Coca-Cola Cleared to Launch Energy Drinks

Arbitration group rules new products would not violate contract with Monster Beverage
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ATLANTA and CORONA, Calif. — That new Coca-Cola energy drink may make its way onto store shelves in the United States after all, after an arbitration group ruled in late June that launching the drink would not violate the terms of a contract between The Coca-Cola Co. and Monster Beverage Corp.

The companies said in a press release July 1 that they will respect the arbitrators’ decision and appreciate that the dispute was resolved amicably. “While there was a disagreement between Coca-Cola and Monster over contractual language, the companies value their relationship and look forward to their continued partnership,” the release said.

The issue arose in late October when Monster CEO Rodney Sacks cited Coca-Cola Co.’s plan to launch Coca-Cola Energy and Coca-Cola Energy No Sugar in the near future in the United States. As a result, the two companies agreed Oct. 31 to work with a tribunal of the American Arbitration Association to resolve the concern.

"Coca-Cola has developed two energy products it believes it may market under an exception [to our agreement] relating to the Coca-Cola brand," Sacks said in November. "We believe that the exception does not apply."

On June 28, the arbitrators ruled that Coca-Cola Energy products do fall within the exception to a noncompete provision of the beverage company’s strategic partnership with Monster Beverage Co. relating to beverages marketed or positioned under the Coca-Cola brand.

Under the ruling, Coca-Cola can continue to sell and distribute Coca-Cola Energy, including in markets where it has already been launched. Coca-Cola is also free to launch the product in additional markets globally.

The Coca-Cola Co. acquired a 16.7% stake in Monster Beverage in 2015, transferring its ownership of its energy-drink brands, including NOS and Full Throttle, among others, to Monster Beverage Corp. In exchange, Monster transferred its nonenergy business, including Hansen’s Natural Sodas, Peace Tea and other drinks, to Coca-Cola Co.

"We value our relationship with Monster," Coca-Cola said in November. "As in any commercial relationship, we will abide by our contractual obligations.”

At that time, Coca-Cola Co. suspended the proposed launch of its energy drinks until at least April 2019. The drinks launched in Spain and Hungary in April. It’s not known when the drink might come to market in the United States.

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