ROLE OF SURROGATE ADVERTIZING IN THE LIQUOR INDUSTRY

WITH REFERENCE TO THE INDIAN ALCOHOL INDUSTRY

1/14/2013

A Dissertation Submitted to the faculty of AMITY SCHOOL OF BUSINESS in partial fulfillment of the requirements for the degree of BBA (BACHELORS OF BUSINESS ADMINISTRATION) in AMITY UNIVERSITY, NOIDA, UTTAR PRADESH.

Name: Karan Agrawal Course: BBA (M&S) Session: 2010-2013 Enroll No: A3914710076

ACKNOWLEDGEMENT

Accomplishment of any project depends on the cooperation and allied efforts of several sources of material, knowledge, energy and time hence the opportunity has been given to me. First of all I thank you God, for life, health, and the energy to be surviving and extending my thanks, I would Like to thank my teacher, Mrs. Niti Saxena who was readily available to help me at the time of need. Without the support of all above this project wouldnt have been a reality what it is today.

CONTENTS
REVIEW OF LITERATURE EXECUTIVE SUMMARY AREA OF STUDY, RESEARCH METHADOLOGY OBJECTIVES OF STUDY INTRODUCTION TWO CONTEXTS OF SURROGATE MARKETING 04 06 07 08 09 11

SURROGATE ADVERTISING & THE LIQUOR INDUSTRY 12 THE INDIAN ALCOHOL INDUSTRY THE STRATEGY 16 18

DETAILED ANALYSIS OF THE MAJOR PLAYER OF THE INDUSTRY 24 CONCLUSION AND LIMITATIONS BIBLIOGRAPHY 31 32
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REVIEW OF LITERATURE
The review of literature shows that a number of studies have been conducted, especially in the developed countries, on different ethical dimensions of advertising Some studies have been carried out on analyzing the effectiveness of advertisements for liquor and cigarettes (Horsky, 1977; Barnes and Bourgeoudis, 1977. They were conducted in countries where advertising for such harmful products is not banned. But the literature on surrogate advertising is very scanty as the problem is of recent origin and is confined to the countries where advertising such harmful products is banned. There has been statements that surrogate advertising is not only misleading, but also false and dishonest in many cases. With surrogate advertising so widespread, this is the moment to tackle the problem head-on. There should be stringent regulatory measures to curb the practice. It is also found that liquor surrogate advertising in India has faced a series of challenges. The surrogates used by this liquor advertisements range from audio cassettes, CDs, perfumes to drinking water. The latest challenge in the Industry had been the ban imposed on television broadcasters from airing liquor surrogate advertisements on the TV. Surrogate advertising is an advertisement of a brand extension in such a way that brings clear recall of the core product in the mind of the consumer. The literal meaning of Surrogate Advertising is duplicating the brand image of one product extensively to promote another product of the same brand. In the advertising world surrogate advertising' is a politically correct term used to define fraudulent pieces of communication. For example, all those playing cards, soda water bottles, apple juices, mineral water and other product ads we see, are actually clever promotions for liquor and cigarette brands by the same name. Surrogate Advertising is quite rightly frowned upon as it is but a cynical attempt at promoting products that public policy decrees is not in society's interest. But the Government should guard against any over-zealous interpretation of what constitutes surrogate advertising so as not to hurt legitimate efforts at brand extension. Given the integrated nature of markets, brand promotion has become an elaborate exercise, often extending across national boundaries. Surrogate advertising has been around ever since someone decided that certain things were probably not good in the interest of the community at large. The government has
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out rightly banned the advertising and publicity of alcohol and tobacco in any form; so, tobacco and alcohol companies have found a way to circumvent the ban on advertising by resorting to surrogate advertising in order to keep their brand alive in the minds of consumers. Surrogate advertising is usually born out of regulation. This regulation may either be government imposed or self-imposed by a regulatory body of the industry. By its very definition, surrogate advertising is something that the advertiser resorts to in an attempt to get his brand across to the consumers mind without violating any regulatory guidelines. Certainly it is not ideal but in a number of cases this is the only way you can reach your consumers in a cost-effective and meaningful way.

EXECUTIVE SUMMARY

The present study has been conducted in a bid to comprehensive and comparative study of the advertising strategy used in liquor industry which makes the need of surrogate advertising exemplary, as the only way of advertising for liquor industry and also to know the role of surrogate advertising in the liquor industry. Alcohol advertising has the potential of promoting changes in attitudes and social values, including publicizing the desirability of social drinking to its viewers, which all encourage a higher consumption of alcohol. It is known that advertising can influence consumer choices, have a positive short-term impact on knowledge and awareness about alcohol, but it has proved difficult to measure the exact effects of advertising on the demand for alcoholic beverages, in part because the effects are likely to be cumulative and long-term. However, the recent literature suggests that advertising increases the overall demand, and influence of consumers towards higher consumption and harmful drinking. The findings of the present research also greatly substantiate this fact as approached consumers in greater majority agree to great extent that advertising increases their overall demand and consumption of harmful drinking.

