SUMMER PROJECT REPORT SUBMITTED TOWARDS THE PARTIAL FULFILLMENT OF UNDER GRADUATE DEGREE IN

BUSINESS ADMINISTRATION

TO STUDY THE EFFECTIVENESS OF SURROGATE ADVERTISING IN LIQUOR.

SUBMITTED TO SUBMITTED BYNIDHI GUPTA AASHI CHAURASHIYA ASSISTANT PROFESSOR. A3923012004

BBA+MBA.

AMITY SCHOOL OF BUSINESS, NOIDAAMITY UNIVERSITY – UTTAR PRADESH

CERTIFICATE OF ORIGIN

This is to certify that I, Ms Aashi Chaurashiya, a student of Under Graduate Degree in BBA+MBA (2012-2016), Amity School of Business, Noida has worked under the able guidance and supervision of Ms. Nidhi Gupta, Assistant Professor.

This Summer Project report has the requisite standard for the partial fulfillment the Under Graduate Degree in Business Administration. To the best of our knowledge no part of this report has been reproduced from any other report and the contents are based on original research.

I am aware that in case of non-compliance, Amity School of Business is entitled to cancel the report.

Signature Aashi Chaurashiya

A3923012004 BBA+MBA (2012-2016)

Signature of Project Coordinator Signature Ms. Nidhi Gupta.

2

ACKNOWLEDGEMENT

I express my sincere gratitude to my faculty guide Ms. Nidhi GuptaFor her able guidance, continuous support and cooperation throughout my project, without which the present work, would not have been possible.

SignatureAashi Chaurashiya.

3

Topic Page No

Executive Summary 6

Objectives of the study 7

Research Methodology used 8

Literature Review 9

Introductions--------------------------------------------------------------

Industry Structure and developments-------------------------------

Opportunities and Threats --------------------------------------------

Future Outlook ---------------------------------------------------------

DEFINING SURROGATE ADVERTISING ---------------------

LIQUOR ADS ON TV -------------------------------------------------

KABHI WHISKY, KABHI RUM------------------------------------

Allowing socially responsible ads by Liquor Company----------

Advertising in the Liquor category on Televisions---------------

Surrogate advertising — Needed, a spirited attack -------------

Liquor Company’s uses overseas series to Circumvent ad ban---------

Kingfisher, Wills spared from surrogate ad ban: ----------------------

Surrogate liquor ads flow into FM radio: --------------------------

I & B Ministry’s Slashing of Surrogate Ads -----------------------

Foul Cry by Major Liquor-----------------------------------------------

Bacardi origins ------------------------------------------------------------

BACARDI’S WAY OF SURROGATE ADVERTISING--------

Key Findings

Data Analysis

Conclusion

4

Bibliography

5

EXECUTIVE SUMMARY

Advertising has become a big tool for disseminating product Information. It is being done

through different media – banners, radio, television & lately the internet. Advertisement

in general has also drawn Public ire & government interference time and again – either

for moving away from the truth and the consumers 'right to information' or for creating

false images. This is especially true in the case of surrogate advertisements. The issue of

surrogate advertisement gained momentum after the government forcefully imposed a

ban on it. The aim of this project is to highlight & discuss the same in detail.

The surrogate could either resemble the original product or could be a different product

altogether, but using the established brand of the actual product.

Present study is undertaken in respect of studying the effectiveness of surrogate

advertising from customer’s point of view. It starts with analyzing the various purposes

of adopting surrogate advertising. It helps to analyze the pros and cons of surrogate

advertising and its impact in the broader sense. It also studies the contribution of such

type of advertising in branding and creating a good brand image and winning brand

loyalty of target customers. Further, it helps in evaluating the importance of Surrogate

advertising in different sectors of the economy.

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RESEARCH METHODOLOGY ADOPTED-

Secondary data or second hand data will form the basis of my study in this project.

Data collection methods-

a) Newspapers, journals and periodicals.

b) Research papers.

c) Internet.

d) Magazines.

e) Reference books based on marketing and advertising.

Limitation of the study- Since the study is entirely based on secondary sources hence

there are chances of it being outdated or not accurate in all aspects.

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LITERATURE REVIEW

Here, I have included the analysis and interpretation of three research papers between

2000 and 2007.

In 2000, Henry Saffer of Pune examined the relationship between alcohol consumption

and alcohol advertising bans. After the govt. banned usage of liquor, consumption in

India reduced at a slower rate than they would have occurred if these advertisements bans

were remaining in place as they were initially.

Then, in the year 2005, Meng Chang of Research Centre, California USA conducted a

research towards the effects of advertisement of liquor towards the young generation.

They found out that youth seems to get attracted and it affects their decision to purchase

the product often.

And now based on these conclusions, I am taking this study of effectiveness of surrogate

advertising in the liquor industry by means of collecting secondary data from various

sources like Internet,magazines,reference books on marketing,case

studies,newspapers,journals and research papers too.

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RATIONALE OF THE STUDY.

Liquor Industry has one of the fastest growing markets in India. The liquor industry does

make campaign to entire customer, therefore the assurance of the customer are increasing

day by day.

In an industry where change is the only constant, survival depends on the quickest

reaction time. When technology advances happen at the blink of the eye, one has to keep

pace or else get left behind. To achieve this, the Co’s have to lay emphasis on total

customer satisfaction through improvements by their own capabilities and teamwork, for

this the products should be backed by strong R & D, continuous up gradation of

technology, customer oriented marketing and unique background integration process in

manufacturing.

OBJECTIVES OF THE STUDY.

My research objective is to find out that “How successful has Surrogate Advertising been

in promoting the liquor Brand”

Is surrogate advertising actually for launching a new product or is it for manipulation of

the existing liquor brands for sales? We get a 100% recall value for the actual liquor

products even though surrogate versions were being mentioned on T.V.

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INTRODUCTION

Liquor Industry has one of the most lately growing marketing values in our country India.

The liquor industry does market its products by campaign to the entire market of

customers. Therefore, the assurance of the customer is increasing day by day this is

mainly due to the advertising.

In an industry where change is the only constant ingredient required for growth, survival

and development depends on the fastest reaction time. When the technology

improvements take place at the click of a cursor, one has to keep pace or get left behind.

To achieve this, the companies have to lay emphasis on total consumer satisfaction

through continuous improvements by their own capabilities and teamwork. For this

products should be made keeping in mind a strong R & D, continuous technological

advancements, customer satisfaction and unique background integration process in

manufacturing.

