PepsiCo, Inc. (PEP) Challenges Energy Drinks with Mountain Dew Kickstart

Kickstart only comes in two flavors, both of which are a derivative of the original Mountain Dew. Someone thinking of purchasing a java-flavored Monster isn’t likely to opt for a fruit punch- or original-Mountain-Dew-flavored Kickstart.

However, Monster shareholders should be concerned about the general trend Kickstart represents. As I’ve written previously, Monster’s competition has been increasing. Kickstart is yet another competitor.

Will Coke respond?

As Pepsi continues to innovate, The Coca-Cola Company (NYSE:KO) might be getting left in the dust.

To be fair, Coke remains the dominant soft drink, and was rated the world’s most valuable brand in 2012 by Interbrand. But the company has made little headwind in the energy drink market. Its energy drink, Full Throttle, only sells half as well as Pepsi’s Amp according to energyfiend.

Coke was rumored to be working to acquire Monster in the first half of 2012. But after a Wall Street Journal report prompted a rally in shares of Monster, Coke publicly denied the acquisition.

Investors shouldn’t dump Coke shares simply because the company can’t compete in the energy drink market. Despite its failings, it remains a Warren Buffett favorite and pays a solid dividend.

But while Pepsi keeps trying, Coke seems to have given up. Investors in Coke shouldn’t expect much growth from the company.

Energy drinks remain a growth market

Ultimately, PepsiCo, Inc. (NYSE:PEP)’s willingness to launch a drink like Kickstart shows that the energy drink market remains an area of growth for the industry. That should actually help Monster, which continues to control a significant portion of the total market.

Yet at some point, the energy drink market will become saturated. When that day comes, Monster could be pressured from a growing host of competitors.

As for the beverage giants, PepsiCo, Inc. (NYSE:PEP) appears to offer more room for growth than Coke. Conservative investors can take solace in Coke’s brand power and dividend, but growth seekers might want to look to Pepsi instead.

The article Pepsi Challenges Energy Drinks with Mountain Dew Kickstart originally appeared on Fool.com and is written by Salvatore “Sam” Mattera.

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