Monster Beverage Corp (NASDAQ:MNST) CEO on The Coca-Cola Company (NYSE:KO) deal. Below is a brief summary from the conference call this morning.
The transaction were initially the investment by The Coca-Cola Company (NYSE:KO) in acquiring a 66.7 interest in Monster Beverage Corp (NASDAQ:MNST) in the second is the scale on KO on it energy brand portfolio to us. The third is the distribution rights that we have granted to KO for the US where they don’t have existing monster business and, finally, the sale by us to KO of the non-energy business and then ( inaudible ) of all those figures gives you the 2.51 net payment. I just wanted to clarify that.
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Monster Beverage – Coca-Cola’s unique transaction
The transaction we’re excited about, it’s a very unique transaction. I think I may be speaking subject to correction but I think this is the first time that any brand has truly been an got itself into and become actual part of the international system. The system is completely open to our brand.
We are absolutely aligned with The Coca-Cola Company (NYSE:KO) by having all the brands in each different countries it really gives us the energy offering to the individual bottlers in each Company and also enables us in conjunction with the bottlers to determine strategies in each Company for processing the different products, what are the market strength and in many ways this will obviously be a great tool to help us compete at Monster Beverage Corp (NASDAQ:MNST) and was future earning profits in many of these countries where we have struggled to date.
In some countries where the Coke brands are ahead of the Monster Beverage Corp (NASDAQ:MNST) brands, a lot of them have been in those countries for many years but we’re going now to immediately get us a platform so that we don’t end up obviously investing and having a negative margins but we’re trying to still shower full infrastructure and get volumes to a point where we can get to break even.
This will greatly enhanced that and each country will be determined on its own. The Coke rants have strengths in many countries and in some countries they are weaker.
Monster Beverage’s objective to be a truly global brand
In some countries where they are weaker we look at what do we do it that we want to reposition them on processing and I think other process — Company’s where the still and is stronger — obviously, are primarily objective is to end up with Monster Beverage Corp (NASDAQ:MNST) is a truly global brand.
We believe this will become a real competitor in the industry and the ( inaudible ) industry we think in the long-term will become an industry brought down to ( inaudible ) ourselves. So, you know we believe this is a unique opportunity.
One of the challenges Monster Beverage Corp (NASDAQ:MNST) have always had in the Coke system is The Coca-Cola Company (NYSE:KO) with their representatives, obviously motivating the bottlers to promote and obviously if they could give preference to their brand, we’re sitting in different meetings going to the same people and I think team and motivate them and to give our brand preference and that conflict really get eliminated which we think is very, very important and we think that would be helpful to us going forward.
The brands are nice and the brands for example not in the US and the numbers and Nielsen it’s been growing nicely. It’s a small brand but it’s custom drawn praise we think the brand is really, really good and we think it will be really beneficial to the Company in the long-term.
Monster Beverage’s relation with Coca-Cola
Monster Beverage Corp (NASDAQ:MNST) also believe that as we continue to evolve our relationship with The Coca-Cola Company (NYSE:KO), we will start you know producing through their system in most countries which will obviously reduce or eliminate the damages, issues and transport costs of shipping that we have been incurring up until now and that will be very helpful.
The main thing is that their model is really concentrate model. They sell concentrate and if you look at the revenues that we put together on the pro forma which the revenues are about 350 million, that is represented by about 66 million unit cases around the world, roughly and think about 60% international about 40% USA. And that model is an interesting model that we’ve looked at carefully now and in some countries where we have low value chains and high transport and import duties and taxes, we will look fresh at whether it makes sense for us on the monster grade to be looking at a slightly different model.
It doesn’t change the fact that we will retain responsibility for and remain involved in the marketing and positioning of the brand because that’s what we think we bring to the table that we’ve done well over the years and that won’t change. It’s just a question of how do you divide the value change and who has responsibility for marketing into his responsibility for local marketing and projections.
That is something we will see going forward but be sure to get an increase in our every sales price per case going forward because we have the non-energy brand out of that’s where there is a lower average sale price per case that that will be offset partially or wholly, we are not sure of the numbers by their products which comes in at a lower cost per case.
Overall, we believe, as you can see from the numbers, the cross section will be accretive in we will believe — we believe they will continue to be a very valuable transaction for the long-term strategy of Monster Beverage Corp (NASDAQ:MNST) and for the monster brand individually as a brand is well.