Monster and Pepsi Are on the Lookout For This Possible Ban
Makers of highly caffeinated energy drinks including Monster Beverage Corp. (NASDAQ:MNST) and PepsiCo Inc. (NYSE:PEP) will face advertising and sales bans on the popular drinks if the American Medical Association chooses to support such restrictions in a debate scheduled for this weekend.
The suggested ban would prevent people under 18 from buying the drinks, and also curb advertising targeting that age group. The high-energy beverages are extremely popular among young people, but have also come under scrutiny related to possible adverse health effects. Physicians have reported an increase in emergency room visits caused by the stimulant drinks, which can contain as much caffeine as several pots of coffee in one can. Drinking too much caffeine can lead to dizziness, insomnia, intense anxiety, and other problems.
“The popularity of stimulant drinks has increased markedly in recent years, with sales increasing 240 percent from 2004-2009, and further data indicating that these drinks are consumed by 30 to 50 percent of children, adolescents, and young adults,” the New York delegation to the AMA House of delegates said in its resolution.
The AMA is a powerful lobby group in Washington and state capitols around the country, and companies that produce these high-energy drinks are likely to fight any push for a ban from the group. Back in April, Monster asked a federal judge to stop the city of San Francisco from placing a similar ban on the caffeinated beverages. The San Francisco city attorney’s office was trying to force Monster to limit serving sizes, curb marketing towards young people, and beef up warning labels on the drinks.
Monster fired back, saying that drinks from Starbucks (NASDAQ:SBUX), Austria’s Red Bull, and Rock Star Inc. have comparable amounts of caffeine, and that it was being singled out unfairly. Monster believes its current warning label, which reads “not recommended for children, pregnant women, or people sensitive to caffeine,” provides consumers with adequate information.
The Food and Drug Administration has been studying whether highly-caffeinated energy drinks pose a significant risk when consumed by certain groups of people, but noted that caffeinated drinks have had a long history of safe use. The FDA is also investigating eight deaths have allegedly been caused by Monster beverages based on adverse-event reports. No link connecting the deaths to Monster’s drinks has been found thus far.
If the ban goes through, it could be a huge blow to Monster, the leading seller of energy drinks in the U.S. by volume, as the company gets a significant portion of its business from people under 18.