November 28, 2012 / 3:31 AM / 5 years ago

Monster Beverage shares surge after FDA comments

Two cans of Monster energy drink are shown in this photo illustration in Los Angeles October 23, 2012. REUTERS/Sam Mircovich

(Reuters) - Shares in energy drink maker Monster Beverage Corp (MNST.O) soared more than 13 percent on Tuesday on comments by the U.S. Food and Drug Administration that did not suggest any immediate action against makers of the caffeinated drinks, although the regulator will consider adding warnings and more information on the drink labels.

The FDA said it would consider asking for disclosures on the amount of caffeine in food products, limitations on their use and warnings about possible side effects after it completes a previously announced safety review of adverse events related to energy drinks. (FDA letter: link.reuters.com/dun34t)

“Although these products have the potential to raise safety or regulatory issues, there is a long history of safe use of other caffeine containing products in the United States,” FDA senior advisor Michele Mital said in the letter.

The FDA comments were in response to concerns raised by Democratic Senators Richard Blumenthal of Connecticut and Dick Durbin of Illinois.

Monster Beverage was sued last month by parents of a teenager who died after consuming two cans of the company’s beverage.

In late October, the FDA said it was investigating reports of five deaths that could be associated with Monster Beverage’s energy drink. The FDA also said on November 14 that another caffeine drink, 5-Hour Energy made by Living Essentials LLC, could have been involved in 13 deaths that have occurred over the last four years.

Monster Beverages shares fell more than 30 percent in the last month as investors expressed concern over potential legal and regulatory fallout before surging on Tuesday to close up 13 percent at $51.97 on the Nasdaq.

In its letter, the FDA added that it was looking at whether products safe for most individuals could pose risks arising from toxic effects for young people and those with pre-existing health issues, such as heart conditions.

The senators replied to the agency’s statement, saying that the “FDA can and should take action now to regulate energy drinks that are marketed as beverages.”

Reporting by Vrinda Manocha in Bangalore; Editing by Lisa Shumaker

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