Coca-Cola in fight with Monster over new energy drinks
The Coca-Cola Company (TCCC) announced on Thursday it plans to launch its own Energy drinks under its trademark name.
In an e-mail statement, the soft drinks giant said the new drinks would be called “Coca-Cola Energy” and “Coca-Cola Energy No Sugar.” The company has not said when the drinks would become available in the market.
The announcement signals yet another move by the soft drinks maker to diversify away from its mainstay sugary drinks. The new drinks would likely have caffeine from naturally-derived sources and Guarana extract, the company said. Coca-Cola said it is currently in arbitration with Energy drinks maker, Monster Beverage, in which it holds a 16.75% stake, over its plans to start making Energy drinks. Coca-Cola up until now has been marketing the Monster Energy brand worldwide through its extensive distribution network. Monster said the move by Coke to start making its own Energy drinks violates its agreement with the soft drinks giant.
A spokesperson for Coca-Cola said “We have submitted the difference in interpretation to an arbitration panel for resolution, which is the mechanism agreed by the Coca-Cola Company and Monster in the original agreement.” "While, (Monster's) management declined to provide much detail and doesn't expect the issue to have a material impact on its relationship with (Coca-Cola), we believe this development increases uncertainty around (Monster) and could further suggest that (Coca-Cola) is not as likely to acquire the rest of (Monster,)" Herzog said in a note to clients.
In the meantime, Coca-Cola's new proposed drinks are already doing damage to Monster despite any release being months away. After the news, Monster's shares fell more than 13% on Thursday when it revealed that it was in arbitration with Coca-Cola. For now, a lot is riding on this arbitration ruling for Monster, and a ruling could go a long way in determining its future business relationship with Coca-Cola.
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