New York State to Probe Energy Drink Manufacturers

New York State to probe

The Attorney General of New York State has subpoenaed three firms that make energy drinks, including PepsiCo Inc, in order to obtain information about the three companies’ advertising practices and marketing, according to an industry insider.

Attorney General Eric Schneiderman sent the subpoenas to Monster Beverage Corp, Living Essentials LLC who makes the 5-Hour Energy Drink, and PepsiCo Inc, said the same insider who spoke on condition of anonymity to reporters from Reuters.  Official sources at both Schneiderman’s office and Pepsi declined to comment on the situation.  Spokespeople at the other companies also would not speak of the current situation, but mentioned that they were responding to other subpoenas issued earlier.

Schneiderman is probing if the drink makers have overstated the beneficial effects of drink ingredients while understating the effects of caffeine.   Critics of energy drinks claim the common stimulant is the main active ingredient.

Some market analysts feel that any change in labelling laws will not have any effect on the sales of energy drinks.

“We think changes to labelling and marketing related to source of stimulant are unlikely to materially impact energy drink sales,” wrote Mark Astrachan of Stifel Nicolaus.

Energy drinks usually contain almost the same amount of caffeine per ounce as a strong cup of coffee.  Currently, in a market where sales of soft drinks are stagnating, consumption of energy drinks is increasing.  The leading brand in the U.S. market is Monster, which has a 39 percent share.  Red Bull of Austria, because it has a higher price, is the market leader for revenue.

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