A Big Threat Is Coming for Monster Beverage
Speaking from a personal perspective, I’ve never understood (let alone liked the taste of) the so-called “energy drinks” that you see flooding the market these days.
Loading up a carbonated beverage with sugar and caffeine – and calling it an “energy drink” – shouldn’t be a big breakthrough.
Specifically, two cans of Monster Energy contain 480 milligrams of caffeine, which translates into the caffeine equivalent of 14 12-ounce cans of Coca-Cola!
It’s not hard to get your heart beating out of your chest with those caffeine doses.
In fact, due to some past lawsuits about these extremely high levels, Monster Beverage (Nasdaq: MNST) now places warnings on all cans, which read “CONSUME RESPONSIBLY: LIMIT 3 BOTTLES PER DAY.”
How can they operate like this?
Well, Monster Beverage markets every product (admittedly) quite well…
Hitting on the extreme sports market, Monster Energy is widely connected to events like BMX, motocross, speedway, skateboarding and snowboarding.
But Monster Beverage will soon have some major competition from another beverage monster… Coca-Cola.
You see, back on July 1, an arbitration panel decided that the introduction and sale of a new line of energy drink products, Coca-Cola Energy, is allowed under the terms of a contract between the companies.
Under the ruling, Coca-Cola can 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.
I’m bringing this to your attention now because Coca-Cola Energy is getting set to launch this competitive line of products in January. This could be a direct competitive threat to Monster Beverage – as it could shift energy-seeking consumers over to the Coca-Cola brand and taste.
I’ll admit that I’m not the extreme sports enthusiast who drinks these products. However, I believe Coke tastes better than the flavors Monster Beverage is selling right now. If consumers can get the same “energy boost” they want with the flavor of Coke, we might begin to see a shift in consumer preferences starting to take shape. And that’s trouble for Monster Beverage.
Action Plan: Just this morning in The War Room, members entered into a new Monster Beverage position that they will profit from if there is continued downside from the new Coke energy drink risk.
Sometimes, especially on Wall Street, all it takes is the threat of new competition to drive a stock lower – and that’s what we’re playing off of here. To play along, I invite you to join me in The War Room today!
About Bryan Bottarelli
Bryan graduated with a business degree from the highly rated Indiana University Kelley School of Business, and his first job out of college was trading stock options on the floor of the Chicago Board Options Exchange. He was mentored by some of the country’s top floor traders in the heart of the technology boom from 1999 to 2000, where he learned to identify and implement some of his most powerful trading secrets. Now he shares his secrets with a group of elite traders. We will be republishing some of his highly sought after content from his free e-letter, Trade of the Day.