Stocks for Coca-Cola to Buy: Monster (MNST)
The obvious acquisition for Coca-Cola would be Monster Beverage Corporation (NASDAQ:MNST). Coca-Cola acquired a 16.7% stake in the energy drink maker in 2015 in an asset swap. Coca-Cola sold Monster its NOS and Full Throttle energy drink brands in return for non-energy drink brands like Hansen Juice, Hansen sodas, and Peace Tea. Coca-Cola also paid $2.15 billion for the stake in MNST.
Rumored for years, Coca-Cola seems at least somewhat interested in Monster Beverage, with its sizable investment and agreement to distribute Monster drinks. An acquisition of the 83.3% of MNST shares the company doesn’t own would cost more than $21 billion, but could be a major growth piece for Coca-Cola.
In the recent third quarter, MNST reported net sales up 4.1% to $788 million. International sales saw an increase of 11.8% in the quarter to $190.9 million.
The quarter continued the progress of Coca-Cola distributing the company’s products in several regions. Monster Energy was launched in China and Turkey during the quarter. More international launches are planned for 2017. The new product launch of Mutant, a possible rival to Mountain Dew, also happened in the quarter.
For years, KO owned the top two carbonated soft drinks brands with its namesake Coca-Cola and number two with Diet Coke. Pepsi Cola finally passed Diet Coke to slip into the number two spot.
While Coke’s top two brands have dominated their peers, Pepsi’s Mountain Dew brand has been the number four most sold carbonated soft drink and fended off numerous attempts from Coca-Cola to have a competing brand. Monster is the latest company to take on Mountain Dew and with Coca-Cola’s full weight, could perhaps dent into the strong market share Mountain Dew has.
Mutant was launched by Monster Energy in the third quarter, with a rollout to select convenience store chains beginning in September. The company is targeting convenience stores first by going after customers who typically buy 20oz Mountain Dew bottles.
Monster Energy said it saw “encouraging early results.” Monster Energy will also release Monster Hydro, a bottled water energy drink soon. You can bet that Coca-Cola will closely be watching the success or failure of Mutant, as it has needed a strong rival to Mountain Dew for years.