Banning Liquor Surrogate Advertising
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THE INDIAN LIQUOR INDUSTRY Contd..The liquor
industry was heavily regulated by the government. Companies were not allowed
to expand capacity without prior approval from the concerned state
government. The distribution of liquor was also controlled in many states
through auction system, the open-market system and the government-controlled
system. Under the auction system, the government fixed a floor price for the
shops and the bidders had to quote prices. The license was given to the
highest bidder.
States following the open-market system gave companies freedom to choose
their distributor and to determine the price and the discounts. In the
government-controlled system, liquor was distributed by state agencies such
as BEVCO (in Kerala) and the Andhra Pradesh Beverage Corporation (in Andhra
Pradesh). There were around 25,000-27,000 licensed retail sales outlets in
the country, in addition to the bars, pubs, hotels and restaurants serving
liquor. There were restrictions on the location of these outlets and their
business hours.
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Liquor producers spent heavily on advertising on the
electronic media because of the reach of satellite and cable TV. Though
the broadcasters were bound by a 30-year old advertising code which
banned them from airing advertisements that related to or promoted
cigarettes and tobacco products, liquor, wines and other intoxicants,
the telecast of such advertisements continued blatantly over the years.
This was because the code was only a code of conduct, not a legally
enforcing code. Doordarshan, the state-owned TV channel, was the only
one that adhered to it.
The broadcasters were also bound by the Cable TV Act, 1995. However, as
most of the channels were uplinked from outside India, the Act did not
apply to them. Moreover, satellite channels did not want to follow this
code because they garnered about 50% of their advertisement revenues
from liquor. |
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In the peak seasons for the sale of liquor, this revenue
almost doubled. In the first half of 1998, STAR reported revenues of Rs 127.9
million from liquor advertisements while Zee reported revenues of Rs 40 million[4]
. The regional channels managed to get about Rs 0.70 million in revenues. Since
liquor ads generated such high revenues, Doordarshan also planned to air such
ads in 2000. With a reach of 70 million homes, it expected to acquire a
significant share of liquor advertisement revenues. Doordarshan estimated that
its revenues would increase three times from cricket matches alone if it were
permitted to air liquor advertisements.
Even as Doordarshan was considering the above option, the I&B Ministry barred TV
channels from telecasting liquor and cigarette advertisements in September 2000.
With pressure increasing from public interest groups to ban liquor
advertisements, the government had to make amendments to the Cable TV Act 1995
(Refer Exhibit III). While the Indian government could not take action on most
of the channels for violating the codes, as they did not uplink from India, the
cable operators were punishable under Indian law. The I&B Ministry also took
steps to monitor the advertisements broadcast by these companies.
Due to the ban, liquor companies focused more on promotions for brand building.
They started sponsoring events that projected the ‘glamour'of the brands, like
track racing, car rallies etc. for instance Shaw Wallace Co. (SWC), one of the
leading liquor companies in India, conducted the Royal Challenge Invitation Golf
tournament, which became an annual event. Some companies also promoted their
products through corporate advertising, distributing free gifts like caps and
T-shirts with the brand name and using glow-signs outside the retail outlets.
However, as the TV was the most effective medium of advertising, surrogate
advertising on TV became more popular.
ABOUT SURROGATE BRANDS
THE DEBATE
TABLE II AD SPENDS OF LEADING INDIAN LIQUOR COMPANIES
WHAT LIES AHEAD?
QUESTIONS FOR DISCUSSION:
EXHIBIT I SALES OF WINES, SPIRITS & LIQUOR COMPANIES
EXHIBIT II SALES OF BEER COMPANIES
EXHIBIT III CABLE TV ACT 1995: 2000 AMENDMENTS RELATED TO LIQUOR ADS
ADDITIONAL READINGS & REFERENCES:
[4] Zee could air liquor ads only after 9.30 pm as it was aired in the
Middle East also.
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