Bacchus Bottled Up

A few years ago, during her tenure as I&B minister, Sushma Swaraj drew flak for inviting satellite channel honchos to discuss a ban on liquor campaigns. A few broadcasters had then argued that the move would only encourage surrogate advertising and not address the real issue. Which, three years later, hasn’t been settled yet as mandarins in the ministry rack their brains trying to decipher the new advertising code set in the amended Cable Television Networks (Regulation) Act. Besides alcohol, the new legislation bans direct or indirect promotion of cigarettes and other tobacco products and synthetic baby foods.

But the restriction, slated to be enforced within a month, is a bit of a dichotomy. The government plans to put the Rs 6,000-crore liquor industry under ogl (Open General Licence) next year so as to increase the current Rs 2,000-crore contribution to the state exchequer (liquor is a state subject) and achieve a higher annual growth rate than the current 15 per cent. And if I&B minister Arun Jaitley pushes the ban through - helped by some tacit lobbying from Discovery India head Kiran Karnik (the first to suggest such a move) - advertising agencies and channels (read Star, Zee, Sony and espn) stand to lose more than Rs 150 crore in revenue next year. Advertising of liquor, cigarette and tobacco products on satellite channels was around Rs 60 crore last year and many in the circuit had nurtured hopes of a whopping 100 per cent increase this year.

Another intriguing angle to the case is, who exactly complies? The new guidelines put the onus of controlling such advertising on cable operators and not the channels, probably because the government has no control over broadcasters uplinked abroad. Which throws up another poser: can a cable operator tamper with a channel’s signals infringing copyright laws? Star TV’s marketing head Sumantra Dutta feels it could be a classic Catch 22 but adds the channels will eventually have to stop accepting such ads. "There are too many grey areas," says Dutta, whose channel earned Rs 15 crore, or 8 per cent of its total ad revenues, from liquor ads. On the other hand, Sony and Zee earned about Rs 12 crore each in liquor advertising in 1999. It will now stop completely.

"The move will definitely send wrong signals and comes at a time when the industry is complying perfectly with its own regulations," says Pramod Krishna, head of the Confederation of Indian Alcoholic Beverage Companies. Krishna, who recently met Jaitley, says he apprised the minister of global studies to substantiate the argument that advertising did not encourage consumption or impact market size. "Ads only create product awareness, promote competition and give the consumer a wider choice," says Krishna. "Interestingly, the government recently granted permission to South African Breweries to start operations. But how will they promote their brands?" he asks.

Many agree. Ever since Swaraj expressed her concerns over such advertising, liquor and cigarette companies had started adhering to a particular code which stipulated airing such commercials only between 9 pm and 6 am. "Television is one of the fastest means to build brands - its absence will adversely impact a number of new players who will now be forced to re-evaluate their investment decisions," says a Seagram spokesman. "The move will also favour established Indian brands that suffer from low profitability," he adds. Says Bacardi-Martini India’s marketing head Mahesh Madhavan: "We are trying to evaluate the impact because mnc brands never indulged in surrogate advertising and clearly showed their brands. If the ban does come in, I’d like to know what I should do with a brand like Bacardi Blast which is an album."

Indian companies - which for decades have indulged in surrogate campaigns like McDowell party cards and glasses, Four Square cricket gear, Wills Sports and Bagpiper soda - are equally baffled. Kurush Grant, executive director (marketing) of itc, feels his company will have to explore alternative avenues like beefing up its vending network in the event of the proposed ban covering even surrogate advertising. "itc doesn’t advertise on TV. Since the restrictions are regarding promotions, we will have to find ways to further expand our distribution network," says Grant. United Breweries’ divisional vice-president (marketing) Shekhar Ramamurthy underscores the need for a thorough study of the guidelines: "What am I supposed to do with Kingfisher bottled water which is an established brand? Now if they tell me I can’t advertise the Kingfisher brand at all, it would be very unfair." It’s confusion time after Round One. For the government. And the companies.