Soda giant Coca-Cola has paid 1.6 billion euro for a 16.7 % share in Monster Beverage, one of the world's largest energy drink manufacturers. Several brands will now switch owners.
Option to have 25 % of shares
The billion-dollar deal between Coca-Cola and Monster is part of a wider partnership. Coca-Cola's energy drinks (like Burn and Full Throttle) will move to Monster, while Monster will solely focus on energy drinks and move its soda drinks (like Hansen's Natural Sodas and Peace Tea) to Coca-Cola.
The two American companies have also signed a new distribution agreement, which spells bad news for AB InBev as it has been Monster's American distributor. This paves the way for Monster to penetrate emerging countries like China and Russia, where it has been absent up until now.
Coca-Cola has an option to increase its shares to 25 % within 4 years, Coca-Cola CEO Muhtar Kent confirmed.
The investment fits Coca-Cola's strategy to invest in promising new brands and technology. The fast-growing energy drink market is estimated to be worth 20 billion euro, according to Euromonitor International.
The Atlanta-based soda giant most important income has been under pressure for a while now as more people are adopting healthier lifestyles. To tap into that new market, Coca-Cola had increased its share in Keurig Green Mountain (which distributes home-based drink suppliers) to 16 % in an attempt to attack SodaStream.