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What changed in Monster Beverage's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Monster Beverage's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+397 added−416 removedSource: 10-K (2024-02-29) vs 10-K (2023-03-01)

Top changes in Monster Beverage's 2023 10-K

397 paragraphs added · 416 removed · 335 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

95 edited+23 added−19 removed82 unchanged
Biggest changeOverview We develop, market, sell and distribute energy drink beverages and concentrates for energy drink beverages, primarily under the following brand names: ● Monster Energy® ● Monster Energy Ultra® ● Monster Rehab® ● Monster Energy®Nitro ● Java Monster® ● Punch Monster® ● Juice Monster® ● Monster Hydro® Energy Water ● Monster Hydro ® Super Sport ● Monster Super Fuel® ● Monster Dragon Tea® ● Reign Total Body Fuel ® ● Reign Inferno® Thermogenic Fuel ● Reign Storm® ● True North® ● NOS® ● Full Throttle® ● Burn® ● Mother® ● Nalu® ● Ultra Energy® ● Play® and Power Play® (stylized) ● Relentless® ● BPM® ● BU® ● Gladiator® ● Samurai® ● Live+® ● Predator® ● Fury® ​ We also develop, market, sell and distribute craft beers, hard seltzers and flavored malt beverages (“FMBs”) under a number of brands, including Jai Alai® IPA, Florida Man TM IPA, Dale’s Pale Ale®, Wild Basin TM Hard Seltzers, Dallas Blonde®, Deep Ellum TM IPA, Perrin Brewing Company TM Black Ale, Hop Rising® Double IPA, Wasatch® Apricot Hefeweizen, The Beast Unleashed TM and a host of other brands.
Biggest changeWe also develop, market, sell and distribute craft beers, hard seltzers and flavored malt beverages (“FMBs”) under a number of brands, including Jai Alai® IPA, Florida Man TM IPA, Dale’s Pale Ale®, Wild Basin® Hard Seltzers, Dallas Blonde®, Deep Ellum TM IPA, Perrin Brewing Company TM Black Ale, Hop Rising® Double IPA, Wasatch® Apricot Hefeweizen, The Beast Unleashed®, Nasty Beast TM Hard Tea and a host of other brands.
Play® and Power Play ® (stylized) – a line of carbonated energy drinks. We offer the following energy drinks under the Play ® and Power Play® (stylized) product line: Apple Kiwi, Fruit Punch, Mango, Passion Fruit, Peach, Original and Sugar Free. Predator® – a line of affordable carbonated energy drinks.
We offer the following energy drinks under the Play ® and Power Play® (stylized) product line: Apple Kiwi, Fruit Punch, Mango, Passion Fruit, Peach, Original and Sugar Free. Predator® – a line of affordable carbonated energy drinks.
If we materially underestimate demand for our products and/or are unable to secure sufficient ingredients or raw materials including, but not limited to, aluminum cans, aluminum cap cans, sleek aluminum cans, aluminum cans with re-sealable ends, PET plastic bottles, caps, labels, flavor ingredients, flavors, juice concentrates, coffee, tea, supplement ingredients, ethanol, other ingredients and certain sweeteners, and/or procure adequate packing arrangements and/or obtain adequate or timely shipment of our products, we might not be able to satisfy demand on a short-term basis.
If we materially underestimate demand for our products and/or are unable to secure sufficient ingredients or raw materials including, but not limited to, aluminum cans, aluminum cap cans, sleek aluminum cans, aluminum cans with re-sealable ends, to a limited extent PET plastic bottles and caps, labels, flavor ingredients, flavors, juice concentrates, coffee, tea, supplement ingredients, ethanol, other ingredients and certain sweeteners, and/or procure adequate packing arrangements and/or obtain adequate or timely shipment of our products, we might not be able to satisfy demand on a short-term basis.
We believe that many of those products contain lower levels of supplement ingredients, principally deliver refreshment and are positioned differently from our energy or “functional” drinks. We are also subject to increasing levels of regulatory issues including in relation to the registration and/or taxation of our products in certain new international markets, which may put us at a competitive disadvantage.
We believe that many of those products contain lower levels of supplement ingredients, principally deliver refreshment and are positioned differently from our energy or “functional” drinks. We are also subject to increasing levels of regulatory issues including in relation to the registration and/or taxation of our products in certain international markets, which may put us at a competitive disadvantage.
Competitive pressures in the “alternative,” energy, coffee, “functional,” and “beyond beer” (hard seltzers, FMBs, canned cocktails and other ready-to-drink beverages) beverage categories could cause our products to maintain or to lose market share, or we could experience price erosion, which could materially impact our business and results of operations.
Competitive pressures in the “alternative,” energy, coffee, “functional,” “craft beer” and “beyond beer” (hard seltzers, FMBs, canned cocktails and other ready-to-drink beverages) beverage categories could cause our products to maintain or to lose market share, or we could experience price erosion, which could materially impact our business and results of operations.
Outside of the United States, for example, Latvia, Lithuania, Turkey, and Bahrain prohibit the sale of energy drinks to persons under the age of 18; Canada prohibits the promotion of energy drinks to children 12 years and under; Latvia and Scotland prohibit the sale of energy drinks in educational establishments; and Turkey prohibits the sale or advertising of energy drinks in “collective consumption areas,” such as sports complexes, schools or hospitals.
Outside of the United States, for example, Latvia, Lithuania, Poland, Turkey, and Bahrain prohibit the sale of energy drinks to persons under the age of 18; Canada prohibits the promotion of energy drinks to children 12 years and under; Latvia and Scotland prohibit the sale of energy drinks in educational establishments; and Turkey prohibits the sale or advertising of energy drinks in “collective consumption areas,” such as sports complexes, schools or hospitals.
The labels and graphics for many of our products are redesigned and refreshed from time to time to maximize their visibility and identification, wherever they may be placed in stores, which we continue to reevaluate from time to time. Where appropriate, we partner with our bottlers/distributors and/or retailers to assist our marketing efforts.
The labels and graphics for many of our products are redesigned and refreshed from time to time to maximize their visibility and identification, wherever they may be placed in stores, which designs we continue to reevaluate from time to time. Where appropriate, we partner with our bottlers/distributors and/or retailers to assist our marketing efforts.
Big, Boom, Raptor, Amp, Fusion, Hi-Tiger, Eastroc Super Drink, Carabao, Power Horse, XL, Crazy Tiger, Effect, Missile, Nocco, Adrenaline Rush, Real Gold, War Horse, BLU, CELSIUS, Eneryeti, GURU Organic Energy and a host of other international brands.
Big, Boom, Raptor, Amp, Fusion, Hi-Tiger, Eastroc Super Drink, Carabao, Power Horse, XL, Crazy Tiger, Effect, Missile, Nocco, Adrenaline Rush, Real Gold, War Horse, BLU, CELSIUS, Eneryeti, GURU Organic Energy, Prime Energy and a host of other international brands.
Monster Energy® Nitro – a line of carbonated energy drinks containing nitrous oxide. We offer the following energy drinks under the Monster Energy® Nitro product line: Cosmic Peach and Super Dry. Monster® Tour Water TM – a line of deep well still and sparkling waters. Rehab® Monster® Energy Drinks – a line of non-carbonated energy drinks with electrolytes.
Monster Energy® Nitro – a line of carbonated energy drinks containing nitrous oxide. We offer the following energy drinks under the Monster Energy® Nitro product line: Cosmic Peach and Super Dry. Monster Tour Water® – a line of deep well still and sparkling waters. Rehab® Monster® Energy Drinks – a line of non-carbonated energy drinks with electrolytes.
Our Monster Energy® Drinks segment primarily generates net operating revenues by selling ready-to-drink packaged energy drinks primarily to bottlers and full service beverage distributors. In some cases, we sell directly to retail grocery and specialty chains, wholesalers, club stores, mass merchandisers, convenience chains, drug stores, foodservice customers, value stores, e-commerce retailers and the military.
Our Monster Energy® Drinks segment primarily generates net operating revenues by selling ready-to-drink packaged energy drinks primarily to bottlers and full service beverage distributors (“bottlers/distributors”). In some cases, we sell directly to retail grocery and specialty chains, wholesalers, club stores, mass merchandisers, convenience chains, drug stores, foodservice customers, value stores, e-commerce retailers and the military.
See “Part I, Item 1A – Risk Factors – Changes in government regulation, or a failure to comply with existing regulations related to energy drinks, could adversely affect our business, financial condition and results of operations,” “Regulations concerning our alcohol beverages may adversely affect our business, financial condition or results of operations and inhibit the sales of such products,” and “Significant changes to or failure to comply with various environmental laws may expose us to liability and/or cause certain of our facilities and/or those of our co-packers to close, relocate or operate at reduced production levels, which could adversely affect our business, financial condition and results of operations” below for additional information.
See “Part I, Item 1A – Risk Factors – Changes in government regulation, or a failure to comply with existing 16 Table of Contents regulations, related to energy drinks, could adversely affect our business, financial condition and results of operations,” “Regulations concerning our alcohol beverages may adversely affect our business, financial condition or results of operations and inhibit the sales of such products,” and “Significant changes to or failure to comply with various environmental laws may expose us to liability and/or cause certain of our facilities and/or those of our co-packers to close, relocate or operate at reduced production levels, which could adversely affect our business, financial condition and results of operations” below for additional information.
Those products or product lines discontinued in 2022, either individually or in aggregate, did not have a material adverse impact on our financial position, results of operations or liquidity. Products – Monster Energy® Drinks Segment Monster Energy® Drinks – a line of carbonated energy drinks. Our Monster Energy® drinks contain vitamins, minerals, nutrients, herbs and other ingredients (collectively, “supplement ingredients”).
Those products or product lines discontinued in 2023, either individually or in aggregate, did not have a material adverse impact on our financial position, results of operations or liquidity. Products – Monster Energy® Drinks Segment Monster Energy® Drinks – a line of carbonated energy drinks. Our Monster Energy® drinks contain vitamins, minerals, nutrients, herbs and other ingredients (collectively, “supplement ingredients”).
We offer the following high performance energy drinks under the Reign Total Body Fuel® product line: Cherry Limeade, Lemon Hdz, Lilikoi Lychee, Mang-O-Matic, Melon Mania, Orange Dreamsicle, Peach Fizz, Razzle Berry, Reignbow Sherbet, Strawberry Sublime, Tropical Storm and White Gummy Bear.
We offer the following high performance energy drinks under the Reign Total Body Fuel® product line: Cherry Limeade, Lemon Hdz, Lilikoi Lychee, Mang-O-Matic, Melon Mania, Orange Dreamsicle, Peach Fizz, Razzle Berry, Reignbow Sherbet, Sour Gummy Worm, Strawberry Sublime, Tropical Storm and White Gummy Bear.
Our alcohol beverages are also subject to various taxes, license fees, and the like levied by governmental entities as well as bonds that such entities may deem necessary to ensure compliance with applicable laws and regulations. One such tax that we must comply with is the federal excise taxes.
Our alcohol beverages are also subject to various taxes, license fees, and the like levied by governmental entities as well as bonds that such entities may deem necessary to ensure compliance with applicable laws and regulations. One such tax that we must comply with is the U.S. federal excise tax.
Our alcohol customers are primarily beer distributors who in turn sell to retailers within the alcohol distribution system. Percentages of our gross billings to our various customer types for the years ended December 31, 2022, 2021 and 2020 are reflected below.
Our alcohol customers are primarily beer distributors who in turn sell to retailers within the alcohol distribution system. Percentages of our gross billings to our various customer types for the years ended December 31, 2023, 2022 and 2021 are reflected below.
In 2020, we established our Equality, Diversity and Inclusion (EDI) Leadership Advisory Group, comprised of leaders from across the Company, designed to provide insight on our diversity and inclusion efforts and to assist in the integration of the EDI program within our overall strategy and business objectives.
In 2020, we established our Diversity, Equality and Inclusion (DEI) Leadership Advisory Group, comprised of leaders from across the Company, designed to provide insight on our diversity and inclusion efforts and to assist in the integration of the DEI program within our overall strategy and business objectives.
Our third-party flavor suppliers generally do not make such flavors and/or blended concentrates available to other third-party customers. 11 Table of Contents We have entered into purchase agreements with key packaging and ingredient suppliers to maintain an adequate supply of such packaging and ingredients for the next one to four years based on current anticipated volume needs.
Our third-party flavor suppliers generally do not make such flavors and/or blended concentrates available to other third-party customers. We have entered into purchase agreements with key packaging and ingredient suppliers to maintain an adequate supply of such packaging and ingredients for the next one to four years based on current anticipated volume needs.
Co-Packing Arrangements All of our non-alcohol and certain alcohol finished goods are manufactured by various third-party bottlers and co-packers situated throughout the United States and abroad, under separate arrangements with each party. Our co-packaging arrangements vary in terms and do not generally obligate us to procure minimum quantities of products within specified periods.
Co-Packing Arrangements A majority of our non-alcohol and certain alcohol finished goods are manufactured by various third-party bottlers and co-packers situated throughout the United States and abroad, under separate arrangements with each party. Our co-packaging arrangements vary in terms and do not generally obligate us to procure minimum quantities of products within specified periods.
(See “Part I, Item 1A – Risk Factors”). For most of our products there are limited co-packing facilities in our domestic and international markets with adequate capacity and/or suitable equipment to package our products.
(See “Part I, Item 1A – Risk Factors”). For certain of our products, there are limited co-packing facilities in our domestic and international markets with adequate capacity and/or suitable equipment to package our products.
However, we may not be able to satisfactorily reformulate our products in all jurisdictions that adopt similar legislation. Limitations on Container Size. We package our products in a variety of different package types and sizes including, for certain of our Monster Energy® brand energy drinks, aluminum cans larger than 16 fluid ounces.
However, we may not be able to satisfactorily reformulate our products in all jurisdictions that adopt similar legislation. 18 Table of Contents Limitations on Container Size. We package our products in a variety of different package types and sizes including, for certain of our Monster Energy® brand energy drinks, aluminum cans larger than 16 fluid ounces.
Our products compete with all liquid refreshments and in many cases with products of much larger and in some cases better financed competitors, including the products of numerous nationally and internationally known producers such 12 Table of Contents as TCCC, PepsiCo, Inc. (“PepsiCo”), Keurig Dr. Pepper Inc. (“KDP”) and Red Bull GmbH.
Our products compete with all liquid refreshments and in many cases with products of much larger and in some cases better financed competitors, including the products of numerous nationally and internationally known producers such as TCCC, PepsiCo, Inc. (“PepsiCo”), Keurig Dr. Pepper Inc. (“KDP”) and Red Bull GmbH.
The Company’s Alcohol Brands segment primarily generates operating revenues by selling kegged and ready-to-drink canned beers, hard seltzers and FMBs, primarily to beer distributors in the United States. Generally, the Alcohol Brands segment will have lower gross profit margin percentages than the Monster Energy® Drinks segment.
The Company’s Alcohol Brands segment primarily generates operating revenues by selling kegged and ready-to-drink canned beers, hard seltzers and FMBs, primarily to beer distributors in the United States. Generally, the Alcohol Brands segment has lower gross profit margin percentages than the Monster Energy® Drinks segment.
For certain risks with respect to our energy drinks see “Part I, Item 1A – Risk Factors” below. Corporate History In the 1930s, Hubert Hansen and his sons started a business selling fresh non-pasteurized juices in Los Angeles, California.
For certain risks with respect to our beverages see “Part I, Item 1A – Risk Factors” below. Corporate History In the 1930s, Hubert Hansen and his sons started a business selling fresh non-pasteurized juices in Los Angeles, California.
Bahrain, Saudi Arabia and the United Arab Emirates began 17 Table of Contents applying a selective tax of 100% on energy drinks in 2017, Qatar and Oman began applying the tax in 2019, and there are indications that a similar measure may be enacted in Kuwait. Limits on Caffeine Content.
Bahrain, Saudi Arabia and the United Arab Emirates began applying a selective tax of 100% on energy drinks in 2017, Qatar and Oman began applying the tax in 2019, and there are indications that a similar measure may be enacted in Kuwait. Limits on Caffeine Content.
For our Monster Energy® Drinks segment, we are generally responsible for arranging for the purchase and delivery to our third-party bottlers and co-packers of the containers in which our beverage products are packaged. 9 Table of Contents Our products are packaged in a number of locations, both domestically and internationally.
For our Monster Energy® Drinks segment, we are generally responsible for arranging for the purchase and delivery to our third-party bottlers and co-packers of the containers in which our beverage products are packaged. Our products are packaged in a number of locations, both domestically and internationally.
Excise taxes on sweetened beverages already are in effect in certain foreign countries where we do business, such as France, the United Kingdom, Ireland, South Africa, Mexico and Colombia. Poland recently established a tax on drinks with added sugars, specifically targeting beverages containing caffeine and taurine. Other countries are considering similar measures.
Excise taxes on sweetened beverages already are in effect in certain foreign countries where we do business, such as France, the United Kingdom, Ireland, South Africa, Mexico and Colombia. Poland recently established a tax on drinks with added sugars, specifically targeting beverages containing caffeine and taurine.
We limit our description of our customer types to include only our sales to our full service bottlers/distributors without reference to such bottlers/distributors’ sales to their own customers. ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 2020 U.S. full service bottlers/distributors 48% ​ 51% ​ 56% International full service bottlers/distributors 39% ​ 39% ​ 34% Club stores and e-commerce retailers 9% ​ 8% ​ 8% Retail grocery, direct convenience, specialty chains and wholesalers 2% ​ 1% ​ 1% Alcohol, direct value stores and other 2% ​ 1% ​ 1% ​ Our non-alcohol customers include Coca-Cola Canada Bottling Limited, Coca-Cola Consolidated, Inc., Coca-Cola Bottling Company United, Inc., Reyes Coca-Cola Bottling, LLC, Coca-Cola Southwest Beverages LLC, The Coca-Cola Bottling Company of Northern New England, Inc., Swire Pacific Holdings, Inc.
We limit our description of our customer types to include only our sales to our full service bottlers/distributors without reference to such bottlers/distributors’ sales to their own customers. ​ ​ ​ ​ ​ ​ ​ ​ 2023 2022 2021 U.S. full service bottlers/distributors 47% ​ 48% ​ 51% International full service bottlers/distributors 40% ​ 39% ​ 39% Club stores and e-commerce retailers 8% ​ 9% ​ 8% Retail grocery, direct convenience, specialty chains and wholesalers 2% ​ 2% ​ 1% Alcohol, value stores and other 3% ​ 2% ​ 1% ​ Our non-alcohol customers include Coca-Cola Canada Bottling Limited, Coca-Cola Consolidated, Inc., Coca-Cola Bottling Company United, Inc., Reyes Coca-Cola Bottling, LLC, Coca-Cola Southwest Beverages LLC, The Coca-Cola Bottling Company of Northern New England, Inc., Swire Pacific Holdings, Inc.
Our Reign Total Body Fuel® and Reign Inferno® Thermogenic Fuel high performance energy drinks compete with VPX Bang, Adrenaline Shoc, C4, CELSIUS HEAT, NOCCO, Rockstar XDURANCE, Ghost Energy, G Fuel, VPX Redline, Bucked Up Energy, and 3D in the performance energy category.
Our Reign Total Body Fuel®, Reign Inferno® Thermogenic Fuel high performance energy and Bang Energy® drinks compete with Adrenaline Shoc, C4, CELSIUS, NOCCO, Rockstar XDURANCE, Ghost Energy, G Fuel, Bucked Up Energy and 3D in the performance energy category.
To a lesser extent, our Strategic Brands segment generates net operating revenues by selling certain ready-to-drink packaged energy drinks to bottlers and full service beverage distributors. Generally, the Monster Energy® Drinks segment generates higher per case net operating revenues, but lower per case gross profit margin percentages than the Strategic Brands segment.
To a lesser extent, our Strategic Brands segment generates net operating revenues by selling certain ready-to-drink packaged energy drinks to bottlers/distributors. Generally, the Monster Energy® Drinks segment generates higher per case net operating revenues, but lower per case gross profit margin percentages than the Strategic Brands segment.
Department of Agriculture promulgated regulations requiring that, by January 1, 16 Table of Contents 2022, the labels of certain bioengineered foods include a disclosure that the food is bioengineered. These regulations may impact, reduce and/or otherwise affect the purchase and consumption of our products by consumers.
Department of Agriculture promulgated regulations requiring that, as of January 1, 2022, the labels of certain bioengineered foods include a disclosure that the food is bioengineered. These regulations may impact, reduce and/or otherwise affect the purchase and consumption of our products by consumers.
As of December 31, 2022, approximately 43% of our U.S. employees are from one or more underrepresented groups, including, but not limited to, Black, Latino, Asian, Pacific Islander, Native American and other Indigenous tribes and approximately 36% of our U.S. employees are female.
As of December 31, 2023, approximately 45% of our U.S. employees are from one or more underrepresented groups, including, but not limited to, Black, Latino, Asian, Pacific Islander, Native American and other Indigenous tribes and approximately 36% of our U.S. employees are female.
We also offer several voluntary benefits to full-time employees, including supplemental life insurance, whole life insurance, accident insurance, critical illness insurance, flexible health spending accounts, flexible spending accounts for childcare, travel insurance, pre-paid legal cover, healthy rewards programs, identity theft assistance, and retirement savings account(s). 19 Table of Contents We also offer an Employee Assistance Program (EAP) to all employees.
We also offer several voluntary benefits to full-time employees, including supplemental life insurance, whole life insurance, accident insurance, critical illness insurance, flexible medical spending accounts, flexible spending accounts for childcare, travel insurance, pre-paid legal cover, healthy rewards programs, identity theft assistance, and retirement savings account(s). We also offer an Employee Assistance Program (EAP) to all employees.
ITEM 1. BUSINESS When this report uses the words “the Company”, “we”, “us” and “our”, these words refer to Monster Beverage Corporation and its subsidiaries, unless the context otherwise requires. Based in Corona, California, Monster Beverage Corporation is a holding company and conducts no operating business, except through its consolidated subsidiaries. The Company’s subsidiaries primarily develop and market energy drinks.
ITEM 1. BUSINESS When this report uses the words “the Company”, “we”, “us” and “our”, these words refer to Monster Beverage Corporation and its subsidiaries, unless the context otherwise requires. Based in Corona, California, Monster Beverage Corporation is a holding company and conducts no operating business, except through its consolidated subsidiaries.
For our Alcohol Brands segment, we purchase cans, cartons, hops, malt, yeast, sugar, ethanol and other additives and flavorings and packaging materials from ingredient and raw material suppliers to be used in the brewing, fermentation, and packaging of alcohol beers and FMB products.
For our Alcohol Brands segment, we purchase cans, cartons, hops, malt, yeast, sugar, ethanol and other additives and flavorings and packaging materials from ingredient and raw material suppliers to be used in the brewing, fermentation, and packaging of alcohol beers, hard seltzers and FMBs.
Certain of our material distribution arrangements for our Monster Energy® brand energy drinks, as amended from time to time, are described below: (a) Amended and Restated Distribution Coordination Agreement with TCCC, pursuant to which we have designated, and in the future may designate, subject to TCCC’s approval, territories in Canada and the United States in which bottlers from TCCC’s network of wholly or partially-owned and independent bottlers (the “TCCC North American Bottlers”) will distribute and sell, or continue to distribute and sell, our Monster Energy® brand energy drinks. 10 Table of Contents (b) Amended and Restated International Distribution Coordination Agreement with TCCC, pursuant to which we have designated, and in the future may designate, countries, or territories within countries, in which we wish to appoint TCCC network bottlers to distribute and sell our Monster Energy® brand energy drinks, subject to TCCC’s approval.
Certain of our material distribution arrangements for our Monster Energy® brand energy drinks, as amended from time to time, are described below: (a) Amended and Restated Distribution Coordination Agreement with TCCC, pursuant to which we have designated, and in the future may designate, subject to TCCC’s approval, territories in Canada and the United States in which bottlers from TCCC’s network of wholly or partially-owned and independent bottlers (the “TCCC North American Bottlers”) will distribute and sell, or continue to distribute and sell, our Monster Energy® brand energy drinks.
(USA), Liberty Coca-Cola Beverages, LLC, Coca-Cola Europacific Partners, Coca-Cola Hellenic, Coca-Cola FEMSA, Swire Coca-Cola (China), COFCO Coca-Cola, Coca-Cola Beverages Africa, Coca-Cola İçecek and certain other TCCC network bottlers, Asahi Soft Drinks, Co., Ltd., Wal-Mart, Inc. (including Sam’s Club), Costco Wholesale Corporation and Amazon.com, Inc. Our alcohol customers include J.J. Taylor Distributing, Ben E.
(USA), Liberty Coca-Cola Beverages, LLC, Coca-Cola Europacific Partners, Coca-Cola Hellenic, Coca-Cola FEMSA, Swire Coca-Cola (China), COFCO Coca-Cola, Coca-Cola Beverages Africa, Coca-Cola İçecek and certain other TCCC network bottlers, Asahi Soft Drinks, Co., Ltd., Wal-Mart, Inc. (including Sam’s Club), Costco Wholesale Corporation and Amazon.com, Inc. Our alcohol customers include Reyes Beverage Group, Ben E. Keith Company, J.J.
We offer the following energy drinks under the Predator ® product line: Gold Strike, Malt Smash, Mango Mayhem, Mean Green, Peach, Purple Rain, Red Apple, Spicy Ginger and Tropical. Relentless® – a line of carbonated energy drinks. We offer the following energy drinks under the Relentless ® product line: Apple Kiwi, Cherry, Origin, Passion Punch, Peach, and Raspberry.
We offer the following energy drinks under the Predator ® product line: Gold Strike, Malt Smash, Mango Mayhem, Mean Green, Peach, Punch, Purple Rain, Red Apple, Spicy Ginger and Tropical. Relentless® – a line of carbonated energy drinks.
We offer the following coffee + energy drinks under the Java Monster® product line: Java Monster® 300 French Vanilla, Java Monster® 300 Mocha, Java Monster® Cold Brew Latte, Java Monster® Cold Brew Sweet Black, Java Monster® Irish Blend®, Java Monster® Kona Blend, Java Monster® Loca Moca®, Java Monster® Mean Bean®, Java Monster® Salted Caramel and Java Monster® Vanilla Light.
We offer the following coffee + energy drinks under the Java Monster® product line: Java Monster® 300 French Vanilla, Java Monster® 300 Mocha, Java Monster® Café Latte, Java Monster® Cold Brew Latte, Java Monster® Cold Brew Sweet Black, Java Monster® Irish Blend®, Java Monster® Irish Crème, Java Monster® Loca Moca®, Java Monster® Mean Bean® and Java Monster® Salted Caramel.
