Monster Beverage Corporation (MNST) recently issued a press release responding to radiologist, Jonas Dorner’s recommendation through a paper to restrict consumption of energy drinks. Energy drinks, under the Monster Energy brand, represent more than 90% of the company’s total revenue. Monster claimed that some of the statements in the paper were misleading and untrue.
The paper was written by the trainee radiologist and presented at the Radiological Society of North America’s annual meeting.
The paper points out that the taurine in energy drinks is beneficial for the functioning of the heart. However, it also states that the amount of caffeine in energy drinks is three times higher than other caffeinated drinks such as coffee and cola and that the consumption of energy drinks should be restricted.
However, Monster Beverage claims that the statement regarding caffeine is unsupported by data and hence misleading. It further claims that leading energy drinks contain half the amount of caffeine compared to coffee from companies such as Starbucks Corporation (SBUX).
Monster Beverage has been facing several legal issues related to the impact of its energy drinks on consumer health.
In June, the American Medical Association (AMA) House of Delegates proposed a ban on marketing of energy drinks.
In Aug 2012, according to The Wall Street Journal, New York’s attorney general initiated a probe to determine whether leading energy drink makers have misled their consumers about the ingredients and nutritional value of energy drinks manufactured by them. The investigation asked for information from three large companies, namely, PepsiCo Inc. (PEP), Monster Beverage and Living Essentials LLC. The investigation was to check the amount of caffeine and other artificial ingredients added to the drinks such as fruit flavors, vitamins B, taurine and ginseng.
Monster Beverage Corporation carries a Zacks Rank #4 (Sell). A better ranked beverage company is Coca-Cola Enterprises Inc. (CCE) carrying a Zacks Rank #2 (Buy).