Yesterday, shares of MNST were weak for what seems like the umpteenth time on the same news - concerns over the FDA's involvement in energy drinks. This time, it was a letter sent from the offices of Sens. Durbin and Blumenthal and Rep. Markey to Living Essentials, the manufacturer of 5 Hour Energy Drink. The letter is linked below:
The latest flurry of activity is in response to data published by the Drug Abuse Early Warning Network regarding emergency room visits and energy drinks. The report is linked below:
http://www.samhsa.gov/data/2k13/DAWN126/sr126-energy-drinks-use.pdf
The gist of the report is that emergency room visits involving energy drinks doubled from 2007 to 2011 - the data prior to 2007 is squirrelley, at best. Of course, over the same period MNST's volume has grown over 60% and energy shots have seen a substantial increase in popularity.
We are encouraged by the fact that our elected officials have fixed everything else in the country to the point where looking at caffeinated drinks has become an issue. However, we haven't changed our view that there isn't a role for the FDA here.
Part of us thinks KO should simply buy MNST and use KO's more substantial resources to fight this battle because, and make no mistake about it, they will come for KO's products next (KO's recent efforts to get out in front of the obesity issue tells us there is concern there). Mayor Bloomberg isn't the only part-time nanny that holds a political office.
Hedgeye is an outstanding resource for historical perspective, and part of that is some very quotable quotes. I prefer to rely more on pop culture for my quotes, and look to Captain Jean-Luc Picard in his fight against the Borg in Star Trek: First Contact - "The line must be drawn here! This far and no further!"
- Rob
Robert Campagnino
Managing Director
HEDGEYE RISK MANAGEMENT, LLC