Sometimes, superstar brands come from the unlikeliest places.In this case, that would mean a podunk town in California, a healthy beverage company few had heard of and an idea guy who’d never taken a business or marketing class in his life (but whose experiences did include breaking his back in three places during a motorcycle escapade in the desert).
In fact, most people who pop open a can of Monster Energy drink have probably never heard of the Hansen Beverage Co. of Corona, Calif., and even fewer probably know the name Mark Hall. But if most consumers aren’t aware of the story of Monster Energy, the beverage segment sure is.
As well it should be. Life’s never been the same since this beast showed up.
Monster has dished out energy-drink pioneer Red Bull the stiffest competition it’s ever faced, leaving the formerly smooth-running company in a confusion of pricing strategies and a top-management beheading. Monster’s distribution alliance inked with Anheuser-
Busch in May 2006 and has been so successful that the beer giant is now furiously assembling a portfolio of nonalcoholic drinks in an effort to reinvent its entire brand. Monster’s parent, Hansen’s Natural (which was actually flirting with bankruptcy just a few years ago), is now on track to hit $1 billion in ’07 sales-and Monster’s behind most of it. Every key sales and division exec at Hansen is now a millionaire; often, many times over.
All that from one little can? Well, not entirely. The energy behind Monster Energy is Mark Hall, whose skill as a marketer and branding strategist helped Monster claw its way past the competition. Which is surprising in itself, because Hall, 51, is a mild-mannered executive whose smiles do not bear any obvious fangs.
“He’s the quiet giant,” said George Kalil, a major bottler whose market, Phoenix, was one of the first in which the Monster gored the Bull. Monster, said Kalil, is “still growing, and I have every confidence Mark will continue to bring things to the table.”
The table, of course, is the now rollicking field of energy drinks. And to many observers, what Red Bull, Rockstar, Adrenaline Rush, Whoopass and, of course, Monster are busy doing is nothing short of reinventing the carbonated soft-drink business for a new generation of thirsty consumers. “In convenience stores, the only people going to the fountain and pulling a Coke are old people,” Hall said flatly. “If we’ve been able do anything, it’s to make soft drinks cool for young people. Let’s be real: [energy drinks are] cool soft drinks.”
For the uninitiated few, “energy” for brews like Monster is not a new-age vibe; it means caffeine. As such, energy drinks-which some young people seem to like in lieu of a night’s sleep-have come under the fire of various health advocacy groups. (In point of fact, though, the 160mg of caffeine found in a 16-oz. can of Monster looks pretty tame compared to the 320mg you’ll gulp down in the same-sized cup of Starbucks drip coffee.) Controversy aside, it’s clear that energy drinks’ cool factor is one thing that’s beyond dispute.
Hall’s an unlikely guy to be sitting in the president’s chair of Hansen’s Monster Beverage Division. Even though he holds a B.S. in biology, chemistry and education, his teaching career ended when he decided he hated kids, and Hall ended up on the slopes as a full-time ski bum.
Skiing ended when the phone rang one day. It was a college buddy name Don Klopcic.His family had picked up a lucrative Budweiser distributorship in Grand Rapids, Mich., and was looking for someone to keep an eye on their sleepy “all-other” house in Pontiac populated with a mishmash of imports like Heineken and also-ran brands like Blatz.
“The Klopcics saw me wasting my life and invited me in,” Hall recalled. “I had no experience, but they said, ‘Figure it out.'”
Hall did. “We didn’t have any brands that retailers couldn’t do without,” Klopcic recalled. “So it took a lot of hand-selling. Mark had never lacked for ingenuity or creativity. He was always a great salesman.” By the time Hall left just shy of a decade later, he’d helped grow the operation from 300,000 to 4 million cases.
History repeats itself, and the beverage biz is no exception. During Hall’s tenure with the Klopcics, he’d made other friends who’d later change the course of his life. This time it had been a tough pair of Brooklyn-based distributors named John Ferolito and Don Vultaggio, who’d devised a malt liquor called Midnight Dragon. By the time an exec from Ferolito, Vultaggio & Sons called Hall years later, the company had launched a new iced tea called AriZona. Hall took the job, and before long he’d risen to national sales manager.
Most who’ve followed Hall’s career see a direct connection between what he did at AriZona and would later do at Hansen with Monster. “He learned that business very well and took the same kind of approach,” said Klopcic. In the employ of Vultaggio, Hall had picked up plenty of practical experience in nuts-and-bolts areas like packaging design and product formulation (AriZona was an early pioneer of unusual ingredients, like ginseng). But he said his fundamental lesson from those years was Vultaggio’s dogged, don’t-take-nofor- an-answer approach. “A lot of marketing is common sense; common sense, perseverance and problem-solving,” Hall said.
