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NABCA Presentation March 10 2010 The material herein is confidential and intended only for the above recipient. It is not to be used by or made available to persons not receiving copies directly from Prohibition Beverage. TABLE OF CONTENTS The Science and Evolution of the Caffeine-Alcohol Debate • • Overview of the research most frequently cited Going from research article to state and federal action Not All Alcohols are Created Equal • • Positioning versus formulation issues Comparison of alcohol beverage types – they are not all the same Table of Contents The Dangers and Implications for the Industry • A dangerous precedence for the industry Company Strategy and Background strategy, business model, history, management team, strategic relationships Market Opportunity Target Consumers Products p.i.n.k., sake spirit Marketing R. Scott Winters, Ph.D. CEO Distribution • [email protected] Financials 215 –recent 627 –acquisitions, 2788 (office) Exit •strategy, valuation • 215 – 327 – 8640 Contact Information (cell) THE SCIENCE AND EVOLUTION OF THE CAFFEINE-ALCOHOL DEBATE Overview of the Study • Investigated drinking behaviors of students on college campuses • Was “questionnaire” based asking them to self report on various behaviors, including alcohol consumption and “risky behaviors” • Asked, if within the last month had the respondent consumed a non-alcohol energy drink while drinking alcohol Some Important Facts • It never addressed or even attempted to address alcohols that contain caffeine • On post-hoc analysis, they found a correlation between drinking non-alcohol energy drinks and the student’s with risky behavior. • It did not – and could not, based on the experimental design – show that mixing nonalcohol energy drinks and vodka caused the risky behavior THE SCIENCE AND EVOLUTION OF THE CAFFEINE-ALCOHOL DEBATE What about other scientific studies? • Most studies deal with the behavior of college drinking, primarily under-age drinking • There are some studies have actually looked at the effects of mixing alcohol and caffeine The General Conclusions • There does not seem to be any evidence to support that mixing alcohol and caffeine together has any physical effect different from drinking alcohol alone. • There may be a perceptional effect… • If you tell people that what they’re consuming with alcohol has other effects, then they perceive themselves as having those effects. • They won’t do better in tests, but they’ll act faster and perceive themselves as having done better. THE SCIENCE AND EVOLUTION OF THE CAFFEINE-ALCOHOL DEBATE “All drinks containing alcohol and caffeine should be banned.” O’Brian Interview to Scott Carpenter Marin Institute State Attorney Generals TTB FDA O’Brian Study • • • • Non-alcohol energy drinks College kids Correlation Placebo effect (maybe?) FDA letter to Prohibition • Luxury product • No “energy positioning” • Trace amounts of caffeine as a secondary product NOT ALL ALCOHOLS ARE CREATED EQUAL 1. Alcohol Beverages that are positioned as “energy drinks” • • Alocopops: generally low ABV, distributed as RTD, low price point, confusing packaging/labeling Some higher-proof alcohol beverages 2. Not positioned as energy drinks but contain caffeine a) Those that ad caffeine directly b) Those that contain caffeine in secondary analysis (something else breaks down, such as chocolate, coffee or guarana) i) Primary compound added alone ii) Additional flavorings added The Problem: You can now have two products with the exact same level of caffeine, neither positioned as an energy-alcohol, but one is arbitrarily deemed “acceptable” and the other is found unacceptable. THE DANGER AND IMPLICATION FOR THE INDUSTRY It is my personal opinion that it exposes the industry to two very dangerous scenarios: 1. If upon complete chemical analysis a beverage exhibits a compound that is not explicitly GRAS approved, then the beverage is at risk. 2. Independent of the FDA decision, the states are independently banning the distribution and sales of products. Finally: • The core issue, based upon the cited research and ubiquitous availability, remains unaddressed.