Rodney Sacks
Chairman And Co-Chief Executive Officer at Monster Beverage
Thanks, Tom. The company achieved record fourth quarter and full year net sales with annual net sales topping the $5.5 billion mark for the first time in the company's history. Despite certain challenges in the 2021 fourth quarter, the company achieved solid results overall. We note that the comparative 2020 fourth quarter included a non-recurring tax benefit of $165.1 million as well as reduced marketing, sponsorships and certain other operating expenses, largely as a consequence of the COVID-19 pandemic. These items should be taken into consideration when evaluating comparative performance over the 2020 fourth year and full year -- fourth quarter and full year.
During the 2021 fourth quarter, the company continued to procure additional quantities of aluminum cans from suppliers in the United States and abroad in response to increased consumer demand. In addition, the company continued to experience additional global supply chain challenges, including freight inefficiencies, shortages of shipping containers port of entry congestion and delays in the receipt of certain ingredients. In the United States, the company lacked sufficient co-packing capacity to meet increased demand for certain of its products. As a result, the company was not able to fully satisfy increased demand for its products in a number of markets in the 2021 fourth quarter. During the 2021 fourth quarter, the company experienced increased aluminum can costs attributable to higher aluminum commodity pricing as well as the cost of importing aluminum cans.
In addition, the company experienced increased ingredient and other input costs, including shipping and freight, labor, trucking, fuel, co-packing fees, secondary packaging materials, increased outbound freight costs and production and efficiencies, which resulted in increased costs of sales and increased operating costs in the 2021 fourth quarter. The company continues to address the challenges in its supply chain as it navigates through the uncertainty of the current global supply chain environment. In the fourth quarter of 2021, net sales were $1.43 billion compared with $1.20 billion in the fourth quarter of 2020, an increase of 19.1%. Adjusting for foreign currency movements, net sales for the 2021 fourth quarter would have been up 19.3%. The comparative net sales for the 2020 fourth quarter were negatively impacted by $15.2 million related to prior returns from our customers as a result of a European formulation issue with a limited number of products in Europe and labeling issue concerning one product in Japan, which we will refer to as the 2020 product returns.
Gross profit as a percentage of net sales for the 2021 fourth quarter was 53.9% and compared with 57.7% in the 2020 fourth quarter. The decrease in gross profit as a percentage of net sales for the 2021 fourth quarter was primarily the result of increased freighting costs, increased aluminum can costs attributable to higher aluminum commodity pricing, geographical and product sales mix and production inefficiencies. Operating expenses for the 2021 fourth quarter were $334.7 million compared with $288.4 million in the 2020 fourth quarter. As a percentage of net sales, operating expenses for the 2021 fourth quarter were 24.9% compared with 24.1% in the 2020 fourth quarter and 28.9% in the 2019 fourth quarter pre-COVID. The increase in operating expenses was primarily due to increased outbound freight and warehouse costs, increased expenditures for sponsorships and endorsements and increased expenditures for other marketing activities including social media and digital marketing and increased payroll costs.
During the comparative 2020 fourth quarter, the company decreased expenditures for sponsorship and endorsements and decreased expenditures for travel and entertainment, each largely as a consequence of the COVID-19 pandemic. The impact of the COVID-19 pandemic was less pronounced on our sales and marketing programs during the 2021 fourth quarter. Distribution costs for the 2021 fourth quarter increased to $69.8 million, which is an increase of 48.4% or 4.9% of net sales compared to $47 million or 3.9% of net sales in the 2020 fourth quarter and 3.5% of net sales in the 2019 fourth quarter. Operating income increased 2.6% to $412.9 million from $402.3 million in the fourth quarter of 2020.
We believe that a portion of the increase in costs that we experienced in the quarter and the 2021 full year are likely to be transitory. With our two new suppliers of aluminum cans in the United States operational, we will begin to decrease our reliance on the use of imported aluminum cans in the United States, although we will continue to import aluminum cans into the United States, although at a reduced level in the first half of 2022. In 2022, we expect to continue to import aluminum cans into EMEA reducing such imports in the second half of 2022. The supply chain challenges we are experiencing are significantly increasing and the logistic costs of importing and shipping raw materials and ingredients as well as other freighting costs, which are included in cost of sales. The cost of repositioning finished products to distribution centers are included in freight-in costs.
