Rodney Sacks
Chairman and Co-Chief Executive Officer at Monster Beverage
Thanks, Tom. The company achieved record second quarter net sales of $1.85 billion in 2023 second quarter, 12.1% higher than net sales of $1.66 billion in the 2022 comparable period and 14.4% higher on a foreign currency adjusted basis. Gross profit as a percentage of net sales for the 2023 second quarter was 52.5% compared with 47.1% in the comparative 2022 second quarter. The increase in gross profit percentage of net sales for the 2023 second quarter as compared to the 2022 second quarter was primarily the result of pricing actions, decreased freighting costs and increased aluminum can costs. The increase was partially offset by lower gross margins in the alcohol segment and in which our sales had quite a nice bump as you've seen from the release.
As expected, promotional allowances for the 2023 second quarter were marginally higher than the comparable 2022 second quarter as well as the 2023 first quarter. Operating expenses for the 2023 second quarter were $450.4 million compared with $406.9 million in the 2022 second quarter. As a percentage of net sales, operating expenses for the 2023 second quarter were 24.3% compared to 24.6% in the 2022 second quarter.
Distribution expenses the 2023 second quarter decreased to $82 million or 4.4% of net sales compared to $87.9 million or 5.3% of net sales in the 2022 second quarter. The $5.8 million decrease in distribution expenses was primarily due to decreased freight out expenses of $11.8 million, partially offset by higher warehouse expenses of $4.8 million as a result of higher raw materials and finished product inventories in the United States and EMEA.
The increase in other operating expenses was primarily due to increased payroll expenses. We are purchasing aluminum cans from local sources globally. We have returned to our Orbitz strategy of producing in closer proximity to our customers. The cost of repositioning finished products to distribution centers are included in costs. The company continues to address certain challenges in its supply chain as it navigates the current global supply chain environment. Operating income for the 2023 second quarter eased 40.4% to $523.8 million from $373 million in the 2022 comparative quarter.
The effective tax rate for the 2023 second quarter was 23.2% compared with 25.3% in the 2022 second quarter. The decrease in the effective tax rate was primarily attributable to an increase in deductible interest expense a decrease in the effective state income tax rate as well as an increase in net income in certain foreign jurisdictions, which have lower tax rates compared to the United States.
Net income increased 51.4% to $413.9 million as compared to $273.4 million in the 2022 comparable quarter. Diluted earnings per share for the 2023 second quarter increased 52.8% to $0.39 from $0.26 in the second quarter of 2022. Due to continued cost pressures, the company implemented pricing actions the United States in 2022 as well as in many other international markets in 2022 and in the first half of 2023. The company plans to implement additional increases in a number of other international markets during the remainder of the 2023 year. In the United States, the company implemented an additional price increase on its 18.6-ounce and 24-ounce line -- effect of April 1, 2023. We will continue to review further opportunities for pricing actions in order to mitigate inflationary pressures.
According to the Nielsen report for the 13 weeks through July '22, 2023, for all outlets combined, namely convenience, grocery, drug, mass merchandisers, sales in dollars in the energy drink category, including energy shots, increased by 13.6% versus the same period a year ago. Sales of the company's energy brands, including Reign, were up 12.2% in the 13-week period. Sales of Monster were up 10.5%. Sales of Reign were up 43.7%. Sales of NOS increased to 11.2% and sales of Full Throttle increased 14.7%. Sales of Red Bull increased to 10.2%. The company continues to have market leaders share leadership in the energy drink category for all outlets combined in the United States in both the 13-week and four-week periods ended July 22, 2023.
According to Nielsen, for the four weeks ended July 22, 2023, sales in dollars in the energy drink category in the convenience and gas channel, including energy shots in dollars, increased 13.7% over the same period the previous year. Sales of the company's energy brands, which include Reign, increased 13.8% in the four-week period in the convenience and gas channel. Sales of Monster increased by 11.1% over the same period versus the previous year. Reign sales increased 54.9%. NAS was up 13.2%. Full Throttle was up 23 2%. Sales of Red Bull were up 8.8%.
According to Nielsen, for the four weeks ended July 22, 2023, the company's market share of the energy drink category in the convenience and gas channel, including energy shots in dollars increased from 36% to 36.1%. Monster share decreased from 30.4% a year ago to 29.8%. Reign's share increased 0.8% to 3.1%, NOS's share remained at 2.5% and Full Throttle share remained at 0.7%. Red Bull's share decreased 1.6 points from 36.3% a year ago to 34.7%. VPX Bang's share decreased 4.2 points to 1.8%. Five-hour share was lower by 0.7 points at 3.5%, Rockstar share was down 0.2% to 3.4% -- share is 6.6% and -- share is 3% and Ghosts share is 2.8%. Please note that VPX Bang was in bankruptcy during this period, and we will address our acquisition of Bang later in this call.
