Monster’s Brewing Business Is Crashing Hard
In June 2021, after it became clear that New York City’s current mayor, Eric Adams, was as much or more of a political hack as his predecessor, The Onion published an instant-classic item on this dispiriting electoral dynamic. “Well, Well, Well, Not So Easy To Find A Mayor That Doesn’t Suck Shit, Huh?” reads the headline, perched atop a photo of former NYC mayor Bill De Blasio looking smug.
The joke was on my mind last week as Monster Beverage Corporation (MBC) reported its second-quarter earnings. Recall, the energy-drink giant bought into the American beer business in a big way back in January 2022, acquiring the CANarchy Craft Brewing Collective for some $330 million. That was then. These days, Monster’s beverage-alcohol division has started to look like it got thrown through drywall.
Net sales for the unit — a mish-mash of half a dozen craft breweries, as well as a homegrown flavored-malt-beverage brand — are down a staggering 31.9 percent compared to the same period last year, according to MBC’s Q2 earnings report earlier this month. Zoom out to six months, and the decline stands at 9.1 percent. The declines are accelerating: Even though The Beast Unleashed, Monster’s flagship flavored malt beverage, hasn’t even fully cycled through the low-denominator, limited-distribution benchmarks it began laying down after its January 2023 launch, its best days look to be behind it. After a rash of closures and layoffs, MBC also told analysts on Aug. 7 that it would write down another $8.1 million of its initial CANarchy investment, after taking a $39.9 million impairment charge on its booze division in the fourth quarter of 2023 “due in part to the continuing challenges in the craft beer and seltzer categories.”
One imagines the smug looks on the faces of American brewing executives taking stock of the interloper’s woes in the tough market they’re all muscling through. Well, well, well, not so easy to run a beer business that doesn’t suck shit, huh?
The beverage-marketing juggernaut’s comeuppance has been swift. It wasn’t long ago that it looked like MBC executives, hardened in the cutthroat, flavor-forward, convenience store-centric world of non-alcoholic energy drinks, had the skills and vision to pull off a smooth transition to “total beverage.” It clearly grasped the perils of making enemies of the National Beer Wholesalers Association in a way that its fellow Big Beverage firm, the much larger PepsiCo, didn’t. Rather than trying to stand up its own operation in the middle tier, à la Blue Cloud, or sign distributors one at a time, it bought CANarchy’s ready-build wholesaler network instead. After the January 2022 buyout of CANarchy’s brands, the firm waited almost a year before even announcing The Beast Unleashed, an impressive display of corporate composure given the mad scramble among every damn consumer packaged goods conglomerate under the sun to cash in on leverage their non-alcoholic brand equity with hard seltzers, juices, and teas. It didn’t even really start fiddling with the breweries it acquired for a year or so after closing on CANarchy.
Unlike many of its peers, the firm’s longtime co-chief executive also seemed to grasp just how alarming a soft-to-hard crossover might be in the court of public opinion (and actual court, too.) “I actually am vehemently opposed to putting a brand that’s a strong consumer brand onto an alcoholic product,” co-CEO Hilton Schlosberg told investors on a January 2022 conference call to discuss the then-fresh acquisition, according to Brewbound. “I think it’s just opening up for major issues down the road. … This vision of kids being stopped, and they claim that they thought they were drinking non-alcoholic products.” Now there’s a guy who understands Regulatory Roulette is not a game you want to win!
Overall, these moves demonstrated a level of sophistication and restraint that, frankly, I don’t really associate with Monster as a brand. However, as a company, I think it made a lot of smart moves in the early days of its tenure as one of the country’s largest craft breweries, as (somehow) defined by the Brewers Association.
Of course, MBC didn’t buy CANarchy to leave it be forever. Whatever institutional hubris may have animated the decision to build The Beast Unleashed from scratch rather than extending one of the existing beverage-alcohol brands it had bought — Wild Basin, Oskar Blues Brewing Co.’s hard seltzer sub-brand seemed ripe for it — there was some expediency at play, too. CANarchy’s breweries were struggling to keep up with the shifting preferences of the American drinking public. Data collected by the BA show that the roll-up’s annual volumes grew 2 percent in 2020 before falling 5 percent and 13 percent the following two years. Independently owned craft breweries might be able to keep their investors calm through those tough-but-recoverable declines, but MBC is publicly traded, and had plans of its own. Things would have to change.
Even as MBC began to make proactive moves with its beverage-alcohol business, though, the outcomes weren’t catastrophic. Not, at least, in ways that might presage those bed-shitting results from last quarter. Hell, some of the firm’s choices played well, at least at first.
The Beast Unleashed arrived with much fanfare at the top of 2023; by mid-March of that year, it was already a top-50 FMB brand, with its variety pack outselling those of PepsiCo/Boston Beer Co.’s Hard Mtn. Dew and Anheuser-Busch InBev’s Bud Light Seltzer Hard Soda, according to Sightlines editor and retail-scan superman Bryan Roth. Sure, the former was struggling to expand its footprint with Blue Cloud helming distribution, and the latter was called, indecipherably, “Bud Light Seltzer Hard Soda.” But still! By October, Monster was the 23rd-largest vendor in the beer category, per Circana multi-outlet and convenience scans crunched by Brewbound’s Jessica Infante — and that was excluding the CANarchy brands. The Beast Unleashed closed out its first full frame as the top-selling new beer brand in NielsenIQ scans, crowed Schlosberg and his co-CEO Rodney Sacks in a January 2024 investor presentation. Three flavors were top-selling FMB ready-to-drinks; Mean Green, designed to taste the most like NA Monster, was No. 1.
