Are Energy Drinks the New Tobacco?

November 26, 2013

Analysis of a proposed advertising ban in the context of Joe Camel

It turns out that, for Americans, the best part of waking up isn’t just Folgers in their cup. It’s caffeine in almost any imaginable form-potato chips, gum, candy, beef jerky, sunflower seeds, waffles, syrup, marshmallows, and of course, the bad boy of caffeinated products: the energy drink or energy shot. The caffeinated food market topped $1.6 billion in domestic retail sales last year, up nearly 50% from five years ago.1 Although data suggests that adolescents under age 17 consume an average of less than 100 mg of caffeine per day, legislators, regulators, and health authorities are engaged in a full-court press on the energy drink industry to change product labels and restrict its advertising.2  This article addresses the theoretical unfairness case against energy drink marketers in the context of the Federal Trade Commission’s attempt to restrict tobacco advertising, specifically Joe Camel, in the late 1990s.

Regulators are Percolating

In November 2012, FDA announced that it was reviewing adverse event reports relating to illness, injuries, and deaths allegedly caused by over-consumption of highly caffeinated energy drinks such as 5-Hour Energy, Monster, Red Bull, and Rockstar.3  Although no conclusive finding was issued, in April 2013 FDA announced that it was undertaking a full investigation of the safety of added caffeine in food products, particularly its effect on children and adolescents.4 FDA’s current regulations regarding added caffeine apply only to colas and date back to the 1950s.5

In June 2013, the American Medical Association sent a letter to FDA urging the agency to restrict caffeine levels in energy drinks and calling for a ban on the marketing of such drinks to children under 18, because the beverages may contribute to heart problems, anxiety, headaches, and related issues.6 That same month, Senate Commerce Committee Chairman Jay Rockefeller (D-WV) sent letters to Red Bull, Monster Beverage Corp., Rockstar, and Living Essentials, asking these companies to detail their marketing practices to children. In a hearing in late July, three committee members-Sens. Richard Blumenthal (D-CT), Edward Markey (D-MA), and Richard Durbin (D-IL)-discussed research findings indicating that adolescents are a major target of energy drink companies, and they pressed the companies to restrict their advertising practices.

In response, Red Bull, Monster, and Rockstar agreed not to market to children under age 12, and they agreed to labeling and advertising guidelines set by the American Beverage Association (ABA). The ABA’s guidelines include caffeine labeling; prohibiting the mixing of energy drinks with alcohol; adding the advisory statement, “Not intended/recommended for children, pregnant or nursing women and/or persons sensitive to caffeine”; and restricting such products from sale or marketing in school or as sports drinks.7

Committee members found these steps insufficient, though, and pressed the companies to further restrict their marketing practices, even suggesting that an advertising image of a 12-year-old skateboarder was akin to marketing strategies formerly used by tobacco companies to attract young potential smokers.8

Senator Markey’s reference to tobacco advertising as evidence of companies prompting behavioral trends raises issues previously confronted by the marketing of purportedly harmful products and the government’s attempts to further public health and safety by restricting advertising. Can the government unilaterally impose a ban on energy drink advertising or energy drink advertising to consumers under age 18?

Joe Camel Rides Again?

The Federal Trade Commission (FTC), which has jurisdiction over advertising, has traveled this road before. Indeed, the Commission’s challenge to RJ Reynolds’ Joe Camel advertising, based on an unfairness theory, is highly instructive and suggests that a similar challenge to energy drinks would also face significant hurdles.

In 1997, under pressure to act against cigarette advertising, the FTC proposed a complaint alleging that Joe Camel advertising was a “substantial contributing factor” in the decisions of many youths to start smoking. Young people, the Commission alleged, were unable to separate the attraction of a likable cartoon character from the potential harms of smoking, thereby causing injury.

Section 5 of the FTC Act prohibits unfair or deceptive acts and practices. An act is unfair if it causes a substantial injury that is not reasonably avoidable and not outweighed by countervailing benefits to consumers and/or competition. In the Joe Camel case, the FTC asserted that the act was merely a “substantial contributing factor” leading to injury -a standard unprecedented in FTC jurisprudence at the time. Up until this point, the relevant law required a showing that, but for the act, the injury would not have occurred.

Despite this untested and reduced causation burden, the government’s case proved speculative because the Commission could not show that advertising was a substantial contributing factor to youths starting to smoke. In fact, none of the Commission’s experts could prove the existence of this alleged effect and, even assuming it existed, none could measure it. Further, the FTC’s experts testified that they would not expect regulatory intervention generally, let alone against Joe Camel, to have any significant effect on youth smoking rates.

