by James F. Peltz
Jolted by surging sales of the Bang energy drink, Monster Beverage Corp. is fighting back in court by alleging that Bang’s producer engages in false advertising and other business malfeasance.
Monster, the energy drink sector’s biggest player along with Red Bull, filed an expanded lawsuit against Bang maker Vital Pharmaceuticals Inc. and its chief executive, Jack Owoc, on Wednesday that claims Bang’s growth is fueled by “flagrant consumer deception and systematic anti-competitive business practices.”
Monster initially sued Vital last September, alleging it was “deceiving the public about the product’s ingredients and the benefits of consumption.”
Vital this week sued Monster, claiming trademark infringement, to which Monster responded by saying the complaint was an attempt to shift attention from its original suit against Vital.
In its latest suit, Monster alleged that “Bang’s main pitch to consumers” — the drink’s “super creatine” compound — “is a hoax,” and that Vital also has interfered with distribution contracts to gain in-store shelf space at Monster’s expense.
Monster also alleged that Vital, which also uses the name VPX Sports, made attempts that “appear to have succeeded” in stealing trade secrets from former Monster employees it hired.
Vital said in a statement to The Times that Monster’s latest suit was “riddled with false and inflammatory allegations” and said Monster was suing because of “its inability to compete with VPX’s Bang energy drink in the marketplace.”
“Monster is simply living up to its reputation of being an overly litigious ‘bully’ and employing scorched-earth tactics to deal with perceived competitors,” privately held Vital said, adding that it “will address Monster’s sham complaint in due course” and was confident it would be dismissed.
Corona-based Monster acknowledged in its latest suit, filed in U.S. District Court in Santa Ana, that Bang has “experienced significant market growth” and that “Monster’s shelf space is Bang’s primary target.”
Indeed, Bang “is clearly taking [market] share from Monster,” said Duane Stanford, executive editor of the trade journal Beverage Digest. The litigation shows “Monster is ready to defend that ground,” he said.
Protecting market share is crucial today because the sales growth of the overall energy drink sector has slowed from a decade ago, when the drinks exploded in popularity.
“The battle becomes how well you take sales from other companies,” Stanford said.
In the 12 months that ended in mid-March, U.S. retail sales of the drinks — often sold in convenience stores and bought by young adults — totaled $14 billion, up nearly 10% from a year earlier, according to Beverage Digest.
Monster led the sector with 36% of the market, followed closely by Red Bull at 35%. Bang was seventh at 3.2% over that span, but more recently, Bang’s share has more than doubled to 7%, Stanford estimated.
One reason: Bang is increasingly popular at fitness clubs because the company, in its own words, claims to be a leader in “performance-enhancing beverages and sports nutrition.”
One Vital product, for instance, is Bang Pre-Workout Master Blaster. It’s caffeine-free but includes such ingredients as Vital’s super creatine supplement.
The advertising on Bang’s website notes that its statements about its ingredients “have not been evaluated” by the U.S. Food and Drug Administration and that the product “is not intended to diagnose, treat, cure or prevent any disease.”
But Monster alleged in its suit that “contrary to statements on Bang’s label, there is no creatine in Bang” and that Bang’s “super creatine is not creatine.”
Creatine is an amino acid that facilitates muscle energy, and it’s generated by the body or made synthetically and can be taken as a supplement, according to the Mayo Clinic website.
Monster said in its suit that a Yale University pharmacologist had “tested multiple formulations of Bang” and each time “could not detect any amount of creatine in Bang.” The suit also alleged that “the super creatine compound is functionally useless.”
The suit also alleged that Vital interfered with sales and contractual rights “by rewarding employees and distributors for stealing valuable in-store shelf space” that belonged to Monster.
Monster, formerly known as Hansen Natural Corp., once was an obscure seller of fruit juices and sodas. But it exploited the energy drink trend with its Monster line and the company’s sales soared.
Monster said in its lawsuit that the company has spent more than $5 billion in advertising and marketing its brand since the Monster line debuted in 2002.
Monster and other energy drink makers also have faced lawsuits alleging that their drinks, often rich in caffeine, contributed to serious injuries and deaths.
In its latest annual securities filing with the government, Monster said that it remains a defendant in “a number” of such personal injury suits and that the company “believes that each complaint is without merit and plans a vigorous defense.”
As Monster grew, so did its stock price, soaring from a split-adjusted 10 cents a share in mid-2003 to a close of $52.59 on Wednesday. That surge is a key reason why Monster Chief Executive Rodney Sacks now has a net worth of $1.8 billion, according to Forbes.
Monster’s suit seeks a jury trial, an injunction that blocks Vital’s alleged “unlawful conduct” and financial damages to be proved in court.
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