- Coca-Cola is launching its new Coca-Cola Energy line in the U.S. in January 2020, after debuting its inaugural energy drink in Europe earlier this year.
- Each of the four varieties — Coca-Cola Energy, Coca-Cola Energy Zero Sugar, Coca-Cola Energy Cherry and Coca-Cola Energy Cherry Zero Sugar — will come in 12-ounce cans and have 114 milligrams of caffeine, guarana extracts and B vitamins.
- Coca-Cola considers this brand launch an extension of Coke and an appeal to cola drinkers rather than a grab at energy drink consumers. “We know Coca-Cola fans love the taste of Coke… and, with Coca-Cola Energy, we found there was an opportunity to extend Coca-Cola to a category many people haven’t tried," Janki Gambhir, Coca-Cola trademark innovation brand director, said in a statement.
Coca-Cola CEO James Quincey likes to refer to the company as a “total beverage company.” With the launch of this new product, Coca-Cola is expanding its reach to the energy drink segment — adding to products in the soda, sparkling water, coffee and alcohol categories.
As consumers began losing their taste for soda, Coke started seriously looking into the energy drink space. In 2015, it acquired a 16.7% stake in Monster for $2.15 billion. At that time, the company already had Relentless and NOS energy beverages under its umbrella. The partnership with Monster catapulted the Atlanta soda giant into the thick of the energy drink category, where it was able to learn the ins and outs of the business from one of the nimble category leaders.
Four years of learning later, the company leaped at a loophole in its distribution contract with the energy drink company and released its own-branded energy beverage in Europe at the beginning of 2019. Coca-Cola filed an arbitration case to determine whether its energy drink products would violate the deal the company made in 2015, and Coca-Cola won the suit in July. Since then, the company has worked quickly to get its name-brand energy products stateside.
With prior experience working alongside Monster and a household brand recognition, it should be relatively simple for Coca-Cola to get consumers to at least try the new drink. With name recognition comes trust, something that energy drinks across the category have been struggling to inspire as more consumers become wary of unfamiliar ingredients on labels and health and safety concerns surrounding certain additives. These struggles have translated to stagnated growth in energy drinks. U.S. sales were projected to reach $15.3 billion in 2018, but the annual growth rate has slowed to 1.5%, according to Euromonitor International — a stark contrast to the 60% growth rate between 2008 and 2012, Fortune reported.
In line with this trend, Monster has reported slow growth with its most recent earnings report showing a second-quarter net sales rise 8.7% to $1.10 billion, from $1.02 billion in the same period last year. This is nearly half of the growth that was reported by the company in the fourth quarter of 2015, just after Coca-Cola took its original stake in the company. Things could become even scarier for Monster as Coca-Cola reported in its Q2 earnings report that its branded energy drink “has shown early signs of success.”
Depending on how the U.S. launch goes, Coca-Cola may want to divest its stake in Monster and focus its efforts on growing its own brand — a direct competitor within the crowded energy drink space. That would doubly hurt California-based Monster, which would lose its access to Coke’s vast supply chains and retailer relationships. Coca-Cola, on the other hand, would likely be fine, especially because it learned a fair amount in its almost five-year partnership with an industry-leading brand.
Whether cola drinkers will become long-term fans of energy drinks is another question. Market Research Hub reported the market for energy drinks is expected to grow at an annual rate of 8.86% between 2017 and 2021. But at the same time, ready-to-drink, energy-enriched coffees and teas alongside functional waters have grown more popular, which could edge out more traditional performance and nutrition beverages.
Still, Coca-Cola is confident that consumers who love the flavor of Coke will be persuaded to try another beverage with a similar flavor but a whole lot more energy.