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Diving overview:
- Monster Beverage expects to have a “moderate” impact from tariffs this quarter and next year due to higher tariffs on imported aluminum for cans, CEO and Vice Chairman Hilton Schlosberg said in a Nov. 6 earnings call.
- According to Schlosberg, the tariffs have had a major impact on the Midwest premium for aluminum, raising the price of cans the company buys from suppliers. The Midwest Premium is an additional charge applied to the base price of aluminum shipped to your region. This may reflect factors such as energy and transportation costs, as well as the impact of trade conflicts, including tariffs.
- “We will continue to recognize tariffs on aluminum through higher Midwest premiums and continue to implement mitigation strategies across our business,” the CEO told investors.
Dive Insights:
In February, Schlosberg said the company would take a wait-and-see approach to tariff relief and price increases, noting it was premature to formalize a response. Since then, tariffs imposed by President Donald Trump on imported aluminum have forced the company to deal with higher costs.
“Based on our business model, we do not believe that the current tariffs will have a material impact on the company’s operating results,” Schlosberg said. “However, we still expect some impact to continue in the fourth quarter of 2025 and into 2026.”
This year, Midwest premiums hit a record high in November, Blake Hurtik, editorial manager at market intelligence firm Argus Media, said in an email.
“The 50% Section 232 import tariff was the main driver,” Hurtik said. reference tariffs imposed by trump Early this year.
Monster has been raising prices since Nov. 1, but the increases are not directly related to tariffs and are instead focused on revenue growth, Schlosberg added. “Our pricing strategy considers consumer buying behavior, brand momentum, channel and package mix.”
Other food manufacturers have also suffered from the impact of aluminum tariffs this year. Last September, The Campbell’s Company reported that the company was unable to fully offset the impact of the tariffs due to domestic supply shortages of certain steel derivatives used in canning. The company expects to alleviate 60% of its tariff costs in fiscal 2026.
“There is not enough production capacity available in the U.S. or supply available in the U.S.,” Mick Beekhuizen, CEO, president and director, told investors. “If I can get it, I will buy it locally.”
