Creating a Monster!

Monster Energy grew from natural roots to become a behemoth energy brand

The phrase monster conjures up the childhood mystery figure under the bed, or perhaps, one of the many Hollywood horror movie versions. More recently, the neon green claw logo that represents Monster energy drink has ranked close behind the boogeyman or Frankenstein. Like those Hollywood figures, the claw logo has become an identifiable symbol for the No. 2 selling brand in the fast-growing energy drink category, which has become a force all its own.
“Monster is aggressive, cool, sinister, dark, mysterious and fun,” says the brand’s positioning statement. “Monster is about action sports, punk rock music, partying, girls and living life on the edge.”

The brand keeps the category interesting by adding more products and SKUs to its lineup. Made by Hansen Natural Corp., Corona, Calif., Monster now features eight incarnations and a variety of packaging options. Its latest creation — Java Monster — blends coffee flavors and its proprietary energy blend for a category-blurring beverage.

“One of the main differences we believe we found with Monster was that instead of just creating a brand, another drink, we created a whole different personality and an image around the brand,” says Rodney Sacks, chairman and chief executive officer of Hansen Natural Corp. “I think our primary focus is to keep that personality true to itself and in the forefront of consumers’ minds. And that has meant, in many cases, continuing to adapt to changes in consumer preferences, sports and interests. As they change, we’ve tended to immediately follow in those areas.”

From natural roots

Creating this Monster was not an easy task. In the late 1990s, the juice, smoothie and soft drink maker was an early figure in the budding energy drink category with its Hansen’s Energy drink. After a few incarnations, including functional endurance, de-stress and anti-oxidant blends, the company re-evaluated how Hansen’s Energy fit in with Hansen Natural’s portfolio.

“Hansen was a brand that was well established,” Sacks says. “It stands for natural, trusted, good-for-you beverages, and has had that reputation for 70 years. So when we came out with Hansen’s Energy, we wanted to keep everything under one umbrella and that trademark. The consumer for Hansen’s Energy was a younger, aggressive male consumer. What we struggled with was being able to make the brand meaningful and cool to young male consumers while the brand stood for and marketed itself as homey and family-oriented with good-for-you values.”

Realizing the disconnect between the natural line and energy brands, Sacks along with Hilton Schlosberg, vice chairman of the board of directors, worked with Mark Hall, current president of Monster Beverage Co., to branch out from the Hansen’s trademark and develop an energy drink that could effectively go after the proper demographic.

“We walked that tightrope for many years and eventually came to the decision that if we were going to make a real impression in this category, we needed to create a brand that really spoke for, looked like and conveyed what the category really wanted, what young, male consumers really wanted and felt like,” Sacks says. “It’s their lifestyle. So when Monster was born we were able to do things such as go into extreme sports. It just never was possible before.”

Monster continues to market to that target demographic of young, 18- to 30-year-old males who are into action sports, rock music and in need of energy. The demographic is kept in mind as the brand launches new variations from its initial green Monster Energy drink. The product premiered in a 16-ounce can and the “green” lineup, as it is known in the company, has since grown to include a 24-ounce resealable “cap can” and 32-ounce can.

The 24-ounce “cap can” offers more Monster with the advantage of resealability, which is well-suited for the consumer on the move. Addition-ally, the package features an added spectacle of a smoking effect when the can is opened. The package launched last year with the intention of going national, but the demand outstripped the supply so sales were restricted to California, explains Geoff Bremmer, Monster brand manager.

“It became our second best selling SKU at retail, given equal distribution, with our regular green Monster 16-ounce as No. 1,” Bremmer says. “What’s most exciting about that is our distribution on 24-ounce is not anywhere near the 16-ounce green can yet — it’s only half as much.”

Also new to the green lineup is the 32-ounce can, which Bremmer says is basically a four-pack of 8-ounce cans in one container. The 32-ounce can retails for $3.99 and recently began shipping.

