Intent on curbing surrogate ads by liquor cos, govt seeks data on brand extension and sales data

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The Centre is in no mood to connive at violation of regulations governing surrogate advertising by liquor companies. The Central Consumer Protection Authority (CCPA) has directed liquor marketers to provide it a list of products that are sold under the same brand as alcohol beverages in the past three years. Known in marketing lingo as brand extensions, these typically involve breaches in code of surrogate advertising.

The Times of India has reported that the CCPA has also urged the liquor companies to strictly adhere to the guidelines and not to violate them to lift sales.

Significantly, the CCPA’s step comes days ahead of the IPL, which marks a busy season for such advertisement by the alcobev companies. This country has long banned advertising alcohol brands, which has compelled liquor brands to resort to heavy surrogate advertising hoping the brand rub-off would help push up sales of the liquor products.

The step by the Ministry of Consumer Affairs has reportedly been triggered after a few instances of liquor marketers violating these regulations.

The CCPA wants to scrutinise all the numbers in the related sectors that could benefit from breaches in surrogate advertising and has sought revenue and turnover data of sales of alcobev besides brand extension products such as mineral water, playing cards, music CD in the past three years. The agency has also wanted details of the expenditure incurred in carrying out brand extension activity including sponsorship of events, award ceremonies, music festivals, payments to celebrities/influencers and TV ads in the past three years.

CCPA wants to find out whether there is any correlation between the actual sales of the brand extension items the expenditure on the promotion of these products. “This assessment is critical for determining whether promoting of brand extension products authentically represents the extended product or functions as a surrogate for alcoholic beverages under the same brand,” CCPA chief commissioner Rohit Kumar Singh said in the directive issued on March 19.

Incidentally, a report by International Spirits and Wines Association of India has stated that the alcobev market size stood at $52.4 billion in 2021 and could reach $64 billion in five years and was supposed to expand by 6.54% between 2023 and 2027. This sector employs more than 80 lakh people in the sectors of agriculture, retail and food and beverages.

“The industry is advised to ensure that all brand extensions follow the broad principles of advertising only genuine extensions (that is, turnover and distribution in proportion to advertising spends), and ensure that advertisements contain no cues of restricted category such as tag lines and layouts and do not unduly suppress the category name and extension being advertised,” the two-page direction mentioned.