Coke frightens Monster with plans to launch Coca-Cola Energy drink

Coca-Cola plans to launch a new line of energy drinks under its Coke brand, putting it in direct competition with Monster, in which it owns a 17 per cent stake.

The drinkmaker told Reuters that Coca-Cola Energy and Coca-Cola Energy No Sugar will be made with natural caffeine and guarana extract.

However, it did not say when it was planning to launch the new drinks.

Coke’s plans wiped $10m from the value of its own shares in Monster Energy, which dropped as much as 13 per cent on the news.

Monster’s chief executive Rodney Sacks revealed on a call with analysts that the two companies are in arbitration over the drinks.

He said an agreement with Monster restricts Coke from selling its own energy drinks.

The drinkmaker has agreed to suspend the launch of launch of Coca-Cola Energy until April next year, Sacks said.

“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,” a Coke spokesperson said.

However analysts questioned whether the company should market these new drinks as coke.

"While Coca-Cola certainly has the distribution muscle to push new offerings, we question the fit of an energy drink under the Coca-Cola trademark," Cowen & Co analyst Vivien Azer told Reuters.

Coca-Cola is on the verge of stepping into the $500bn global coffee market, as it looks to complete its acquisition of Costa. 

The company said last week that sugar-free drinks had helped it grow profit by 70 per cent to $2.8bn in the third quarter of the year.