Dive Brief:
- The Monster Beverage Corp. has acquired American Fruits and Flavors, the company's primary flavor ingredients supplier, for $690 million.
- With this deal, Monster now owns intellectual property related to flavor development of the company's products, including the flagship green variety and other flavors central to Monster's portfolio.
- Monster will also now be able to better distribute American Fruit and Flavors’ products throughout Monster's international supply chain.
Dive Insight:
This grants Monster opportunities that other energy drink makers — and beverage companies in general — don't have by putting new flavor technologies directly into Monster's hands. An in-house flavor department reduces costs and increases earnings, but it also provides an advantage with the flexibility to control flavor development.
As consumers, particularly millennials, demand more beverage flavor innovation, that limitation can hinder a manufacturer's growth potential. Currently, energy drink flavors tend to be dominated by fruity varieties, but having the flavor technologies plus Monster's resources under one roof could foster a new wave of tastes.
AFF stands to benefit as a flavor ingredients company with easier access to international markets. This means increased revenue by expanding into new countries (for both AFF and Monster), but it can also lead to increased innovation. International distribution enables AFF to test out new flavors on the global market to determine which flavors are most successful where.