We offer the following energy drinks under the Monster Energy® drink product line: Monster Energy®, Monster Energy® Zero Sugar, Lo-Carb Monster Energy®, Monster Assault®, Monster® Mango Loco® , Juice Monster® Aussie Style Lemonade TM , Juice Monster® Khaotic®, Juice Monster® Mango Loco®, Juice Monster® Pacific Punch®, Juice Monster® Papillon TM (Juiced Monster® 5 Table of Contents Monarch in certain countries) Juice Monster® Pipeline Punch®, Juice Monster® Ripper®, Monster Energy® Import, Monster Energy® Export, M3(stylized)®, Monster Mule®, Monster Cuba Libre®, Monster Energy Zero Ultra®, Monster Energy Ultra Black®, Monster Energy Ultra Blue®, Monster Energy Ultra Fiesta® Mango, Monster Energy® Ultra Golden Pineapple®, Monster Energy Ultra Paradise®, Monster Energy® Ultra Peachy Keen®, Monster Energy Ultra Red®, Monster Energy Ultra Rosa®, Monster Energy Ultra Strawberry Dreams®, Monster Energy Ultra Sunrise®, Monster Energy Ultra Violet®, Monster Energy Ultra® Watermelon, Monster Energy® Mixxd Punch, Monster Energy® Valentino Rossi, Monster Energy® Lewis Hamilton 44, Monster Energy® Lewis Hamilton 44 Zero Sugar, Monster Energy® Super Cola® (Japan), Monster® (stylized) Reserve Kiwi Strawberry, Monster® (stylized) Reserve Orange Dreamsicle, Monster® (stylized) Reserve Watermelon and Monster® (stylized) Reserve White Pineapple. ​ Java Monster ® Coffee + Energy Drinks – a line of non-carbonated dairy based coffee + energy drinks.
We offer the following energy drinks under the Monster Energy® drink product line: Monster Energy®, Monster Energy® Zero Sugar, Lo-Carb Monster Energy®, Monster Assault®, Juice Monster® Aussie Style Lemonade TM , Juiced Monster® Bad Apple®, Juice Monster® Khaotic®, Juice Monster® Mango Loco®, Juice Monster® Pacific Punch®, Juice Monster® Papillon TM (Juiced Monster® Monarch in certain countries), Juice Monster® Pipeline Punch®, Juice Monster® Ripper®, Juice Monster® Rio Punch TM , Monster Energy® Import, Monster Energy® Export, M3(stylized)®, Monster Mule®, Monster Energy Zero Ultra®, Monster Energy Ultra Black®, Monster Energy Ultra Blue®, Monster Energy® Ultra Fantasy Ruby Red TM , Monster Energy Ultra Fiesta® Mango, Monster Energy® Ultra Golden Pineapple®, Monster Energy Ultra Paradise®, Monster Energy® Ultra Peachy Keen®, Monster Energy Ultra Red®, Monster Energy Ultra Rosa®, Monster Energy® Ultra Strawberry Dreams TM , Monster Energy Ultra Sunrise®, Monster Energy Ultra Violet®, Monster Energy Ultra® Watermelon, Monster Energy® Mixxd Punch, Monster Energy® Valentino Rossi, Monster Energy® Lewis Hamilton 44, Monster Energy® Lewis Hamilton 44 Zero Sugar, Monster Energy® Super Cola® (Japan), Monster® (stylized) Reserve Kiwi Strawberry, Monster® (stylized) Reserve Orange Dreamsicle, Monster® (stylized) Reserve Peaches N’ Crème, Monster® (stylized) Reserve Watermelon and Monster® (stylized) Reserve White Pineapple. ​ Java Monster® Coffee + Energy Drinks – a line of non-carbonated dairy based coffee + energy drinks.
Other countries, such as Argentina, Brazil, Colombia, the member states of the Gulf Cooperation Council, Mexico, the People’s Republic of China, Peru and Uruguay are also considering, or have enacted, new labeling requirements, which may require us to amend our labels and warning statements.
Other countries, such as Argentina, Brazil, Colombia, Ecuador, Honduras, the member states of the Gulf Cooperation Council, the member states of the Caribbean Community and Common Market (CARICOM), Mexico, the People’s Republic of China, Paraguay, Peru and Uruguay are also considering, or have enacted, new labeling requirements, which may require us to amend our labels and warning statements.
We offer the following energy drinks under the Rehab® Monster® product line: Peach Tea, Raspberry Tea, Strawberry Lemonade, Tea + Lemonade and Watermelon. Reign Total Body Fuel ® High Performance Energy Drinks – a line of high performance energy drinks with BCAA’s, B vitamins, electrolytes and CoQ10 with zero sugar.
We offer the following energy drinks under the Rehab® Monster® product line: Green Tea, Peach Tea, Strawberry Lemonade, Tea + Lemonade, Watermelon and Wild Berry Tea. 6 Table of Contents Reign Total Body Fuel® High Performance Energy Drinks – a line of high performance energy drinks with BCAA’s, B vitamins, electrolytes and CoQ10 with zero sugar.
We increased expenditures for our sales and marketing programs by approximately 11.4% in the twelve-months ended December 31, 2022 compared to the twelve-months ended December 31, 2021. Customers Our non-alcohol customers are primarily full service beverage bottlers/distributors, retail grocery and specialty chains, wholesalers, club stores, mass merchandisers, convenience chains, foodservice customers, value stores, e-commerce retailers and the military.
We increased expenditures for our sales and marketing programs by approximately 15.8% in the twelve-months ended December 31, 2023 compared to the twelve-months ended December 31, 2022. 14 Table of Contents Customers Our non-alcohol customers are primarily full service beverage bottlers/distributors, retail grocery and specialty chains, wholesalers, club stores, mass merchandisers, convenience chains, foodservice customers, value stores, e-commerce retailers and the military.
Full Throttle® – a line of carbonated energy drinks. We offer the following energy drinks under the Full Throttle® product line: Original (Citrus) and True Blue. Fury® – a line of affordable carbonated energy drinks. We offer the following energy drinks under the Fury ® product line: Gold Strike and Mean Green. Gladiator® – a line of carbonated energy drinks.
We offer the following energy drinks under the Full Throttle® product line: Original (Citrus) and True Blue. Fury® – a line of affordable carbonated energy drinks. We offer the following energy drink under the Fury ® product line: Gold Strike. Live+® – a line of carbonated energy drinks.
We have entered into agreements with various TCCC network bottlers, both in the United States and internationally, providing for the distribution and sale of our Strategic Brands energy drinks. Alcohol Brands Distribution Agreements CANarchy has entered into agreements with various beer distributors, both in the United States and internationally, providing for the distribution of our alcohol products.
We have entered into agreements with various TCCC network bottlers, both in the United States and internationally, providing for the distribution and sale of our Strategic Brands energy drinks.
In addition, legislation has been proposed in certain jurisdictions that would specifically impose excise taxes on energy drinks. For example, Kuwait is considering a proposal that would impose an excise tax on energy drinks. Such targeted legislation has been passed in other countries.
For example, Kuwait is considering a proposal that would impose an excise tax on energy drinks. Such targeted legislation has been passed in other countries.
Keith, Reyes Beer Division, Sheehan Family Companies, and Admiral Beverage. A decision by any large customer to decrease amounts purchased from us or to cease carrying our products could have a material adverse effect on our financial condition and results of operations.
Taylor Distributing and Sheehan Family Companies. A decision by any large customer to decrease amounts purchased from us or to cease carrying our products could have a material adverse effect on our financial condition and results of operations.
Compliance with these provisions has not had, nor do we expect such compliance to have, any material adverse effect upon our capital expenditures, net income or competitive position. 18 Table of Contents Container Deposits. Various municipalities, states and foreign countries require that a deposit be charged for certain non-refillable beverage containers.
Compliance with these provisions has not had, nor do we expect such compliance to have, any material adverse effect upon our capital expenditures, net income or competitive position. Container Deposits. Various municipalities, states and foreign countries require that a deposit be charged for certain non-refillable beverage containers. The precise requirements imposed by these measures vary by jurisdiction.
We consider Monster®, Monster Energy®, ®, Monster Energy Ultra®, Monster Dragon Iced Tea®, Unleash the Beast!®, Rehab® Monster®, Java Monster®, Muscle Monster®, Punch Monster®, Juice Monster®, Hydro® (stylized), Monster HydroSport Super Fuel®, Hydro Super Sport®, Monster Super Fuel®, Espresso Monster®, Monster Energy® Nitro, Reign Total Body Fuel®, Reign Inferno®, Reign Storm®, True North®, BU®, Nalu®, NOS®, Full Throttle®, Burn®, Mother®, Ultra Energy®, Play® and Power Play® (stylized), Relentless®, Predator®, Fury®, Live+®, BPM®, Gladiator®, Samurai®, Oskar Blues Brewery®, Cigar City®, Deep Ellum Brewing Co®, Perrin Brewing Company®, Squatters®, Wasatch®, Jai Alai®, Dale’s Pale Ale®, Dallas Blonde®, Wild Basin TM , Dale’s®, Mama’s Little Yella Pils®, Hop Rising® and The Beast Unleashed TM to be our core trademarks.
We consider Monster®, Monster Energy®, ®, Monster Energy Ultra®, Unleash the Beast!®, Rehab® Monster®, Java Monster®, Muscle Monster®, Punch Monster®, Juice Monster®, Monster Energy® Nitro, Reign Total Body Fuel®, Reign Inferno®, Reign Storm®, BU®, Nalu®, NOS®, Full Throttle®, Burn®, Mother®, Ultra Energy®, Play® and Power Play® (stylized), Relentless®, Predator®, Fury®, Live+®, BPM®, Gladiator®, Samurai®, Bang Energy®, Monster Tour Water®, Oskar Blues Brewery®, Cigar City®, Deep Ellum Brewing Co®, Perrin Brewing Company®, Squatters®, Wasatch®, Jai Alai®, Dale’s Pale Ale®, Dallas Blonde®, Wild Basin®, Dale’s®, Hop Rising®, The Beast Unleashed® and Nasty Beast TM Hard Tea to be our core trademarks.
BU® – a line of carbonated energy drinks. We offer the following energy drink under the BU® product line: Original. Burn® – a line of carbonated energy drinks. We offer the following energy drinks under the Burn® product line: Apple Kiwi, Blue, Dark Energy, Fruit Punch, Mango, Original, Passion Punch, Peach, Peach Mango, Pineapple, Royal, Sour Twist and Zero Raspberry.
We offer the following energy drinks under the Burn® product line: Apple Kiwi, Blue, Dark Energy, Fruit Punch, Guava, Mango, Original, Passion Punch, Peach, Peach Mango, Pineapple, Royal, Sour Twist, Watermelon Zero Sugar, Yellow and Zero Raspberry. Full Throttle® – a line of carbonated energy drinks.
We also enforce and protect our trademark rights against third parties infringing or disparaging our trademarks by opposing registration of conflicting trademarks and initiating litigation as necessary. 15 Table of Contents Government Regulation The production, distribution and sale in the United States of many of our products are subject to various U.S. federal, state and local regulations, including but not limited to: the Federal Food, Drug and Cosmetic Act (“FD&C Act”); the Occupational Safety and Health Act and various state laws and regulations governing workplace health and safety; various environmental statutes; the Safe Drinking Water and Toxic Enforcement Act of 1986 (“California Proposition 65”); various state and federal laws and regulations pertaining to the sale and distribution of alcohol beverages; data privacy and personal data protection laws and regulations, including the California Consumer Privacy Act of 2018 (as modified by the California Privacy Rights Act) and a number of other federal, state and local statutes and regulations applicable to the production, transportation, sale, safety, advertising, marketing, labeling, packaging, and ingredients of such products.
Government Regulation The production, distribution and sale in the United States of many of our products are subject to various U.S. federal, state and local regulations, including but not limited to: the Federal Food, Drug and Cosmetic Act (“FD&C Act”); the Occupational Safety and Health Act and various state laws and regulations governing workplace health and safety; various environmental statutes; the Safe Drinking Water and Toxic Enforcement Act of 1986 (“California Proposition 65”); various state and federal laws and regulations pertaining to the sale and distribution of alcohol beverages; data privacy and personal data protection laws and regulations, including the California Consumer Privacy Act of 2018 (as modified by the California Privacy Rights Act) and a number of other federal, state and local statutes and regulations applicable to the production, transportation, sale, safety, advertising, marketing, labeling, packaging, and ingredients of such products.
We offer the following energy drinks under the Mother ® product line: Epic Swell, Frosty Berry, Kicked Apple ® , Kiwi Sublime, Lava Guava, Original, Passion, Sugar Free, Tropical Blast TM and Zero Sugar Razzle Berry. Nalu® – a line of carbonated energy drinks.
We offer the following energy drinks under the Live+® product line: Ascend, Ignite, Persist and Watermelon. Mother® – a line of carbonated energy drinks. We offer the following energy drinks under the Mother ® product line: Epic Swell, Frosty Berry, Kicked Apple, Kiwi Sublime, Lava Guava, Original, Passion, Rainbow Sherbet, Sugar Free, Tropical Blast and Zero Sugar Razzle Berry.
According to Beverage Marketing Corporation, domestic U.S. wholesale sales in 2022 for the “alternative” beverage category of the market are estimated at approximately $72.9 billion, representing an increase of approximately 10.4% over estimated domestic U.S. wholesale sales in 2021 of approximately $66.1 billion. 3 Table of Contents Reportable Segments We have four operating and reportable segments: (i) Monster Energy® Drinks segment (“Monster Energy® Drinks”), which is primarily comprised of our Monster Energy® drinks, Reign Total Body Fuel® high performance energy drinks, Monster ® Tour Water TM and True North® Pure Energy Seltzers, (ii) Strategic Brands segment (“Strategic Brands”), which is primarily comprised of the various energy drink brands acquired from The Coca-Cola Company (“TCCC”) in 2015 as well as our affordable energy brands, (iii) Alcohol Brands segment (“Alcohol Brands”), which is primarily comprised of the various craft beers and hard seltzers purchased as part of our acquisition of CANarchy Craft Brewery Collective LLC (“CANarchy”) on February 17, 2022 as well as The Beast Unleashed TM FMBs and (iv) Other segment (“Other”), which is comprised of certain products sold by American Fruits and Flavors LLC (“AFF”), a wholly-owned subsidiary of the Company, to independent third-party customers (the “AFF Third-Party Products”).
According to Beverage Marketing Corporation, domestic U.S. wholesale sales in 2023 for the “alternative” beverage category of the market are estimated at approximately $73.4 billion, representing an increase of approximately 5.9% over estimated domestic U.S. wholesale sales in 2022 of approximately $69.3 billion. 3 Table of Contents Reportable Segments We have four operating and reportable segments: (i) Monster Energy® Drinks segment (“Monster Energy® Drinks”), which is primarily comprised of our Monster Energy® drinks, Reign Total Body Fuel® high performance energy drinks, Reign Storm® total wellness energy drinks, Bang Energy® drinks and Monster Tour Water®, (ii) Strategic Brands segment (“Strategic Brands”), which is primarily comprised of the various energy drink brands acquired from The Coca-Cola Company (“TCCC”) in 2015 as well as our affordable energy brands, Predator® and Fury®, (iii) Alcohol Brands segment (“Alcohol Brands”), which is comprised of various craft beers, hard seltzers and FMBs and (iv) Other segment (“Other”), which is comprised of certain products sold by American Fruits and Flavors LLC (“AFF”), a wholly-owned subsidiary of the Company, to independent third-party customers (the “AFF Third-Party Products”).
We offer the following energy drinks under the Nalu ® product line: Black Tea & Passion Fruit, Exotic, Frost, Green Tea & Ginger, Hibiscus Rooibos, Melon Splash, Original and Passion. NOS® – a line of carbonated energy drinks. We offer the following energy drinks under the NOS ® product line: GT Grape, Original and Sonic Sour.
Nalu® – a line of carbonated energy drinks. We offer the following energy drinks under the Nalu ® product line: Black Tea & Passion Fruit, Cassis Lavender, Exotic, Frost, Green Tea & Ginger, Hibiscus Rooibos, Melon Splash, Original, Passion and Strawberry Rhubarb. NOS® – a line of carbonated energy drinks.
Competition includes microbreweries, regional brewers, national craft brewers, and large international and domestic producers of beers, FMBs, and hard seltzers such as Molson Coors, Constellation Brands, AB InBev, The Boston Beer Company and The Mark Anthony Group among many others.
Our alcohol products compete within the FMB, hard seltzer, and craft beer categories of the alcohol beverage industry. Competition includes microbreweries, regional brewers, national craft brewers, and large international and domestic producers of beers, FMBs, and hard seltzers such as Molson Coors, Constellation Brands, AB InBev, The Boston Beer Company and The Mark Anthony Group among many others.
These strategies and activities may apply to the CANarchy family of products or The Beast Unleashed TM where permitted by applicable laws. 13 Table of Contents We also manage taprooms and brewpubs adjacent to some of our manufacturing locations where we sell our alcohol products, merchandise, and food to consumers in a branded environment.
These strategies and activities may apply to our alcohol products where permitted by applicable laws. We also manage taprooms and brewpubs adjacent to some of our manufacturing locations where we sell our alcohol products, merchandise, and food to consumers in a branded environment.
Peru also recently challenged the use of L-carnitine in energy drinks. Other markets may also restrict or prohibit the use of ginseng and certain other botanicals in food. We may incur costs to address such country-specific requirements for or face restrictions on our products. Age and Other Restrictions on Energy Drink Products.
Other markets may also restrict or prohibit the use of ginseng and certain other botanicals in food. We may incur costs to address such country-specific requirements or face restrictions on our products. 17 Table of Contents Age and Other Restrictions on Energy Drink Products.
We have registered Monster®, Monster Energy®, ®, Monster Energy Ultra®, Unleash the Beast!®, Rehab® Monster®, Java Monster®, Muscle Monster®, Punch Monster®, Juice Monster®, Hydro® (stylized), Espresso Monster®, True North®, BU®, Nalu®, Burn®, Mother®, Play®, Power Play® (stylized), Relentless®, Ultra Energy®, BPM®, Predator®, Fury®, Live+®, Gladiator®, Samurai®, Reign®, Reign Total Body Fuel® and Reign Inferno® outside of the United States in certain jurisdictions.
We have registered Monster®, Monster Energy®, ®, Monster Energy Ultra®, Unleash the Beast!®, Rehab® Monster®, Java Monster®, Muscle Monster®, Punch Monster®, Juice Monster®, BU®, Nalu®, Burn®, Mother®, Play®, Power Play® (stylized), Relentless®, Ultra Energy®, BPM®, Predator®, Fury®, Live+®, Gladiator®, Samurai®, Reign®, Reign Total Body Fuel®, Reign Inferno®, Reign Storm®, Bang Energy®, Monster Tour Water®, The Beast Unleashed® and Nasty Beast TM Hard Tea outside of the United States in certain jurisdictions.
Coca-Cola Consolidated, Inc. accounted for approximately 11%, 12% and 12% of our net sales for the years ended December 31, 2022, 2021 and 2020, respectively.
Coca-Cola Consolidated, Inc. accounted for approximately 10%, 11% and 12% of our net sales for the years ended December 31, 2023, 2022 and 2021, respectively. Reyes Coca-Cola Bottling, LLC accounted for approximately 9%, 9% and 10% of our net sales for the years ended December 31, 2023, 2022 and 2021, respectively.
The precise requirements imposed by these measures vary by jurisdiction. Other deposit, recycling, ecotaxes and/or product stewardship proposals have been, and may in the future be, introduced and enacted at the federal, state, and local levels, and in foreign countries.
Other deposit, recycling, ecotaxes and/or product stewardship proposals have been, and may in the future be, introduced and enacted at the federal, state, and local levels, and in foreign countries.
Domestically, our energy drinks compete directly with Red Bull, Rockstar, MTN Dew Amp, MTN Dew Kickstart, MTN Dew GameFuel and MTN Dew Energy, G Fuel, Venom, VPX Redline, 5-Hour Energy Shots, MiO Energy, VPX Bang, V8 + Energy, Uptime, hi*ball, CELSIUS, C4, Alani Nu, 3D Energy, ZOA Energy, Rowdy Energy, GHOST Energy, Gatorade Fast Twitch, Prime Energy, Starbucks BAYA Energy, Guayaki Yerba Mate, Optimum Nutrition, Adrenaline Shoc and many other brands.
Domestically, our energy drinks compete directly with Red Bull, Rockstar, MTN Dew Amp and MTN Dew Energy, G Fuel, Venom, 5-Hour Energy Shots, MiO Energy, V8 + Energy, Uptime, hi*ball, CELSIUS, C4, Alani Nu, 3D Energy, ZOA Energy, GHOST Energy, Gatorade Fast Twitch, Prime Energy, Starbucks BAYA Energy, Guayaki Yerba Mate, Adrenaline Shoc, Accelerator Active Energy, Arizona Rx Energy, Bucked Up Energy, XYIENCE Energy and many other brands.
Our Java Monster® product line competes directly with Starbucks Frappuccino, Starbucks Doubleshot, Starbucks Tripleshot and other Starbucks coffee drinks, Costa Coffee, Dunkin Donuts, Stok, High Brew, Douwe Egberts Coffee, Emmi CAFFÈ, Bang Keto Coffee, Nescafe, Black Rifle, International Delight, Rise Brewing Co. and Black Stag.
Our Java Monster® product line competes directly with Starbucks Frappuccino, Starbucks Doubleshot, Starbucks Tripleshot and other Starbucks coffee drinks, Costa Coffee, Dunkin Donuts, Stok, High Brew, Douwe Egberts Coffee, 13 Table of Contents Emmi CAFFÈ, Nescafe, Black Rifle, International Delight, Rise Brewing Co., Black Stag, La Colombe, Super Coffee, Bolthouse Farms and Victor Allen’s Coffee.
We offer the following brands under the Oskar Blues TM brand family: Dale’s Pale Ale ® , Double Dale’s, Mama’s Little Yella Pils, and others. Deep Ellum TM – a line of craft beers. We offer the following brands under the Deep Ellum TM brand family: Dallas Blonde ® , Deep Ellum TM IPA, and others.
Oskar Blues TM – a line of craft beers. We offer the following brands under the Oskar Blues TM brand family: Dale’s Pale Ale ® , Dale’s Light Lager, Double Dale’s and others. Deep Ellum TM – a line of craft beers.
We depend on our bottlers and full service beverage distributors to prioritize our products, provide stable and reliable distribution and secure adequate shelf space in retail outlets.
We depend on our bottlers/distributors to prioritize our products, provide efficient, stable and reliable distribution and secure 12 Table of Contents adequate shelf space in retail outlets.
We are granted a right-of-use for any kegs used in production from a third-party supplier at a contracted rate per fill. Most of our alcohol finished goods are manufactured at one of our seven owned or leased manufacturing facilities, but we have started and will increase production and packaging at co-packers as we require additional capacity.
We are granted a right-of-use for any kegs used in production from 9 Table of Contents a third-party supplier at a contracted rate per fill. Most of our alcohol finished goods are manufactured at our owned or leased manufacturing facilities or at third-party co-packers.
Monster Energy ® Distribution Agreements We have entered into agreements with various bottlers/distributors providing for the distribution of our Monster Energy® energy drinks during initial terms of up to twenty years, which may be renewed thereafter for additional terms ranging from one to five years, subject to certain terms and conditions, which may vary depending on the form of the agreement.
Net sales outside the United States were $2.71 billion, $2.36 billion and $2.04 billion for the years ended December 31, 2023, 2022 and 2021, respectively. 10 Table of Contents Monster Energy ® Distribution Agreements We have entered into agreements with various bottlers/distributors providing for the distribution of our Monster Energy® energy drinks during initial terms of up to twenty years, which may be renewed thereafter for additional terms ranging from one to five years, subject to certain terms and conditions, which may vary depending on the form of the agreement.
Raw Materials and Suppliers The principal raw materials used in the manufacturing of our products are aluminum cans, aluminum cap cans, sleek aluminum cans, aluminum cans with re-sealable ends, PET plastic bottles, caps, kegs, cartons as well as flavors, juice concentrates, glucose, sugar, sucralose, milk, cream, coffee, tea, hops, malt, yeast, ethanol, supplement ingredients and other packaging materials, the costs of which are subject to fluctuations.
Monster Brewing Company has also entered into distribution agreements with licensed beer distributors for the exclusive distribution of certain beverages in agreed upon territories. 11 Table of Contents Raw Materials and Suppliers The principal raw materials used in the manufacturing of our products are aluminum cans, aluminum cap cans, sleek aluminum cans, aluminum cans with re-sealable ends, to a limited extent PET plastic bottles and caps, kegs, cartons as well as flavors, juice concentrates, glucose, sugar, sucralose, milk, cream, coffee, tea, hops, malt, yeast, ethanol, supplement ingredients and other packaging materials, the costs of which are subject to fluctuations.
Products – Packaging Our products are packaged in a variety of different package types and sizes including, but not limited to, aluminum cans, aluminum cap cans, sleek aluminum cans, aluminum cans with re-sealable ends, kegs as well as polyethylene terephthalate (PET) plastic bottles. 8 Table of Contents Manufacture and Distribution AFF develops and manufactures the primary flavors for our Monster Energy® Drinks segment.
Products – Packaging Our products are packaged in a variety of different package types and sizes including, but not limited to, aluminum cans, aluminum cap cans, sleek aluminum cans, aluminum cans with re-sealable ends, kegs as well as to a limited extent, polyethylene terephthalate (PET) plastic bottles.
Available Information As a public company, we are required to file our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements on Schedule 14A and other information (including any amendments) with the Securities and Exchange Commission (the “SEC”).
See Note 19, “Employee Benefit Plan” in the Notes to the Consolidated Financial Statements for a discussion of our 401(k) Plan. 20 Table of Contents Available Information As a public company, we are required to file our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements on Schedule 14A and other information (including any amendments) with the Securities and Exchange Commission (the “SEC”).
We continue to actively seek alternative and/or additional co-packing facilities around the world (including in Africa, Asia, Australia, Central and South America, China, Europe, India, Mexico, the Middle East and the United States) with adequate capacity and capability for the production of our various products to minimize transportation costs and transportation-related damages as well as to mitigate the risk of a disruption in production and/or importation.
We continue to actively seek alternative and/or additional co-packing facilities globally with adequate capacity and capability for the production of our various products to minimize transportation costs and transportation-related damages as well as to mitigate the risk of a disruption in production and/or importation.
Samurai® – a line of carbonated energy drinks. We offer the following energy drinks under the Samurai® product line: Fruity and Strawberry. 7 Table of Contents Ultra Energy® – a line of carbonated energy drinks. We offer the following energy drinks under the Ultra Energy® product line: Apple Kiwi, Original, Passion Punch, Peach Mango and Zero Raspberry.
We offer the following energy drinks under the Relentless ® product line: Cherry, Origin, Passion Punch, Peach Zero Sugar, Raspberry Zero Sugar and Watermelon Zero Sugar. Samurai® – a line of carbonated energy drinks. We offer the following energy drinks under the Samurai® product line: Fruity and Strawberry. Ultra Energy® –a line of carbonated energy drinks.
Congress, in some state legislatures and by some local governments, with excise taxes generally ranging between $0.01 and $0.02 per ounce of sweetened beverage. Berkeley, California became the first jurisdiction to pass such a measure, and a general tax of $0.01 per ounce on certain sweetened drinks, including energy drinks, became effective on January 1, 2015.
