• Ad Age, Thursday, October 21, 2010 11:06 AM

Anheuser-Busch and MillerCoors both got out of the business of combining alcohol and caffeine two years ago as pressure mounted from activists who charged that the drinks were marketed to underage drinkers and posed health risks, E.J. Schultz reports. Then there was the matter of state attorneys general threatening a lawsuit.

The gap in the market has not gone unfilled, however. Small companies, such as Chicago-based Phusion Projects, maker of Four Loko, and Portland, Ore.-based Charge Beverages, which markets Core and Axis, have stepped into the "alco-speed" breach. The segment is still "very small but [the brands] are growing very, very fast," says Eric Shepard, executive editor of Beer Marketer's Insights.

A year ago, the Food and Drug Administration asked 27 drink manufactures to prove that their products are safe and it is reviewing 19 responses. The matter is a "high priority," FDA spokesman Michael Herndon tells Schultz, but a decision "could take some time." U.S. Sen. Charles Schumer, D-N.Y., meanwhile, has asked the Federal Trade Commission to investigate, saying companies are promoting their products as an "everyday energy drink."

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