Monster Beverage Corporation
) slumped recently on news that the American Medical Association
(AMA) may impose a ban on marketing of energy drinks.
The AMA's House of Delegates has proposed the ban to
discourage youngsters under the age of 21 from consuming such
drinks with high caffeine content due to the possible health
hazards. Youngsters get charged up from the caffeine and other
ingredients in such stimulating drinks. AMA will be meeting this
weekend to debate and possibly decide on this ban. The meeting
could possibly result in a recommendation to curb sales of such
stimulating drinks to youngsters.
If the ban gets through, it may significantly hurt the sales
of this California-based energy drink maker, whose Monster Energy
brand of energy drinks represents more than 90% of total
Other beverage giants like
The Coca Cola Company
) also make energy drinks and may face a setback with the
proposed curb on advertising of such drinks. As it is, these cola
giants are seeing sluggish sales of its colas due to changing
consumer preferences and increasing health consciousness. Rising
obesity concerns, possible new taxes on sugar-sweetened beverages
and growing regulatory pressures are also affecting PEP and KO's
carbonated beverage sales. However, unlike Monster Beverage,
energy drinks make up a very small part of their product
Forbes.com reported that these high-energy drinks have become
increasingly popular in recent years with sales increasing 240%
from 2004-2009. Moreover, the site reported that studies have
revealed that energy drinks contain excessive amounts of
caffeine. One can of a stimulant drink may contain caffeine
equivalent to around 50 cups of coffee.
Monster Beverage carries Zacks Rank #5 (Strong Sell).
Flowers Foods, Inc
), carrying Zacks Rank #1 (Strong Buy), is a consumer staples
stock that is currently doing well.
FLOWERS FOODS (FLO): Free Stock Analysis
COCA COLA CO (KO): Free Stock Analysis Report
MONSTER BEVERAG (MNST): Free Stock Analysis
PEPSICO INC (PEP): Free Stock Analysis Report
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