Berkeley, California became the first jurisdiction to pass such a measure, and a general tax of $0.01 per ounce on certain sweetened drinks, including energy drinks, became effective on January 1, 2015.
In 2022, we continued to outsource the manufacturing process for our finished goods energy drink products to third-party bottlers and contract packers. We purchase flavor ingredients, flavors, concentrates, sweeteners, juices, supplement ingredients, cans, bottles, caps, labels, trays, boxes and other ingredients for our non-alcohol products from ingredient suppliers, which are delivered to our various third-party bottlers and co-packers.
We purchase flavor ingredients, flavors, concentrates, sweeteners, juices, supplement ingredients, cans, bottles, caps, labels, trays, boxes and other ingredients for our non-alcohol products from ingredient suppliers, which are delivered to our various third-party bottlers and co-packers. In some cases, certain common supplies may be purchased by our various third-party bottlers and co-packers.
In some cases, certain common supplies may be purchased by our various third-party bottlers and co-packers. Depending on the product, the third-party bottlers or co-packers add filtered water and/or other ingredients (including supplement ingredients), for the manufacture and packaging of the finished products into our approved containers in accordance with our recipes and formulas.
Depending on the product, the third-party bottlers or co-packers add filtered water and/or other ingredients (including supplement ingredients) for the manufacture and packaging of the finished products into our approved containers in accordance with our recipes and formulas. Depending on the beverage, the bottler/packer may also add carbonation to the products as part of the production process.
Products – Alcohol Brands Segment Cigar City TM – a line of craft beers. We offer the following brands under the Cigar City TM brand family: Jai Alai ® , Florida Man TM , and others. Oskar Blues TM – a line of craft beers.
We offer the following energy drinks under the Ultra Energy® product line: Apple Kiwi, Citrus Peach, Original, Passion Punch and Peach Mango. Products – Alcohol Brands Segment Cigar City TM – a line of craft beers. We offer the following brands under the Cigar City TM brand family: Jai Alai ® , Florida Man TM , and others.
Squatters® – a line of craft beers. We offer the following brands under the Squatters® brand family: Hop Rising® Double IPA, and others. Wild Basin TM – a line of craft hard seltzers. We offer the following flavors under the Wild Basin TM product line: Lemon, Grapefruit, Peach, Berry Sorbet, Black Cherry, Strawberry and others.
We offer the following brands under the Deep Ellum TM brand family: Dallas Blonde ® , Deep Ellum TM IPA, and others. Squatters® – a line of craft beers. We offer the following brands under the Squatters® brand family: Hop Rising® Double IPA, and others. Wild Basin TM – a line of craft hard seltzers.
Quarterly fluctuations may also be affected by other factors including the introduction of new products, the opening of new markets, particularly internationally, where temperature fluctuations may be more pronounced, the addition of new bottlers and distributors, changes in the mix of the sales of our finished products and increased or decreased advertising and promotional expenses.
Quarterly fluctuations may also be affected by other factors including the introduction of new products, the opening of new markets, particularly internationally, where temperature fluctuations may be more pronounced, the addition of new bottlers and distributors, changes in the mix of the sales of our finished products and increased or decreased advertising and promotional expenses. 15 Table of Contents Intellectual Property We presently have more than 21,300 registered trademarks and pending applications in various countries worldwide, and we apply for new trademarks on an ongoing basis.
In certain other states and countries where our products are sold, we are also required to collect deposits from our customers and to remit such deposits to the respective jurisdictions based upon the number of cans and bottles of certain carbonated and non-carbonated products sold in such states.
In certain other states and countries where our products are sold, we are also required to collect deposits from our customers and to remit such deposits to the respective jurisdictions based upon the number of cans and bottles of certain carbonated and non-carbonated products sold in such states. 19 Table of Contents Human Capital Resources As of December 31, 2023, we have employees in 73 countries, with a total of 6,003 employees working worldwide.
We offer the following flavors under The Beast Unleashed TM brand family: Mean Green, Peach Perfect, Scary Berries, and White Haze. Products – Other Segment AFF sells a limited number of products to independent third-party customers. Other Products We continue to evaluate and, where considered appropriate, introduce additional products, flavors and types of beverages to complement our existing product lines.
Products – Other Segment AFF sells a limited number of products to independent third-party customers. 8 Table of Contents Other Products We continue to evaluate and, where considered appropriate, introduce additional products, flavors and types of beverages to complement our existing product lines.
Wasatch® – a line of craft beers. We offer a number of brands under the Wasatch ® brand family including Apricot Hefeweizen and others. Perrin – a line of craft beers. We offer a number of brands under the Perrin brand family including Black Ale and others. The Beast Unleashed TM – a line of FMBs.
We offer the following flavors under the Wild Basin TM product line: Lemon, Grapefruit, Peach, Watermelon and others. Wasatch® – a line of craft beers. We offer a number of brands under the Wasatch® brand family including Apricot Hefeweizen and others. Perrin – a line of craft beers.
We have a mid-level manager development program, in which participants learn leadership skills, network with peers and senior executives, and tackle critical initiatives.
We provide training for our employees covering harassment, discrimination and unconscious bias. We support our employees through a variety of training, mentorship and development programs. We have a mid-level manager development program, in which participants learn leadership skills, network with peers and senior executives, and tackle critical initiatives.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeGovernment Regulation and Litigation Risks ● Changes in government regulation, or a failure to comply with existing regulations, related to energy drinks, could adversely affect our business, financial condition and results of operations. ● Regulations concerning our alcohol beverages may adversely affect our business, financial condition or results of operations and inhibit the sales of such products. ● Significant changes to or failure to comply with various environmental laws may expose us to liability and/or cause certain of our facilities and/or those of our co-packers to close, relocate or operate at reduced production levels, which could adversely affect our business, financial condition and results of operations. ● We cannot predict the effect of possible inquiries from and/or actions by attorneys general, other government agencies and/or quasi-government agencies into the production, advertising, marketing, promotion, labeling, ingredients, usage and/or sale of our products. 21 Table of Contents ● Litigation regarding our products, and related unfavorable media attention, could expose us to significant liabilities and reduce demand for our products, thus negatively affecting our financial results. ● If we encounter material product recalls, our business may suffer material losses and such recalls could damage our brand image and corporate reputation, also resulting in material losses.
Biggest changeGovernment Regulation and Litigation Risks ● Changes in government regulation, or a failure to comply with existing regulations, related to energy drinks could adversely affect our business, financial condition and results of operations. ● Regulations concerning our alcohol beverages may adversely affect our business, financial condition or results of operations and inhibit the sales of such products. ● Significant changes to or failure to comply with various environmental laws may expose us to liability and/or cause certain of our facilities and/or those of our co-packers to close, relocate or operate at reduced production levels, which could adversely affect our business, financial condition and results of operations. ● We cannot predict the effect of possible inquiries from and/or actions by attorneys general, other government agencies and/or quasi-government agencies into the production, advertising, marketing, promotion, labeling, ingredients, usage and/or sale of our products. ● Litigation regarding our products, and related unfavorable media attention, could expose us to significant liabilities and reduce demand for our products, thus negatively affecting our financial results. ● If we encounter material product recalls, our business may suffer material losses and such recalls could damage our brand image and corporate reputation, also resulting in material losses. 22 Table of Contents Intellectual Property, Information Technology and Data Privacy Risks ● Our intellectual property rights are critical to our success, and the loss of such rights could materially adversely affect our business. ● Our use of information technology and third party service providers exposes us to cybersecurity breaches and other interruptions that could disrupt our business operations and adversely impact our reputation and results of operations. ● If we fail to comply with data privacy and personal data protection laws, we could be subject to adverse publicity, government enforcement actions and/or private litigation, which may negatively impact our business and operating results.
As a result, if we are unable to maintain good relationships with these bottlers/distributors, if changes in control or ownership occur within the current distribution network, or if they do not effectively focus on marketing, promoting, selling and distributing our products, sales of our products could be adversely affected.
As a result, if we are unable to maintain good relationships with these bottlers/distributors, if changes in control or ownership occur within the current distribution network, or if they do not effectively focus on marketing, promoting, selling and/or distributing our products, sales of our products could be adversely affected.
Competitive pressures in the energy drink category could impact our revenues, cause price erosion and/or lower market share, any of which could have a material adverse effect on our business and results of operations. Criticism of our beverages and/or criticism or a negative perception of our products generally could adversely affect us.
Competitive pressures in the energy drink category could impact our revenues, cause price erosion and/or lower our market share, any of which could have a material adverse effect on our business and results of operations. Criticism of our beverages or a negative perception of our products generally could adversely affect us.
In recent years, the United States has imposed tariffs on steel and aluminum as well as on goods imported from certain countries. Additional tariffs imposed by the United States on a broader range of imports, or further trade measures taken by other countries, could result in an increase in supply chain costs.
In recent years, the United States has imposed tariffs on steel and aluminum as well as on goods imported from certain countries. Additional tariffs imposed by the United States or other countries on a broader range of imports, or further trade measures taken by other countries, could result in an increase in supply chain costs.
Changing weather patterns could result in decreased agricultural productivity in certain regions, and/or outbreaks of diseases or other health issues, which may limit availability and/or increase the cost of certain key ingredients, juice concentrates, supplements and other ingredients used in our products and could impact the food security of communities around the world.
Changing weather patterns could result in decreased agricultural productivity in certain regions, and/or outbreaks of diseases or other health issues, which may limit the availability and/or increase the cost of certain key ingredients, juice concentrates, supplements and other ingredients used in our products and could impact the food security of communities around the world.
Consumer demand for our products could diminish significantly if we, our employees, bottlers/distributors, suppliers or business partners fail to preserve the quality of our products, act or are perceived to act in an unethical, illegal, discriminatory, unequal or socially irresponsible manner, including with respect to the sourcing, content or sale of our products, service and treatment of our customers, or the use of customer data.
Consumer demand for our products could diminish significantly if we, our employees, bottlers/distributors, suppliers or business partners fail to preserve the quality of our products and/or act or are perceived to act in an unethical, illegal, discriminatory, unequal or socially irresponsible manner, including with respect to the sourcing, content or sale of our products, service and treatment of our customers, or the use of customer data.
Unilateral decisions by bottlers/distributors, buying groups, convenience chains, grocery chains, mass merchandisers, specialty chain stores, club stores, e-commerce retailers, e-commerce websites and other customers, including retailer disagreements with our bottlers/distributors, to discontinue carrying all or any of our products that they are carrying at any time, restrict the range of our products they carry, impose restrictions or limitations on the sale of our products and/or the sizes of containers of our products and/or devote less resources to the sale of our products could cause our business to suffer.
Unilateral decisions by bottlers/distributors, buying groups, convenience and gas chains, grocery chains, mass merchandisers, specialty chain stores, club stores, e-commerce retailers, e-commerce websites and/or other customers, including retailer disagreements with our bottlers/distributors, to discontinue carrying all or any of our products that they are carrying at any time, restrict the range of our products they carry, impose restrictions or limitations on the sale of our products and/or the sizes of containers of our products and/or devote less resources to the sale of our products could cause our business to suffer.
Operational and Industry Risks ● The Company and TCCC have extensive commercial arrangements and, as a result, the Company’s future performance is substantially dependent on the success of its relationship with TCCC. ● Provisions in our organizational documents and control by insiders or TCCC may prevent changes in control even if such changes would be beneficial to other stockholders. ● We rely on bottlers and other contract packers to manufacture our products.
Operational and Industry Risks ● The Company and TCCC have extensive commercial arrangements and, as a result, the Company’s future performance is substantially dependent on the success of its relationship with TCCC. ● Provisions in our organizational documents and control by insiders or TCCC may prevent changes in control even if such changes would be beneficial to other stockholders. ● We primarily rely on bottlers and other contract packers to manufacture our products.
Cybersecurity attacks are evolving, may be difficult to detect for periods of time, and include, but are not limited to, malicious software (malware, ransomware and viruses), phishing and social engineering, attempts to gain unauthorized access to networks, computer systems and data, malicious or negligent actions of employees (including misuse of information they are entitled to access), cyber extortion, electronic or wire fraud, and other forms of electronic security breaches.
Cybersecurity attacks may be difficult to detect for periods of time, and include, but are not limited to, malicious software (malware, ransomware and viruses), phishing and social engineering, attempts to gain unauthorized access to networks, computer systems and data, malicious or negligent actions of employees (including misuse of information they are entitled to access), cyber extortion, electronic or wire fraud, and other forms of electronic security breaches.
Legislation has been proposed and/or adopted at the U.S. federal, state and/or municipal level and proposed and/or adopted in certain foreign jurisdictions to restrict the sale of energy drinks (including, prohibiting the sale of energy drinks at certain establishments or pursuant to certain governmental programs), limit the content of caffeine and other ingredients in beverages, require certain product labeling disclosures and/or warnings, impose excise taxes, limit product size or impose age restrictions for the sale of energy drinks.
Legislation has been proposed and/or adopted at the U.S. federal, state and/or municipal level and proposed and/or adopted in certain foreign jurisdictions to restrict the sale of energy drinks (including, prohibiting the sale of energy drinks at certain establishments or pursuant to certain governmental programs), limit the content or levels of caffeine and other ingredients in beverages, require certain product labeling disclosures and/or warnings, impose excise taxes, limit product size or impose age restrictions for the sale of energy drinks.
The human and economic consequences, and consequences in general, of the COVID-19 pandemic, including new variants, as well as the measures taken or that may be taken in the future by governments, businesses (including the Company and our suppliers, bottlers/distributors, co-packers and other service providers) and the public at large to limit the COVID-19 pandemic, have and will directly and indirectly impact our business and results of operations.
The human and economic consequences, and consequences in general, of the COVID-19 pandemic, including new variants, as well as the measures taken or that may be taken in the future by governments, businesses (including the Company and our suppliers, bottlers/distributors, co-packers and other service providers) and the public at large to limit the COVID-19 pandemic, have and may in the future directly and indirectly impact our business and results of operations.
While we are actively addressing these issues and have publicly committed to setting certain sustainability -related targets, these initiatives are our current plans and aspirations, may be refined in the future, and are not guarantees that we will be able to achieve them, especially given the difficulties and expenses of implementation as well as the ever-changing regulatory and technological landscape.
While we are actively addressing these issues and have publicly committed to setting certain sustainability-related targets, these initiatives represent our current plans and aspirations that may be refined in the future, and are not guarantees that we will be able to achieve them, especially given the difficulties and expenses of implementation as well as the ever-changing regulatory and technological landscape.
Similarly, our sponsorship relationships could subject us to negative publicity as a result of actual or alleged misconduct by individuals or entities associated with organizations we sponsor or support. Likewise, campaigns by activists connecting us, or our supply chain, with human and workplace rights, environmental or animal rights issues could adversely impact our corporate image and reputation.
Similarly, our sponsorship relationships could subject us to negative publicity as a result of actual or alleged misconduct by individuals or entities associated with organizations that we sponsor or support. Likewise, campaigns by activists connecting us, or our supply chain, with human and workplace rights and/or environmental or animal rights issues could adversely impact our corporate image and reputation.
We also compete with companies that are smaller or primarily national or local in operations, such as CELSIUS, PRIME, C4, Alani Nu, Bang, GHOST, and others as well as local craft breweries in our Alcohol Brands segment. Our products also compete with private-label brands such as those carried by grocery store chains, convenience store chains and club stores.
We also compete with companies that are smaller or primarily national or local in operations, such as CELSIUS, PRIME, C4, Alani Nu, GHOST, and others as well as local craft breweries in our Alcohol Brands segment. Our products also compete with private-label brands such as those carried by grocery store chains, convenience store chains and club stores.
In addition, there are limited alternative packing facilities in our domestic and international markets with adequate capacity and/or suitable equipment for many of our products. For example, in 2022, sales of many of our product lines continued to be adversely impacted by production capacity constraints as a result of above forecast demand.
In addition, there are limited alternative packing facilities in our domestic and international markets with adequate capacity and/or suitable equipment for many of our products. For example, in 2022, sales of many of our product lines continued to be adversely impacted by production capacity constraints as a result of above forecast consumer demand.
In order to retain and expand our market share, we must continue to develop and introduce different and innovative beverages and be competitive in the areas of efficacy, taste, quality and price, although there can be no assurance of our ability to do so. There is no assurance that consumers will continue to purchase our products in the future.
In order to retain and expand our market share, we must continue to develop and introduce different and innovative beverages and be competitive in the areas of efficacy, taste, quality and price/value, although there can be no assurance of our ability to do so. There is no assurance that consumers will continue to purchase our products in the future.
These third parties may experience cybersecurity incidents that may involve data we share with them or rely on them to provide to us, and the need to coordinate with such third-parties, including with respect to timely notification and access to personnel and information concerning an incident, may complicate our efforts to resolve any issues that arise.
Third parties may experience cybersecurity incidents that may involve data we share with them or rely on them to provide to us, and the need to coordinate with such third-parties, including with respect to timely notification and access to personnel and information concerning an incident, may complicate our efforts to resolve any issues that arise.
A decision by any large customer to decrease the amount purchased from us or to cease carrying our products could have a material adverse effect on our financial condition and consolidated results of operations. The marketing efforts of our bottlers/distributors are important for our success.
A decision by any large customer to decrease the amount purchased from us or to cease carrying our products could have a material adverse effect on our financial condition and consolidated results of operations. The marketing efforts of our bottlers/distributors are important to our success.
Moreover, competitors’ or others’ attempts to persuade regulators, retailers, and/or customers in certain countries to reduce the permitted or maximum container sizes for our products from those currently being sold and marketed by us could negatively impact our business.
Moreover, competitors’, consumers’ or others’ attempts to persuade regulators, retailers, and/or customers in certain countries to reduce the permitted or maximum container sizes for our products from those currently being sold and marketed by us could negatively impact our business.
In addition, possible trading disputes between our bottler/distributors and their customers or buying groups may result in the delisting of certain of the Company’s products, temporarily or otherwise. Bottler/distributor consolidation may also have an impact on our business.
In addition, possible trading disputes between our bottler/distributors and their customers or buying groups may result in the delisting of certain of the Company’s products, temporarily or otherwise. Bottler/distributor consolidation may also have an adverse impact on our business.
The current COVID-19 pandemic has presented and may continue to present a substantial public health and economic challenge in certain countries and has affected, and may continue to affect, our employees, communities and business operations, as well as the global economy and financial markets.
The COVID-19 pandemic has presented, and may continue to present, a substantial public health and economic challenge in certain countries and has affected, and may continue to affect, our employees, communities and business operations, as well as the global economy and financial markets.
We rely on bottlers and other contract packers to manufacture our products. If we are unable to maintain good relationships with our bottlers and contract packers and/or their ability to manufacture our products becomes constrained or unavailable to us, our business could suffer.
We primarily rely on bottlers and other contract packers to manufacture our products. If we are unable to maintain good relationships with our bottlers and contract packers and/or their ability to manufacture our products becomes constrained or unavailable to us, our business could suffer.
For example, with regard to our Alcohol Brands, the broader alcohol industry is experiencing a shift in drinking preferences and behaviors, moving away from traditionally popular beer brands and segments and towards above premium beers, hard seltzers, FMBs, ready-to-drink malt-based, sugar-based, and spirits-based beverages, CBD and other cannabis beverages, and other similar beverages.
For example, with regard to our Alcohol Brands, the broader alcohol industry is experiencing a shift in drinking preferences and behaviors, moving away from traditionally popular beer brands and segments and towards, for example, premium beers, imports, hard seltzers, FMBs, ready-to-drink malt-based, sugar-based, and spirits-based beverages, CBD and other cannabis beverages, and other similar beverages.
We may be unable to achieve analysts’ net revenue and/or earnings forecasts, which are based on their own projected revenues, sales volumes and sales mix of many product types and/or new products, certain of which are more profitable than others, as well as their own estimates of gross margin and operating expenses.
We may be unable to achieve analysts’ net revenue and/or earnings forecasts, which are based on their own projected revenues, sales volumes and sales mixes of many product types and/or new products, certain of which are more profitable than others, as well as their own estimates of gross margin and operating expenses.
Many of our packaging supply contracts allow our suppliers to alter the costs they charge us for packaging supplies based on changes in the costs of the underlying commodities that are used to produce those packaging supplies, such as aluminum for cans, PET plastic for bottles and pulp and paper for cartons and/or trays.
Many of our packaging supply contracts allow our suppliers to adjust the costs they charge us for packaging supplies based on changes in the costs of the underlying commodities that are used to produce those packaging supplies, such as aluminum for cans, PET plastic for bottles and pulp and paper for cartons and/or trays.
For a discussion of certain of such legislation, see “Part I, Item 1 – Business – Government Regulation.” Furthermore, additional legislation may be introduced in the United States and other countries at the federal, state, local, municipal and supranational level in respect of each of the foregoing subject areas.
For a discussion of certain of such legislation, see “Part I, Item 1 – Business – Government Regulation.” Furthermore, additional legislation may be introduced in the United States and other countries at the federal, state, provincial, local, municipal and/or supranational level in respect of each of the foregoing subject areas.
A lengthy disruption or delay in the production of any of our products could significantly adversely affect, and has adversely affected, our revenues from and/or costs of such products, because alternative co-packing facilities in the United States and abroad with adequate long- 23 Table of Contents term capacity may not be available for such products either at commercially reasonable rates and/or costs and/or within a reasonably short time period and/or within a geographically cost effective distance, if at all.
A lengthy disruption or delay in the production of any of our products could significantly adversely affect, and has adversely affected, our revenues from and/or costs of such products, because alternative co-packing facilities in the United States and abroad with adequate long-term capacity may not be available for such products either at commercially reasonable rates and/or costs, within a reasonably short time period and/or within a geographically cost effective distance, if at all.
We are subject to the risks of investigations and/or enforcement actions by state attorneys general and/or other government and/or quasi-governmental agencies relating to the advertising, marketing, promotion, ingredients, usage and/or sale of our products, and we are a party, from time to time, to various government and regulatory inquiries and/or proceedings.
We are subject to the risks of investigations and/or enforcement actions by state attorneys general and/or other government and/or quasi-governmental agencies relating to the production, advertising, marketing, promotion, labeling, ingredients, usage and/or sale of our products, and we are a party, from time to time, to various government and regulatory inquiries and/or proceedings.
Changes in U.S. tax laws as a result of any legislation proposed by the new U.S. Presidential Administration or U.S.
Changes in U.S. tax laws as a result of any legislation proposed by a new U.S. Presidential Administration or U.S.
The principal raw materials used by us are aluminum cans, sleek aluminum cans, aluminum cap cans, aluminum cans with re-sealable ends, aluminum or steel kegs, cartons, PET plastic bottles, caps, flavors, juice concentrates, glucose, sugar, sucralose, milk, cream, coffee, tea, cocoa, malted barley, hops, water, yeast, ethanol, supplement ingredients and other packaging materials, the costs and availability of which are subject to fluctuations.
The principal raw materials used by us are aluminum cans, sleek aluminum cans, aluminum cap cans, aluminum cans with re-sealable ends, aluminum or steel kegs, cartons, to a limited extent PET plastic bottles and caps, flavors, juice concentrates, glucose, sugar, sucralose, milk, cream, coffee, tea, cocoa, malted barley, hops, water, yeast, ethanol, supplement ingredients and other packaging materials, the costs and availability of which are subject to fluctuations.
In addition, TCCC does not control all members of its distribution system, many of which are independent companies that make their own business decisions that may not always align with TCCC’s interests. Provisions in our organizational documents and control by insiders or TCCC may prevent changes in control even if such changes would be beneficial to other stockholders.
In addition, TCCC does not control all members of its distribution system, many of which are independent companies that make their own business decisions that may not always align with TCCC’s interests. 23 Table of Contents Provisions in our organizational documents and control by insiders or TCCC may prevent changes in control even if such changes would be beneficial to other stockholders.
There can be no assurance that our advertising, marketing and promotional programs and our commitment to product safety and quality, human rights and environmental sustainability will have the desired impact on our products’ brand image and on consumer preferences and demand.
There can be no assurance that our advertising, marketing and promotional programs and our commitment to product safety and quality, human rights and environmental sustainability will have the desired impact on our products’ brand images and on consumer preferences and demand.
Adverse changes or developments affecting our currently limited number of breweries could hinder our ability to produce alcohol products to take to market on a timely basis or require us to entirely suspend our Alcohol Brands segment operations.
Likewise, adverse changes or developments affecting our currently limited number of breweries could hinder our ability to produce alcohol products to take to market on a timely basis or require us to entirely suspend certain of our Alcohol Brands segment operations.
We are required to maintain both disclosure controls and procedures as well as internal control over financial reporting that are effective for the purposes described in “Part II, Item 9A – Controls and Procedures.” If we fail to maintain such controls and procedures, our business, results of operations, financial condition and/or the value of our stock could be materially harmed.
We are required to maintain both disclosure controls and procedures as well as internal control over financial reporting that are effective for the purposes described in “Part II, Item 9A – Controls and Procedures.” If we fail to maintain 39 Table of Contents such controls and procedures, our business, results of operations, financial condition and/or the value of our stock could be materially harmed.
We face and will continue to face substantial risks associated with having foreign operations, including: economic and/or political instability in our international markets; fluctuations in foreign currency exchange rates; restrictions on or costs relating to the repatriation of foreign profits to the United States, including possible taxes and/or withholding obligations on any repatriations; and tariffs and/or trade restrictions.
We face and will continue to face substantial risks associated with having foreign operations, including, but not limited to: economic and/or political instability in our international markets; fluctuations in foreign currency exchange rates; restrictions on or costs relating to the repatriation of foreign profits to the United States, including possible taxes and/or withholding obligations on any repatriations; and tariffs and/or trade restrictions.
The impact of such incidents may be exacerbated if they receive considerable publicity, including rapidly through social or digital media (including for malicious reasons) or result in litigation. 32 Table of Contents In addition, from time to time, there are public policy endeavors that are either directly related to our products and packaging or to our business.
The impact of such incidents may be exacerbated if they receive considerable publicity, including rapidly through social or digital media (including for malicious reasons), or result in litigation. In addition, from time to time, there are public policy endeavors that are either directly related to our products and packaging or to our business.
If the inventory of our products held by our distributors and/or retailers is too high, they will not place orders for additional products, which could unfavorably impact our future sales and adversely affect our operating results. 29 Table of Contents Our business is subject to seasonality, which may cause fluctuations in our operating results.
If the inventory of our products held by our distributors and/or retailers is too high, they will not place orders for additional products, which could unfavorably impact our future sales and adversely affect our operating results. Our business is subject to seasonality, which may cause fluctuations in our operating results.
Damage to our reputation and loss of brand equity may reduce demand for our products and thus have an adverse effect on our future financial results, as well as require additional resources to rebuild our reputation and could also reduce our stock price. Climate change and natural disasters may affect our business.
Damage to our reputation and loss of brand equity may reduce demand for our products and thus have an adverse effect on our future financial results, as well as require additional resources to rebuild our reputation and could impact our stock price. Climate change and natural disasters may negatively affect our business.
