Monster Drinks: Is Coca Cola Looking to Buy Them?By: Sarah Parrott - January 15, 2014
Anyone who has either visited a gas station or been around teenage boys for any length of time in the past ten years is probably familiar with Monster, which is a specific, popular brand of energy drink. The drink has a sort of cult following behind it (often made up of the aforementioned teenage boys), and has become even more popular over the years by inextricably linking itself to the popular Call of Duty video game franchise, as well as building awareness and publicity for young athletes.
Monster’s publicity is not all good, however. The company and its energy drinks have been under fire lately because of allegations that the brand markets to children. This is problematic because the drinks are not particularly healthy; in fact, they are often harmful, and have even proven to be deadly on occasion, as is the case of the incident that lead to the current lawsuit. The lawsuit rests on the accusation that, although Monster drinks are proven to be harmful to “children, pregnant women, and people sensitive to caffeine,” the company still markets its goods to children.
Despite this recent bout of bad publicity, however, there are rumors abounding that Coca-Cola may take steps to acquire Monster Beverage Corp. Rumors such as these are not uncommon, and the two companies have negotiated previously, although nothing was settled upon. The possibility is becoming more and more concrete, however, as Coca-Cola is looking seriously into expanding into the energy drink market.
Monster has seen tremendous growth in its worth since the first talks with Coca-Cola back in 2011, rising from being worth around $11 billion to $16 billion. Although the cost would now be higher, Jack Russo, an analyst at Edward Jones & Co., thinks that it would still be profitable for Coca-Cola to make the purchase. He was quoted as saying, “A transaction like this would give a buyer a huge, huge base in the energy drink category.”
Russo was also careful to warn, however, that lawsuits and other existing problems and stigmas surrounding the energy drink market certainly need to be taken into account. “Certainly any buyer that wants to get into this category has to look at the regulatory environment and see that there are a lot more alarm bells going off about energy drinks,” said Russo. That brings up the question, then, of whether or not Coca-Cola will decide that Monster’s profitability is worth its somewhat infamous stigma.
What do you think? Would it be a good move for Coca-Cola to buy out Monster?
Image via Twitter.