The first line extension for the brand was Monster Lo-Carb, which is a lower calorie formulation of green Monster, and a personal favorite of Hall, who says he drinks two a day. Unlike many lower carbohydrate formulations, Monster Lo-Carb contains glucose, which is part of Monster’s energy blend. According to the company, the inclusion of glucose in this “blue” variety allows for faster delivery of energy benefits.

Within all of its innovation, Monster seeks to expand energy drinks to more usage occasions. Such was the case with Monster Assault, which combines energy with a soft drink flavor, Bremmer says.
“People drink an energy drink maybe at 3 in the afternoon after a long day, before they go out at night or in the morning to get them going, but it’s usually for a functional reason,” he says. “People drink a cola while they’re eating lunch or dinner. The thought on Monster Assault was, ‘Let’s blend the effectiveness of an energy drink with the refreshment of a soft drink.’”

From there, the brand continued its hybridization with energy and juice products Monster Khaos and M-80. These “plus juice” products not only added health benefits, but also opened the product to morning drinking occasions. While Khaos has a dominant orange flavor and M-80 features more tropical notes, Monster does not base product names on flavors.

“There are no flavors of Monster; there are only different personalities,” Hall says. “We have a juice item, Khaos, but when they say, ‘What does it taste like?’ Our answer is it tastes like ‘It.’ We don’t name the flavors. If I gave it to 10 people, they’d all say something, but they cannot exactly describe what it is. They wouldn’t say, ‘Oh, it’s orange.’”

Additionally, to back up its claims of efficacy, Hansen has a doctor of pharmacology on staff who assists during new product development. If Monster wants to add a new ingredient to its energy blend, it consults with the professor, who evaluates the literature both on the ingredient and its interaction with the existing ingredients, Hall says. The professor also is on hand to answer technical inquiries the brand receives from consumers.

On-premise push

The multiple Monster “personalities” are gaining exposure in the on-premise segment. In May 2006, Hansen and Anheuser-Busch Inc., St. Louis, formed a distribution deal in which select Anheuser-Busch wholesalers will have the rights to distribute Monster, Lost and Rumba energy drinks. Over the course of the year, the distribution rights were transitioned in certain territories from Hansen’s network of beer and liquor distributors as well as soft drink bottlers to the Anheuser-Busch system.

Since the agreement, Monster has been working with Anheuser-Busch’s distribution network to expand Monster’s on-premise availability as well. The company hopes to bring the entire Monster portfolio, including its latest Java Monster lineup, into restaurants, bars and nightclubs. Bremmer says Monster, Lo-Carb, Khaos, M-80, Assault and Java Monster are all good for mixing.

“There is a lot more a bar owner can do with our portfolio and boost their profits through our brands,” he says.

Marketing Monster

Much of Monster’s status is intertwined in how the brand is marketed. Equally important is how it is not marketed; Monster does no mass media marketing, including television ads or billboards. Instead, it focuses on sponsoring athletes, artists, personalities, tours and events to target its young male demographic.

The company’s Southern California roots influence Monster’s partnerships, Bremmer says.

“We’re based near Orange County, Calif., which is the mecca of action sports: surfing, skating and snowboarding,” he says. “Many of the apparel and sports brands like Oakley, Billabong, Burton and Quiksilver; if they are not based in Orange County, they’ve set up an office here. Corona also is the hotbed of motor sports with many of our sponsored race teams just down the street.”

The neon green claw logo has long been a staple at punk rock summer festival The Warped Tour or during action sports competitions such as the X-Games. When Monster was getting its start, Hall and his team offered on-the-spot sponsorships to X-Game athletes. Now the brand is ingrained in the action sports tournament. At this summer’s X-Games, Monster athletes scored a total of 14 medals.
Monster has grown along with its athletes. BMX riders (and occasional MTV hosts) Dave Mirra and T.J. Lavin are sponsored by Monster. Racecar driver Robby Gordon is sponsored and will be featured in an upcoming promotion for the brand. It also keeps an eye on up-and-coming athletes, such as Riley Hawk, the son of skateboarding star Tony Hawk.