We do not have possession of the list of such flavor ingredients or formulas used in the production of certain of our products and certain of our blended concentrates, and we may be unable to obtain comparable flavors or concentrates from alternative suppliers on short notice.
We do not have possession of the list of such flavor ingredients or formulas used in the production of 29 Table of Contents certain of our products and certain of our blended concentrates, and we may be unable to obtain comparable flavors or concentrates from alternative suppliers on short notice.
There is increasing awareness of and concern for health, wellness and nutrition considerations, including 27 Table of Contents concerns regarding caloric intake associated with sugar-sweetened beverages, the perceived undesirability of artificial ingredients, and the potential adverse consequences from excess consumption of alcohol beverages.
There is increasing awareness of and concern for health, wellness and nutrition considerations, including concerns regarding caloric intake associated with sugar-sweetened beverages, the perceived undesirability of artificial ingredients, and the potential adverse consequences from excess consumption of alcohol beverages.
Given such variation by season, our results for any particular quarter may not be indicative of the results to be achieved for the entire fiscal year. The costs of packaging supplies, ocean and domestic freight, and inflation generally may adversely affect our results of operations.
Given such variation by season, our results for any particular quarter may not be indicative of the results to be achieved for the entire fiscal year. The costs of packaging supplies, raw material inputs, ocean and domestic freight, and inflation generally may adversely affect our results of operations.
Financial Risks ● Fluctuations in our effective tax rate could adversely affect our financial condition and results of operations. ● We may be required in the future to record a significant charge to earnings if our goodwill or intangible assets become impaired. ● Fluctuations in foreign currency exchange rates may adversely affect our operating results. ● Uncertainty in the financial markets and other adverse changes in general economic or political conditions in any of the major countries in which we do business could adversely affect our industry, business and results of operations. ● Default by or failure of one or more of our counterparty financial institutions could cause us to incur significant losses. ● Our investments are subject to risks which may cause losses and affect the liquidity of these investments.
Financial Risks ● Fluctuations in our effective tax rate could adversely affect our financial condition and results of operations. ● We may be required to record a charge to earnings if our goodwill or intangible assets become impaired. ● Fluctuations in foreign currency exchange rates may adversely affect our operating results. ● Uncertainty in the financial markets and other adverse changes in general economic or political conditions in any of the major countries in which we do business could adversely affect our industry, business and results of operations. ● Default by or failure of one or more of our counterparty financial institutions could cause us to incur significant losses.
If we are unable to maintain good relationships with our existing bottlers and distributors and/or secure such bottlers and distributors, our business could suffer. ● We currently derive most of our revenues from energy drinks, and competitive pressure in the energy drink category could adversely affect our business and operating results. ● Criticism of our beverages and/or criticism or a negative perception of our products generally could adversely affect us. ● Increased competition in the beverage industry and changing retail landscape could hurt our business. ● Our inability to implement our growth strategy, including expanding our business in existing and new sectors, such as the alcohol beverage sector, or successfully integrate acquired businesses or assets could adversely affect our business and financial results. ● Changes in consumer product and shopping preferences may reduce demand for our products. ● Our continued expansion outside of the United States exposes us to uncertain conditions and other risks in international markets. ● If we are not able to pass on increases in the costs of raw materials, including aluminum cans, ingredients, fuel and/or costs of co-packing or if we experience shortages of such raw materials, our business and results of operations could be materially, adversely affected and result in a higher cost base. ● Our failure to accurately estimate demand for our products or maintain sufficient inventory levels could adversely affect our business and financial results. ● Our business is subject to seasonality, which may cause fluctuations in our operating results. ● The costs of packaging supplies, ocean and domestic freight, and inflation generally may adversely affect our results of operations. ● Global or regional catastrophic events, such as the military conflict in Ukraine, could impact our operations and affect our ability to grow our business. ● The COVID-19 pandemic has impacted and may continue to impact our business and operations. ● Failure to meet sustainability expectations or standards could expose us to increased costs, reputational harm, or other adverse consequences. ● Climate change and natural disasters may negatively affect our business. ● If we are not able to retain the services of our workforce, there may be an adverse effect on our operations and/or our operating performance until we find suitable replacements. ● Negative publicity (whether or not warranted) could damage our brand image and corporate reputation, and may cause our business to suffer.
If we are unable to maintain good relationships with our existing bottlers and distributors and/or secure such bottlers and distributors, our business could suffer. 21 Table of Contents ● We currently derive most of our revenues from energy drinks, and competitive pressure in the energy drink category could adversely affect our business and operating results. ● Criticism of our beverages or a negative perception of our products generally could adversely affect us. ● Increased competition in the beverage industry and changing retail landscape could hurt our business. ● Our inability to implement our growth strategy, including expanding our business in existing and new sectors or successfully integrate acquired businesses or assets could adversely affect our business and financial results. ● Changes in consumer product and shopping preferences may reduce demand for our products. ● Our continued expansion outside of the United States exposes us to uncertain conditions and other risks in international markets. ● If we are not able to pass on increases in the costs of raw materials, including aluminum cans, ingredients, fuel and/or costs of co-packing, we may face a higher cost base, and our business and results of operations could be adversely affected. ● Our failure to accurately estimate demand for our products or maintain sufficient inventory levels or anticipate shortages of raw materials could adversely affect our business and financial results. ● Our business is subject to seasonality, which may cause fluctuations in our operating results. ● The costs of packaging supplies,raw material inputs, ocean and domestic freight, and inflation generally may adversely affect our results of operations. ● Global or regional catastrophic events could impact our operations and affect our ability to grow our business. ● The COVID-19 pandemic has impacted and may continue to impact our business and operations. ● Failure to meet sustainability expectations or standards could expose us to increased costs, reputational harm, or other adverse consequences. ● Climate change and natural disasters may negatively affect our business. ● If we are not able to retain the services of our workforce, there may be an adverse effect on our operations and/or our operating performance until we find suitable replacements. ● Negative publicity (whether or not warranted) could damage our brand image and corporate reputation and may cause our business to suffer.
For the years ended December 31, 2022, 2021 and 2020, aggregate foreign currency transaction gains (losses), including the gains or losses on forward currency exchange contracts, amounted to ($37.9) million, $0.3 million and ($11.2) million, respectively. Potential changes in accounting standards or practices and/or taxation may adversely affect our financial results.
For the years ended December 31, 2023, 2022 and 2021, aggregate foreign currency transaction gains (losses), including the gains or losses on forward currency exchange contracts, amounted to ($60.2) million, ($37.9) million and $0.3 million, respectively. Potential changes in accounting standards or practices and/or taxation may adversely affect our financial results.
In connection with the OECD’s BEPS project, companies are required to disclose more information to tax authorities on operations around the world, which may lead to greater audit scrutiny of profits earned in various countries.
In connection with the OECD’s 38 Table of Contents BEPS project, companies are required to disclose more information to tax authorities on operations around the world, which may lead to greater audit scrutiny of profits earned in various countries.
If an inquiry by a state attorney general or other government or quasi-government agency finds that our products and/or the advertising, marketing, promotion, ingredients, usage and/or sale of such products are not in compliance with applicable laws or regulations, we may become subject to fines, product reformulations, container changes, changes in the usage or 34 Table of Contents sale of our products and/or changes in our advertising, marketing and promotion practices, each of which could have an adverse effect on our business, financial condition or results of operations.
If an inquiry by a state attorney general or other government or quasi-governmental agency finds that our products and/or the production, advertising, marketing, promotion, labeling, ingredients, usage and/or sale of such products are not in compliance with applicable laws or regulations, we may become subject to fines, product reformulations, container changes, changes in the usage or sale of our products and/or changes in our advertising, marketing and promotion practices, each of which could have an adverse effect on our business, financial condition or results of operations.
The production, distribution and sale in the United States of many of our products are also currently subject to various federal and state regulations, including, but not limited to: the FD&C Act; the Occupational Safety and Health Act; various environmental statutes; data privacy laws; California Proposition 65; and various other federal, state and local statutes and regulations applicable to the production, transportation, sale, safety, advertising, labeling, packaging and ingredients of such products.
The production, distribution and sale, as well as our manufacturing facilities themselves, in the United States of many of our products are also currently subject to various federal and state regulations, including, but not limited to: the FD&C Act; the Occupational Safety and Health Act; various environmental statutes; data privacy laws; California Proposition 65; and various other federal, state and local statutes and regulations applicable to the production, transportation, sale, safety, advertising, labeling, packaging and ingredients of such products.
As our growth strategy includes further expanding our international business, if we are unable to continue to expand distribution of our products outside the United States, our growth rate could be adversely affected. In many international markets, we have limited operating experience and in some international markets we have no operating experience.
As our growth strategy includes further expanding our international business, if we are unable to continue to expand distribution of our products or maintain consumer demand outside the United States, our growth rate could be adversely affected. In many international markets, we have limited operating experience and in some international markets we have no operating experience.
Changes in applicable laws, regulations, standards or practices related to greenhouse gas emissions, packaging and water scarcity, as well as initiatives 31 Table of Contents by advocacy groups in favor of certain climate change-related laws, regulations, standards or practices, may result in increased compliance costs, capital expenditures and other financial obligations, which could affect our business, financial condition and results of operations.
Changes in applicable laws, regulations, standards or practices related to greenhouse gas emissions, packaging and water scarcity, as well as initiatives by advocacy groups in favor of certain climate change-related laws, regulations, standards or practices, have and may continue to result in increased compliance costs, capital expenditures and other financial obligations, which could affect our business, financial condition and results of operations.
Overall, the effectiveness of these acquisitions can be less predictable than developing new lines of energy drinks and might not provide the anticipated benefits or desired rates of return.
Overall, the effectiveness of these acquisitions can be less predictable than developing new lines of beverages and might not provide the anticipated benefits or desired rates of return.
In addition, we cannot predict the duration and severity of disruptions in any of our markets or the impact they may have on our customers or business, as our expansion outside of the United States has increased our exposure to any developments or crises in African, Asian, European and other international markets.
In addition, we cannot predict the duration and severity of disruptions in any of our markets or the impact they may have on our customers or business, as our expansion outside of the United States has increased our exposure to any developments or crises in African, Asian, Central and South American, European, Middle Eastern and other international markets.
These changing rules and regulations, along with constantly evolving stockholder expectations, have resulted in, and may continue to result in, increased general and administrative expenses and increased management time and attention spent complying with or meeting such expectations and rules.
These 31 Table of Contents changing rules and regulations, along with constantly evolving stockholder expectations, have resulted in, and may continue to result in, increased general and administrative expenses and increased management time and attention spent complying with or meeting such expectations and rules.
Governmental agencies heavily regulate the alcohol beverage industry. In particular, they monitor and regulate licensing, warehousing, trade and pricing practices, permitted and required labeling, including warning labels, signage, advertising, relations with wholesalers and retailers, and, in control states, product listings. Increased regulatory trade practice enforcement may increase in response to the Treasury Report.
In particular, they monitor and regulate licensing, warehousing, trade and pricing practices, permitted and required labeling, including warning labels, signage, advertising, relations with wholesalers and retailers, and, in control states, product listings. Increased regulatory trade practice enforcement may increase in response to the Treasury Report.
Alternative facilities with sufficient capacity or capabilities may not be readily available or may take significant time or money to run at the same capacity as our current breweries. Such significant disruption may, in turn, have an adverse effect on gross margins, operating cash flows, and overall financial performance of our Alcohol Brands segment.
Alternative facilities with sufficient capacity or capabilities may not be readily available or may take significant time or money to run at the same capacity as our Phoenix facility, Norwalk facility or our current breweries. Such significant disruption may, in turn, have an adverse effect on gross margins, operating cash flows, and overall financial performance of our business.
Risks associated with entering into a new sector include: (1) having no or limited experience in such sector; (2) increased exposure to certain governmental regulations and compliance requirements; (3) difficulties developing, manufacturing, and marketing the products of newly acquired companies; and (4) our lesser familiarity with consumer preferences in the new sector.
Risks associated with entering into a new sector, such as the alcohol beverage sector, include, but are not limited to: (1) having no or limited experience in such sector; (2) exposure to certain governmental regulations and compliance requirements; (3) difficulties developing, manufacturing, and marketing the products of newly acquired companies; and (4) our lesser familiarity with consumer preferences in the new sector.
Moreover, anti-alcohol groups have successfully advocated, and increasingly continue to advocate, for more stringent labeling requirements, higher taxes, and 25 Table of Contents other regulations designed to curtail alcohol consumption.
Moreover, anti-alcohol groups have successfully advocated, and increasingly continue to advocate, for more stringent labeling requirements, higher taxes, and other regulations designed to curtail alcohol consumption.
Our net sales to customers outside of the United States were approximately 37%, 37% and 33% of consolidated net sales for the years ended December 31, 2022, 2021 and 2020, respectively.
Our net sales to customers outside of the United States were approximately 38%, 37% and 37% of consolidated net sales for the years ended December 31, 2023, 2022 and 2021, respectively.
The GDPR includes operational requirements for companies receiving or processing personal data of residents of the European Union different from those that were previously in place and also includes significant penalties for noncompliance.
In the European Union, the General Data Protection Regulation (“GDPR”) includes operational requirements for companies receiving or processing personal data of residents of the European Union different from those that were previously in place and also includes significant penalties for noncompliance.
Because of our increasingly global presence, our business could be affected by unstable political conditions, civil unrest, protests and demonstrations, large-scale terrorist acts, especially those directed against the United States or other major industrialized countries where our products are distributed, the outbreak or escalation of armed hostilities (such as the military conflict in Ukraine), major natural disasters and extreme weather conditions, such as hurricanes, wildfires, tornados, earthquakes or floods, or widespread outbreaks of infectious diseases (such as the COVID-19 pandemic).
Because of our increasingly global presence, our business could be affected by unstable political conditions, civil unrest, protests and demonstrations, large-scale terrorist acts, especially those directed against the United States or other major industrialized countries where our products are distributed, the outbreak or escalation of armed hostilities (such as the military conflicts in Ukraine, Israel and Gaza as well as tensions in the Middle East in general and tensions across the Taiwan Straits), major natural disasters and extreme weather conditions, such as hurricanes, wildfires, tornados, earthquakes or floods, or widespread outbreaks of infectious diseases (such as the COVID-19 pandemic).
To the extent we integrate acquired businesses, it is possible that we will not realize the expected benefits from any completed acquisition over the timeframe we expect, or at all, or that our existing operations will be adversely affected as a result of acquisitions. The costs of achieving these benefits could also be higher than we expected.
To the extent we integrate acquired businesses, it is possible that we will not realize the expected benefits from any completed acquisition over the timeframe we expect, or at all, or that our existing operations will be adversely affected as a result of acquisitions.
Our failure to accurately estimate demand for our products or maintain sufficient inventory levels could adversely affect our business and financial results. We may not correctly estimate demand for our existing products and/or new products.
Our failure to accurately estimate demand for our products or maintain sufficient inventory levels or anticipate shortages of raw materials could adversely affect our business and financial results. We may not correctly estimate demand for our existing products and/or new products.
Data breaches or improper processing, or breaches of personal data in violation of the GDPR, the CCPA and/or of other personal data protection or privacy laws and regulations, could harm our reputation, cause loss of consumer confidence, subject us to government enforcement actions (including fines), or result in private litigation against us, which may result in potential loss of revenue, increased costs, liability for monetary damages or fines and/or criminal prosecution, thereby negatively impacting our business and operating results. ​ Financial Risks Fluctuations in our effective tax rate could adversely affect our financial condition and results of operations .
Data breaches or improper processing, or breaches of personal data in violation of the GDPR or of other personal data protection or privacy laws and regulations, could harm our reputation, cause loss of consumer confidence, subject us to government enforcement actions (including fines), or result in private litigation against us, which may result in potential loss of revenue, increased costs, liability for monetary damages or fines and/or criminal prosecution, thereby negatively impacting our business and operating results .
Allegations, even if untrue, that we are not respecting the human rights found in the United Nations Universal Declaration of Human Rights; actual or perceived failure by our suppliers or other business partners to comply with applicable labor and workplace rights laws, including child labor laws, or their actual or perceived abuse or misuse of migrant workers; adverse publicity surrounding obesity, alcohol consumption, including alcoholism and drunk driving, and other such health concerns related to our products, water usage, our environmental impact and the sustainability of our operations, labor relations, our culture and our workforce or the like could negatively affect our Company’s overall reputation and brand image, which in turn could have a negative impact on our products’ acceptance by consumers.
Allegations, even if untrue, that we are not respecting the human rights found in the United Nations Universal Declaration of Human Rights; actual or perceived failure by our suppliers or other business partners to comply with applicable labor and workplace rights laws, including child labor laws, or their actual or perceived abuse or misuse of migrant workers; adverse publicity surrounding obesity and alcohol consumption, including alcoholism and drunk driving; and other such concerns related to our products, water usage, our environmental impact and the sustainability of our operations, labor relations, our culture and our workforce or the like could negatively affect our Company’s overall reputation and brand image, which in turn could have a negative impact on our products’ acceptance by consumers. 33 Table of Contents Government Regulation and Litigation Risks Changes in government regulation, or a failure to comply with existing regulations related to energy drinks, could adversely affect our business, financial condition and results of operations.
If we are unable to maintain good relationships with our bottlers and contract packers and/or their ability to manufacture our products becomes constrained or unavailable to us, our business could suffer. ● We rely on our breweries for production of certain of our alcohol beverages, and developments negatively affecting production at such facilities could materially impact the financial results of our Alcohol Brands segment. 20 Table of Contents ● We rely on bottlers and distributors to distribute our products.
If we are unable to maintain good relationships with our bottlers and contract packers and/or their ability to manufacture our products becomes constrained or unavailable to us, our business could suffer. ● We rely on limited Company-owned facilities for production of certain of our non-alcohol and alcohol beverages, and developments negatively affecting production at such facilities could materially impact the financial results of our business. ● We rely on bottlers and distributors to distribute our products.
If a regulatory authority finds that a current or future product, its label, or a production run is not in compliance with any of these regulations, we may be fined, or the products in question may have to be recalled, removed from the market, reformulated and/or have the packaging changed, which could adversely affect our business, financial condition and results of operations. 33 Table of Contents Regulations concerning our alcohol beverages may adversely affect our business, financial condition or results of operations and inhibit the sales of such products.
If a regulatory authority finds that a current or future product, its label, or a production run or facility is not in compliance with any of these regulations, we may be fined, or the products in question may have to be recalled, removed from the market, reformulated and/or have their packaging changed, which could adversely affect our business, financial condition and results of operations.
The loss of services of either Rodney Sacks, Chairman and Co-Chief Executive Officer, Hilton Schlosberg, Vice Chairman and Co-Chief Executive Officer, or any other key members of our senior management could adversely affect our business until suitable replacements can be found.
We do not maintain key person life insurance on any members of our senior management. The loss of services of either Rodney Sacks, Chairman and Co-Chief Executive Officer, Hilton Schlosberg, Vice Chairman and Co-Chief Executive Officer, or any other key members of our senior management could adversely affect our business until suitable replacements can be found.
In addition, the increase of such criticism and negative perception of the relative healthfulness or safety of alcohol beverages could decrease sales and consumption of alcohol, including the demand for our alcohol products. Any such developments may have a negative impact on the operating results of our Alcohol Brands segment.
In addition, the increase of such criticism and negative perception 26 Table of Contents of alcohol beverages generally could decrease sales and the consumption of alcohol, including the demand for our alcohol products. Any such developments may have a negative impact on the operating results of our Alcohol Brands segment.
While we have procedures in place for selecting and managing our relationships with third-party service providers and other business partners, we do not have control over their business operations or governance and compliance systems, practices and procedures, which increases our financial, legal, reputational and operational risk.
While we have procedures in place for selecting and managing our relationships with third-party service providers and other business partners, we do not have control over their business operations or governance and compliance systems, practices and procedures, and our management of multiple third party service providers increases our operational complexity.
Our focus is in the energy drink category, and our business is vulnerable to adverse changes impacting the energy drink category and business, which could adversely impact our business and the trading price of our common stock.
Our focus is in the energy drink category, and our business is vulnerable to adverse changes impacting the energy drink category and business, which could adversely impact our business and the trading price of our common stock. Most of our sales are currently derived from our energy drinks.
We anticipate competition will remain robust as some competitors are consolidating (as evidenced by business combinations of substantial value carried out by significant competitors in recent years), building more capacity, expanding geographically, and/or adding more SKUs and styles.
We anticipate competition will remain robust due to a number of new entrants in the energy drink category. Some competitors are consolidating (as evidenced by business combinations of substantial value carried out by significant competitors in recent years), building more capacity, expanding geographically, and/or adding more SKUs and styles.
Some consumer advocacy groups and others have expressed concerns regarding certain ingredients in diet sodas, which are contained in certain of our energy drinks, or have called for the curtailment of alcohol dissemination and consumption. There are also changes in demand for different packages, sizes and configurations. Such developments could reduce our revenues and adversely affect our results of operations.
Some consumer advocacy groups and others have expressed concerns regarding certain ingredients in diet beverages, which are contained in certain of our energy drinks, or have called for the curtailment of alcohol dissemination and consumption. There are also changes in demand for different packages, sizes and configurations.
Our organizational documents may limit changes in control. Furthermore, as of February 16, 2023, Mr. Sacks and Mr. Schlosberg together may be deemed to beneficially own and/or exercise voting control over approximately 9.3% of our outstanding common stock. As of February 16, 2023, TCCC owned approximately 19.5% of our common stock.
Our organizational documents may limit changes in control. Furthermore, as of February 15, 2024, Mr. Sacks and Mr. Schlosberg together may be deemed to beneficially own and/or exercise voting control over approximately 8.2% of our outstanding common stock. As of February 15, 2024, TCCC owned approximately 19.6% of our common stock.
Therefore, the acquisition and integration of acquired businesses may not contribute to our earnings as expected, we may not achieve profit margin targets when expected, or at all, and we may not achieve the other anticipated strategic financial benefits of such transactions. Changes in consumer product and shopping preferences may reduce demand for our products.
Therefore, the acquisition and integration of acquired businesses may not contribute to our earnings as expected, we may not achieve profit margin targets when expected, or at all, and we may not achieve the other anticipated strategic financial benefits of such transactions.
However, industry-wide shortages of certain flavor ingredients, flavors, fruits and fruit juices, coffee, tea, cocoa, dairy-based products, packaging materials (including aluminum cans) supplement ingredients and sweeteners have been, and could from time to time in the future be, encountered, which could interfere with and/or delay production of certain of our products.
Moreover, industry-wide shortages of certain flavor ingredients, flavors, fruits and fruit juices, coffee, tea, cocoa, dairy-based products, packaging materials (including aluminum cans), supplement ingredients and sweeteners have been, and could from time to time in the future be, encountered, resulting in production fluctuations or delays and/or product shortages and/or increased costs.
We may be required from time to time to recall products entirely or from specific co-packers, markets, retailers or batches or reformulate certain of our products if such products become contaminated, damaged, mislabeled, defective or otherwise materially non-compliant with applicable regulatory requirements. A material product recall could adversely affect our profitability and our brand image and corporate reputation.
We have been, and may in the future be, required from time to time to recall products entirely or from specific co-packers, markets, retailers or batches or reformulate certain of our products if such products become contaminated, damaged, mislabeled, defective or otherwise materially non-compliant with applicable regulatory requirements.
As a result, in the event of a disruption and/or delay, and/or demand exceeding forecasted demand, we may be unable to procure alternative packing facilities at commercially reasonable rates and/or within a reasonably short time period.
In 2023, we continued to outsource manufacturing of most of our non-alcohol finished goods to bottlers and other contract packers. As a result, in the event of a disruption and/or delay, and/or demand exceeding forecasted demand, we may be unable to procure alternative packing facilities at commercially reasonable rates and/or within a reasonably short time period.
Our third-party flavor suppliers generally do not make such flavors and/or blended concentrates available to other third-party customers. We have identified alternative suppliers for certain of the ingredients contained in many of our beverages.
Our third-party flavor suppliers generally do not make such flavors and/or blended concentrates available to other third-party customers. We have identified alternative suppliers for certain of the ingredients contained in many of our beverages. However, certain of our co-packing arrangements allow such co-packers to increase their fees based on certain of their own cost increases.
Sales of our products may also be influenced to some extent by weather conditions in the markets in which we operate. We, our bottlers and our contract packers, use a number of key ingredients in the manufacture of our beverage products that are derived from agricultural commodities, such as sugar, ethanol, coffee, tea cocoa, barley and hops.
We, our bottlers and our contract packers use a number of key ingredients in the manufacture of our beverage products that are derived from agricultural commodities, such as sugar, ethanol, coffee, tea cocoa, barley and hops.
For example, last year, the SEC and, subsequently, the European Commission published proposed rules that, if adopted, would require companies to significantly increase their disclosures related to climate change and mitigation efforts, which may require us to incur additional costs to comply and impose more oversight obligations on our Board of Directors and management.
For example, the California legislature and European Commission have each adopted laws that require companies to significantly increase their disclosures related to climate change and mitigation efforts, which will require us to incur additional costs to comply and impose more oversight obligations on our Board of Directors and management.
The predicted effects of climate change may also result in challenges regarding availability and quality of water, or less favorable pricing for water, which could adversely impact our business and results of operations.
The predicted effects of climate change may also result in challenges regarding the availability and quality of water, or less favorable pricing for water, which could adversely impact our business and results of operations. Sales of our products may also be influenced to some extent by weather conditions in the markets in which we operate.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changePROPERTIES As of February 16, 2023, our principal properties include our corporate headquarters as well as our Southern California warehouse and distribution center. 39 Table of Contents Our owned corporate facilities located in Corona, California, consist of (i) an approximately 141,000 square-foot, free-standing, six-story building (LEED Gold and ENERGY STAR certified), (ii) an approximately 147,625 square-foot three-story parking structure and storage facility, which houses our approximately 14,000 square-foot quality control laboratory, (iii) an approximately 75,426 square foot, free-standing, three-story building (currently pursuing ENERGY STAR certification), (iv) an approximately 20,661 square-foot, free-standing, single-story building and (v) an approximately 49,617 square-foot, free-standing, two-story building.
Biggest changePROPERTIES As of February 15, 2024, our principal properties include the following: Our owned corporate headquarters located in Corona, California, consist of (i) a free-standing, six-story building (LEED Gold and ENERGY STAR certified), (ii) a three-story parking structure and storage facility, which houses our quality control laboratory, (iii) a free-standing, three-story building (currently pursuing ENERGY STAR certification), (iv) a free-standing, single-story building and (v) a free-standing, two-story building.
During 2020, we purchased a three-story office building located in Uxbridge, United Kingdom. During 2019, we acquired a manufacturing plant and adjoining land in Athy, County Kildare, Ireland to produce and supply ingredients, including flavors, for certain of our international markets. During 2019, we purchased approximately 7.66 acres of land in San Fernando, California.
