Anheuser to stop selling alcoholic energy drinks

By Karen Jacobs

ATLANTA (Reuters) - Anheuser-Busch Cos (BUD.N) will stop selling energy drinks that contain alcohol in the United States under an agreement with 11 state attorneys general who had alleged that the brewer was marketing the products to underage drinkers.

The St. Louis company said on Thursday it has stopped producing caffeinated versions of its Bud Extra and Tilt malt beverage products, and was reformulating them to remove caffeine and guarana, another stimulant.

"We have determined that competing in the prepackaged caffeinated alcohol beverage sector may detract from our reputation as the global industry leader in promoting responsibility among adults who drink and discouraging underage drinking," Francine Katz, vice president of communications and consumer affairs for Anheuser, said in a statement.

Attorneys general from the states -- Arizona, California, Connecticut, Idaho, Illinois, Iowa, Maine, Maryland, New Mexico, Ohio and New York -- praised Anheuser-Busch and called on other makers of alcoholic energy drinks to halt their sale and marketing.

The attorneys general said they were investigating as many as 15 other companies that market similar drinks.

Anheuser-Busch, which has rejected a $46.3 billion takeover offer from InBev NV INTB.BR, controls nearly half the U.S. beer market with brands like Budweiser.

The attorneys general said their investigation, which began more than a year ago, showed Anheuser-Busch made false and misleading statements about the health effects of Tilt and Bud Extra, and ads were aimed at consumers under the age of 21.

"We were concerned that these beverages were being aggressively marketed over the Internet with a strong focus on college populations," Maine Attorney General Steven Rowe said during a conference call.

The state officials said the alcoholic energy drinks were marketed with promotional giveaways for things like free music downloads.

"The nature and tenor and content of the ads was clearly targeting underage drinkers as well as others," Connecticut Attorney General Richard Blumenthal said.

Anheuser-Busch disputed those marketing allegations, saying Tilt and Bud Extra were primarily promoted on the premises of licensed retailers. It also said the settlement agreement includes no findings it engaged in unlawful behavior.

"There was no TV and little print or radio advertising of these products, and their Web sites had limited features and few unique visitors," Katz said.

"No advertiser who was trying to target underage people would have used such a marketing plan," the statement added.

The settlement revives a controversy that fueled Anheuser's decision last year to pull its Spykes drinks from the market after parent advocacy groups and others accused the company of targeting underage drinkers with the sweet caffeinated alcoholic product.

As part of the settlement, Anheuser-Busch will also pay $200,000 to participating states.