WHAT ARE THE HISTORY, LAWS, PROFITABILITY, AND RESPONSIBILITES TO THE CONSUMER OF
ADVERTISING HARD LIQUOR ON TV IN THE UNITED STATES?
INTRODUCTION
Purpose
The goal of this report is to inform the reader of the recent events that prompted hard
liquor advertising on TV. In addition, the laws associated with advertising across this
media, as well as recent legislative endeavors to control such advertising. Furthermore,
the report also focuses on the potential profitability the distilled spirit's industry
will gain from advertising across this media and the industries social responsibilities
to the consumer.
Sources and Methods
Research for this report is gathered mainly from information found on the World Wide Web.
Some information was gained through newspaper articles obtained by using the InfoTrac
system in the Ruth Scarborough Library on the Shepherd College Campus. Refer to the
bibliography for specific information references.
History
Research by the Distilled Spirits Council of the United States (DISCUS) found that 30 to
50 percent of Americans think that distilled spirits are being advertised on TV. Since
Prohibition the hard liquor industry voluntarily agreed not to advertise their products,
first on radio in 1936, and of TV in 1948. However, the industry is being faced with
declining sales. Their competitors such as the beer and wine industries have grown. The
sales of beer and wine have increased dramatically, leaving the hard liquor industry
behind. The main reason for this occurrence is due to the fact that these industries
have tapped into the resource of advertising on TV.
Consequently, this has prompted the hard liquor industry to reevaluate its current
marketing situation. The first company to take the leap to TV is Seagram. The Seagram
company began advertising 30-second Crown Royal whiskey commercials in Corpus Christi,
Texas.
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Definitions
The words "distilled spirit" is used throughout this report. Distilled spirits and hard
liquor in this report have the same meaning. Distill means to let fall, exude, or
precipitate in drops or in a wet mist according to Webster's Dictionary. Hard liquor is
the end result of this process using the appropriate ingredients. Distilled spirit is
any alcoholic beverage not defined as beer or wine.
Laws
Constitutional
The right to advertise is constitutionally protected commercial free speech under the
First Amendment. This fact is being upheld in a recent commercial free speech decision
by the Supreme Court. The case of 44 Liquormart, Inc. vs. Rhode Island upholds the
industry's commercial free speech rights by insuring that beverage alcohol is allowed the
same protection under the First Amendment as other legal products and services.
In addition, the Courts also ruled that truthful and non-misleading advertising is an
essential part of the free enterprise system. Withholding this form of advertising
deprives the consumers of knowledge that is needed to make conscious and informed
decisions.
Federal Regulations
Advertising hard liquor on TV is a constitutionally protected right, however, the
industry must follow strict Federal regulations. An advertisement of distilled spirits
can not contain any false or misleading statement that tends to create a misleading
impression of the product to the consumer. Furthermore, a statement in an advertisement
cannot say anything bad about a competitor's product. Provisions are made also for a
statement's design that cannot contain any material that is obscene or indecent.
Federal regulations do not permit claims of distilled spirits having curative or
therapeutic qualities. This practice was very popular in the 1800's and early 1900's.
Traveling salespersons would often stage a show in the middle of small towns claiming a
miracle cure for various sicknesses. Most often, the cure would involve alcohol
consumption causing the consumer to become intoxicated. This advertising was false and
misleading.
Flags, seals, coats of arms, crests, and other insignias which can be capable of relating
to the American flag or a branch of the armed forces is strictly prohibited. The
advertisement can not mislead the consumer into thinking that the product is endorsed,
made, used by, or produced for any of the government, organizations, or families these
insignias are associated.
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The use of deceptive advertising techniques such as subliminal techniques are also
prohibited under federal regulations. Subliminal techniques refer to any advertising
technique that attempts to convey a message to a person by means of images or sounds that
are very brief. These messages usually cannot be perceived at a normal level of
awareness according to federal regulations.
The federal regulations above are only a select few. There are many constraints on
advertising distilled spirits. In addition to advertising constraints there are many
prohibited practices concerning bottling and labeling of hard liquor. Persons who are
interested in finding out this information it can be found on the World Wide Web at
http://143.231.208.199/.
104TH Congress Bills
Federal regulations for hard liquor advertising are very strict. However, some lawmakers
believe that the regulations are not strict enough. United States Representative Joe
Kennedy, Democrat from Massachusetts, is a major player in introducing legislation to
further restrict or stop distilled spirits advertising.
Mr. Kennedy introduced several bills to the 104th Congress. The first bill he
introduced is known as the "Children's Protection from Alcohol Advertising Act of 1996".
The purpose of this bill is to establish advertising requirements for alcoholic
beverages. Restrictions proposed by this bill are that no alcoholic beverage can be
advertised on any audio tape, audio disc, videotape, video arcade game, computer game or
in film. Furthermore, no outdoor advertising of alcoholic beverages can be located
within one thousand feet of any school, playground, or other public facility where
persons under 21 are expected to be present. Another major provision of this bill is to
restrict any advertisement on TV between the hours of 7:00 A.M. and 10:00 P.M. to be
limited to only a picture of the beverage with factual, objective audio information about
the beverage.
