ATLANTA The Coca-Cola Company decided Monday to take a bite (or a gulp, rather) out of Hansen Natural Corporation’s Monster Energy drink brand. Though many predicted Coke would take an equity stake in the company, it instead agreed on a long-term distribution deal that includes Canada, six Western European countries and about half of the United States.
It’s no wonder Coke is reaching out for help, considering it’s own energy drink brand—Full Throttle—showed an 11 percent drop in traded shares in the first half of the year. Energy drink sales are higher than that of many beverage types, but consumers are replacing the major energy drink labels for independent ones. Only Red Bull surpasses Monster’s current sales, and Brandweek named Monster Energy one of its 2007 Marketers of the Year. Rockstar, with whom Coke has already made a similar deal, joins the two brands as the most popular in the energy drink segment but has showed a 0.3 percent volume drop.
“We do believe that CCE is better off with having a growing brand [Monster] in 50 percent of the U.S. versus having a declining brand [Rockstar] in 100 percent of the United States. We also believe that down the road the Coke system could potentially pick up the balance of the United States,” said Morgan Stanley analyst William Pecoriello.
Anheuser-Busch will be distributing Monster throughout areas not included in Coke’s deal.