Expert testimony also contradicted constitutional protections for commercial speech. The government’s chief causation witness, Michael Eriksen, ScD, director for the Centers for Disease Control’s Office on Smoking and Health, testified that a comprehensive approach was required. Removal of just one intervention could not be expected to make a difference.9

The U.S. Supreme Court’s commercial speech decisions have established that proof is required by convincing evidence that a proposed ban will directly, materially, and significantly advance the government’s interests.10

To make this showing, the FTC would have had to prove that, but for the Joe Camel advertising campaign, the injury (increase in youth smoking) would not have occurred. The case never reached this point, however, as the Commission voluntarily dismissed it mid-trial, stating that the issue was moot as a result of a multi-state settlement with numerous states. While there may have been some truth to that, a ruling in the Commission’s favor would have put the company under order and would have marked a significant victory for the FTC on an important policy initiative. Withdrawal of the complaint mid-trial almost certainly indicated a lack of confidence in the causation case.

The Bar is Too High

The same standards would apply if the FTC were to seek a ban against energy drink advertising. Once again, the Commission would need to show that, but for the advertising, the injury (headaches, anxiety, and heart problems) would not have occurred. A showing that energy drink advertising more probably than not causes caffeine over-consumption and related negative health effects would require definitive evidence regarding the effects of caffeine on youths at the levels provided in energy drinks, which is still under investigation, and proof that the advertising caused the injury and that banning it would materially, directly, and substantially advance the government’s interests. This bar is, almost certainly, unreachably high.

Further, unlike Joe Camel, while the jury may be out on safe levels of caffeine consumption, the ubiquity and social acceptance of caffeine consumption in the general population differentiates the energy drink scenario from tobacco, which by the late 1990s, had been conclusively shown to have universally negative health effects, and the public use of which was on its way toward broader social prohibitions. Unlike tobacco, caffeine is popular and sold in many forms, the most popular of which are coffee and soda. Conclusively attributing harm to the advertising of these products over all the others available would be virtually impossible.  For all of these reasons, changes to energy drink advertising are unlikely to result from an enforcement proceeding at the FTC.

References

1. B Dennis, “Slew of New Caffeinated Food Products has FDA Jittery,” Washington Post, June 1, 2013, available at http://articles.washingtonpost.com/2013-06-01/national/39670762_1_alert-energy-caffeinated-gum-top-food-safety-official.
2. V Fulgoni, “Trends in Caffeine Consumption,” Nutrition Impact LLC, Aug. 5, 2013, available at http://www.iom.edu/Activities/Nutrition/PotentialHazardsCaffeineSupplements/2013-AUG-05/Day%201/Session%201/5-Fulgoni-Video.aspx.
3. FDA, “Energy ‘Drinks’ and Supplements: Investigations of Adverse Event Reports,” November 16, 2012, available at http://www.fda.gov/Food/RecallsOutbreaksEmergencies/SafetyAlertsAdvisories/ucm328536.htm.
4. FDA, “FDA to Investigate Added Caffeine,”
May 3, 2013, available at http://www.fda.gov/ForConsumers/ConsumerUpdates/ucm350570.htm.
5. See id. Caffeine is considered generally recognized as safe (GRAS), which means that manufacturers can determine the levels at which to add it to their products.
6. American Medical Association, “AMA Adopts New Policies on Second Day of Annual Meeting,” June 18, 2013, available at http://www.ama-assn.org/ama/pub/news/news/2013/2013-06-18-new-ama-policies-annual-meeting.page.
7. Several other industry groups have also issued caffeine labeling guidelines including, but not limited to, the Natural Products Association, the Council for Responsible Nutrition, the American Herbal Products Association, and the Consumer Health Products Association.
8. K Bachman, “Senate Dems Pressure Energy Drink Makers to Stop Marketing to Teens,” ADWEEK, July 31, 2013, available at http://www.adweek.com/news/advertising-branding/senate-dems-pressure-energy-drink-makers-stop-marketing-teens-151576.
9. Trial Tr. at 1475, In re R.J. Reynolds Tobacco Co., FTC Docket No. 9285 (May 28, 1997).
10. 44 Liquormart, Inc. v. Rhode Island, 517 U.S. 484, 505 (1996); Rubin v. Coors Brewing Co., 514 U.S. 476, 490 (1995); Cent. Hudson Gas & Elec. Corp. v. Pub. Serv. Comm’n, 447 U.S. 557, 566 (1980).