Business Standard

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

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