It is generally recognized that surrogate advertising is even more influencing than normal advertising, but the liquor industry has no choice. Of course, this strategy assumes that the brand and, in some cases, the advertisements, are already well known. Otherwise, such advertising may not serve any purpose. It is difficult to evaluate the effectiveness of surrogate advertising.

AREA OF STUDY
Role of Surrogate advertizing in the liquor industry further bringing focus on the Indian alcohol industry.

RATIONALE FOR STUDY

This study is aimed towards accomplishing the objective of a comprehensive and comparative study of the advertising strategy adopted in liquor industry i.e. Surrogate advertising. In India, the trend of surrogate advertisement gathered momentum with the Cable TV Network Regulation Act, which prohibits tobacco and liquor advertisements on TV channels. Hence learning about the current climate of the Indian liquor industry within the advertizing context.

RESEARCH METHODOLOGY
This will shed light on the course of action undertaken to carry out the detailed study basically banking on secondary form of research data. A lot of articles and the internet was browed extensively in order to collect information about the role of this form of advertizing. Also research data were collected from books, journals, periodicals, newspapers and magazines. Further, the reports of Indian liquor industry relating to advertising and advertising ban reports of government was used.
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OBJECTIVES OF THE STUDY

The objective of this work is comprehensive and comparative study of the advertising strategy used in liquor industry which makes the need of surrogate advertising exemplary, as the only way of advertising for liquor industry and also to know the effectiveness of surrogate advertising in influencing customer perception towards the products offered by the company (keeping the Indian alcohol industry in mind). To study the reasons which made surrogate advertising as the only way of advertising in liquor industry. To learn the role played by surrogate advertisers.

INTRODUCTION
Advertising, a broad and diverse phenomenon has created its immense importance in the present era of business and social world. It has different connotations to different people related to the field of advertising.

To the CEO of a corporation, advertising is an essential marketing tool that helps to create brand awareness and loyalty ,advertising is the creative expression of a concept. To a media planner, advertising is the way a firm uses the mass media to communicate to the current and potential customers. To scholars and museum curators, advertising is an important cultural artefact, text, and historical record. For some, advertising is just fun and a source of entertainment. In fact, sometimes, determining just what is and what is not advertising, is in itself a difficult task. According to Wells and Burnet advertising is a paid non-personal communication from an identified sponsor using mass media to persuade or influence an audience. In the present era, advertising has assumed the role of a powerful force, which is affecting each and every individual in a positive or a negative way. The general public attitude towards advertising is ambivalent most people like some of the advertisements they see or hear, but they may say that they dont like the advertisement in general.

Many advertising related issues are left to the discretion of the advertiser. Decisions may be based on a variety of considerations, including the objective of the advertising campaign, the attitudes of the target audience, the philosophies of the agency and the advertiser, and legal precedent. Many decisions are based on ethical concerns . Most of the ethical aspects of advertising, border on and interact with both social and legal considerations of the advertising process. Ethics are the moral standards and principles, against which behavior is judged. Much of what is judged as ethical or unethical, comes down to personal judgement.

Ethics, therefore, should be subject to a higher standard of expectation than law. There are various issues in advertising such as puffery, deception, vulgarity, stereotyping, etc., having ethical dimensions, but not all of them implicate legal realities. Surrogate advertising is one such ethical issue that has become commonplace. It relates to advertising by duplicating the brand image of one product extensively to promote another product of the same brand. Liquor or tobacco advertising is banned in India and
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hence companies that sell these products have to resort to advertising their wares using products that carry almost the same names and looks. This is surrogate advertising and one of the emerging ethical issues in advertising in India. Kingfisher advertising packaged water, liquor manufacturers like Bacardi advertising compiled music CDs and Jagatjit Industries advertising Aristocrat Premium apple juice are some examples of surrogate advertising, later more will be focused on below.

Though the companies are directly advertising different products through such advertisements, their intention is to indirectly advertise the banned products such as, liquor or tobacco. When people view these advertisements, they associate these with banned products. Thus, such products are indirectly advertised and they in turn, influence peoples behavior. Further ,Surrogate advertising is the most insidious form of advertising, where the biggest hypocrites are the media who gleefully accept these lucrative advertisements, while at the same time harping on moral standards that their readers/viewers should inculcate.

INTRODUCTION TO THE INDIAN SURROGATE ADVERTIZING CLIMATE:

In India, the trend of surrogate advertisement gathered momentum with the Cable TV Network Regulation Act, which prohibits tobacco and liquor advertisements on TV channels. The liquor industry has intentionally blurred the line between products, advertising `old wine' in a `new bottle,' only this time with a soft-drink label. The advertisement comes with the same music and punch line as the one for the popular liquor brand telecast before the ban on liquor advertisements. This phenomenon, known as "surrogate advertising" (duplicating the brand image of one product extensively to promote another product of the same brand), has become commonplace.