We are rebuilding and increasing inventories in an effort to reduce the excessive cost of trucking long distances to satisfy demand and to return to our Orbitz strategy of producing in proximity to our customers. Increased freight in costs, including the shipment cost of importing cans amounted to approximately $38 million in the 2021 fourth quarter and approximately $100 million for the 2021 full year. Our out-of-orbit freight costs, which are included in distribution expenses amounted to approximately $15 million in the 2021 fourth quarter and $54 million for the 2021 full year. Net income decreased 31.9% to $321.3 million as compared to $471.7 million in the 2020 comparable quarter. Net income for the 2020 fourth quarter was positively impacted by the recognition of a non-recurring tax benefit of approximately $165.1 million. Net income for the comparative 2020 fourth quarter, excluding the non-recurring tax benefit, the impact of the 2020 product returns, associated inventory provisions and other related costs was $328.6 million.
Diluted earnings per share for the 2021 fourth quarter decreased 32.1% to $0.60 from $0.88 in the fourth quarter of 2020. Diluted earnings per share for the comparative 2020 fourth quarter excluding the non-recurring tax benefit, the impact of the 2020 product returns, associated inventory provisions and other related costs was $0.62. According to the Nielsen reports, for the 13 weeks through February 12, 2022, for all outlets combined, namely convenience, grocery, drug, mass merchandisers, sales in dollars in the energy drink category, including energy shots, increased by 13.3% versus the same period a year ago. Sales of the company's energy brands, including Reign, were up 8.1% in the 13-week period. Sales of Monster were up 10.5%. Sales of Reign were down 1.7%. Sales of NOS decreased 12.5% and sales of Full Throttle increased 12.4% the decrease in sales of NOS at retail during the fourth quarter was as a result of shortages in the supply of concentrate for NOS. The NOS supply issues are improving.
Sales of Red Bull increased 13.8%. Sales of Rockstar decreased by 1.3% and sales of 5-Hour increased 2.1%. Sales of VPX Bang increased 0.4%. According to Nielsen, for the four weeks ended February 1, 2022, and sales in dollars in the energy drink category in the convenience and gas channel, including energy shots in dollars, increased 7.4% over the same period the previous year. Sales of the company's energy brands, which include Reign increased 4% in the four-week period in the convenience and gas channel. Sales of Monster increased by 5.7% over the same period versus the previous year. Reign sales decreased 0.9% and NOS sales was down 10.8% and full Tuttle was up 6.3%. sales of Red Bull were up 8.3%, Rockstar was down 4.5% and 5-Hour was down 1.3%. VPX Bang's sales decreased 4%.
According to Nielsen, in the four weeks ended February 12, 2022, the company's market share of the energy drink category in the convenience and gas channel, including energy shots in dollars, decreased 1.2 points to 37.2%. Monster share decreased 0.5 a share point to 31.6%. Reign's share decreased 0.2 of a share point to 2.4%. NOS' share decreased a 0.5 of a point 2.5% and Full Throttle share remained at 0.8%. Red Bull's share increased 0.3 points to 36.2%. Rockstar's share was down 0.5 a point to 4%. 5-Hour share was lower by 0.4 of 4.5%. And VPX Bang share decreased 0.8 of a points to 7%. According to Nielsen, for the four weeks ended February 12, 2022, sales in dollars in the coffee plus energy drink category, which includes our Java Monster line in the convenience and gas channel increased 2.3% over the same period the previous year. Sales of Java Monster including Java Monster 300 were 4.2% higher in the same period versus the previous year. Sales of Starbucks Energy were 0.7 of a percent higher.
Java Monster's share including Java Monster 300 of the coffee -- plus energy category, which primarily includes Java Monster, Java Monster 300, Starbucks Doubleshot and Tripleshot, Rockstar Roasted and Bang Keto Coffee. For the four weeks ended February 12, 2021, was 53.7%, up one point, while Starbucks Energy share was 44.1%, down 0.7 of a point. According to Nielsen, in all measured channels in Canada, for the 12 weeks ended January 29, 2022, the energy drink category increased 12.3% in dollars. Sales of the company's energy drink brands increased 10.8% versus a year ago. The market share of the company's energy drink brands was 40.8%, down 0.6 of a point. Monster sales increased 13.9% and its market share increased to 0.5 points to 36.3%. NOS's sales decreased 7.2% and its market share decreased 0.3 point to 1.6%. Full Throttle sales decreased 25.4% and its market share decreased 0.3 of 0.25%.
