Anheuser-Busch to Stop Selling Alcoholic Energy Drinks

Meager Stake in Segment Might Not Have Been Worth the Legal Trouble

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CHICAGO ( -- Succumbing to pressure from state attorneys general and activists, Anheuser-Busch will stop selling alcoholic energy drinks -- and put rivals that still market them in an awkward position.
A-B said in a statement that they are reformulating Tilt and Bud Extra.
A-B said in a statement that they are reformulating Tilt and Bud Extra.

The attorneys general and the Center for Science in the Public Interest have threatened to sue A-B and Miller Brewing Co., charging that their alcoholic energy drinks are marketed to underage drinkers and also pose health risks.

A-B, while maintaining that the beverages are legal and not marketed to underage drinkers, nonetheless notified CSPI that it would agree to stop marketing alcoholic drinks with energy supplements such as caffeine.

Commitment to responsibility
In a letter to CSPI yesterday, A-B attorney J. Russell Jackson wrote: "To demonstrate its commitment to remaining the industry leader in responsibility, Anheuser-Busch has determined to permanently withdraw from the pre-packaged caffeinated alcoholic beverage market."

That move marks a sharp reversal for the company, which had earlier dismissed claims about its selling caffeinated alcoholic beverages as "alarmist." A-B maintained that the claims unfairly single out brewers when distilled spirits makers have long marketed caffeinated cocktails such as Red Bull and vodka. A-B in February vowed to "vigorously defend" its right to sell the beverages.

The settlement reached today, however, suggests the brewer decided its meager stake in the segment (caffeinated brands such as Tilt and Bud Extra account for only a small fraction of a percent of sales) wasn't worth the trouble.

Reformulating products
"Although Bud Extra and Tilt met all regulatory requirements, had much less caffeine than a Starbuck's coffee, and had received all necessary federal and state agency approvals, we are reformulating these products [without the caffeine, guarana and similar supplements] in response to the AG's concerns," A-B said in a statement.

Miller Brewing Co., which was not party to the settlement, may not afford to be as accommodating. The brewer in 2006 paid $215 million to acquire the Sparks and Steel Reserve brands, and Sparks -- a caffeinated malt beverage -- has been one of its fastest-growing brands.

According to Beer Marketer's Insights, caffeinated alcoholic drinks account for slightly more than 1% of Miller's shipments -- a small number, but one that's been growing quickly. (Ad Age noted Sparks' growth when it named the brand to its Marketing 50 list last year.)

More significant for Miller
"For A-B, this category is insignificant, but for Miller, it's a little more significant," said Insights editor Benj Steinman.

CSPI, in a statement, made it clear that it -- and, presumably, the attorneys general who have thus far followed its lead on the issue -- is girding for a confrontation with Miller. "Frankly, Miller Brewing is lurching on very thin legal ice if they continue to market these dangerous drinks," CSPI's litigation director said in a statement.

A statement from New York Attorney General Andrew Cuomo said the attorneys general were "conducting ongoing investigations into other producers of alcoholic energy drinks."

In a statement, Miller said: "We have cooperated with the attorneys general investigation on this matter and will continue to fully cooperate with their investigation. The Federal Alcohol and Tobacco Tax and Trade Bureau have approved all product formulations and labels for Sparks, Sparks Light and Sparks Plus. And we remain in close and frequent contact with the [bureau] to make certain that the labeling, marketing and product formulations of all our brands meet all applicable federal regulations. Consistent with all our brands, Sparks is responsibly marketed only to legal-drinking-age consumers."
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