Coca-Cola (NYSE: KO) has officially entered the energy drink world with Coke Energy.
Representing a growing $53 billion in market value, the global energy drink industry is a force to be reckoned with. The U.S. accounted for $13.5 billion of those sales in 2018, with Red Bull in the lead and Monster Beverage closely following.
In addition to joining the profitable ranks of energy drinks, Coca-Cola appears to be responding to health trends with its new beverage. Taking into account that nutritional benefit has been on the rise as far as what consumers expect from their beverages, this move seems to make sense.
One health trend includes a move award from sugar, which could explain why Coca-Cola Zero Sugar is still around since its original launch in 2007 and appears to be doing well. Just last year, Coca-Cola Zero Sugar was in part responsible for a 6% worldwide retail value increase for Coca-Cola, according to CNN.
Another consumer beverage health trend involves a focus on all-natural ingredients. Coca-Cola seems to have that covered as well. According to the company, Coke Energy will include "caffeine from naturally derived sources, guarana extracts and B vitamins, and [be] completely taurine-free."
Low or no sugar and natural ingredients don't mean low caffeine, though.
Coke Energy, which Coca-Cola advertised during the 2020 Super Bowl to promote its U.S. launch in January, will have the same amount of caffeine as the average energy drink and 12-ounce cup of coffee: 114 milligrams per 12-ounce can.
"We're putting the full marketing muscle behind our Coke Energy launch in the U.S.," said Coca-Cola CEO James Quincey.
All things considered, Coca-Cola appears to be taking Coke Energy very seriously. While advertising with full force in light of consumer trends, however, it would be in the blue chip company's interest to make sure they market their energy drink responsibly when it comes to children.
Considering pediatric health experts recommend that children and adolescents abstain from energy drinks, both Red Bull and Monster Beverage have received criticism in the past for advertisements that didn't seem to target adults.
For now, at least, it doesn't appear that Coke Energy will be going down that controversial path. According to Geoff Cottrill, Coca-Cola senior vice president of strategic marketing for creative, Coke Energy won't target minors in their advertisements.
Coca-Cola shares rose about 22% during 2019, and the company has a current market cap of roughly $255.5 billion. PepsiCo (NASDAQ: PEP), Coca-Cola's long-time rival competitor, had shares up around 27% last year and has a current stock value of $201 billion.