Published August 28, 2012
| The Wall Street Journal
New York's attorney general is investigating whether the multi-billion dollar energy-drink industry is deceiving consumers with misstatements about the ingredients and health value of its products.
Eric T. Schneiderman issued subpoenas in July to PepsiCo Inc., maker of AMP, Monster Beverage Corp., and Living Essentials LLC, maker of 5-Hour Energy drink, according to a person familiar with the matter. The subpoenas asked for information on the companies' marketing and advertising practices.
The caffeine-heavy, 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."The probe is the latest in a series of attention-getting moves by New York officials. In May, New York City Mayor Michael Bloomberg announced plans to restrict the sale of large sodas at restaurants, movie theaters and other locations, sparking criticism from the beverage industry. This month, New York's top banking regulator, Benjamin M. Lawsky, accused British bank Standard Chartered PLC of illegal dealings with Iranian entities, and the bank agreed to a $340 million settlement.
Energy drinks are among the fastest-growing products in the beverage sector. U.S. retail sales of the drinks rose 16 percent last year to $8.9 billion, accounting for 12 percent of the carbonated-soft-drink category, according to Beverage Digest, a trade publication and data service. Monster leads in the U.S. by volume, ahead of Austria's Red Bull GmbH and Rockstar Inc.
The drinks are regulated more loosely than traditional sodas such as cola. In 2009, the Food and Drug Administration 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" isn't defined by any FDA regulation, describing it as an ill-defined marketing term with widely varying ingredients.
The New York probe is focused on whether the drink makers are misleading consumers with inaccurate labeling and advertising, according to the person familiar with the matter. 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.