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Coca-Cola proposes energy drinks in clash with Monster Beverage

By Reuters | Published Fri, November 9th 2018 at 12:34, Updated November 9th 2018 at 12:42 GMT +3
Coca-cola cans on display. [Photo: Reuters]

Coca-Cola is planning to launch a range of energy drinks for the first time on its own brand name as it intensifies efforts to break away from its traditional fizzy sodas and shift to health-focused trends.

The company on Thursday told Reuters it was working on plans to launch new drinks which would be branded “Coca-Cola Energy” and “Coca-Cola Energy No Sugar” and made with naturally-derived caffeine and guarana extract.

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Coke has previously taken a cautious approach to energy drinks as they are wrought with controversy in both the United States and international markets after some drinks were linked to deaths in young people.

The company initially took a nearly 17 percent stake in energy drinks maker Monster Beverage Corp in 2015, making Coke the largest shareholder, to sample at a distance the market in which it had a small presence with its NOS and Full throttle brands.

However, the partnership has turned rocky with Coke currently in arbitration with Monster Beverage over the launch of the Coke energy drinks, as it would put it in direct competition with Monster and violate their initial 2015 agreement.

“We have submitted the difference in interpretation to an arbitration panel for resolution, which is the mechanism agreed by the Coca-Cola Co and Monster in the original agreements,” a Coca-Cola spokesperson said.

Analysts, however, were skeptical whether consumers would take to Coke’s energy drinks under a brand mainly associated with fizzy sodas.

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“While Coca-Cola certainly has the distribution muscle to push new offerings, we question the fit of an energy drink under the Coca-Cola trademark,” Cowen & Co analyst Vivien Azer said.

Stifel analyst Mark Astrachan said he did not think Coke’s new line of beverages would gain meaningful market share as consumers of energy drinks opt for something edgier.

Astrachan said Coca-Cola may be using the launch to enhance the consumption of trademark Coke drinks rather than materially change its relationship with Monster that is currently worth about USD6 billion.

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Monster shares fell 10 percent on Thursday after it revealed that it was in arbitration with Coke, while Coca-Cola shares were down marginally at USD49.27.

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