’s own Monster brand has only been available in Brazil since 2010 and has not yet captured a big portion of the market.
While TCCC’s Burn brand is the number two brand in off-trade value terms, Monster Beverage’s Monster brand is in seventh place. Monster’s off-trade value sales grew from US$1 million in 2010 to US$19 million in 2014. Monster has grown steadily in Brazil through pricing that is lower than Red Bull, as it uses 500ml metal beverage cans while key competitors such as Red Bull use 250ml cans. Unit prices for Monster are slightly higher than Burn’s.
To succeed in Brazil, Monster will need to do a better job of differentiating itself, not just from leader Red Bull but Burn. The Monster energy drink’s image needs to be redesigned and the product repositioned. Monster is currently much too similar to Burn, with higher prices. Since the Monster energy drink is priced higher than Burn’s, it may make sense for the Monster brand to be targeted to active middle-income and higher-income consumers while the Burn brand is marketed to lower- and middle-income consumers. As Red Bull is marketed as a premium, fashionable drink, Monster could market itself as a delicious energy drink for people who love sports and music. Where Monster can distinguish itself is through flavour variety. Unlike in its domestic US market, where there are over 30 different varieties of Monster, Monster Beverage only sells its Monster Green product in Brazil. To improve the health image of energy drinks, some energy drinks such as TNT from Grupo Petrópolis and Ecco from Brasil Kirin have been investing in combining energy drink benefits with fruit. Red bull also has flavoured drinks, such as cranberry, blueberry and lime. Given Brazilians’ enjoyment of fruit juice flavours, Monster Beverage should introduce more fruit flavours to Brazil.
Monster currently sponsors the Motocross series and the Professional Bull Riders series in Brazil, and sponsors numerous extreme athletes and music bands in the US. In keeping with a more premium image than the Burn brand, Monster may want to consider introducing smaller metal cans or plastic bottles that can be closed. Monster’s current packaging of 500ml cans is perceived by many consumers as too much for consuming at once.