By KATE BERRY
It’s been a monster of a ride for Hansen Natural Corp. So much so, the king of beers could be looking to get on board.
The Corona-based company’s Monster energy drink,a cocktail of caffeine, vitamins and carbonated sugar water,is a hit with extreme sports fans and the party crowd.
The drink has helped push Hansen’s stock up five-fold in the past year.
Last week came word that Anheuser-Busch Cos. is talking with Hansen about jointly developing an energy drink, distributing products,or even buying Hansen.
Both companies declined to comment.
Energy drinks are fueling Hansen. The company’s fourth-quarter profit surged 152% from a year earlier to $18.4 million. Sales rose 84% to $114 million.
The company counts a recent market value of $2.8 billion. Earlier this month, Citigroup analyst Gregory Badishkanian issued a “buy” rating on Hansen’s stock, which was trading at about $114 last week. The shares could go to $160, Badishkanian said.
“Hansen is still in the early stages of its growth cycle,” he said.
The company gets 60% of its roughly $500 million in yearly sales from energy drinks, the fastest-growing part of the beverage market.
Hansen has a variety of drinks besides Monster Energy. Another one, Lost Energy, is made with Irvine surfwear maker Lost Clothing.
“Twenty million cans per year with our Web site address printed on it has brought a lot of new traffic to lostenterprises.com,” Lost cofound-er Mike Reola said. “Revenue generated from Lost Energy drink has allowed us to do things that only a company with higher sales can do.”
The drinks are helping Hansen gain ground on the market leader Red Bull, made by Austria’s Red Bull GMBH.
Chief Executive Rodney Sacks has attributed Hansen’s surge to “aggressive personality” and “in-your-face image,” which has been pushed at skateboarding, surfing, motocross and desert racing events.
The primary energy drink consumer: guys 18 to 30, who often use them as cocktail mixers.
Sacks and Hilton Schlosberg, Hansen’s vice chairman, chief financial officer and chief operating officer, own a quarter of Hansen’s stock, a stake now worth nearly $700 million.
The question for Hansen is whether it will be able to produce long-term profit growth of 20%, versus the industry average of 8%.
Skeptics think Coca Cola Co. and Pepsico Inc. eventually will gain market share in energy drinks.
So far, Hansen’s Monster drink has held its own against an onslaught of advertising by Coca Cola for its Full Throttle.
Hansen was seen as a takeover target for Coke and Pepsi, which had the chance to buy the company before the energy drink fad kicked in. Now Hansen could be too pricey.
Anheuser-Busch, the top U.S. brewer, is said to be looking at energy drinks as a way to offset sluggish beer sales. Reports of talks with Hansen came from trade publication Beverage Business Insights and Stifel Nicolaus analyst Mark Swartzberg.
Short sellers betting on a drop in the stock have jumped on Hansen, believing the energy fad will ultimately fade. They have accumulated 4.5 million shares, or more than a quarter of the stock’s float.
Berry is a staff writer at the Los Angeles Business Journal.
