Unleash the Beast: The Juicy Origins of Monster Beverage
If you enter just about any convenience store, no matter where you are in the world, chances are high you'll find Monster's iconic M-formed claw marks stacked on the drink shelves. Inspired by energy drink pioneer Red Bull, wholesome and feel-good Hansen Natural's brand became aggressive and perceived as dangerous if over-consumed: Monster Beverage. In this article, we tell the story of how a family-run juice business transformed into a beast of a brand and one of the best-performing stocks in history.
Key Insights
Sliding doors: The story of how Monster was created has many coincidental plot twists, including a bankruptcy and an incredibly successful focus group testing.
The influential people behind Monster: From the 1990s, founders Rodney Sacks and Hilton Schlosberg, and former brand president Mark Hall, all remain in the company.
Red Bull's road to dominance: A detour into the creation of Red Bull. From its Thai origins to its European and eventual global dominance, all through the lens of marketing perfection.
Masterclass of packaging: Monster's impact on the energy drink market was instant and fearless: rough, loud, and in large – driven by a desire to differentiate.
Brand importance: As exemplified by Monster, Red Bull, and most recently Celsius: the importance of branding and consumer awareness in the energy drink industry is undeniable. Join us as we explore the key features of this fiercely competitive market.
Hubert Hansen's Family-run Juice Company
The intriguing story of Monster began nearly a century ago in sunny California. While the company's origins are in the beverage business, both the inside and outside of the packaging were quite opposite to what we have come to associate with it now.
The now-global beverage company was founded in 1935 by Hubert Hansen as “Hansen's Fruit and Vegetable Juices.” For many years, the business was family-run, with Hubert's three sons assisting in the day-to-day operations. As revealed by the name, the Los Angeles-based company sold fresh, unpasteurized fruit juices in a wide range of tastes and blends.
The juice business was fruitful from the start with big success in the local area, including delivery to Hollywood Film Studios. After opening a larger plant in Azuza, California, in 1946, expansion began beyond LA. The Hansen family's juices were soon established in many of the western states, followed by Hawaii, and eventually on the East Coast.
Although the company had many successful years there had been few changes in its product portfolio – let alone its operational structure – up until the 1970s. This was about to change as the next generation of Hansen sought to explore a new direction in the beverage industry. In 1977, Hubert's grandson Tim obtained a license to use the family name as a trademark and formed his separate business: Hansen Foods, which soon became “Hansen Natural Corp”, (and parts of the entity that later became Monster).
By using the family's name, Tim aimed to build on the wholesome image established by his grandfather's fresh juice products. The spun-off company initially focused on pasteurized, shelf-stable juices, but soon expanded to sodas with Hansen's Natural Sodas in 1978. The sodas stood out with their all-natural ingredients and unique combination of flavors: Key Lime Twist, Kiwi Strawberry, Mandarin Lime, and Mango Orange to name a few.
Despite early success, competing in the soda industry against the likes of Coca-Cola and PepsiCo was difficult. After a decade Tim Hansen's venture had finally reached an end-point. The financing of a new factory in combination with insufficient sales forced the company into bankruptcy in 1988.
In many business stories, this would be the end. But not in this one.
Fortunately, some of Hansen's assets, including the brand name, were acquired by California Co-Packers – ensuring that Hansen's Soda survived. Business continued for some years before an unexpected ownership change would come to steer the brand in a completely different direction.
Paths Meet – Sacks and Schlosberg Ready for Business
Now it’s time to introduce two key figures in this story: Rodney Sacks and Hilton Schlosberg – two of the founding fathers of Monster. Sacks, a former South African lawyer, and Schlosberg, a Brit who had lived in South Africa for some time, both moved to the United States and were looking for a business opportunity.
In 1992, a Los Angeles investment banker introduced them to a beverage company with a well-known brand within the Bay Area. This company, which just a few years earlier had gone bankrupt, was acquired by the consortium led by Sacks and Schlosberg for $14.6 million. At the time of the acquisition, Hansen employed no more than a dozen employees, generated annual sales of $17 million, and outsourced its operations having lost control of its factory in the bankruptcy. As you've probably realized, prospects were not great. But with new ownership and management came fresh energy and ideas.
