India to introduce strict regulations banning surrogate liquor ads affecting Carlsberg, Pernod Ricard, and Diageo: Report

The World Health Organization says bans or comprehensive curbs on alcohol advertising "are cost-effective measures" in the interest of public health.

India, which currently prohibits direct liquor advertising, is poised to implement comprehensive new regulations that will also ban surrogate advertisements and event sponsorships related to alcohol. This move may compel major companies like Carlsberg, Pernod Ricard, and Diageo to revise their marketing strategies, according to a report by Reuters.

These "surrogate ads" frequently evade the restriction by purportedly displaying less desired products instead, such as water, music CDs, or glassware emblazoned with emblems and colours associated with their main product, and frequently endorsed by well-known Bollywood movie stars, the report said.

According to the chief civil servant for consumer affairs and draft regulations that were originally published by Reuters, they might now impose fines on businesses and bans on celebrities who support deceptive tobacco and alcohol advertisements.

"You can't take a circuitous way to promote products," the official, Nidhi Khare, told Reuters, adding that final rules were expected to be issued within a month.

"If we find ads to be surrogate and misleading, then even those who are endorsing (products), including celebrities, will be held responsible."

For example, Carlsberg markets Tuborg in India with an ad featuring film stars at a rooftop dance party, using the slogan "Tilt Your World," which mirrors its beer advertisements and includes the "Drink Responsibly" message.

Similarly, Diageo's popular YouTube ad for Black & White ginger ale, which has garnered 60 million views, showcases the brand's iconic black-and-white terriers, linking back to its scotch brand.

These new regulations could significantly impact liquor companies in India, the world's eighth-largest alcohol market by volume, with annual revenues estimated at $45 billion by Euromonitor, Reuters reported.

India's 1.4 billion people are becoming increasingly affluent, making it a valuable market for companies like United Breweries, a division of the Heineken Group that manufactures Kingfisher beer and holds more than a quarter of the market share by volume.

Diageo and Pernod, well-known for their whiskies, together hold a fifth of the market, with India accounting for almost a tenth of Pernod's worldwide sales.

A "prohibition against engaging in surrogate advertisement" is part of the proposed regulations, according to the draft, and it covers sponsorships and advertisements for goods that are seen as "brand extensions" or that resemble alcohol brands, the report added.

According to the new regulations, producers and endorsers may face fines of up to 5 million rupees ($60,000), and promoters may face endorsement bans that last one to three years. The penalties are based on consumer legislation.

Carlsberg declined to comment, while other companies did not respond to Reuters' queries, including those on sales of non-alcohol products.

Diageo and Pernod are represented by the International Spirits and Wines Association of India, whose members "are committed to a compliant way of building brand extension businesses," according to Nita Kapoor, the organization's outgoing chief executive, it said.

She said the organisation was in discussions with the government and backed the promotion of "genuine" brand expansions.

HEALTH IMPACT

The World Health Organization states that bans or strict limits on alcohol advertising are "cost-effective measures" for improving public health. According to its data, India's per capita alcohol consumption is projected to increase to nearly 7 liters by 2030, up from about 5 liters in 2019. In contrast, China's consumption is expected to decrease to 5.5 liters during the same period. Additionally, alcohol-related deaths in India currently stand at 38.5 per 100,000 people, significantly higher than China's rate of 16.1 per 100,000, reported Reuters.

According to Khare, the draft from India was based on an analysis of international best practices. Norway, for example, forbids advertisements for alcohol and other products that use characteristics of a spirits brand; analysts claim that these prohibitions have gradually reduced alcohol sales, according to the report.

The new proposed regulations, which specifically target attempts to circumvent existing limitations, forbid marketing of goods like soda or music CDs using a "similar label, design, pattern, or logo" to those of alcohol products.

But according to the draft, advertisements for products like glasses and Coke cans allow "brand names to appear in all their ads, creating its recall value for the consumers."

The new regulations come after warnings to liquor companies like Pernod and some domestic tobacco firms about misleading ads. India supports brand extension ads but requires them to clearly represent the product, avoiding any misleading impressions of promoting liquor. For instance, Pernod's ad for Blenders Pride glassware, featuring Bollywood star Alia Bhatt, showcases no actual glassware and closely resembles whisky brand promotions, it added.