Monster also works with music artists and tours. This year, OzzFest, which is put on by Black Sabbath member Ozzy Osbourne and his wife Sharon, decided to give back to its fans by removing the entry fee for its tour stops. Instead of paying high prices for tickets to the heavy metal tour, fans could only get tickets through OzzFest’s Web site or through a Monster four-pack promotion.
“The batch through OzzFest sold out within one day, so [Monster] was the only place left to get tickets to OzzFest,” Bremmer explains. “It was such a huge success that we had over 20,000 ticket redemptions. It went so well we’re bringing back a similar promotion this year.”

Additionally, Monster has a Hispanic initiative, which sponsors Spanish rock bands and more than 40 events a year. The brand also has a presence on college campuses with Monster ambassadors located on nearly 150 campuses across the country. Furthermore, the brand has approximately 25 street teams in nationwide markets to give out energy “where its consumers need it the most,” Bremmer says. The teams may visit beaches, skate parks, record stores and other local hangouts to sample Monster products.

For the virtually minded consumer, Monster integrated itself into “Dave Mirra’s BMX Challenge,” a video game for Nintendo’s Wii game system. In the game, Mirra wears a Monster logo shirt and the game’s energy monitor is shaped as Monster’s green claw logo. As the player lands BMX tricks, the energy ‘M’ fills up, and when it’s filled to the brim, the player gets an extra burst of energy for its virtual BMX rider.

Adding new Monsters

In order to stay fresh in a fast-growing category, innovation is necessary. While Monster has been at the forefront of hybrid energy products, the brand continues to push the envelope with new entries.

“If you’re going to try to get ahead of the pack, in growth, in positioning, you have to be different,” Sacks explains. “And to be different you’ve got to be creative and you’ve got to be ahead of the curve, which is a colloquial expression everybody uses, but you really need to come out with products that are different and do so ahead of the other people. And then what happens is that everybody copies very quickly, so you find yourself having to continue to innovate and be different.”

In June, Monster dared to be different with the launch of Java Monster, a line of coffee/energy drinks. Unlike its brethren, Java Monster features a dairy base with coffee, mocha and vanilla latte flavors. The product features less caffeine than traditional coffeehouse coffee, but with the added effects from the amino acids, B vitamins, taurine and ginseng in its energy blend. Instead of stocking Java Monster alongside energy drinks, Monster is marketed and merchandised as a ready-to-drink coffee beverage.

Not only does the company hope Java Monster brings more efficacy to the RTD coffee category, but also some masculinity. The company is positioning the product as “coffee for real guys,” Hall says. It’s an RTD coffee product that can be confidently brought on to the job site, Bremmer adds.

Despite its masculine positioning, Monster took a careful approach to the package design of Java Monster. Instead of the Monster logo in metal, the ‘M’ logo is burned into wood for a homey coffee feel that does not take too much away from Monster’s masculine image, Hall explains. Through both the packaging and the product, Java Monster has brought in new consumers.

“The simple vision of Java Monster was to take the energy needs of those consumers who are either afraid, inexperienced or put off by the whole marketing and concept of energy drinks and fulfill their energy needs with a Monster branded product,” Hall says. “We were very conscious in the design that we were able to transfer some of our equity over without screwing up who we are and our core imagery.”

The line launched in Big Black, Loca Moca and Mean Bean flavors and has been transcending demographics to attract males and females in broad age ranges — when it’s been on store shelves. In the first months of the launch, production of Java Monster could hardly keep up with demand.

“It’s blown away our forecast,” Bremmer says. “We reached the point where we weren’t able to fill our orders. A lot of our initial plans were to sample the product using our street teams during the morning shift and really get the product out there, but we weren’t able to fill our orders, let alone give the product to our sampling teams. So for 2008 we will be able to do a lot of the things we had planned for 2007.”