Sacks took on the role of chairman and CEO, and Schlosberg became vice chairman and president. Three decades later, Sacks remains in both roles, while Schlosberg remains vice-chairman now also co-CEO alongside Sacks. Shortly after the acquisition, the company went public under the name Hansen Natural Corporation.
The uniquely flavored sodas were soon accompanied by iced teas, lemonades, and juice drinks – all targeting the so-called “New Age” category, which was popular with younger consumers at the time. This category was defined by products that were relatively healthy compared to traditional sodas (or at least publicly believed to be healthier).
Despite a strong foothold on the West Coast, Hansen faced fierce competition. Battling against industry giants like Coca-Cola, PepsiCo, and Snapple's (now owned by Keurig Dr Pepper) popular iced teas, once again proved challenging. Hansen ended up reporting losses both in 1994 and 1995. However, management remained optimistic about what was soon to come.
In 1996, Hansen introduced an “energy smoothie,” marking its entry into the emerging functional beverage market. This new product line, which signaled “a fresh innovative spirit” at Hansen, included ingredients relatively uncommon in the U.S. but with established use in other parts of the world – most notably taurine.
At this point, it's time to introduce a parallel story to better understand what Hansen evolved to down the line – about a company that had found its wings far away in Asia.
Krating Daeng & Red Bull's First Mover Advantage
The massive success of the Red Bull brand all comes from the Austrian Alps. However, what would eventually go on to become the world's most popular energy drink actually originates from Thailand.
In 1976, a man named Chaleo Yoovidhya introduced a non-carbonated energy drink called Krating Daeng. Although energy drink-like products had existed in Asia for about a decade, the drink was one of the pioneers of the trend that would eventually find itself in every corner of the world. Krating Daeng contained energy stimulants such as caffeine, taurine, B vitamins, and sugar. Ingredients that remain central to modern energy drinks, including Red Bull.
In less than a decade it grew to become a popular drink in Thailand before the trajectory of the brand took an unexpected turn. In 1982, Austrian businessman Dietrich Mateschitz bought a Krating Daeng in Thailand after hearing that it could cure his jetlag. Bewildered by the effects, yet puzzled by the weird taste, Mateschitz envisioned the huge potential of the drink. After some consideration, he decided to take the international expansion of Krating Daeng into his own hands.
In 1984, Mateschitz convinced Yoovidhya and together they founded Red Bull GmbH with each of the partners holding roughly half of the company. The name was an English translation of Krating Daeng which means red gaur, a type of wild bull. Whereas the energy drink was known as a blue-collar drink in Thailand – Mateschitz had a different target group in mind for his version.
With the clean blue-silver design, he wanted the brand to be associated with a sense of premium, confidence, and mystery. The small, slim can was a smart ploy to signal that the drink came in a restricted dose due to its potency. In line with the premium branded can, Mateschitz priced the energy drink accordingly, opposite to its Thai inspiration which was relatively cheap.
The boldly priced and packaged energy drink was launched in Austria in 1987, and within a few years, it had spread across Europe. Red Bull's success, both in terms of marketing and taste, defied conventional sense. The company had gained an early lead in what proved to be a lasting trend, not just a passing fad.
Enter: Hansen's Energy
Returning to our story, the California-based company launched a new product category: energy drinks (back then often described as functionals). Inspired by Red Bull's success in Europe, Hansen's Energy debuted in the U.S. in early 1997. Similar to their Thai-Austrian counterpart, the drink came in a slim 8-oz can, but with a neon green and black design. At the same time, the distinctive blue-and-silver cans of Red Bull had just hit the shelves in California.
The timing of Hansen's energy drink proved successful with an instant impact on the company's sales. In both 1997 and 1998, profit doubled while the share price quadrupled.
