As Coca-Cola Co. moves away from soda, the beverage maker is eyeing the energy drink market. The company is looking to roll out beverages that are created with natural guarana extract and caffeine that are said to be called “Coca-Cola Energy No Sugar” and “Coca-Cola Energy,” Reuters reported.
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.