Energy Booze Ad Attack Hits Marketers in Wallet
Move by AGs Could Force Changes From A-B, Others as
High Tax Threat Is Raised
By Jeremy Mullman
August 27, 2007
There's a key difference between last week's move by
state attorneys general to go after purveyors of
alcoholic energy drinks and the move by the same group
earlier this year to take Anheuser-Busch to task over
age verification on its online TV network: This one
While the Attorneys General's quixotic-to-date
campaign against Bud.TV's age verification (the most
stringent on any alcohol website) hasn't led to the
slightest change there, a letter the AG's sent to the
Alcohol and Tobacco Tax and Trade Bureau could wind up
making a much greater impact by walloping alcoholic
energy-drink makers right in the pocketbook.
The AGs not only asked the agency to investigate
misleading marketing claims that alcoholic energy
drinks boost stamina or energy, but -- in a largely
overlooked aside -- the AGs also asked the bureau to
explore whether the beverages ought to be taxed as
distilled spirits and not malt-based beverages.
Typically, malt beverages are taxed at less than half
the rate of distilled spirits, and in some states the
spread is considerably wider. In California, for
instance, the excise tax on malt beverages is about
20¢ a gallon; the same tax on liquor is $3.30 a
Because most alcoholic energy drinks and other
flavored-malt beverages are generally sold at
convenience and grocery stores, the price increase
associated with that sort of taxation shift could be
catastrophic to sales of the products, which is, of
course, what the AGs and alcohol-industry watchdogs
are hoping for.
"There are two things that drive underage drinking:
price and accessibility," said Michele Simon, research
and policy director at the Marin Institute, a watchdog
group that has long lobbied for a crackdown on
flavored malt beverages, which it derisively dubs "alcopops."
"This is a way to address both." Groups like Marin and
the AGs argue that all flavored malt beverages, but
alcoholic energy drinks in particular, target youth by
mimicking the flavors and characteristics of
nonalcoholic drinks that have become increasingly
popular with teens.
The AGs, in their letter, singled out Miller Brewing's
Sparks and A-B's Bud Extra, as well as a third
company, Charge Beverages, for having "taken advantage
of the youth appeal by engaging in aggressive
marketing campaigns ... [that] claim that such
beverages increase a person's stamina or energy level.
However, they do not mention the potentially severe,
adverse consequences of mixing caffeine with alcohol."
Sparks, the AGs argued, employs an "advertising
scheme" focused on "providing energy," including cans
designed to resemble batteries. And Bud Extra, the
letter said, used slogans such as "Who's up for
staying out all night?"
In statements, both A-B and Miller denied that their
alcoholic energy beverages are marketed to youth, and
said that both meet the current standard to be taxed
as a malt beverage.