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Energy-Beverage Market Booms Thanks To Consumers And Huge Profits

By mopsie, Jun 16, 2006 | |
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    They promise to "let your man out," enable you to "party like a rock star," and help you "when slowing down isn't an option."

    Energy drinks, chock full of sugar and caffeine and with names like Monster, No Fear, and Gorilla Juice, first appeared six years ago in dance clubs in New York City and Los Angeles.

    Today the $3.5 billion energy-beverage market is 6 percent of the nonalcoholic beverage industry, which includes soft drinks. That's up 75 percent since last year and is expected to top $10 billion by 2010, thanks to peppy consumer demand and profit margins that are three times that of soda.

    Promoted by pro wrestlers and extreme-sport athletes, energy drinks are appearing in office cubicles and at youth soccer matches. Teens guzzle them at school. Truck drivers and computer programmers may tap them when working late at night.

    What appears to be a new trend is actually a throwback to the early days of carbonated beverages, notes John Craven, editor of the beverage website BevNET. At the turn of the last century, sodas were sold in pharmacies for medicinal purposes.

    Though clearly not medicine, some of today's energy-drinks carry lofty messages that deal with performance enhancement, added vitality, and even weight loss. Those claims, targeted mostly at teenage and 20-something males, irk health professionals. Advertising for energy drinks can be misleading, particularly when they "are used as a substitute for proper rest, nutrition, and exercise," says Roberta Anding, spokeswoman for the American Dietetic Association. (ADA) "They're really stimulant drinks."

    The US Food and Drug Administration recommends that beverages contain less than 65 milligrams of caffeine per 12 ounces of liquid. Yet, because caffeine has the FDA's GRAS ("Generally Regarded as Safe") status, the agency does not provide a daily recommended allowance. Nor does the FDA make any special recommendations for kids, though some studies show that kids react differently to caffeine than adults.

    Colas, such as Coke and Pepsi, both of which contain about 40 milligrams of caffeine per serving, fall within FDA guidelines. A 12-ounce cup of brewed coffee, however, has about 200 milligrams.

    Most industry-leading energy drinks such as Red Bull, Monster, and Rockstar contain between 105 and 120 milligrams of caffeine per 12-ounce serving. It's less caffeine per ounce than coffee and some teas, but many energy drinks add energy-touting cocktails of herbal extracts and dietary supplements ranging from ginseng and ephedrine (an herbal extract) to taurine (an amino) and horny goat weed.

    "It's not meant to be a health drink," says Chris Kennedy of Wet Planet Beverages, the maker of Jolt Cola. Jolt was introduced in 1985 as one of the first "caffeine enhanced" soft drinks. "We're not recommending 19 Jolts," Mr. Kennedy says. "What we're saying is one or two ... or three." Three would be the equivalent of 216 milligrams of caffeine.

    People don't drink them for the taste, says Jon Marlow, manager of the Toledo Lounge in Washington, D.C. The most popular energy-drink mix his bar serves, a Red Bull-Vodka, is $9. "People do it because they can order something that's got caffeine that isn't hot like coffee."

    Red Bull, headquartered in Austria, sold about 1 billion cans worldwide last year. That got the attention of Coca-Cola and Pepsi, both of which are eagerly joining the energy drink market. Since last year, the beverage giants have been pulling less profitable soft drinks off store shelves to make room for more caffeine-potent options.

    And what about all that caffeine?

    "Caffeine isn't innocuous," says Roland Griffiths of the department of neuroscience at Johns Hopkins University in Baltimore. "It's important to recognize that it's a drug. But there's no hard-and-fast rule for how much is problematic."

    How much caffeine is problematic depends on the individual, doctors say. "People have different sensitivity levels" to caffeine, says Bruce Goldberger, director of toxicology at the University of Florida College of Medicine in Gainesville.

    An energy drink affects a 300-pound man differently from a 45-pound 5-year-old, says the ADA's Ms. Anding. Although caffeine is a mild diuretic (causing frequent urination), may block calcium absorption in women, and could prove harmful to pregnant women, not everyone is persuaded that it's dangerous.

    "I don't object to people using it," Anding says, "but if you believe that this can be a substitute for a good diet, there's a disconnect."

    Daily consumption of caffeine can lead to mild addiction at a threshold of about 100 milligrams per day, says Dr. Griffiths. In such cases, when caffeine consumption stops, withdrawal symptoms such as headaches and sleepiness may occur. It's for this reason that some energy drinks, Red Bull, in particular, are banned in France, Sweden, Denmark, Italy, and Norway.

    A 2002 European Union directive states that all drinks containing more than 150 milligrams of caffeine per liter be labeled as such. Teas and coffees are exempt from "high caffeine content" labeling.

    In the US, mandatory labeling of carbonated drinks hasn't materialized, although many health experts, including Griffiths and Dr. Goldberger, recommend warning labels.

    By Steven Ellis - CBS News

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