Surrogate advertising involves advertising for products using a companys brand to promote other products sold using that same brand. For example, it is technically
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acceptable to promote Smirnoff cassettes in television ads in India, but not Smirnoff vodka. In fact, so brazen is the attempt to lure customers and advertise the liquor brands that nothing is left to chance. In most cases, licensees have actually been taking hefty amounts from the liquor companies to allow them to advertise their brands. In India, where even surrogate advertisement, showing mineral water or sports gear of the same name as popular liquor brands, is banned, it is surprising the licensees of these kiosks are getting away with so much advertising. The companies are actually luring youngsters to start drinking by advertising their brands. Somebody must put an end to this.

TWO CONTEXTS OF SURROGATE MARKETING:

The first is when a company farms out the entire marketing function and the group providing the service is called a "surrogate marketing department.

The second is what is happening in India with respect to the ban on tobacco and alcohol advertising. Companies in banned industries are introducing brand extensions with products that are legal to advertise with the same brand name as the banned product. One liquor company introduced apple juice with the same brand name as the liquor. The idea is the companies can advertise freely the extension - thus keeping their banned-from-themedia products in the minds of the customers. So the apple juice, for instance, is the surrogate for the liquor in the ads. The companies also don't care much about the sales of the surrogate products - for instance, I read that the apple juice isn't even readily available to buy throughout the company. This loophole that the tobacco and liquor companies are exploiting is upsetting the legislature because every apple juice ad that reminds the consumers of the liquor is a slap in the lawmakers' faces. But, they also don't quite know what to do about it! In general, surrogate marketing is when you promote one product or service in the hopes of selling another. Why we would want to do that varies. The best reason is that we aren't able to legally. But other reasons might be because the two products sell better together - for instance, we may make a product and it requires service - which we don't provide. We can market a service provider - the surrogate - who will only use our product.
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SURROGATE ADVERTISING AND LIQUOR INDUSTRY

Worldwide, 1.8 million deaths in 2000 were attributable to alcohol use causing 3.2% of all global deaths and contributing to 4% of the disease burden. Alcohol is the leading risk factor related to the major burden of disease in low mortality developing countries and the third most prevalent risk factor for leading diseases and injuries in developed countries. While alcohol consumption is decreasing in some developed countries, it is on the rise in developing nations Significant proportion of the student population drink at hazardous level. The burden from alcohol exceeds that from tobacco because alcohol problems tend to take their toll earlier in life. The physiological and social consequences of alcohol use also negatively affect school performance, attendance and productivity at work and relations within the family.

Alcohol transnationals are shifting their focus to Asia and other devel oping countries (young population and a growing economy) as the American and European markets are saturated. With an increase in per capita incomes, trade barriers falling, and alcoholic beverages advancing into new markets in developing countries, alcohol consumption is likely to increase. Both beer and spirits consumption in India have been rising, possibly due to economic liberalisation of the Indian market. Privatisation and opening up the market to foreign companies dramatically changes the advertising and marketing of alcohol and most countries (such as in Asia) lack alcohol control national policies and strategies.

Alcohol advertising has the potential of promoting changes in attitudes and social values, including publicizing the desirability of social drinking to its viewers, which all encourage a higher consumption of alcohol and weakens the social climate towards effective alcohol control policies. In countries where advertising in the media is not totally banned, there is frequent portrayal of alcohol in the media, particularly in magazines, newspapers and television, especially of internationally branded beverages. The mainstream of these portrayals suggests alcohol use as a harmless pursuit, showing solidarity, friendship and masculinity, while neglecting any negative consequences.

It is known that advertising can influence consumer choices, have a positive short-term impact on knowledge and awareness about alcohol, but it has proved difficult to measure the exact effects of advertising on the demand for alcoholic beverages, in part because
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the effects are likely to be cumulative and long-term. Recent literature suggests that advertising and other marketing activities increase the overall demand, and influence teenagers and young adults towards higher consumption and harmful drinking. Even in places where alcohol advertising is banned, messages on alcohol use could be conveyed to existing or potential consumers in a variety of ways. One method frequently used is surrogate advertising brand sharing of products including name and logos, advertising at the point of sales, and sponsorship of events particularly in teenager friendly events such as sports, music and cultural events. Thus an effective monitoring system is needed.

