Saudi Arabia has banned energy drink advertising altogether and will limit their distribution and sale, while brands including Red Bull will now be forced to carry health warnings.
The state-owned Saudi Press Agency (SPA) announced the news on Monday following a cabinet meeting in Riyadh where information submitted by the state’s minister of interior on the ‘adverse effects of energy drinks’ was discussed.
Industry leaders including Red Bull will be worried by the move, given strong growth for sports and energy drinks in the region.
In neighboring UAE they have recorded strong growth in recent years: 43% total volume growth to 26.2m liters between 2008 and 2013 and 54% value growth over the same period to AED 527m ($143.5m), according to Euromonitor International in its October 2013 report 'Sports and Energy Drinks in the United Arab Emirates'.
After reviewing the evidence, the Saudi Arabian cabinet approved a number of actions that include, firstly, a blanket ban on advertising of energy drinks “via any readable, audible or visible media organ, or by any other means”.
Energy drinks companies, their agents, distributors and marketing associations are also now banned from sponsoring any sporting, social or cultural event.
Thirdly, and slightly cryptically, the decree will “prohibit the free distribution of energy drinks to consumers of all age groups”.
Banned in restaurants, canteens, sports clubs...
A sales ban on energy drinks in restaurants and canteens, education and health facilities, halls and public and private sports clubs has also been imposed.
And finally: “Factory owners and importers of energy drinks shall be committing to writing a text on the tin of any energy drinks in Arabic and English languages, warning of the harmful effects of energy drinks.”
Red Bull will be affected by the move, given strong growth for energy drinks in the region. Taking the neighboring United Arab Emirates (UAE) again, it accounted for 25% of off-trade volumes and 28% of on-trade value share here in 2012, according to Euromonitor International.
Meanwhile, Monster Energy entered that market last July after signing a distribution deal with Agthia Group's consumer products division Al Ain Foods and Beverages.
Red Bull said in a statement sent to BeverageDaily.com: "We are surprised by this decision by the Saudi Arabian government. Red Bull is available in more than 165 countries because health authorities across the world have concluded that Red Bull is safe to consume. More than 5bn cans were consumed last year and about 35bn cans since Red Bull was created more than 25 years ago.’
Soft drinks also under pressure in region
In its October 2013 report, Euromonitor’s analysts said Red Bull had reaped benefits from its ongoing ad spend in neighboring UAE and sponsorship of major sports events, notably its Formula One racing team.
Saudi Arabia’s move follows a move by the UAE in December, as the federal cabinet chose to ban supersize fizzy drinks to tackle obesity.
Soft drinks consumption in the UAE is especially high – it is the fifth highest soft drinks consumer globally, with residents knocking back 103 liters/year on average, according to the World Health Organization (WHO).
In addition to favorable demographics, consumers there and in Saudi Arabia are also drawn to energy drinks because of the 'substitution effect' caffeine lends those who do not drink alcohol; both factors mean the market is an attractive one for the likes of Monster and Red Bull.