According to Nielsen, for the four weeks ended July 22, 2023, sales in dollars in the coffee plus energy drink category, which includes our Java Monster line in the convenience and gas channel decreased 3% and over the same period the previous year. Sales of Java Monster, including Java Monster 300, and Java Monster Nitro Cold Brew were 3.3% higher in the same period versus the previous year. Sales of Starbucks Energy were 7% lower. Java Monster share of the coffee plus energy drink category for the four weeks ended July 22, 2023, was 54.1%, up 3.3 points, while Starbucks Energy's share was 45.6%, down two points.
According to Nielsen, in all measured channels in Canada, for the 12 weeks ended June 17, 2023, the energy drink category increased 14.8% in dollars. Sales of the company's energy drink brands increased 21.6% versus a year ago. The market share of the company's energy drink brands was 42.4%, up 2.4 points. Monster sales increased 25.6% and its market share increased to 3.3 points to 38.1%. NASCAR sales decreased 5.8% and its market share decreased 0.3 of a point to 1.3%. Full Throttle sales decreased 43.2% and its market share decreased 0.3% of 2.3% [Phonetic].
According to Nielsen for all outlets combined in Mexico, the energy drink category increased 23.7% for the month of June 23. Monster sales increased 25.3%. Monster's market share in value increased 0.4 points to 28.8% against the comparable period the previous year. Sales of Predator increased to 75.3% and its market share increased 1.7 points to 5.6%. The Nielsen statistics for Mexico cover single months, which is a short period that may often be materially influenced positively and/or negatively by sales in the OXXO convenience chain, which dominates the market. Sales in OXXO convenience chain in turn can be materially influenced by promotions that may be undertaken in that chain by one or more energy drink brands during a particular month. Consequently, such activities could have a significant impact on the monthly Nielsen statistics for Mexico.
According to Nielsen, for the month of June 2023 compared to June 2022, Monster reached our market share in value increased in Greek and Argentina from 50.5% to 55.5%, in Chile from 38.1% to 40.8%, and in Brazil from 41.6% to 44.4%. Monster Energy is the leading energy brand in value in Argentina, Brazil and Chile. I would like to point out that the Nielsen numbers in EMEA should only be used as a guide because the channels read by Nielsen in EMEA vary from country to country and are reported on varying dates within the month referred to from country to country.
According to Nielsen, in the 13-week period until June 18, 2023, Monster's retail market share in value as compared to the same period the previous year, grew from 16.2% to 16.6% in Belgium, from 32.7% to 33.1% in France, from 29.8% to 31.1 in Great Britain, from 31.8% to 35.2% in Norway, from 28.1% to 30.3% in the Republic of Ireland, from 39.4% to 41.6% in Spain and from 15.6% to 15.9% in Sweden. Monster's retail market share in value as compared to the same period the previous year declined from 6.6% to 5. 5% in the Netherlands.
According to Nielsen, in the 13-week period ended until the end of June 2023, Monster's retail market share in value as compared to the same period the previous year declined from 19.3% to 17.7% in South Africa.
According to Nielsen, in the 13-week period until the end of May 2023, Monster's retail market share in value as compared to period the previous year grew from 18% to 22.1% in the Czech Republic, from 27.4% to 28% in Denmark, from 15% to 16.4% in Germany and from 28% to 29.9% in Italy. Monster's retail market share in value as compared to the same period the previous year declined from 38.7% to 37.5% in Greece and from 20.6% to 18.7% in Poland.
According to Nielsen, in the 13-week period until the end of May 2023, Predator's retail market share in value as compared to the same period the previous year, grew from 26.3% to 31.5% in Kenya and from 15.4% to 19.8% in Nigeria. According to IRI in Australia, Monster's market share in value for the four weeks ending July 9, 2023, increased from 14.1% to 16.9%, as compared to the same period the previous year. Mother's market share in value decreased from 10.4% to 10.3%. According to IRI in New Zealand, Monster's market share in value for the ended July 9, 2023, increased from 12.6% to 14.9% compared to the same period the previous year. Live+ market share in value decreased from 6.5% to 5.6% and Mother's market share in value remained at 5.3%.
According to Intag in Japan in the month ending June 2023, Monster's market share in value in the convenience store channel as compared to the same period the previous year declined from 56.7% to 55.1%. According to Nielsen in South Korea, in the month ending June 2023, Monster's market share in value in all outlets combined as compared to the same period the previous year decreased from 59.9% to 57.6%. We again point out that certain market statistics that cover single months or four-week periods may often be materially influenced positively and/or negatively by promotions or other trading factors during these periods.
