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Controlled liquor ads could hit channels, companies

Raksha Hegde & Reeba Zachariah

Media companies will receive a significant blow to their advertisement revenues if information and broadcasting minister Sushma Swaraj's recent diktat that liquor ads be "controlled" is implemented.

Consider this: The total ad revenue for TV channels stood at Rs 30 billion in the year 2000. Of this, the liquor industry's share was close to Rs 2 billion. With new channels flooding the market and the ad pie not increasing, the fight for a share is becoming more and more difficult.

According to the Adex arm of the research agency Org-Marg, the liquor industry's biggest beneficiaries are Sony Entertainment Television, which got ads worth Rs 442 million last year, and Zee Cinema, which mopped up Rs 362 million. Star Network, through its four main channels, received over Rs 300 million as ad revenue from the liquor industry.

Adex data further state (based on information from card rates of channels) that the United Breweries group spent Rs 259 million advertising its Kingfisher Mineral Water on various TV channels last year. On the other hand, Herbertsons' non-liquor offering Bagpiper Club Soda spent Rs 14 million in the same period.

An added worry for most channels in the current recessionary market is that one of the biggest spenders - the fast moving consumer goods industry - has tightened its purse strings.

TV channels have already lost out direct liquor advertisements per se with the (government) ban effective from September last year. According to Adex, TV channels earned Rs 1.86 billion by way of liquor advertisements.

Last year, the government had amended certain regulatory policies which have made it mandatory for all TV channels - free-to-air or digital pay-per-view - to follow the programming and advertising code set by the government.

Under these codes, TV channels are barred from airing tobacco and liquor ads. Though, technically, the government cannot take direct action against most TV channels as they uplink from outside India, cable operators who distribute errant channels are punishable by Indian law.

Subsequently, the I&B ministry had set up a committee to look into the issue of surrogate ads.

Another loser in this whole game is the liquor companies themselves. With advertising options reducing, industry players have already started resorting to ground promotions as an alternative form of product promotion.

Ravi Nedungadi, president and chief financial officer of the UB group, feels the new entrants in the market will take a hit due to lesser brand recall.

Mohita Arora, general manager, marketing, UDV, adds: "With the current restrictions, one's visibility is affected which cannot be replaced by events. This has impacted sales."

Though Radico Khaitan has started advertising its 8 pm apple juice brand on all major channels, Poonam Chandel, brand manager, denies doing surrogate advertising as the company feels that theirs is a separate product category altogether.

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