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Energy Products Market Wide Awake And Going Gourmet, Despite FDA Investigation

By Jazmine Woodbery

Can engrained visions of Red Bull giving you wings and a Food and Drug Administration investigation into energy drinks stop the energy products market from surging ahead—and straight onto gourmet retailers’ shelves?

Retailers are seeing beverage sales rise, and that rise is on the back of the power of the ever-widening energy drink market. Energy drinks raked in billions last year, up 14 percent from five years ago, and energy shots themselves saw a 168 percent sales increase in that time period, according to market research firm Packaged Facts.

“Caffeine is the legal drug of choice in the United States. It’s in medications, it’s in food, and because of the specialty coffee explosion with Starbucks, coffee is where you get your lift. Most people are habituated to it,” said Tom Pirko, President of Bevmark, a food and beverage consulting firm based in Santa Barbara, Calif. “People have been drinking coffee and tea for caffeine forever and now people are reaching for energy drinks as well. That’s not going to stop. And until retailers see the consumers saying ‘No we’re not going to consume these products,’ the retailers are going to push on selling them.”

Wells Fargo Securities Beverage Buzz survey reported an estimated 9 percent uptick for Monster Beverage Corporation in-store volumes during the second quarter of the year, after an already sustained 7 percent increase in the quarter before. Still, although big wigs like Monster, Red Bull and Rockstar sit handily atop the American markets, the success of these major brands has spurred the growth in availability of healthier, organic and gourmet energy drink products as well.

Campbell Soup Company, for example, produces the V-Fusion + Energy drink, featuring juice and green tea, and Starbucks’ new Refreshers line features pomegranate, strawberry and melon flavors enhanced with unroasted green coffee beans. Other specialty products within the larger energy drink market include natural energy drink Guru, Steaz Energy drinks (billed as “good for the mind, body and soul”) and all-natural fair trade energy drink brand Hiball Energy.

Somewhat surprisingly, all of this growth in the industry comes on the heels of Illinois Senator Dick Durbin calling for a Food and Drug Administration investigation into energy drinks. Durbin’s push began last year, after reports of five deaths allegedly linked to the consumption of Monster energy drinks, including the December 2011 death of 14-year-old Anais Fournier.

“Energy drinks with names like Monster Energy, Red Bull, Rockstar, Full Throttle and AMP are now common fixtures in grocery stores, vending machines, and convenience stores. These products target young people claiming to increase attention, stamina, performance, and weight loss,” Durbin wrote to the FDA Commissioner. “The glossy marketing tailored to youth has worked. Thirty to fifty percent of adolescents report consuming energy drinks…[However,] consuming large quantities of caffeine can have serious health consequences, including caffeine toxicity, stroke, anxiety, arrhythmia, and in some cases death.”

Others are joining the fight as well, bringing lawsuits against major energy drink companies. This includes a mother in California who is suing Monster, alleging that her son died after drinking 32 ounces of the drink a day before his death. Her claim is bolstered by research that links excessive caffeine intake to negative health consequences, particularly for kids and young adults.

The FDA’s current regulations on energy drinks limit caffeine to 0.02 percent or less of the product, about 71 milligrams in a 12-ounce drink. Some companies often eschew these limits, however, by marketing their products not as drinks, but rather as dietary supplements. The agency also places regulations on energy food products, such as Perky Jerky, high quality dried and cured turkey and beef jerky that, according to CEO Brian Levin, was first envisioned when a can of energy drink fell on a pack of jerky.

“It’s not considered any more of an energy product than a diet soda or a piece of chocolate,” said Perky Jerky CEO Brian Levin. “We created a gourmet, high quality product for active lifestyles and the ingredient we use for energy is a very small amount essentially used for flavoring…It’s frustrating to be lumped into these products that have more of a desire to jump on this energy craze when if anything we are going away from it.”

Perky Jerky is sold in a broad spectrum of retail environments, including at Whole Foods in the southwestern United States and in the Dean and DeLuca catalog. The company’s growing popularity is enabling it to expand. Soon, Perky Jerky plans to roll out a line of gluten free products as well as more flavors and turkey alternatives.

“This is kind of a higher end product that’s within reach,” Levin said.

Although the FDA investigation into energy foods and drinks does not immediately appear to have far reaching ramifications for the gourmet industry, in fact the energy product market has become so pervasive that there is a growing segment of specialty food and drink companies like Perky Jerky, marketing their offerings as “energy products.” In addition, more and more gourmet retailers are stocking these kinds of products.

According to Pirko, there is definitely room in the gourmet marketplace for speciality energy food and drink products. “The breakthroughs could come if [a company] can authentically make some claims if there really is an ingredient that catches the public’s fancy,” Pirko said. He acknowledged, however, that the ongoing FDA investigation might affect those who are attempting to market less-proven energy products, because retailers themselves could be more hesitant to stock their shelves with an unknown commodity in an ever-changing market.

Still, this uncertainty is not stopping many gourmet companies from stepping up to that challenge. This includes companies like Turbo Truffle, a caffeine-infused gourmet chocolate brand, and ENERGMAX, a line of natural gourmet energy bars.

loadebars-stackedLoAdebar, a company which makes loaded energy bars, is clearly making an effort to differentiate itself from the larger energy food and drink market and show that the arena has room for more options than just Rockstar and Red Bull. This month, LoAdebar is bringing its products to Natural Products Expo East, the premier marketplace for natural, organic and healthy gourmet products.

“There is definitely a place for natural healthy energy food, and that is not just for people with busy active lifestyles,” said Norma Maloney, owner of LoAdebar. Maloney noted that these products can be practical supplements for those on-the-go. “Most of the energy bars in the marketplace are not tasty, they are not simple and have too many fillers. My goal with LoAdebar has been to complement the healthy lifestyle choices with a snack that combines great taste and good nutrition.”

Maloney said that at times people “expect magic” from energy products and that this is the place where the FDA could help to give consumers more realistic expectations from their products. At venues such as Expo East, Maloney works to highlight her company’s products, letting retailers and consumers know LoAdebar can serve as a good tasting, good for you product that is also a good energy boost.

Still, even though he does not see the market itself closing any time soon, Pirko argues that the more ingrained the big dogs are in consumers’ minds, the harder it will be for smaller companies to make inroads. “If you are going to try and take on Red Bull and Monster, you are going to need a big trust fund,” he said, “It’s probably going to be a little trust fund when you are done.”

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