Coke and Monster settle their dispute over Coke’s energy drinks

USA | After months of arbitration due to concerns about Coca-Cola violating its agreement with Monster Beverage Corp, courts have ruled on 1 July 2019 that Coke can sell its brand-name line of energy drinks globally.

Coke is using a loophole in its 2014 agreement with Monster (when Coca-Cola took a 16.7 percent stake in the energy drink company). While the contract prohibits Coke from distributing other firms’ energy drinks, it is free to market products under the Coca-Cola label.

In late 2018 Coca-Cola announced the release of a line of energy drinks, called “Coca-Cola Energy” and “Coca-Cola Energy No Sugar”. The firm immediately filed for arbitration against Monster to see whether the new products would breach their contract. In April 2019, Coke began selling these drinks in Spain and Hungary, indicating a conviction that it would win at arbitration. 

It is no surprise that Coke has been eying up the energy drink category. In the US, it is sizeable, with sustained growth of 4 percent to 5 percent annually forecasted through 2022. What is more, as consumers turn away from soft drinks, Coca-Cola has been keen on diversifying its portfolio.

Media say that Coca-Cola Energy only uses ingredients from naturally derived sources, including guarana extracts and B vitamins, whereas Monster’s drinks contain taurine. The energy additive has recently come under scrutiny as studies have shown conflicting evidence about its effects on human health.

Although the settlement has been termed “amicable” by both Coke and Monster, there is little doubt that Coca-Cola Energy will be directly in competition with Monster and the relationship between the two firms could come under some stress.