Surrogate advertisements for alcohol or tobacco products can appear within advertisements for something more innocent like bottled water or perfume. The more innocent product is somehow merely the carrier for the disguised, 'surrogate' advertisement. For example, the innocent product may be labeled with the familiar logo of the Tobacco Company or brewery. The surrogate advertising need not be imbedded with another advertisement at all, however. The tobacco company (or any other company whose products may not be advertised directly in a given society) may give out free playing cards, for example, its familiar company symbol used as the pattern on the back of the cards. Any advertising technique of this kind would be considered surrogate advertising. Another challenge that liquor industry is facing is that the consumer groups, which were earlier targeted as one large demographic island, have been fragmented into distinct psychological groups. Unlike a decade ago, the consumers today have a number of options in terms of brands and segments. A fast emerging change is in terms of flavor substitution depending on consumption conditions. The generation Y consumers include a very young and skeptical group of people, who are defining their own world of drinking. They have a multitude of taste preferences that they like to be made available at bars and pubs. This makes it difficult for the alcohol companies to keep pace with their changing preferences.

Another challenge that liquor industry is facing is that the consumer groups, which were earlier targeted as one large demographic island, have been fragmented into distinct psychological groups. Unlike a decade ago, the consumers today have a number of options in terms of brands and segments. A fast emerging change is in terms of flavor substitution depending on consumption conditions. The generation Y consumers include a very young and skeptical group of people, who are defining their own world of drinking. They have a multitude of taste preferences that they like to be made available
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at bars and pubs. This makes it difficult for the alcohol companies to keep pace with their changing preferences.

So how are the liquor companies managing these challenges along with government laws and restrictions? From tropical fruit based drinks to Pepper Vodka, Organic beers and alternatives, the segment that defines new age beverage. Alcohol marketers have found that by blending the best of different categories, they can appeal to consumers who seek various benefits such as flavor as well as added health benefits. And by mixing it up, liquor marketers get a colorful palette of flavors never seen before. Furthermore, beverage marketers are increasingly trying to communicate with consumers on a personal level. For example, the Johnnie Walker Relationship Marketing Program called Journey of Taste has been implemented successfully in most of its markets. This mentor program (as it is usually called) features a guided Scotch whisky education to the consumers led by a qualified Johnnie Walker Ambassador. It not only allows the consumers to appreciate the Scotch whisky or the brand but also allows them to develop a long-term association with the brand. Guinness, a beer brand, is also entering the second year of its Believer mentor program designed to convert Guinness drinkers into effective brand ambassadors.

Nonetheless, there are conventional marketing techniques that the marketers use to revive their brands and capture younger markets. Cognacs or scotches suffer from a stodgy image that they are mostly consumed by older men. Hence, cognac makers Hennessy and Courvoisier have been trying to reach out to the younger market by building their brands in the entertainment industry and urban markets. Liquor marketers have also recognized that strong brand names, which deliver high sales and profits, have the potential to wave the magic wand on new products. The launch of the initial Courvoisier Autumn Collection marked the Liquor Companys attempt to transform it from being the worlds first cognac to an icon of fashion. The launch was part of a wider trend where makers of luxury brands try to capitalize on their labels by extending them into new areas of business.

However, there are also liquor marketers that are finding creative ways to play around government restrictions. In many countries, the government does not allow the advertisement of liquor on TV and other mass media. To counter this, the liquor industry has intentionally blurred the line between products by advertising cocktail mixers, soft
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drinks or soda water using the brand name of popular liquors. This phenomenon, known as surrogate advertising (duplicating the brand image of one product extensively to promote another product of the same brand) has become widespread in many countries and continues to gain momentum. For example, in India, the Bagpiper club soda advertisement featuring movie celebrities is similar to an earlier advertisement of Bagpiper whisky.

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INDIAN ALCOHOL INDUSTRY IN CONTEXT WITH SURROGATE ADVERTIZING.

In contemporary India, tendency of alcohol consumption has percolated down to youth. Media has played a leading role in encouraging the use of alcohol among the youth through portrayal of alcohol in congenial social settings, association of alcohol use with glamour and celebrity status and by using direct and indirect advertising. Age of initiation for alcohol use has progressively reduced in Kerala (India). In 1986, the age was 19. This was reduced to 17 in 1990 and further to 14 in 1994. Alcohol Industry is following exactly the same marketing and promotion tactics and strategies as were employed by the Tobacco Industry globally and especially in developing countries.

HOW DO LIQUOR COMPANIES DO SURROGATE ADVERTISING?

