Beverage, Leverage & Regulation

Energy-drink makers stand firm on products' safety, even as opponents look for a weakness.

Steve Holtz, Editor in Chief, CSP Daily News

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What’s Next?

And that leaves the question: What if?

The consensus is that all the poking and prodding into energy drinks could lead to one of four possible outcomes: no action; increased labeling and cautions; age restrictions; or an all-out ban.

Few believe an all-out ban is likely. “I really hope they don’t [ban energy drinks].I think it would be silly,” says Anthony Perrine, owner of Lou Perrine’s Gas and Grocery in Kenosha, Wis.

Another convenience retailer in the Midwest (who requested anonymity)agrees, but he’s still preparing for any eventuality. The retailer is actively considering how “to replace energy if such regulations are put in place,” he says. He’s also looking at new ways to use assortment or promotions to “drive additional category growth to offset any loss due to energy.”

Beverage analyst Mark Astrachan ofStifel, Nicolaus & Co., St. Louis, says it’s unlikely an overall ban will occur, but anything is possible. “Eight billion drinks have been safely consumed since Monster first started making drinks,” he says.“Currently, I’m unsure of what FDA will decide. Legislators can write laws, but it’s the FDA that says what’s safe.”

For Perrine, “Energy drinks really opened up the morning business for me. Sure, we had the morning coffee customer, but that was an older guy. Energy drinks helped move the morning beyond coffee.”

That could partially be lost if sales of energy drinks are restricted by age, most likely to consumers 18 and older.“There’s going to be some impact to the category if we start age-restricting it. What that is, who knows?” says Dana Sump, packaged beverage category manager for Casey’s General Stores, Ankeny, Iowa. “I don’t think anybody really knows, because we don’t ask people their age when they buy it.”

Perrine admits he sees kids as young as 12 buying energy drinks pretty regularly. He estimates limiting sales to those 18 and older may quash about 15% of his energy-drink sales. Retailers and the ABA generally have few qualms about requiring additional labeling or FDA approval of energy drinks, and some say there could even be some advantages to it.

“It’d keep some of them from getting to market too fast,” says Sump. “That’ll be OK. In my mind, that’ll weed out the ones that don’t belong in the business anyway.”

Responsible energy-drink manufacturers already adhere voluntarily to the ABA’s Guidance for the Responsible Labeling and Marketing of Energy Drinks, according to Maureen Beach, director of communications for the ABA. This includes displaying total caffeine amounts from all sources on their packages, including an advisory statement indicating that the product is not intended(or recommended) for children, pregnant or nursing women, or persons sensitive to caffeine; and not marketing energy drinks to children or selling them in grade or high schools.

But when or where the battle might end is anyone’s guess.

“We won’t speculate on possible actions by FDA,” Beach told CSP. “What we do know at this point is that they plan to hold an expert panel to gather additional information and data at some point in the not-too-distant future. We look forward to the opportunity to provide any assistance during that process.”

The road ahead for energy drinks could be a long one, just as it is for cigarettes, which are constantly under review and attack by various parties. And just as with cigarettes, retailers are advised to follow the laws as they stand in each market or community.

So Are Energy Drinks Dangerous?

There’s much evidence on both sides of this question—much of it circumstantial.

One fact often quoted goes back to a 2011 report of more than 136.1 million emergency-room visits. According to the report, nearly 21,000 of those visits involved energy drinks either as the alleged reason for or a contributing factor to the visit. Both the FDA and American Beverage Association (ABA)say this statistic is of concern. However, ABA says, “it is difficult to draw hard conclusions about the role of energy drinks in these hospital visits because the report did not provide information on the general health of the people involved or other circumstances which may have contributed to their hospital visit.”Similarly, after the news this past falloff 13 deaths tied to energy drinks and shots, U.S. Sens. Richard Durbin (D-Ill.)and Richard Blumenthal (D-Conn.)repeated their request for regulation of caffeine in energy drinks marketed as beverages. In response, Michele Mital, the acting associate commissioner of the FDA’s Department of Health and Human Services, said that to date there is no strong correlation between energy drinks and adverse side effects.“FDA has yet to identify any safety studies that call into question the safety of combinations of various ingredients added to energy drinks under intended conditions of use,” Mital wrote. “If we determine that any such combinations are of concern … we will consider regulatory actions.”It’s at this point in the conversation that Daniel Fabricant, director of the FDA’s Division of Dietary Supplement Program, goes back to a standard FDA tenet.“We always advise: Consult your physician; follow the labeling,” he says.“If it sounds too good to be true, it probably is.”

The FDA’s Role: Don’t Call It an Investigation

The FDA isn’t “investigating energy drinks,” per se. In fact, the agency doesn’t technically recognize the phrase “energy drink.”

“ ‘Energy drink’ is a marketing term. It has no regulatory bearing to the agency,” Daniel Fabricant, director of the FDA’s Division of Dietary Supplement Program, told CSP in an exclusive interview.

Energy drinks can “come to market either as beverages, which are conventional foods, or as dietary supplements,” meaning two different sets of regulation from the FDA. The two most demonized brands recently—Monster and 5-Hour—are both labeled as dietary supplements. Or at least they were. Monster Beverages CEO Rodney Sacks says he will, following the recommendation of the American Beverage Association, retag his drinks as conventional foods, requiring different labeling and, in some states, a better sales-tax position. Critics say the change absolves the beverage maker of the requirement to report “adverse effects” to the FDA. Sacks, however, says it is not his intent to avoid such reporting.

“This change will have the effect of leveling the playing field with our major competitors,” Sacks said in a recent earnings conference call. In addition, the change will “eliminate our competitive disadvantage in certain states where energy drinks labeled as conventional food, like Red Bull, are exempt from sales tax and are eligible for redemption with food stamps.”

Rockstar made a similar change several months ago.

Smaller energy shots, usually packaged in 2-ounce bottles, generally remain under the supplement category, including Monster’s Worx and 5-Hour Energy, which embraced the tag in a statement in November.

Still, Fabricant says the FDA is not targeting energy drinks. Rather, it’s just doing its job. “We’re not in the business of condemning anyone or giving anyone a clean bill of health,” he says. “What we do as a public health agency: We look at all sources of information we receive, and we’re continually looking at that information and new information on how we can better protect public health.”

Fabricant says that as this issue of CSP went to press, there were no actions taken against energy drinks by the FDA regarding limiting ingredient quantities, regardless of urging by numerous U.S. congressmen to do so. Instead, Fabricant says, his office works strictly on fact-based science.

“We’re not telling people what they should think. Adverse events may indicate something, and we’re compelled to look at everything out there,” he says. “Our burden is to prove something’s unsafe under the conditions of use as described on the label. If we find a harm, we are compelled to act.”


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