As Amazon launches into energy drinks, how will Monster respond?
- Amazon has launched private-label energy drinks under its Solimo brand, called Solimo Red Energy Drink and Solimo Silver Energy Drink, according to TJI Research. Both flavors of the sugar-free, low-calorie beverage are available from the online retailer at $29.99 for a 24-pack of 16-ounce cans.
- This is the first time Amazon has offered private label energy drinks, TJI reported. The new products are designed to compete with Red Bull, Rockstar and Monster Energy — whose Zero Ultra, Sugar Free Energy Drink is currently one of the top-selling items on Amazon. Monster shares were down more than 4% on Thursday following the news, but bounced back later in the day, according to Seeking Alpha.
- Amazon appears to be adding to its private-label food and beverage items with new products in the milk, dairy and coconut water segments. TJI also reported last month that the company seems to be expanding its job offerings for its private label segments, posting at least four recent roles.
This is an unsurprising move from the e-commerce giant, which has been pushing to develop more private label offerings, but it could spell trouble for Monster.
Depending on how the new Solimo energy drink tastes, Amazon could pose a serious threat if it ever undercuts Monster's energy drinks in price or makes it easier to order online. However, the new Amazon branded energy drinks are currently slightly more expensive — $29.99 for one pack — than Monster's Zero Ultra, Sugar Free Energy Drink, which is priced at $25.99 for the same quantity. Both offer free shipping, so it's doubtful most potential buyers would quibble over a $4 difference, but Amazon could give its new drinks better positioning on the website.
Amazon is clearly launching its energy drinks to counter Monster's popularity. In its online product description, the company even states: "If you like Monster Energy's Zero Ultra, Sugar Free Energy Drink, we invite you to try Solimo." The description also notes the new beverages have no sugar, 10 calories per serving and contain 152 milligrams of caffeine per can — the low-calorie count and no sugar attributes are trends consumers look for today.
As the world's largest e-commerce marketplace by revenue, Amazon brings an outsized influence to anything it decides to do. It has plenty of incentives to enter the energy drink space. According to Market Research Hub, U.S. sales of energy drinks could total about $16.9 billion by 2022. Total sales were worth close to $11 billion in 2018, a 7.5% jump from the previous year.
This latest launch by Amazon raises the question of what Coca-Cola might do in response, since it just started competing with Monster in Europe with its own branded energy drinks. Coke owns 16.7% of Monster and has been in arbitration with the company over whether the competitive situation violates an agreement the two made in 2015 when that acquisition occurred.
But Monster does have some competitive advantages. It's one of the best-known energy drink brands in the U.S. and is second only to Red Bull. Monster recently innovated with an energy drink product called Reign, which has no sugar, no calories and 300 mg of caffeine. That launch drew opposition from Bang Energy, which recently sued it for trademark infringement, trade dress infringement and unfair competition. Monster also expects to debut other products this year such as a Dragon Tea line, a new Ultra product and more of its Java Monster.
However, Wells Fargo is lowering its estimates of Monster. According to a note from analyst Bonnie Herzog sent to Food Dive, retailer sentiment on the drinks is deteriorating, and there is potential for stocks to continue to drop.
Energy drink products seem to have a built-in audience of younger consumers. However, according to Mintel, some of these fans have moved toward more natural products in recent years. Still, sufficient numbers remain to make investments in the segment worth the time and trouble, so there are likely to be even more choices as the category shakes out and the bigger players maneuver for advantages.
- TJI Research Amazon Launches Private Label Energy Drinks
- Seeking Alpha Monster Beverage on watch after Amazon energy drink launch