(I should note that despite Schlosberg’s vehemence about keeping the energy drink’s branding off the alcoholic line extension, Mean Green looks more than a little bit like Monster as such, right down to the electric-green M logo in the center of the eye.)
The existing CANarchy portfolio faced tougher sledding as MBC got into the weeds. In November 2023, Oskar Blues’ Austin facility — a 50,000-square-foot brewhouse with a 5,000-square-foot taproom opened in 2016 — was abruptly shuttered, reportedly without advanced notice to the unspecified number of employees who lost their jobs. In March 2024, the company laid off a dozen workers at Tampa’s Cigar City Brewing, including longtime brewmaster Wayne Wambles, a signal that whatever “research and development” the corporation planned to do at the facility in the future would be much different than its venerable, award-winning past. Two months later, Deep Ellum Brewing in Dallas received similar treatment: closure, 25 layoffs, and a shift of production to other facilities.
The cuts were, of course, rough for the affected workers. It smarted extra for observers from around the once-ebullient, now-beleaguered craft brewing industry to watch an outside corporation — not just an outsider to craft beer, but from beer entirely — make them. “The location that we know and love has been slowly dismantled over the past two weeks,” said Alex Kidd, the commentator behind the popular Don’t Drink Beers Instagram account and blog, in a visibly irate video message posted to the social platform as news of Cigar City’s closure got out. It wasn’t the outpouring of grief you saw after news of Sapporo USA’s own abrupt closure of San Francisco’s legendary Anchor Brewing Co. last year, but MBC’s moves earned it no friends among the in-flux industry members who had seen this pattern play out plenty over the past half-decade. They also haven’t magically turned around the Collective’s collective struggles, not yet at least. The breweries were down around 9 percent in volume through the third week of July 2024.
This all brings us back to that comeuppance. After delivering bad news to some of its craft brewing properties over the past nine months, MBC execs had to do likewise to analysts on its Q2 call last week. That Monster Brewing’s net sales have plunged nearly 32 percent on the quarter is bad, but what it signals is worse. Namely, that the company bet big on its flagship FMB, The Beast Unleashed, and it just isn’t sticking. The Q2 earnings report signals as much: “The decrease in net sales was primarily due to decreased sales by volume of flavored malt beverages.”
Why? Well, for one thing, the FMB space is crowded as hell. For another, I’m not convinced Monster has figured out how to position these brands. It’s running its (extremely powerful) energy-drink marketing playbook on the beverage-alcohol space as though that Venn diagram of drinkers is a circle, even though it isn’t. I’ve personally seen stacks of the stuff sitting untouched in grocery stores, and a few tipsters from around the country have checked in with your humble Hop Take columnist to report the same.
That’s anecdotal evidence, of course, but coupled with the brand’s falling volumes, it suggests that The Beast Unleashed just isn’t winning the coveted repeat buyer. Its growth throughout 2023 was likely fueled by some combination of novelty and aggressive geographic expansion, but you’re only the hot new thing on the shelf once, and there are only 50 states to open for distribution. The Beast Unleashed is in all 50; Nasty Beast, which aims to ride Twisted Tea’s long tail and has picked up around 1 percent of hard tea share in its first year so far, is in 49. Maybe it’s the liquid, the packaging, the lack of “facings” in the cooler due to its limited SKUs… maybe it’s all of the above, or something else entirely.
Whatever it is, it ain’t working. MBC jump-started its adventures in beverage alcohol with its CANarchy acquisition, but to get its brewing unit back on track, it’ll have to embrace the suck just like everyone else.
🤯 Hop-ocalypse Now
There’s a bill currently working its way through the California legislature that would codify restrictions on how retailers can use self-checkout stations. Naturally, the grocery industry is not a fan, and ditto the state’s Chamber of Commerce. Another apparent critic of the idea is The Drinks Business’ managing editor Sarah Neish, who filed a lengthy pearl-clutcher last week arguing that the bill, SB 1446, would dictate drinkers would “no longer be able to buy alcohol at self check-outs.” But here’s the thing: That hasn’t been allowed since 2013, when the California Grocers Association’s lawsuit against the state control authority’s interpretation of a law passed two years prior in Sacramento failed in appellate court. In other words, the Drinks Business published thousands of words and some anti-labor swipes based on a false premise that Hop Take was able to debunk with a quick Google and texts to a handful of sources from the Golden State. (Not the “Sunshine State,” as it’s referred to in the column; that’s Florida.) The publication, which is based in the United Kingdom, did not not respond to Hop Take’s request for comment.
📈 Ups…
Around two-thirds of the American drinking public drinks beer, and 29 percent prefer it to other categories, according to new survey data from YouGov… After a 14-year run, the taproom and brand of the Bay Area’s Heretic Brewery will live on thanks to a recent acquisition by nearby Calicraft… Lawson’s Finest Liquids is marching down the Eastern Seaboard, opening distribution in North Carolina (its 10th state, including its home of Vermont)… New Trail Brewing Co. in Pennsylvania has found a “bizarro world” niche, posting 75 straight months of growth even as the craft segment struggles…
📉 …and downs
The Brewers Association, Beer Institute, and National Beer Wholesalers Association all filed more objections to the supposedly shady processes behind the 2025 federal dietary guideline revisions… The 2024 Craft Brewers Convention saw a ~20 percent attendance drop from the previous year, per the BA’s post-mortem…
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