Caffeine Catastrophe: Energy Drinks, Products Liability and Market Strategy

Evan Peterson


Despite widespread growth in the U.S. alternative beverage market in recent years, there are rising concerns that the producers of energy drinks, energy shots, and relaxation drinks have failed to adequately disclose potential health risks associated with consuming high levels of caffeine. In contrast to other caffeinated products, current FDA regulations do not require energy drinks to display comprehensive ingredient and warning labels.  Consumer concerns have prompted a heightened discourse on the potential adverse health effects of energy drink consumption, a media call for investigation into the advertising practices of energy drink firms, a governmental push for greater regulation by the FDA, and a rise in products liability litigation. In order to reduce costs and better position themselves in the marketplace, U.S. energy drink firms must effectively manage the risks associated with producing and marketing these beverages in an increasingly hostile and inquisitive marketplace. Building on existing research, this article will examine three strategic options these firms can undertake in response to increasing products liability litigation and FDA regulation: product discontinuance, product relocation, and product offering modification. Based on major drawbacks associated with product discontinuance and product relocation, product offering modification offers the greatest potential to build consumer trust, decrease litigation costs, and respond to regulatory concerns.

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International Journal of Marketing Studies  ISSN 1918-719X(Print) ISSN 1918-7203(Online)

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