Government set to tighten grip on alcohol 'surrogate ads'; industry braces for impact

As the alco-beverage market gears up for a new set of regulations, brands may want to rethink their marketing strategies.

In a move set to reshape the landscape of alcohol advertising in India, the Union Consumer Affairs Ministry is poised to unveil new draft rules that could put an end to so-called 'surrogate' advertisements. These regulations, expected to be released for public comment within the fortnight, aim to crack down on alcohol manufacturers' practice of promoting their brands through seemingly unrelated products such as playing cards or music CDs.

The proposed rules will require manufacturers to provide regular market reports detailing the availability and sales volumes of their advertised products in the retail market. Moreover, certificates of sales will need to be made publicly accessible online, allowing for verification of substantial sales of the advertised items, as per reports. This move implies a significant shift in policy, potentially closing loopholes that have long been exploited by alcohol brands to maintain visibility in a market where direct alcohol advertising is prohibited.

In a parallel development, the Union Health Ministry has recently urged the Board of Control for Cricket in India (BCCI) and the Sports Authority of India (SAI) to take proactive measures against surrogate advertising of tobacco and alcohol-related products by sportspersons. This intervention underscores the government's commitment to addressing the issue across multiple sectors, particularly in high-visibility areas such as sports.

It is crucial to note the distinction between surrogate advertising and brand extension advertising, a nuance that lies at the heart of the ongoing discussion. Surrogate advertising, which involves promoting alcohol or tobacco products under the guise of other goods, is prohibited by law. In contrast, brand extension advertising, where a company uses its established brand name to market new, unrelated products, is legally permissible. This distinction has been a point of contention and confusion, leading to the need for clearer regulations.

The impetus for these new regulations stems from recent actions by the Central Consumer Protection Authority (CCPA). After identifying multiple instances of liquor brands breaching existing surrogate advertising regulations, the CCPA in March urged companies to ensure compliance with the norms. They also requested a comprehensive list of products marketed under the same brand as alcoholic beverages over the past three years.

To draft these new regulations, an 11-member committee, chaired by consumer affairs joint secretary Anupam Mishra, was then formed. The proposed guidelines will fall under the purview of the Consumer Protection Act 2019, providing specific directives on permissible and prohibited practices for firms.

Industry experts have weighed in on the potential impact of these impending regulations. Manisha, CEO & secretary general of the Advertising Standards Council of India (ASCI), offers insight into the current regulatory landscape. She states, "The ASCI and CBFC guidelines clearly distinguish between surrogate advertising, which is prohibited by law, and brand extension advertising, which is legally permitted. These guidelines have been developed through extensive mutual consultation to ensure clarity and compliance among advertisers."

Manisha further elaborates on ASCI's role in monitoring and reporting violations: "The responsibility for regulating direct alcohol advertising lies with individual states, and ASCI consistently brings violations to the attention of the relevant authorities, particularly concerning digital media, where the prevalence of influencer ads is high. Last year, ASCI reported 82 instances of direct alcohol advertisements and 65 instances of vaping and e-cigarette advertisements to various authorities for appropriate action."

While the new regulations are expected to have a significant impact on larger alcohol brands, some industry insiders suggest that smaller businesses may be less affected. Vicky Chand, director and CEO at Radiant Manufacturers, a modern grain-based distillery, offers a perspective from the craft spirits sector.

He says, "Surrogate advertising is not really necessary for small businesses to be visible. It's not possible to compete with the big boys and their budgets. So restrictions will not really impact the small batch spirits and brewing industries."

Chand points to alternative marketing strategies already employed by some brands, saying, "We have seen so many ways to approach the customers directly at bars and other point of sales. Greater Than Gin turns their Goa office into a bar after the office hours are done. Lots of other innovative examples are there. Necessity in terms of rules and budgets binding any innovator will lead to creative and inventive ways to approach consumers."

However, for larger brands and the industry as a whole, the impact could be substantial. Anurag Kedia, co-founder of Lone Wolf Beverages, outlines the potential challenges and necessary adaptations.

He says, "The government's upcoming restrictions on surrogate ads will have notable implications for the alco-bev industry. Firstly, these restrictions will significantly reduce brand visibility, making it harder for companies to keep their brands top-of-mind for consumers. This is particularly challenging for smaller brands, which may struggle to maintain their market presence and brand recall in the absence of surrogate advertising."

Kedia emphasises the need for innovation in marketing strategies: "The limitations on surrogate ads will necessitate a shift in marketing strategies, compelling brands to innovate and discover new ways to engage their audience effectively. The impact will also be felt in sponsorship and event domains, where many alcohol beverage brands rely heavily on these platforms for surrogate advertising."

Looking ahead, Kedia suggests several alternative approaches for the industry such as content marketing and storytelling. “They offer a viable approach, allowing brands to highlight their values and narratives without directly showcasing the product. Through blogs, videos, and social media, brands can share behind-the-scenes content, customer stories, and industry insights to foster an emotional connection with consumers."

He also highlights the potential of experiential marketing and digital engagement: "Experiential marketing presents another opportunity, with brands creating immersive experiences such as branded events, pop-up bars, and virtual tastings that focus on the overall experience rather than the product itself. Additionally, leveraging influencers and user-generated content can help promote lifestyle associations with the brand, while loyalty programs and direct consumer engagement through apps or platforms can offer exclusive content, rewards, and personalised experiences."