(Bloomberg) -- Monster Beverage Corp. could generate $76 million in sales if it decides to introduce an alcoholic beverage, according to Stifel.
Stifel analyst Mark Astrachan said the company is considering introducing an alcoholic option, which is likely to be a hard seltzer, based on a review of trademark filings. That could represent a potentially lucrative opportunity for the firm behind Monster Energy, given the growing popularity of spiked seltzers across different demographics, the analyst wrote in a research note.
Monster declined to comment through a spokesperson.
Goldman Sachs said recently that hard seltzer sales could reach $20 billion by 2025, up from about $3.5 billion today. White Claw from Mark Anthony Brands and Boston Beer Co.'s Truly line currently dominate the category, but offerings from Constellation Brands Inc. and Anheuser-Busch InBev SA have dented their market share, Astrachan wrote. He noted the sparkling seltzer category has grown from 3.5% of the off-premise beer market in June 2019 to 9.4% in the four weeks ended May 31.
“We think the success of new entrants suggests an opportunity for Monster given its strong track record of innovation, including, importantly, expanding usage occasions with new products,” Astrachan said. He rates the stock a buy with a price target of $77.
Astrachan said Reign, a Monster drink targeted at athletes, captured 3.3% of the market share for its sector 14 months after it was introduced. If Monster captured a similar chunk of the hard seltzer category, Astrachan estimated it could add about $76 million in sales, or about 2.6% of Monster's total projected U.S. sales for this year.
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