“The Energy Drink Cartel: Why Consumers Are Paying the Price for a Rigged Market”

“The Energy Drink Cartel: Why Consumers Are Paying the Price for a Rigged Market”

By: Nick Kuppler

Introduction:

Whether working out, powering through the last four hours of a 9-5, or cramming for a late-night study session, energy drinks have become a daily necessity for millions worldwide. Over the past few decades, their popularity has exploded, especially among gym rats, students, and blue-collar workers.[1] However, this growth in popularity and the current market conditions have resulted in a cost to consumers. Since Red Bull and Monster do not have real competition in the caffeine industry, it has not only driven up costs in the industry, but it has also stifled innovation and limited the variety and accessibility of new energy drink options. This market is quickly becoming a duopoly, if it hasn’t already become one. It is undeniable that Monster and Red Bull have excessive market power.[2] The real question is what needs to be done to restore competition and protect consumers.

How The Monster & Red Bull Duopoly Was Formed

In 1987, Red Bull set what has now become the modern energy drink craze in motion and quickly cemented its position as the market leader.[3] In the following years, Monster gained its position through aggressive acquisitions and relentless marketing, securing itself as the primary alternative.[4] In present day, Monster and Red Bull have transformed the energy drink market into a near-duopoly, controlling nearly 70% of global sales.[5] This dominance has made it almost impossible for smaller competitors to get a seat at the table, leaving consumers with limited choices.

One major contributor to their continued success is their strategic partnerships with large beverage distributors. Red Bull has partnered with Keurig Dr. Pepper, while Monster partnered with Coca-Cola.[6] These partnerships provide both brands with crucial distribution networks that smaller competitors have difficulty accessing. Additionally, their agreements with large retailers have ensured prime shelf space for their products, pushing out emerging brands. It’s rare to walk into a store and not see Red Bull or Monster lined up on the shelves. Whereas smaller companies, like Alani Nu and Celsius, struggle to gain visibility and shelf space, making it increasingly difficult for them to compete.[7]

This tight grasp on distribution and marketing allows both companies to raise prices without any real fear of influence from competitors. As a result, innovation is stifled. Without any real viable alternatives to challenge them, Monster and Red Bull have minimal incentives to offer discounts or worry about their prices being too high. This dominance means that prices have steadily risen over the past decade, often outpacing inflation and production costs.[8] Monster and Red Bull may blame supply chain issues or rising ingredient prices on the increased cost. The reality is that consumers are forced to pay these costs because the “competitive” landscape of the energy drink market allows these two giants to act however they please.

This sharp price increase is not prevalent in other competitive beverage markets. For example, prices have remained the same in the soft drinks and alcohol market, where brands constantly fight for dominance through discounts, promotions, and innovation. Monster and Red Bull, on the other hand, do not need to engage in such competition. Instead, they stick to their pricing models, relying on brand loyalty and the lack of viable alternatives to keep consumers locked in.

Smaller brands face significant barriers to entry, from high marketing costs to difficulty securing retail space and navigating distribution networks that the industry’s two giants have tightly controlled. These larger corporations almost immediately acquire many brands that manage to gain some market shares before they can even make a name for themselves in the industry.[9] This lack of competition chills innovation. Smaller companies with more affordable options are left to fight a losing battle against Red Bull and Monster’s dominance. As long as this duopoly persists, consumers will continue to face rising prices, limited choices, and a static market.

The Need for Antitrust Regulation in the Energy Drink Market

Given the dominance of Monster and Red Bull and the lack of meaningful competition in the energy drink market, antitrust regulations are essential to restore balance. The current landscape, which has led to rising prices, limited choices, and a lack of new entrants, is a clear example of market failure. With no other energy drink companies gaining and growing their market share, consumers have no choice but to pay their rising prices.

The primary objective of antitrust law is to prevent companies from abusing their market power at the expense of consumers and competition. Monster and Red Bull’s position and influence in the industry is a prime example of such abuse. The first step toward solving this issue is acknowledging that it is a clear antitrust concern. The U.S. Federal Trade Commission (FTC) and the Department of Justice (DOJ) should take decisive action by launching antitrust investigations into both of these companies’ business practices. Suppose evidence shows that they have engaged in price-fixing, exclusive supply agreements, or predatory practices that prevent new entrants from competing. In that case, formal lawsuits should be pursued by either the FTC, DOJ, or other energy drink brands that are being harmed in order to hold them accountable.