According to Nielsen, for all outlets combined in Mexico, the energy drink category increased 25.9% for the month of January 2022. Monster sales increased 24.5%. Monster's market share in value decreased 0.3 points to 27.8% against the comparable period the previous year. Sales of Predator increased 38.3% and its market share increased 0.3 of a share point to 3.1%. 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 the 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 January 2022 compared to January 2021, Monster's retail market share in value increased in Argentina from 41.3% to 43.8%. Monster Energy continues to be the leading energy brand in value in Argentina. According to Nielsen, for the month of January 2022 compared to January 2021, Monster's retail market share in value increased in Brazil from 32.2% to 37.8%. In Chile, Monster's retail share for the month of January 2022 decreased from 47.2% to 33.1%, due to a shortage of shipping containers. 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. In addition, the company experienced supply issues in EMEA during 2021, which impacted the Nielsen statistics in different countries. According to Nielsen, in the 13-week period ending January 29, 2022,
Monster's retail market share in value as compared to the same period the previous year grew from 27.3% to 29.5% in Great Britain, from 7.9% to 8.1% in the Netherlands and from 36.8% to 38.4% in Spain. Monster's retail market share in value as compared to the same period the previous year declined from 15.3% to 14.2% in Belgium and from 31.1% to 30.3% in France, and from 20.1% to 19.3% in Poland. According to Nielsen, in the 13-week period ending January 2, 2022, Monster's retail market share in value as compared to the same period the previous year grew from 26.4% to 26.5% in Denmark from 15.1% to 15.8% in Germany and from 14.5% to 14.6% in Sweden. Whilst the retail market share in value as compared to the same period the previous year declined 27.9% to 27% in the Italy, from 29.3% to 25.3% in Norway, and from 28.3% to 27.6% in the Republic of Ireland.
According to Nielsen for the 13-week period ending December 31, 2021, Monster's retail market share in value as compared to the same period the previous year grew from 15.2% to 15. 6% in the Czech Republic, from 37.4% to 38% in Greece and from 20.4% to 20.5% in South Africa. According to Nielsen, in the 13-week period until the end of December 2021, Predators retail market share in value as compared to the same period the previous year grew from 12.9% to 20. 8% in Kenya and from 1.9% to 14. 4% in Nigeria. According to IRI in Australia, Monster's market share in value for the month ending February 6, 2022, increased from 12.2% to 12.8% as compared to the same period the previous year.
Monster's market share in value decreased from 11.8% to 11% during the same period. The market share of the company's brands in Australia for the month ended February 6, 2022, decreased from 24% to 23.8%. According to IRI in New Zealand, Monster's market share in value for the 4 weeks ended February 6, 2022. Increase from 11.6% to 13.35% as compared to the same period the previous year. Live+ market share in value remained the same at 7.1% and Monster's market share in value decreased from 6.3% to 6%. The market share of the company's brands in New Zealand for the four weeks ended February 6, 2022, increased from 25% to 26.4%. According to INTAGE in Japan, for the month ended January 2022, Monster's market share in value in the convenience store channel as compared to the same period the previous year grew from 50.8% to 56.3%.
According to Nielsen, in South Korea for the month of December -- ended December 2021, Monster's market share in value in all outlets combined as compared to the same period the previous year, grew from 56.5% to 60.2%. Monster continues to be the leading energy brand in Japan and South Korea. 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 those periods. Net sales to customers outside the US were $508.1 million, which is 35.7% of total net sales in the 2021 fourth quarter compared to $384.8 million or 32.2% of total net sales in the corresponding quarter in 2020. Foreign currency exchange rates had a negative impact on net sales in US dollars by approximately $2.4 million in the 2021 fourth 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 and their customers overseas.
In EMEA, net sales in the 2021 fourth quarter increased 47.5% in dollars and increased 46.1% in local currencies over the same period in 2020. Net sales adjusted for the 2020 product returns in this region increased 41.2% in dollars and increased 39.9% in local currencies. Gross profit in this region as a percentage of net sales for the fourth quarter was 32.6% compared to 30.2% in the same quarter in 2020. Gross profit in the fourth quarter was impacted by can freight and raw material airfreight costs. In local currencies, gross profit as a percentage of net sales for the quarter was 32.2%. Gross profit as a percentage of net sales, excluding the impact of the 2020 product returns in this region associated inventory provisions and other related costs was 40.1% for the 2020 fourth quarter. In 2021 fourth quarter, can supply shortages, lack of ingredient availability, it's sufficient canning capacity and a shortage of trucking availability together had an adverse impact on sales in EMEA.
