Posted: September 13th, 2017

The Rise and Fall of Four Loko

The Rise and Fall of Four Loko

 
Case 6.5 The Rise and Fall of Four Loko
IF YOU ’ RE SERIOUS ABOU T YOUR PAR TYING ,how do you manage to keep awake when drinking late into

the night? That question may seem absurd to some people, but it has long bedeviled club- hoppers and

other revelers. Some of them drink cola on the side or mixed with alcohol; others favor Red Bull and

vodka. Recently, however, a few entrepreneurial companies came to their aid, by combining alcohol and

caffeine into one convenient package. Joose and Four Loko are two examples. The former added 54 mil-

ligrams, the latter 156 milligrams, of caffeine to a malt bever-age that is 12 percent alcohol. ( In

comparison, a can of Coke contains 35 milligrams of caffeine, and an eight- ounce cup of coffee between

100 and 200 milligrams. Beer is usually around 5 percent alcohol and wine 12 percent.) Made with fruit

flavors and packaged in bright colors, Joose and Four Loko were sold in large, 23.5 ounce cans. 107 While

these innovative products made some consumers happy, they soon alarmed colleges and health officials

around the country when they led, or appeared to have led, to a growing number of intoxicated

students and other young people landing in hospital emergency rooms, some with seri-ous alcohol

poisoning— for example, the New Jersey student who showed up in a local hospital with a blood alcohol

level of .40 ( at least four times the legal limit for driving a car) after drinking three cans of Four Loko

and several shots of tequila in an hour. In response, several colleges and universities banned the drinks

from their campuses or tried to warn stu-dents about their dangers. Peter Mercer, the president of

Ramapo College, where the New Jersey student was enrolled, says, “ I do not see any socially redeeming

purpose being served by these beverages.” Senator Charles E. Schumer of New York calls Four Loko “ a

toxic and dangerous brew.” Dr. Michael Reihart, an emer-gency room physician in Lancaster,

Pennsylvania, agrees: “ This is one of the most dangerous new alcohol concoctions I have ever seen.” He

adds, “ It’s a recipe for disaster because your body’s natural defense is to get sleepy and not want to

drink, but in this case you’re tricking the body with caffeine.” With these drinks, “ you have a product

where people don’t appreciate how much alcohol they’re consuming,” says Rob McKenna, an attorney

general in the state of Washington. These concerns didn’t dent the popularity of Four Loko, however. On

a fan- operated Facebook page, for example, more than 25,000 people have displayed their support of

the beverage, many posting photos of themselves with empty cans stacked or strewn about. Some say

they like the drink because it doesn’t take many to get intoxicated. Stores near many college campuses

found themselves giv-ing the beverages increased shelf space because of the high demand, especially

after Four Loko expanded the fla-vors it offered. “ You can get drunk for $ 5 all night,” says Boston

College junior, Christine Binko, though she doesn’t like the cans littering the streets near the campus,

and she thinks “ it brings out the aggression in people.” Many observers were worried by the colorful

packaging of the beverages and the fact that they come in flavors like water-melon, blue raspberry, and

lemon- lime. Senator Schumer, for one, charges that the beverages are “ explicitly designed to attract

under- age drinkers.” And it’s true that the brightly colored cans resemble iced tea, soda, or energy

drink con-tainers and can be mistaken for nonalcoholic beverages. “ I’ve talked to parents who were

shocked because the can was in their refrigerator and they didn’t realize it was an alcoholic beverage,”

Dr. Reihart said. “ It looks like every other energy drink out there.” Chris Hunter, the co- founder and

managing partner of the company that owns Four Loko, believes that his product is being unfairly

singled out and says that his company takes steps to prevent its product falling into the hands of

minors. “ Alcohol misuse and abuse and under- age drinking are issues the industry faces . . . The singling

out or banning of one product is not going to solve that. Consumer education is what’s going to do it.”

Not wanting to wait for consumer education, Michigan and Washington banned caffeinated alcoholic

beverages in November 2010, and legislators in several other states were considering the same course of

action. “ Disappointed” by calls to ban the drink, Four Loko contended that its product is safe. “ We

want to open a dialogue to discuss specific concerns and try to reach solutions,” a statement issued by

the company said. “ When consumed responsibly, our products are just as safe as any other alcoholic

beverages.” That ­dialogue never happened because, at the urging of Senator Schumer and other

politicians, the Food and Drug Administration ( FDA) soon stepped in. It sent a warning to Four Loko and

three other manufacturers that the caffeine added to their malt alcoholic beverages is an “ unsafe food

additive” and that the beverages are a “ public health concern” because they mask the sensory clues

that drinkers rely on to determine their level of intoxica-tion. The products, the FDA ruled, cannot

remain on the market in their current form. In response, some partygoers rushed to stack up on Four

Loko before the ban went into effect. Four Loko, for its part, has released a new version of the drink,

which now contains no caffeine. Sales of the new product, however, have been comparatively poor. One

of the beverages caught up in the FDA crackdown is Moonshot ’ 69, a craft beer produced by tiny New

Century Brewery, a one- person company run by Rhonda Kallman, a co- founder of Sam Adams. Because

Moonshot ’ 69 contains about 69 milligrams of caffeine, the FDA will no longer let Kallman produce it.

That’s because the caffeine was put directly into the beverage and not naturally occurring ( as it would

be if, say, the beer were brewed with coffee). But Moonshot ’ 69 bears little resemblance to high-

alcohol, high-caffeine malt beverages like Four Loko. It’s only 5 percent alcohol and comes in standard

12- ounce beer bottles, and no one would mistake it for an energy drink. “ This is prohibition,” complains

Kallman. “ It’s devastating the company, and, as a U. S. citizen, I’m just ­flabbergasted.” Stuck with $

25,000 worth of inventory that she cannot sell, Kallman says that instead of outlawing caffeinated

alcoholic beverages across the board, the FDA should set parameters for alcoholic bever-ages with

caffeine, including those where the caffeine comes from naturally occurring sources. “ Give us a base

line,” she argues. “ I’m happy to comply. Regulate, but don’t ban. . . . I’m a responsible marketer who has

more than twenty- five years in the business.”
Discussion Questions
1. Are these drinks as dangerous as the critics maintain? How much of the problem is the caffeine, how

much labeling and marketing, and how much is irresponsible behavior on the part of young ­drinkers? Are

companies like Joose and Four Loko being singled out for social problems, in particular, alcohol abuse by

young people, that are in fact much wider in scope?
2. Is Peter Mercer correct that caffeinated alcoholic bever-ages serve no “ socially redeeming purpose”?

Is that the proper test for determining whether society should permit a product to be sold? What about

the fact that there is a market demand for these products?
3. Is the banning of Four Loko and kindred beverages an example of legal paternalism?
4. Should others measures— for example, consumer educa-tion, regulation of caffeine content, changes

to product labeling and packaging— have been attempted before banning these beverages?
5. Did the FDA move too quickly or was it necessary for the agency to act swiftly ( in Senator Schumer’s

words) “ before more tragedies occur”? Do you think the FDA acted on the basis of scientific evidence or

as a result of political pressure?
6. What responsibilities do the manufacturers of alcoholic beverages have? What steps, if any, should

they take to see that their produces are not abused? Did Four Loko fall down in this respect? What

about Moonshot ’ 69?

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