PepsiCo, Monster, Reliance win partial reprieve on 'energy drink' label ban in India

PepsiCo, Monster Beverage and Reliance's beverage unit can keep ‌the "energy drink" label on existing stocks in India, a court ruled on Tuesday as it reviewed a ban on the label by the food regulator. The ruling provides a breather for the companies after a months-long dispute they say disrupted operations.

The regulator in June ordered makers of high-caffeine beverages sold as "energy drinks" to stop ‌using the description, rejecting the industry's efforts to stall the move in a market expected to be worth $1.6 billion by 2028. On Tuesday, the Delhi ‌High Court made the allowances for PepsiCo and Monster in a hearing that followed their pleas last week, according to court orders released.

The decision permits the companies to only sell existing stocks of drinks with the label. Any stocks manufactured after Tuesday must not carry the "energy drink" label, the order added. The order follows reprieves the court granted to Reliance Consumer, the beverage ⁠arm of ​Reliance, earlier on Tuesday and to Austria's ⁠Red Bull last week.

The legal showdown is being closely watched as the Food Safety and Standards Authority of India (FSSAI) has embarked on a broader India-wide food safety push this year. ⁠Its crackdown has ranged from raids and shutdowns to new ingredient warning-label requirements, driven by growing concern over the health risks posed by junk food and beyond. As it heard ​Reliance's arguments, the court asked FSSAI's lawyer why the regulator had not allowed the company enough time before passing the order, telling the ⁠agency it was "never too late" to correct its mistake.

The court will continue to hear the cases in the coming weeks. FSSAI did not immediately respond to a request for comment.

STOCK SEIZURES AND ⁠FINANCIAL ​LOSSES The label ban has threatened the ambitions of PepsiCo, Monster Beverage and Reliance in India's fast-growing energy drinks market, where retail sales are expanding 12.6% a year, outstripping growth in the US and China, according to Euromonitor.

Reliance and PepsiCo have said that hundreds of millions of their beverage products labelled "energy ⁠drink" have been abruptly taken out of circulation since the ban. State authorities have seized their stock, causing financial losses and impacting investment plans, the companies ⁠have said.

Such moves "are causing substantial disruption" ⁠to business operations, the beverages' arm of Reliance said in a court filing dated October 1, a copy of which was reviewed by Reuters. Reliance revived the Campa brand in 2023 and has since used its retail network and ‌low prices to ‌challenge Coca-Cola and PepsiCo.