There is a surrogate approach towards liquor advertising in India. There is not much that

they can do except market themselves through promotions with the latest celebrity.

Hollywood films like the movie named “Scent of a Woman” have helped in brand

endorsement to a great extent.

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INDUSTRY STRUCTURE AND DEVELOPMENTS

The Indian Made Foreign Liquor (IMFL) market consists of Whisky, gin, rum and vodka.

The whisky market is further segmented into low priced, regular, and deluxe, semi

premium, premium and Scotch. The most competitive segment in the IMFL category is

the regular segment whisky. This segment has more than 30 brands competing with each

other.

The size of the organized IMFL industry stands close to Rs.200 billion and comprises of

approximately 25 IMFL manufactures. The low price IMFL and country liquor segment

accounts for approx. Rs.120billion. Now low priced IMFL is a distinct category as

opposed to country liquor, with products in the latter category typically sold at lower

prices.

The total IMFL market today’s stands at around 70 million cases per annum which is

been growing at a rate of 10% to 12% over the past 5 years. India is one of the very few

liquor markets in the world where the growth rates are positive. Particularly, the cheap

liquor segment has shown a growth of more than 25% over the past 5 years. Also, which

is estimated to be more than the size of the IMFL market? There also exists a huge

unorganized sector (estimated to be as large as the organized sector) involved in the

production and safe of cheap liquor (which is distinctly different from excise duty paid

country liquor). This trend is witnessed most in the rural areas of the country.

The Indian Liquor industry also faces huge competition with the major small domestic

liquor companies.

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REGULATION.

The liquor industry is one of the last few industries that are still under the licensing

policies of the Central Government and will likely see the most significant growth over

the next 2-3 years on account of more progressive regulation.

Liquor, in India, is a state subject, not a central one, in that each state controls the excise

duty structure and also the distribution of liquor. The event, liquor manufactured in one

state is sold in another state, the incidence of import duty and export duty results in high

product prices at the consumer end. It is this non uniformity of the duty structure coupled

with different types of distribution arrangements dictated by the state governments that

makes manufacturing and marketing of liquor a very challenging task for Indian

companies.

Distribution while unregulated in some states such as Maharashtra and West Bengal is

regulated in some others such as through auctions (Haryana & Rajasthan, Bihar,

Jharkhand) or through government controlled procurement agencies (such as Tamil Nadu

and Andhra Pradesh). There are around 100,000-110,000 licensed liquor outlets in India,

with another 10, 0000 outlets such as bars and restaurants.

.

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Market Size (IMFL)

o Market: 95 million cases 

o Past growth 15 % @ per annum

o Brown spirits - particularly whisky, rum & brandy account for   over 75 %

of this market

o South and North share 60% of market 

Industry Structure

o Industry in the organized sector - an industrial license is required to start

manufacture

Major brands (manufacturers): Signature, Blue Riband (UB Group), Aristocrat (Jagjit

Industries), Smirnoff, Gilbeys Green Label, Malibu, Archer’s Peach Schnapps

(International Distilleries India), Passport (Seagrams), VAT 69, Black & White, Black

Dog (United Distillers India)

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OPPORTUNITIES AND THREATS.

On April 1, 2001, India, under commitment to the WTO, removed quantitative

restrictions (QR) on bottled in origin (BIO) liquor imports and placed them under the

OGL (Open General License) category. Further, it is expected that the important duty of

foreign liquor would also be brought down to a committed level of 150%, the WTO

bound rate over the next 2/3 years.

This would lead to the entry of large Liquor Multinationals companies in the country.

These Multinationals will make strong inroads in the higher priced categories of the

market such as super premium and premium end of the whisky market consisting of price

levels of Rs.450 and above per bottle of 750 ml. It is believed that these segments are

those where the Indian liquor industry will face maximum competition over the next 3 to

4 years. Already, domestic brands are losing substantial market share top India specific

brands of Multi nationals companies. The competition in this segment is bound to

intensify still further.

With duties coming down over a period of time and imported liquor coming under the

purview of OGL, there have emerged excellent opportunities for their trading in the

domestic market products like imported, wines, beer, breezers and coolers etc. should

have good opportunities for an aggressive player.

Taking advantage of this opportunity, Radico has already entered into exclusive

marketing distribution arrangements with earnest and Julio Gallo, California, USA, the

owners of the largest winery in the world distribution of their wines in India and also with

Interbrew, of Germany for the distribution of Beck’s beer in India.

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The company is also planning to introduce Ready to drink products like Bacardi

breezers and coolers through a tie up with major foreign players. This segment is likely to

see good growth in future as consumers get acquainted with the product gradually.

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FUTURE OUTLOOK.

It is believed that the Indian liquor industry is set to grow exponentially over the next 4 to

5 years on the back of a major unshackling of the regulatory structure governing it. In the

last 2 years, at the State level, the Delhi Government has thrown open retail distribution

to private parties, the Uttar Pradesh government’s new excise policy has substantially

increased the contribution per case of country liquor for most distillers in the state, the

Tamil Nadu Government’s decision to allow 100 ml packs of IMFL to wean indications

towards this direction. At the central government level, there is a proposal to charge a

uniform excise duty as opposed to state specific excise duties.

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DEFINING SURROGATE ADVERTISING.

Surrogate advertising can be defined as advertisement of a brand extension in such a way

that brings clear recalled of the core product in the mind of the consumer. The concept of

surrogate advertising in India emerged due to certain regulations enforced on the

promotion of certain products mainly liquor and tobacco (products). Here the companies

are producing these products in order to avoid legal complications, and also in order to

remain in the minds of the consumers, use reminder adverting by way of resorting to

surrogate advertising. These companies advertise their brand extensions for the

promotion of the core brand.

An advertisement of any thing whether it is product, service or event in the name

of core brand by which the actual product is recalled is surrogate advertisement.

Cigarette companies have used the vehicle of surrogate advertising to reach the minds of

consumers from time to time giving for example Gold Flake which produces gold Flake

expression greeting cards, Red and White which sponsors bravery awards, and wills

which advertises wills cigarettes on the sports wear which we have witnessed time and

again on the T-shorts worn by the Indian cricket team. Wills lifestyle is also an example

of surrogate advertising.

