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Small-Cap Success Story: Monster Beverage

Monster Beverage (MNSTis the undisputed king of American energy drink-makers, occupying 35 percent of the of the entire industry, and coming in second only to the Thai-Austrian company Red Bull. It is somewhat surprising to think that a only 15 years ago, Monster was a natural soda company with only a dozen employees.

While some small caps-turned Wall Street darlings found success by sticking to their guns, like True Religion Jeans, Monster did the exact opposite. A long focus on making esoteric, offbeat, almost deliberately un-commercial sodas under the Hansen Natural Brand gave way to making a decidedly populist energy drink in Monster Energy.

America, Meet Energy Drinks

Sacks came to the US in 1989 and went looking for investment opportunities – he didn’t have a particular industry in mind, only some investors and a desire to make a mark in American business. After some combing, Sacks settled on Hansen, a tiny Southern California soda company, which he purchased in 1992 for $14.6 million.

Hansen was formed in 1935, and more or less stayed low-key and private. Sacks and his group of investors had a different idea.

After purchasing the company, Sacks decided he wasn’t interested in keeping things the same. During a trip to Britain, he took a keen interst in the popularity of a new energy drink called Red Bull, and decided that such a drink could be a wild success in America.

Hansen went public in 1995, and launched the first iteration of an energy drink concoction in 1996. In 1997 they launched Hansen’s Energy at the same time Red Bull finally hit America. After Hansen Energy found some success, the company decided to considerably amp up the focus on high-octane beverages.

Hansen Energy didn’t make the dent the company had hoped for. It was citrusy and fruity, and din’t appeal to the teenagers they felt were their target market. They decided they needed something with more sugar, more caffeine. More rush.

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