Coca-Cola has bought a $2.15 billion stake in Monster Beverage to begin a partnership with the energy drinks firm.
Coca-Cola has announced it is purchasing a stake in energy drinks company Monster Beverage to effect the start of a new working partnership.
The drinks giant is set to buy a 16.7 per cent stake in Monster in a cash deal worth around $2.15 billion (£1.3 billion).
But the deal does not end there. In fact, Coca-Cola will transfer its global energy drink business to Monster, which will hand over all of its non-energy business in exchange.
That brings Monster back to its roots as a firm that focuses on energy drinks – a fast-growing market that has plenty of potential. Coke has clearly cottoned onto the potential of the segment, and Monster provides it a golden opportunity to expand its reach into that product category.
It may be known for the world’s most recognisable fizzy drink, but Coke has actually been working to expand its market share outside of the soda market for quite some time. More and more health-conscious consumers are either switching away from fizzy drinks in favour of healthier beverages or at least reducing their intake, and sales have been declining as a result.
Caffeine and sugar-heavy energy drinks may not seem like the healthiest of alternatives, but the market is still among those with highest potential for growth than the well-established soda category.
The deal will also work in Monster’s favour, since it gives them access to one of the world’s most advanced and far-reaching distribution chains. That gives the energy drinks brand the infrastructure that it will need to support growth in new global markets.
“At the same time, we become The Coca-Cola Company’s exclusive energy play, with a robust portfolio led by our Monster Energy line and The Coca-Cola Company’s energy brands,” said Monster chairman and chief executive officer in the announcement.
“Our business will be bolstered by The Coca-Cola Company energy brands we will acquire, providing us with complementary energy product offerings in many geographies, as well as access to new channels, including vending and specialty accounts.”
Regulators will still have to approve the move, but it is hoped the deal will be closed early next year.
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