Moving ahead the liquor companies have successfully used the name of the core brand

with some other products like Royal Challenge. Similarly, Bacardi extends its brand

name by producing Bacardi cassettes, Teacher’s advertises in the name of Teacher’s

Achievement Awards, McDowell’s in the name of the Soda, Aristocrat, 8 PM, Contessa

and AC Black go ahead in the name apple juice, and Gilbeys and Kingfisher in the name

of water etc.

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He also talked of an advertisement (surrogate in nature) in which a small line of 6-/8 front

size statement reading CDs and Cassettes of the 100pipers pure music series are available

in select outlets whereas no CD, cassette or music system is shown. Above all, a

Seagrams 100 piper (which is a wine) is written in a manner that it is creating an image of

bottle sticker, i.e. round folded sticker.

In INDIA there are no specific laws to control the activities relating to surrogate

advertisement. However the government issues certain directives from time to time which

are based on various laws and codes like the Code for commercial Advertising on

Doordarshan and The cable Television networks (Regulation) Act, 1995, Press Council

of India Act 1978 and the Cinematography Act 1952.

However the regulation is not going to affect surrogate advertising because TV channels

are free to air ads of kingfishers mineral water and other products like Aristocrat apple

juice though it is clear that these products have been produced by the liquor companies

only for surrogate advertising. Secondly, the consumers of liquor and tobacco companies

are mostly habitual of their brands and they are not much affected by the advertisement.

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19

LIQUOR ADVERTISEMENTS ON TV-

CASE 1: The handsome young guy is celebrating his corporate victory at his office.He pulls out a bottle of Aristocrat from his drawers and savors the brownish looking fluid. Cut to the next scene: in the hazy background which looks like a poolside party going on, our hero again is shown dancing with a pretty girl. Drinking Aristocrat APPLE juice.

CASE 2: A few young men out on a trek. They finally reach their destination to celebrate while their adventure gear is prominently displayed beside them. The adventure gear is from Four Square, a brand of cigarettes.

CASE 3: A gang of boys and girls is seen dancing in the rain. Obviously they are having a good time, courtesy MINERAL WATER, from the `King of Good Times' aka as Kingfisher

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Some channels have complied while others are likely to follow their footsteps.

Figures about how much television advertising spends by the booze go glug-glug

courtesy the governments are hard to come by one estimate placed it at a giddying

Rs 3000 million, but media planners and buyers believe they won't have to do that.

Liquor advertisers will find an out. Already Bacardi has invested in Bacardi blast

night parties, which serve as a very effective branding vehicle.

Such TV commercials have been flowing like beer on tap on various television

channels despite the Indian government going against the practice though

informally.

"With the government rupturing the whip on surrogate advertising on TV, the

liquor companies will move to strengthen ground events and discover other such

below-the-line avenues for promotion.

A lot of that was already happening with booze cash backing musical concerts,

exhibitions and seminars. Royal Challenge for example sponsors golf events.

A clutch of media planners and advertising personalities feels that there is going to

be a rise in the number of liquor and tobacco sponsored events in the upcoming

years in the effort to neutralize the ban on ads on TV channels.

Some have even taken the cable TV route working closely with cable operators to

insert ads or "crawlers" during movies that are aired on home video channels.

Some liquor companies going to cable operators to have their ads aired on the

home video channel on which the government's consideration has not been drawn

till now is also been banned. The merits were two-fold on advertising on cables:

cable operators' charges for ads are just a fraction of what satellite channels charge

and in the short-term this can be an alternative to

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Outdoors and direct advertising. What could spoil the party however is the fact

that in some places like Delhi the state government has expelled hoardings?

Below-the-line advertising will give rise to hog a bigger share of the media

budget of liquor and tobacco companies.

Of late, TV channels have seen adequate commercials pegging aerated water,

mineral water, bar accessories by liquor companies. Apple juice, Bagpiper soda,

Kingfisher water, Aristocrat Premium apple juice, Hayward’s 5000 dart boards are

some of the commonly known examples. Johnnie Walker Scotch whisky promotes

a series of effective stories on CNBC India through sound bytes from projecting

Indians like Mr. Amitabh Bachchan. Almost every channel has been party to the

surrogate commercial brigade, with the sole exclusion being Doordarshan, which

by mandate did not carry any such fare.

"What are advertisements for?" It is a method to communicate to and come in

Anywhere where there is a chance to come in contact with the consumer it can be

misused, it can be through his mouse pad or the club he frequents. So, the liquor

companies have options and will go in for that sort of marketing too.

Though liquor companies did not seem to be concerned, as the ad expenditure of

liquor companies have not come down with the ban on TV ads.

Annual revenues from surrogate advertising for the television industry as a whole

is about four per cent of total ad spends - between Rs2000 million and Rs2250

million.

According to one TV channel executive it was niche channels that would be

affected more than general entertainment ones. In the first place the categorization

Though liquor companies did not seem to be concerned, as the ad expenditure of

liquor companies have not come down with the ban on TV ads.

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Annual revenues from surrogate advertising for the television industry as a whole

is about four per cent of total ad spends - between Rs2000 million and Rs2250

million. of advertisers was limited as the viewer profile was either up market or

focusing younger generations. Movie, sports, news and music channels were the

channels that he felt would prove to be most beneficial in the long run.

Looking abroad for parallels though, India seems to be working in reverse

direction. In the US for instance, while beer ads have been a regular feature of the

TV advertising, while talking about hard liquor, the spirits industry has lived under

a voluntary ban on the placement of ads on TV for the past 50 years. But with

declining revenues over the past two increasingly health-conscious decades, the

industry has begun carefully testing the regulatory climate by placing ads on some

local TV or cable stations. There is a heated debate going on in the US over the

freedom of this setback, especially after NBC declared towards the end of last year

that they would allow liquor commercials to run all through late evening

programming, making them the first national network doing so.

Coming back to India, as the government tightens the screws and takes the fizz out

of the liquor company’s blast, the pretentious ones are re-framing their tactics.

The restriction put by the government can be termed a non-option as it applies to

the competition too. Hence, all the constituents affected by the liquor crackdown

have to take cognizance of the fact that the tipplers' party is over. If they don't

work accordingly, they may end up with a hangover. That's if the government acts

on its threat putting its weight behind the liquor ad ban move, it is quite likely that

it is dry days for television channels even for surrogate ads.