As things turned out, he’d soon have plenty of problems to solve. After leaving Vultaggio in late 1996, Hall met a headhunter who matched him up with Hansen, which had narrowly escaped bankruptcy a few years earlier. For Hall, it was hardly love at first sight when Hansen’s CEO Rodney Sacks and vice chairman Hilton Schlosberg introduced him to the company’s motley array of beverages.
“I told Rodney and Hilton, ‘No offense, but I can’t work with what you have-your products, your margins, your sales force,'” Hall recalled. “They replied that you can make [new] products if you need them. Every time I said no, they raised the options until I was starting with 150,000 shares. I figured, I just have to get the stock up to $5” to be comfortable. (By now, with the stock past $50, it’s safe to say that Hall is more than comfortable.)
THE MONSTER MASH
Around the same time Hall had dropped his boots at Hansen, America was just starting to get the early buzz about the novel category called energy drinks, which had begun in Asia and quickly spilled into Europe. By April 1997, just four months after he got there, Hall had launched Hansen’s Energy, which debuted in San Diego the same month as a European newcomer named Red Bull launched in the northern part of the state.
Both concoctions came in a slim 8-oz. can. When skeptical retailers argued they didn’t have the shelf space to take a chance on the weird item, Hall and his small crew came up up with a suction-cupped rack that stuck to the inside of cooler doors. Hansen Energy started to flex its market muscle. “For the first two years, we were actually beating Red Bull,” Hall recalled.
But Hansen’s brew was overtaken by 1999. Competition, of course, was inevitable. Soon, Coca-Cola, Snapple, SoBe (even Hall’s former employer AriZona) got into the game, even as Red Bull found its footing and vaulted into the top spot. Though Hansen extended its line to try to hold its ground, the company found itself getting beat at its own game.
To Hall, it was clear that there was a disconnect between the Hansen brand (with its wholesome, good-for-you aura) and the young male demo that comprised the core energy-drink consumer. Hall’s first hurdle was convincing his bosses- who were highly protective of their brand- that the Hansen name couldn’t cut it in energy. That effort, Hall remembered, was “really a fight. Hilton, Rodney and the board thought we shouldn’t make a [newly named drink] because it wouldn’t enhance the Hansen brand.”
Partly by reminding them why he had been brought into the company in the first place, Hall finally got the green light. (Sacks didn’t comment for this story, but Hall is quick to note that, once convinced, Sacks became an ardent supporter of the effort.) Next came a two-page list of possible new brand names that had the requisite attitude to butt heads with Red Bull. “I viewed Red
Bull as being a white-collar, yuppie drink,” Hall said. “I wanted to be an aggressive, blue-collar drink-[like] the guy with the tattoos.”
As a name, Monster fit best because it was aggressive and evoked Saturday-night party cries like “Unleash the beast.” Its secondary allusion to size also was handy, since Hall planned to pack his new drink in a 16-oz. can (vs. Red Bull’s 8.3 ozs).
Next came the trademark sinister-looking claw marks, rendered in a lurid green against a black background. In tests, only half of consumers realized the scratch marks formed an “M,” but Hall decided that the ambiguity would only add to the mystique.
As branding, it was unorthodox. But just as Vultaggio, his one-time mentor at AriZona, had demonstrated when he put iced tea into a pastel- colored giant beer can, unorthodox got people’s attention. “Human nature is that we’re taught from childhood to get in line,” Hall said. “I’ve always had trouble with lines.”
Hall convinced the company to pony up for a giant booth near the entrance of the 2002 National Assn. of Convenience Stores trade show in Las Vegas. Years later, show-goers still recall the shock of seeing an attitude brand like Monster from the staid Hansen’s Natural. “I walked into the show and was floored,” recalled Dan Cavanaugh, a 35- year beverage veteran who now runs sales for Honest Tea. “They had a giant friggin’ booth with Jimi Hendrix’s guitar and a big Monster sign. It was gorgeous. They’d reinvented themselves overnight.”
Unlike the creators of AriZona, Hall was not content to let everything ride on a can design. Some kind of lifestyle marketing was needed to forge the emotional bond with users, and it had to be something that would pass the cool test with adolescent and twentysomething males.