In some cases, impacting the availability of our products on shelf at retailers. However, the shortages of trucking availability will largely resolve in the latter part of the quarter. The company is continuing to address the controllable challenges in its supply chain in EMEA by continuing to import cans and expanding its co-packing capacity. We are also pleased that in the 2021 fourth quarter, Monster gained market share in the Czech Republic, Denmark, Germany, Great Britain, Greece, the Netherlands, South Africa, Spain and Sweden. In Asia Pacific, net sales in the 2021 fourth quarter increased 19.2% in dollars and increased 22.8% in local currencies over the same period in 2020. In Asia Pacific, excluding the impact of the 2020 product returns and the labeling issue in this region in the 2020 fourth quarter, net sales in the 2021 fourth quarter increased 10.7% in dollars and 14.1% in local currency over the same period in 2020.
Gross profit in this region as a percentage of net sales was 41.4% versus 34.8% over the same period in 2020. Excluding the impact of the 2020 product returns in this region, associated inventory provisions and related costs, gross profit as a percentage of net sales would have been 40.3% in 2020. In Japan, net sales in the 2021 fourth quarter increased 12.7% in dollars and 20% in local currency. Without the impact of the 2020, product returns in Japan net sales decreased 1.2% in dollars and increased 5.2% in local currency over the same period in 2020, largely due to COVID-19 restrictions in Japan. In South Korea, net sales increased 31.3% in dollars and 35.5% in local currency, as compared to the same quarter in 2020. Monster remains the market leader in Japan and South Korea. In China, net sales increased 22.6% in dollars and 17.6% in local currency, as compared to the same quarter in 2020.
We are reevaluating the optimal product range for China going forward. We remain optimistic about the prospects for the Monster brand in China.In Oceania, which includes Australia, New Zealand, Tahiti, French Polynesia, New Caledonia, Papua New Guinea and Guam, net sales increased 7.5% in dollars and 4.8% in local currencies due to timing of sales into bottlers. In Latin America, which includes Mexico and the Caribbean, net sales in the 2021 fourth quarter increased 17% in dollars and increased 21% -- 21.6% in local currencies over the same period in 2020. Gross profit in this region as a percentage of net sales was 38.6% for both the 2021 and 2020 fourth quarters. In Brazil, net sales in the 2021 fourth quarter increased by 36.9% in dollars and 39.6% in local currency. Net sales in Chile increased 6% in dollars and 9% in local currency in the 2021 fourth quarter. Net sales in Argentina increased 30.7% in dollars and 66.7% in local currency in the 2021 fourth quarter.
There are a number of pending proceedings with VPX, but as they are subjudicate, we will not be answering any questions on this matter on today's call. In the United States, we launched our new True North Pure Energy Seltzer line in e-commerce and selected natural channels in the third quarter. In early 2022, we launched this said line nationally into mainstream channels with our Coca-Cola bottlers. In October 2021, we commenced the launch of our new reserve line of Monster Energy drinks in two flavors, Watermelon and White Pineapple. We have launched multiple innovation SKUs, two new 12-ounce flavors as well as new package configurations in the 2022 first quarter. This month, we launched four new flavor extensions in 16-ounce cans to the retail trade, namely Ultra Peachy Keen, Juice Monster Aussie Star Lemonade, Rehab Watermelon and Reignbow Sherbet. In January 2022, we launched additional multi-pack options, such as four-pack, Ultra Watermelon, a four-pack Reign White Gummy Bear, two Ultra Variety packages in a 12-pack format.
Additionally, we have launched 12-ounce six packs of Monster Energy, Zero Ultra, our new Peachy Keen Ultra, Java Monster Mean Bean and Java Monster Loca Moca, Ultra Peachy Keen is also launching in a 12-ounce option along with our Ultra Watermelon. In addition, Java Monster Nitro Cold Brew is scheduled to launch in the 2022 second quarter with two lower-calorie SKUs, Sweet Black and Latte. In the 2022 first quarter in Canada, we are planning to launch nine new innovations, including the transition into a 355 ml eight-pack for Monster Energy, Zero-Ultra and Ultra Predators. In January 2022, we launched Ultra Gold in a 473 ml single can and 4-pack. We also launched Ultra Watermelon in a 4-pack and Ultra Paradise in a 710 ml can. We are in the process of launching a 4-pack Reign of Raspberry as well as introducing Reign White Gummy Bear in a 473 ml can.
