It has the potential to be the largest acquisition in Coke's history, but it's a necessary one if it wants to compete in the fast-growing energy drink market.
The energy drinks category almost reached $7 billion in sales in 2011, having increased 15.7 percent from the year prior, according to data from SymphonyIRI.
And yet, Coke has failed to really cash in. It has tried for years to get a big piece of the energy drink pie, and nothing has worked.
Red Bull dominates the energy drink market with $2.3 billion in sales. Monster is the closest competitor at $1.2 billion, with Rockstar a distant third at around $750 million. The rest of the industry is packed with smaller brands like Amp and Doubleshot.
Coke's energy drink is called Full Throttle, a brand it debuted in 2004 and tried to cultivate on its own. It's only at about $100 million in sales now. Coke also acquired NOS in 2007 when it bought Fuze Beverages, but none of the energy drinks in its portfolio are in the same league as the big three. Red Bull and its brand have proved far too strong.
Coke CEO Muhtar Kent told the WSJ that he's "very happy" with the current status of its energy drink brands, so they're likely viable businesses that are making some money.
Still, it will be admitting defeat if it goes through with this acquisition, but after eight years of Full Throttle mediocrity, it's about time that it did. On the other end, perhaps an acquisition like this will finally present dominant Red Bull with something to worry about.NOW SEE: How Dietrich Mateschitz Ignored The Haters And Created The Top Energy Drink On The Planet >
More From Business Insider
- KRUGMAN: Watch This Video, And You'll See Why The Economy Is Doomed
- McDonald's Employee Gives Revolting Tell-All On Reddit
- Unbelievable Headline From 1935 Confirms That Nothing Ever Changes In The World