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Monster Beverage Transfers Non-Energy Drinks to Coca-Cola

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Monster Beverage’s non-energy drinks

As we saw in the first part of this series, The Coca-Cola Company (KO) and Monster Beverage (MNST) closed their strategic partnership on June 12. As part of the partnership, Monster Beverage transferred its non-energy drinks business to Coca-Cola. This includes brands like Hansen’s Natural Sodas, Peace Tea, Hubert’s Lemonade, and Hansen’s Juice Products.

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Monster Beverage’s product lines

Energy drinks form Monster Beverage’s major product line and accounted for ~93.4% of the company’s 2014 net sales. The company’s non-energy business, including non-carbonated beverages, carbonated beverages, and other categories, accounts for the remaining 6.6% of the 2014 net sales.

How does Coca-Cola benefit?

Brands like Hansen’s Natural Sodas have an interesting product line that includes diet versions, natural mixers, sparkling water, and sparkling fruit beverages. This brand will expand Coca-Cola’s already extensive line of carbonated beverages.

Hubert’s Lemonade is a line of premium ready-to-drink lemonades sweetened with cane sugar and stevia leaf extract. The product contains no preservatives, artificial sweeteners, artificial flavors, or caffeine. Peace Tea includes ready-to-drink iced teas in many flavors. With the transfer of these naturally sweetened beverages and ready-to-drink tea products, Coca-Cola gains access to some healthier beverage variants. Coca-Cola makes up more than 0.8% of the portfolio holdings of the iShares Core S&P 500 ETF (IVV).

Other beverage companies such as PepsiCo (PEP) and Dr Pepper Snapple (DPS) are also expanding their portfolios of low-calorie carbonated beverages and non-carbonated beverage categories like ready-to-drink teas.

Coca-Cola’s 16.7% stake in Monster Beverage gives it access to one of the growth categories of the nonalcoholic beverage industry. Energy drinks have been outperforming carbonated soft drinks and certain other categories. We’ll take a look at this in the next part of this series.

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