But as often is the case: excessive market returns attract competition, and as several times earlier in this story, the well-known beverage giants (including a certain energy drink from Austria) were quick to join the market. Hansen responded by expanding its energy drink product line but continued to lose market share. By the late 1990s, Red Bull had replicated its European success and dominated the U.S. market.
Marketing executive Mark Hall, who had joined Hansen just a few years earlier, understood why the company was losing ground. He recognized a disconnect between Hansen Natural's wholesome brand image and the energy drink target group. Convincing (what was often) young, energetic men to choose the good-for-you associated brand of Hansen over the confident and mysterious appeal of Red Bull, was unlikely to happen. Hall was determined – Hansen's wouldn't cut it.
Initially, Sacks, Schlosberg, and the board were understandably skeptical, reasoning that “a newly named drink wouldn't enhance the Hansen brand”. But after some time and persuasion, they allowed Hall to explore rebranding options for the energy drink. With the name still a work-in-progress, the company began discussions surrounding product packaging.
While packaging has always been a way to differentiate products, Red Bull's success with its slim can, which conveyed a premium feel, inspired many companies to rethink the design of their beverage containers. Some followed Red Bull's lead with smaller cans, while others went in the opposite direction.
In 2001, Rockstar Energy (later acquired by PepsiCo) introduced a 16oz energy drink – double the size of Red Bull. Though it may not seem revolutionary today, Rockstar's large can was distinctive, different and set it apart from its small or regular-sized competition.
To better understand its target group's preferences for packaging, Hansen conducted focus group testing. Basically, lining up silhouettes of containers in glass, plastic, and aluminum, in all different sizes, listening carefully to consumer feedback. After several unsuccessful rounds of testing, Hansen finally got the invaluable insight it was looking for – and more. According to Harold Taber, Director of Hansen Natural, one of the testers provided the following invaluable feedback:
“I don't know what everyone else is seeing but that can down on the end is a monster compared to the rest of them”.
And that's how Monster got its name – and upgraded to 16oz in the process.
Creating (a) Monster – Brand Packaging Perfection
In April 2002, Hansen released its new product: the Monster energy drink. With a tagline of “Unleash the Beast”, the company presented a large black can featuring neon-green claw marks forming an M. Monster perfectly aligned with the image Hall aimed to project. While Hansen's Energy conveyed a natural and welcoming feel, Monster was its complete opposite – wanting to create an appeal through a feeling that it would be dangerous if over-consumed.
With Monster's audacious branding, Hansen could finally try to bridge the gap with its desired target group – energetic, adrenaline-seeking, risk-taking men between 18 and their 30s, who are into action sports and rock music. Monster Energy was aggressive, cool, and got the attention of their target audience instantly. Importantly, it was also different from the dominant Red Bull. This was key in Hansen's strategy to connect to wider parts of the target audience.
Hansen's Monster can was large, rough, and loud. Red Bull's can was slim, elegant, and stylish, looking more “like a traditional European beer” as described by McLean, a brand and packaging design company that helped Hansen's develop Monster. Hansen hoped that the difference in their appearance and feel would lead to Monster being the preferred drink by blue-collar workers.
“I viewed Red Bull as being a white-collar, yuppie drink. I wanted to be an aggressive, blue-collar drink – like the guy with the tattoos.”
- Mark Hall, former Brand President, now on the Board of Directors.
The upgrade to 16oz cans was also a masterstroke. Not only because the large can fit perfectly with the Monster branding and made the claws more impactful - but primarily because Hansen decided to keep the price unchanged. While Rockstar's large can might have inspired Hansen, the strategy itself is a time-tested play in the beverage industry.
Already during the Great Depression, Pepsi used the approach in its competition with Coca-Cola. From competing with 6.5oz bottles, Pepsi upgraded to a 12oz bottle without raising the price. Being a value option during the hard times of the 1930s proved a success and Pepsi's status and profits climbed to the tune of the company's radio advertising campaign:
Pepsi-Cola hits the spot / Twelve full ounces, that's a lot / Twice as much for a nickel, too / Pepsi-Cola is the drink for you.
