Tag: marketing

One of the best-performing stocks of the last twenty years – a famed 100-bagger – is Monster Energy.

Why didn’t we see this?

If you want to succeed at investing, Howard Marks wrote, you have to be different and you have to be right. Embedded in that is the notion that being different is hard.

If different was without social, financial, political, emotional, or mental costs then everyone would do it.

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Monster Energy faced at least two of our common business headwinds. First is the TiVo problem. Can an innovator (like Monster) gain distribution before market leaders with distribution (Coke, Pepsi, Anheuser Busch) gain innovation?

It’s remarkable that Monster succeeded. Their competitors already made sweetened caffeinated beverages. They already managed brands and distributed millions of liters of fluid to every gas station, bodega, and grocery store across the country.

The second is category creation. If you can’t be first, notes the second Immutable Law of Marketing, create a category where you can be. Buy-now-pay-later, fast-casual, on-demand-storage, and hard seltzer are all examples.

But the ‘energy drink’ category had a market leader: Red Bull. Not only that, the market leader had existed for nearly twenty years before Monster Energy began.

So what happened?

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Sometimes the category isn’t the competition. Snickers and Milky Way don’t really compete. Honey Baked Ham, Chinese restaurants, and ordering pizza are all holiday meals but not many consumers debate between those three. It’s homemade or Honey Baked.

“Red Bull and Monster consumers are unique. Red Bull went after the extreme consumer but early on focused on on-premise service: bars and restaurants. As a result, it morphed into what I would consider a white-collar beverage. Partly because of the premium price, partly because the smaller can…Monster decided on a 16oz can – the same price for twice the volume and marketed it towards more blue-collar workers. They also focused on palatability, especially from a sweet standpoint.”

Mark Astrachan, Odd Lots podcast

That ‘Monster’ can was a focus group suggestion.

A canonical Job-to-be-done example is the McDonald’s milkshake. The five-minute clip of Clayton Christensen is worth watching and the explanation probably mimics hiring Monster. It’s sweet and caffeinated. It’s large, so it lasts. It also means something to the consumers. Here’s a Google Trends map from January 2023.

There’s something about Pennsylvania through West Virginia, Ohio, Kentucky, Tennesse, Arkansas up through Missouri, Iowa, and Wisconsin consumers. Monster Energy tapped ‘that thing’.

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Related: Bitter Brew tells the story of Anheuser-Busch’s history. For God, Country, and Coca-Cola tells the story of Coke and highlights the importance of distribution advantages as Coke employees were the rear guard of the Allied forces marching across Europe in 1945.