Monster Beverage jumps after saying price increase ‘highly likely’

Shares in Monster Beverage hit a six-week high and were the best performer in the S&P 500 after the company said it was “highly likely” to raise prices for its drinks by the end of this year in an effort to counter rising commodity costs.

The company was also making “good progress in the US with gains in overall market share,” Rodney Sacks, chief executive, told analysts in a Q&A following the company’s annual meeting on Thursday.

Monster and other beverage companies have come under pressure this year from rising prices for raw materials such as aluminium and sweeteners, as well as freight.

That, as well as an underwhelming first-quarter earnings report in which net sales missed market forecasts, contributed to shares falling to a one-year low in May.

The company previously said it would look at raising prices for its drinks. Mr Sacks said yesterday “we are highly likely to increase pricing — the question will be when and to what extent”, adding, “probably before the end of the year.”

Monster shares were up 5.2 per cent on Friday to $55.59, their highest since late April, compared to flat performance for the S&P 500. That leaves the beverage maker’s shares down 12.2 per cent in 2018. The stock gained 42.7 per cent last year.