We utilize the property as a manufacturing facility for certain of our products. Manufacturing commenced in January 2024. During 2020, we purchased a three-story office building located in Uxbridge, United Kingdom. During 2019, we acquired a manufacturing plant and adjoining land in Athy, County Kildare, Ireland to produce and supply ingredients, including flavors, for certain of our international markets.
Our owned Southern California warehouse and distribution center is located in Rialto, California, consisting of an approximately 1,000,000 square-foot building which is LEED certified. During 2022, we acquired certain real property and equipment in Norwalk, California. We intend to utilize the property as a manufacturing facility for certain of our products.
Our owned Southern California warehouse and distribution center is located in Rialto, California, which is LEED certified. During 2023, we acquired a beverage production facility in Phoenix, Arizona, to manufacture certain of our energy drink products. During 2022, we acquired certain real property and equipment in Norwalk, California.
We are in the process of constructing a new production facility thereon to consolidate AFF’s operations into a single location. In addition, we lease many smaller office and/or warehouse/manufacturing spaces, both domestically and in certain international locations. ​
In addition, we lease many smaller office and/or warehouse/manufacturing spaces, both domestically and in certain international locations. ​
Added
In January 2024, we acquired additional land adjoining the property to support continued development of the manufacturing site. During 2019, we purchased approximately 7.66 acres of land in San Fernando, California. We are in the process of constructing a new production facility thereon to consolidate AFF’s operations into a single location.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeThe Company evaluates, on a quarterly basis, developments in legal proceedings and other matters that could cause an increase or decrease in the amount of the liability that is accrued, if any, and any related insurance reimbursements.
Biggest changeThe Company evaluates, on a quarterly basis, developments in legal proceedings and other matters that could cause an increase or decrease in the amount of the liability that is accrued, if any, and any related insurance reimbursements. As of December 31, 2023, $0.3 million of loss contingencies were included in the Company’s accompanying consolidated balance sheet.
As of December 31, 2022 and 2021, no loss contingencies were included in the Company’s consolidated balance sheets. ​ On September 29, 2022, a jury in the U.S.
As of December 31, 2022, no loss contingencies were included in the Company’s consolidated balance sheet. ​
Removed
District Court for the Central District of California (the “District Court”) awarded Monster Energy Company (“MEC”) approximately $293 million in damages in its false advertising and trade secrets case against Vital Pharmaceuticals, Inc. (“VPX”), the maker of Bang Energy.
Removed
The jury found VPX and its chief executive officer to have falsely advertised the “Super Creatine” ingredient of Bang Energy and to have acted willfully and deliberately in violating the federal Lanham Act. The jury also found that VPX stole trade secrets and interfered with MEC’s contracts over shelf space with certain key vendors.
Removed
The parties are currently briefing post-verdict issues, including MEC’s motion for a permanent injunction relating to “Super Creatine” and request for enhanced and punitive damages. In April 2022, MEC and Orange Bang, Inc.
Removed
(“Orange Bang”) filed a joint motion in the District Court to confirm a final arbitration award against VPX that awarded MEC and Orange Bang $175.0 million and a 5% royalty on all future sales of VPX’s Bang Energy drink and other Bang-branded products as well as certain fees and costs.
Removed
Pursuant to the terms of the agreement between MEC and Orange Bang, the award and future royalties will, after accounting for MEC’s expended fees and costs, be shared equally between MEC and Orange Bang. The arbitration arose from a settlement agreement that VPX entered into in 2010 with Orange Bang, a family-owned beverage business.
Removed
Pursuant to the terms of that agreement, VPX is only permitted to use the Bang mark on “creatine-based” products or on Bang products that are marketed and sold 40 Table of Contents only in the vitamin and dietary supplement sections of stores. On September 29, 2022, the District Court entered final judgment confirming the award.
Removed
On October 28, 2022, VPX filed a notice of appeal of the District Court’s final judgment confirming the award. On October 10, 2022, VPX, along with certain of its domestic subsidiaries and affiliates, filed for protection under Chapter 11 of the Bankruptcy Code in the Southern District of Florida.
Removed
Due to such ongoing proceedings, VPX’s appeal of the District Court’s final judgment confirming the final arbitration award is stayed. While reserving all rights to appeal, VPX made its first royalty payment of $3.6 million on February 14, 2023, which is for sales of Bang Energy drinks and other Bang-branded products from October 10, 2022 through December 31, 2022.
Removed
This payment is subject to potential claw back if, among other things, the judgment and final arbitration award are overturned on appeal or VPX becomes administratively insolvent. In addition, per ASC 450 “Contingencies”, the Company will not recognize the September 2022 jury award or April 2022 arbitration award until the awards are realized or realizable.
Removed
As of March 1, 2023, the proceedings have yet to progress to a stage where there is sufficient information for an accurate timeline of when the awards, including any royalty payments received, will be realized or realizable, if at all. ​

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeSuch shares are included in common stock in treasury in the accompanying consolidated balance sheet at December 31, 2022. 42 Table of Contents The following tabular summary reflects the Company’s repurchase activity during the quarter ended December 31, 2022. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Maximum Number (or ​ ​ ​ ​ ​ ​ ​ ​ ​ Approximate Dollar ​ ​ ​ ​ ​ ​ ​ Total Number of ​ ​ Value) of Shares that ​ ​ ​ ​ ​ ​ ​ Shares Purchased ​ ​ May Yet Be Purchased ​ ​ Total Number ​ ​ ​ ​ as Part of Publicly ​ Under the Plans or ​ ​ of Shares ​ Average Price ​ Announced Plans ​ Programs (In Period Purchased per Share¹ or Programs thousands)² Oct 1 – Oct 31, 2022 ​ 2,263,063 ​ $ 89.10 ​ 2,263,063 ​ $ 182,837 November 2, 2022 Authorization ​ ​ ​ ​ ​ ​ ​ $ 500,000 Nov 1 – Nov 30, 2022 — ​ $ — — ​ $ 682,837 Dec 1 – Dec 31, 2022 — ​ $ — — ​ $ 682,837 ​ ¹Excluding broker commissions paid. ²Net of broker commissions paid.
Biggest changeSuch shares are included in common stock in treasury in the accompanying consolidated balance sheet at December 31, 2023. 43 Table of Contents The following tabular summary reflects the Company’s repurchase activity during the quarter ended December 31, 2023. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Maximum Number (or ​ ​ ​ ​ ​ ​ ​ ​ ​ Approximate Dollar ​ ​ ​ ​ ​ ​ ​ Total Number of ​ ​ Value) of Shares that ​ ​ ​ ​ ​ ​ ​ Shares Purchased ​ ​ May Yet Be Purchased ​ ​ Total Number ​ ​ ​ ​ as Part of Publicly ​ Under the Plans or ​ ​ of Shares ​ Average Price ​ Announced Plans ​ Programs (In Period Purchased per Share¹ or Programs thousands)² Oct 1 – Oct 31, 2023 ​ — ​ $ — ​ — ​ $ 282,838 November 7, 2023 Authorization ​ ​ ​ ​ ​ ​ ​ $ 500,000 Nov 1 – Nov 30, 2023 — ​ $ — — ​ $ 782,838 Dec 1 – Dec 31, 2023 791,317 ​ $ 54.57 791,317 ​ $ 739,643 ​ ¹Excluding broker commissions paid. ²Net of broker commissions paid.
On June 14, 2022, the Company’s Board of Directors authorized a share repurchase program for the purchase of up to an additional $500.0 million of the Company’s outstanding common stock (the “June 2022 Repurchase Plan”).
On June 14, 2022, the Company’s Board of Directors authorized a share repurchase program for the purchase of up to $500.0 million of the Company’s outstanding common stock (the “June 2022 Repurchase Plan”).
On November 2, 2022, the Company’s Board of Directors authorized a share repurchase program for the purchase of up to an additional $500.0 million of the Company’s outstanding common stock (the “November 2022 Repurchase Plan”). During the year ended December 31, 2022, no shares were repurchased under the November 2022 Repurchase Plan.
On November 7, 2023, the Company’s Board of Directors authorized a share repurchase program for the purchase of up to an additional $500.0 million of the Company’s outstanding common stock (the “November 2023 Repurchase Plan”). During the year ended December 31, 2023, no shares were repurchased under the November 2023 Repurchase Plan.
During the year ended December 31, 2022, 0.2 million shares of common stock were purchased from employees in lieu of cash payments for options exercised or withholding taxes due for a total amount of $12.5 million. While such purchases are considered common stock repurchases, they are not counted as purchases against the Company’s authorized share repurchase programs.
During the year ended December 31, 2023, 3.8 million shares of common stock were purchased from employees in lieu of cash payments for options exercised or withholding taxes due for a total amount of $214.2 million. While such purchases are considered common stock repurchases, they are not counted as purchases against the Company’s authorized share repurchase programs.
ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Principal Market The Company’s common stock trades on the Nasdaq Global Select Market under the symbol, “MNST”. As of February 16, 2023, there were 522,409,358 shares of the Company’s common stock outstanding held by approximately 183 holders of record.
ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Principal Market The Company’s common stock trades on the Nasdaq Global Select Market under the symbol, “MNST”. As of February 15, 2024, there were 1,040,636,235 shares of the Company’s common stock outstanding held by approximately 189 holders of record.
Performance Graph The following graph shows a five-year comparison of cumulative total returns: 1 ​ ​ 1 Annual return assumes reinvestment of dividends. Cumulative total return assumes an initial investment of $100 on December 31, 2017. The Company’s current self-selected peer group is comprised of TCCC, Dr. Pepper Snapple Group, Inc. (through July 9, 2018), Keurig Dr. Pepper Inc.
Performance Graph The following graph shows a five-year comparison of cumulative total returns: 1 ​ ​ 1 Annual return assumes reinvestment of dividends. Cumulative total return assumes an initial investment of $100 on December 31, 2018. The Company’s self-selected peer group is comprised of TCCC, Keurig Dr. Pepper Inc., Constellation Brands, Inc., Molson Coors Beverage Company and PepsiCo, Inc.
As of March 1, 2023, $500.0 million remained available for repurchase under the November 2022 Repurchase Plan. The aggregate amount of the Company’s outstanding common stock that remains available for repurchase under all previously authorized repurchase plans is $682.8 million as of March 1, 2023.
As of February 27, 2024, $500.0 million remained available for repurchase under the November 2023 Repurchase Plan. The aggregate amount of the Company’s outstanding common stock that remains available for repurchase under all previously authorized repurchase plans is $642.4 million as of February 27, 2024.
During the year ended December 31, 2022, the Company purchased approximately 5.1 million shares of common stock at an average purchase price of $86.89 per share, for a total amount of approximately $441.5 million (excluding broker commissions), which exhausted the availability under the March 2020 Repurchase Plan.
During the year ended December 31, 2023, the Company purchased approximately 3.3 million shares of common stock at an average purchase price of $55.52 per share, for a total amount of approximately $182.8 million (excluding broker commissions), which exhausted the availability under the June 2022 Repurchase Plan.
During the year ended December 31, 2022, the Company purchased approximately 3.6 million shares of common stock at an average purchase price of $88.73 per share, for a total amount of approximately $317.2 million (excluding broker commissions), under the June 2022 Repurchase Plan. As of March 1, 2023, $182.8 million remained available for repurchase under the June 2022 Repurchase Plan.
During the year ended December 31, 2023, the Company purchased approximately 4.8 million shares of common stock at an average purchase price of $54.31 per share, for a total amount of approximately $260.3 million (excluding broker commissions), under the November 2022 Repurchase Plan. As of February 27, 2024, $142.4 million remained available for repurchase under the November 2022 Repurchase Plan.
On March 13, 2020, the Company’s Board of Directors authorized a share repurchase program for the purchase of up to $500.0 million of the Company’s outstanding common stock (the “March 2020 Repurchase Plan”).
On November 2, 2022, the Company’s Board of Directors authorized a share repurchase program for the purchase of up to an additional $500.0 million of the Company’s outstanding common stock (the “November 2022 Repurchase Plan”).
Removed
(after July 10, 2018), Constellation Brands, Inc., Molson Coors Beverage Company and PepsiCo, Inc. The Company’s former self-selected peer group is comprised of TCCC, Dr. Pepper Snapple Group, Inc. (through July 9, 2018), Keurig Dr. Pepper Inc. (after July 10, 2018), National Beverage Corporation, Jones Soda Company and PepsiCo, Inc.
Removed
The Company removed National Beverage Corporation and Jones Soda Company from its peer group and added Constellation Brands, Inc. and Molson Coors Beverage Company to its peer group, as such latter companies have higher market capitalizations and because the Company has recently entered the alcohol beverage industry. 43 Table of Contents

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeCongress, which may include efforts to change or repeal the 2017 Tax Cuts and Jobs Act and the federal corporate income tax rate reduction; ● Our ability to produce our products in international markets in which they are sold, thereby reducing freight costs and/or product damages; ● Our ability to effectively manage our inventories and/or our accounts receivables; ● Our foreign currency exchange rate risk with respect to our sales, expenses, profits, assets and liabilities denominated in currencies other than the U.S. dollar, which will continue to increase as foreign sales increase; ● The long-term impact of the United Kingdom’s departure from the European Union (or “Brexit”); ● Changes in accounting standards may affect our reported profitability; 63 Table of Contents ● Implications of the Organization for Economic Cooperation and Development’s base erosion and profit shifting project; ● Any proceedings which may be brought against us by the Securities and Exchange Commission (the “SEC”), the FDA, the FTC, the ATF or other governmental agencies or bodies; ● The outcome and/or possibility of future shareholder derivative actions or shareholder securities litigation that may be filed against us and/or against certain of our officers and directors, and the possibility of other private shareholder litigation; ● The outcome of product liability or consumer fraud litigation and/or class action litigation (or its analog in foreign jurisdictions) regarding the safety of our products and/or the ingredients in and/or claims made in connection with our products and/or alleging false advertising, marketing and/or promotion, and the possibility of future product liability and/or class action lawsuits; ● Exposure to significant liabilities due to litigation, legal or regulatory proceedings, including litigation directed at the energy and alcohol beverage industries generally or at the Company in particular; ● Intellectual property injunctions; ● Unfavorable resolution of tax matters; ● Uncertainty and volatility in the domestic and global economies, including risk of counterparty default or failure; ● Our ability to address any significant deficiencies or material weakness in our internal controls over financial reporting; ● Our ability to continue to generate sufficient cash flows to support our expansion plans and general operating activities; ● Decreased demand for our products resulting from changes in consumer preferences, including, but not limited to: changes in demand for different packages, sizes and configurations; changes due to perceived health concerns such as obesity, ingredients in our products or packaging, and alcohol abuse; changes due to product safety concerns; and/or changes due to decreased consumer discretionary spending power; ● Adverse publicity surrounding obesity, alcohol consumption, and other health concerns related to our products, product safety and quality, water usage, environmental impact and sustainability, human rights, our culture, workforce and labor and workplace laws; ● Our ability to meet or comply with sustainability-related expectations, standards, and regulations, including forthcoming rules set forth by the SEC and European Commission; ● Changes in demand that are weather or season related and/or for other reasons, including changes in product category and/or package consumption and changes in cost and availability of certain key ingredients including aluminum cans, as well as disruptions to the supply chain, as a result of climate change and poor or extreme weather conditions; ● The impact of unstable political conditions, civil unrest, large scale terrorist acts, the outbreak or escalation of armed hostilities, major natural disasters and extreme weather conditions, widespread outbreaks of infectious diseases (such as the COVID-19 pandemic), or unforeseen economic and political changes and local or international catastrophic events; ● The human and economic consequences of the COVID-19 pandemic, including new variants, as well as the measures taken or that may be taken in the future by governments, and consequently, businesses (including the Company and its suppliers, bottlers/ distributors, co-packers and other service providers) and the public at large to limit the COVID-19 pandemic; ● The impact of changes to our sponsorship and endorsement activities, our sampling activities, and/or our innovation activities as a result of COVID-19 or other pandemics on our future sales and market share; ● The impact of countries being in lockdown due to the COVID-19 pandemic at various times; ● The impact on our business of competitive products and pricing pressures and our ability to gain or maintain our share of sales in the marketplace as a result of actions by competitors, including unsubstantiated and/or misleading claims, false advertising claims and tortious interference, as well as competitors selling misbranded products; ● The impact on our business of trademark and trade dress infringement proceedings brought against us relating to our brands, which could result in an injunction barring us from selling certain of our products and/or require changes to be made to our current trade dress; ● Our ability to implement and/or maintain price increases, including through reductions in promotional allowances; ● An inability to achieve volume growth through product and packaging initiatives; 64 Table of Contents ● Our ability to sustain the current level of sales and/or achieve growth for our Monster Energy® brand energy drinks and/or our other products, including our Strategic Brands and Alcohol Brands; ● Our ability to implement our growth strategy, including expanding our business in existing and new sectors, such as the alcohol beverage sector; ● Our ability to successfully integrate CANarchy and other acquired businesses or assets; ● The inherent operational risks presented by the alcohol beverage industry that may not be adequately covered by insurance or lead to litigation relating to alcohol marketing, advertising, or distribution practices, alcohol abuse problems and other health consequences arising from excessive consumption of or other misuse of alcohol, including death; ● The impact of criticism of our products and/or the energy drink and/or alcohol beverage markets generally and/or legislation enacted (whether as a result of such criticism or otherwise) that restricts the marketing or sale of energy drinks and/or alcohol beverages (including prohibiting the sale of energy and/or alcohol drinks at certain establishments or pursuant to certain governmental programs), limits caffeine or alcohol content in beverages, requires certain product labeling disclosures and/or warnings, imposes excise and/or sales taxes, limits product sizes and/or imposes age restrictions for the sale of energy and/or alcohol drinks; ● Our ability to comply with and/or resulting lower consumer demand and/or lower profit margins for energy drinks and/or alcohol beverages due to proposed and/or future U.S. federal, state and local laws and regulations and/or proposed or existing laws and regulations in certain foreign jurisdictions and/or any changes therein, including changes in taxation requirements (including tax rate changes, new tax laws, new and/or increased excise, sales and/or other taxes on our products and revised tax law interpretations) and environmental laws, as well as the Federal Food, Drug, and Cosmetic Act and regulations or rules made thereunder or in connection therewith by the FDA, as well as changes in any other food, drug or similar laws in the United States and internationally, especially those changes that may restrict the sale of energy and/or alcohol drinks (including prohibiting the sale of energy and/or alcohol drinks at certain establishments or pursuant to certain governmental programs), limit caffeine or alcohol content in beverages, require certain product labeling disclosures and/or warnings, impose excise taxes, impose sugar taxes, limit product sizes, or impose age restrictions for the sale of energy and/or alcohol drinks, as well as laws and regulations or rules made or enforced by the ATF and Explosives and/or the FTC or their foreign counterparts; ● Disruptions in the timely import or export of our products and/or ingredients including flavors, flavor ingredients and supplement ingredients due to port congestion, strikes and related labor issues or otherwise; ● Our ability to satisfy all criteria set forth in any model energy and/or alcohol drink guidelines, including, without limitation, those adopted by the American Beverage Association, of which we are a member, and/or any international beverage associations and the impact of our failure to satisfy such guidelines may have on our business; ● The effect of unfavorable or adverse public relations, press, articles, comments and/or media attention; ● Changes in the cost, quality and availability of containers, packaging materials, aluminum cans or kegs, the Midwest and other premiums, raw materials, including flavors and flavor ingredients, and other ingredients and juice concentrates, and our ability to obtain and/or maintain favorable supply arrangements and relationships and procure timely and/or sufficient production of all or any of our products to meet customer demand; ● Any shortages that may be experienced in the procurement of containers and/or other raw materials including, without limitation, water, flavors, flavor ingredients, supplement ingredients, aluminum cans generally, PET containers used for our Monster Hydro® energy drinks, 24-ounce aluminum cap cans and 550ml BRE aluminum cans with resealable ends; ● Limitations in procuring sufficient quantities of aluminum cans; ● In order to secure sufficient quantities of aluminum cans and sufficient co-packing availability in the future, we may be required to commit to minimum purchase volumes and/or minimum co-packing volumes.
Biggest changeCongress, which may include efforts to change or repeal the 2017 Tax Cuts and Jobs Act and the federal corporate income tax rate reduction; ● Our ability to produce our products in international markets in which they are sold, thereby reducing freight costs and/or product damages; ● Our ability to effectively manage our inventories and/or our accounts receivables; ● Our foreign currency exchange rate risk with respect to our sales, expenses, profits, assets and liabilities denominated in currencies other than the U.S. dollar, which will continue to increase as foreign sales increase; ● Changes in accounting standards may affect our reported profitability; ● Implications of the Organization for Economic Cooperation and Development’s base erosion and profit shifting project; ● Any proceedings that may be brought against us by the SEC, the FDA, the FTC, the ATF or other governmental or quasi-governmental agencies or bodies; ● The outcome and/or possibility of future shareholder derivative actions or shareholder securities litigation that may be filed against us and/or against certain of our officers and directors, and the possibility of other private shareholder litigation; ● The outcome of product liability or consumer fraud litigation and/or class action litigation (or its analog in foreign jurisdictions) regarding the safety of our products and/or the ingredients in our products and/or claims made in connection with our products and/or alleging false advertising, marketing and/or promotion, and the possibility of future product liability and/or class action lawsuits; ● Exposure to significant liabilities due to litigation, legal or regulatory proceedings, including litigation directed at the energy and alcohol beverage industries generally or at the Company in particular; ● Intellectual property injunctions; 64 Table of Contents ● Unfavorable resolution of possible tax matters; ● Uncertainty and volatility in the domestic and global economies, including risk of counterparty default or failure; ● Our ability to address any significant deficiencies or material weakness in our internal controls over financial reporting; ● Our ability to continue to generate sufficient cash flows to support our expansion plans and general operating activities; ● Decreased demand for our products resulting from changes in consumer preferences, including, but not limited to: changes in demand for different packages, sizes and configurations; changes due to perceived health concerns such as obesity, ingredients in our products or packaging, and alcohol abuse; changes due to product safety concerns; and/or changes due to decreased consumer discretionary spending power; ● Adverse publicity surrounding obesity, alcohol consumption, and other health concerns related to our products, product safety and quality, water usage, environmental impact and sustainability, human rights, our culture, workforce and labor and workplace laws; ● Our ability to meet or comply with sustainability-related expectations, standards, and regulations, including rules proposed by the SEC, laws implemented by the California legislature, and directives adopted by the European Commission; ● Changes in demand that are weather or season related and/or for other reasons, including changes in product category and/or package consumption; ● Changes in cost and availability of certain key ingredients including aluminum cans, as well as disruptions to the supply chain, as a result of climate change and poor or extreme weather conditions; ● The impact of unstable political conditions, civil unrest, large scale terrorist acts, the outbreak or escalation of armed hostilities, major natural disasters and extreme weather conditions, widespread outbreaks of infectious diseases (such as the COVID-19 pandemic), or unforeseen economic and political changes and local or international catastrophic events; ● The impact on our business of competitive products and pricing pressures and our ability to increase or maintain our market share as a result of actions by competitors, including unsubstantiated and/or misleading claims, false advertising claims and tortious interference, as well as competitors selling misbranded products; ● The impact on our business of trademark and trade dress infringement proceedings brought against us relating to any of our brands, which could result in an injunction barring us from selling certain of our products and/or require changes to be made to our current trade dress; ● Our ability to implement and/or maintain price increases, including through reductions in promotional allowances; ● An inability to achieve volume growth through product and packaging initiatives; ● Our ability to implement our growth strategy, including expanding our business in existing and new sectors, such as the alcohol beverage sector; ● The inherent operational risks presented by the alcohol beverage industry that may not be adequately covered by insurance or lead to litigation relating to alcohol marketing, advertising, or distribution practices, alcohol abuse problems and other health consequences arising from excessive consumption of or other misuse of alcohol, including death; ● Our inability to transition distribution agreements in our Alcohol Brands segment and/or the impact of higher costs to change distributors for our alcohol beverages; ● The impact of criticism of our products and/or the energy drink and/or alcohol beverage markets generally and/or legislation enacted (whether as a result of such criticism or otherwise) that restricts the marketing or sale of energy drinks and/or alcohol beverages (including prohibiting the sale of energy and/or alcohol drinks at certain establishments or pursuant to certain governmental programs), limits caffeine or alcohol content in beverages, requires certain product labeling disclosures and/or warnings, imposes excise and/or sales taxes, limits product sizes and/or imposes age restrictions for the sale of energy and/or alcohol drinks; ● Our ability to comply with and/or resulting lower consumer demand and/or lower profit margins for energy drinks and/or alcohol beverages due to proposed and/or future U.S. federal, state and local laws and regulations and/or proposed or existing laws and regulations in certain foreign jurisdictions and/or any changes therein, including changes in taxation requirements (including tax rate changes, new tax laws, new and/or increased excise, sales and/or other taxes on our products and revised tax law interpretations) and environmental laws, as well as the Federal Food, Drug, and 65 Table of Contents Cosmetic Act and regulations or rules made thereunder or in connection therewith by the FDA.
In addition, articles critical of the caffeine content in energy drinks and their perceived benefits, or alcohol drinks and their misuse or abuse, as well as articles indicating certain health risks of energy or alcohol drinks have been published.
In addition, articles critical of the caffeine content in energy drinks and their perceived benefits, or alcohol drinks and their misuse or abuse, as well as articles indicating certain health risks of energy and alcohol drinks have been published.
For the year ended December 31, 2022, cash used in operating activities was primarily attributable to a $347.7 million increase in inventories, a $129.0 million increase in accounts receivable, a $38.3 million increase in prepaid expenses and other assets, a $30.4 million decrease in accrued liabilities, a $19.9 million decrease in deferred revenue, a $16.9 million decrease in income taxes payable, a $4.5 million decrease in other liabilities and $4.4 million decrease in prepaid income taxes.
For the year ended December 31, 2022, cash used in operating activities was primarily attributable to a $347.7 million increase in inventories, a $129.0 million increase in accounts receivable, a $38.3 million increase in prepaid expenses and other assets, a $30.4 million decrease in accrued liabilities, a $19.9 million decrease in deferred revenue, a $16.9 million decrease in income taxes payable, a $4.5 million decrease in other liabilities and a $4.4 million decrease in prepaid income taxes.
Net sales for the Strategic Brands segment increased primarily due to increased worldwide sales by volume of our Predator® and NOS® brand energy drinks as a result of increased consumer demand.
Net sales for the Strategic Brands segment increased primarily due to increased worldwide sales by volume of our NOS®, Predator® and Fury® brand energy drinks as a result of increased consumer demand.
To a lesser extent, for both the years ended December 31, 2022 and 2021, cash used in investing activities also included the acquisition of real property, fixed assets consisting of vans and promotional vehicles, coolers and other equipment to support our marketing and promotional activities, production equipment, furniture and fixtures, office and computer equipment, computer software, equipment used for sales and administrative activities, certain leasehold improvements, improvements to real property as well as the acquisition, defense and maintenance of trademarks.
