Red Bull wins India court reprieve to use ‘energy drink’ label

An Indian court on Tuesday quashed the food regulator’s order to stop Austrian beverage firm Red Bull using the label “energy drink” on its cans, saying the decision had been taken without allowing the company to explain its position.

The decision will come as a major relief for Red Bull, but also Pepsi, Monster Beverage and billionaire Mukesh Ambani’s Reliance, which in private had all criticised India’s move, fearing the removal of the category label could damage their brands. The other companies did not take legal action.

The regulator ordered makers of high-caffeine beverages sold as “energy drinks” to stop using the description in June, rejecting ​efforts to stall the move in a market expected to be worth $1.6 billion by 2028.

Hearing the Red Bull challenge, the Delhi High Court on Tuesday set aside the order, saying it agreed with the company that the regulator took the decision “without affording any opportunity” to the company to provide its views.

The Food Safety and Standards Authority of India will appeal against the court’s decision on public health grounds, a government official with direct knowledge of the plans told Reuters on condition of anonymity. The regulator did not respond to requests for comment.

Red Bull’s India unit had ‌argued ⁠the prohibition of the label “introduces substantial regulatory uncertainty and adversely affects” its existing and planned commercial investments.

“Abrupt prohibition”

Energy drinks have ​sparked health concerns among regulators in several countries around the world who worry they contain significant amounts of caffeine, sugar and taurine, an amino acid, which research suggests can contribute to health problems including high blood pressure and heart problems. They will be ​banned for under-16s in England from April next year.

The energy drink market in India boomed after Pepsi launched Sting in 2017, with its 20-rupee ($0.21) plastic ⁠bottles proving ​popular among 15- to 19-year-olds and in rural areas, according to consumer research firm Euromonitor.

In its court filing, Red Bull argued India’s decision was against the country’s stated policy to facilitate “international trade, promote investment and provide greater certainty to businesses,” as the “abrupt prohibition” of the descriptor was issued without any change to the underlying product standard.