Rodney C.Sacks
Co-CEO at Monster Beverage
Thanks, Tom. The company achieved record first-quarter net sales of $1.7 billion in the 2023 first quarter, 7.9% higher than net sales of $1.52 billion in the 2022 comparable period and 15.3% higher on a foreign currency adjusted basis, gross profit as a percentage of net sales for the 2023 first quarter was 52.8% compared with 51.1% in the comparative 2022 first-quarter. The increase in gross profit as a percentage of net sales for the 2023 first quarter as compared to the 2022 first quarter was primarily the result of pricing actions, decreased freight-in costs and decreased aluminum can cross.
Gross profit as a percentage of net sales increased on a sequential quarterly basis to 52.8% in the 2023 first quarter, from 51.8% in the 2022 fourth quarter and 51.3% in the 2022 third quarter. Gross profit as a percentage of net sales excluding gross profit for the Company's Alcohol Brands segment increased on a sequential quarterly basis to 53.6% in the 2023 first quarter from 52.5% in the 2022 fourth quarter and 51.9% in the 2022 third quarter. The depletion of our remaining higher-cost imported cans inventories will continue over the next few quarters, which should be fully utilized during 2023.
Operating expenses for the 2023 first quarter were $412.8 million compared to $377.2 million in the 2022 first quarter. As a percentage of net sales, operating expenses for the 2023 first quarter were 24.3% compared with 24.8% in the 2022 first quarter. Distribution expenses for the 2023 first quarter decreased to $760.3 million, or 4.5% of net sales compared to $81.4 million or 5.4% of net sales in the 2022 first quarter. The $5.1 million decrease in distribution expenses was primarily due to decreased freight-out expenses of $15.7 million, partially offset by higher warehouse expenses of $9.9 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 now purchasing aluminum cans from local sources globally. We have rebuilt finished product inventory levels globally to return to our orbit strategy of producing in closer proximity to our customers. The cost of repositioning to finished products to distribution centers are included in freight-in costs. The Company continues to address the challenges in its supply chain as it navigates through the uncertainty of the current global supply chain environment.
Operating income for the 2023 first quarter increased 21.4% to $485.1 million from $399.5 million in the 2022 comparative quarter. The effective tax rate for the 2023 first quarter was 20.1% compared to 25% in the 2022 first quarter. The decrease in the effective tax rate was primarily attributable to the increase in the stock compensation deduction in the 2023 first quarter. Net income increased 35.1%, to $397.4 million, as compared to $294.2 million in the 2022 comparable quarter. Diluted earnings per share for the 2023 first quarter increased 36.6% to $0.38 from $0.27 in the first quarter of 2022.
Due to continued cost pressures, the Company implemented pricing actions in the United States in 2022, as well as in many other international markets in 2022 and in the first quarter of 2023. The Company plans to implement additional price 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 lines, effective April 1, 2023. We will continue to review further opportunities for pricing actions in order to mitigate inflationary pressures.
According to the Nielsen reports for the 13 weeks through April 22, 2023, all outlets combined, namely convenience, grocery, drug, mass merchandisers, sales in dollars in the energy drink category including energy shots increased by 12.7% versus the same period a year ago. Sales of the Company's energy brands including Reign were up 10.5% in the 13-week period. Sales of Monster were up 9.5%, sales of Reign were up 24.1%, sales of NOS increased 14.1% and sales of Full Throttle increased 5.5%. Sales of Red Bull increased 10.6%, sales of Rockstar increased by 3.7% and sales of 5-Hour decreased 4.1%. VPX Bang's sales decreased 55.5%.
The Company continues to have market-share leadership in the energy drink category all outlets combined in the United States in both the 13-week and 14-week period ended April 22, 2023. According to Nielsen, for the four weeks ended April 22, 2023, $1,000 in the energy drink category in the convenience and gas channel including energy shots in dollars increased12.7% over the same period the previous year. Sales of the Company's energy brands, which include Reign increased 11% in the four-week period in the convenience and gas channel. Sales of Monster increased by 9.3% over the same period, versus the previous year, Reign sales increased 37.8%, NOS's was up 8.8% and Full Throttle was up 11.7%. Sales of Red Bull were up 9.8%, Rockstar was up 5.4% and 5-Hour was down 5.8%. VPX Bang sales decreased 59.5%.
