Yesterday, American franchise Coca-Cola confirmed their purchase of a 16.7% stake in the energy drink Monster beverage.
The stake itself is meant to be worth $2.15 million(£1.3 million), and will become their second caffeine drink based acquisition in the past 6 months after they announced that they would be acquiring the Green Mountain Coffee brand.
What the stake means for Coca-Cola is that they will now hold 2 seats on Monster’s board of directors and that they will get the opportunity to increase their market share in the energy drinks market. Last night, the share prices for Coca-Cola rose by 1.2% after the announcement of the trade, whilst Monster’s surged by a massive 22%.
The investment means that Monster will be able to use Coca-Cola’s dominant distribution system. Monster CEO Rodney C. Sacks stated that the deal “enhanced access to the Coca-Cola Company’s distribution system, the most powerful and extensive system in the world. 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.”
The deal however, is yet to be completed, but is very much expected to be by the end of the year or the beginning of 2015, with both parties being major beneficiaries from it.
The move also highlights Cola-Cola’s realisation that developed economies are now majorly focused on health issues such as obesity and that audiences are not favouring sugar filled drinks as much as they once were, and that this is was having an effect on the sales of their major products.
