By: Justin J. Prochnow, Greenberg Traurig LLP @LawguyJP
We're setting the record straight and letting you in on the do's and don'ts for formulation in energy drinkdom.
MYTH: Energy drinks are unregulated by the federal government.
FACT: FDA makes a distinction between two categories of energy products: energy supplements and energy drinks. FDA does, however, fear a blurring of the line distinguishing beverages and liquid supplements. If you’re going to sell it as a supplement in order to use novel ingredients, don’t call it an energy drink or a relaxation drink. If you are not consistent, the FDA will choose for you, and it usually will not be the choice you would make.
MYTH: Products are sold as supplements to avoid caffeine limitations for beverages.
FACT: We hear this from politicians, and it's completely untrue (Surprise!). There are no express limitations on the amount of caffeine used in foods, beverages or supplements. Caffeine is GRAS for “cola-type beverages in accordance with GMP” that is set at 0.02 percent, or about 71mg/12-oz. beverage. (Natural caffeine from botanicals qualifies as a dietary ingredient as a constituent of a botanical.) This does not prohibit caffeine’s use in other beverages—all you need is your own GRAS affirmation.
This gets to the heart of why companies (if they know the law) have sold products as supplements instead of beverages: cost of the GRAS report. If you have a beverage with three or four ingredients with no GRAS ingredients, that GRAS report will cost you perhaps $120–180k before you can legally sell this product.
MYTH: It’s cheaper to sell products as dietary supplements.
FACT: This has historically been the case and has probably been the top reason for selling as a supplement instead of a beverage. But the economics of this have changed, thanks to the costs associated with complying with dietary supplement GMPs.
MYTH: Companies selling energy products can continue to operate pursuant to the status quo.
FACT: Intense scrutiny from groups—regulators, politicians, consumer groups—is making people reassess. Civil litigation has exploded over the last two years. Companies need to make sure what their insurance coverage is.