Banning Liquor Surrogate Advertising

About Surrogate Brands Contd...

The agency – Time Monitoring (Delhi-based) – was responsible for scanning all advertisements on all private satellite channels including regional channels. At the same time, the Confederation of Indian Alcoholic Beverage Companies (CIABC), in a self-disciplinary move, asked all TV channels to stop telecasting surrogate liquor advertisements.

The Debate

The banning of surrogate advertisements for liquor brands became a very controversial and sensitive issue. Liquor producers felt that while the government allowed them to do business, it did not allow them to do so in a profitable manner. Liquor companies argued that the ban would severely affect the sales.

The said that TV was the most effective medium of advertising for these products and thus the restriction would hamper brand building.

However, some analysts were of the opinion that the ban could turn out to be advantageous for domestic players.

According to a WTO agreement signed in March 2001, MNCs had unrestricted license to sell their products. After the ban, these MNCs would not have access to the quickest and most effective form of advertising – the TV.

Thus MNCs who had recently entered the Indian industry were expected to face difficulties in building their brands.

The ban would also affect the entry decisions of MNCs that were planning to enter the Indian liquor industry. Moreover, some analysts argued that the ban would not affect the established domestic players severely. It would only affect new launches and new brand building activities of these companies.

Players who already had very strong brands (E.g. McDowell No. 1, KingFisher, Hayward's and Royal Challenge) would not be affected by the ban. Apart from reducing foreign competition, the ban was also expected to improve margins for these players, as these companies had already spent heavily on advertising and other promotional activities. (Refer Table II).

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Case Details

Case Code : MKTG024
Themes: Advertising and Promotion
Case Length : 13 Pages
Period : 1999-2002
Organization : Archies Greetings
Pub Date : 2002
Teaching Note : Available
Countries : India
Industry : Advertising

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