Q&A: Opportunities and Risks in the Energy-Drink Market

Mnet 131862 Chroma Dex Lead

Interview with Frank L. Jaksch, Jr., Co-founder and Chief Executive Officer, ChromaDex

The energy-drink market continues to grow at a rapid pace, but the segment is facing increasing scrutiny from regulators and consumers in regards to the beverages’ safety. Frank Jaksch, Jr. of ChromaDex spoke with Food Manufacturing about the unique challenges faced by energy-drink manufacturers, and how these companies can reduce product risk while increasing profitability.

Q: What are the latest developments you’ve heard regarding the discussion of health risks associated with energy drinks?

A: The latest development is the U.S. Senate Committee on Commerce, Science and Transportation hearing on July 31 entitled “Energy Drinks:  Exploring Concerns about Marketing to Youth” in which energy drink manufacturers were criticized for marketing practices that the senators argued are targeting children and teens. The energy drink manufacturers denied the charges. The hearing followed letters sent last month by Commerce Committee Chairman Sen. Jay Rockefeller (D-W.Va.) to energy drink manufacturers asking them to detail their marketing practices to children and teenagers. The letters were sent in response to reports raising questions about the health risks to youth posed by energy drinks. In June, the American Medical Association said it would support a ban on marketing energy drinks to children under 18 because the caffeinated beverages can cause heart problems and other issues.

In the recent hearing, the questioning was carried out by Sens. Richard Blumenthal (D-Conn.) and Edward Markey (D-Mass.), two lawmakers who are concerned about the marketing of products that could be unhealthy or unsafe for children and teens. With Sen. Dick Durbin (D-Ill.), the senators released a report in April, “What’s All the Buzz About?: A Survey of Popular Energy Drinks Finds Inconsistent Labeling, Questionable Ingredients and Targeted Marketing to Adolescents.” The report concluded that adolescents are a major target of energy drink companies through websites, events and other marketing practices.

Q: The FDA is currently investigating the safety of energy drinks. What factors is the agency likely taking into consideration during its assessment of the safety of these beverages?

A: The majority of energy products contain caffeine as an active ingredient due to its stimulatory effects on the central nervous system. Sugar is also widely used because it is a source of rapid energy. Other stimulants such as guarana, yerba mate and green tea may also be used. Caffeine and caffeine alternatives will continue to be the leading ingredients of energy drinks, given the expectations and demands of consumers, who love the energy boost and alertness they provide.

We expect, however, that oversight from the FDA will result in strict labeling and composition requirements similar to those mandated by Health Canada, the federal department responsible for helping Canadians maintain and improve their health. The Health Canada mandate supports a maximum limit for total caffeine of 400 milligrams per liter, with a maximum amount of caffeine of 180 milligrams for a container presented as a single-serve container. Strict labeling requirements for the amount of caffeine are important because they allow consumers to make informed decisions about how much caffeine they are consuming, thus helping prevent overconsumption. If the FDA adopts labeling requirements, we believe the energy drink market will be driven by ingredients that reduce the amount of caffeine without noticeably changing consumers’ experience, with modified versions of caffeine being the most desirable solution. One such ingredient is ChromaDex’s PURENERGY™, which allows a reduction in the amount of caffeine while maintaining the energy boost.

Q: What litigation risks are energy drink makers most likely to face and why?

A: While we are not qualified to speak on legal matters, according to the senators’ study, the FDA has released a series of adverse health event reports allegedly linked with the consumption of products marketed as energy drinks. Also, the Department of Health and Human Services recently issued a report which noted that emergency room visits related to energy drinks doubled from 10,000 to 20,000 between 2007 and 2011. Whenever an adverse health outcome is linked to the consumption of a product, there is a potential for lawsuits.

Q: Some energy drink companies are adding more natural and organic ingredients to give their products a healthier image. What are the risks of doing this?

A: As mentioned, we believe a modified version of caffeine has the potential to be the most desirable and the most consistently employed ingredient solution going forward. The only other viable option is to pursue other natural compounds that deliver a similar effect. There are a lot of challenges associated with pursuing new natural compounds, however, because they would most likely fit into the same category as DMAA (1,3-dimethylamylamine, methylhexanamine, or geranium extract), a natural stimulant banned in 2012 by the FDA because of health risks. New natural compounds in this category would likely meet the same fate. In addition to stimulants, energy drinks often contain specialty ingredients such as B vitamins, ginseng and amino acids whose combinations and additive impacts have not been thoroughly evaluated and are not well understood, according to the senators’ report. With the exception of the B-vitamins, there currently is no requirement to disclose the quantities of many of these other ingredients on the label.

Q: What considerations should energy drink makers take into account when developing new formulations and selecting ingredients for their products?

A: The energy drink segment already encompasses an array of options including ready-to drink beverages (food products), shot formats (dietary supplements), powder forms and gum and gelatin strips (similar to breath freshening strips). According to Datamonitor, the U.S. energy drink market is anticipated to be around $19.7 billion this year, which is almost a 160 percent increase from 2008. The growth is attributed to more private label initiatives, larger container sizes, multi-pack options, sugar-free versions and juice hybrids that have a more agreeable flavor. The energy drink market is also extremely profitable, with continued growth predicted due to the role of new and innovative products and novel ingredients, including those that reduce amounts of caffeine. In the future, energy drink manufacturers will have the potential opportunity to serve the market by pursuing innovations that will reduce the risk of caffeine overconsumption.

Frank L. Jaksch Jr. is the co-founder and chief executive officer of ChromaDex®, an innovative natural products company that discovers, acquires, develops and commercializes proprietary-based ingredient technologies through its unique business model that utilizes its wholly owned synergistic business units, including ingredient technologies, natural product fine chemicals (known as "phytochemicals"), chemistry and analytical testing services and product regulatory and safety consulting (as Spherix Consulting). The company provides seamless science-based solutions to the nutritional supplement, food and beverage, animal health, cosmetic and pharmaceutical industries. The ChromaDex ingredient technologies unit includes products backed with extensive scientific research and intellectual property. Its ingredient portfolio includes pTeroPure® pterostilbene; ProC3G™, a natural black rice containing cyanidine-3-glucoside; PURENERGY™, a caffeine-pTeroPure co-crystal; nutraGac™, a gac fruit powder; curcumin; and Niagen™, its recently launched branded nicotinamide riboside, a novel next-generation B-vitamin. To learn more about ChromaDex visit www.chromadex.com.

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