In the 2021 fourth quarter, we launched Monster Energy Mango Loco in Uruguay and Ecuador as well as Monster and Predator Gold Strike in Trinidad. In Honduras, we expanded our Fury package offerings with the 355 ml returnable glass bottle. We are planning a national launch of Monster Pacific Punch, Monster Dragon Tea Peach, Reign, Orange Dreamsicle and Reign Mango Magic in Brazil in the first half of 2022. Additional 2022 first quarter LatAm innovations, include Monster Zero Sugar in Ecuador, Pipeline Punch in Central America and Trinidad Monster Mango Loco in Peru and Colombia and VR46, the doctor in Argentina. In Chile, we are launching Reign Melon Mania, Reign Lemon Heads and Reign Orange Dreamsicle. In Mexico, we will introduce our second predator flavor with Predator Mean Green.
In the 2021 fourth quarter in New Zealand, we launched Monster Ultra Fiesta Mango. In the 2022 first quarter, we launched Monster Ultra Gold and Mother Kiwi Sublime in Australia and are planning to launch Super Fuel Tropical Thunder in New Zealand. In EMEA, in the fourth quarter of 2021, we launched Monster Green, Monster Nitro and Monster Result in a number of countries. We also launched Ultra Watermelon, Golden Paradise and Juice Monarch Mango Loca and Pacific Punch in a number of countries during the 2021 fourth quarter. Monster Super Fuel Mean Green Watermelon and Subzero were launched in two countries in the fourth quarter of 2021. During the 2021 fourth quarter and 2022 first quarter, we also launched our strategic Brands innovation and Predator in additional countries.
In particular, we launched our Predator Spicy Ginger and Tropical in South Africa. During the fourth quarter of 2021, we launched Monster Rose in Japan in October, and the Predator brand in Vietnam in November 2021. We are planning to introduce the Predator brand in several additional countries in APAC in the course of 2022. We are planning to launch a number of additional products or product lines in our domestic and international markets later this year. On February 17, 2022, we completed our acquisition of CANarchy Craft Brewery Collective, a craft beer and hard sales for company for $330 million in cash subject to adjustments. The transaction brings the Cigar City, Highly IPA and Floridian Man IPI, Oscar Blues, Dale's Pale Ale and Wild Basin Hard Seltzer, Deep Ellum, Dallas Blond and Deep Llama, Perm Brewing, Black Ale, Squatters, Hopising, IPA and CIPA and Wassa, Apricot Hefeweizen brands to our beverage portfolio.
The transaction does not include Canary stand-alone restaurants. Our organizational structure for our existing energy beverage business will remain unchanged. CANarchy will function independently, retaining its own organizational structure and team. We are enthusiastic about the opportunities that this acquisition presents to us in the alcohol space and through their distribution network. We estimate January 2022 sales to be approximately 20.2% higher than in January 2021. On a foreign currency adjusted basis, January 2022 sales would have been approximately 23% higher than the comparable January 2021 sales. January 2022 had one more selling day than January 2021. Although we see some improvement, the company has continued to experience supply chain challenges in January, which adversely impacted sales.
In this regard, we caution again that sales over a short period are often disproportionately impacted by various factors, such as, for example, selling days, days of the week in which holidays fall, timing of new product launches and the timing of price increases and promotions in retail stores, distributor incentives as well as shifts in the timing of production in some instances where our bottlers are responsible for production and unilaterally determine their production schedules, which affects the dates on which we invoice such bottlers as well as inventory levels maintained by our distribution partners, which they alter unilaterally for their own business reasons. We reiterate that sales over a short period, such as a single month, should not necessarily be imputed to or regarded as indicative of results for a full quarter or any future period. If the COVID-19 pandemic and related unfavorable economic conditions continue in certain regions, our new product innovation launches in those regions could be delayed. In conclusion, I'd like to summarize some recent positive points. Currently, the company's flavor manufacturing facilities, its co-packers, warehouses and shipment facilities and bottlers and distributors are all operating.
The company continues to address the challenges in its supply chain as it navigates through the uncertainty of the current global supply chain environment. We are continuing to experience increased costs in our operations, some of which may be transitory, and we have and are in the process of implementing reductions in promotions and other pricing actions in the United States and EMEA to mitigate against such increased costs. Our AFF flavor facility in Ireland is operational and is providing flavors to our EMEA region and will improve service levels in EMEA. We are pleased with the new additions to the Monster Energy portfolio. We are planning to continue additional launches of our Reign Total Body Fuel high-performance energy drinks in additional international countries. We are pleased with the rollout of Predator and Fury, our affordable energy drink portfolio internationally. We are proceeding with plans to launch our affordable energy brands in a number of international countries. Our supply chain challenges are improving. We are enthusiastic about the opportunities that CANarchy presents.
I would like to now open the floor to questions about the quarter and the year. Thank you.
