SAN FRANCISCO -- In a settlement agreement that will permanently keep caffeine and other stimulants out of Four Loko alcohol products, beverage manufacturer Phusion Projects LLC has also agreed to keep an eye on social-media websites to have images and videos of its "products portrayed in an irresponsible manner" removed.
Phusion Projects voluntarily removed caffeine, guarana and taurine from its Four Loko line of beverages in 2010, following outcry by numerous health groups and the threat of a ban by some U.S. legislators.
Still Tuesday's settlement between 20 attorneys general and the city attorney of San Francisco is being hailed as a win by groups battling underage and irresponsible drinking, who often invoke the names of well-known convenience stores when citing the issue as c-stores are the primary channel of sales for the products.
"The agreement is a strong statement in the right direction to control the alcopop advertising and marketing practices of one company that leads the race to the bottom in self-regulation," stated Bruce Lee Livingston, Executive Director/CEO of Alcohol Justice, an industry watchdog group dedicated to removing marketing of alcoholic beverages to youths. "Unfortunately this order cannot reduce the supersized alcohol content or the availability of Four Loko or other cheap alcopops at any 7-Eleven or other convenience store."
The settlement resolves allegations that Phusion marketed and sold flavored malt beverages, namely Four Loko, in violation of consumer protection and trade practice statutes by promoting Four Loko to underage persons, promoting dangerous and excessive consumption of Four Loko, promoting the misuse of alcohol, and failing to disclose to consumers the effects and consequences of drinking alcoholic beverages combined with caffeine.
Additionally, the settlement addresses Phusion’s practice of manufacturing, marketing and selling unsafe and adulterated caffeinated alcoholic beverages prior to a November 2010 letter from the U.S. Food & Drug Administration warning Phusion that caffeinated Four Loko is an unsafe product.
“What Four Loko did in marketing their products and encouraging irresponsible behavior by underage kids is simply unacceptable,” said Ohio Attorney General Mike DeWine. “This agreement will put a stop to these practices that encouraged young people to consume their beverages in an irresponsible way.”
As part of the settlement, Phusion agreed to not manufacture caffeinated alcoholic beverages and reform how it markets and promotes its non-caffeinated flavored malt beverages, including Four Loko.
A major part of that includes policing social-media websites, where Four Loko drinkers have posted videos of themselves guzzling the 23.5-ounce cans of the 12%-alcohol-by-volume beverages.
To that end and under the Assurance of Voluntary Compliance, Phusion cannot:
- Promote binge drinking, drinking while driving, consuming an alcoholic beverage by means of a rapid ingestion technique or device, or underage drinking.
- Promote to consumers, wholesalers, distributers or marketers mixing its flavored malt beverages with products containing caffeine.
- Sell, offer for sale, distribute or promote alcoholic products to underage persons.
- Hire underage persons or actors under the age of 25 to promote alcohol products.
- Hire models or actors for its promotional materials that are under the age of 25 or that appear to be under the age of 21.
- Promote flavored malt beverages on school or college property, except at retail establishments licensed to sell alcoholic products.
- Use names, initials, logos or mascots of any school, college, university, student organization, sorority or fraternity in Phusion’s promotional materials for its alcohol products.
- Distribute, sell, provide or promote merchandise bearing the brand name or logo of flavored malt beverages to underage persons.
Violations of the settlement would require Phusion Projects to pay the State Attorneys General that are signatories to the settlement and the city attorney of San Francisco a combined $400,000.
For his part, Phusion Projects president Jim Sloan remains somewhat defiant. "While our company did not violate any laws and we disagree with the allegations of the State Attorneys General, we consider this agreement a practical way to move forward and an opportunity to highlight our continued commitment to ensuring that our products are consumed safely and responsibly only by adults 21 and over," he said in a statement. "The agreement also notes Phusion’s decision several years ago, in 2010, to reformulate Four Loko to remove caffeine, as well as guarana and taurine. Today, Four Loko products without caffeine, guarana, or taurine are sold in 48 states and will continue to be available to consumers. Phusion continues to believe, however, as do many people throughout the world, that the combination of alcohol and caffeine can be consumed safely and responsibly."
And in a brief statement to its consumers, Chicago-based Phusion Projects posted on its Facebook page on Monday: "Four Loko isn't going anywhere. We will continue to bring our loyal fans the products they love. Thanks for your support."
Click here to read the complete settlement.
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