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By IsleGirl2010
May 8, 2009

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Hey all,

This is my first attempt at sharing notes from the call I heard - it is also the first time I listened to one. It was harder to take notes than I expected but here is my take-away summary. I did my best but feel free to correct any error I may have --

INDUSTRY
- beverage industry continues to decline though energy drink category grew 3% while Monster energy line grew 6%.

- Most customers are in the blue collar category and gas stations are the most important outlet to date. Traffic in gas station has improved but Sacks said they haven't seen any impact on the Monster sales.

NEW PRODUCTS
- Energy shots are a faster growing category and Monster brand is growing ahead of competition already. However, they do cannibalize the energy drink market since the customers are the same.

- Hammer Expresso Monster will launch in Q2 - a direct competition to Starbucks Expresso as a reaction to them copying the Monster Java energy can. This product uses a technology same as Guinness to give a unique creamy taste. Sacks said that makes it better than anything similar in the market.

- Java monster sales down slightly but the deficit is reducing. Overall Monster brand would have had higher growth if not for Java Monster. Starbucks energy drink has taken market share but no significant threat from other competitors. They currently have 25.6% market share in the coffee drink market (or coffee energy drink).

INTERNATIONAL SALES
- International sales and launches are the most talked about. It grew 13% from 8% last year. This will be more important in the near future for growth.

- Within 6 weeks of launching in European market, Monster already #2 energy drink. Reception has been great but Sacks caution economic situation could limit growth and there is a lot of competition though it is a big market.

- UK distribution has been disappointing because the team there has not been as excited about Monster since they have another home grown brand (I didn't catch the name) they were concern about. Sacks said they have addressed all issues and convince the team that there is room for both brands. They expect improvement in this market soon.

- Canada have new CCE distributor - should be up to speed soon. There will be a new distributor in Spain by the end of May - Australia - June/July & Italy - end of June.

COST

- They've been working on lowering costs which has helped the bottom line.

- Merchandising and display cost down due to eliminating multiple distributors. Also, there was a Monster Java demo expense in 2008 that was not repeated this year.

- Sponsorship has increased ($2 mil) mostly because of a signed deal with a motor GPC champion (didn't jot down the name) which is already paying off. Overall sponsorship costs should be in line with last year or slightly lower.

- Lower cost in apple juice, cream, freight (from lower fuel) etc. helped improved margin by 400 basis points (can someone explain basis points to me?).

OTHER & MOVING FORWARD

- There are plans in product placement in restaurants. More info will be released later in the quarter.

- Monster continues to grab market shares from Red Bull. Monster shares rose to 28.2% while Red Bull declined to 30% per Nielsen report.

- Sacks happy with Q1 results and expect to continue producing strong numbers but caution that we're in "unchartered waters" with the state of the economy. April numbers look good.

- Sacks excited about international launch this summer and expects the CCE system in Europe will come through in carrying the monster brand.

Hope this is interesting to y'all!

My overall take - great quarter.

Management has proven very competent in navigating through rough times. They managed to squeeze out some growth while other companies are struggling. The future, looks like, is in the energy shots and international growth.

I may be foolishly optimistic but I won't be surprise to see strong sales international like in the US when they first came out as soon as the brand takes off. The energy shots category is still in its early stages. These coupled with the cost control makes me hold on tightly to my many shares.

Just my 2 cents,
IG