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Anheuser-Busch Wants to Boost Energy-Drink Category With Hansen Alliance

Posted on: Saturday, 8 April 2006, 00:00 CDT

By Leslie Berkman, The Press-Enterprise, Riverside, Calif.

Apr. 7--A marketing alliance reportedly being discussed by Anheuser-Busch Cos., Inc, and Hansen Natural Corp. could offer a huge new distribution channel for Hansen's already amazingly successful Monster energy drink, industry analysts say.

Beverage industry experts say an alliance between Corona-based Hansen and Anheuser-Busch would give the beer-brewing giant access to Monster, the second- best selling brand in the nation's $3.4 billion-a-year energy beverage business.

Access to Anheuser-Busch's huge distribution network, analysts say, would give Hansen even stronger exposure for its products in convenience stores, where most energy drinks are sold, and perhaps build a new market for the Monster brand in bars.

Gregory Badishkanian, an analyst with Citigroup, said in a report "there is a 50 percent chance" a partnership could be formed to distribute Monster in bars. He added that "based on our discussion with industry contacts, we think discussions could take at least several months to conclude."

If a distribution agreement is reached, Badishkanian said, it could fuel continued growth of the Monster brand for the next 18 to 24 months.

The discussions between Anheuser-Busch and Hansen were first reported last week in a trade newsletter.

Hansen's stock surged by 5.8 percent on March 30 to $126 a share after Mark Swartzberg, a New York-based beverage analyst with Stifel, Nicolaus & Co., said "based on follow-up inquiries we believe conversations between (Anheuser-Busch) and Hansen are indeed happening."

Swartzberg said in his report that a potential joint development of an alcoholic energy drink bearing the Monster name also could make strategic sense for Anheuser-Busch, which he said has had limited success with energy drinks. Currently Anheuser-Busch has two beer energy drink brands, B(e) and Tilt, and the non-alcohol brand 180.

Scott Van Winkle, an analyst at Canaccord Adams, said Monster, which Hansen introduced in 2002, is "a brand that has resonated well with consumers. It is the right brand targeted at the right demographics and marketed the right way."

In large part because of the success of Monster, Hansen's annual sales between 2004 and 2005 almost doubled to $349 million and its earnings more than tripled to $63 million.

Anheuser-Busch could also work with the Corona beverage firm to develop an alcoholic energy beverage, Beverage Business Insights said.

The newsletter in its March 28 edition, quoting anonymous sources, also said there was a possibility St. Louis-based Anheuser-Busch might acquire Hansen, which in addition to Monster manufactures a wide variety of juices, smoothies, natural sodas and other nonalcoholic beverages.

August A. Busch IV, president of Anheuser-Busch's domestic brewing unit, in an interview with a reporter for the St. Louis Post-Dispatch early this week, denied that the brewer was considering an acquisition in the energy drink market.

According to the St. Louis Post-Dispatch, Busch declined to comment about a possible Hansen partnership but admitted Anheuser-Busch has been looking to become "a more meaningful player" in the booming energy drink category.

Hansen's stock retained its gains this week, which may mean investors are excited by the prospect of other kinds of collaborations, an industry analyst observed. Thursday the stock closed at $128.75 a share, up .77 percent from Wednesday's close.

Hansen and Anheuser-Busch officials declined comment on what, if any, negotiations may be happening.

"It is our policy to not confirm, deny or speculate" about such reports, Dave Peacock, vice president for Anheuser-Busch Inc., said in a statement.

HANSEN NATURAL CORP.

Headquarters: Corona

Chairman and CEO: Rodney Sacks

Products: Natural sodas, fruit juices, smoothies, energy drinks.

Market capitalization: $2.87 billion

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Copyright (c) 2006, The Press-Enterprise, Riverside, Calif.

Distributed by Knight Ridder/Tribune Business News.

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HANS, BUD, C,

Source: The Press-Enterprise

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