The Coca-Cola Company (NYSE:KO) started off 2013 with decent results. Even though the beverage seller’s revenue dipped, the report impressed the market, which looks positive for companies that sell refreshments in general. Coca-Cola reported especially strong results in its tea, juice, and energy drinks businesses. Rising demand for these products could help Starbucks Corporation (NASDAQ:SBUX) and Monster Beverage Corp (NASDAQ:MNST), although these companies do have to consider the competition from The Coca-Cola Company (NYSE:KO).
Overall results
Energy drinks
A stronger performance by Coca-Cola in the energy drink market could suggest tougher competition for Monster Beverage Corp (NASDAQ:MNST). Nevertheless, The Coca-Cola Company (NYSE:KO)’s announcement that it sold 9% more energy drinks, by volume, isn’t a reason for Monster investors to worry. Monster achieved 15% revenue growth last quarter, and Monster’s growing from a large base. Energy Fiendstates that in 2012, Monster Beverage Corp (NASDAQ:MNST) had 37% market share, while Red Bull had 42% of the market. Traditional soft drink companies still haven’t caught up to the two big names in this business.
A slowdown in the energy drink market overall would pose more of a risk to Monster, as the energy drink seller’s held up relatively well against direct competition. Monster Beverage Corp (NASDAQ:MNST)’s 10-K explains that consumer concerns about energy drinks, or caffeinated beverages in general, could hurt the company. Rising energy drink sales at The Coca-Cola Company (NYSE:KO) make this risk look less significant. Coca-Cola’s energy drink results could also suggest better prospects for Starbucks Corporation (NASDAQ:SBUX)’ Refreshers as well.
Tea drinks
Coca-Cola also sold more tea in 1Q 2013, as the beverage giant reported an overall gain in the double digits. One item in the report specifically stands out for Starbucks Corporation (NASDAQ:SBUX). The Coca-Cola Company (NYSE:KO) explained that its Ayataka green tea brand achieved 13% growth in Japan, and the beverage giant also noted that Ayataka became a billion dollar brand recently. The news that a company that’s best known for its cola drinks successfully grew a major tea brand in an Asian market makes coffee giant Starbucks’ tea sales prospects look a lot better. With Tazo and Teavana, Starbucks Corporation (NASDAQ:SBUX)already has two strong tea brands of its own.
Juice drinks
Juice also stood out as a growth area for The Coca-Cola Company (NYSE:KO) this quarter, with juice sales rising by 9%, and this category provides diversification for the beverage giant as well. Rising juice sales could also be good news for Starbucks’ Evolution Fresh line. In February, Starbucks Corporation (NASDAQ:SBUX) announced that Evolution Fresh juice was available at coffee shops in Boston and New York City. As for Monster Beverage Corp (NASDAQ:MNST), rising juice demand might mean a few more Hansen beverage sales, but at this point energy drinks provide almost all of Monster’s revenue, which explains why the beverage company changed its name to Monster Beverage Corp (NASDAQ:MNST) last year.
Takeaway
Coca-Cola’s results highlight areas in the international refreshment market that currently have growth potential. This quarter, the beverage giant’s efforts to expand outside of soft drinks look like they worked. The Coca-Cola Company (NYSE:KO)’s juice, tea, and energy drink operations all exceeded its overall performance. These results indicate global drink trends that should work in favor of Monster Beverage Corp (NASDAQ:MNST) and Starbucks Corporation (NASDAQ:SBUX) as well.
The article Starbucks and Monster Look Better After Coca-Cola’s Report originally appeared on Fool.com and is written by Eric Novinson.
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