Not only does the company plan on added visibility for the line, it hints at Java Monster extensions.
“There are a number of SKUs we’re going to launch because we really do feel we can command the shelf space,” Sacks says. “We think it’s important, creative and shouldn’t cannibalize the existing energy category. It really should be placed in the coffee door with morning products, with juices and competitive coffee products. We believe that it’s going to be incremental because it will draw more consumers into that coffee/energy category and the energy category as such.”

Monster hopes the newcomers who are picking up Java Monster will be inspired to try Monster’s carbonated varieties.

“The cross-pollenation has been really good,” Sacks says. “That’s where we are at the moment, but we’ll think of new things by the middle of next year, I have no doubt. We’ll continue to try to innovate and look at where we should be.”

Both Sacks and Hall say the energy category is not just a fad, and even venture to say that energy drinks are the new soft drinks.

“We believe that the energy drink category as a category is here to stay, but there are going to be refinements within that category to keep it interesting, make it interesting for consumers and help broaden it to more consumers,” Sacks says. “We think Java Monster is broadening it to the existing consumer and bringing in additional consumers: the morning consumer, the coffee drinker, the orange juice drinker and more.”

Natural innovation

While Monster makes up more than 80 percent of Hansen Natural Corp.’s sales, according to Rodney Sacks, chairman and chief executive officer, the company remains innovative on the Hansen’s Natural side of the business. The natural beverage business was the company’s base when Sacks and his partners purchased the juice and natural soda company in 1992.

“Hansen’s continues to be a very important and, I think, strategically placed brand in the beverage industry today,” Sacks says. “It’s a brand that’s probably one of the only, if not the only brand, that has real credibility and heritage. Most of the new age brands that are trying to be healthier are brands that are inventions of bigger companies. Hansen’s is a brand that started 70 years ago by selling natural, fresh juices to film studios in Southern California. It has continued to enjoy a premium, trusted image and we’ve continued to build on that.”

Hansen’s Natural brand is extending Hansen’s Natural Soda line with fruit flavors in both regular and sugar-free versions. In contrast to the Monster image, Hansen’s new sparkling line is packaged in sleek 10.5-ounce cans with understated packaging. The new line will be sold in four-packs in flavors such as Dragonfruit and Blueberry Pomegranate.

“We’re launching a whole new line of products that we believe will resonate well with health-conscious consumers, particularly those who are now expressing concern at the levels of [high] fructose corn syrup in sodas, carbonated products and juices,” Sacks explains. “We think we have some great new products that are continuing to innovate and drive the Hansen’s business from that side.”

As the natural trend encapsulates all areas of the food and beverage industry, the company with the term in its name feels confident in its roots.

“We believe that the Hansen’s Natural business is really well positioned going forward to take advantage of this health wave that is sweeping the country,” Sacks says.

Preparing for segmentation

Anticipating the trends is one way to stay ahead of the pack. In the energy drink category, Monster thinks the next wave will be price segmentation.

“We anticipate the energy category might be affected by the segmentation we’re seeing in the beer market, where there are premium, mid-grade and low-tier products,” says Geoff Bremmer, Monster brand manager. “Right now, virtually all energy drinks are at the same price point. We think within the energy drink category, segmentation will start to rise with different packaging sizes and brands to create segments that open the category.”

In preparation for segmentation, Hansen Natural Corp. offers several allied brands, including Lost, Rumba, Unbound, Joker and Ace energy drinks. The Monster brand occupies the premium tier. The Lost brand, which was an early partnership for Hansen’s with the surfboard manufacturer of the same name, is distributed exclusively by Anheuser-Busch, with which Hansen’s formed a partnership in 2006. Rumba energy drink, which is made with juice, also is featured in the distribution partnership.
In a lower-priced tier, are Joker, Unbound and Ace energy drinks. Joker was developed through a partnership between Hansen’s and convenience store chain Circle K and was expanded into national direct store distribution for a lower price. That also was the case with Unbound, which was created for AM/PM convenience store chain and since been expanded nationally. Both Joker and Unbound are often run on two for $3 promotions, while Monster retails for $2.29, Bremmer says.