Monster Beverage Faces Modest Tariff Impact from Aluminum Costs
Monster Beverage Corporation is expecting a “modest” impact from tariffs in the current quarter and next year, primarily due to the high duty on imported aluminum for cans, according to CEO and Vice Chairman Hilton Schlosberg. During a recent earnings call on November 6, Schlosberg discussed the effects of tariffs on the company’s operations.
Impact of Tariffs on Aluminum
Tariffs have significantly affected the Midwest premium for aluminum, which has raised the cost of cans purchased by Monster Beverage from suppliers. The Midwest premium is an additional charge applied to base prices for aluminum delivered to the region, reflecting factors such as energy and transportation costs, as well as the impact of trade conflicts and tariffs.
Schlosberg mentioned that the company will continue to recognize tariffs on aluminum through the higher Midwest premium and implement mitigation strategies across the business where possible.
Response to Tariff Increases
Earlier this year, Monster Beverage took a wait-and-see approach to tariff mitigation and price increases, considering it premature to formulate a response. However, duties imposed by President Donald Trump on imported aluminum have forced the company to address higher costs.
Schlosberg stated that the current tariffs are not expected to have a material impact on the company’s operating results based on its business model. However, a modest impact is anticipated in the fourth quarter of 2025 and in 2026.
Industry Impact
Other food manufacturers have also faced challenges due to aluminum tariffs. The Campbell’s Company reported a lack of domestic supply of certain steel derivatives used for canning, preventing them from fully offsetting tariff impacts. The company aims to mitigate 60% of tariff costs in fiscal 2026.
Overall, the aluminum tariffs have had a significant impact on the industry, driving up costs for manufacturers and leading to strategic adjustments in pricing and supply chain management.
Conclusion
Despite the challenges posed by tariffs on aluminum, Monster Beverage is taking proactive steps to mitigate the impact on its operations and continue to drive revenue growth. By implementing strategic pricing strategies and supply chain adjustments, the company aims to navigate the current trade environment and maintain its competitive position in the market.