What they sell is different from what they offer

BRAND EXTENSION
Apple Juice Water Soda Mens Accessories Sporting Equipment Awards Web Sites Cassettes Fashion Weeks, Swimsuit Calendar

CORE BRAND
8 PM Contessa ACP Gilbeys Kingfisher Mc Dowells Directors Special Royal Challenge Teachers Imperial Blue Bacardi Kingfisher Blenders Pride

COMPANY
Radico Khaitan Jagjit Industries Guiness UDV UB Group UB Group Shaw Wallace Shaw Wallace Allied Domecq Seagrams Bacardi UB Group Seagrams
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Surrogate Advertising- Aristocrat a popular whisky brand is being advertised as Aristocrat Apple Juice. Mc. Dowells is advertised as sodas, Kingfisher has packaged water bottles. Some alcohol brands have introduced brand promotional items such as: Haywards 5000 has darting kits, Bacardi advertises through its Bacardi blast album and also advertises through parties tied up with rediff.com . Regulatory strategies for alcohol control thus will have to be formulated on same lines as Tobacco Control. This will require initiating efforts for alcohol control at national, regional and international levels. The liquor industry in India comprises the organized and unorganized sectors. The organized sectors include IMFL and the beer industry while the unorganized sector comprises of the market for country liquor. The size of the country liquor is approximately 40 times that of the IMFL market. The size of the ABs industry is estimated at Rs. 95 bn., while fermented drinks account for 35% of the ABs market, the rest is derived from Indian Made Foreign Liquor (IMFL) segment.

The UB group, consisting of McDowells Limited, UB Limited and Herbertsons Limited, dominate the liquor market and have a combined market share (in terms of sales value) aggregating 28%. The other major players in the segment include Shaw Wallace & Co. Limited, Jagatjit Industries Limited and Mohan Meakin Limited having market shares of 13%, 9% and 8% respectively. However, in terms of sales volumes, Balaji Distillers Ltd., an associate of UB Limited, has a market share of 21.4% followed by Jagatjit Industries Limited at 20.4% and Mohan Meakins Limited at 16.3%. Shaw Wallace & Co. Limited and Herbertsons Limited have 14.0% and 13.1% of market shares respectively.

The state of Maharashtra accounts for approximately 26% of the total market for liquor followed by the states of Tamil Nadu, Delhi, Calcutta and Rajasthan, which respectively accounted for 18%, 10%, 8% and 7% of the total market. The Government of Gujarat has always prohibited the sale of ABs in the state while in Andhra Pradesh (AP) and Haryana, prohibition has been frequently imposed and lifted. The frequent imposition and lifting of prohibition in certain states has destabilised the industrys growth and performance.

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STRATEGY :
As the demand in the ABs industry is primarily brand driven, manufacturers focus on brand promotion to increase their sales. The manufacturers also create various brands under a single product category in order to counter competition. However, there is a strict regulation on advertising and some states have even banned advertisements. Consequently, the companies have resorted to surrogate advertising through sponsorship of fashion shows and sport events.

The surrogates used by Smirnoff Vodka, Hayward's 5000, Royal Challenge Whiskey and Kingfisher beer advertisements ranged from audiocassettes, CDs and perfumes to golf accessories and mineral water. By August 2002, the I&B Ministry had banned 12 advertisements. Leading satellite TV channels, including Zee, Sony, STAR and Aaj Tak were issued show-cause notices asking them to explain their reason for carrying surrogate liquor advertisements. The channels were asked to adhere strictly to the Cable Television Regulation Act 1995.

As a result, Zee and STAR stopped telecasting the advertisements; Aaj Tak and Sony soon followed suit. In addition, the I&B Ministry hired a private monitoring agency to keep a watch on all advertisements for violations of the Act.

These developments led to heated debates over the issue of surrogate advertising by liquor companies. Though the liquor companies involved protested strongly against the I&B Ministry's decision, they had no choice, but to comply with the regulations. Analysts remarked that the government's policy was hypocritical. One said, "On the one hand they allow these 'socially bad' products to be manufactured and sold (in order to garner revenues) and then they deny the manufacturers the right to propagate knowledge of their products in order to drive sales. If something is bad and cannot be advertised, why allow it to be sold at all?"

Meanwhile, the government also seemed to be in dilemma. On the one hand, it had to encourage the sales of liquor and tobacco because they were the highest taxed sectors of the Indian economy. On the other hand, there was also the need to take the high moral ground and reduce the consumption of such products.
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The Indian liquor industry can be divided into two broad segments: Indian Made Foreign Liquor (IMFL) and country-made liquor. IMFL comprises alcoholic beverages that were developed abroad but are being made in India (whisky, rum, vodka, beer, gin and wine), while country-made liquor comprises alcoholic beverages made by local breweries. While many players were present in the IMFL segment, breweries in the unorganized sector accounted for almost 100% of the country-made liquor segment. During 1999-00, the Rs 60 billion Indian liquor industry grew at the rate of 10-12%. While IMFL was consumed by the middle and upper classes of society, the economically backward classes consumed country-made liquor. In India, 40-50% of all males and 1% of all females consumed alcohol. Almost 62% of the drinkers could be classified as light drinkers (i.e. social drinkers), 29% percent as moderate drinkers, and about 9% as hard drinkers. The organized industry was dominated by Shaw Wallace and United Breweries, which together accounted for around 53% of the total market. The government heavily regulated the liquor industry. Companies were not allowed to expand capacity without prior approval from the concerned state government. The distribution of liquor was also controlled in many states through auction system, the open-market system and the government-controlled system.

