ALBANY, N.Y. -- New York's attorney general is investigating whether the energy-drink industry is deceiving consumers with misstatements about the ingredients and health value of its products, reported The Wall Street Journal.
Eric Schneiderman issued subpoenas in July to PepsiCo Inc., maker of AMP; Monster Beverage Corp.; and Living Essentials LLC, maker of 5-hour Energy drink, a person familiar with the matter told the newspaper. The subpoenas asked for information on the companies' marketing and advertising practices.
The caffeinated, carbonated beverages have become ubiquitous at grocery stores, gas stations and checkout counters across the country. Makers of the drinks, which are often sweetened with flavors such as grape or mixed berry, say they boost energy with a mix of additives including B-vitamins, taurine and ginseng. AMP's website, for example, says the B-vitamins and caffeine in its Boost drinks offers "the kick you need to tackle the early morning meeting." On its website, 5-hour Energy says it gives "hours of energy" with "no crash later."
Energy drinks are among the fastest-growing products in the beverage sector. U.S. retail sales of the drinks rose 16% last year to $8.9 billion, accounting for 12% of the carbonated-soft-drink category, according to the report, citing Beverage Digest. Monster leads in the United States by volume, ahead of Austria's Red Bull GmbH and Rockstar Inc.
The drinks are regulated more loosely than traditional sodas such as cola, said the report.
In 2009, the U.S. Food & Drug Administration (FDA) said it was "concerned" certain ingredients such as botanical extracts were being added to beverages and foods beyond their traditional use, which it said raised questions about safety. The federal agency says the term "energy drink" is not defined by any FDA regulation, describing it as an ill-defined marketing term with widely varying ingredients.
The investigation is focused on whether the drink makers are misleading consumers with inaccurate labeling and advertising, the person familiar with the matter told the Journal. The investigation is in the early stages and could expand to other companies, that person said.
Spokespeople for PepsiCo, Monster and Living Essentials declined to comment.
Investigators are examining whether the companies overstated the benefits of exotic-sounding ingredients while understating the role of caffeine, a common stimulant that industry critics believe to be the main active ingredient, the source said.
The products' labels often do not say how much caffeine is contained in the drink, the report said. The label on Monster's 16-ounce can says it contains caffeine, but does not say how much; 5-hour Energy does not say how much caffeine is contained in one bottle, but its website says it is about as much as a cup of coffee.
A Monster spokesperson said that on a per-ounce basis, Monster contains half the caffeine of some cups of coffee. "Monster energy drinks are completely safe, and we stand behind our products," she told the paper . AMP's label says it contains 10 milligrams per fluid ounce.
Investigators are looking into whether the addition of ingredients like guarana--another source of caffeine--violates laws that ban putting multiple sources of caffeine in one beverage without disclosing the overall amount, according to the person familiar with the investigation.
In related news, contrary to conventional scientific consensus, an researcher in Italy said that his study suggests that energy drinks may have positive heart benefits (see Related Content below).
If energy-drink makers are found to have violated certain New York state laws regulating food and drugs, they could be forced to pay civil fines and penalties, and to change their labeling and marketing, the report said.
While the FDA generally has jurisdiction to regulate food and drink safety, state attorneys general also have powers to investigate and regulate almost any product sold within the boundaries of their states.
California-based Monster disclosed in an August 9 Securities & Exchange Commission (SEC) filing that it received a subpoena in July as part of an unnamed state attorney general's probe into the "advertising, marketing, promotion, ingredients, usage and sale" of its energy drinks. 5-hour Energy disclosed in a July bond-offering memorandum a state attorney general recently requested documents about its product and marketing.
Those disclosures are related to the New York attorney general's probe, people familiar with the matter said.
Separately, the members of the hip-hop group The Beastie Boys are suing Corona, Calif.-based Monster over what the Beastie Boys say was an unauthorized, 23-minute medley of their music in a promotional video, the Associated Press reported earlier this month. Member Adam Yauch died of cancer in May. Surviving members Michael Diamond and Adam Horovitz, along with Yauch's widow, Dechen Wangdu Yauch, filed the lawsuit. Yauch's will states: "In no event may my image or name or any music or any artistic property created by me be used for advertising purposes."
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