New concerns on caffeine consumption and the impact of potential regulations: The case of energy drinks

The increasing consumption of energy drinks and caffeine added products, coupled with somewhat inconsistent labeling practices, has generated health concerns from possible excessive caffeine intake. In this paper, we simulate the impacts of potential caffeine content regulatory policies on demand for energy drinks as well as caffeine and sugar consumption. We model demand for energy drinks as a function of price and product characteristics that includes both caffeine levels and the presence of labeled caffeine content. Using our demand estimation results, we simulate the impact of potential policies including mandatory caffeine content labeling, advertising restriction and caffeine content regulations. Results indicate that mandatory labeling and advertising restrictions would reduce the overall sales in the energy drinks sector, but with a limited impact. The effect of caffeine content regulation would vary depending on whether the policy is implemented on a per-ounce basis or a per-can basis. Furthermore, these policies have different impacts on sugar and caffeine consumption, and therefore policymakers should be cautious when implementing caffeine regulations.