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Monster discloses probe of advertising practices

Thu, 08/09/2012 - 5:41pm
The Associated Press

Shares of Monster Beverage Corp., the country's biggest energy drink maker, sank Thursday after the company disclosed that it was being investigated for its advertising practices.

The Corona, Calif.-based company said in a filing with the U.S. Securities and Exchange Commission that it received a subpoena last month from an unspecified state attorney general's office concerning the advertising, marketing, promotion, ingredients, use and sale of its energy drinks.

A representative for the company, Roger Pondel, declined to comment beyond what was disclosed in the filing.

The company said in the filing that the investigation is in an early stage and that it's unknown if the state attorney general will take any action, or whether such action would significantly impact its business.

Shum Preston, a spokesman for the California Justice Department, a division of the state's attorney general's office, said the agency does not confirm or comment on any potential investigations. Although Monster is based in California, the company is still subject to investigation by other jurisdictions where its drinks are sold.

Energy drinks are a fast-growing segment of the beverage industry. Last year, the category grew volume by 16.6 percent, according to Beverage Digest. Monster had a 35 percent share of the market, Red Bull had 30 percent and Rockstar had 19 percent.

Shares of Monster were down $3.76, or 6 percent, at $57.44 in after-hours trading, after falling $6.57, or 10 percent, to close at $61.20.

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