Monster Beverage Corp (NASDAQ:MNST), the biggest energy drinks seller in the United States, has decided to market its high caffeine energy drinks as a beverage. Ingredients of the drinks will remain the same, but by switching to “beverage” the company will avoid intensive scrutiny from regulators.
The New York Times says that now Monster Energy will be under no obligation to inform federal regulators about reports that link its products with deaths and injuries.
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The Food and Drug Administration strictly monitors the safety of energy drinks. Yesterday, a group of doctors and scientists urged the FDA to take action against the high caffeine energy drinks. They told the regulator that scientists have found evidences that high caffeine in energy drinks can cause severe health problems.
The new cans of Monster Beverage Corp (NASDAQ:MNST) will, for the first time, disclose the caffeine content. A 16-ounce Monster Beverage can will have 140-160 milligrams of caffeine. Just for comparison, Starbucks’ 16-ounce cup of coffee has 330 milligrams of caffeine.
Monster Beverage Corp (NASDAQ:MNST) is fighting critics and regulators endlessly. Recently, the company called a news conference to defend itself in a suit that a 14-year old girl died by drinking two cans of Monster drinks within a day.
The switch by Monster Beverage Corp. (NASDAQ:MNST) from energy drink to beverage shows how easily companies can decide which rules to follow to avoid scrutiny. Director of the FDA’s dietary supplements division admitted last year that there is no regulation that defines energy drinks.
Monster Beverage Corp (NASDAQ:MNST) has been selling its products as energy drinks for almost ten years to convince people that they are unique – different from beverages. But like other companies in the energy drink market, Monster too ran into troubles. Last year, FDA received five death reports, citing Monster Energy drinks as a possible cause.
Monster Beverage spokesperson Michael Sitrick cited several reasons for the company’s decision to market its products as beverages. One reason is to avoid “misguided criticism” and another reason is that people can purchase beverages by using government-subsidized food stamps. In certain states, energy drinks labeled as beverages are exempt from sales tax, which gave an edge to many of Monster’s competitors that already marketed their products as beverages. Monster’s shift will level the playing field.
Monster Beverage Corp (NASDAQ:MNST) shares were up 0.85 percent to $50.14 at 11:10 AM EDT. There have been rumors that David Einhorn is shorting Monster Beverage Corp.
UPDATE 3/26: Recently, Monster became a member of the American Beverage Association. The company said it will stick to the association’s recommendations to list caffeine amounts on labels, and to label energy drinks as beverages. The change will become as soon as the new packaging is manufactured.