Competition is strong in the energy drink industry, which complicates Guru’s plans to increase its market share.
The fight is strong between Guru, Red Bull and Monster Energy, who are struggling in a market whose size is growing at a rate of 15%. “The industry is very strong and you have to grow quickly to gain market share,” explains President and CEO Carl Goyette during a conference call Thursday to discuss the results of the completed third quarter. on July 31.
The company thus observes “big variations” monthly in its market shares, depending on the different promotional offensives of its competitors. These variations are attributable to the launch of new products and sales on multi-packs, explained the manager.
Competition has had an effect on the company’s gross margins, which fell from 54.8% last year to 51.2%. Finance chief Ingy Sarraf explained that this decrease was “half” attributable to the discount offered by Guru and the rest was attributable to rising costs.
The company has no plans to raise prices for increased costs, at least not until its competitors move forward. “We are never the first to do it,” says M.me Sarraf. Red Bull and Monster are much bigger than us. So we follow the industry. »
Consumers are also more attentive to prices in a context of high food inflation, which reduces room for maneuver on prices. “All brands want to increase their market share,” adds Mr. Goyette. All brands see that consumers are more price sensitive. »
The manager said he was confident of increasing his market share in provinces other than Quebec. He also announced that the company had reached an agreement to be on the shelves of 24 Costco stores in Quebec.
The company reported a net loss of $3 million, compared to a net loss of $6.5 million in the same period last year. Revenues, for their part, increased by 15% to 8.9 million.
Analyst John Zamparo of CIBC World Markets points out, in a note to investors, that the loss is “significantly” lower than his expectations thanks to spending controls.
Guru shares lost 3 cents, or 1.30%, to $2.27 in late trading on the Toronto Stock Exchange.