Tomahawk, WI 08/15/2014 (Basicsmedia) – The Coca-Cola Company (NYSE:KO) looks set to offset a decline in its carbonated-soft-drink business after agreeing to increase its stake to 17% in energy drink marketer, Monster Beverage Corp (NASDAQ:MNST). CNBC’s Digital Senior Writer John Jannarone believes the latest move by Coca-Cola is part of a long-term strategy to OWN the entire Monster Company taking into consideration that CEO, Muhtar Kent had already stated that they could increase their stakes to 25%.

Coca-Cola Company (NYSE:KO) and Monster have been two completely different entities in the industry despite operating in the larger beverage segment. Coca-Cola total volumes sales for last year were down by 2% in contrast to an 8% growth of the same for Monster. The move to increase its stake in Monster could not have come at a better time as Coca-Cola had promised to double its revenue by 2020.

“[…] it’s a step towards potentially owning the whole thing someday that’s why the stock is reacting so well, and there were all kinds of reason for all this to happen. The main thing is growth; look at the bigger picture numbers coke is seeing volume declines. Last year down 2%, Monster is up 8%, and they have promised investors they are going to double revenue between 2010 and 2020 so they can’t really do that on their own,” said Mr. Jannarone.

Coca-Cola Company (NYSE:KO) move to increase its stake in Monster is a strategy in a way, aimed at preventing another company coming in and acquiring the same from under its watch. Coca-Cola according to Jannarone relies heavily on Monster for 15% of its profit especially for operations in the U.S.

“[…] there is always a risk that somebody else was going to come in and sweep this from under them. They already have pretty big deal with Monster, and they generate something like 15% of their operating profits in the U.S from that monster agreement, so if Pepsi or Bart came in and bought Monster they would be in real trouble,” said Mr. Jannarone.

 Monster currently commands a huge market share in the U.S especially in the energy drink segment having also gained a substantial amount of market share in the overseas markets. Coca-Cola Company (NYSE:KO) 17% acquisition stake in Monster is valued at 2.15 billion.

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