Liquor companies accused of indulging in surrogate advertising seem to be playing musical chairs as they move from one channel to another to evade the information and broadcasting (I&B) ministry. Sources in the government say as soon as the I&B ministry sends notices to broadcasters to withdraw their surrogate ads, they reappear on other channels. Sometimes the products are also changed. As for instance, if the surrogate product was apple juice which was objected to, it is later changed to soda.The government, for now, seems to have no option but to keep sending out show cause notices to the television channels. The apex body for broadcasting companies, the Indian Broadcasting Foundation (IBF), is taking a serious view of the matter. In a recent meeting with members of the Confederation of Indian Alcoholic Beverages Companies (CIABC) and other liquor companies such as Seagram and Jagatjit Industries, IBF informed them that they must withdraw all surrogate ads and should adhere to the rules prescribed in the Advertising Code.

A market survey in revealed that advertising has a direct influence on the consumption habits of 431 million people in India and an indirect impact on 275 million `aspirants' from the lower income group. Considering this and realising that nearly 50 per cent of the television owners have access to cable channels, there is no doubt that the hidden call
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for alcohol consumption behind the surrogate advertisements is not escaping the eyes of viewers in the world's fourth highest liquor-consuming country. Surrogate advertising defeats the very purpose of banning liquor advertisements.

It rules that that if liquor companies promote any juice, mineral water or soda, these should be shown in a proper manner and not as trimmings to liquor advertisement. These are welcome steps, but the key point lies in enforcement. If, in a free society, producers have a legitimate right to let consumers know about their products through advertisements, consumers have the right to information in adverts that are clear and honest. Surrogate advertisements are not only misleading, but also false and dishonest in many cases. With surrogate advertising so widespread, this is the moment to tackle the problem head-on.

THERE SHOULD BE STRINGENT REGULATORY MEASURES TO CURB THE PRACTICE, SUCH AS:

i) ii)

Making transparent laws banning surrogate advertisements for different products under a single brand names, by amending the Trade Marks Act, for instance; Providing teeth to the Advertising Standards Council of India to enable it take action against false and misleading advertisements, and keep a close vigil over clever evasion of the law;

iii) Asking the electronic and print media to adhere to the advertisement codes and not encourage surrogate advertisements; iv) Calling on the ASCI address complaints received from consumers against surrogate advertisements and take appropriate actions immediately; v) Creating a consumer awareness programme to help people understand the negative impact of surrogate advertisements;

vi) Adopting strict laws to penalize those companies featuring surrogate advertisements without any real existence of the product; and vii) Requiring advertising agencies to have full knowledge of the products under the same brand for which they are promoting advertisements, and taking legal actions against those agencies which design surrogate advertisements.
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If one believes that honesty is the best policy and truth ultimately gains, the best policy would be to stand up strongly to the dishonest practices of surrogate advertising.

With the Government trying to clamp down on surrogate advertising, liquor companies seem keen to bat out the ban. Even as liquor brands have traditionally been associated with up market sporting activities like golf, polo, derby and yachting, companies are now turning towards the game of the masses - cricket. In fact, the latter half of the current year will see liquor brands as the title sponsors of two major cricketing events featuring India. Immediately after the triangular series at Zimbabwe (of which Royal Stag was the associate sponsor), the India and Zimbabwe Test series will be called the Royal Stag Cup. Till date Royal Stag has used several international cricketers as brand endorsers. This is the first time the company has forayed into tournament sponsorship. Similarly, the ICC World XI Vs Australia series held Down Under was called the Johnnie Walker Super Series.

Meanwhile, Royal Stag has roped in Zimbabwean Vice-Captain, Heath Streak as their new Royal Stag brand ambassador. Other celebrity Royal Stag cricket endorsers include Australian Cricket captain Ricky Ponting, and India's ace offie Harbhajan Singh. The Information and Broadcasting (I&B) Ministry's efforts to ban surrogate advertising of liquor brands has reached a naught. A few months ago, it had sent out notices to various television channels to withdraw advertisements by liquor companies. But within a few weeks of the notices being issued, surrogate advertising made a comeback on television. In fact, a few liquor companies have been advertising during the ongoing cricket series as well.

The Rs 60,000-crore Indian beverage alcohol industry has always been operating in a restricted and controlled environment. It is a real shame that an industry that is a legitimate business in the country and which contributes a whopping Rs 22,000 crore just in revenues to the government, is not allowed to market its products freely and communicate to its consumers directly. This restrictive environment is also applicable to the beer and wine industry. Product advertising for liquor and cigarette companies is banned in the country since 1995 by Cable Television Network (Regulation) Act. According to Rule 7 (2) of the Act, no broadcaster is permitted to show advertisement which promotes directly or indirectly promotion, sale or consumption of cigarettes, tobacco products, wine, alcohol, liquor or
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other intoxicants, infant milk substitution, feeding bottle or infant food. This ban is now likely to be extended to advertising of extended brands.