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KABHI WHISKY, KABHI RUM

For example, licensees may put up signs to advertise their establishments or

products. These signs and advertisements may include liquor prices ,hours of sale

and the names of liquor manufacturers or the brands. But they could not place

advertisements in newspapers, magazines and periodicals, or on television, radio

or the Internet, and issue pamphlets and brochures. They should also not:

Law speaks against liquor advertisements, however, such restrictions are

circumvented by ads purported to be for products outside the banned category. All

liquor licenses include bars, pubs, restaurants, licensee retail stores, wineries,

breweries and distilleries - are allowed to advertise their products, but they must

act in accordance with Liquor Control and Licensing regulations.

Motivate people to drink liquor or to drink irresponsibly (ads that mention

price must take this into account; if a licensee's price advertising

encourages or results in drinking excess, the Liquor Control and Licensing

Branch can prevent the licensee from including liquor prices in future

advertising)

Show people drinking liquor, or anyone who is either intoxicated or

behaving irresponsibly or illegally

Associate liquor with driving

Be directed at minors or placed in locations used or visited mostly by

minors, such as theaters and playgrounds

Depict liquor as:

o One of life's necessities

o Key to social acceptance or personal success

o Central to the enjoyment of an activity, or

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o A status symbol.

In addition:

Ads for bars and winery lounges may not use pictures of

minors (in BC, that's anyone under the age of 18)

Ads for restaurants must make clear that serving food is their

main primary purpose.

Ads for companies making beer, wine or spirits may name a

liquor store, bar or restaurant where the product is sold, and

Ads for companies that make beer, wine or spirits are not to

be shown on a theatre screen before a movie.

A few sips of AC Apple juice in a TV commercial drop the neckline of a nubile

woman by several inches (as imagined by the imbiber). Guess what would happen

if AC juice ferments to Aristocrat whisky for which the former is surrogate.

So we have Club soda as a stand in for bagpiper whisky, or mineral water for

kingfisher beer. Going hand in hand with the I.T. mode, there are websites for both

Seagram whisky and Bacardi rum…

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The latest proposal: allow socially responsible ads by liquor companies

Faced with a 7 to 11 percent loss in revenues after the ban on both direct and

indirect liquor advertising, a group of TV broadcasters has submitted a suggestion

to the government to permit them to use socially responsible ads backed by liquor

companies.

A committee of broadcasters headed by I&B special secretary Mr. R.R. Shah,

which was established by the government recently to find out what constitutes

surrogate ads, has mentioned to the government that socially useful advertisements

funded by liquor companies should be allowed on TV channels according to a top

official in a private TV channel.

Socially useful ads sponsored by liquor companies are a very famous concept in

the US and the UK, and are likely to be well accepted in India as well, as a

member of the committee on surrogate ads. Since public service validation does

not lead to promotion of liquor ads, these cannot be clubbed with direct/indirect or

even surrogate advertising of liquor. The socially useful ads or public service

endorsements, which this committee is referring to, may not essentially talk about

drunken driving as some liquor companies have been doing so far. Although the

government has not decided whether to allow liquor companies to advertise

socially responsible ads on. TV channels there are feelers that the government is

warm to the idea. In fact, broadcasters are even open to the idea of the government

is warm to the messages can be allowed on TV channels. For instance, if the

government feels that only medically helpful or crime prevention messages must

be beamed on channels, broadcasters are ready to abide.

Advertising in the Liquor category on Television registers a negligible

dip of 2% in 2003 as compared to 2002-

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Key Results-

Advertising in the Liquor category marks a dip of 2% in 2003 compared to

2002.

Feature Films are the most preferred program genre for Liquor Advertising

in 2003.

A look at the trend of TV advertising in the Liquor category in year 2003

compared to 2002-

We can see that Advertising shows a negligible dip of 2% in year 2003 as

compared to the year 2002. The above graph shows the indexed spends of the

Liquor category on Television Advertising since the year 2002.

Advertising in the Liquor category is expected to be quite periodic in nature.

27

The graph shows that Liquor advertising spends on Television varies every year across 2000-2003 i.e. is very dynamic.

Where do we see ads for Liquor? The graph show that almost 29% of the total advisement on Liquor is on Feature Films. The other program genres, which are favored by Liquor category, are as follows- Drama/Soap, News Bulletin, Cricket, Music Shows/songs, and Comedies and many more. 

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(Analysis from AdEx India-A Division of TAM Media Research)

Surrogate advertising — Needed, a spirited attack

In India, the trend of surrogate advertisement gathered pace with the Cable TV

Network Regulation Act, which bans tobacco and liquor advertisements on TV

channels. The liquor industry has very thoughtfully blurred the line between

products, advertising `old wine' in a `new bottle,' only this time with a soft-drink

label.

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"MEIN, AAP AUR Bagpiper". This Bagpiper club soda advertisement, featuring

cine celebrities, is similar to the earlier one for Bagpiper whisky. The

advertisement comes with the same music and punch line as the one for the

popular liquor brand telecast before the ban on liquor advertisements. This

phenomenon, known as "surrogate advertising" has become common place.

Surrogate advertisements took off not long ago in the UK, where British

housewives protested strongly against liquor advertisements "luring" away their

husbands. The liquor industry found a way around the ban: Surrogate

advertisements for cocktail mixers, fruit juices and soda water using the brand

names of the popular liquors.

A market survey in 2005 revealed that advertising has a longing influence on the

eating habits of 481 million people in India and an indirect impact on 300 million

`aspirants' from the lower strata of the society. Considering this and realizing that

nearly 50 per cent of the television owners have access to cable channels, there is

no doubt that the hidden call for alcohol intake behind the surrogate

advertisements is not escaping the eyes of viewers in the world's fourth highest

liquor-consuming country. Surrogate advertising defeats the very purpose of

banning liquor advertisements by the Govt.

. According to the International Wine and Spirit Board, a liquor industry

publication, there will be a jump in the number of people reaching the legal

drinking age of 25 within the next few years.

Sociological studies have shown that, in India, a significant share of income of a

large section of the population is spent on liquor, potentially leading to financial

distress and health hazards.. The implication is that the problem is going to grow.

The motivations of firms look even more suspect when they advertise products

that cannot be bought. In 2002, for example, Jagjit Industries, the maker of

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Aristrocrat Whisky, advertised a product called `Aristrocrat Apple Juice.' The

company reportedly confirmed availability of the fruit juice in places like Delhi,

Haryana, Punjab and Rajasthan, yet, no reputed shop in Delhi had ever seen it, let

alone sells it..

