Monster Beverage missed market expectations for second-quarter sales on Wednesday as budget-conscious customers reigned in spending.
This hurt demand for the company’s pricey energy drinks in an uncertain economic environment.
Higher costs for essentials like food and fuel have prompted customers in the US to be more mindful of spending on non-essential items, impacting sales for companies such as Monster.
Shares of the California-based company were down about 10% in trading after the bell.
Co-chief executive of the company Hilton Schlosberg said, “Retailers have reported a reduction in convenience store foot traffic and we have seen a shift at retail towards more mass and dollar channels.
“Other beverage and consumer packaged product companies have also seen a tighter consumer spending environment and weaker demand in the quarter.”
Production costs have been high, and as a result Monster will raise prices for its core brands and packages in the US by about 5%, effective 1 November.
Banking on brand power, it has joined other global packaged food makers such as PepsiCo and Kraft Heinz in steadily raising product prices for the past few quarters to counter spiralling costs.
For the second quarter, the company posted net sales of $1.90 billion, compared with analysts’ average estimate of $2.01 billion, according to data from the London Stock Exchange Group.
Monster Beverage reported a profit of 41 cents per share for the quarter that ended 30 June.
This fell below analysts’ estimates of 45 cents per share.
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