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Clipped wings

Author: Mara Georgieva and Dessislava Nikolova, Capital Date: Fri, Feb 24 2012 2363 Views
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Proposed amendments to Bulgaria's Health Act equate energy drinks to alcoholic beverages insofar as regulatory barriers on sale and advertising are concerned, a move that would cut the wings (to borrow the motto of Red Bull) of a market worth 80 million leva a year.

According to the motivation memo from the Health Ministry, which accompanied the bill, "the consumption of energy drinks in combination with alcohol and/or drugs harbours a significant health risk, especially among youth, because the stimulating effect of the energy drinks masks the toxic action of alcohol and drugs."

The amendments, which make Bulgaria the first country in the European Union to consider a ban on the sale or advertising of energy drinks to under-age customers, was passed at first reading in Parliament's health care committee. These also contained the ban on smoking in any enclosed public space.

Predictably, the energy drinks ban has producers, advertisers and even some lawyers – who say that the new legislation will trigger the reaction of a series of EU institutions – up in arms.

Bulls, pit bulls and other monsters

The peak of the sales of energy drinks in Bulgaria was 2008, when domestic consumption reached 10 million litres. Since then, it has decreased in half to five million litres in 2011 – partially because of the overall drop in consumption prompted by recession, but also because energy drinks are among the most expensive non-alcoholic beverages.

Despite the market segment being estimated at about 80 million leva, it is a tiny fraction of the non-alcoholic beverages market – along with sports drinks, energy drinks account for only 0.3 per cent of total non-alcoholic drinks consumption.

Distributors say that the bulk of their sales come on the "cold" market (restaurants, bars and discos), where a 150ml drink can sells, on average, for five or six leva. Energy drink advertising does not target under-age consumers.

For major producers, it is an issue of prestige to have an energy drink on the market. Beer giant Carlsberg launched its Battery brand in Bulgaria in 2008, but suspended active distribution two years later. Coca-Cola began selling Burn in 2002 and has been on the market ever since, albeit with some intermittent interruptions. The company also sells the Monster energy drink.

PepsiCo sells Pepsi X and mineral water bottler Devin set foot on the segment by taking over the distribution of Red Bull in Bulgaria in 2007.

Red Bull leads the market in terms of sales and its main competitor is Pit Bull, a local product from Nova Trade, which outsells it in terms of volumes, according to industry sources.
 
Reasoning and reactions
The Health Ministry's memo said that children and teenagers were a risk group in which consumption of caffeine, in amounts much smaller than adults, could lead to negative effects. The amendments envision a ban on energy drinks advertising targeting under-age consumers, nor should it feature under-age consumers or link energy drinks to any sporting or physical achievement.

The bill has found some supporters, among them the chairperson of the Council on Electronic Media Georgi Lozanov, whose statement effectively duplicated the Health Ministry's memo before endorsing the amendments.

Krassimir Gergov, the chairperson of Bulgaria's association of advertising agencies, has also endorsed the bill, which he described as "balanced, motivated and timely".

The industry, for its part, sees no fault with existing regulation. The consumer information regulations, last amended in 2011, already mandate that energy drinks should be sold with a sticker warning about the high caffeine content and a recommendation that the product should not be consumed by children, pregnant or breast-feeding women. The sticker should also contain information on the caffeine content.

"Energy drinks have been sold for more than 20 years in 160 countries and there is no member state in which they are sold with any sort of restriction," the European association of soft drink producers, UNESDA, said in a letter.

According to UNESDA, a 250ml energy drink contains 80mg of caffeine, the same amount as a cup of instant coffee or half a cup of cappuccino. Caffeine consumption via an energy drink is only a small share of the total caffeine intake, including coffee and other soft drinks. Furthermore, the restriction had no grounds based on any scientific research, UNESDA said.

Bulgarian Soft Drinks Association, a member of UNESDA, said that the health safety of key ingredients of energy drinks had been ascertained by European risk assessment institutions. "There are no restrictions on the sale of energy drinks in the EU," the association's chairperson Milcho Boshev said.

The Bulgarian Association of Advertisers also opposes the bill.

Warning against the amendments, the Austrian embassy in Sofia has written to Parliament's health care committee to consider the existing legislative precedents in the EU and notify the European Commission. Austria is the home country of Red Bull, one of the leading energy drink producers in the world.

Bulgaria was required to notify other member states of regulatory changes that impact the European single market via the technical regulations information system (TRIS), the embassy said. Under EU law, Bulgaria should make the bill available to other member states for reaction for a period of three months, something that the Health Ministry had not done.

Possible outcomes of consultations with other member states can lead to a repeal of proposed amendments as a result of opposition, infringement procedures by the European Commission or even a lawsuit brought by other member states in the Court of Justice of the European Union.

The chairperson of the health care committee in Parliament, Dessislava Atanassova from ruling party GERB has warned as much, but Health Minister Stefan Konstantinov said that the bill could be amended further before the second reading.

In the meantime, MPs might reconsider their opinion on tomato juice, another drink known to mix well with vodka.

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