Much like Pepsi's success, Hansen's Monster became a value option in the energy drink market. Of course, value is relative but as Red Bull was the clear leader in the energy drink category, (even in the U.S. at the time) Monster's double-sized can was priced roughly the same as the slim can of Red Bull.
While others followed Rockstar and Monster, Red Bull didn't. It took many years for Red Bull to respond to the trend, and when they eventually did Hansen and Monster had clawed a substantial share of the U.S. energy drink market away from the Austrians.
Extreme Sports Marketing
The branding and packaging of Monster and Red Bull clearly differed. However, their marketing activities were very similar. Red Bull had pioneered sports marketing (primarily extreme sports) for over a decade: from sponsoring individual athletes or teams to arranging its own high-profile events. Hansen quickly realized that Monster would also be a perfect fit for this category of marketing.
Initially, Hansen focused directly on the athletes. Sponsoring athletes who would get TV coverage at events such as the X Games meant that Monster's brand reached millions of watchers all over the U.S. and the rest of the world. The strategy was a success from the start, with the adrenaline-seeking target group suddenly witnessing their favorite extreme sports athletes doing 360s with Monster-branded gear and equipment.
Since then, Monster's iconic neon claws have become synonymous with extreme sports, sponsoring not only athletes but also events and series. Beyond skateboarding and big air snowboarding competitions, the distinctive M has found its way to everything from Conor McGregor's fighting shorts to Lewis Hamilton's Formula One car.
Monstrous Growth & Valuable Partnerships
Hansen Natural had reinvented itself by creating Monster. Through perfect timing, branding, and customer awareness Monster's popularity skyrocketed and sales followed. From 2001 to 2006 Hansen Natural's sales increased from roughly $80 million to over $600 million. During this period the share price soared an almost incomprehensible 70x (!).
Red Bull's earlier success in Europe had provided the company with enough experience and popularity for it to remain the undisputed leader in the U.S. during its first years in the country. At the time Monster was released, the blue-silver-canned company had a market share of over 90%.
By 2006, Red Bull's grip on the market had been halved. Apart from Monster, the aforementioned Rockstar brand, and Full Throttle (now owned by Monster) had taken market share – both distributed by Coca-Cola and ironically, bottled in large cans.
Up until 2006, Hansen had distributed its drinks through a Direct Store Delivery (DSD) model with several different distributors/wholesalers. This often involved salesmen personally delivering the drinks to each individual store.
Although this model had been advantageous in securing that the M-clawed logo remained in the best shelf space, it was starting to hinder expansion as demand wasn't saturated. Hansen had to face it: Monster had become too popular and to meet demand they needed a partner.
Within just two years, Hansen secured major distribution agreements with Anheuser-Busch in 2006 for national distribution and Coca-Cola in 2008 for both national and international distribution. While Hansen's earlier DSD network didn't prevent its international expansion, it definitely hindered it.
Partnering with these experienced distributors meant that Monster could reach more markets, more stores, and more customers. Also, consolidating distribution to fewer partners meant more streamlined logistics and operations.
Sales growth continued as Hansen expanded to new markets with its large cans. By 2012, the Monster portfolio had expanded to include more than ten different energy drinks. Alongside the original black-canned energy drink, notable additions in the Monster portfolio were Java Monster (coffee-flavored), Monster Assault (cola-flavored), and Monster Absolutely Zero (zero-calorie, zero-sugar).
At the time of writing, Monster offers over 40 different drinks. The Monster family's expansive growth now allows the company to fill entire store shelves, creating a so-called billboard effect, termed by Celsius CEO John Fieldly, in a recent Odd Lots podcast. According to Fieldy, adding new flavors might not cannibalize sales – it might boost them. Adding flavors expands a brand's presence as the increased billboard serves as an in-store marketing to potential consumers.
