In 2015, Coca-Cola Co. had taken in a stake in Monster Beverage Corp of almost 17 percent. But Coke is reportedly in arbitration with Monster since its new energy drinks would make it a competitor to Monster and reportedly go against the companies’ agreement in 2015.
At the same time, analysts are viewing the energy drink idea critically. Cowen & Co analyst Vivien Azer noted, “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.”
The news comes as a coffeehouse chain acquisition generated a bit of buzz for Coca-Cola in August. At the time it was reported that the company said it will buy Costa, a coffee chain, for $5.1 billion. As part of the deal, Coca-Cola was to take over the 4,000 Costa outlets from the U.K.’s Whitbread, and, as Reuters noted, brings Coca-Cola “into one of the few bright spots” across the packaged food and drinks landscape.
It’s also a recent example of how marquee names need and want to diversify beyond what might be their trademarks. The $5 billion purchase price was $1 billion more than some on the Street had expected, showing that Coke is willing to pay up to compete. The battle, at first glance, seems a bit unequal between participants, as Starbucks has 20,000 locations.
This is not Coke’s first dabbling in coffee beans, either, as the company has a coffee business in Japan, via Georgia Coffee. The global coffee market is one that, beyond actual coffee shops, is growing 6 percent annually, said Reuters.
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