Ever wondered why renowned liquor brands such as Royal Stag or Seagram’s 100 Pipers advertise music albums or CDs and not their alcoholic products?
All matters revolving around intoxicating liquor in India are highly regulated. The Central and State governments have the power to make rules and regulations governing these subjects. It is crucial for companies to comply with rules and regulations pertaining to advertising of such products as any non-compliance with these rules and regulations may result in imprisonment for a term which may extend to 2 years for 1st time offenders and imprisonment which may extend to 5 years for every such subsequent offence.
The primary regulation governing the advertising of intoxicating liquor is the Cable Televisions Network (Regulation) Act, 1995 and the rules made thereunder. The Cable Networks Rules, 1994[1] (“Rules”) prohibit any promotion, whether directly or indirectly, of sale or consumption of liquor. However, a product using a brand name or logo which is also used for liquor may be advertised on cable service subject to the following conditions:
1. The story board or visual of the advertisement must depict only the product being advertised and not the prohibited products in any form or manner;
2. The advertisement must not make any direct or indirect reference to the prohibited products or contain any nuances or phrases promoting prohibited products;
3. The advertisement must not use particular colors and layout, or presentations associated with prohibited products; and
4. The advertisement must not use situations typical for promotion of prohibited products when advertising the other products.
In order to examine the suitability for unrestricted public exhibition prior to telecast, all such advertisements are to be reviewed by the Ministry of Information and Broadcasting and if found to be genuine brand extensions shall be previewed and certified by the Central Board of Film Certification.
Further, the Rules state that no advertisement shall violate the Code for Self-Regulation of Advertising Content in India (“Code”), as adopted by the Advertising Standards Council of India (“ASCI”). The Code lays down the following guidelines for advertisement of a genuine and unrestricted product/service that may be considered as a brand extension of a restricted product (such as liquor):
1. Brand extension product/service is to be registered with appropriate government authority;
2. For a brand that exists in the market for more than 2 years, sales turnover of the product/service should exceed INR 5 crore per annum nationally, or INR 1 crore per annum in each such state where distribution has been established.
3. For a brand that exists in the market for less than 2 years, it must (a) achieve a net sales turnover of INR 20 lakhs per month from launch and such sales should not be to a subsidiary or sister concern; or (b) demonstrate fixed asset investments of not less than INR 10 crores (not inclusive of advertising related expenses) which are exclusive to the advertised brand extension.
4. In case the manufacturing/procurement of such brand extensions is being outsourced, then evidence may include board resolutions and purchase orders for contracts longer than a year with service providers/manufacturing entities and should clearly demonstrate the possibility of achieving the turnover as laid out above.
5. Evidence of turnover greater than 10% of the turnover of the same brand in the restricted category (including sub brands in the restricted category) is to be furnished.
It is pertinent to note that irrespective of the time the brand has been in the market, the date of the first invoice for sale for the said brand extension would be considered as the date of launch. In the event a brand extension fails to meet the qualification criteria stated above, it would be considered a surrogate advertisement, created to advertise a restricted category.
Thereof, renowned liquor brands such as Royal Stag or Seagram’s 100 Pipers promote and advertise music albums or CDs and not their alcoholic products. The products are then considered as a brand extension and companies achieve the aim to advertise their brand name without undertaking any advertisement of the restricted product.
[1] Rule 7 (1) (viii) of the Cable Networks Rules, 1994