Understanding the gravity of the situation, the Indian Broadcasting Foundation

(IBF) has started to take on the surrogate liquor advertisements. The IBF decided

that Jagjit Industries and other liquor-manufacturing units must get production of

the advertisement approved both at the `storyboard stage' and after the production

of the commercial.

It also ruled that that if liquor companies promote any juice, mineral water or soda,

these should be shown in a proper manner and not as trimmings to liquor

advertisement.

These are welcome steps, but the key point lies in enforcement. If, in a free

society, producers have a legitimate right to let consumers know about their

products through advertisements, consumers have the right to information in

adverts that are clear and honest.

Surrogate advertisements are not only misleading, but also false and dishonest in

many cases. With surrogate advertising so widespread, this is the moment to tackle

the problem head-on.

There should be stringent regulatory measures to curb the practice, such as:

Making transparent laws banning surrogate advertisements for different

products under a single brand names, by amending the Trade Marks Act,

for instance;

31

Providing teeth to the Advertising Standards Council of India to enable it

take action against false and misleading advertisements, and keep a close

vigil over clever evasion of the law;

Asking the electronic and print media to adhere to the advertisement codes

and not to encourage surrogate advertisements;

Consumer awareness programme could be created to help people

understand the negative impact of surrogate advertisements;

Adopting strict laws to penalize those companies featuring surrogate

advertisements without any real existence of the product; and

Requiring advertising agencies to have full knowledge of the products

under the same brand for which they are promoting advertisements, and

taking legal actions against those agencies which design surrogate

advertisements.

32

This is not cricket! - Liquor Company’s uses overseas series to circumvent ad

ban:

WITH the Government trying to clamp down on surrogate advertising, liquor

companies seem keen to bat out the ban. Even as liquor brands have traditionally

been associated with up market sporting activities like golf, polo, derby and

yachting, companies are now turning towards the game of the masses - cricket.

After the triangular series at Zimbabwe in 2003 (of which Royal Stag was the

associate sponsor), the India and Zimbabwe Test series will be called the Royal

Stag Cup.

Till date Royal Stag has used several international cricketers as brand endorsers.

This is the first time the company has forayed into tournament sponsorship.

Similarly, the ICC World XI Vs Australia series to be held Down Under will be

called the Johnnie Walker Super Series.

As both the series were being held outside India it would be difficult for the

Government to blip out the liquor brands. Since the matches will be beamed into

Indian drawing rooms live, the brands will enjoy good visibility.

33

Internationally beer brands such as Fosters and Lion have supported cricket in

Australia and Sri Lanka respectively. Meanwhile, Royal Stag has roped in

Zimbabwean Vice-Captain, Heath Streak as their new Royal Stag brand

ambassador. Other celebrity Royal Stag cricket endorsers include Australian

Cricket captain Ricky Ponting, and India's ace off spinner Harbhajan Singh.

The Information and Broadcasting (I&B) Ministry's efforts to ban surrogate

advertising of liquor brands has reached a naught. A few months ago, it had sent

out notices to various television channels to withdraw advertisements by liquor

companies.

But within a few weeks of the notices being issued, surrogate advertising made a

comeback on television. In fact, a few liquor companies have been advertising

during the ongoing cricket series as well between ENGLAND AND INDIA.

However channels were categorically told that there is a complete ban on

advertising by liquor companies.

The Government is also handicapped by procedure wherein it can take action

against channels only after receipt of complaints. "The Government cannot suo

motu issue show-cause notices. It has to first receive complaints," said official

sources.

Liquor companies on their part state that their advertising is self-regulated and

comply with the Indian Broadcasting Foundation and the Advertising Standards

Council of India code.

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Kingfisher, Wills spared from surrogate ad ban:

In a significant policy shift, the government has in principle decided to permit

non-liquor and non-tobacco advertisements of Kingfisher and Wills brands on TV

channels. This is despite the fact that the Cable TV Act prohibits advertising of

liquor and tobacco.

According to I & B ministry sources, the government will, however, consider

granting similar exemptions on a case-by-case basis to such “genuine” businesses.

The Cable TV Act is also likely to be amended on these lines later.

A committee, comprising representatives from home, health, law, women

empowerment and information & broadcasting ministries, is still examining the

objection raised by the UB Group (Kingfisher water, soda and airline) and ITC

(Wills Lifestyle) over the ban.

A government however gave both Kingfisher and Wills a green signal soon. The

UB group and ITC have been successful in convincing the government that they

have “genuine” non-liquor, non-tobacco businesses, though with the same brand

names.

According to industry estimates, liquor advertising (surrogate) is worth Rs 250

crore to 300 crore in India. Even as there are several liquor brands indulging in

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surrogate advertising on TV, only Kingfisher is likely to be spared for now. ITC, a

major tobacco brand, too would be allowed to beam its Wills Lifestyle ads. For

other liquor companies, decisions will be taken on a case-to-case basis, till the

policy is fine tuned, the source said.

Before tobacco advertising was banned, ITC alone had an ad budget, on both

television and print, of Rs 100 crore, as per Lintas Media estimates for 2003. Of

this, Rs 76 crore was only for print. As for Kingfisher, its airline ad budget alone

is around Rs 10 crore.

In a recent interview, UB chairman Vijay Mallya had in an interview that I&B

minister S Jaipal Reddy had assured him the ministry couldn’t take a view that

Kingfisher ads are surrogate. “Certainly not with an airline. We already have a

very significant mineral water business Mr. Mallya had said.

The government clampdown on surrogate liquor and tobacco ads had begun

during the National Democratic Alliance (NDA) regime. In fact, former

information & broadcasting Minister Sushma Swaraj was in the process of

formulating a norm on brand extension and surrogate advertising based on the

volume of non-liquor or non-tobacco business.

The reasoning, at that point, was that if there’s a standalone genuine business

owned by a liquor/tobacco company, the brand could be advertised.

However, last month, the UPA government issued notices to liquor/tobacco

companies and television channels, stating that there’s a blanket ban on

advertising liquor.

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Surrogate liquor ads flow into FM radio:

Even as the Information and Broadcasting (I&B) Ministry is clamping down on

surrogate liquor ads appearing on various television channels, these ads seem to

have crept into the various private FM radio channels.