According to Nielsen for the four weeks ended April 22, 2023, the Company's market share of the energy drink category in the convenience and gas channel including energy shots in dollars decreased from 37.5%, to 36.9%, Monster share decreased from 31.6% a year ago to 30.6%, Reign's share increased 0.5 share points to 2.9%, NOS's share remained at 2.6 and Full Throttle share remained at 0.7 of a percent. Red Bull share decreased 0.9 points, from 35.2% a year ago to 34.3%. VPX Bang's share decreased 4.2 points to 2.4%, 5-Hour share was lower by 0.7 points at 3.7% Rockstar's share was down 0.2 of a point to 3.4%. CELSIUS' share is 5.4%, C4 share is 2.8% and GHOST's share is 2.9%.
According to Nielsen for the four weeks ended April the 22, 2023, sales in dollars of the coffee plus energy drink category, which includes our Java Monster line in the convenience and gas channel increased 0.8 of a percent over the same period the previous year. Sales of Java Monster including Java Monster 300 and Java Monster Nitro Cold Brew were 0.67% higher the same period of the previous year. Sales of Starbucks Energy were 4.7% higher. Java Monster share of the coffee plus energy drink category for the four weeks ended April 22, 2023 was 55.1%, down 0.1 of a point, while Starbucks Energy share was 44.5%, up 1.6 points.
According to Nielsen in all measured channels in Canada for the 12 weeks ended March 25, 2023, the energy drink category increased 14.7% in dollars. Sales of the Company's energy drink brands increased 19.5% versus a year ago. Market share of the Company's energy drink brands was 43.1%, up 1.7 points. Monster sales increased 19.7% and its market share increased 1.6 points to 38.6 nausea, NOS's sales increased 4.2% and its market share decreased by 0.1 of a point to 1.3%, Full Throttle sales decreased 8.4% and its market share decreased 0.1 of a point 2.4%.
According to Nielsen for all outlets combined in Mexico, the energy drink category increased 17.8% for the month of March 2023, Monster sales increased 24.8%, Monster's market share in value increased 1.7 points to 30% against the comparable period the previous year. Sales of Predator increased 71.3% and its market share increased 1.7 share points to 5.4%. 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 March 2023, compared to March 2022, Monster's retail market share in value increased in Argentina. 53.5% and in Chile from 36.4% to 42.7%, in Brazil for the month-end, March 2023, our share increased from 42.1% to 43.9%. 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 the end of March 2023, Monster's retail market share in value as compared to the same period the previous year, grew from 14.8% to 15.8% in Belgium, from 18.3% to 20.9% in the Czech Republic, from 32.4% to 33.4% in France, from 15% to 16.6% in Germany, from 29.3% to 30.9% in Great Britain, from 28.2% to 34.4% in Italy, from 29.7% to 34.6% in Norway, from 27.9% to 28.7% in the Republic of Ireland, from 38.2% to 39.9% in Spain and from 15.9% to 18.1% in Sweden. Monster's retail market share in value as compared to the same period the previous year declined from 7.8% to 4.7% in the Netherlands, from 21.2% to 19.2% in Poland, and from 20.1% to 19% in South Africa.
According to Nielsen, in the 13-week period until the end of February 2023, Monster's retail market share in value as compared to the same period of the previous year. Increased from 27.7% -- 27% to 27.7% in Denmark, Monster's retail market share in value as compared to the same period the previous year declined from 38.3% to 36.5% increase. According to Nielsen, in the 13-week period until the end of February 2023, Predator's retail market share in value as compared to the same period of the previous year, grew from 23% to 31% in Kenya and from 14.7% to 19.5% in Nigeria.
According to IRI in Australia. Monster's market share in value for the four weeks ending April 9, 2023 increased from 13.5% to 16.6%, as compared to the same period the previous year, Mother's market share in value increased from 10.3% percent to 10.7%. According to IRI in New Zealand, Monster's market share in value for the four weeks ended April 16,, 2023, increased from 12.9% to 14.6% compared to the same period the previous year. Live+'s market-share in value increased from 6.1% to 6.2% and Mother's market share in value decreased from 5.7% to 5.1%.
