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Monster's Price Scares Potential Partners

WebiMax Contributor, May 1, 2012

Remember childhood soft-drink selections?  There was Coke, Pepsi, 7-up, and possibly some Capri Sun if your mom was super cool.  Today's variety is broader.  There are sports beverages, flavored water, fruit drinks, energy drinks, and more.

By volume sold, guess which drink manufacturer has the most impressive sales record in the US?  It's a Monster!  Monster enjoys about 35% of the market (per the Beverage Digest).  The vertical has come a long way from Coke, Pepsi, and RC Cola.  Coke notices, looking to "bolt-on" acquisitions as voiced by Muhtar Kent, its chief exec.

Some thought Coke was giving Monster a look; but, Coke may have been frightened off by big, scary dollar signs.  It's interesting to follow how 'the Market' influences business maneuvers.  There was discussion on the (Wall) streets that Coke was interested in Monster.  Such gossip influenced Monster stock, raising its shares 20% on Monday.  The 20% equaled $2 billion!  That's not exactly loose change.

Coke balked at the numbers, denying an incipient deal with Monster.  The Wall Street seesaw tilted back; Monster's shares ebbed in price.  It's understood Coke and Pepsi have noticed Monster for some time; Monster paraded itself around last year, looking for potential suitors; yet, Monster's prices have gotten a lot of attention in the past year.  Monster stock doubled in the last year, trading at 30 times higher than 2012 estimates.

Coke's deal with Monster would be the former's biggest in its history.  Coke bought Vitaminwater in 2007 for $4.2 billion.  Coke's and Pepi's plight is similar to that of other major brands, which must modify to stay relevant in modern times.  The newspapers are doing it.  The book publishers are doing it.  Just about all businesses are trying to stay relevant in modern times.  Energy drinks have been popular with Americans in recent years; naturally, Coke and Pepsi are going to take interest in that market.  However, acquiring the most popular energy-drink supplier at the moment, Monster, is a monetarily imposing proposition.

The WSJ article traces the evolution of Coke; the brand's been attempting to expand.  Earlier in the year, Coke acquired a majority hold on Zico, a supplier of coconut water.  Additionally, Coke has stake in the energy drink market already; Full Throttle and Fuze NOS brands are within the Coke stables; yet the energy drinks aren't as popular as Red Bull or Monster.

If Coke does decide to takeover Monster, things will be looking pretty gruesome for Pepsi, a brand trailing Coke in the beverage market share for years.  One raised glass is deserved of another.  It will be interesting to see how the dynamic plays out.  What would you do if you were Coke?  Would you stay settled, hoping progression continues based on the brand's history?  Would you refresh the brand's direction and arsenal, chasing Monster down? How about Pepsi?  Would you see Monster as your opportunity to upend Coke?

Need an Expert Contributor?

Ken Wisnefski is a seasoned web entrepreneur and a frequent contributor to news outlets and business publications. Ken’s vast knowledge of how to make online businesses succeed has made him a sought after consultant from businesses wishing to improve their online initiatives. Contact pr@webimax.com to collaborate!

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