Coca-Cola offers energy drinks in conflict with Monster Beverage

(Reuters) – Coca-Cola Co (KO.N) is considering launching a range of energy drinks under its own brand for the first time, while it is redoubling its efforts to break with its traditional fizzy sodas and adopt new trends focused on health.

The company announced on Thursday to Reuters that it was planning to launch new drinks dubbed "Coca-Cola Energy" and "Coca-Cola Energy No Sugar", based on caffeine and guarana extract, from the company. 39, natural origin.

Coke has already adopted a cautious approach to energy drinks, raising controversy in the United States and international markets after some drinks have been linked to youth deaths.

The company initially took a 17% stake in energy drink maker Monster Beverage Corp. (MNST.O) in 2015, making Coke the largest shareholder, remotely sampling the market on which it was little present with its brands NOS and Full Throttle.

However, the partnership has become difficult with Coke, which is currently in arbitration with Monster Beverage regarding the launch of Coke energy drinks, as this would put it in direct competition with Monster and violate their initial agreement of 2015.

"We have submitted the difference of interpretation to an arbitration group for it to be settled, which is the mechanism agreed by Coca-Cola Co and Monster in the initial agreements," said one spokesperson for Coca-Cola.

However, analysts have wondered whether consumers would adopt Coke's energy drinks under a brand mainly associated with soft drinks.

"While Coca-Cola certainly has the muscle of distribution to offer new offerings, we are wondering about the fit of an energy drink under the Coca-Cola brand," said Vivien Azer, an analyst with Cowen & Co.

Stifel analyst Mark Astrachan said he did not think Coca-Cola's new beverage range would gain significant market share as energy drinkers opt for something more difficult.

Astrachan said Coca-Cola could use the launch to improve brand-name coke-based beverage consumption rather than substantially altering its relationship with Monster, which is currently worth around $ 6 billion.

Monster shares fell 10% Thursday after revealing that they were in arbitration with Coke, while shares of Coca-Cola were down slightly to $ 49.27.