To a lesser extent, for both the years ended December 31, 2023 and 2022, cash used in investing activities also included the acquisition of real property, fixed assets consisting of vans and promotional vehicles, coolers and other equipment to support our marketing and promotional activities, production equipment, furniture and fixtures, office and computer equipment, computer software, equipment used for sales and administrative activities, certain leasehold improvements, improvements to real property as well as the acquisition, defense and maintenance of trademarks.
For the years ended December 31, 2022, 2021 and 2020, there were no goodwill impairments recorded and there are no accumulated impairment balances. Other Intangibles – In accordance with FASB ASC 350, intangible assets with indefinite lives are not amortized but instead are measured for impairment at least annually, or when events indicate that an impairment exists.
For the years ended December 31, 2023, 2022 and 2021, there were no goodwill impairments recorded and there are no accumulated impairment balances. Other Intangibles – In accordance with FASB ASC 350, intangible assets with indefinite lives are not amortized but instead are measured for impairment at least annually, or when events indicate that an impairment exists.
A detailed discussion of 2020 items and year-to-year comparisons between 2021 and 2020 that are not included in this Annual Report on Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
A detailed discussion of 2021 items and year-to-year comparisons between 2022 and 2021 that are not included in this Annual Report on Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
All statements containing a projection of revenues, income (loss), earnings (loss) per share, capital expenditures, dividends, capital structure or other financial items, a statement of management’s plans and objectives for future operations, or a statement of future economic performance contained in management’s discussion and analysis of financial condition and results of operations, including statements related to new products, volume growth and statements encompassing general optimism about future operating results and non-historical information, are forward-looking statements within the meaning of the Exchange Act.
All statements containing a projection of revenues, income (loss), earnings (loss) per share, capital expenditures, dividends, capital structure or other financial items, a statement of management’s plans and objectives for future operations, or a statement of future economic performance contained in management’s discussion and analysis of financial condition and results of operations, including statements related to new products, volume growth and statements encompassing general optimism about future operating results and non-historical 62 Table of Contents information, are forward-looking statements within the meaning of the Exchange Act.
The primary drivers of our promotional and other allowance activities for our energy drink products for the years ended December 31, 2022 and 2021 were (i) to increase sales volume and trial, (ii) to address market conditions, and (iii) to secure shelf and display space at retail.
The primary drivers of our promotional and other allowance activities for our energy drink products for the years ended December 31, 2023 and 2022 were (i) to increase sales volume and trial, (ii) to address market conditions, and (iii) to secure shelf and display space at retail.
We expect 59 Table of Contents to continue to use a portion of our cash in excess of our requirements for operations for purchasing short-term and long-term investments, leasehold improvements, the acquisition of capital equipment (specifically, vans, trucks and promotional vehicles, coolers, other promotional equipment, merchandise displays, warehousing racks as well as items of production equipment required to produce certain of our existing and/or new products and to develop our brand in international markets) and for other corporate purposes.
We expect to continue to use a portion of our cash in excess of our requirements for operations for purchasing short-term and long-term investments, leasehold improvements, the acquisition of capital equipment (specifically, vans, trucks and promotional vehicles, coolers, other promotional equipment, merchandise displays, warehousing racks as well as items of production equipment required to produce certain of our existing and/or new products and to develop our brand in international markets) and for other corporate purposes.
One or more of our products are distributed in approximately 157 countries and territories worldwide. ● Profitable Growth – We believe “functional” value-added beverage brands supported by marketing and innovation and targeted to a diverse consumer base, drive profitable growth.
One or more of our products are distributed in approximately 158 countries and territories worldwide. ● Profitable Growth – We believe “functional” value-added beverage brands supported by marketing and innovation and targeted to a diverse consumer base, drive profitable growth.
In addition, other key challenges and risks that could impact our Company’s future financial results include, but are not limited to: ● the risks associated with the realization of benefits from our relationship with TCCC; ● changes in consumer preferences and demand for our products; ● economic uncertainty in the United States, Europe and other countries in which we operate; ● the risks associated with foreign currency exchange rate fluctuations; ● maintenance of our brand image, product quality and corporate reputation; ● increasing concern over various environmental, human rights and health matters, including obesity, caffeine and/or alcohol consumption and energy and/or alcohol drinks generally, and changes in regulation and consumer preferences in response to those concerns; 49 Table of Contents ● profitable expansion and growth of our family of brands in the competitive market place (See “Part I, Item 1 – Business – Competition” and “Part I, Item 1 – Business – Sales and Marketing”); ● costs of establishing and promoting our brands internationally; ● the risks associated with entering into new sectors in the beverage industry, in particular the alcohol beverage sector, and making acquisitions to implement our growth strategy; ● increases in costs of raw materials used by us; ● restrictions on imports and sources of supply, duties or tariffs, changes in related government regulations and disruptions in the timely import or export of our products and/or ingredients including flavors, flavor ingredients and supplement ingredients, due to port strikes and/or port congestion, delays due to the COVID-19 pandemic, related labor issues or other importation impediments; ● protection of our existing intellectual property portfolio of trademarks and copyrights and our continuous pursuit to develop and protect new and innovative trademarks and copyrights for our expanding product lines; ● limitations on available quantities of aluminum cans, other packaging materials and ingredients; ● limitations on co-packing availability and in particular, consolidation in the co-packing industry; ● increases in ocean and domestic freight rates; ● the long-term impact of Brexit on our business in Europe and the United Kingdom; ● the imposition of additional regulation, including regulation restricting the sale of energy or alcohol drinks, limiting caffeine or alcohol content in beverages, requiring product labeling and/or warnings, imposing excise taxes and/or sales taxes, and/or limiting product size and/or age restrictions; and ● the continuation or worsening of the COVID-19 pandemic.
In addition, other key challenges and risks that could impact our Company’s future financial results include, but are not limited to: ● the risks associated with the realization of benefits from our relationship with TCCC; 49 Table of Contents ● profitable expansion and growth of our family of brands in the competitive market place (See “Part I, Item 1 – Business – Competition” and “Part I, Item 1 – Business – Sales and Marketing”); ● changes in consumer preferences and demand for our products; ● The emergence of new subcategories within the energy and/or alcohol beverage sectors that we fail (or are late) to successfully react to; ● economic uncertainty in the United States, Europe and other countries in which we operate; ● the risks associated with foreign currency exchange rate fluctuations; ● maintenance of our brand image, product quality and corporate reputation; ● increasing concern over various environmental, human rights and health matters, including obesity, caffeine and/or alcohol consumption and energy and/or alcohol drinks generally, and changes in regulation and consumer preferences in response to those concerns; ● costs of establishing and promoting our brands internationally; ● the risks associated with entering into new sectors in the beverage industry, in particular the alcohol beverage sector, and making acquisitions to implement our growth strategy; ● increases in costs of raw materials used by us; ● restrictions on imports and sources of supply, duties or tariffs, changes in related government regulations and disruptions in the timely import or export of our products and/or ingredients including flavors, flavor ingredients and supplement ingredients, due to port strikes and/or port congestion, delays due to pandemics, related labor issues or other importation impediments; ● protection of our existing intellectual property portfolio of trademarks and copyrights and our continuous pursuit to develop and protect new and innovative trademarks and copyrights for our expanding product lines; ● limitations on available quantities of aluminum cans, other packaging materials and ingredients; ● limitations on co-packing availability and in particular, consolidation in the co-packing industry; ● the long-term impact of Brexit on our business in Europe and the United Kingdom; ● increases in ocean and domestic fuel and freight rates; and ● the imposition of additional regulations, including regulations restricting the sale of energy or alcohol drinks, limiting caffeine or alcohol content in beverages, requiring product labeling and/or warnings, imposing excise taxes and/or sales taxes, and/or limiting product size and/or age restrictions.
For both the years ended December 31, 2022 and 2021, cash provided by investing activities was primarily attributable to sales of available-for-sale investments. For both the years ended December 31, 2022 and 2021, cash used in investing activities was primarily attributable to purchases of available-for-sale investments.
For both the years ended December 31, 2023 and 2022, cash provided by investing activities was primarily attributable to sales of available-for-sale investments. For both the years ended December 31, 2023 and 2022, cash used in investing activities was primarily attributable to purchases of available-for-sale investments.
We continue to incur expenditures in connection with the development and introduction of new products and flavors. 47 Table of Contents Value Drivers of our Business We believe that the key value drivers of our business include the following: ● International Growth – The introduction, development and sustained profitability of our brands internationally remains a key value driver for our corporate growth.
We continue to incur expenditures in connection with the development and introduction of new products and flavors. Value Drivers of our Business We believe that the key value drivers of our business include the following: ● International Growth – The introduction, development and sustained profitability of our brands internationally remains a key value driver for our corporate growth.
Quarterly fluctuations may also be affected by other factors including the introduction of new products, the opening of new markets where temperature fluctuations are more pronounced, the addition of new bottlers/distributors, changes in the sales mix of our products and changes in and/or increased advertising and promotional expenses.
Quarterly fluctuations may also be affected by other factors including the introduction of new products, the opening of new markets where temperature fluctuations are more pronounced, the addition of new bottlers/distributors, 56 Table of Contents changes in the sales mix of our products and changes in and/or increased advertising and promotional expenses.
Those factors and the other risk factors described therein are not necessarily all of the important factors that could cause actual results or developments to differ materially from those expressed in any of our 66 Table of Contents forward-looking statements. Other unknown or unpredictable factors also could harm our results.
Those factors and the other risk factors described therein are not necessarily all of the important factors that could cause actual results or developments to differ materially from those expressed in any of our forward-looking statements. Other unknown or unpredictable factors also could harm our results.
Revenue Recognition – Promotional and other allowances (variable consideration) recorded as a reduction to net sales for our energy drink products primarily include consideration given to the Company’s non-alcohol bottlers/distributors or retail customers including, but not limited to the following: ● discounts granted off list prices to support price promotions to end-consumers by retailers; ● reimbursements given to the Company’s bottlers/distributors for agreed portions of their promotional spend with retailers, including slotting, shelf space allowances and other fees for both new and existing products; ● the Company’s agreed share of fees given to bottlers/distributors and/or directly to retailers for advertising, in-store marketing and promotional activities; ● the Company’s agreed share of slotting, shelf space allowances and other fees given directly to retailers; ● incentives given to the Company’s bottlers/distributors and/or retailers for achieving or exceeding certain predetermined sales goals; ● discounted or free products; ● contractual fees given to the Company’s bottlers/distributors related to sales made directly by the Company to certain customers that fall within the bottlers’/distributors’ sales territories; and 61 Table of Contents ● commissions paid to TCCC based on our sales to certain wholly-owned subsidiaries of TCCC and/or to certain companies accounted for under the equity method by TCCC.
For the year ended December 31, 2021 no impairment charges were recorded to intangibles. 61 Table of Contents Revenue Recognition – Promotional and other allowances (variable consideration) recorded as a reduction to net sales for our energy drink products primarily include consideration given to the Company’s non-alcohol bottlers/distributors or retail customers including, but not limited to the following: ● discounts granted off list prices to support price promotions to end-consumers by retailers; ● reimbursements given to the Company’s bottlers/distributors for agreed portions of their promotional spend with retailers, including slotting, shelf space allowances and other fees for both new and existing products; ● the Company’s agreed share of fees given to bottlers/distributors and/or directly to retailers for advertising, in-store marketing and promotional activities; ● the Company’s agreed share of slotting, shelf space allowances and other fees given directly to retailers; ● incentives given to the Company’s bottlers/distributors and/or retailers for achieving or exceeding certain predetermined sales goals; ● discounted or free products; ● contractual fees given to the Company’s bottlers/distributors related to sales made directly by the Company to certain customers that fall within the bottlers’/distributors’ sales territories; and ● commissions paid to TCCC based on our sales to certain wholly-owned subsidiaries of TCCC and/or to certain companies accounted for under the equity method by TCCC.
We limit our description of our customer types to include only our sales to our full service bottlers/distributors without reference to such bottlers/distributors’ sales to their own customers. ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 2020 U.S. full service bottlers/distributors 48% ​ 51% ​ 56% International full service bottlers/distributors 39% ​ 39% ​ 34% Club stores and e-commerce retailers 9% ​ 8% ​ 8% Retail grocery, direct convenience, specialty chains and wholesalers 2% ​ 1% ​ 1% Alcohol, direct value stores and other 2% ​ 1% ​ 1% ​ Our non-alcohol customers include Coca-Cola Canada Bottling Limited, Coca-Cola Consolidated, Inc., Coca-Cola Bottling Company United, Inc., Reyes Coca-Cola Bottling, LLC, Coca-Cola Southwest Beverages LLC, The Coca-Cola Bottling Company of Northern New England, Inc., Swire Pacific Holdings, Inc.
We limit our description of our customer types to include only our sales to our full service bottlers/distributors without reference to such bottlers/distributors’ sales to their own customers. ​ 2023 2022 2021 U.S. full service bottlers/distributors 47% ​ 48% ​ 51% International full service bottlers/distributors 40% ​ 39% ​ 39% Club stores and e-commerce retailers 8% ​ 9% ​ 8% Retail grocery, direct convenience, specialty chains and wholesalers 2% ​ 2% ​ 1% Alcohol, value stores and other 3% ​ 2% ​ 1% ​ Our non-alcohol customers include Coca-Cola Canada Bottling Limited, Coca-Cola Consolidated, Inc., Coca-Cola Bottling Company United, Inc., Reyes Coca-Cola Bottling, LLC, Coca-Cola Southwest Beverages LLC, The Coca-Cola Bottling Company of Northern New England, Inc., Swire Pacific Holdings, Inc.
These obligations vary in terms, but are generally satisfied within one year. In addition, approximately $3.0 million of unrecognized tax benefits have been recorded as liabilities as of December 31, 2022. It is expected that the amount of unrecognized tax benefits will not significantly change within the next 12 months.
These obligations vary in terms, but are generally satisfied within one year. In addition, approximately $3.1 million of unrecognized tax benefits have been recorded as liabilities as of December 31, 2023. It is expected that the amount of unrecognized tax benefits will not significantly change within the next 12 months.
In the event that we over-estimate future demand for our products and therefore may not purchase such minimum quantities in full, or utilize such minimum co-packing volumes in full, we may incur claims and/or costs or losses in respect of such shortfalls; ● The impact on our cost of sales of corporate activity among the limited number of suppliers from whom we purchase certain raw materials; 65 Table of Contents ● Our ability to pass on to our customers all or a portion of any increases in the costs of raw materials, ingredients, commodities and/or other cost inputs affecting our business; ● Our ability to achieve both internal domestic and international forecasts, which may be based on projected volumes and sales of many product types and/or new products, certain of which are more profitable than others; there can be no assurance that we will achieve projected levels of sales as well as forecasted product and/or geographic mixes; ● Our ability to penetrate new domestic and/or international markets and/or gain approval or mitigate the delay in securing approval for the sale of our products in various countries; ● The effectiveness of sales and/or marketing efforts by us and/or by the bottlers/distributors of our products, most of whom distribute products that may be regarded as competitive with our products; ● Unilateral decisions by bottlers/distributors, buying groups, convenience chains, grocery chains, mass merchandisers, specialty chain stores, e-commerce retailers, e-commerce websites, club stores and other customers to discontinue carrying all or any of our products that they are carrying at any time, restrict the range of our products they carry, impose restrictions or limitations on the sale of our products and/or the sizes of containers of our products and/or devote less resources to the sale of our products; ● The impact of certain activities by competitors and others to persuade regulators and/or retailers and/or customers in certain countries to reduce the permitted or maximum container sizes for our products from those currently being sold and marketed by us; ● The impact of possible trading disputes between our bottler/distributors and their customers and/or one or more buying groups which may result in the delisting of certain of the Company products, temporarily or otherwise; ● The effects of retailer consolidation on our business and our ability to successfully adapt to the rapidly changing retail landscape, including, but not limited to, substantial competition in the alcohol beverage market from new entrants, consolidations by competitors and retailers, and other competitive activities; ● Our ability to adapt to the changing retail landscape with the rapid growth in e-commerce retailers; ● The effects of bottler/distributor consolidation on our business; ● The costs and/or effectiveness, now or in the future, of our advertising, marketing and promotional strategies; ● The success of our sports marketing, social media and other general marketing endeavors both domestically and internationally; ● Possible product recalls and/or reformulations of certain of our products and/or market withdrawals of certain of our products due to defective and/or non-compliant formulas or production in one or more jurisdictions; ● The failure of our bottlers and/or co-packers to manufacture our products on a timely basis or at all; ● Our ability to make suitable arrangements and/or procure sufficient capacity for the co-packing of any of our products both domestically and internationally, the timely replacement of discontinued co-packing arrangements and/or limitations on co-packing availability, including for retort production; ● Our ability to make suitable arrangements for the timely procurement of non-defective raw materials; ● Our inability to protect and/or the loss of our intellectual property rights and/or our inability to use our trademarks, trade names or designs and/or trade dress in certain countries; ● Volatility of stock prices which may restrict stock sales, stock purchases or other opportunities as well as negatively impact the motivation of equity award grantees; ● Provisions in our organizational documents and/or control by insiders which may prevent changes in control even if such changes would be beneficial to other stockholders; ● Any disruption in and/or lack of effectiveness of our information technology systems, including a breach of cyber security, that disrupts our business or negatively impacts customer relationships, as well as cybersecurity incidents involving data shared with third parties; and ● Recruitment and retention of senior management, other key employees and our employee base in general.
In the event that we over-estimate future demand for our products and therefore may not purchase such minimum quantities in full, or utilize such minimum co-packing volumes in full, we may incur claims and/or costs or losses in respect of such shortfalls; ● The impact on our cost of sales of corporate activity among the limited number of suppliers from whom we purchase certain raw materials; ● Our ability to pass on to our customers all or a portion of any increases in the costs of raw materials, ingredients, commodities and/or other cost inputs affecting our business; ● Our ability to penetrate new domestic and/or international markets and/or gain approval or mitigate the delay in securing approval for the sale of our products in various countries; ● The effectiveness of sales and/or marketing efforts by us and/or by the bottlers/distributors of our products, most of whom distribute products that may be regarded as competitive with our products; ● Unilateral decisions by bottlers/distributors, buying groups, convenience and gas chains, grocery chains, mass merchandisers, specialty chain stores, e-commerce retailers, e-commerce websites, club stores and other customers to discontinue carrying all or any of our products that they are carrying at any time, restrict the range of our products they carry, impose restrictions or limitations on the sale of our products and/or the sizes of containers of our products and/or devote less resources to the sale of our products; ● The impact of certain activities by competitors and others to persuade regulators and/or retailers and/or customers in certain countries to reduce the permitted or maximum container sizes for our products from those currently being sold and marketed by us; ● The impact of possible trading disputes between our bottler/distributors and their customers and/or one or more buying groups which may result in the delisting of certain of our products, temporarily or otherwise; ● The effects of retailer consolidation on our business and our ability to successfully adapt to the rapidly changing retail landscape, including, but not limited to, competition from new entrants, consolidations by competitors and retailers, and other competitive activities; ● Our ability to adapt to the changing retail landscape with the rapid growth in e-commerce retailers; ● The effects of bottler/distributor consolidation on our business; ● The costs and/or effectiveness, now or in the future, of our sponsorships and endorsements, marketing and promotional strategies; ● The success of our sports marketing, social media and other general marketing endeavors both domestically and internationally; 66 Table of Contents ● Possible product recalls and/or reformulations of certain of our products and/or market withdrawals of certain of our products due to defective packaging and/or non-compliant formulas or production in one or more jurisdictions; ● The failure of our bottlers and/or co-packers to manufacture our products on a timely basis or at all; ● Our ability to make suitable arrangements and/or procure sufficient capacity for the co-packing of any of our products both domestically and internationally, the timely replacement of discontinued co-packing arrangements and/or limitations on co-packing availability, including for retort production; ● Our ability to make suitable arrangements for the timely procurement of non-defective raw materials; ● Our inability to protect and/or the loss of our intellectual property rights and/or our inability to use our trademarks, trade names or designs and/or trade dress in certain countries; ● Volatility of stock prices which may restrict stock sales, stock purchases or other opportunities as well as negatively impact the motivation of equity award grantees; ● Provisions in our organizational documents and/or control by insiders which may prevent changes in control even if such changes would be beneficial to other stockholders; ● Any disruption in and/or lack of effectiveness of our information technology systems, including a breach of cyber security, that disrupts our business or negatively impacts customer relationships, as well as cybersecurity incidents involving data shared with or by third parties; and ● Succession plans for and/or the recruitment and retention of senior management, other key employees and our employee base in general.
These measurements will continue to be a key management focus in 2023 and beyond (See “Part II, Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations”). As of December 31, 2022, the Company had working capital of $3.76 billion compared to $3.72 billion as of December 31, 2021.
These measurements will continue to be a key management focus in 2024 and beyond (See “Part II, Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations”). As of December 31, 2023, the Company had working capital of $4.43 billion compared to $3.76 billion as of December 31, 2022.
(USA), Liberty Coca-Cola Beverages, LLC, Coca-Cola Europacific Partners (formerly Coca-Cola European Partners and Coca-Cola Amatil), Coca-Cola Hellenic, Coca-Cola FEMSA, Swire Coca-Cola (China), COFCO Coca-Cola, Coca-Cola Beverages Africa, Coca-Cola İçecek and certain other TCCC network bottlers, Asahi Soft Drinks, Co., Ltd., Wal-Mart, Inc. (including Sam’s Club), Costco Wholesale Corporation and Amazon.com, Inc. Our alcohol customers include J.J. Taylor Distributing, Ben E.
(USA), Liberty Coca-Cola Beverages, LLC, Coca-Cola Europacific Partners (formerly Coca-Cola European Partners and Coca-Cola Amatil), Coca-Cola Hellenic, Coca-Cola FEMSA, Swire Coca-Cola (China), COFCO Coca-Cola, Coca-Cola Beverages Africa, Coca-Cola İçecek and certain other TCCC network bottlers, Asahi Soft Drinks, Co., Ltd., Wal-Mart, Inc. (including Sam’s Club), Costco Wholesale Corporation and Amazon.com, Inc. Our alcohol customers include Reyes Beverage Group, Ben E.
Net changes in foreign currency exchange rates had an unfavorable impact on net sales in the Strategic Brands segment of approximately $17.2 million for the year ended December 31, 2022. Our growth strategy includes further developing our domestic markets, expanding our international business and growing our business into new sectors, such as the alcohol beverage sector.
Net changes in foreign currency exchange rates had an unfavorable impact on net sales in the Strategic Brands segment of approximately $22.4 million for the year ended December 31, 2023. ​ Our growth strategy includes further developing our domestic markets, expanding our international business and growing our business into new sectors, such as the alcohol beverage sector.
MD&A includes the following sections: ● CANarchy Acquisition – a discussion of our acquisition of CANarchy on February 17, 2022; ● Russia-Ukraine Conflict – a discussion of the impact of the Russia-Ukraine conflict on our business and operations; ● The COVID-19 Pandemic – a discussion of the impact of the COVID-19 pandemic on our business and operations; ● Pricing Actions – a discussion of certain pricing actions implemented during 2022; ● Our Business – a general description of our business, the value drivers of our business, and opportunities and risks facing our Company, stock repurchases, acquisitions and divestitures; ● Results of Operations – an analysis of our consolidated results of operations for the years ended December 31, 2022 and 2021; ● Sales – details of our sales measured on a quarterly basis in both dollars and cases; ● Inflation – information about the impact that inflation may or may not have on our results; ● Liquidity and Capital Resources – an analysis of our cash flows, sources and uses of cash and contractual obligations; ● Accounting Policies and Pronouncements – a discussion of accounting policies that require critical judgments and estimates including newly issued accounting pronouncements; ● Forward-Looking Statements – cautionary information about forward-looking statements and a description of certain risks and uncertainties that could cause our actual results to differ materially from the Company’s historical results or our current expectations or projections; and ● Market Risks – information about market risks and risk management.
MD&A includes the following sections: ● Bang Energy Acquisition – a discussion of our acquisition of Bang Energy on July 31, 2023; ● Pricing Actions – a discussion of certain pricing actions implemented during 2022 and 2023; ● Our Business – a general description of our business, the value drivers of our business, and opportunities and risks facing our Company, stock repurchases, acquisitions and divestitures; ● Results of Operations – an analysis of our consolidated results of operations for the years ended December 31, 2023 and 2022; ● Sales – details of our sales measured on a quarterly basis in both dollars and cases; ● Inflation – information about the impact that inflation may or may not have on our results; ● Liquidity and Capital Resources – an analysis of our cash flows, sources and uses of cash and contractual obligations; ● Accounting Policies and Pronouncements – a discussion of accounting policies that require critical judgments and estimates including newly issued accounting pronouncements; ● Forward-Looking Statements – cautionary information about forward-looking statements and a description of certain risks and uncertainties that could cause our actual results to differ materially from the Company’s historical results or our current expectations or projections; and ● Market Risks – information about market risks and risk management.
Promotional allowances as a percentage of gross billings were 13.6% and 14.4% for the years ended December 31, 2022 and 2021, respectively. **Gross billings represent amounts invoiced to customers net of cash discounts, returns and excise taxes.
Promotional allowances as a percentage of gross billings were 13.7% and 13.6% for the years ended December 31, 2023 and 2022, respectively. **Gross billings represent amounts invoiced to customers net of cash discounts, returns and excise taxes.
For the year ended December 31, 2022, our net cash provided by operating activities was approximately $887.7 million as compared to $1.16 billion for the year ended December 31, 2021.
For the year ended December 31, 2023, our net cash provided by operating activities was approximately $1.72 billion as compared to $887.7 million for the year ended December 31, 2022.
As of December 31, 2022, we had $0.4 million of accrued interest and penalties related to unrecognized tax benefits. Accounting Policies and Pronouncements Critical Accounting Policies and Estimates Our consolidated financial statements are prepared in accordance with GAAP. GAAP requires us to make estimates and assumptions that affect the reported amounts in our consolidated financial statements.
As of December 31, 2023, we had $0.6 million of accrued interest and penalties related to unrecognized tax benefits. 60 Table of Contents Accounting Policies and Pronouncements Critical Accounting Policies and Estimates Our consolidated financial statements are prepared in accordance with GAAP. GAAP requires us to make estimates and assumptions that affect the reported amounts in our consolidated financial statements.
Cash provided by operating activities was $887.7 million for the year ended December 31, 2022, as compared with cash provided by operating activities of $1.16 billion for the year ended December 31, 2021.
Cash provided by operating activities was $1.72 billion for the year ended December 31, 2023, as compared with cash provided by operating activities of $887.7 million for the year ended December 31, 2022.
Net changes in foreign currency exchange rates had an unfavorable impact on our net sales of the Monster Energy® Drinks segment of approximately $222.3 million for the year ended December 31, 2022.
Net changes in foreign currency exchange rates had an unfavorable impact on net sales for the Monster Energy® Drinks segment of approximately $124.3 million for the year ended December 31, 2023.
