Banning Surrogate Liquor Advertising

            
 
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Case Details:

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

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Meanwhile, the government also seemed to be in dilemma. On the one hand, it had to encourage the sales of liquor and tobacco because they were the highest taxed sectors of the Indian economy. On the other hand, there was also the need to take the high moral ground and reduce the consumption of such products.

The Indian Liquor Industry

The Indian liquor industry can be divided into two broad segments: Indian Made Foreign Liquor (IMFL) and country-made liquor. IMFL comprises alcoholic beverages that were developed abroad but are being made in India (whisky, rum, vodka, beer, gin and wine), while country-made liquor comprises alcoholic beverages made by local breweries. While many players were present in the IMFL segment, breweries in the unorganized sector accounted for almost 100% of the country-made liquor segment. During 1999-00, the Rs3 60 billion Indian liquor industry grew at the rate of 10-12%.

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While IMFL was consumed by the middle and upper classes of society, country-made liquor was consumed by the economically backward classes. In India, 40-50% of all males and 1% of all females consumed alcohol. Almost 62% of the drinkers could be classified as light drinkers (i.e. social drinkers), 29% percent as moderate drinkers, and about 9% as hard drinkers.

The organized industry was dominated by Shaw Wallace and United Breweries, which together accounted for around 53% of the total market (Refer Table I, Exhibit I and Exhibit II). 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)...

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3] In November 2002, Rs 48 equalled 1 US $.

 

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