US: Monster Beverage Corp faces legal probe over flagship brand
Monster is facing a legal probe into its flagship brand
Monster Beverage Corp has confirmed that it has recieved a subpoena from a US state attorney general over an investigation into its flagship energy drink.
However, analysts believe Monster may not be alone in facing regulatory action.
In a filing yesterday (9 August), the California-based group said the investigation concerns the "advertising, marketing, promotion, ingredients, usage and sale of its Monster Energy brand of energy drinks". The probe is at an "early stage" and it is not yet known if any action will be taken by the attorney general, the filing added.
No further details were given by Monster.
However, analysts Stifel Nicolaus said it believed the case could relate to a letter sent by Illinois Senator Richard Durbin to the US Food and Drug Administration (FDA) in April asking for "regulatory action relating to caffeine levels and other additives in energy drinks".
It also said it understood that Monster is "not alone in receiving a subpoena".
The analysts added that it could hit the group's share price. "We believe the disclosure of the investigation is negative for MNST (Monster) shares as it will likely increase scrutiny of the energy drink category, which could impact company sales growth," the note added.
According to the Stifel Nicolaus, on a per ounce basis, Monster has less caffeine than Starbucks coffee and 3.6 times that of Coca-Cola.
Earlier this week, Monster reported a surge in first-profits and plans to expand into more international markets.
Separately, it has also emerged this week that the company is facing a copyright claim from US hip hop group the Beastie Boys over allegations around the use of the act's music in some of Monster's online promotional activity.
Shares in Monster are currently down by 9.69% today at US$61.20.
Nobody was available for comment from the company.
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