We believe that the following opportunities exist for us: ● domestic and international growth potential of our products; ● growth potential of the energy drink and alcohol beverage categories, both domestically and internationally; ● growth potential of the affordable energy drink category; ● planned and future new product and product line introductions with the objective of increasing sales and/or contributing to higher profitability; ● the introduction of new package formats designed to generate strong revenue growth; ● package, pricing and channel opportunities to increase profitable growth; ● effective strategic positioning to capitalize on industry growth; ● broadening distribution/expansion opportunities in both domestic and international markets; ● launching and/or relaunching our products and new products into new domestic and international markets and channels; ● continued focus on reducing our cost base; and ● our entry into the alcohol category and development of our alcohol portfolio. 50 Table of Contents Results of Operations This section of the Annual Report on Form 10-K generally discusses 2022 and 2021 items and year-to-year comparisons between 2022 and 2021.
We believe that the following opportunities exist for us: ● domestic and international growth potential of our products; ● growth potential of the energy drink and alcohol beverage categories, both domestically and internationally; ● growth potential of the affordable energy drink category; ● planned and future new product and product line introductions with the objective of increasing sales and/or contributing to higher profitability; ● the introduction of new package formats designed to generate strong revenue growth; ● package, pricing and channel opportunities to increase profitable growth; ● effective strategic positioning to capitalize on industry growth; ● broadening distribution/expansion opportunities in both domestic and international markets; 50 Table of Contents ● launching and/or relaunching our products and new products into new domestic and international markets and channels; ● continued focus on reducing our cost base; and ● our entry into the alcohol category and development of our alcohol portfolio.
Cash flows used in investing activities. Net cash used in investing activities was $161.4 million for the year ended December 31, 2022, as compared to cash used in investing activities of $992.0 million for the year ended December 31, 2021.
Cash flows used in investing activities. Net cash used in investing activities was $193.4 million for the year ended December 31, 2023, as compared to cash used in investing activities of $161.4 million for the year ended December 31, 2022.
In addition, gross billings may not be realized in the form of cash receipts as promotional payments and allowances may be deducted from payments received from certain customers. 55 Table of Contents The following table reconciles the non-GAAP financial measure of gross billings with the most directly comparable GAAP financial measure of net sales: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Percentage Percentage ​ In thousands ​ ​ ​ ​ ​ ​ ​ ​ ​ Change ​ Change ​ ​ 2022 2021 2020 22 vs. 21 ​ 21 vs. 20 ​ Gross Billings ​ $ 7,261,639 ​ $ 6,424,632 ​ $ 5,328,683 13.0 % 20.6 % Deferred Revenue ​ ​ 39,969 ​ ​ 41,462 ​ ​ 42,110 ​ (3.6) % (1.5) % Less: Promotional allowances, commissions and other expenses*** ​ (990,558) ​ (924,742) ​ (772,155) 7.1 % 19.8 % Net Sales ​ $ 6,311,050 ​ $ 5,541,352 ​ $ 4,598,638 13.9 % 20.5 % ​ ***Although the expenditures described in this line item are determined in accordance with GAAP and meet GAAP requirements, the presentation thereof does not conform to GAAP presentation requirements.
In addition, gross billings may not be realized in the form of cash receipts as promotional payments and allowances may be deducted from payments received from certain customers. 55 Table of Contents The following table reconciles the non-GAAP financial measure of gross billings with the most directly comparable GAAP financial measure of net sales: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Percentage Percentage ​ In thousands ​ ​ ​ ​ ​ ​ ​ ​ ​ Change ​ Change ​ ​ 2023 2022 2021 23 vs. 22 ​ 22 vs. 21 ​ Gross Billings ​ $ 8,229,709 ​ $ 7,261,639 ​ $ 6,424,632 13.3 % 13.0 % Deferred Revenue ​ ​ 39,955 ​ ​ 39,969 ​ ​ 41,462 ​ (0.0) % (3.6) % Less: Promotional allowances, commissions and other expenses*** ​ (1,129,637) ​ (990,558) ​ (924,742) 14.0 % 7.1 % Net Sales ​ $ 7,140,027 ​ $ 6,311,050 ​ $ 5,541,352 13.1 % 13.9 % ​ ***Although the expenditures described in this line item are determined in accordance with GAAP and meet GAAP requirements, the presentation thereof does not conform to GAAP presentation requirements.
Our Monster Energy® Drinks segment represented 92.4% and 94.2% of our net sales for the years ended December 31, 2022 and 2021, respectively. Our Strategic Brands segment represented 5.6% and 5.3% of our net sales for the years ended December 31, 2022 and 2021, respectively.
Our Monster Energy® Drinks segment represented 91.8% and 92.4% of our net sales for the years ended December 31, 2023 and 2022, respectively. Our Strategic Brands segment represented 5.3% and 5.6% of our net sales for the years ended December 31, 2023 and 2022, respectively.
We include out-bound freight and warehouse costs in operating expenses rather than in cost of sales. 51 Table of Contents Net Sales Net sales were $6.31 billion for the year ended December 31, 2022, an increase of approximately $769.7 million, or 13.9% higher than net sales of $5.54 billion for the year ended December 31, 2021.
We include out-bound freight and warehouse costs in operating expenses rather than in cost of sales. 51 Table of Contents Net Sales Net sales were $7.14 billion for the year ended December 31, 2023, an increase of approximately $829.0 million, or 13.1% higher than net sales of $6.31 billion for the year ended December 31, 2022.
Net changes in foreign currency exchange rates had an unfavorable impact on net sales of approximately $239.5 million for the year ended December 31, 2022. The vast majority of our net sales are derived from our Monster Energy® Drinks segment.
Net changes in foreign currency exchange rates had an unfavorable impact on net sales of approximately $146.7 million for the year ended December 31, 2023. 46 Table of Contents ​ The vast majority of our net sales are derived from our Monster Energy® Drinks segment.
Principal uses of cash flows in 2022 were purchases of investments, purchases of treasury stock, the acquisition of CANarchy, development of our brands internationally and acquisitions of real property, property and equipment.
Principal uses of cash flows in 2023 were purchases of investments, purchases of treasury stock, the acquisition of Bang Energy, development of our brands internationally and purchases of real property, property and equipment.
Operating income as a percentage of net sales decreased to 25.1% for the year ended December 31, 2022 from 32.4% for the year ended December 31, 2021.
Operating income as a percentage of net sales increased to 27.4% for the year ended December 31, 2023 from 25.1% for the year ended December 31, 2022.
However, future business opportunities may cause a change in this estimate. 58 Table of Contents Purchases of inventories, increases in accounts receivable and other assets, acquisition of property and equipment (including real property, personal property and coolers), leasehold improvements, advances for or the purchase of equipment for our bottlers, acquisition and maintenance of trademarks, payments of accounts payable, income taxes payable and purchases of our common stock are expected to remain our principal recurring use of cash.
Purchases of inventories, increases in accounts receivable and other assets, acquisition of property and equipment (including real property, personal property and coolers), leasehold improvements, advances for or the purchase of equipment for our bottlers, acquisition and maintenance of trademarks, payments of accounts payable, income taxes payable and purchases of our common stock are expected to remain our principal recurring use of cash.
This improvement was primarily attributable to (i) Pricing Actions, (ii) our decreased reliance on imported cans and (iii) improved finished product inventory levels in closer proximity to our customers, resulting in a reduction of long-distance freight costs.
This improvement was primarily attributable to (i) the Pricing Actions, (ii) our decreased reliance on imported cans and (iii) improved finished product inventory levels in closer proximity to our customers, resulting in a reduction of long-distance freight costs. ​ During the COVID-19 pandemic we prioritized ensuring product availability for our customers and consumers.
Net changes in foreign currency exchange rates had an unfavorable impact on net sales to customers outside of the United States of approximately $239.5 million for the year ended December 31, 2022. Net sales to customers outside the United States, on a foreign currency adjusted basis, increased 27.1% for the year ended December 31, 2022.
Net changes in foreign currency exchange rates had an unfavorable impact on net sales to customers outside of the United States of approximately $146.7 million for the year ended December 31, 2023. Net sales to customers outside the United States, on a foreign currency adjusted basis, increased 21.2% for the year ended December 31, 2023.
The overall average net sales per case for our energy drink products (excluding net sales of Alcohol Brands and Other segments) decreased to $8.82 for the year ended December 31, 2022, which was 1.9% lower than the average net sales per case of $8.99 for the year ended December 31, 2021.
The overall average net sales per case for our energy drink products (excluding net sales of Alcohol Brands and Other segments) increased to $9.01 for the year ended December 31, 2023, which was 2.2% higher than the average net sales per case of $8.82 for the year ended December 31, 2022.
The cash flows provided by financing activities for both the years ended December 31, 2022, and 2021 was primarily attributable to the issuance of our common stock related to stock-based compensation.
The cash flows used in financing activities for both the years ended December 31, 2023 and 2022 was primarily the result of the repurchases of our common stock. The cash flows provided by financing activities for both the years ended December 31, 2023 and 2022 was primarily attributable to the issuance of our common stock under our stock-based compensation plans.
Net sales to customers outside the United States amounted to $2.36 billion and $2.04 billion for the years ended December 31, 2022 and 2021, respectively. Such sales were 46 Table of Contents approximately 37% of net sales for both the years ended December 31, 2022 and 2021.
Net sales to customers outside the United States amounted to $2.71 billion and $2.36 billion for the years ended December 31, 2023 and 2022, respectively. Such sales were approximately 38% and 37% of net sales for the years ended December 31, 2023 and 2022, respectively.
Non-GAAP Financial Measures and Other Key Metrics Gross Billings** Gross billings were $7.26 billion for the year ended December 31, 2022, an increase of approximately $837.0 million, or 13.0% higher than gross billings of $6.42 billion for the year ended December 31, 2021.
Non-GAAP Financial Measures and Other Key Metrics Gross Billings** Gross billings were $8.23 billion for the year ended December 31, 2023, an increase of approximately $968.1 million, or 13.3% higher than gross billings of $7.26 billion for the year ended December 31, 2022.
Liquidity and Capital Resources Cash and cash equivalents, short-term and long-term investments – As of December 31, 2022, we had $1.31 billion in cash and cash equivalents, $1.36 billion in short-term investments and $61.4 million in long-term investments. We maintain our investments for cash management purposes and not for purposes of speculation.
Liquidity and Capital Resources Cash and cash equivalents, short-term and long-term investments – As of December 31, 2023, we had $2.30 billion in cash and cash equivalents, $955.6 million in short-term investments and $76.4 million in long-term investments. We maintain our investments for cash management purposes and not for purposes of speculation.
These principal uses of cash flows are expected to be and remain our principal recurring use of cash and working capital funds in the future (See “Part II, Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources”). 48 Table of Contents Opportunities, Challenges and Risks Looking forward, our management has identified certain challenges and risks for the beverage industry and the Company, including our significant commercial relationship with TCCC and TCCC’s status as a significant stockholder of the Company, in each case as described above under “Part I, Item 1A – Risk Factors.” In addition, legislation has been proposed and/or adopted at the U.S., state, county and/or municipal level and proposed and/or adopted in certain foreign jurisdictions to restrict the sale of energy and alcohol drinks (including prohibiting the sale of energy and/or alcohol drinks at certain establishments or pursuant to certain governmental programs), limit caffeine and/or alcohol content, require certain product labeling disclosures and/or warnings, impose taxes, limit product sizes or impose age restrictions for the sale of energy and/or alcohol drinks.
Opportunities, Challenges and Risks Looking forward, our management has identified certain challenges and risks for the beverage industry and the Company, including our significant commercial relationship with TCCC and TCCC’s status as a significant stockholder of the Company, in each case as described above under “Part I, Item 1A – Risk Factors.” In addition, legislation has been proposed and/or adopted at the U.S., state, county and/or municipal level and proposed and/or adopted in certain foreign jurisdictions to restrict the sale of energy and alcohol drinks (including prohibiting the sale of energy and/or alcohol drinks at certain establishments or pursuant to certain governmental programs), limit caffeine and/or alcohol content, require certain product labeling disclosures and/or warnings, impose taxes, limit product sizes or impose age restrictions for the sale of energy and/or alcohol drinks.
The following summarizes our cash flows for the years ended December 31, 2022, 2021 and 2020 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net cash provided by (used in): ​ ​ ​ ​ ​ ​ ​ 2022 2021 2020 Operating activities ​ $ 887,699 ​ $ 1,155,741 ​ $ 1,364,163 Investing activities ​ $ (161,367) ​ $ (992,022) ​ $ (472,487) Financing activities ​ $ (706,938) ​ $ 34,821 ​ $ (526,068) ​ Cash flows provided by operating activities.
The following summarizes our cash flows for the years ended December 31, 2023, 2022 and 2021 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net cash provided by (used in): ​ ​ ​ ​ ​ ​ ​ 2023 2022 2021 Operating activities ​ $ 1,717,753 ​ $ 887,699 ​ $ 1,155,741 Investing activities ​ $ (193,395) ​ $ (161,367) ​ $ (992,022) Financing activities ​ $ (542,599) ​ $ (706,938) ​ $ 34,821 ​ Cash flows provided by operating activities.
We believe that cash available from operations, including our cash resources and access to credit, will be sufficient for our working capital needs, including purchase commitments for raw materials and inventory, increases in accounts receivable, payments of tax liabilities, expansion and development needs, purchases of capital assets, purchases of equipment, purchases of real property and purchases of shares of our common stock, through at least the next 12 months.
No short-term or long-term investments were held by our foreign subsidiaries at December 31, 2023. ​ We believe that cash available from operations, including our cash resources and access to credit, will be sufficient for our working capital needs, including purchase commitments for raw materials and inventory, increases in accounts receivable, payments of tax liabilities, expansion and development needs, purchases of capital assets, purchases of 58 Table of Contents equipment, purchases of real property and purchases of treasury stock, through at least the next 12 months.
The increase in operating income for the Strategic Brands segment was primarily the result of a $30.6 million increase in gross profit. Operating loss for the Alcohol Brands segment, exclusive of corporate and unallocated expenses, was $31.5 million for the year ended December 31, 2022 (effectively from February 17, 2022 to December 31, 2022).
The increase in operating income for the Strategic Brands segment was primarily the result of a $14.6 million increase in gross profit. ​ Operating loss for the Alcohol Brands segment, exclusive of corporate and unallocated expenses, was $81.1 million for the year ended December 31, 2023, an increase of approximately $49.6 million, or 157.5% higher than operating loss of 53 Table of Contents $31.5 million for the year ended December 31, 2022 (effectively from February 17, 2022 to December 31, 2022).
For the year ended December 31, 2021, cash provided by operating activities also increased due to a $114.3 million increase in accounts payable, a $71.6 million increase in accrued liabilities, a $31.5 million increase in accrued promotional allowances, a $16.4 million increase in deferred income taxes, an $8.0 million increase in accrued compensation and a $7.2 million increase in income taxes payable.
For the year ended December 31, 2023, cash provided by operating activities also increased due to a $112.8 million increase in accounts payable, a $23.0 million increase in other liabilities, a $13.4 million increase in accrued compensation, an $8.4 million increase in accrued promotional allowances, a $7.9 million decrease in inventories and a $2.0 million decrease in deferred income taxes.
The following table sets forth key statistics for the years ended December 31, 2022, 2021 and 2020, respectively. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (In thousands, except per share amounts) ​ ​ ​ ​ ​ ​ Percentage ​ Percentage ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Change ​ Change ​ ​ 2022 2021 2020 22 vs. 21 21 vs. 20 ​ Net sales 1 ​ $ 6,311,050 ​ $ 5,541,352 ​ $ 4,598,638 ​ 13.9 % 20.5 % Cost of sales ​ 3,136,483 ​ 2,432,839 ​ 1,874,758 ​ 28.9 % 29.8 % Gross profit* 1 ​ 3,174,567 ​ 3,108,513 ​ 2,723,880 ​ 2.1 % 14.1 % Gross profit as a percentage of net sales ​ 50.3 % 56.1 % 59.2 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating expenses ​ 1,589,846 ​ 1,311,046 ​ 1,090,727 ​ 21.3 % 20.2 % Operating expenses as a percentage of net sales ​ 25.2 % 23.7 % 23.7 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating income 1 ​ 1,584,721 ​ 1,797,467 ​ 1,633,153 ​ (11.8) % 10.1 % Operating income as a percentage of net sales ​ 25.1 % 32.4 % 35.5 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other (expense) income, net ​ (12,757) ​ 3,952 ​ (6,996) ​ (422.8) % (156.5) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income before provision for income taxes 1 ​ 1,571,964 ​ 1,801,419 ​ 1,626,157 ​ (12.7) % 10.8 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Provision for income taxes ​ 380,340 ​ 423,944 ​ 216,563 ​ (10.3) % 95.8 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income taxes as a percentage of income before taxes ​ 24.2 % 23.5 % 13.3 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income 1 ​ $ 1,191,624 ​ $ 1,377,475 ​ $ 1,409,594 ​ (13.5) % (2.3) % Net income as a percentage of net sales ​ 18.9 % 24.9 % 30.7 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income per common share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ $ 2.26 ​ $ 2.61 ​ $ 2.66 ​ (13.2) % (2.1) % Diluted ​ $ 2.23 ​ $ 2.57 ​ $ 2.64 ​ (13.1) % (2.4) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Energy Drink case sales (in thousands) (in 192‑ounce case equivalents) 2 ​ 701,677 ​ 613,441 ​ 504,821 ​ 14.4 % 21.5 % ​ 1 Includes $40.0 million, $41.5 million and $42.1 million for the years ended December 31, 2022, 2021 and 2020, respectively, related to the recognition of deferred revenue. 2 Excludes case sales of the Alcohol Brands and Other segments. *Gross profit may not be comparable to that of other entities since some entities include all costs associated with their distribution process in cost of sales, whereas others exclude certain costs and instead include such costs within another line item such as operating expenses.
The following table sets forth key statistics for the years ended December 31, 2023, 2022 and 2021, respectively. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (In thousands, except per share amounts) ​ ​ ​ ​ ​ ​ Percentage ​ Percentage ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Change ​ Change ​ ​ 2023 2022 2021 23 vs. 22 22 vs. 21 ​ Net sales 1 ​ $ 7,140,027 ​ $ 6,311,050 ​ $ 5,541,352 ​ 13.1 % 13.9 % Cost of sales ​ 3,345,821 ​ 3,136,483 ​ 2,432,839 ​ 6.7 % 28.9 % Gross profit* 1 ​ 3,794,206 ​ 3,174,567 ​ 3,108,513 ​ 19.5 % 2.1 % Gross profit as a percentage of net sales ​ 53.1 % 50.3 % 56.1 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating expenses ​ 1,840,851 ​ 1,589,846 ​ 1,311,046 ​ 15.8 % 21.3 % Operating expenses as a percentage of net sales ​ 25.8 % 25.2 % 23.7 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating income 1 ​ 1,953,355 ​ 1,584,721 ​ 1,797,467 ​ 23.3 % (11.8) % Operating income as a percentage of net sales ​ 27.4 % 25.1 % 32.4 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest and other income (expense), net ​ 115,127 ​ (12,757) ​ 3,952 ​ 1,002.5 % (422.8) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income before provision for income taxes 1 ​ 2,068,482 ​ 1,571,964 ​ 1,801,419 ​ 31.6 % (12.7) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Provision for income taxes ​ 437,494 ​ 380,340 ​ 423,944 ​ 15.0 % (10.3) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income taxes as a percentage of income before taxes ​ 21.2 % 24.2 % 23.5 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income 1 ​ $ 1,630,988 ​ $ 1,191,624 ​ $ 1,377,475 ​ 36.9 % (13.5) % Net income as a percentage of net sales ​ 22.8 % 18.9 % 24.9 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income per common share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ $ 1.56 ​ $ 1.13 ​ $ 1.30 ​ 38.0 % (13.2) % Diluted ​ $ 1.54 ​ $ 1.12 ​ $ 1.29 ​ 38.0 % (13.1) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Energy Drink case sales (in thousands) (in 192‑ounce case equivalents) ​ 769,241 ​ 701,677 ​ 613,441 ​ 9.6 % 14.4 % ​ 1 Includes $40.0 million, $40.0 million and $41.5 million for the years ended December 31, 2023, 2022 and 2021, respectively, related to the recognition of deferred revenue. *Gross profit may not be comparable to that of other entities since some entities include all costs associated with their distribution process in cost of sales, whereas others exclude certain costs and instead include such costs within another line item such as operating expenses.
Our Alcohol Brands segment represented 1.6% of our net sales for the year ended December 31, 2022. Our Other segment represented 0.4% and 0.5% of our net sales for the years ended December 31, 2022 and 2021, respectively.
Our Alcohol Brands segment represented 2.6% and 1.6% of our net sales for the years ended December 31, 2023 and 2022, respectively.
(See “Forward-Looking Statements” and “Part II, Item 7A – Qualitative and Quantitative Disclosures about Market Risks”). CANarchy Acquisition On February 17, 2022, we completed the CANarchy Transaction.
(See “Forward-Looking Statements” and “Part II, Item 7A – Qualitative and Quantitative Disclosures about Market Risks”). Bang Energy Acquisition On July 31, 2023, we completed the Bang Transaction.
Management cautions that these statements are qualified by their terms and/or important factors, many of which are outside our control and involve a number of risks, uncertainties and other factors, that could cause actual results and events to differ materially from the statements made including, but not limited to, the following: ● Our ability to absorb, mitigate or pass on cost increases to our bottlers/distributors and/or customers; ● The impact of rising costs, interest rates, and inflation on the discretionary income of our consumers, particularly the rising cost of energy; ● Uncertainties associated with an economic slowdown or recession that could negatively impact the financial condition of our customers and could result in a reduced demand for our products; ● The impact of the military conflict in Ukraine, including supply chain disruptions, volatility in commodity prices, increased economic uncertainty and escalating geopolitical tensions; 62 Table of Contents ● Fluctuations in growth and/or growth rates and/or decline in sales of the domestic and international energy drink categories generally, including in the convenience and gas channel (which is our largest channel) and the impact on demand for our products resulting from deteriorating economic conditions and/or financial uncertainties; ● The impact of temporary or permanent facility closures, production slowdowns and disruptions in operations experienced by our suppliers, bottlers/distributors,/or co-packers, and/or breweries, including any material disruptions on the production and distribution of our products; ● The consolidation of co-packers leading us to increasingly rely on fewer co-packing groups, certain of which account for a large percentage of our co-packing capacity for our Monster Energy® drinks; ● The impact of logistical issues and delays, including shortages of shipping containers and port of entry congestion; ● We have extensive commercial arrangements with TCCC and, as a result, our future performance is substantially dependent on the success of our relationship with TCCC; ● The impact of TCCC’s bottlers/distributors distributing Coca-Cola brand energy drinks and possible reductions in the number of our SKUs carried by such bottlers/distributors and/or such bottlers/distributors imposing limitations on distributing new product SKUs; ● The effect of TCCC being one of our significant stockholders and the potential divergence of TCCC’s interests from those of our other stockholders; ● Our ability to maintain relationships with TCCC system bottlers/distributors and manage their ongoing commitment to focus on our non-alcohol products; ● Disruption in distribution channels and/or decline in sales due to the termination and/or insolvency of existing and/or new domestic and/or international bottlers/distributors; ● Lack of anticipated demand for our products in domestic and/or international markets; ● Fluctuations in the inventory levels of our bottlers/distributors, planned or otherwise, and the resultant impact on our revenues; ● Unfavorable regulations, including taxation, age restrictions imposed on the sale, purchase, or consumption of our products, marketing restrictions, product registration requirements, tariffs, trade restrictions, container size limitations and/or ingredient restrictions; ● The effect of inquiries from, and/or actions by, state attorneys general, the Federal Trade Commission (the “FTC”), the Food and Drug Administration (the “FDA”), the Bureau of Alcohol, Tobacco, Firearms and Explosives (the “ATF”), municipalities, city attorneys, other government agencies, quasi-government agencies, government officials (including members of U.S.
Management cautions that these statements are qualified by their terms and/or important factors, many of which are outside our control and involve a number of risks, uncertainties and other factors, that could cause actual results and events to differ materially from the statements made including, but not limited to, the following: ● Our ability to successfully integrate the Bang Energy® business and recognize the anticipated benefits of the transaction; ● Our ability to successfully transition the acquired Bang Energy® beverages to the Company’s primary bottlers/distributors; ● Our ability to procure shelf space, retain customers and increase sales of the acquired Bang Energy® beverages; ● Our ability to consolidate operations and/or rationalize brands acquired from Monster Brewing Company and Bang Energy®; ● Our ability to achieve profitability within our Alcohol Brands segment; ● Our ability to absorb, mitigate or pass on cost increases to our bottlers/distributors and/or customers and/or consumers; ● The impact of rising costs, interest rates, and inflation on the discretionary income of our consumers; ● Uncertainties associated with an economic slowdown or recession that could negatively impact the financial condition of our customers and could result in a reduced demand for our products; ● The impact of the military conflicts in Ukraine, Israel and Gaza as well as tensions in the Middle East in general and tensions across the Taiwan Straits, including supply chain disruptions, volatility in commodity and energy prices, increased economic uncertainty and escalating geopolitical tensions; ● Fluctuations in growth and/or growth rates (positive or negative) of the domestic and international energy drink categories generally, including in the convenience and gas channel (which is our largest channel) and the impact on demand for our products resulting from deteriorating economic conditions and/or financial uncertainties; ● Lack of anticipated demand for our products in domestic and/or international markets; ● Our ability to sustain the current level of sales of and/or achieve growth for our Monster Energy®, Reign Total Body Fuel®, Reign Storm®, Bang Energy® and NOS® brand energy drinks and/or our other products, including our Strategic Brands and Alcohol Brands; ● The impact of temporary or permanent facility closures, production slowdowns and disruptions in operations experienced by our manufacturing facilities, our suppliers, bottlers/distributors, co-packers, and/or breweries, including any material disruptions on the production and distribution of our products; ● Disruption to our and/or our co-packers’ manufacturing facilities and operations due to severe weather, natural disasters, climate change, labor-related issues, production difficulties, capacity limitations, cybersecurity incidents or other causes, which could impair our ability to produce or deliver finished products, resulting in a negative impact on our operating results; ● Our ability to modify our manufacturing facilities to comply with safety, health, environmental, and other regulations; ● The consolidation of co-packers leading us to increasingly rely on fewer co-packing groups, certain of which account for a large percentage of our co-packing capacity for our Monster Energy® drinks; ● The impact of logistical issues and delays, including shortages of shipping containers and port of entry congestion; ● The human and economic consequences of a material reemergence of COVID-19, including new variants, as well as the measures that may be taken by governments and businesses (including the Company and its suppliers, bottlers/distributors, co-packers, and other service providers) and the public at large to limit the spread of COVID-19, including, but not limited to, lockdowns, labor issues, delays, and/or decreased sponsorship, endorsement, sampling, and/or innovation activities, which may have an adverse impact on our business and operations; ● We have extensive commercial arrangements with TCCC and, as a result, our future performance is substantially dependent on the success of our relationship with TCCC; 63 Table of Contents ● The consequence of TCCC’s bottlers/distributors distributing Coca-Cola brand energy drinks, possible reductions in the number of our SKUs carried by such bottlers/distributors and/or such bottlers/distributors imposing limitations on distributing new product SKUs; ● The effect of TCCC being one of our significant stockholders and the potential divergence of TCCC’s interests from those of our other stockholders; ● Our ability to maintain relationships with TCCC system bottlers/distributors and manage their ongoing commitment to focus on our non-alcohol products; ● Disruptions in distribution channels and/or declines in sales due to the termination and/or insolvency of existing and/or new domestic and/or international bottlers/distributors; ● Fluctuations in our inventory levels or those of our bottlers/distributors, planned or otherwise, and the resultant impact on our revenues; ● Unfavorable regulations, including taxation, age restrictions imposed on the sale, purchase, or consumption of our products, marketing restrictions, product registration requirements, tariffs, trade restrictions, container size limitations and/or ingredient restrictions; ● The effect of inquiries from, and/or actions by, state attorneys general, the Federal Trade Commission (the “FTC”), the FDA, the Bureau of Alcohol, Tobacco, Firearms and Explosives (the “ATF”), municipalities, city attorneys, other government agencies, quasi-government agencies, government officials (including members of the U.S.
