---
title: "The Highly Anticipated \"Monster\" Is Mired in Trouble, Once Considered Red Bull's Biggest Rival!"
description: "Recently, according to relevant media reports, Monster energy drink is mired in trouble in the Chinese market. This product, once considered Red Bull's biggest rival, is now facing a \"disconnect with local conditions.\" In the fourth quarter of 2017, its operating losses in India and China totaled approximately $9 million (about RMB 57.15 million). In September 2016, as one of the top two energy drink brands in the United States (the first being Red Bull), Monster Beverage (known as \"Monster\" in the Chinese market) entered the Chinese market with the help of Coca-Cola."
author: "新经销团队"
publisher: "New Distribution"
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published: "2018-04-05"
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# The Highly Anticipated "Monster" Is Mired in Trouble, Once Considered Red Bull's Biggest Rival!

> Recently, according to relevant media reports, Monster energy drink is mired in trouble in the Chinese market. This product, once considered Red Bull's biggest rival, is now facing a "disconnect with local conditions." In the fourth quarter of 2017, its operating losses in India and China totaled approximately $9 million (about RMB 57.15 million). In September 2016, as one of the top two energy drink brands in the United States (the first being Red Bull), Monster Beverage (known as "Monster" in the Chinese market) entered the Chinese market with the help of Coca-Cola.

Recently, according to relevant media reports, Monster energy drink is mired in trouble in the Chinese market. This product, once considered Red Bull's biggest rival, is now facing a "disconnect with local conditions." In the fourth quarter of 2017, its operating losses in India and China totaled approximately $9 million (about RMB 57.15 million).

In September 2016, as one of the top two energy drink brands in the United States (the first being Red Bull), Monster Beverage (known as "Monster" in the Chinese market) entered the Chinese market with the help of Coca-Cola.

01
**Once Highly Regarded by Industry Insiders**
Before Monster hit the shelves, industry insiders were optimistic about its market potential.

**1. Market Positioning**
Monster's brand positioning is as a sports energy drink, with a more focused and precise target audience.
Monster's category is energy vitamin sports drinks, emphasizing sports and associated with youth, individuality, wildness, energy, and refreshment.
Monster chose first-tier markets, with hypermarkets and chain convenience stores as main channels, allowing young and fashionable people to drive consumption among other groups, and letting first-tier markets drive development in second- and third-tier markets, achieving breakthroughs in both audience and market.

**2. Timing of Entry**
Monster chose a time that coincided with the expiration of Red Bull's trademark license. Both general agents and distributors at all levels were anxious and at a loss. Entering the Chinese market at this point, Monster could at least attract distributors and thereby capture a portion of the market.

**3. Backed by Coca-Cola**
In 2014, Coca-Cola acquired a 16.7% stake in Monster Beverage for $2.15 billion, and subsequently, the two companies joined forces to push Monster into more global markets, including China.
It is understood that Monster's production and distribution in China are currently handled by Coca-Cola bottling plants and their teams, while brand marketing and other tasks are handled by Monster's China team.
Considering that the Chinese functional beverage market lacks strong competitors, leading brands are facing bottlenecks, and the functional beverage category is still expected to achieve double-digit consumption growth, Monster's momentum is worth anticipating.

02
**First-Year Revenue Less Than HK$50 Million**
CICC mentioned in a research report that Monster's first-year sales in China were less than HK$50 million, below expectations, mainly due to: 1. Only one SKU, making product distribution and retail shelf placement difficult. 2. Unlike the strategies adopted by most competitors in the Chinese market, Monster's management simply replicated its niche market strategy in China and invested little in mass market promotion.

It has been more than a year since Monster officially entered the Chinese market. According to relevant media reports, multiple distributors have reported that Monster's sales are "indeed not great" and "not easy to sell." It is said that the energy drink market is getting hotter, but clearly, with the surge in players, market competition is becoming more intense.

Monster's CEO, Rodney Sacks, mentioned in a related meeting that losses in the Chinese market dragged down the company's quarterly performance:
1) "Losses in China and India adversely affected operating income. In the fourth quarter of 2017, gross profit declined compared to the same period last year, partly due to inventory issues in China."
2) "In Asia-Pacific, net sales in the fourth quarter decreased by 5.3% in U.S. dollars and 1.9% in local currency compared to the same period last year, mainly due to inventory adjustments by Monster Beverage's bottling partners in China."
3) "In the quarter, Asia-Pacific gross profit as a percentage of net sales was 32.4%, compared to 44.1% in the same period last year, mainly dragged down by inventory issues in China and India."

**Summary of the current problems Monster faces:**

**First, high channel inventory:** Past high expectations from distributors, coupled with slow product turnover, have resulted in high channel inventory. It is understood that although the beverage sales season is approaching, many distributors are still reluctant to stock up.

Relevant industry insiders revealed that at the sales level, Monster was initially treated as a hit product, with the belief that as long as it was distributed, it would sell. "Later, it was found that this was not the case. Now, the opportunities for hit products in the beverage industry are too few," he said.

**Second, limited promotional investment:** Monster's launch was too low-key, with clearly insufficient promotional investment. Although it has the endorsement of the second-largest energy drink in the U.S. and the Coca-Cola platform, these alone are obviously not enough. In a highly competitive beverage environment, relying on traditional offline channels for volume without communication, it is almost impossible to become known to consumers.

Some analysts said, "There is no TV advertising, and online advertising is also very scarce. There is a lack of mainstream media resource support in communication, only small-scale dissemination, such as in hip-hop and rock circles, which is too narrow. Although the target consumers are clear, these people are not entirely energy drink consumers."

**Third, lack of execution on the ground:** As a new product launch, supporting ground execution is most important. Monster had preset shelf placement "right next to Red Bull" at the terminal. But the actual situation was not ideal. Hilton Schlosberg, Vice Chairman and President of Monster Beverage's board, once said that Monster sent employees from the U.S. to China to educate its bottlers in China that Monster products should be placed on energy drink shelves. However, in some places, they were still placed next to Coca-Cola or Sprite.

Despite the initial setback, the company's CEO reiterated its growth potential in China, saying that Monster will persist in China, and losses during the cultivation period are inevitable.

**For Monster, to shake Red Bull's market position in a short time with niche, fashionable, and personalized products, Monster still has a long way to go.**

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