Recently Guinness UDV's Gilbey's Green Label and UB Group's Romanov have

been advertising on some private FM channels in Mumbai and Delhi.

But just as liquor ads are not permitted to advertise on TV, they cannot be heard

on radio. Officials in the Ministry said FM channels would also have to follow the

Broadcasting Code framed for the All India Radio (AIR) and the Doordarshan.

Despite this, FM companies seem to be accepting surrogate liquor ads. The

officials at radio networks refused to comment on the issue calling it "a touchy

one". They merely said that the same guidelines applicable to surrogate advertising

on television is applicable to radio. Also, advertising by liquor companies on radio

has been miniscule compared to television.

B Ministry&I have been looking at the issue of surrogate liquor advertisements

and have been sending out notices to various television channels. "It has been a cat

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and mouse game. Once notices are issued the ads go out, but reappear after a

while," said the Ministry official.

And with the revival of radio through FM, the debate over surrogate advertising on

TV is being carried over to radio as well.

I & B Ministry’s Slashing of Surrogate Ads

IBF Flays surrogate liquor ads

The Indian Broadcasting Foundation (IBF) has come down heavily on surrogate

liquor ads. While asking channels to withdraw commercials of close to a dozen

products, it has also sought changes in several other ads.

The ones that have been seen as inappropriate are ads for 8 P.M. Apple Juice

where two generals are seen exchanging drinks, Bagpiper Hero, Bacardi Breezers,

Johnnie Walker, McDowell’s Signature and Whitehall Party, among others.

In some other ads such as the one for Mc Dowell’s Mera No. 1, it has said that the

term spirit should be removed. The words ‘Rare Spirit’ should be removed from

the Royal Channel Golf Accessories while it has suggested a brand new

commercial for Aristocrat Premium Apple Juice.

Recent at a meeting of the IBF sub committee on surrogate advertising, the apex

body comprising all the major broadcasters has categorically said that members of

the Confederation of Indian Alcoholic Beverage Companies (CIABC). Seagram,

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Jagjit Industries and all other alcohol companies must get product of their

commercials approved both at the storyboard stage and after production of the

commercial. It also said that liquor companies must provide authentic data in the

form of a letter from the Chairman or Member of the Board or the auditors giving

details of the surrogate products’ manufacturing facilities, launch date, distribution

networks and details of the product category registration.

The sub committee said that if the commercial promotes an apple juice, mineral

water or soda, it should be presented in a suitable manner and not shown as an

accessory to alcohol drinking. The recent clampdown on surrogate ads will affect

the television channels as the industry spends over Rs. 300 crore on advertising.

According to medial planners, huge amounts of money are spent on regional

channels such as Alpha Punjabi, Marathi and Bangla or ETC Punjabi, the

expenditure is not very high. The rates for spots on these channels are very low,

said a Delhi based media planner.

Meanwhile, the liquor companies continue to claim that these ads were for genuine

products that are available in the market. The companies had, in fact, some months

back, placed samples and other proofs before the Government to defend their case.

The government, meanwhile, said that the channels would have to adhere to the

Advertisement Code, which is part of the Cable Television Networks (Regulation)

Act, 1995 as they can take action against channels violating the code by asking

cable operators to black out the channel.

According to the IBF’s code, if a liquor company does not have an adequate

number of the product that it was trying to project on television available in the

market through sufficient distribution outlets, TV channels do not accept the ads

of that company.

The case of Hayward’s was cited as an example and how the ads were taken off

the air by TV channels when it was found out the market did not have an adequate

number of dart boards the company was advertising on TV, the IBF source said.

Apart from the government, the IBF was in the process of finalizing its own

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advertising and programming code, which was an attempt towards voluntary self-

regulation, “he added.

Still, government sources indicate that the I & B ministry list of objectionable

television commercials includes ACP Apple Juice Kuch Bhi Ho Sakta Hai

campaign, Royal Stag (that incidentally features two cricketers), Aristocrat,

Smirnoff, Bagpiper, McDowell’s Gilbey’s Green Label, Whitehall, Imperial Blue,

Macintosh Apple Juice, Royal Challenge and Smirnoff.

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Surrogate liquor ads that have gone off air -

Advertisements for Hayward’s 5000, ACP Black apple juice and Radico Khaitan’s

8 pm apple juice was pulled out from all major TV channels immediately, after the

Indian Broadcasters Foundation (IBF) has objected in an act of self discipline

regarding surrogate advertising.

The broadcasters, henceforth, will seek details of products, which they believe

promote non – existent products added an IBF official. They met I & B Ministry

officials to convince them of their efforts at self-regulation.

While a decision has been taken to affect this ban immediately, the

implementation is likely to take at least a couple of days since most of the

advertisements are inserted in advance.

After the I & B Ministry banned liquor ads in 2000, most liquor manufacturers

devised ingenious ways of remaining visible even while observing the legalities.

Mostly, the hard liquor ads were replaced with more socially acceptable options

such as apple juice, even if such products did not exist within their portfolio.

Regarding the ACP black apple juiced ad where a woman sheds her clothes as the

drink is consumed, the IBF official said, “While it might be a genuine ad, the IBF

committee has decided to remove it in its present format.”

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Foul Cry by Major Liquor

Even as the Government gets cracking on surrogate advertising by liquor firm,

Jagjit Industries, whose ad for AC Black apple juice has been pulled off air from

TV channels, alleges that the competition is obfuscating the entire issue to suit

their commercial interests.

Jagjit’s spokesperson said the competition through the Confederation of Indian

Alcoholic beverage Companies (CIABC) has been canvassing against this ad with

the Information and Broadcasting Ministry and the TV channels.

“There is need for regulation of this sector, but I am against arbitrary regulation. If

the ACP Black ad is surrogate sexist below the line advertising, so are many

others. At least, this product actually exists,” says Jagjit director Deepankar Barat.

CIABC chairman Vijay Rekhi, on the other hand says we are only ensuring that

the industry behaves responsible in collaboration with the media and the ministry.

He reckons that the TV channels that are signatories to the voluntary CIABC

marketing code need to enforce it their end.

Many a times though ad may be genuine its content violates all norms of

decency, and hence the ad should be pulled out.

Worldwide, the liquor industry is regulated by a code of conduct, which includes

the hours when such ads can be aired, the content and a compulsory statutory

warning. In India, the Government has been trying to bring in a sense of

regulation.