According to INTAGE in Japan, in the month ending March 2023, Monster's market-share in value in the convenience store channel as compared to the same period the previous year, grew from 52.5% to 52, 7%. According to Nielsen in South Korea, in the month of ending March 2023, Monster's market share in value in all outlets combined, as compared to the same period the previous year decreased from 59.4% to 56.8%. 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 U.S. were $622.9 million, 36.7% of total net sales in the 2023 first quarter compared to 553.4 million or 36.4% 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 $52 million in the 2023 first 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 2023 first quarter increased 5.7% in dollars and increased 14.8% in local currencies over the same period in 2022, Gross profit in this region as a percentage of net sales for the first quarter was 30.7% compared to 29.6% in the same quarter in 2022. We also pleased that in the 2023 first quarter. Monster gained market share in Belgium, the Czech Republic, Denmark, France, Germany, Great Britain, Italy, Norway Republic of Ireland, Spain and Sweden.
In Asia-Pacific, net sales in the 2023 first quarter increased 11.6% in dollars and increased 22.8% in local currencies over the same period in 2022, Gross profit in this region as a percentage of net sales was 44.4%, versus 40.9% over the same period in 2022, Net sales in Japan in the 2023 first quarter decreased 12% in dollars, but increased 1.8% in local currency. In South Korea, Net sales increased 4.3% in dollars and increased 11.4% 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 first quarter increased 68.3% in dollars and increased 81.7% in local currency as compared to the same quarter in 2022. We remain optimistic about the prospects for the Monster brand in China.
In Oceana, which includes Australia, New Zealand, Tahiti, French Polynesia, New Caledonia, Papua New Guinea and Guam, net sales increased 46.9% in dollars and 53.8% in local currencies. In Latin America, including Mexico and the Caribbean, net sales in the 2022 fourth quarter increased 30.8% in dollars and increased 40.4% in local currencies over the same period in 2022. Gross profit in this region as a percentage of net sales was 33% for the 2023 first quarter, versus is 35.4% in 2022 first quarter. We note that gross profit in the region was adversely affected by a fire at a warehouse in Chile. We are implementing measures to improve gross profit in this region, despite such challenges in Chile and continuing challenges with importing raw materials in Argentina.
In Brazil, net sales in the 2020 first quarter increased by 28.5% in dollars and 22.5% in local currency. Net sales in Mexico increased 31.9% in dollars and 21.4% in local currency in the 2023 first quarter. Net sales in Chile increased 36.3% in dollars and increased 36% in local currency in the 2023 first quarter, net sales in Argentina increased 13% in dollars and increased 98.8% in local currency in the 2023 first quarter.
I will now provide an update on our litigation with Vital Pharmaceuticals, which will be referred to as VPX the maker of Bang's 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 Bang Inc, $175 million in damages attorney's fees and costs and an ongoing 5% royalty on future sales of Bang Energy product. VPX has appealed adjustment.
Additionally, on September 29, 2022 the Jury in ury in the United States District Court for the Central District of California returned a verdict awarding MEC approximately $293 million in damages on its claims against VPX for false advertising, misappropriation of trade secrets and interference with Monster's contracts over shelf space with certain key retailers.
On April 12, 2023, the District Court granted MEC's for permanent injunction, which amongst other things joins VPX and former CEO, Jack Owoc from fastly or deceptively claiming that bank or any other beverages contain creatine or a form of creatine. The parties have completed briefing the remaining post-trial issues.
On October 12, 2022 VPX along with certain of its domestic subsidiaries and affiliates filed for protection under Chapter 11 of the bankruptcy code in the Southern District of Florida. While those proceedings are moving forward, VPX is undertaken to make interim royalty payments, subject to potential clawback in certain circumstances. On February 14,, 2023 VPX made its first royalty payment in the amount of approximately $3.6 million. The Company will not recognize either award or the royalty payments, until such time as they are realized or realizable. As this litigation of the bankruptcy proceedings are subdued okay. We will not be onstream further questions on those matters on today's call.
In the first quarter. We initially launched The Beast Unleashed in six states through a network of peer distributors. We are pleased with the early results and are continuing to expand distribution into additional markets with the goal of being national by the end of the year. Net sales if The Beast Unleashed during the first quarter were $20.5 million. We recently relaunched Wild Basin Hard Seltzer with new packaging and great new flavors and taste profiles. We are refreshing the Dale's Beer brand and we'll be introducing Dale's American Light Lager as part of the refresh. We are planning to launch a new flavored malt beverage line within the next few months. Our alcohol beverage innovation pipeline is robust. We look forward to sharing use of additional new products in the near future.
