The popular energy drink manufacturer, Monster Beverage Corporation, saw its shares fall as much as 12 percent on news of a lower than expected third quarter 2012 profit report.
Monster is facing a slew of negative publicity as it faces allegations that five people have died after consuming the Monster Energy drink. A Maryland family is suing the company that is based in Corona, California, claiming their 14-year-old daughter’s death was caused by the consumption of two Monster Energy drinks in a 24-hour period.
Monster also is facing investigations from the New York State Attorney General and the San Francisco, California City Attorney. Both are asking Monster to provide supporting evidence to back up its marketing claims, especially those messages that are targeted to young people.
In addition, several Senators have joined forces with consumer groups to pressure the Food and Drug Administration (FDA) into toughening its stance regarding the energy drink market segment. Senators Richard Durbin (D-IL) and Richard Blumenthal (D-CN) are now urging the FDA to look at how these consumer products are classified.
Currently, energy drinks fall under the dietary supplement classification and therefore have far less FDA scrutiny than other food products that are regulated by the government agency. Faced with the reports of consumer fatalities potentially related to the products, the FDA is being urged to toughen its stance and begin to protect the public better.
Energy Drink Manufacturers may be Stretching the Rules
Because of their dietary supplement classification, energy drink manufacturers have less strict regulatory requirements than other beverage makers. However, if asked, all manufacturers are required to provide evidence to back up their marketing claims.
Of particular concern are the marketing messages seemingly targeted towards teenage boys. According to the American Beverage Association, the energy drink industry has already voluntarily restricted the selling of the beverages in schools and has reduced its marketing efforts towards children.
Some of the energy drink manufacturers claim their products actually have health benefits. A study by the University of California looked at these and was unable to find enough evidence to substantiate the claims. Many of the drinks contain multiple ingredients that on their own are not harmful, but cannot be scientifically proven to provide actual health benefits.
At issue are the caffeine levels contained in these drinks. A recent Consumer Reports study found that of 27 drinks tested in its study, 20 percent contained caffeine levels higher than were listed on the can’s label.
An FDA investigation is ongoing.