Coca-Cola wants to make a Coke-branded energy drink — and the idea isn’t sitting well with Monster Beverage.Shares of Monster — whose biggest investor is Coke — tumbled as much as 11 percent Thursday after Monster Chief Executive Rodney Sacks revealed in a late-Wednesday earnings call that Coke planned to launch two new energy drinks of its own.
Sacks argues that the move violates a 2015 partnership struck between the companies, in which Coke took a 17 percent stake in Monster and agreed to distribute the company’s energy drinks worldwide.
Coke reportedly plans to launch “Coca-Cola Energy” and a diet version called “Coca-Cola Energy No Sugar,” which would contain caffeine from naturally derived sources and guarana extract.
Monster contends that while the companies’ partnership allows Coke to modify the ingredients of its products by adding vitamins or increasing their caffeine content, it doesn’t allow the Coke brand to launch products “positioned as an energy drink,” Sacks told analysts.
The CEO added that Coke agreed to delay the launch of Monster’s potential rivals until April 2019, while both companies await the results of arbitration proceedings that began a week ago.
“Nothing has changed in the relationship, and the manner in which this situation will be dealt with will be conducted from both parties on a civil basis,” Sacks said during the call.