Demonstrating an increased willingness to aggressively respond to consumer concerns in the area of food and beverage products, the Food and Drug Administration (“FDA”) has effectively banned the sale of caffeinated alcoholic beverages. In warning letters issued to four beverage manufacturers this week, the FDA advised that the “additive” of caffeine rendered the beverages “adulterated” and therefore unsafe. The FDA’s usage of warning letters to effect a ban on the sale of caffeinated alcoholic beverages echoes the Agency’s recent usage of warning letters to curtail Front of Package (“FOP”) marketing claims by food manufacturers, and is further evidence of the FDA’s heightened scrutiny of food and beverage products.

The Short History of the Caffeinated Alcoholic Beverage Market

Caffeinated alcoholic drinks such as Phusion Projects LLC’s top-selling “Four Loko”—a soda-like beverage that included an alcohol content of 12% along with the caffeine content of a cup of coffee—have enjoyed growing consumer popularity, particularly among college students. As products’ sales grew, however, so did public health concerns regarding their safety. While caffeine and alcohol are legal products that have been mixed by consumers for years, news reports have recently emerged associating the products with binge drinking, increased risk-taking behavior and, in extreme cases, cardiovascular distress.

The FDA first began looking at the safety of caffeinated alcoholic drinks last year. On November 13, 2009, the FDA issued a series of letters to manufacturers of caffeinated alcoholic drinks. Announcing that it was responding to concerns regarding the products’ “increasing popularity [among] college students and reports of potential health and safety issues[,]” the Agency issued letters to nearly 30 of the beverages’ manufacturers notifying them that it was commencing a review of the products’ safety and legality. Until the FDA took action this week, however, it was not clear what position the Agency took with regard to the safety of these products as the Agency has not issued a formal statement, report or proposed guidelines delineating safe levels of caffeine additives for alcoholic beverages.

The recent spate of news reports appears to have prompted the FDA and state regulators to act more quickly. Several states recently took action to prohibit the sale of caffeinated alcoholic drinks. Washington, Michigan, Oklahoma and Utah banned the caffeinated alcoholic beverages. In Pennsylvania, the Liquor Control Board recently requested that retailers voluntarily halt the sale of the products pending FDA action. In New York, the State Liquor Authority similarly reached agreement with some of the state’s largest beer distributors to stop selling caffeinated alcoholic beverages.

The FDA’s Ban of Caffeinated Alcoholic Beverages

On November 17, 2010, the FDA issued warning letters to four caffeinated alcoholic beverages manufacturers, informing them that the Agency had concluded that their products are adulterated in violation of the FDCA.1 The FDA informed the manufacturers that caffeine is a “food additive” under 21 U.S.C. § 321(s), which as used specifically in their alcoholic beverages is neither prior sanctioned nor generally regarded as safe, as defined by the agency’s regulations. See 21 C.F.R. § 170.30. The FDA found that existing reports raised concerns regarding the products’ safety in the context of their likely consumers, i.e., young adults, and that the Agency was not aware of any reports either refuting these concerns or otherwise establishing the products’ safety. “Therefore,” the FDA concluded, “we are not aware of a sufficient basis to support a conclusion that caffeine, when directly added to alcohol to form a single beverage, is generally recognized as safe.”

At the same time, the Federal Trade Commission (“FTC”) issued warnings to the four manufacturers that received FDA warning letters.2 The FTC letters advised the manufacturers that their marketing practices might be illegal, and asked that the companies take prompt action to protect consumers.

Potential Impact on Food and Beverage Manufacturers

The FDA’s usage of warning letters to implement an ad hoc prohibition of caffeinated alcoholic beverages has potential implications for all food and beverage manufactures. Most immediately, the FDA appears to have imposed a de facto ban on caffeinated alcoholic beverages. Although the FDA’s letters were only issued to four manufacturers, the Agency’s finding that the addition of caffeine to an alcoholic beverage renders it adulterated and unlawful seemingly could apply to any caffeinated alcoholic beverage. Still, there are legitimate questions as to how to interpret the FDA’s ban. The FDA has stated, for example, that “other products containing added caffeine may be subject to agency review,” but has not identified any such products as of yet. Nor has the FDA specified what quantity of caffeine renders alcoholic beverages unsafe, leaving unclear whether an alcoholic beverage containing trace amounts of caffeine could possibly be considered safe for consumption.

While the FDA’s action may be challenged under the Administrative Procedure Act as “arbitrary and capricious,” manufacturers are more likely to comply with the FDA’s determination. Anheuser-Busch and MillerCoors had already removed caffeine from their caffeinated alcoholic beverages (Tilt, Bud Extra, and Sparks) by 2009, and Phusion Projects followed suit shortly before the FDA determination.

The FDA’s decision to effectively ban the sale of caffeinated alcoholic beverages through the mechanism of warning letters may also suggest a shift in FDA enforcement practice, particularly in response to a perceived health crisis. The FDA’s recent actions are akin to the agency’s ad hoc approach toward FOP marketing claims by food manufacturers. The FDA first stated its intention to provide guidance to the food industry with regard to FOP claims over a year ago, and in the meantime has issued a series of warning letters to food manufactures that have the effect of banning or, at a minimum, strongly discouraging particular kinds of FOP claims. The FTC’s simultaneous warnings to caffeinated alcoholic beverage manufacturers that their marketing tactics might be illegal is a rare instance of joint FTC/FDA action and may also be a harbinger of increased regulatory scrutiny of the industry. Potentially as alarming to food and beverage manufacturers, the FDA’s effective ban involved the sale of two legal products—caffeine and alcohol—whose combination the Agency found to have rendered the product adulterated in the absence of formal safety studies.

Ultimately, it remains to be seen whether the federal regulatory response toward caffeinated alcoholic drinks is a continuation of this apparent trend toward increased regulation of food and beverage manufacturers or is a one-time response to an emergent health crisis. If nothing else, the prospect that the FDA, in response to a future health “crisis,” might act to prohibit the sale of food and beverage products through the use of warning letters—without completing a formal review process – may cause food and beverage manufacturers to reconsider their risk mitigation plans and regulatory approach.