PepsiCo, Monster Beverage and Reliance Industries can continue using the “energy drink” label on their products in India after the Delhi High Court put a regulatory ban on hold, providing temporary relief to companies that said the dispute had disrupted operations and caused financial losses.
The court’s decision comes amid a wider food safety crackdown by India’s food regulator and growing competition in the country’s rapidly expanding energy drinks market.
Credits: Reuters
Delhi High Court Puts Ban on Hold
The Food Safety and Standards Authority of India (FSSAI) had ordered manufacturers of high-caffeine beverages marketed as “energy drinks” to stop using the description in June.
The regulator rejected industry efforts to delay the directive, prompting PepsiCo and Monster to approach the Delhi High Court.
On Tuesday, the court put the directive on hold for both companies during a hearing that followed their pleas filed last week, according to a lawyer present at the proceedings.
The ruling follows similar relief granted to Reliance Industries earlier on Tuesday. Austria-based Red Bull had also received relief from the court last week after challenging the regulator’s order.
The cases will continue to be heard in the coming weeks, meaning the latest decisions do not represent a final resolution of the dispute.
FSSAI did not immediately respond to a request for comment.
FSSAI Faces Questions Over Directive
During the hearing involving Reliance, the Delhi High Court questioned FSSAI over the amount of time given to the company before the regulator issued its directive.
The court asked why Reliance had not been given sufficient time and told the regulator that it was “never too late” to correct a mistake.
The proceedings highlight the legal challenges facing FSSAI as it attempts to tighten oversight of food and beverage products across India.
The regulator has launched a broader food safety campaign this year, involving measures ranging from inspections and stock seizures to shutdowns and new warning-label requirements.
The campaign comes amid increasing concern about the health implications of highly processed foods, sugary beverages and products containing high levels of caffeine.
Energy Drinks Market Draws Major Players
The dispute is significant for beverage companies because India has emerged as an important growth market for energy drinks.
The country’s energy drinks market is expected to reach $1.6 billion by 2028. Retail sales are growing at an annual rate of 12.6%, according to Euromonitor, putting India ahead of the United States and China in terms of growth.
The market has attracted major global and domestic companies, with PepsiCo, Monster, Red Bull and Reliance competing for consumers.
For the companies, the ability to market products specifically as “energy drinks” is important because the description distinguishes them from conventional soft drinks and other beverages.
The regulatory order therefore threatened not only product labelling but also how the companies market and distribute their products.
Stock Seizures Create Business Disruption
The companies have argued that the June directive had already caused significant disruption to their operations.
Reliance and PepsiCo said hundreds of millions of beverages carrying the “energy drink” label had been removed from circulation following the regulatory action.
State authorities seized stocks of affected products, leading to financial losses and disrupting the companies’ business plans, according to the firms.
In a court filing dated October 1 and reviewed by Reuters, Reliance’s beverages business said the regulatory action was causing substantial disruption to its operations.
The impact could be particularly significant for Reliance as it continues expanding its consumer beverages business through the Campa brand.
Reliance Expands Campa Beverage Business
Reliance revived the Campa brand in 2023 and has used its extensive retail network and competitive pricing to challenge established beverage companies such as Coca-Cola and PepsiCo.
The company’s entry has added another major domestic player to India’s competitive soft drinks and energy beverages market.
The regulatory dispute therefore comes at a time when Reliance is attempting to expand its presence in the sector and compete with multinational beverage companies.
The temporary court relief could allow the company to continue selling affected products under their existing branding while the legal proceedings continue.
Credits: MarketScreener
Wider Food Safety Crackdown
The dispute is unfolding against the backdrop of a broader push by FSSAI to strengthen food safety enforcement across India.
The regulator’s campaign has included raids, shutdowns and new requirements for warning labels on certain food products and ingredients.
The government’s focus has increasingly extended beyond traditional food safety concerns to questions surrounding nutritional content, caffeine levels and the potential health effects of heavily processed products.
For beverage companies, the developments could lead to closer scrutiny of product formulations, marketing claims and labels.
