On Thursday, Monster Beverage (NASDAQ:MNST) finally took the plunge moving into alcoholic beverages and announced its acquisition of CANarchy Craft Brewery Collective for $330 million.

Monster, best known for its energy drinks, expects the acquisition to close in the first quarter of 2022 but said that the organizational structure of the energy-drink business remains unchanged. 

The CANarchy acquisition will provide Monster Beverage access to high-profile brands, including crown jewels like The Cigar City, Oskar Blues, and Squatters but excludes CANarchy’s standalone restaurants. Monster noted that the brands adds to its growing portfolio and provides an opportunity for expansion.

In 2020, CANarchy was the sixth-largest craft brewer and the 15th-largest overall brewing company in the U.S.

Chairman and co-CEO Rodney Sacks of Monster told shareholders in 2019 that the company had its sight on hard seltzers, malt beverages, and spirits. And, while CANarchy is primarily a craft-beer brewer, it also has hard seltzer brands which the company (Sacks) is planning to focus on and develop.


CLARIFICATION

According to the Brewers Association, technically, following the acquisition, “CANarchy meets the Brewers Association’s craft brewer definition under the ownership of Monster Energy as presently constituted.”  

Industry observers anticipate that Monster Beverage will likely launch its own variation of “Monster Hard Seltzer” but, because hard seltzer is mainly produced with alcohol from malt fermentation, this would technically make Monster Beverage a “craft brewer” as well.

MARKET EXPECTATIONS

On Thursday, following the announcement, shares rose 0.41% to close at $94.37. The U.S. based-company established in 1990, which develops, markets, sells and distributes energy drink beverages is expected to deliver its fourth-quarter earnings report for 2021 on 2 March 2022. 

Evercore ISI analyst Robert Ottenstein recently reiterated a Buy rating on Monster Beverage with a $105 price target which implies an upside potential of 11.26% to current levels.


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