Hansen Becomes Monster
If not evident at this point, Hansen's drink had literally turned into a monster in terms of size relative to Hansen Natural's other products. In 2012 came the reasonable recognition from within the company – Hansen Natural would complete its transformation and become Monster Beverage.
Ironically, but also understandably, this meant that the company had completed a 180-turn: from not wanting to risk its feel-good brand to not wanting to risk its rough brand. Remember, just a decade earlier, the belief that a newly named drink wouldn't enhance the natural and wholesome Hansen brand had almost stopped the creation of Monster.
Ten years later, Monster had exceeded all expectations – driving over 90% of Hansen's revenue at the time of the rebranding – and was now the brand a name change would enhance.
International Focus With Coca-Cola
In 2014, Monster Beverage and Coca-Cola announced that they had taken their partnership to the next level. The extension was divided into three parts: 1) Coca-Cola acquiring a stake of 16.7% in Monster, 2) a business transfer, 3) and an expansion of their distribution agreement. The business transfer was arranged as a swap where Coca-Cola's energy business was transferred to Monster, while Monster's non-energy business became a part of Coca-Cola.
The third part of the deal meant that Coca-Cola and Monster deepened and expanded their global distribution agreement. According to CEO Sacks, this gave Monster enhanced access to the most powerful and extensive distribution system in the world. Monster had operated internationally for a long time but this took its energy drinks' reach to the next level. Its long-term distributional commitment to Coca-Cola meant that Monster could focus fully on its product portfolio and marketing operations while leaving logistics to its partner.
Set a Trend or Fail
One of the main characteristics of the energy drink market is its low barriers to entry. Another key feature is that the margins in energy drink companies generally are pretty substantial. Isolated, these two components might sound appealing. If you look in the drinks section of your local convenience store, it becomes apparent that these two factors have enticed many companies to try their luck in the energy drinks market.
The backside is that it leads to brutal competition where building lasting competitive advantages is extremely challenging. While early prophecies that energy drinks would be a passing fad were incorrect, a more accurate observation might be that many energy drink companies themselves have often proven to be fads. What oftentimes, determines the long-term competitiveness and success of an energy drink among the many competitors on the shelves is marketing.
Even if competition wasn't as fierce as it might be now, the marketing and branding of Monster was perfectly executed. When Hansen Unleashed the Beast in 2002, they released an eye-catching, aggressive, and edgy brand that resonated greatly with their target group. The brand impression of Monster was so strong that its claw-like grip on consumers has not only endured but strengthened for over two decades.
The same can certainly be said for Red Bull. Though they might have had less (in fact, basically no) competition, they had to convince people to drink something they had never heard about, relying solely on innovative marketing. Red Bull's entry to the nascent energy drink market in Europe with its bold and premium, yet mysterious branding was executed with incredible precision. For most, its success didn't and still doesn't make sense. And crucially for this story, its irrational success inspired Hansen to create its Monster.
Another more recent example of a successful energy drink brand is Celsius. What Hansen failed to create in the years pre-Monster, Celsius has achieved: positioning itself as a healthy, conscious, and natural option while still appealing to a younger audience. Celsius' choice to brand itself as a functional and go-to drink for fitness people has proven successful. Similar to Monster's partnership with Coca-Cola, Celsius joined forces with PepsiCo in 2022 through an equity and distribution agreement, expanding the brand's global reach. Since 2020, trendsetting Celsius has increased its annual revenue by an astonishing 10x.
By leading the “healthy” energy drink market Celsius has captured over 10% of the U.S. energy drink market. While Monster's portfolio of energy drinks has experienced a slight decrease in the last few years it still holds close to 30% of the market, trailing only the Thai-Austrian pioneer, Red Bull.
Closing Thoughts
When Hansen Natural unleashed the beast in 2002 they truly created a Monster. Through fearless marketing and exceptional consumer awareness, they produced not only a global brand but also one of the best-performing stocks in history. Now, over two decades later, its influence on the energy drink market remains undeniable, with shelves around the world permanently stacked with the iconic M-clawed cans.
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