Net sales to customers outside the U.S. were $715.4 million, 38.6% of total net sales in the 2023 second quarter compared to $649 million or 39.2% of total net sales in the corresponding quarter in 2022. Foreign currency exchange rates had a negative impact on net sales in U.S. dollars by approximately $38.4 million in the 2023 second quarter. Included in reported geographic sales are our sales to the company's military customers, which are delivered in the U.S. and transshipped to the military customers overseas.
In EMEA, net sales in the 2023 second quarter increased 13% in dollars and increased 16.4% in local currencies over the same period in 2022. Gross profit in this region as a percentage of net sales for the second quarter was 34% compared to 26.7% in the same quarter in 2022. We are pleased that in the 2023 second quarter, Monster gained market share in Belgium, the Czech Republic, Denmark, France, Germany, Great Britain, Italy, Norway, the Republic of Ireland, Spain and Sweden.
In Asia Pacific, net sales in the 2023 second quarter increased 17.8% in dollars and increased 26.7% in local currencies over the same period in 2022. Gross profit in this region as a percentage of net sales was 42.4% versus 40.4% over the same period in 2022. Net sales in Japan in the 2023 second quarter increased 11.9% in dollars and increased 21.2% in local currency.
In South Korea, net sales increased 50.3% in dollars and increased 59.5% in local currency as compared to the same quarter in 2022. Monster remains the market leader in Japan and South Korea. In China, net sales in the second quarter increased 3.7% in dollars and increased 10.6% in local currency as compared to the same quarter in 2022. We remain optimistic about the prospects for the Monster brand in China. In the 2022 second quarter, our distribution partners restocked inventories following the easing of the COVID-19 restrictions in China.
In Oceana, which includes Australia and New Zealand, Tahiti, French Polynesia, New Caledonia, Papua New Guinea and Guam, net sales increased to 26% in dollars and 36.4% in local currency.
In Latin America, including Mexico and the Caribbean, net sales in the 2023 second quarter increased 0.1% in dollars and increased 9.4% in local currencies over the same period in 2022.
In Brazil, net sales in the 2023 second quarter increased by 2.5% in dollars and 3.6% in local currency. Net sales in Mexico increased 3% in dollars and 10.1% in local currency in the 2023 second quarter. Net sales in Chile decreased 23.8% in dollars and decreased 26% in local currency in the 2023 second quarter. The decrease in sales in Chile were due in part to a normalization of bottler inventory levels. Net sales in Argentina decreased 19.5% in dollars but increased 54% in local currency in the 2023 second quarter.
We will now provide an update on our litigation with Vital Pharmaceuticals, Inc. which will be referred to as VPX, the former maker of Bang energy drinks. We previously discussed the trademark infringement arbitration in which an arbitrator found against VPX and awarded Monster Energy Company or MEC and Orange Bank, $175 million in damages, attorney's fees and costs and an ongoing 5% royalty on future sales of certain Bang Energy products, VPX as a field the judgment. We also previously discussed the false advertising case in the United States District Court for the Central District of California in which the jury returned a verdict awarding MEC approximately $293 million in damages and the District Court granted MEC's motion for a permanent injunction in joining VPX and former CEO, Jack Oak from fastly or receptively claiming that Bang or any other beverages creatine or a form of creatine.
VPX and Jack Oak appealed the injunction. The parties have completed briefing on remaining post-trial issues. On October 10, 2022, VPX along with certain of its domestic subsidiaries and affiliates filed for protection under Chapter 11 of the Bankruptcy Code in the United States District Court for the Southern District of Florida. On June 28, 2023, VPX and certain affiliates entered into an asset purchase agreement with the company, which, among other things, provided for the company's acquisition of substantially all of VPX's assets. The transactions contemplated by the asset purchase agreement closed on July 31, 2023, at which time, the company was deemed to have allowed general unsecured claims VPX' bankruptcy case relating to the arbitration award and the juries award, subject to the potential modification of the Jury of Award [Phonetic] in the light of pending post-verdict motions filed by MEC and VPX.
The asset purchase agreement also includes a mutual release between VPX and MEC, which, among other things, requires VPX to dismiss its appeals of the trademark -- the false advertising case as well as cases that VPX filed against MEC in the United States District Court for the Southern District of Florida. Note that this mutual release does not include any claims that come might have against [Indecipherable] in relation to that jury award. The company will not recognize the allowed general unsecured claims or the jury award as it relates to [Indecipherable] until they are realized or realizable. We will not be answering questions on these legal proceedings on today's call.
In June 2023, the company also entered into an agreement with Orange Bank, Inc. regarding the company's use and registration of certain bank trademarks and trade names subject to the successful closure of the asset purchase agreement. Under this agreement, the company will pay Orange Banking a onetime payment of approximately $12.5 million and a 2.5% royalty on all future sales products bearing the trade name Bank. On June 31, 2023, we completed our acquisition of substantially all of the assets of Vital Pharmaceuticals, Inc.
