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March 26, 2014Client Alert

Bowing to Pressure, Four Loko Stops Selling Caffeinated Alcohol Beverages and Restricts Marketing to Under 21-Year-Olds

After being the subject of investigations by 20 state attorneys general and the City of San Francisco alleging that its products were targeting young people and encouraging alcohol abuse, Phusion Projects LLC of Chicago, IL, the maker of Four Loko beverages, has entered a settlement whereby it has agreed to stop selling caffeinated alcoholic drinks and will restrict the marketing of its products to those 21 and older. Phusion will also pay a $400,000 fine.

Four Loko debuted in 2005 and was named for its four primary ingredients – alcohol, caffeine, taurine and guarana. It was reformulated in 2010 to eliminate caffeine, after Phusion received a Warning Letter from the U.S. Food and Drug Administration (FDA) and the product was banned in several states. FDA raised specific concerns about the safety of caffeine when used in the presence of alcohol, and determined that caffeine, when added to alcoholic beverages, was not generally recognized as safe. Phusion has been hit with a deluge of lawsuits alleging injuries and deaths primarily due to underage consumption of the beverage.

Among other things, the settlement specifies that Phusion’s flavored malt beverages may not be promoted on school or college property except at licensed retailers, and may not be promoted to be mixed with caffeine. The use of models and actors younger than 25 (or who appear to be younger than 21) is also eliminated from any product advertising. Phusion is also charged with monitoring all of its “websites, social media or mobile applications or technology” to ensure its product is not advertised or promoted through that medium in a manner inconsistent with the settlements.

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