In fact, recently the government of India has in a unilateral move sought an amendment in the Trade and Merchandise Marks Act of 1958 to explore possibilities of denying extension of registration of trademarks used for brand names of cigarettes, tobacco products, wine, alcohol, liquor and other intoxicants to other products.

This has ostensibly been done to check surrogate advertisements of other products of liquor companies. The sales volumes of these products advertised do not justify advertisement expenditure incurred by the companies, it is argued. The alcohol beverage industry is justifiably upset with the proposed axe on advertising and promotions of legitimate economic activity through trademark extensions. These should not be confused with surrogate advertising wherein no products may exist.

Freedom of commerce should be preserved and brand extensions of cigarette tobacco and liquor products should not be banned notwithstanding similar graphics, if they do not propagate smoking or drinking merely on the ground of the brand names being similar. The ban on advertising of alcohol beverage products has severely handicapped communication with consumers. The industry is naturally compelled to make the best use of the channels and media of communications still open to it. Companies with liquor brands are not advertising liquor products; instead they have extended the equity of their brands into other fields. Over a period of time these products have become independent businesses for companies. Some of the product extensions like water, soda, and music cassettes have sales which run into millions in value and volume. McDowell's sold 1.5 million cases of water and soda, through its 20 franchise plants. Water and soda are added to our core liquor product, they are legitimate businesses.

Umbrella branding is a known phenomenon in marketing and today, we have omnibus brands like Nestle, Amul, Samsung etc which sell many products under one brand
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umbrella. Surely, the reverse logic would also apply that if any of the above-exemplified companies were to come out with a beverage alcohol, their original products cannot be banned.

As far as co-relation between value of goods being sold and quantum of advertisement is concerned, this is a commercial decision why companies spend more than their turnover on a set of products. However, for brand building exercises, huge investments are undertaken and they at times can exceed the value of the sales turnover.

The Advertising Standards Council of India (ASCI) has clarified that as per its code, the mere use of a brand name or company name that may also be applied to a product whose advertising is restricted or prohibited is not reason to find the advertisement objectionable provided the advertisement is not objectionable and the product is produced and distributed in reasonable quantities and the objectionable advertisement does not contain direct or indirect cues for the product that which is not allowed to be advertised.

The industry is fully sensitive to the need for shielding the young and the impressionable from getting carried away. Rather than an outright ban on advertising, the government should endorse the Code of Conduct which specifies the timings when the ad should be aired, non-targeting of children, disallowing teenagers in ads etc.

Instead of an outright ban, the industry has been underlining the need for dialogue and subsequent guidelines outlining dos and donts of advertising. It could specify timings when the ads should be aired, not target children, disallow teenagers in ads, not allow ads that are glamorous or suggest increased attractiveness to the opposite sex after alcohol consumption.

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Analysis on basis of collecting secondary information about marketing efforts by the three major players in the Indian alcohol industry:

SAB MILLER UB GROUP SHAW WALLACE

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SAB MILLER

CHALLENGES FACED IN LIQUOR INDUSTRY:

There are restrictions on advertising, and they do reduce the efficiency of communicating the brand positioning. Every market has its own facilitators and its own barriers, and the role of marketing is to maximise efficiency and effectiveness within the defined framework. They try to ensure that each brand is distinctly positioned with low reliance on fine nuances. They try to engage the consumers at various points of influence touch points through a 360-degree programme.

PROMOTIONAL ACTIVITIES OF THE COMPANY:

Castle Loud is a property we are actively building. Its a music property they are taking across the country again this year. They are bringing in DJs from all over the world and Loud by itself is a property that is present in several countries across the world. They have, of course, Indianised it to suit the market. Castle Loud is an initiative of Castle Lager to bring a perfect balance of music and beer.

CELEBRITY ENDORSERS:

They help cut through the clutter. If the endorser has a perfect brand fit, it also has a constructive rub-off effect. However, with a limited number of celebrities with mass appeal, and a large number of mass brands trying to use them, we have reached a situation where the same celebrities are endorsing many brands, and often brands with divergent image and personality. The effectiveness and efficiency of such
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endorsement is a matter of debate. They have used some of them in the past. They had Manoj Bajpai for Knock Out and Darshan now endorses our brand in the Karnataka market. It really depends on the fit between the brand and the endorsers. Also, these were not people who were into endorsing a whole bunch of products, so the ability to break through the clutter was high.

