Music Concerts, Sporting Events: How Top Alcohol Brands Got Into Trouble Over Surrogate Ads

The Central Consumer Protection Authority (CCPA) has issued warnings to major alcoholic beverage makers such as Bacardi, known for its popular white rum, French winery Pernod Ricard, United Breweries, local Radico Khaitan, and William Grant & Sons, which sells single malt whiskey. Glenfiddich whiskey, said two people aware of the development.

The CCPA, which falls under the Ministry of Consumer Affairs, has written to alcoholic beverage manufacturers about their sponsorship of cultural, musical and sporting events, as well as youth festivals and college events, the people cited above said on condition of anonymity. The consumer rights watchdog is also looking at their use of social media to engage consumers through lifestyle content, events and promotions.

According to London-based beverage consultancy International Wine and Spirit Research (IWSR), India’s $32 billion alcoholic beverage industry is expected to add $7 billion by 2028.

The authority, which plays a crucial role in enforcing consumer rights, ordered these companies to explain why action should not be taken against them for violating government regulations under the Consumer Protection Act 2019.

Emailed questions to the consumer affairs ministry, as well as Bacardi, Pernod Ricard, Bermuda-based United Breweries, the Indian arm of Dutch brewer Heineken, Radico Khaitan and William Grant & Sons remained unanswered at press time of this publication.

Despite past restrictions, this practice remains in vogue, disturbing authorities enough this time to alert them. The move comes as the government is tightening draft guidelines aimed at restricting surrogate advertising.

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Surrogate advertising refers to a pattern of advertising, where alcoholic beverage companies promote their products indirectly through events, music festivals, or non-alcoholic products such as bottled water or soda, music CDs, and cups. This type of advertising has been a gray area in India’s regulatory framework.

According to London-based beverage consultancy International Wine and Spirit Research (IWSR), India’s $32 billion alcoholic beverage industry is expected to add $7 billion by 2028.

Mint had previously reported that alcohol manufacturers will have to prove that substitute products have a market for themselves.

“The Consumer Protection Act (CPA) has sufficient provisions to penalize offenders, even in the absence of specific guidelines for substitute advertising,” said the first of the two people cited above.

The ministry has issued advisories in accordance with the provisions of ‘Guidelines for Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements, 2022’.

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The guidelines largely prohibit substitute advertisements for goods or services whose advertising is otherwise restricted or prohibited by law, preventing companies from circumventing such restrictions by presenting the advertisement as being for goods or services that are not prohibited.

Until the final guidelines are notified, notices and action against violators will continue to be enforced as per existing rules, the people cited earlier said.

The CCPA, empowered by the Consumer Protection Act, has the authority to impose penalties of up to $$10 lakh to manufacturers, advertisers and endorsers for misleading advertisements. For subsequent violations, it may impose penalties of up to $$50 lakh.

The CCPA warning provoked a strong reaction from bodies representing the beer industry.

“As the process of finalizing guidelines on substitute advertising is in its final stages and new rules are expected soon, the recent increase in actions against companies based on previous guidelines makes little sense. It would be better to delay for a while and then , evaluate advertisements based on the new guidelines,” said Vinod Giri, director general, Brewers Association of India.

“Notices are part of the procedural work of the CCPA. They apply to everyone, not just alcoholic beverage manufacturers. There is a rule that everyone must comply with. Violations will attract penalties, as has been seen in other categories such as with IAS institutes of coaching and direct selling entities,” said the second person.

This person said that some companies responded, while others have not yet expressed their opinion. If they agree to take down their misleading ads, they can avoid facing harsher action.

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“The ministry has sent notices to major alcoholic beverage companies based on the guidelines for misleading advertisements issued in 2022. It is a positive step by the government to seek clarification from these companies on substitute advertisements, which are part of misleading advertising,” said Ashim Sanyal, director of operations at Consumer Voice, a consumer rights group.

The names of the companies that follow the set of rules and those that do not were not revealed by either of the two people mentioned above.

Mint reported in August that the CCPA had notified 45 coaching institutes for allegedly violating consumer rights with misleading advertisements and unethical tactics. These actions were part of the CCPA’s broader initiative to protect consumers, including students and aspirants, from deceptive practices that violate the Consumer Protection Act of 2019.

The CCPA imposed penalties totaling $$38.60 lakh against IAS coaching institutes for misleading advertisements.

The draft guidelines currently under development are expected to require sales certificates to be made available online for public viewing, allowing verification of substantial sales of advertised products.

The new rules also aim to strike a balance between industry interests and consumer protection by preventing overt branding of alcoholic products – a measure to ensure that children and young people, who are potential customers, are not influenced by substitute advertising.

It is expected that the draft guidelines currently under development will require the online availability of sales certificates for public viewing, allowing verification of substantial sales of advertised products.

“As regulations on alcohol advertising tighten, brands are turning to alternative methods to effectively engage their target audience. With increasing restrictions on direct and substitute advertising, social media platforms present a valuable opportunity for brands like us to create personalized, interactive connections with consumers,” said Tushar Bhandari, Permanent Director, Associated Alcohols & Breweries, a maker of alcoholic beverages with headquarters in Indore.

“However, this change requires a thoughtful approach to balance compliance with creativity, ensuring that brand messaging remains consistent, engaging and aligned with legal requirements and audience preferences in a highly regulated industry,” said Bhandari.

Giri of the Brewers Association of India said the industry has frequently criticized media regulators’ one-size-fits-all approach for failing to differentiate between genuine brand extensions and frivolous extensions, which they have denied responsible companies with alcoholic beverages in their portfolio. the chance to diversify. and reduce the risk of your business.

“Additionally, the industry has welcomed the CCPA’s initiative to develop guidelines that distinguish between legitimate brand extensions and irresponsible substitute ads, allowing companies to expand responsibly while filtering deceptive practices,” he said. .