relentless

COKE BUYS MONSTER-A NIGHTMARE FOR RELENTLESS AND BURN?

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To buy or not to buy. That is the question.

Apologies to the Shakespeare aficionados amongst you for the blatant bastardisation of perhaps the bard’s most famous quote.

However, it is a question that many corporations often ponder (presumably with a copy of Hamlet to hand) when considering how to defend themselves from a young upstart in their industry, or when judging how best to enter a new market. Do you pour your resources into building a brand, or do you save yourself the hassle and buy up a rival?

The former seems exciting, and the creative amongst you wouldn’t undoubtedly be chomping at the bit to launch a new brand with all the vim and vigour of a start-up. Yet a new brand is unproven and unfamiliar to consumers, and with this comes an inherent risk of failure. The alternative, buying another company outright means you acquire a key strategic asset in their brand. A proven, ready-to-market brand with an identity in consumers’ minds and a consumer base with which it resonates is surely an enticing prospect. But such acquisitions do not come cheap, and thoughts immediately go to how best reclaim the significant investment.

These musings were undoubtedly swirling around the minds of Coke executives when they decided to purchase a 16.7% stake in Monster, the energy drink brand, a few weeks ago for $2.15bn (£1.28bn). The move will be great for Monster, who will surely benefit from Coke’s behemoth global distribution network. Coke will probably do well out of a stake in Monster too, which is the largest energy drink brand in America, and the only real global competitor to Red Bull.

But spare a thought for Relentless and Burn, the two existing energy drinks brands in the Coke portfolio. Much like a kid with a new toy, Coke has cast aside its existing play things and plumped for something new and shiny to take on the energy drinks market. In recent years Monster has powered ahead of Relentless in terms of market value in the UK (£108.1m vs. £59.9m) with Burn energy drink not even making the top ten. And with the positioning of Relentess, around the alternative music scene, feeling like a subset of Monster’s broader positioning around alternative music and sports, one wonders what the fate is for these lesser energy drinks brands within the Coke portfolio. Is there room for all three brands? Will they be repositioned, catering to an even smaller niche to accommodate their bigger brother? Or will they end up on the scrapheap, their assets consumed (ironically) by a turbo-charged Monster?

To me, the Monster brand has always felt more dynamic and exciting than its Coke contemporaries, with an underground grit that Red Bull had, but seems to have lost in recent years as it has gone more mainstream. So I approve (if they care) of Coke’s decision to buy, not build, its way to greater success in the energy drinks market. However, I suspect that Relentless and Burn will be sleeping less easily with this Monster nearby.

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