In pursuing these suits, one of the most effective measures to restore competition is restricting further mergers and acquisitions. Over the past decade, Monster has acquired multiple smaller beverage brands, including Bang Energy’s assets and a significant stake in other emerging drink companies.[10] This consolidation trend has eliminated competition before it has a chance of gaining any market share. Federal regulators should attempt to block any further acquisitions that reduce competition. This would ensure that smaller brands have an opportunity to establish themselves rather than being swallowed up by the industry’s two dominant players.

Another crucial step could be implementing retroactive remedies, such as forced divestitures. If a company has obtained excessive market power through anti-competitive means, regulators can require the company to sell off certain assets or brands. For instance, the regulators could break off Monster’s partnerships with Coca-Cola’s distribution network, allowing smaller brands to access the same retail channels. This would certainly help to level the playing field. Additionally, restricting exclusivity agreements with retailers—where Monster and Red Bull secure prime shelf space while locking out competitors—would promote fairer access for emerging brands.

Because Antitrust regulation is not just about preventing unfair business practices but also protecting consumers from exploitative pricing, one potential remedy could involve requiring energy drink manufacturers to commit to reasonable pricing practices. This would be similar to how regulators oversee pharmaceutical pricing in some instances.[11] If Monster and Red Bull continue to raise their prices well above normal inflation without sufficient justification, regulators could implement reasonable pricing practices by mandating transparency in cost structures and imposing temporary price controls until meaningful competition is restored. While such measures should be used sparingly, they may be necessary in situations where consumer exploitation is clear.

At its core, antitrust regulations ensure a competitive, dynamic marketplace where companies must earn consumer loyalty through quality and price—not simply by using their market power to shut out competitors. Critics would certainly argue that aggressive antitrust intervention, such as blocking acquisitions or enforcing price regulations, could constitute government overreach and interfere with free market principles. However, it is essential to remember that true market competition cannot exist when two dominant players control pricing, distribution, and access to retail space.

Antitrust laws have never been about punishing successful companies, but rather, they are about preventing them from using their dominance to eliminate fair competition. While an aggressive approach, similar intervention has been successfully used in industries like telecommunication and pharmaceuticals.[12]

Conclusion

The energy drink market is at a breaking point. The unchecked dominance of Monster and Red Bull has driven up prices, stifled innovation, and left consumers with fewer choices. Without regulatory intervention, this duopoly will continue consolidating power, making it nearly impossible for new brands to compete. Antitrust enforcement offers a clear path forward. Competition can be restored through legal action, merger restrictions, and pricing oversight. The time to act is now. If regulators fail to step in, consumers will continue to suffer the consequences of an increasingly monopolized industry.

[1] Energy Drinks Market Size, Share & Growth Report: Report Summary, 2030, Grand View Research https://www.grandviewresearch.com/industry-analysis/us-energy-management-systems-ems-market.

[2] Id.

[3] Doug Mack, The Energy Drinks of the Early 1900s, Snack Stack (Aug. 9, 2023), https://snackstack.net/2023/08/09/the-energy-drinks-of-the-early-1900s/.

[4] Id.

[5] M. Ridder, Modern Share of the Leading Energy Drink Brands in the United States in 2023, Statista (Dec. 10, 2024), https://www.statista.com/statistics/306864/market-share-of-leading-energy-drink-brands-in-the-us-based-on-case-volume-sales/.

[6] Id.

[7] Id.

[8] M. Ridder Global: Average Energy & Sports Drinks Price Worldwide 2019-2029, Statista (Oct. 10, 2024), https://www.statista.com/statistics/1345672/price-per-unit-energy-drinks-worldwide/.

[9] Monster Beverage Completes Acquisition of Bang Energy, Monster Beverage Corporation (July 31, 2023), https://investors.monsterbevcorp.com/news-releases/news-release-details/monster-beverage-completes-acquisition-bang-energy

[10] Id.

[11] Filip Conic, Matthias Buente & Morris Hosseini, US Pharmaceutical Pricing at a Crossroads, Roland Berger (Feb. 5, 2024), https://www.rolandberger.com/en/Insights/Publications/US-pharmaceutical-pricing-at-a-crossroads.html.

[12] Id.; see also Robert Crandall, The AT&T Divestiture: Was it Necessary? Was it a Success?, U.S. Department of Justice (Mar. 28, 2007), https://www.justice.gov/archives/atr/att-divestiture-was-it-necessary-was-it-success.