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Energy Drink Business Is Booming, But…

Energy Drink Business Is Booming, But…

Regulatory oversight may change how energy drinks and other products with added caffeine can be sold at retail

With sales up an explosive 60% since 2008, energy drinks are riding a high akin to the boost they induce in consumers. 

Indeed, Americans are increasingly caffeine-driven considering that coffee and energy drinks are the fastest-growing Center Store categories, according to an IRI report.

Manufacturers have responded with functional innovations like Monster Rehab, which blends energy drink with tea and juice, and low-carb Rockstar 2x, with extra caffeine.

The stimulant has even found its way into new categories. There are caffeine-infused Cracker Jack’d Power Bites, Jelly Belly Sports Beans and Wrigley’s Alert Energy Caffeine Gum, with 40mg of caffeine — about the same as in a half-cup of coffee.

The energy category has been a boon to food retailers, but regulatory oversight threatens to change if and how these products can be sold at retail. 

Wrigley has announced it is pulling Alert Energy Caffeine Gum off the market.
Wrigley has announced it is pulling Alert Energy Caffeine Gum off the market.

Prompted by the availability of Wrigley’s Alert Energy gum and other caffeinated products, the Food and Drug Administration last week launched an investigation into the health impact of “new and easy sources of caffeine” on children. FDA hasn’t approved the use of caffeine in food since the 1950s for cola.

“FDA is taking a fresh look at the potential impact that the totality of new and easy sources of caffeine may have on health, particularly vulnerable populations such as children and youth, and if necessary, will take appropriate action,” said Michael Taylor, FDA deputy commissioner for Food and Veterinary Medicine, in a statement.

For Wrigley’s part, it is careful not to target young people with its new product, and even exceeds regulatory requirements by disclosing caffeine content on-pack, according to spokeswoman Jennifer Jackson Luth.

“Alert competes in the well-established energy category. It is developed for adults and will be marketed to consumers 25 and older,” she said.  “As the FDA refines its approach to caffeine, we welcome the opportunity to work with them on this important topic.”

[UPDATE: Wrigley has put the brakes on its new Alert Energy Caffeine Gum. "After discussions with the FDA, we have a greater appreciation for its concern about the proliferation of caffeine in the nation’s food supply," according to a Wrigley statement.]

Earlier this year, a group of researchers, scientists, clinicians and public health professionals urged FDA Commissioner Margaret Hamburg to take action with regards to caffeine by apply the existing GRAS (Generally Recognized As Safe) standard for sodas to energy drinks and other beverages that contain caffeine as an additive.

“We conclude that there is no general consensus among qualified experts that the addition of caffeine in the amounts used in energy drinks is safe under its conditions of intended use as required by the GRAS standard, particularly for vulnerable populations such as children and adolescents,” read the health experts’ missive.

Product positioning and marketing claims have also come under scrutiny amidst reports submitted to the FDA of adverse reactions and even deaths of minors who consumed energy drinks. Developments have unfolded under the watchful eye of local, city and state legislators who have introduced bills that would restrict the sales and marketing of energy drinks.

Energy Drink Regulation

Last month, the nation’s first Energy Drink Education and Protection Plan was approved in Suffolk County, N.Y. — the fourth most populous county in the state, and home to 1.5 million residents.

In addition to prohibiting the advertising of stimulant drinks to minors, the measure, scheduled to take effect next month, bans their sale to minors in county parks. The plan also outlines a public education campaign to increase awareness of the side effects associated with stimulant drink consumption, according to its author, Suffolk County Legislator  Dr. William Spencer.

Energy drink lobbyist Matthew Vishnick deems the ban an unnecessary footstep towards further restrictive legislation against the industry.

“Suffolk County sells approximately 1,000 energy drinks per hour. If they were truly unhealthy, the county would know and they could point a finger, but there hasn’t been any definitive proof that they’re unhealthy or cause negative effects on consumers,” Vishnick said.

Maureen Beach, spokeswoman for the Washington-based American Beverage Association, which represents the non-alcoholic beverage industry, concurs, noting that “a Suffolk County Board of Health official said during the hearing phase that there has not been a single reported incident of adverse health related to energy drinks anywhere in Suffolk County. Public policy should not be based on sensational stories about something which these legislators admitted they had little knowledge; it should be based on facts and science.”

Legislator Spencer, a pediatric ear, nose and throat physician, said his intent is not to stifle sales, but to empower parents to decide what’s best for their children — supervision that was not possible when a colleague’s teenage son received a free sample of energy drink mix in the mail.

“My goal is not to limit business, it’s not to have the government parent, it’s to have parents parent,” Spencer told SN.  “It crosses the line when you have [an energy drink] sample that’s labeled ‘not recommended for children’ mailed directly to a minor.”

Read more: Precedent-Setting Energy Drink Legislation Approved

Tom Pirko, president of Bevmark Consulting, and advisor to many of the major energy drink players, said that given the care energy drink manufacturers take to avoid marketing to minors, the mailing was likely a mistake.

“Just because someone gets [a sample] doesn’t mean there is a massive campaign out there to tempt the youth of America,” he said. “They really try to expunge anyone who is under age.”

The ABA’s Beach said that energy drink makers recognize that parents want more control over what their children consume and that’s why they’ve taken voluntary action.

“They will neither market to children or sell their products in K-12 schools,” she said.

5-Hour Energy, which commands nearly 89% of the energy shot category according to Packaged Facts, strictly markets its shots to adults, spokeswoman Elaine Lutz told SN.

“5-Hour Energy shots are intended for busy adults who need a boost and are not marketed to children, nor does the company condone their purchase or use of this product,” she said.

Other Regulation Proposed

In addition, many comply with the ABA’s Guidance for Responsible Labeling and Marketing, which states that energy drink packaging should voluntarily display total caffeine content along with an advisory statement indicating that the product is not intended or recommended for children, pregnant or nursing women and persons sensitive to caffeine. But that’s not preempted lawmakers from proposing restrictive measures elsewhere in the country.

In Illinois, State Rep. Laura Fine, D-Glenview, has authored a bill that would ban the sale of energy drinks to people under 18.

In Chicago, Alderman Ed Burke proposed a plan to ban the sale and  distribution of energy drinks containing at least 180  milligrams of caffeine, and  taurine or guarana.

More measures may follow, as Legislator Spencer has been in contact with lawmakers from other municipalities, including neighboring Nassau County, and New York State.

Read more: Energy Drinks 'a Bright Spot' for Retailers

U.S. Sen. Richard Blumenthal, D-Conn., who, along with Sen. Dick Durbin, D-Ill., recently urged energy drink makers to stop marketing their products to children, has also reached out to Spencer.

Meanwhile, critics  maintain that such measures are prejudicial to the energy drink industry.

“Proposals like this to ban a non-alcoholic  beverage that is already regulated by the FDA, and contains significantly less caffeine than widely consumed coffeehouse coffees, are simply not grounded in facts or science,” said Beach.

Spencer is likewise  willing to leave matters up to the federal agency.

“If the FDA comes out and says [energy drinks] are safe, we’re more than willing to suspend this legislation,” he said.

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