Monster Or Coke?

For some time I have been eyeing the shares of Monster Beverage Corporation since this happens to be one of the fastest growing companies and stocks in the entire beverage industry. When you're thinking about making any investment decision when it comes to beverages—which are usually quite boring—one certainly would be wise to pay particular attention to anyone in this sector who has the ability to make some waves unlike anyone else, and certainly Monster Beverage Corporation is doing that handily.

Until now I had not been able to come to a conclusion as to exactly how I wanted to approach my interest in this company. First, I wanted to take a closer look at other alternatives, and fully decide my best in to this fast growing brand and the company that owns it. And that brought me back around to Coca-Cola's doors.

That's because Coca-Cola is and has certainly been keeping a close watch on this company as well. And despite claims of rumors as much as two years ago that Coca-Cola was not in talks to buy into Monster, those claims have come full circle—and Coca-Cola now owns nearly 17% of the company and has two board members situated there as well.

My suspicion is that somewhere down the road—and it may be years down the road—The Coca-Cola Company will have quite a lot more to do with Monster Beverage Corporation, be it in distribution, new product development, or marketing. In fact, I believe if the popularity of the Monster brand continues, Coca-Cola may well just buy the entire company.

You have to keep in mind that one thing that Coca-Cola is good at, besides making Coca-Cola of course, is recognizing who the next big player is going to be in the market. Coca-Cola may not be as good at copying trends. But it certainly has the money to buy into who happens to be trendy. And that helps to make Coca-Cola a fairly interesting choice when it comes to buying those trends as an investor.

Coca-Cola has done this in the past by buying Glaecau, makers of Vitamin Water, and by buying into Green Mountain Coffee Roasters and the Keurig and K-Cup empire that belongs to GMCR.

It's true that Coke may have fallen short getting into the energy sector with brands like Full Throttle and NOS not having the ability to capture enough market share from Monster and Red Bull to make any real impact on its presence in this part of the industry. But it can make money on the distribution end of a popular brand like Monster (and has been doing so for quite a while), and it can make money by taking on some ownership of the brand portfolio.

So, what else makes Coca-Cola an enticing prospect over Monster?

Even though Monster Beverage Corporation is more than just the Monster energy drink empire, Monster is really the brand that put it on the map. But it also happens to be a trend. Coca-Cola can as easily buy into a growing trend as it can later sell its interest in that trend if consumer tastes change and the entire sector of the industry goes bust. Just owning Monster could allow you to enjoy a fantastic ride up. But if the brand hits a brick wall, it's also going to be one heck of a ride down as well.

Owning shares of Coca-Cola won't entirely insulate you from any negative movements in any given sector of the beverage industry. But it will provide the investor far more insulation than being entirely invested in a company that may have limited ability to recover from a change in trends that would affect its flagship brand.

If you want to enjoy the upward mobility of a company like Monster Beverage Corporation, I say buy shares of Coca-Cola and you'll enjoy the best of both worlds. And if other trends develop in this sector, you can bet Coke will have its eye on it, and will reach into their pockets to let Coke shareholders in on it as well.