Coke Can Launch Monster Energy Rival, Arbitrator Rules
July 01 2019 - 10:13AM
Dow Jones News
By Dave Sebastian and Jennifer Maloney
Coca-Cola Co. won an arbitration claim against Monster Beverage
Corp., clearing Coca-Cola's way to sell its own energy drink.
Monster had accused Coca-Cola of violating a noncompete
agreement the companies struck in 2015. The two companies filed
their dispute before the American Arbitration Association in
October 2018.
The arbitration ruled Monday that Coca-Cola is able to market
the energy drink, including in areas where it has already been
launched as well as in additional global markets.
Shares of Monster fell 2.7% in premarket trading, while shares
of Coca-Cola were up 0.7%.
In 2015, Coke bought a 16.7% stake in Monster and agreed to
distribute the company's energy drinks in the U.S. and Canada. It
later expanded the agreement to include distribution in other
markets overseas. Coke also transferred ownership of its energy
drinks business, including NOS and Full Throttle, to Monster.
The deal bars the soda giant from distributing competitive
energy drinks but includes an exception for products marketed under
the Coca-Cola brand. The arbitrators ruled June 28 that Coca-Cola
Energy products are an exemption to the noncompete provision, as it
is marketed under the Coca-Cola brand.
"The companies respect the arbitrators' decision and appreciate
that the dispute was resolved amicably," Coca-Cola and Monster said
in a joint statement. "While there was a disagreement between
Coca-Cola and Monster over contractual language, the companies
value their relationship and look forward to their continued
partnership."
A Coca-Cola spokesman declined to comment on the company's plans
to launch the energy drink in the U.S.
The energy drink, as well as its diet version called Coca-Cola
Energy No Sugar, would consist of caffeine from naturally derived
sources and guarana extract.
Write to Jennifer Maloney at jennifer.maloney@wsj.com
(END) Dow Jones Newswires
July 01, 2019 09:58 ET (13:58 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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