Monster Beverage (MNST) Gets Hangover as Senators Urge FDA to Exercise Regulatory Authority on Caffeine

September 12, 2012 11:40 AM EDT
Shares of Monster Beverage Corp. (Nasdaq: MNST) are trading lower by 5.6 percent in early trading on Wednesday. Today's downturn is the kicker on a 90-day, 30 percent decline in the stock.

Yesterday, Senators Dick Durbin and Richard Blumenthal wrote a letter to the FDA discussing health concerns related to energy drinks. In the letter, the Senators expressed concern about the amount of caffeine in energy drinks and the potential adverse effects they have, particularly on young people who are large consumers of products like Monster.

The letter asks the FDA, when reviewing energy drinks, to assess the effects caffeine has on adolescents and children in contrast to only examining its effect on adults.

Ultimately, the Senators want the FDA to regulate the level of caffeine in energy drinks marketed as beverages. Most energy drinks are categorized as dietary supplements, allowing them to skirt regulations that restrict caffeine in soft drinks to .02 percent or about 71 mg in a 12 oz soda. The level of caffeine in energy drinks ranges from 80 to 500 mg per serving, well above prior-sanctioned use limits in soda. If the FDA re-categorizes energy drinks as soft drinks, they would be subject to the same caffeine limits currently imposed on soda.

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