Stock of the Week: Monster Energy

 A Red Bull you can own.

Andrew Willis 13 September, 2021 | 4:48AM
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Did you know that Monster Energy (MNST) isn’t owned by Coca-Cola? Well not entirely, at least. Coca-Cola does own a small portion of the energy drink company, but it’s more of a partnership. And it’s getting a little tenuous…

Monster’s been able to rely on the widest moat in beverages for distribution, merchandising, and retailer negotiation, with its entire U.S. footprint incorporated into the Coke system, says Zain Akbari. But it’s not impossible that one day, Coke should decide to terminate that agreement.

Coke’s competed with Monster before when it launched its own energy drink – and an end to their partnership would be tremendously disruptive to Monster, in our view… At the same time, Coke Energy didn’t do too well and was recently discontinued in the U.S. – so there may be mutual dependencies in this relationship.

Dominating alongside Red Bull, Monster has maintained formidable brand equity. We do see intense competition with upstart energy drinks looking to carve out their own niche, but when it comes to Monster’s consumer base… remember, not even Coke could do it.

For Morningstar, I’m Andrew Willis.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Monster Beverage Corp83.78 USD-3.53Rating

About Author

Andrew Willis

Andrew Willis  is Editor for Morningstar.ca. Follow him on Twitter @AndrewWillisCDN.

 

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