We launched a number of new products in the United States in the 2023 first quarter. In January 2023, Monster Energy Zero Sugar was launched at retail Monster Energy Zero Sugar is available in 16-ounce cans and was specifically developed as an indistinguishable zero-sugar analog of our original unique Monster Energy Green Flavor. In February 2023, we launched a new flavor within hottest Monster Ultra line with Monster Energy Ultra Strawberry Dreams available in 16-ounce cans. In March 2023, we launched Reign Storm, which has positioned us a line of total wellness energy drinks in 12-ounce sleek cans to address a compelling opportunity in the energy drink category. Reign Storm available in four flavors, Valencia Orange, Kiwi Blend., Peach Nectarine and Harvest Grape.
Also in March, we launched Rehab Monster Wild Berry Tea in 16-ounce cans. We are continuing to expand the distribution of Monster Tour Water in still and sparkling variants into additional states.
We launched several new SKUs In the first quarter in 2023 in Canada. In February 2023, we launched Monster Ultra Peechy Keen, Punch, Monster Aussie Star Lemonade and Reign Rainbow Sherbert. In March 2023, we launched Monster Zero Sugar in Canada.
We launched several new SKUs in the 2023 first quarter in Latin-America. In Brazil, we launched Monster Ultra Watermelon. Additionally, we revamped our previous Chaos product in a new Monster Juice Chaotic in Mexico Predator Red Apple launched at retail to further expand our affordable energy offerings.
In Uruguay, we launched our second Ultra SKUs Monster Ultra Paradise in Paraguay and Bolivia, we launched our first Juice SKU with Monster Juice Mango Loco. And additionally, in Bolivia, we launched Fury Gold Strike. First quarter of 2023 in Australia, we launched two Java Monster SKUs. Java Monster Mean Bean and Java Monster Loca Moca.
In EMEA in the first quarter of 2023, we launched Monster Reserve Watermelon, Ultra gold, Ultra Rosa, Ultra Watermelon, Juicy Aussie Lemonade and Juiced Chaotic in a number of countries. During the 2023 first quarter, we also launched additional SKUs of Burn Predator and Reign in certain countries. In EMEA, as part of ongoing pan-EMEA launch, we expanded the distribution of our Monster Energy Lewis Hamilton 440 Sugar energy drink to an additional 22 EMEA markets in the first quarter of 2023, to be followed by another eight markets in the second quarter of 2023.
During the first quarter of 2023, we launched Monster Ultra Paradise in China, Taiwan and Hong Kong. In April 2023, we launched Monster Reserve Watermelon in Japan. We are planning to introduce the Predator brand in additional countries in APAC in the course of 2023. We estimate that on a foreign currency adjusted basis, including the Alcohol Brands segment, April 2023 sales were approximately 9.9% higher than the comparable April 22 sales and 7.9% higher than April 2022, excluding the Alcohol Brands segment. We estimate April 2023 sales including the Alcohol Brands segment to be approximately 7.2% higher than in April 2022 and 5.1% higher than in April 2022, excluding the Alcohol Brands segment. April 2023 had one less selling day compared to April 2022.
With 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, our bottlers are responsible for production and determine their own production schedules. This affects the dates on which we invoice such bottlers. Furthermore, our bottling and distribution partners maintain inventory levels according to their own internal requirements, which they may alter from time-to-time 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.
In conclusion. I would like to summarize some recent positive points. One, the Energy category continues to grow globally; two, we are pleased to report that our pricing actions which have been implemented to partially mitigate inflationary pressures have not significantly impacted consumer demand; three, we are seeing improvements in our gross profit margins on a quarterly sequential basis; four, our AFF flavor facility in Ireland is now providing a large number of flavors to our EMEA region, enabling better service levels and lower landed costs to our EMEA region; five, we are enthusiastic for our 2023 new product innovations, notably, Monster Energy Zero Sugar Ultra Strawberry Dreams, Reign Storm and Tour Water in the United States and Monster Energy Lewis Hamilton 440 sugar in EMEA. We are pleased with the early results from the launch of the Beast Unleashed. We are continuing to expand distribution with the goal of being national by the end of the year. We are excited by the additional alcohol opportunities that the CANarchy acquisition presents.
We are pleased with the initial results of our launch of Reign Storm our new line of total wellness energy drinks. Finally, 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 an additional number of international countries.
I would now like to open the floor to questions about the quarter.
