* Monster still to prove itself in Europe
* Different markets may require different tactics
* Europe more mature; extreme sports not as big
By Mihir Dalal & Abhishek Takle
BANGALORE, Oct 6 (Reuters) - Monster Energy drink maker Hansen Natural Corp's aggressive drive into Europe could push up the premium any potential bidder such as Coca-Cola Co would pay to snare a global brand in a hot growth sector.
Plenty of 'ifs' remain, though.
There are attractive prospects abroad for U.S.-based Hansen, which is chasing sales from South America to Europe and Asia. Even recession hasn't dulled its thirst for overseas growth.
But replicating the U.S. success of the sugar-and-caffeine heavy Monster drink in so many markets is proving tough for a company that traces its roots back to Hubert Hansen's fresh, natural juices in the 1930s.
"They're going a little faster (in their expansion) than is prudent at this point," said JP Morgan analyst John Faucher. "They've probably bitten off a little more than they can chew."
Hansen has been touted as a potential takeover candidate, and that speculation has been ramped up as Coca-Cola recently bought its distributor Coca-Cola Enterprises (CCE), which also distributes Monster in most of the U.S. and in Western Europe.
"A potential buyer would be willing to pay more for a global brand versus just a U.S.-centric brand," said Gabelli & Co analyst Damian Witkowski.
Longbow Research analyst Alton Stump said Hansen has good shelf space visibility through its CCE ties, but he said his channel checks show actual sales in Europe have not been strong. He estimates the European business has yet to break even.
The European Union's energy drink sector was worth close to $9 billion last year, and could grow at 7-9 percent over the next two years, according to research firm Canadean.
"To a company like Coke, Hansen is worth more on their platform than it is as an independent entity ... so they would probably be willing and able to pay a little bit more than what we think the stock is worth on its own," said Morningstar analyst Philip Gorham.
Hansen shares, valued at a little over $4 billion, have gained almost two-thirds to $47 each since July 2009 -- around 17 times forward earnings -- though the stock is below its $68.40 peak in October 2007.
For comparison, Coca-Cola trades at 15.7 times forward earnings and Pepsico Inc at 14.6 times.
RED RAG TO A RED BULL?
In Europe, Hansen is battling market leader Red Bull on its home turf and is also up against brands like GlaxoSmithKline's Lucozade and Carlsberg's Battery.
Austria's privately held Red Bull -- which had 2009 global sales of 3.27 billion euros ($4.25 billion) -- has led the European market since its 1990s launch and has withstood challenges from heavyweights Coke and Pepsi.
What prospect then for Monster in Europe?
"The jury's still out," said Longbow's Stump, noting the European market is far more mature than the United States was when Monster launched there eight years ago.
"The problem now is that Europe is growing, but only at 10 percent or so, So Hansen has to get the consumer to switch from Red Bull to Monster," he said.
And that could be tough.
Some advised Hansen to focus on denting Red Bull's share in Europe's biggest markets -- the UK, France and Germany -- rather than trying to muscle into all the markets at the same time.
"It's very hard for it to focus on its core Western and Continental European markets when it's expanding to other parts such as Eastern Europe as well," Stump said.
Hansen should also be mindful of potential cultural differences, analysts say, noting that Monster's main target in North America -- extreme sports such as skateboarding -- are far less popular in Europe.
Red Bull promotes itself through its association with higher profile European sports such as motor racing and soccer, where Monster is, to date, less visible.
A signal of intent could be for Hansen to attack Red Bull's dominance in Europe's club scene, where the vodka/Red Bull Vod-Bomb is a popular re-energiser. (Reporting by Mihir Dalal and Abhishek Takle in Bangalore, Editing by Ian Geoghegan)