Under their proposed "strategic partnership", Coca-Cola will pay $2.15bn for a 16.7% stake in Monster, which will assume control of Coke's energy brands including NOS, Burn and Full Throttle and gain access to Coke's international distribution network; while Monster will transfer its non-energy brands such as Peace Tea and Hubert's Lemonade to Coca-Cola.
Euromonitor International beverages analyst Jonas Feliciano told FoodNavigator-USA: “I think this is a brilliant move from Coca-Cola.
“It’s like the Keurig deal [Coke recently took an equity stake in Keurig Green Mountain, with whom it is developing the Keurig ‘Cold’ platform]. Maybe they limit their revenue [vs what could be achieved by a straight takeover], but getting a 17% share while divesting its own energy brands hedges Coke against any future energy backlash, so it’s a smart move.”
Monster’s success rate for new products is well above the industry norm
What stood out about Monster was its success at generating brand extensions and new product concepts in a market where the vast majority of new products fail, said Feliciano, noting that Coke had had real success in the energy market (its brands generated net sales of $330m in 2013 from 20 countries) but had not gained the traction of Monster or Red Bull.