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Bacardi origins (A)

The most famous of light and Puerto Rican rums is Bacardi. Bacardi was

originally made in Cuba, and notably the first light rum. They also opened plants

in Mexico and Puerto Rico in the 1930’s. The Puerto Rican plant allowed

importation to the US without the import duty imposed. When Castro took over

Cuba and nationalized the rum industry, Bacardi stopped production there and

Puerto Rico became their main distillery. Though Bacardi is most famous for its

light rum, they also produce other variations. Ron Rico and Don Q are Puerto

Rican rum also.

France imports a lot of Rum from the French West Indies. Once imported to

France, they are often aged. Martinique is the largest producer. Many of these

rums are produced with the addition of dunder. Dunder is the residue left from the

previous batch and can be compared to the making of sour mash in the States.

Haiti also produces fine sipping Rums. Cachucha is made in Brazil from

sugarcane and often heavily sweetened, as it is naturally dry, this is the main

ingredient in Caiparnha. A clock cousin, Caha is made in Pragnay, and other South

American countries. In Mexico rum is more popular than tequila. Here it fees by

the name of aguardiente.

Flavored runs are gaining in popularity; Capitan more a spiced rum and Malilum

coconut flavor are two examples.

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BACARDI’S MARKET SHARE SCENARIO AND CURRENT MARKET STRATEGY –

Bacardi picks up local consumer insights to infuse new spirit into stagnating sales.

Chilling out on a beach in the middle of the day has a universal appeal. Or does it

not, it appears, In India. Which is why Bacardi is on the verge of releasing a brand

new campaign for the Indian market, which replaces the earlier trademark global

TV commercial?

Sure, the fun, colours and passion are all there because the target group of tipplers

between the ages of 25 and 45 years hasn’t changed. Only, in place of sun, sea and

sand in the afternoon, the setting is an evening bash after a tiring day’s work. That

marks a radical for the Cuban rum maker. This is the first time any where in its

worldwide markets that Bacardi Martini has had to leave its global communication

to local taste. What made Bacardi Martini take such a significant step?

The answer lays in the way the market for white spirits, and white rum in

particular, has evolved over the last few years. Today, the white spirits market

accounts for less than 5 percent of total liquor sales in India and is dominated by

gin. White rum and vodka make up less than 2 per cent of the total liquor sales.

International Distillers and Vintners (IDV), which launched its Smirnoff Vodka

eight years ago, was joined by Bacardi in 1998 when the latter introduced white

rum, Carta Blanca. The two were expected to expand the market for white spirits

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through their marketing blitz. Even today, the segment is a drop in the Indian

liquor ocean.

To be sure, Bacardi had a great start. In the first year, Carta Blanca sold 20,000,

the next year (1999-2000), it achieved the targets of 40,000 cases and the

following year sales surged to peak at a little less than 1,00,000 cases.

What worried the company was that after that, sales leveled off. In fiscal 2002,

Bacardi failed to reach last year’s sales.

Considering many global brands have thought twice about bringing their

international campaign into the. So Bacardi began with its world wide Indian

market, how is it that Bacardi chose this option? Part of the explanation lays in the

fact that Bacardi faced a major challenge in defining consumers in the first place.

Although rum as a category, primarily dark rum, accounted for 13 to 14 per cent of

the total market in 1998, consumer loyalty was extremely high and hard to break.

So the task before Bacardi was a formidable one.

Price was another barrier since Bacardi came at a premium of over 250 per cent to

local rums and whiskies. Research at the time showed that, at best, Bacardi could

possible pick up rum drinkers on the fringes, who were open to trying out other

types of rum.

But this number was too small and uncertain. Bacardi could hope to draw in these

consumers long as it preserved the strong, macho properties of dark rum. Most

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rum drinkers chose the product to make a statement about them and stand out in

the crowd.

“The change we are making in India, while subtle, recognizes the need to balance

the playfulness of Bacardi with more of a work ethic if we are to connect even

more with the Indian consumer” Jeff Macdonald Marketing director, Bacardi

Martini India Limited. Research also should that up market consumers were more

concerned with how a drink enhanced their image rather than with taste

positioning of freedom and passion to get consumer to associate the drink with

youthfulness.

The communication was followed up with elaborate below the line activities. Such

as promos (free glasses with a bottle of Bacardi). To increase trials, Bacardi

launched a miniature 60 ml bottle at Rs. 35 and then a 375 ml print bottle for Rs.

180. The idea was to rope in consumers who found the drink expensive.

The last few years saw Bacardi (in common with other liquor companies) hit by

the blanket ban on advertising in the electronic media. In the absence of direct

product advertising, the company was left with no option but to rely on below the

line activities, such as a dance parties and promotions. The standard of surrogated

advertising was taking time since the parent company wasn’t used to this form of

advertising.

Late last year Bacardi kicked off a study to find out what would push sales. The

answer lay in making its surrogate communication more relevant for the Indian

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target audience. While Bacardi targeted a wider consumer segment, young

executives dominated its consumption.

The company discovered these people are serious about their careers, which have

higher priority than having fun. Fun follows after work, while its previous

communication was all about fun.

Based on the findings, the company roped in filmmaker Prasoon Pandey to create

a new film under the aegis of its advertising agency McCann – Erickson. The new

advertising is crafted on simple though of transformation that is how the Bacardi

spirit charges up a lazy evening after a hard days work.

Bacardi’s new advertising may have taken a cue from what most other liquor

brand are doing McDowell’s No. 1 Aristocrat and Gilbey’s Green have all tried to

associate themselves with professional success at the work place.

Bacardi is confined that its new initiatives will help bring about a change in

consumer habits, although it admits the process may take time. Its assumptions are

based on its observation in the US and UK which has been showing a clear move

from whisky to white spirits among young up market people driven by a

combination of strong image based marketing initiatives and the fact that white

spirit has a wider potential as cocktail base.

In the US, more than 50 per cent of the market is already white spirits; India tends

to follow global trends, “says Macdonald. So we are very confident we can grow

this segment and take a leading position.

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The company is introducing a new pack design that will highlight the brand’s heritage

established in 1862 in Cuba and product quality the world’s smoothest rum. The

company plans to be more aggressive with its Bacardi Blast music event which attracted

over 150, 000 consumers across nine metros, in the year 2004.

