Energy drink maker Monster Beverage is currently spatting with its part-owner Coca-Cola over the soda giant’s plans to introduce energy drinks, a potential direct competitor.
Continue Reading Below
Monster CEO Rodney Sacks addressed the controversy on Wednesday’s earnings call.
“Among other provisions, these agreements between the company, Coca-Cola and certain affiliates restrict Coca-Cola from competing in the energy drink category with certain exceptions. As some of you may have read, Coca-Cola has developed two energy products it believes it may market under an exception relating to the Coca-Cola brand” he said in transcripts, while also noting the status of the dispute.
“We believe that the exception does not apply. While mutual agreement to obtain clarification, the issue was submitted to arbitration last week on October 31, 2018. Coca-Cola has indicated that it has suspended the proposed launch of such energy products until April 2019” he said.
Despite the halt, Monster shares tumbled on Thursday, despite posting profit growth of 26 percent and sales growth of 13 percent. Coca-Cola shares were modestly lower.
|MNST||MONSTER BEVERAGE CORP.||88.20||-1.00||-1.12%|
The agreement between the two parties was made when the beverage giant purchased a near 17 stake in the company in 2014.
Rival Pepsi is partners with Rockstar Energy drinks and also has the popular Gatorade brand.
In a statement to FOX Business, a spokesperson for Coca-Cola said, "“We value our relationship with Monster. As in any commercial relationship, we will abide by our contractual obligations. We filed for arbitration with Monster regarding the proposed launch of Coca-Cola Energy. As a good partner, we have submitted the difference in interpretation to an arbitration panel for resolution, which is the mechanism agreed by The Coca-Cola Company and Monster in the original agreements.”