These market risks associated with our investment portfolio may have an adverse effect on our future results of operations, liquidity and financial condition. Of our $1.31 billion of cash and cash equivalents held at December 31, 2022, $668.9 million was held by our foreign subsidiaries. No short-term or long-term investments were held by our foreign subsidiaries at December 31, 2022.
These market risks associated with our investment portfolio may have an adverse effect on our future results of operations, liquidity and financial condition. Of our $2.30 billion of cash and cash equivalents held at December 31, 2023, $971.8 million was held by our foreign subsidiaries.
Net changes in foreign currency exchange rates had an unfavorable impact on net sales of approximately $17.2 million for the Strategic Brands segment for the year ended December 31, 2022. Net sales for the Strategic Brands segment on a foreign currency adjusted basis increased 25.8% for the year ended December 31, 2022.
Net changes in foreign currency exchange rates had an unfavorable impact on net sales of approximately $22.4 million for the Strategic Brands segment for the year ended December 31, 2023.
Net changes in foreign currency exchange rates had an unfavorable impact on 54 Table of Contents gross billings for the Monster Energy® Drinks segment of approximately $268.7 million for the year ended December 31, 2022.
Net changes in foreign currency exchange rates had an unfavorable impact on 54 Table of Contents gross billings for the Monster Energy® Drinks segment of approximately $127.8 million for the year ended December 31, 2023. ​ Gross billings for the Strategic Brands segment were $425.3 million for the year ended December 31, 2023, an increase of $26.6 million, or 6.7% higher than gross billings of $398.7 million for the year ended December 31, 2022.
For the year ended December 31, 2022, cash provided by operating activities was primarily attributable to net income earned of $1.19 billion and adjustments for certain non-cash expenses, consisting of $64.1 million of stock-based compensation, $61.2 million of depreciation and amortization, $7.3 million of non-cash lease expense and $2.2 million loss on impairment of intangibles.
For the year ended December 31, 2023, cash provided by operating activities was primarily attributable to net income earned of $1.63 billion and adjustments for certain non-cash expenses, consisting of $68.9 million of depreciation and amortization, $68.8 million of stock-based compensation, $38.7 million loss on impairment of intangibles, $9.0 million of non-cash lease expense and $4.3 million loss on impairment of property and equipment, partially offset by the $45.4 million Bang Transaction Gain.
Net changes in foreign currency exchange rates had an unfavorable impact on net sales for the Monster Energy® Drinks segment of approximately $222.3 million for the year ended December 31, 2022. Net sales for the Monster Energy® Drinks segment on a foreign currency adjusted basis increased 16.0% for the year ended December 31, 2022.
Our Other segment represented 0.3% and 0.4% of our net sales for the years ended December 31, 2023 and 2022, respectively. ​ Net changes in foreign currency exchange rates had an unfavorable impact on net sales in the Monster Energy® Drinks segment of approximately $124.3 million for the year ended December 31, 2023.
The increase in working capital was primarily the result of the increase in accounts receivable and inventories, related to the increase in net sales for the year ended December 31, 2022.
The increase in working capital was primarily the result of the increase in cash and cash equivalents, 48 Table of Contents related to the increase in net sales for the year ended December 31, 2023.
Liquidity and Capital Resources As of the date of this filing, we expect to maintain substantial liquidity as we manage through the current environment as described in the “Liquidity and Capital Resources” section below. 45 Table of Contents Our Business Overview We develop, market, sell and distribute energy drink beverages and concentrates for energy drink beverages, primarily under the following brand names: ● Monster Energy® ● Monster Energy Ultra® ● Monster Rehab® ● Monster Energy® Nitro ● Java Monster® ● Punch Monster® ● Juice Monster® ● Monster Hydro® Energy Water ● Monster Hydro® Super Sport ● Monster Super Fuel® ● Monster Dragon Tea® ● Reign Total Body Fuel® ● Reign Inferno® Thermogenic Fuel ● Reign Storm® ● True North® ● NOS® ● Full Throttle® ● Burn® ● Mother® ● Nalu® ● Ultra Energy® ● Play® and Power Play® (stylized) ● Relentless® ● BPM® ● BU® ● Gladiator® ● Samurai® ● Live+® ● Predator® ● Fury® ​ We also develop, market, sell and distribute craft beers, FMBs and hard seltzers under a number of brands, including Jai Alai® IPA, Florida Man TM IPA, Dale’s Pale Ale®, Wild Basin TM Hard Seltzers, Dallas Blonde®, Deep Ellum TM IPA, Perrin Brewing Company TM Black Ale, Hop Rising® Double IPA, Wasatch® Apricot Hefeweizen, The Beast Unleashed TM and a host of other brands.
Our Business Overview We develop, market, sell and distribute energy drink beverages and concentrates for energy drink beverages, primarily under the following brand names: ● Monster Energy® ● Monster Energy Ultra® ● Monster Rehab® ● Monster Energy® Nitro ● Java Monster® ● Punch Monster® ● Juice Monster® ● Reign Total Body Fuel ® ● Reign Inferno® Thermogenic Fuel ● Reign Storm® ● Bang Energy® ● NOS® ● Full Throttle® ● Burn® ● Mother® ● Nalu® ● Ultra Energy® ● Play® and Power Play® (stylized) ● Relentless® ● BPM® ● BU® ● Gladiator® ● Samurai® ● Live+® ● Predator® ● Fury® ​ We also develop, market, sell and distribute craft beers, FMBs and hard seltzers under a number of brands, including Jai Alai ® IPA, Florida Man TM IPA, Dale’s Pale Ale ® , Wild Basin® Hard Seltzers, Dallas Blonde ® , Deep Ellum TM IPA, Perrin Brewing Company TM Black Ale, Hop Rising ® Double IPA, Wasatch ® Apricot Hefeweizen, The Beast Unleashed®, Nasty Beast TM Hard Tea and a host of other brands. ​ We also develop, market, sell and distribute still and sparkling waters under the Monster Tour Water® brand name. ​ Our net sales of $7.14 billion for the year ended December 31, 2023 represented record annual net sales.
Such information includes sales made by us directly to the customer types concerned, which include our full service beverage bottlers/distributors in the United States. Such full service beverage bottlers/distributors in turn sell certain of our products to some of the same customer types listed below.
Such full service beverage bottlers/distributors in turn sell certain of our products to some of the same customer types listed below.
See “Part II, Item 8 – Financial Statements and Supplementary Data – Note 1 – Organization and Summary of Significant Accounting Policies” for a summary of our significant accounting policies. 60 Table of Contents The following summarizes our most significant critical accounting estimates: Goodwill – The Company records goodwill when the consideration paid for an acquisition exceeds the fair value of net tangible and intangible assets acquired, including related tax effects.
The following summarizes our most significant critical accounting estimates: Goodwill – The Company records goodwill when the consideration paid for an acquisition exceeds the fair value of net tangible and intangible assets acquired, including related tax effects.
(See “Part I, Item 1 – Business – Seasonality”). ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 2020 Net Sales (in Thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ Quarter 1 ​ $ 1,518,574 ​ $ 1,243,816 ​ $ 1,062,097 Quarter 2 ​ 1,655,260 ​ 1,461,934 ​ 1,093,896 Quarter 3 ​ 1,624,286 ​ 1,410,557 ​ 1,246,362 Quarter 4 ​ 1,512,930 ​ 1,425,045 ​ 1,196,283 Total ​ $ 6,311,050 ​ $ 5,541,352 ​ $ 4,598,638 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Less: Alcohol Brands and Other segment net sales (in Thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ Quarter 1 ​ $ (21,134) ​ $ (5,727) ​ $ (5,105) Quarter 2 ​ (38,428) ​ (7,905) ​ (6,644) Quarter 3 ​ (33,265) ​ (6,316) ​ (8,618) Quarter 4 ​ (31,522) ​ (5,969) ​ (6,671) Total ​ $ (124,349) ​ $ (25,917) ​ $ (27,038) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Adjusted Net Sales (in Thousands)¹ ​ ​ ​ ​ ​ ​ ​ ​ ​ Quarter 1 ​ $ 1,497,440 ​ $ 1,238,089 ​ $ 1,056,992 Quarter 2 ​ 1,616,832 ​ 1,454,029 ​ 1,087,252 Quarter 3 ​ 1,591,021 ​ 1,404,241 ​ 1,237,744 Quarter 4 ​ 1,481,408 ​ 1,419,076 ​ 1,189,612 Total ​ $ 6,186,701 ​ $ 5,515,435 ​ $ 4,571,600 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Energy Drink Case Volume / Sales (in Thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ Quarter 1 ​ 168,793 ​ 138,566 ​ 115,598 Quarter 2 ​ 184,197 ​ 161,450 ​ 116,960 Quarter 3 ​ 182,460 ​ 159,975 ​ 139,922 Quarter 4 ​ 166,227 ​ 153,450 ​ 132,341 Total ​ 701,677 ​ 613,441 ​ 504,821 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Energy Drink Adjusted Average Net Sales Per Case ​ ​ ​ ​ ​ ​ ​ ​ ​ Quarter 1 ​ $ 8.87 ​ $ 8.94 ​ $ 9.14 Quarter 2 ​ 8.78 ​ 9.01 ​ 9.30 Quarter 3 ​ 8.72 ​ 8.78 ​ 8.85 Quarter 4 ​ 8.91 ​ 9.25 ​ 8.99 Total ​ $ 8.82 ​ $ 8.99 ​ $ 9.06 ​ 1 Excludes Alcohol Brands and Other segment net sales. 57 Table of Contents The following represents energy drink case sales by segment for the years ended December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (In thousands, except average net sales per case) 2022 2021 2020 Net sales ​ $ 6,311,050 ​ $ 5,541,352 ​ $ 4,598,638 Less: Alcohol Brands segment sales ​ ​ (101,405) ​ ​ — ​ ​ — Less: Other segment sales ​ (22,944) ​ (25,917) ​ (27,038) Adjusted net sales 1 ​ $ 6,186,701 ​ $ 5,515,435 ​ $ 4,571,600 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Case sales by segment: 1 ​ ​ ​ Monster Energy® Drinks ​ 581,937 ​ 520,577 ​ 428,596 Strategic Brands ​ 119,740 ​ 92,864 ​ 76,225 Total case sales ​ 701,677 ​ 613,441 ​ 504,821 Average net sales per case - Energy Drinks ​ $ 8.82 ​ $ 8.99 ​ $ 9.06 ​ 1 Excludes Alcohol Brands segment (effectively from February 17, 2022 to December 31, 2022) and Other segment net sales.
(See “Part I, Item 1 – Business – Seasonality”). ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 2022 2021 Net Sales (in Thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ Quarter 1 ​ $ 1,698,930 ​ $ 1,518,574 ​ $ 1,243,816 Quarter 2 ​ 1,854,961 ​ 1,655,260 ​ 1,461,934 Quarter 3 ​ 1,856,028 ​ 1,624,286 ​ 1,410,557 Quarter 4 ​ 1,730,108 ​ 1,512,930 ​ 1,425,045 Total ​ $ 7,140,027 ​ $ 6,311,050 ​ $ 5,541,352 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Less: Alcohol Brands and Other segment net sales (in Thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ Quarter 1 ​ $ (50,904) ​ $ (21,134) ​ $ (5,727) Quarter 2 ​ (68,384) ​ (38,428) ​ (7,905) Quarter 3 ​ (49,024) ​ (33,265) ​ (6,316) Quarter 4 ​ (40,037) ​ (31,522) ​ (5,969) Total ​ $ (208,349) ​ $ (124,349) ​ $ (25,917) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Adjusted Net Sales (in Thousands)¹ ​ ​ ​ ​ ​ ​ ​ ​ ​ Quarter 1 ​ $ 1,648,026 ​ $ 1,497,440 ​ $ 1,238,089 Quarter 2 ​ 1,786,577 ​ 1,616,832 ​ 1,454,029 Quarter 3 ​ 1,807,004 ​ 1,591,021 ​ 1,404,241 Quarter 4 ​ 1,690,071 ​ 1,481,408 ​ 1,419,076 Total ​ $ 6,931,678 ​ $ 6,186,701 ​ $ 5,515,435 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Energy Drink Case Volume / Sales (in Thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ Quarter 1 ​ 182,444 ​ 168,793 ​ 138,566 Quarter 2 ​ 198,406 ​ 184,197 ​ 161,450 Quarter 3 ​ 203,088 ​ 182,460 ​ 159,975 Quarter 4 ​ 185,303 ​ 166,227 ​ 153,450 Total ​ 769,241 ​ 701,677 ​ 613,441 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Energy Drink Adjusted Average Net Sales Per Case ​ ​ ​ ​ ​ ​ ​ ​ ​ Quarter 1 ​ $ 9.03 ​ $ 8.87 ​ $ 8.94 Quarter 2 ​ 9.00 ​ 8.78 ​ 9.01 Quarter 3 ​ 8.90 ​ 8.72 ​ 8.78 Quarter 4 ​ 9.12 ​ 8.91 ​ 9.25 Total ​ $ 9.01 ​ $ 8.82 ​ $ 8.99 ​ 1 Excludes Alcohol Brands segment and Other segment net sales. 57 Table of Contents The following represents energy drink case sales by segment for the years ended December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (In thousands, except average net sales per case) 2023 2022 2021 Net sales ​ $ 7,140,027 ​ $ 6,311,050 ​ $ 5,541,352 Less: Alcohol Brands segment sales ​ ​ (184,855) ​ ​ (101,405) ​ ​ — Less: Other segment sales ​ (23,494) ​ (22,944) ​ (25,917) Adjusted net sales 1 ​ $ 6,931,678 ​ $ 6,186,701 ​ $ 5,515,435 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Case sales by segment: 1 ​ ​ ​ Monster Energy® Drinks ​ 632,950 ​ 581,937 ​ 520,577 Strategic Brands ​ 136,291 ​ 119,740 ​ 92,864 Total case sales ​ 769,241 ​ 701,677 ​ 613,441 Average net sales per case - Energy Drinks ​ $ 9.01 ​ $ 8.82 ​ $ 8.99 ​ 1 Excludes Alcohol Brands segment and Other segment net sales.
Based on our current plans, capital expenditures (exclusive of common stock repurchases) are likely to be less than $300.0 million through December 31, 2023.
Based on our current plans, capital expenditures (exclusive of common stock repurchases) are likely to be less than $500.0 million through December 31, 2024. However, future business opportunities may cause a change in this estimate.
For the year ended December 31, 2022, cash used in investing activities included $329.5 million (net of cash acquired), related to the CANarchy Transaction.
For the year ended December 59 Table of Contents 31, 2023, cash used in investing activities included $363.4 million related to the acquisition of Bang Energy. For the year ended December 31, 2022, cash used in investing activities included $329.5 million (net of cash acquired), related to the acquisition of Monster Brewing Company.
For the year ended December 31, 2022, an impairment charge of $2.2 million was recorded to intangibles. For the year ended December 31, 2021 no impairment charges were recorded to intangibles. For the year ended December 31, 2020, an impairment charge of $8.7 million was recorded to intangibles.
For the year ended December 31, 2023, impairment charges of $38.7 million were recorded to intangibles primarily related to trademarks in our Alcohol Brands segment. For the year ended December 31, 2022, an impairment charge of $2.2 million was recorded to intangibles.
The effective combined federal, state and foreign tax rate was 24.2% and 23.5% for the years ended December 31, 2022 and 2021, respectively. The increase in the effective tax rate was primarily attributable to the decrease in income in certain foreign jurisdictions with lower tax rates compared to the United States.
The effective combined federal, state and foreign tax rate was 21.2% and 24.2% for the years ended December 31, 2023 and 2022, respectively. The decrease in the effective tax rate was primarily attributable to the increase in the stock compensation deduction for the year ended December 31, 2023.
Operating income for the Strategic Brands segment, exclusive of corporate and unallocated expenses, was $197.7 million for the year ended December 31, 2022, an increase of approximately $24.0 million, or 13.8% higher than operating income of $173.7 million for the year ended December 31, 2021.
The increase in operating income for the Monster Energy® Drinks segment was primarily the result of a $572.5 million increase in gross profit. ​ Operating income for the Strategic Brands segment, exclusive of corporate and unallocated expenses, was $207.1 million for the year ended December 31, 2023, an increase of approximately $9.4 million, or 4.8% higher than operating income of $197.7 million for the year ended December 31, 2022.
Cash used in financing activities was $706.9 million for the year ended December 31, 2022 as compared to cash provided by financing activities of $34.8 million for the year ended December 31, 2021. The cash flows used in financing activities for the year ended December 31, 2022 was primarily the result of the repurchases of our common stock.
Cash used in financing activities was $542.6 million for the year ended December 31, 2023 as compared to cash used in financing activities of $706.9 million for the year ended December 31, 2022.
On February 17, 2022, we completed the CANarchy Transaction which facilitated our entry into the alcohol beverage sector. Our non-alcohol customers are primarily full service beverage bottlers/distributors, retail grocery and specialty chains, wholesalers, club stores, mass merchandisers, convenience chains, foodservice customers, value stores, e-commerce retailers and the military.
Our non-alcohol customers are primarily full service beverage bottlers/distributors, retail grocery and specialty chains, wholesalers, club stores, mass merchandisers, convenience chains, foodservice customers, value stores, e-commerce retailers and the military. Our alcohol customers are primarily beer distributors who in turn sell to retailers within the alcohol distribution system.
Net changes in foreign currency exchange rates had an unfavorable impact on gross billings in the Strategic Brands segment of approximately $17.2 million for the year ended December 31, 2022. Gross billings for the Alcohol Brands segment were $103.0 million for the year ended December 31, 2022 (effectively from February 17, 2022 to December 31, 2022).
Net changes in foreign currency exchange rates had an unfavorable impact on gross billings in the Strategic Brands segment of approximately $22.0 million for the year ended December 31, 2023. ​ Gross billings for the Alcohol Brands segment were $188.6 million for the year ended December 31, 2023, an increase of $85.6 million, or 83.0% higher than gross billings of $103.0 million for the year ended December 31, 2022 (effectively from February 17, 2022 to December 31, 2022). ​ Gross billings for the Other segment were $23.5 million for the year ended December 31, 2023, an increase of $0.6 million, or 2.6% higher than gross billings of $22.9 million for the year ended December 31, 2022. ​ Promotional allowances, commissions and other expenses, as described in the footnote below, were $1.13 billion for the year ended December 31, 2023, an increase of $139.1 million, or 14.0% higher than promotional allowances, commissions and other expenses of $990.6 million for the year ended December 31, 2022.
Net changes in foreign currency exchange rates had an unfavorable impact on both net sales and the overall average net sales per case for the year ended December 31, 2022. Unit Sales of our alcohol products are expressed in barrel equivalents (“Barrel”). A Barrel is a unit of measurement equal to 31 U.S. gallons.
Net changes in foreign currency exchange rates had an unfavorable impact on both net sales and the overall average net sales per case for the year ended December 31, 2023.
Operating Expenses Total operating expenses were $1.59 billion for the year ended December 31, 2022, an increase of approximately $278.8 million, or 21.3% higher than total operating expenses of $1.31 billion for the year ended December 31, 2021.
Operating Income Operating income was $1.95 billion for the year ended December 31, 2023, an increase of approximately $368.6 million, or 23.3% higher than operating income of $1.58 billion for the year ended December 31, 2022.
The decrease in the average net sales per case was primarily the result of geographical and product sales mix. Barrel sales for our craft beers and hard seltzers, in 31 US gallon equivalents, were 0.3 million barrels for the year ended December 31, 2022 (effectively from February 17, 2022 to December 31, 2022).
The increase in the average net sales per case was primarily the result of the Pricing Actions. ​ Case sales for our craft beers, hard seltzers and FMBs, in 192-ounce equivalents, were 13.1 million cases for the year ended December 31, 2023, an increase of approximately 6.6 million cases or 101.3% higher than case sales of 6.5 million cases for the year ended December 31, 2022 (effectively from February 17, 2022 to December 31, 2022).
The increase in operating expenses was primarily due to increased general and administrative expenses of $92.9 million, including travel and entertainment, professional service fees (including legal and accounting) and depreciation and amortization, increased out-bound fuel, freight and warehouse costs of $74.3 million, increased selling and marketing expenses of $59.9 million, including sponsorships and endorsements, point of sale, premiums and allocated trade development, and increased payroll expenses of $57.0 million (of which $23.1 million was related to CANarchy).
Operating Expenses Total operating expenses were $1.84 billion for the year ended December 31, 2023, an increase of approximately $251.0 million, or 15.8% higher than total operating expenses of $1.59 billion for the year ended December 31, 2022. ​ The increase in operating expenses was primarily due to increased general and administrative expenses of $80.9 million, including travel and entertainment, professional service fees (including legal and accounting) and depreciation and amortization, increased selling and marketing expenses of $92.2 million, including sponsorships and endorsements, point of sale, premiums and allocated trade development, and increased payroll expenses of $82.4 million.
Barrel sales were 0.3 million for the year ended December 31, 2022 (effectively from February 17, 2022 to December 31, 2022). Inflation Inflation had a negative impact on our results of operations, leading to increased cost of sales and operating expenses for the years ended December 31, 2022 and 2021.
Inflation We believe inflation did not have a significant impact on our results of operations for the year ended December 31, 2023. Inflation had a negative impact on our results of operations, leading to increased cost of sales and operating expenses for the year ended December 31, 2022. To mitigate the impact of inflation, we implemented the Pricing Actions .
Operating income for the Other segment, exclusive of corporate and unallocated expenses, was $3.0 million for the year ended December 31, 2022, a decrease of approximately $3.9 million, or 56.2% lower than operating income of $6.9 million for the year ended December 31, 2021.
The increase in the operating loss for the Alcohol Brands segment for the year ended December 31, 2023 was primarily as a result of the Alcohol Impairment Charges of $42.7 million. ​ Operating income for the Other segment, exclusive of corporate and unallocated expenses, was $3.6 million for the year ended December 31, 2023, an increase of approximately $0.5 million, or 17.3% higher than operating income of $3.0 million for the year ended December 31, 2022.
Gross billings for the Monster Energy® Drinks segment were $6.74 billion for the year ended December 31, 2022, an increase of approximately $678.4 million, or 11.2% higher than gross billings of $6.06 billion for the year ended December 31, 2021.
Net changes in foreign currency exchange rates had an unfavorable impact on gross billings of approximately $149.8 million for the year ended December 31, 2023. ​ Gross billings for the Monster Energy® Drinks segment were $7.59 billion for the year ended December 31, 2023, an increase of approximately $855.4 million, or 12.7% higher than gross billings of $6.74 billion for the year ended December 31, 2022.
Other (Expense) Income, net Other (expense) income, net, was ($12.8) million for the year ended December 31, 2022, as compared to other (expense) income, net, of $4.0 million for the year ended December 31, 2021. Foreign currency transaction gains (losses) were ($37.9) million and $0.3 million for the years ended December 31, 2022 and 2021, respectively.
Interest and Other Income (Expense), net ​ Interest and other income (expense), net, was $115.1 million for the year ended December 31, 2023, as compared to interest and other income (expense), net, of ($12.8) million for the year ended December 31, 2022.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeWe do not consider the potential loss resulting from a hypothetical 10% adverse change in quoted foreign currency exchange rates as of December 31, 2022 to be significant.
Biggest changeWe do not consider the potential loss resulting from a hypothetical 10% adverse change in quoted foreign currency exchange rates as of December 31, 2023 to be significant. ​ As of December 31, 2023, we had $2.30 billion in cash and cash equivalents, $955.6 million in short-term investments and $76.4 million in long-term investments.
Therefore, gains and losses on our foreign currency exchange contracts are recognized in other (expense) income, net, in the consolidated statements of income, and are largely offset by the changes in the fair value of the underlying economically hedged item.
Therefore, gains and losses on our foreign currency exchange contracts are recognized in interest and other income (expense), net, in the consolidated statements of income, and are largely offset by the changes in the fair value of the underlying economically hedged item.
All foreign currency exchange contracts entered into by us as of December 31, 2022 have terms of three months or less. We do not enter into forward currency exchange contracts for speculation or trading purposes. We have not designated our foreign currency exchange contracts as hedge transactions under FASB ASC 815.
All foreign currency exchange contracts entered into by us as of December 31, 2023 have terms of three months or less. We do not enter into forward currency exchange contracts for speculation or trading purposes. ​ We have not designated our foreign currency exchange contracts as hedge transactions under FASB ASC 815.
We do not use derivative financial instruments to protect ourselves from fluctuations in interest rates and generally do not hedge against fluctuations in commodity prices. Our net sales to customers outside of the United States were approximately 37% of consolidated net sales for both the years ended December 31, 2022 and 2021. Our growth strategy includes expanding our international business.
We do not use derivative financial instruments to protect ourselves from fluctuations in interest rates and, except for aluminum, generally do not hedge against fluctuations in commodity prices. ​ Our net sales to customers outside of the United States were approximately 38% and 37% of consolidated net sales for the years ended December 31, 2023 and 2022, respectively.
As a result, we are subject to risks from changes in foreign currency exchange rates. During the year ended December 31, 2022, we entered into forward currency exchange contracts with financial institutions to create an economic hedge to specifically manage a portion of the foreign exchange risk exposure associated with certain consolidated subsidiaries’ non-functional currency denominated assets and liabilities.
During the year ended 67 Table of Contents December 31, 2023, we entered into forward currency exchange contracts with financial institutions to create an economic hedge to specifically manage a portion of the foreign exchange risk exposure associated with certain consolidated subsidiaries’ non-functional currency denominated assets and liabilities.
As of December 31, 2022, we had $1.31 billion in cash and cash equivalents, $1.36 billion in short-term investments and $61.4 million in long-term investments Certain of these investments are subject to general credit, liquidity, market and interest rate risks.
Certain of these investments are subject to general credit, liquidity, market and interest rate risks.
Added
Our growth strategy includes expanding our international business. As a result, we are subject to risks from changes in foreign currency exchange rates.

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