Throughout 2022, Monster contributed to high costs in can imports. This was due to the fact that as the beverage manufacturer struggled to shift supply to the U.S. amid high consumer demand for its energy drinks
Monster Energy Company, LLC paid a total of $56 million in higher transportation costs for the second quarter of the year. This amount included the cost of importing cans for local producers. However, this operational inefficiency cost the company $46 million.
Monster Energy co-CEO and vice president Hilton Schlosberg said the company is relying less on imported cans overall, but is still taking on higher costs to meet demand. “We are in this business for the long term and it’s important for us to make sure that our customers and our consumers continue to have energetic products “Schlosberg added.
Port congestion and soaring freight costs pushed Monster to shift more of its aluminum can supply to end-use markets. But high demand made it difficult for the company to control costs, and Monster opted to pay to import cans last quarter rather than let the shelves empty.
“Yes, maybe we had a setback in gross margin but at least we were able to bring our inventories back to a situation where we can serve customers and we can serve consumers.” , the executive confessed.
In addition, the overall reliance on imported cans was eliminated, and Monster worked to redeploy finished inventory in U.S. distribution centers to reduce lead times and costs. The energy drink maker is confident of lower cost of sales in the coming quarters. “through increased use of domestic cans”. in the coming quarters.
Precisely, the continued reliance on imported cans comes as the company worked to ensure adequate availability ahead of planned price increases. Monster raised prices by about 6% in the U.S., and implemented some price increases in the second half of 2022 in certain international markets.
“We have done our best to stay on track and work within a very challenging supply chain environment,” Schlosberg concluded.
