What Are The History Laws Profitability And


What Are The History, Laws, Profitability And Social Responab Essay, Research Paper



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 sources section 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.

1 2 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. 3 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 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 4 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 5 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. 6 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: 7 . 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. ii


Code of Federal Regulations. CITE: 27 CFR Sec.5.63. EXPCITE Title 27. CHAPTER

I. SUBCHAPTER A, PART 5, Subpart H. Online. Http://

Code of Federal Regulations. CITE: 27 CFR Sed.5.65. EXPCITE Title 27. CHAPTER

I. SUBCHAPTER A, PART 5, Subpart H. Online. Http://…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. iii

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:.