ENERGY TO BURN
In the 1990s, Hall broke his back in three places, 20 miles from the nearest road, while riding a Honda XR-650 in the Southern California desert. If the incident was painful, it was also formative: Hall decided that aggressive sports was the way to go for marketing, starting with freestyle moto cross. “It was the coolest thing out there-not organized, rebellious,” he said. “It was on the edge. Its ever-evolving nature attracted me.”
Crucially, rather than go in for expensive media buys and corporate sponsorships of major events, Hall decided to focus strictly on the athletes. Together with sports marketing veteran Scott Sepkovic, he went prospecting, his pockets lined and ready. “We went to the X Games with $25,000 in our pockets and signed people on the spot. We knew that if you show them the money they’d believe you.” The pair made it a point to approach athletes who had qualified for the finals, ensuring that their investments would produce an immediate payoff in TV coverage. The brand has since expanded its involvements to encompass drag racing, super bike, rally, core-just about any form of motorized racing short of corporate ones like Nascar and Indy Car. By some estimates, its athlete payroll now tops $15 million, funded by the absurd amounts of cash the high-margin drinks throw off.
Since Hansen’s sales force was better equipped to call on health food stores than convenience stores, Hall made another bold move: He recruited a high-energy former AriZona exec with whom he’d had a famously fractious relationship at the tea maker to build a DSD network for Monster and its siblings, figuring the sheer amount of work to be done would force the two to co-exist more amicably this time around.
It worked. Monster grew quickly, particularly in the Sun Belt metros that are most hospitable to energy drinks. Before long, Monster caught the attention of giant brewer Anheuser-Busch, which was trying to break out of the low-margin ghetto of its mass-market brews. By May 2006, A-B inked a series of deals with Hansen’s Natural that put Monster and its sibling brands at the center of a company strategy to move from being solely a brewer to being a diversified beverage company.
THE OCCASIONAL FRANKENSTEIN
Even against this kind of marketing track record, Hall has had his share of misfires. An early alcoholic energy drink called Hard Energy ran afoul of federal authorities, who claimed that to put the world “energy” in the name was tantamount to making a claim, which is not allowed for alcoholic beverages. Hansen restaged the item as “Hard E” but nobody got the connection and it died. He’s also had his misses on the nonalcoholic side, from a licensed surf-apparel brand called Lost to energy brands devised for other companies, including convenience store chains and
None of this fazes Hall, and he keeps new ideas flowing in the novelty-driven category. Though the pressures to feed the beast are enormous, distributors credit him with avoiding the trap of rushing things to market while still half-baked. “He won’t turn something loose unless he’s crossed every ‘t’ and dotted every ‘i.’ It’s just not his style,” said Kalil. “That’s what separates him from marketers today.”
Monster having earned its stripes, Hall is getting bolder in where he’ll extend it. He recently launched a coffee extension called Java Monster in the same outsize 16-oz. can, which many view as an inventive response to the effete glass bottle of the PepsiCo/Starbucks Frappuccino brand. Though production capacity is tight, the brand is off to a strong start among the legions of Starbucks haters who patronize c-stores.
“With Java Monster, he may have reinvented energy drinks,” said Honest Tea’s Cavanaugh. Distributors say that, with Coca-Cola’s acquisition of Vitaminwater having created a void in the market, Hall’s group is also toying with an enhanced water, maybe under the Monster rubric. At the same time, he continues to push the envelope on the core Monster brand-say, with a gigantic, 24-oz. can called Monster BFC (“big freakin’ can”). As is typical for this cagey brand, it’s hard to know whether the tagline is warning kids not to chug the full 24 ounces, or daring them to do it.
Five years into its run, it’s clear Monster Energy is a marketing phenomenon, a view that would be unlikely to change even if it were to sputter out tomorrow (under pressure, say, from critics who worry about the health effects of high-level caffeine consumption). What happens next is anybody’s guess. Lots of observers figure there’s a good chance that a bigger company will scarf up Hansen soon enough- whether PepsiCo, trying to make the best of a mediocre energy portfolio, or Anheuser-Busch, possibly as a defensive maneuver to prevent somebody else from snagging its distribution partner. If A-B did buy Hansen, some beverage execs figure Hall could be the perfect person to juice up the brewer’s spotty innovation efforts across the board (after all, Hall’s roots, as a distributor, are in beer).
Hall is disinclined to look that many steps ahead. A change of control at Hansen likely would cause all his remaining options to vest. Then, for the second time in his life, he’d have a handy grub stake and the leisure to conjure up a grand new adventure. This time, he might not be so inclined to accept the first job offer that comes along.
Photo by Vern Evans