A second bill introduced by Mr. Kennedy is the "Sensible Advertising and Family Education
Act". The act requires Surgeon General's Warnings on all media advertisements on TV.
Such warnings as "Alcohol is a drug and may be addictive" (WWW, Sensible Advertising and
Family Education Act).
A third bill introduced is the "Alcohol Advertising Accountability Act of 1996". The
bill proposed by Mr. Kennedy and others requires the Secretary of Health and Human
Services to report annually to the Congress on alcohol advertising. The report consists
of alcohol advertising profiles and its effects on consumers.
In addition, the above bill will require the Secretary of Health and Human Services to
establish a panel to assist in gathering information. The information will consist of
the
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media used by alcohol advertising to reach children. Furthermore, the total expenses
for alcoholic beverage advertising in each media such as TV, magazines, and radio. The
report will also identify the types of themes, especially on TV ads, of advertising
beverage alcohol.
The report content will also include a determination of the extent young people are
exposed to alcohol advertising. The relationship between alcohol advertising practices
and underage drinking will also be evaluated. Consequently, the evaluation of the above
factors will include recommendations for legislation by the Secretary of Health and Human
Services.
The most recent bill introduced by Mr. Kennedy is the "Just Say No Act". His undying
efforts to ban alcohol advertising is enforced in this bill. Mr. Kennedy suggests that
distilled spirits on any medium of electronic communication shall be unlawful.
PROFITABILITY
Target Market
The market for distilled spirits is shrinking as its loyal customers are aging. The need
for a younger market has spawned the industries decision to advertise in order to
increase profits. The graph below represents the percentage of people who say they
drink, and their respective age. Furthermore, the graph compares the type of alcohol
each age group is inclined to drink.
Corporate Profits
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According to Impact, a publication for the alcoholic beverage industry, distilled spirits
will show its first growth in 15 years. The total spirits category is expected to rise
0.3 percent. In addition, the top 25 premium brands are expected to be up 4.9 percent.
Crain Communications Inc. suggests that "the turnaround comes as some liquor marketers
are attempting to move into TV..."(WWW, Spirits Sales Drought Eases).
Media Profits
Corporations are not the only beneficiaries to increasing profits. The media has much
more revenue to gain from this venture to TV. However, the major networks, do not want
to air hard liquor advertisements. They fear they will lose money from beer and wine
marketers.
This is not the case with locally owned affiliates and some cable networks. They will
accept part of almost $228 million the industry spends annually on advertising.
SOCIAL RESPONSIBILITY
DISCUS Code of Good Practice
DISCUS is the trade association representing producers and marketers of distilled spirits
sold in the United States. The association claims, " the industry holds itself to a
higher standard than required by any laws or regulations that apply to the marketing or
advertising of beverage alcohol "(WWW, DISCUS Code of Good Practice: An Enduring
Example...).
The industry not only has to follow strict government regulations, as discussed in the
law section of the report, but has its own voluntary Code of Good Practice for distilled
spirits advertising.
According to DISCUS the code has two fundamental principles: " (1) to ensure
responsible, tasteful, and dignified advertising and marketing of distilled spirits to
adult consumers who choose to drink", and " (2) to avoid targeting advertising and
marketing of distilled spirits to individuals below the purchase age" (WWW, DISCUSS Code
of Good Practice: An Enduring Example...).
The Code of Good Practice contains provisions on responsible content and responsible
placement of spirits advertising. A few provisions are firstly, distilled spirits should
not be advertised or marketed in any manner directed or primarily intended to appeal to
persons below the legal drinking age. Secondly, distilled spirits advertising should not
depict a child or portray objects, images, or cartoon figures that are popular with
children. Finally, distilled spirits advertising should portray distilled spirits and
drinkers in a responsible manner.
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Public Education
DISCUS members of the distilled spirits industry claim to pay a vital role in fighting
alcohol abuse. DISCUS supports, develops or initiates social responsibility efforts to
educate the public about beverage alcohol.
The Century Council is a non-profit organization mainly supported by DISCUS and its
members. Their objective is to reduce alcohol abuse across the U.S. The Century Council
investigates, funds, and implements innovative approaches to address the problems of
underage drinking and drunk driving.
DISCUS and its members not only support the Century Council but various other
organizations as well. A few of these organizations are the: White House Leadership
Conference on Youth, Drug Use, and Violence, the National Commission Against Drunk
Driving(NCADD), BACCHUS ( Boosting Alcohol Consciousness Concerning Health of University
Students), and "Friends Don't Let Friends Drive Drunk". Everyone of these organizations
deal with the curbing of underage drinking, alcohol abuse, and other various problems.
DISCUS involvement with the above organizations are not the only social obligations the
establishment is concerned with. In 1994 they initiated legislation to Congress known as
the "Drunk Driving Prevention Act". The act make provisions to include mandatory alcohol
and drug education for drivers. In addition, the ban of open containers in vehicles and
zero tolerance for drivers under age 21 who are caught drinking. The act also includes
Administrative Licenses Revocation(ALR) whereby authorizing a police officer to
confiscate the license of any driver who fails a chemical test or refuses to take one.
