Alcobev makers confront potent cocktail of brand expansion, surrogate ads
Alcohol beverage (alcobev) makers express confusion regarding the government’s classification of the difference between brand extension and surrogate advertising.
According to two alcobev makers, the new directive by the Central Consumer Protection Authority (CCPA) requires alcohol makers to submit details regarding their business activities related to brand extensions.
An executive from one of the alcohol companies mentioned that they were not part of the discussions held by the ministry with the industry. “We are currently clueless about the difference between brand extension and surrogate advertising,” the executive said.
Furthermore, the executive emphasised the necessity for broader consultation, noting its potential impact on advertising expenditures.
Another source from an alcohol company echoed this sentiment, saying, “We are currently assessing the necessary actions as we have brand extensions. Clarity on the difference between brand extensions and surrogate advertising is imperative.”
He added that the industry requires clear guidelines on the matter and may seek clarification at an industry level through an association. However, experts believe that this directive will not immediately impact alcohol companies or brands.
Anand Ramanathan, partner at Deloitte India specialising in the consumer products and retail sector, commented, “It primarily aims at increasing awareness among new brands entering the industry regarding regulations. Companies typically do not heavily engage in surrogate advertising outside of alcoholic beverages. They are also cognisant of government measures and are prepared to mitigate any potential consequences.”
Ramanathan suggested that firms have alternatives such as advertising at points-of-sale or through the Horeca (an acronym for hotel, restaurant, and catering) channel to enhance visibility without surrogate advertising.
Sandeep Goyal, chairman and managing director of Rediffusion Brand Solutions, remarked, “The alcobev industry is a wellfunded, strong lobby. Government interventions to clamp down on surrogate advertising have occurred in the past, but companies have always found ways to circumvent these measures.” Goyal said that clear and immediate penal actions, such as cancelling trade licences, are essential to curb surrogate advertising effectively. The CCPA, in its notice dated March 19, identified numerous instances of liquor brands violating existing regulations by advertising alcoholic beverages in mainstream media under the guise of promoting other products or services associated with the same brand.
“These advertisements incorporate elements such as slogans, brand imagery, layout, and context that are closely linked to the liquor brand, spend disproportionately versus the business size, thus promoting alcoholic beverages in a manner that circumvents the current laws,” CCPA said in its directive.
The CCPA emphasised the need to develop comprehensive guidelines concerning surrogate advertising during stakeholder consultations.
Alcobev makers have been instructed to provide details within 15 days, including a list of products sold under the same brand name as the alcobev for the past three years, along with details of the states where these products were marketed. They are also required to furnish revenue and turnover data specifically related to the sale of brand extension products over the past three years, as well as data related to the sale of alcoholic beverages and total expenses incurred on promoting brand extensions, including costs associated with collaborations, sponsorship events, award ceremonies, music festivals, television advertisements, social media promotions, payments to celebrities, and influencers over the past three years