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The company recently announced plans to add a new beverage, Coca-Cola Energy, to its list of Coca-Cola products. The drink would use guarana extract and other natural ingredients for more caffeine and would also be available in a variety without sugar.
Monster, partner of Coca-Cola's energy drinks, is not happy about the plan. Coca-Cola filed a request for arbitration with Monster to determine whether the new product would violate tThe deal was made when Coca-Cola took a stake in Monster and in the two products traded. Both companies said they appreciated the relationship.
"Coke wants to play wherever he can," said Duane Stanford, editor of Beverage Digest. "When you do that, you will sometimes encounter contractual obstacles."
At the moment, Coca-Cola seems to be turning to energy – with good reason.
The energy sector is one of the fastest growing segments of the beverage industry, said Laurent Grandet, consumer analyst at Guggenheim Securities. And it's very profitable because consumers are used to paying more for energy drinks than soft drinks, he noted.
In addition, some people already drink Coca-Cola for a dose of caffeine. "It's a natural extension of the brand," he said.
Coke recognized the importance of energy drinks when it signed an agreement with Monster in 2014. Once the deal was signed, Coca-Cola transferred energy brands such as Full Throttle, Burn and Mother to Monster. She has also taken over non-energy beverage brands from Monster, including Hansen's Natural Sodas and Hubert's Lemonade. Coca-Cola has also become Monster's preferred distribution partner worldwide. Coca-Cola now holds nearly 18.5% of the company.
But since then, the energy drinks sector has evolved.
"Almost all drink categories are experimenting with the full use of energy components," Stanford said. We "see the fuzzy lines".
By using natural ingredients and taking advantage of its recognizable brand, Coca-Cola could tackle consumers who do not need a Red Bull or Monster drink. In this way, the new drink could serve as a complement rather than competition to Monster.
Coca-Cola said it would "meet our contractual obligations" vis-à-vis Monster once the problem is solved, and a Monster executive told analysts last week that the Coca-Cola-Monster relationship was "good", adding that he "does not" see any change "arising from the disagreement.
Quincey said the acquisition aimed to give access to Costa's many products, such as its coffee vending machines, outlets on the go, its iced coffee ready to drink and the beans from its roaster.
Coca-Cola has also invested in its flagship brand.
For Mr. Stanford, the interest in an energy line is a sign that, according to Coca-Cola, thinks that Coca-Cola still has room to grow. "Coca-Cola is again looking for ways to experiment with its flagship brand," he said.
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