Coca-Cola and Monster Resolve Energy Drink Dispute--2nd Update
July 01 2019 - 12:44PM
Dow Jones News
By Dave Sebastian and Jennifer Maloney
Coca-Cola Co. won an arbitration claim against Monster Beverage
Corp., clearing the way for the soda giant to sell an energy
version of Coke.
Monster had tried to stop the rollout of Coca-Cola Energy, which
went on sale last year in Europe. A Coke spokesman declined to
comment on when it may be released in the U.S.
The matter was a delicate one because of the companies' close
relationship. Coke is Monster's distribution partner and a
significant Monster shareholder. The ruling increases pressure on
Monster as competitors take market share with new brands touting
ingredients with health benefits.
Coke's energy drink, and its diet version, Coca-Cola Energy No
Sugar, contain caffeine from naturally derived sources and guarana
extract.
Monster last year accused Coca-Cola of violating a noncompete
agreement the companies struck in 2015, when Coke bought a 16.7%
stake in Monster and agreed to distribute the company's energy
drinks in the U.S. and Canada. They 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 barred the soda giant from distributing competitive
energy drinks but included an exception for products marketed under
the Coca-Cola brand.
The two companies filed their dispute before the American
Arbitration Association in October 2018.
The arbitrators ruled on June 28 that Coke is able to market the
energy drink in areas where it has already been launched, as well
as in additional global markets. Coca-Cola Energy products are an
exemption to the noncompete provision, as they are marketed under
the Coca-Cola brand, the arbitrators decided.
"The companies respect the arbitrators' decision and appreciate
that the dispute was resolved amicably," Coke and Monster said,
jointly announcing the agreement. "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."
Responding to increased competition, Monster in March launched a
new brand called Reign, which contains coenzyme Q10, a dietary
supplement taken for heart health. The company is also considering
an expansion into alcohol and other nonalcoholic drinks, including
cannabis-infused beverages, should they become federally legal,
Monster has said.
Write to Jennifer Maloney at jennifer.maloney@wsj.com
(END) Dow Jones Newswires
July 01, 2019 12:29 ET (16:29 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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