“This year BACARDI objective is to make it even bigger and even hotter, with

innovative venues the hottest international DJs and hot, new Bacardi cocktail” said Mr.

Macdonald.

Bacardi Blast compact discs (CDs) will be another thrust area for brand building. The

company is all set to launch the ninth CD in the series, having already sold over 300,000

copies with four releases reaching number one in the charts. “We plan to have Bacardi

Nightshift events in even more big way,” says Macdonald. And a new on trade

promotion concept that will become the hottest post work party in town.

Most of these initiatives are in line with Bacardi Martini’s objective to garner quick

volume in the Indian market. Last year, the company acquired a 51 per cent stakes in

erstwhile white and Mackay (now Whytehall India) and spreading its presence in IMFL

whiskies as well.

Apart from this, the company is distributing William Grant’s Scotch whisky brands and

Bacardi Martini’s affiliate John Dewar & Sons Dewars Scotch Whisky in India. But its

experience with white liquor will test whether it’s truly understood the spirit of the Indian

Market.

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BACARDI’S WAY OF SURROGATE ADVERTISING

The General Manager, marketing BACARDI put it: “any alternative brand has to fit the

original proposition. Both our product and the parties and music we are promoting allow

consumers to release the super – me.

Music can get us in the party mood, just like a peg or two, but apple juice is just apple

juice, despite Aristocrat’s assurances to the contrary on the small screen.

That could be the distinction between alternative brand advertising and surrogate ads that

the committee will be searching for.

The committee, we are told, will look into whether the brands advertised are legitimate

products it may also look into the amount of revenue invested into promotion of a brand

Vis a Vis the percentage of revenue it brings into a company.

Bacardi kicked off the “Blast concept around six years ago which dates surrogate

advertising with music events in the metros in conjunction with Channel V.

The ad jingle that made Bacardi a household name was switched from sipping on Bacardi

Rum to swinging to Bacardi Blast.

But any one old enough to drink will also surely recalled the old words as soon as the

tune comes on the telly. That is the brand recall and value advertisers will sorely miss, if

the clampdown is through.

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Key Findings –

The present research has been conducted in a bid to comprehensive and comparative study of the advertising strategy used in liquor industry which makes the need of surrogate advertising exemplary, as the only way of advertising for liquor industry and also to know the effectiveness of surrogate advertising in influencing customer perception towards the products offered by the company.

Liquor Industry has one of the most lately growing marketing values in our country India. The liquor industry does market its products by campaign to the entire market of customers. Therefore, the assurance of the customer is increasing day by day this is mainly due to the advertising.

The real objective of these ads is to make up for the losses occurring to the companies because of ban on direct ads of parent products these ads are peculiar and the author has identified the following features of these ads:

(I) Use of the same brand name, tag line and logo as of the parent product (this being the most distinctive feature),

(II) Use of themes like sex, adventure, party, fun, passion, bravery, masculinity, etc. which go more with the parent product of the company like liquor, tobacco and cigarettes and;

(III) Use of a surrogate product which can be related (like soda) or unrelated (like cassettes, clothing, golf accessories) to the parent product.

(IV) It also studies the contribution of such type of advertising in branding and creating a good brand image and winning brand loyalty of target customers.

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Surrogate advertising should not be allowed. Tobacco and liquor banners make use of this phenomenon extensively and try to lure the public. The whole point of banning the product was not the banner but the harm it causes to public and viewers. Hence placing it under the same banner for a different product makes no sense.

The banners should concentrate more on the consequences of the products (like tobacco etc.) Rather than promoting them for a different product.

Most of the surrogate advertisements are even supported because of the revenue it brings to the different levels of hierarchy in the country.

Even though surrogate advertisements should be banned, there many other sources and mediums using which the public is lured. Most of the television serials are an example of this.

It is generally recognized that surrogate advertising is even more influencing than normal advertising, but the liquor industry has no choice. Of course, this strategy assumes that the brand and, in some cases, the advertisements, are already well known. Otherwise, such advertising may not serve any purpose.

. This fact is also substantiated by the findings of the present research as most commonly approached liquor consumers in this research find that surrogate advertisements are not only misleading, but also false and dishonest in many cases. Instead of an outright ban of surrogate advertising, liquor companies need to underline the need for dialogue and subsequent guidelines outlining dos and don’ts of advertising. It could specify timings when the ads should be aired, not target children, disallow teenagers in ads, not allow ads that are glamorous or suggest increased attractiveness to the opposite sex after alcohol consumption.

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. There should be stringent regulatory measures to curb the practice, through following measures-

• Making transparent laws banning surrogate advertisements for different products under a single brand names, by amending the Trade Marks Act, for instance;

• Providing teeth to the Advertising Standards Council of India (ASCI) to enable it take action against false and misleading advertisements, and keep a close vigil over clever evasion of the law;

• Asking the electronic and print media to adhere to the advertisement codes and not encourages surrogate advertisements;

• Creating consumer awareness programs to help people understand the negative impact of surrogate advertisements.

• Adopting strict laws to penalize those companies featuring surrogate advertisements without any real existence of the product; and

• Requiring advertising agencies to have full knowledge of the products under the same brand for which they are promoting advertisements, and taking legal actions against those agencies which design surrogate advertisements.

 

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DATA ANALYSIS-

WHILE ANALYSING THE AGE GROUP OF PEOPLE CONSUMING

TOBACCO IN ANY FORM THE RESULTS WERE AS UNDER-

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TRENDS OF CONSUMPTION OF LIQUOR IN INDIA-

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CONCLUSION.

My research objective was to find out that “how successful has

surrogate adverting been in promoting the liquor brand” 60% of the

general public have agreed according to the alone mentioned data that

surrogate advertising has been successful in promoting the liquor

brands.

We get a cent percent recall value for the original liquor products even

though surrogate versions were being mentioned on the television.

Therefore, I would like to conclude by saying that surrogate advertising

stimulates of liquor brand is more or less a negative aspect used for

marketing.

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BIBLIOGRAPHY

Links

www.bacardi.com, Jan 2008

www.yahoo.com

www.expressindia.com

www.hindustantimes.com, June 2010

Books

‘Confessions of an advertising man’ by David Ogilvy.

Truth, lies and advertising by Jon Steel.

Marketing Management by Philip Kotler.

Magazines referred

India Today.

Business Today.

Newspapers

The Economic Times.

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