Many of these laws are in use today, thereby being adopted by state legislature.
Parental Guidance
Roper Starch research organization conducted a national survey asking young people what
influenced their decision to drink or not drink. The survey resulted in 60 percent
citing their parents as their primary influence, 28 percent cite their peers, while only
4 percent site advertisements. The results of this research suggest that distilled
spirits advertising is not the culprit for alcohol abuse. Improper parental guidance and
lack of public education is the determining factors in alcohol abuse.
CONCLUSION
The conclusion reached through this report's findings are that:
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. The distilled spirits industry should be allowed to advertise on TV along with
beer and wine. The industry should get equal and fair treatment as the other alcohol
industries afforded by the First Amendment.
. Government will always pose regulations on industry. The role of the government is to
protect and serve the citizens of the U.S. The distilled spirits industry has and will
continue to abide by these regulations. The industry claims to hold itself to higher
standards than that of the regulations imposed by government.
. The answer to America's alcohol problems is not to ban advertisements. Free speech and
the promise of a better tomorrow is what makes this country great. Public education,
parental guidance and freedom of choice are the answer to the problems.
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BIBLIOGRAPHY
Code of Federal Regulations. CITE: 27 CFR Sec.5.63. EXPCITE Title 27. CHAPTER I.
SUBCHAPTER A, PART 5, Subpart H. Online.
Http://143.231.208.199/cgi-bin/fastweb..wAAA+distilled%26spirits%26advertising.
Code of Federal Regulations. CITE: 27 CFR Sed.5.65. EXPCITE Title 27. CHAPTER I.
SUBCHAPTER A, PART 5, Subpart H. Online.
Http://143.231.208.199/cgi-bin/fastweb...wAAA+distilled%26spirits%26advertising.
Crain Communications Inc. "Spirits Sales Drought Eases:." (Dec. 1996). Online.
Http://adage.com/ns-search/news-an.../.
Dallas(AP). "Liquor Ads Start on Television After Decades-Long Voluntary Ban." The New
York Times. (June 12,96). Online. Http://www.newstimes.com/archive/jun1296/ nab.htm.
Distilled Spirits Council of the U.S. "Beverage Alcohol Advertising: A Constitutionally
Protected Right." Online. Http://www.discuss.health.org/adcode/const.htm.
Distilled Spirits Council of the U.S. "DISCUS Code of Good Practice: An Enduring
Example of Social and Corporate Responsibility." Online. Http://www.discuss.health.org
/adcode/code.htm.
Distilled Spirits Council of the U.S. "Distillers Change Advertising Code to Advance
Equal Treatment." Online. Http://www.discus.health.org/adcode/prad.htm.
Distilled Spirits Council of the U.S. "Distillers Spirits Advertising in Perspective."
Online. Http://www.discus.health.org/adcode/adpers.htm.
Distilled Spirits Council of the U.S. "Social Responsibility and Public Education: The
Distilled Spirits Industry's Commitment to Curbing Alcohol Abuse." Online.
Http://www.discuss.health.org/adcode/social.htm.
Jackson, Jerry T. "Dor Issues Policy Statement Regarding Liquor Advertising." (July,
1996). Online. Http://www.state.ga.us/Departments/DOR/pressrel/p071296a.htm.
McDowell, Bill., Teinowitz, Ira. "Cable Network To Take Liquor Ads." (Nov., 1996).
Online. Http://adage.com/news_and_features/features/19961111/article5.html.
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U.S. House Of Representatives. "Alcohol Advertising Accountability Act of
1996(Introduced in the House). "Online. Http://rs9.loc.gov/cgi-bin/query12?c104:
H.R.+3475:.
U.S. House Of Representatives. "Childrens Protection from Alcohol Advertising Act of
1996(Introduced in the House)." Online. Http://rs9.loc.gov/cgi-bi/query/2?c104:
H.R.3473:.
U.S. House Of Representatives. "Just Say No Act(Introduced in the House)." Online.
Http://rs9.loc.gov/cgi-bin/query/2104:H.R.+3644:.
U.S. House Of Representatives. "Sensible Advertising and Family Education Act." Online.
Http://rs9.loc.gov/cgi-bin/query/1?c104:./temp/~c104H0mc!e817:.
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Part
Page
I. INTRODUCTION .................................................................... 1
A. Purpose
................................................................................ 1
. Sources and Methods ............................................................1
. History
...................................................................................1
. Definitions
............................................................................2
. LAWS
.......................................................................................2
. Constitutional
.......................................................................2
. Federal Regulations .............................................................2
. 104th Congress Bills .............................................................3
. PROFITABILITY ..................................................................... 3
A. Target Market
.......................................................................4
. Corporate Profits .................................................................5
C. Media Profits
.......................................................................5
. SOCIAL RESPONSABILITY ...................................................5
. DISCUS Code of Good Practice ..........................................5
. Public Education ..................................................................6
. Parental Guidance .................................................................6
. CONCLUSION
............................................................................6
VI. BIBLIOGRAPHY ......................................................................
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