Key Update

PepsiCo, Monster Beverage and Reliance Consumer Products Ltd. (RCPL) can continue using the “energy drink” label on their products in India after the Delhi High Court put a Food Safety and Standards Authority of India (FSSAI) directive on hold. The interim relief comes after the companies said the regulator’s order had disrupted their operations and caused financial losses.

Delhi High Court Grants Temporary Relief

In June, FSSAI directed manufacturers of high-caffeine beverages sold as “energy drinks” to stop using the description. The regulator rejected the industry’s efforts to delay the move, setting off a dispute in India’s rapidly growing energy drinks market, which Euromonitor expects to reach $1.6 billion by 2028.

On Tuesday, the Delhi High Court put the directive on hold for PepsiCo and Monster Beverage after hearing their pleas filed the previous week, according to a lawyer present at the hearing. The court had also granted similar relief to RCPL earlier that day and to Austria-based Red Bull the previous week. It will continue hearing the cases in the coming weeks.

Court Questions FSSAI Over Time Given to Companies

During the hearing of RCPL’s plea, the court questioned FSSAI on why it had not given the company sufficient time before issuing the order. It also told the regulator that it was “never too late” to correct a mistake. The court’s remarks came as it examined how the directive had affected the companies. FSSAI had not immediately responded to a request for comment.

FSSAI Steps Up Food Safety Action

The court proceedings come as FSSAI expands its food safety enforcement across India. The regulator has intensified action against food businesses through inspections, raids and shutdowns, while also introducing new requirements for ingredient and warning labels. These measures form part of a broader food safety push amid growing concerns about the health risks associated with highly processed foods and beverages.

Companies Report Stock Seizures and Losses

The regulatory action has also created uncertainty for the companies as they compete in India’s fast-growing energy drinks market. According to Euromonitor, retail sales in the sector are growing at 12.6% annually, outpacing growth in the United States and China. Reliance and PepsiCo said state authorities had removed hundreds of millions of their beverage products labelled “energy drink” from circulation following the June order. They also reported stock seizures, financial losses and disruptions to their investment plans.

In a court filing dated October 1 and reviewed by Reuters, Reliance’s beverage arm said the enforcement action was “causing substantial disruption” to its business operations.

Source: Money Control