New York State is launching an investigating to find out if energy drink makers are deceiving customers with their advertisements, with CNBC's Herb Greenberg.
By Roland Jones, NBC News
First it was big sugary drinks.
Now New York is taking aim at the multibillion-dollar energy-drink industry, looking into whether it is misleading consumers with its statements about the ingredients and health value of its products.
In July, New York Attorney General Eric T. Schneiderman sent subpoenas to PepsiCo, the maker of AMP energy drinks, to Monster Beverage, which makes Monster Energy brand drinks, and to Living Essentials, the company that makes the 5-hour Energy drink, according to a person familiar with the investigation. The probe was first reported in The Wall Street Journal.
The subpoenas asked for information on the companies? marketing and advertising practices.
Energy drinks have become increasingly popular in recent years. Manufacturers often market them as a way to temporarily increase energy and alertness, but some health advocates worry that the drinks contain large amounts of caffeine and sugar, which could be harmful if consumed excessively.
New York?s investigation follows a highly publicized move by New York City Mayor Michael Bloomberg in May to fight rising obesity by proposing a citywide ban on selling sodas and other sugary drinks larger than 16 ounces in movie theaters and other locations.
The move has drawn criticism from the beverage industry, which saw sales of $115 billion in the U.S. last year, according to data from Beverage Digest, a trade publication.
The energy drinks sector is far smaller but growing rapidly, with U.S. sales rising 16 percent to $8.9 billion last year and accounting for 12 percent of the carbonated-soft-drink category.
The energy drink business is a ?very tiny? part of the business?of giants such as Coke and Pepsico, said John Sicher, editor and publisher of Beverage Digest. Top sellers include Monster Energy, Red Bull, which is owned by an Austrian company Red Bull GmbH, and Rockstar Energy Drinks, he added.
New York investigators are looking into whether makers of the energy drinks are overstating the benefits of exotic-sounding ingredients in their drinks, while understating the amount of caffeine they contain. Industry critics believe caffeine is likely the main active ingredient in the drinks.
Energy drinks boast such unusual-sounding ingredients as guarana, ginkgo, ginseng and milk thistle, yet the labels on the drinks show they have much larger quantities of caffeine and taurine -- a naturally occurring amino acid present in high concentrations in many energy drinks.
In a statement, the American Beverage Association, which represents the non-alcoholic beverage industry, said it wasn?t aware of the details of the investigation and therefore could not comment on it.
However, the ABA did point out that, like all foods and beverages, energy drinks' ingredients and labeling are regulated by the U.S. Food and Drug Administration.
?Despite the misperception, most mainstream energy drinks contain about half the caffeine of a similar size cup of coffeehouse coffee,? the ABA said.
Earlier this month the FDA found that the caffeine content in energy drinks does not pose a safety issue.
The findings came after Sen. Dick Durbin of Illinois sent a letter to the FDA?s commissioner calling for an investigation following the death of a 14-year-old girl from Maryland who died of a cardiac arrhythmia due to caffeine toxicity after drinking two 24-ounce Monster energy drinks in a 24-hour period.
Monster Beverage disclosed in a regulatory filing on Aug. 9 that it had received a subpoena from an unnamed state attorney general ?in connection with an investigation concerning the company?s advertising, marketing, promotion, ingredients, usage and sale of its Monster Energy brand of energy drinks.?
Similarly, 5-hour Energy disclosed in a July bond-offering memorandum that a state attorney general recently requested documents about its product and marketing, the Journal reported.
The New York Attorney General?s office declined to comment for this article.
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