Market Overview

Battle of Energy Drink Brands: Coca-Cola vs. Monster


Coca-Cola Energy Drink Brands (NYSE: KO)
• Burn
• Nos
• RealGold

Monster Energy (main) Drink Brands(NASDAQ: MNST)
• Monster Energy (with varying flavors)
• JAVA Monster

According to the Beverage Marketing Association, domestic U.S. wholesale sales for “alternative” beverages (aka energy drinks) are roughly $31.9 billion; sales increased 5% in 2011 versus 2010. Monster has consistently stated it has gained market share in the energy drink category, which makes sense as the company continues to release new extensions of its trademark Monster brand.

However, Coca-Cola has said it, too, is gaining market share in energy drinks, and announced a strong 25% increase in unit volume in the first quarter (sequential acceleration). Clearly, both of these caffeinated fizz-selling companies are stealing business form lesser known energy drink brands, perhaps even industry pioneer Red Bull, which to my knowledge remains stuck on its signature drink and has opted to increase can sizes instead of issuing new flavors.

So which company deserves your investing dollars?

I say go find a can of Burn, drink it up, and then buy Coca-Cola’s stock. You see, Monster, while growing rapidly, is essentially selling only energy drinks and only in the U.S. as a more entrenched competitor (in terms of distribution and production capabilities) in Coke is saying it’s gaining market share. This is not welcome news to investors in Monster, for they have sent the stock meaningfully higher in the past year on expectations for a very bright financial future.

Furthermore, buying a share in Coke brings exposure to a global portfolio of brands (such as Vitamin Water) that are top of mind with consumers and are finding new customers to satisfy through increased distribution.

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