N.Y. Restricting 'AEDs'

NYACS says state has habit of "jumping gun," hurting c-stores

ALBANY, N.Y. -- Governor David A. Paterson and State Liquor Authority (SLA) chairman Dennis Rosen on Sunday announced that the SLA has reached a voluntary agreement with Four Loko producer Phusion Products LLC to stop shipping alcoholic beverages that contain caffeine and other stimulants to New York State by Friday, November 19, 2010. In addition, Phusion Products has agreed to fund alcohol awareness programs to educate licensees and consumers about the dangers of alcohol and binge drinking.

"New Yorkers deserve to know that the beverages they buy are safe for consumption," [image-nocss] Paterson said. "The voluntary agreement reached this weekend between beverage distributors and the [SLA] is an important first step toward permanently removing alcoholic energy drinks from the marketplace. I'll continue to work with the beverage industry to protect the safety of all New Yorkers. I'd like to thank Chairman Rosen for his efforts on this issue and the beverage industry for working with the state to achieve this agreement."

Paterson also announced that the state's largest beer distributors have voluntarily agreed to stop selling malt beverages that contain caffeine and other stimulants. Under the voluntary agreement reached late Saturday, beer distributors will stop placing orders for these alcoholic energy drinks (AEDs) immediately, and will be given until December 10, 2010, to clear their inventory of the products, with retailers given additional time to sell off existing stock.

"We have an obligation to keep products that are potentially hazardous off the shelves, and there is simply not enough research to show that these products are safe," Rosen said. "I want to thank the industry, particularly the New York State Beer Wholesalers Association, for stepping up to the plate and helping us accomplish this in an orderly fashion. I also want to thank Governor Paterson, Senator [Charles] Schumer and State Senator Jeffrey Klein for bringing these issues as well as the dangers of binge drinking among youths to the forefront."

The agreement was reached after extensive conversations between industry leaders and the SLA regarding concerns over the potential dangers of these products, including the caffeine content and its potential to mask the effects of alcohol in the short term. After determining there is not enough evidence to ensure these products are safe for consumption, distributors agreed to voluntarily stop selling the products within an agreed upon time frame.

Steve Harris, president of the New York State Beer Wholesalers Association, said: "We commend Chairman Rosen and his staff for their willingness to work with the industry regarding this difficult issue. We are pleased to be a partner in the process of resolving the tangled issues that have surrounded these products."

So-called AEDs are flavored malt beverages in which caffeine or other stimulants such as guarana, taurine or ginseng, have been intentionally added in high levels by the manufacturer. AEDs do not include products that are flavored with coffee or real tea.

Chicago-based Phusion said that it begin selling only noncaffeinated versions of its products in New York as the U.S. Food & Drug Administration (FDA) continues its now year-long examination of approximately 40 caffeinated alcoholic beverage products on the market nationwide.

"We were the first company to take this proactive, voluntary step. And we think it shows that we are not turning a deaf ear to what's going on: that a select few have chosen to abuse our products, drink them while underage or break the law and sell them to minors," said Phusion co-founder and managing partner Jaisen Freeman. "We understand that the [SLA] wants to address alcohol abuse and underage drinking. The only effective way to do that is with stricter enforcement of existing alcohol laws and more education and awareness. This is why the alcohol education component of this agreement was important to us."

Under the agreement, Phusion reserves the right to apply to resume the sale and distribution of caffeinated alcoholic beverages, including Four Loko, in the state if emerging science, regulatory developments or other relevant changes in circumstances arise. The same applies if other alcoholic beverage companies are allowed to distribute and sell caffeinated alcoholic beverages in New York. (Click here to view the full statement.)

According to a statement released by the New York Association of Convenience Stores (NYACS), there is no cutoff date for retailers to stop selling the product. Stores will be able to sell through the inventory they receive prior to December 10.

"The SLA didn't want to saddle retailers with the cost of dumping unsalable product; however, they cautioned that if a particular store still has large quantities of the product on hand after the first to the year, they will begin to ask questions," said NYACS.

Rosen reached out to NYACS for input prior to the announcement, the association said.

"While convenience store operators share the community's concerns about misuse of regulated beverages, any ban on alcoholic energy drinks would perpetuate two regrettable traditions of New York regulatory policy--jumping the gun on product restrictions and chasing customers away from convenience stores," the group responded.

Meanwhile, State Senator Jeff Klein (D), said that he will introduce legislation in the state Senate that seeks to address what he called the "deceptive" labeling practices used by the manufacturers of the drinks by strengthening the SLA's ability to review and enact more rigorous labeling standards for beverages that have a combination of 2% alcohol by volume and 5 milligrams of caffeine. In addition, Klein called for an increase in fines for those caught selling to minors.

(Click here for previous CSP Daily News coverage of caffeinated alcoholic beverages.)