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UB GROUP
PROMOTIONAL ACTIVITIES ASSOCIATED WITH KINGFISHER

Fashion. It has an intangible edge that appeals to the youth. Not everybody can wear fashionable clothes and not everybody can be a fashion model but everyone aspires to have that kind of image. Kingfisher is firmly entrenched in that kind of environment. They have instituted the fashion awards, the first of its kind in the country. In terms of brand building, they have associated ourselves with a property that appeals to the youth. Apart from this, we have time to time advertised

THE PROHIBITION ON ADVERTISING ALCOHOL AFFECTED UB

It has affected not just UB but the entire industry. It is important to realize that the law of the land and we need to follow it. Apart from that, they have realized that they cant sit back and stop the brand building process. Hence, advertising and brand building continues. While they cannot advertise alcohol, they have successfully built brand through associations. A lot of companies, they dont want to name them, do this by using things like branded glasses, which is not truly credible. But they, on the other hand, they do fashion, do sports. In fact, water is a very successful brand in its segment. They actually sell a lot of water in this country. They are, in fact, the fourth or fifth largest water brand in India. In the recently held marathon in Mumbai, Kingfisher was the official water sponsor. They make large quantities of water. They have an organization that does water, and obviously we use that to build our brand. If direct advertising were allowed, it would definitely help! Then you could talk to your consumers directly saying that Kingfisher beer stands for all the values we are talking about, that it is fashionable, trendy and exciting. We may still continue all our sponsorships. A lot of big brands, take Budweiser for example, do a lot of advertising and undertake sponsorships. They would have added this dimension to our advertising to support our brand building.
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 ADVERTISING BEARING ON SALES

Advertising has a direct impact on any business. The only difference between the conventional advertising of a soft drink, garment or soap and us is that while they can communicate directly about their brand and talk about its virtue, brand and benefits, but they cant. They have to do it through associations and events. When they advertise that Kingfisher West Bengal is Indias best football club, and a winner of many tournaments, also Kingfisher is the best beer in the country.

CHANGES AT THE FRONT-END

It is changing, but the change is slow. There are a number of large department stores like Food World that retail beer. The shopping experience in say a Food World is far superior to going to a regular liquor store. So, they would think that going forward there will be a number of such shops coming up. Also, there are a number of very classy, up-market and stylish bars and lounges opening up, particularly in the larger cities and that will also accelerate as we go forward. The whole experience of purchasing and consumption of beer is going to improve.

IMPORTANCE OF POINT OF PURCHASE ADVERTISING FOR BEER

It is very important. Since direct advertising is limited, the point of sale can make a difference. When a consumer walks into a store, he comes with a basket of brands in his mind. Not everyone walks in thinking I want brand XYZ. In such a situation, good quality as also visibility of the item could make him change his mind.

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SHAW WALLACE
CHALLENGES OF LIQUOR ADVERTISING
As a leading alcoholic beverage company in the country. They are always on a lookout for new and innovative ways to engage our consumers through right communication. In doing so, they are always guided by the code developed by the Confederation of Indian Alcoholic Beverages Companies (CIABC), the apex association of alco-bev companies of which Shaw Wallace is a member. So long as our communication meets the standards and conditions of the CIABC code, we are keen on evolving new avenues for brand expression. Shaw Wallace is becoming much more of a marketing driven company and is increasingly taking the route of imaginative promotions, events and associations for building brands. While above the line spend is slated to go up from the existing 30 per cent to 60 per cent, below the line spend will be gradually reduced from the current 70 per cent to 40 per cent by the end of current fiscal. This represents a marked shift in the marketing spend of the company and a conscious move from a brand push policy to a brand pull policy. Brand image, highlighted through association with relevant events and sponsorships, has been identified as the most important factor in fuelling consumers' demand. Accordingly, as a part of the overall marketing mix, Shaw Wallace is positioning its brands by associating with world-class events. The activities that are woven around brands need to embody respective brands' attributes. For instance an association with golf helps Shaw Wallace impart an aura of sophistication and premium ness, the attributes that Royal Challenge stands for. They would like to reiterate that Shaw Wallace focuses on genuine and logical brand extension rather than surrogate advertising and all our brand communication will reflect this bias.

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 IMPORTANCE OF ADVERTISING TO THE LIQUOR INDUSTRY

Communication is very important to project the brand attributes. More than any thing else, consumers buy a product for what it stands for. This is all the more true in case of lifestyle products like liquor where positioning of one brand puts it apart from other similar brands. Advertising is right communication help in imparting that distinctive edge.

FUTURE PROSPECT
The line spending is increasing given the requirements of the market place. The BTL spend will be about 40% of our overall marketing spend this year. They are constantly working to ensure that all the brands remain relevant and contemporary and any new commercials or campaigns made will be pursuant to that objective.

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CONCLUSION
It is generally recognized that surrogate advertising is even more influencing than normal advertising, but the liquor industry has no choice. Of course, this strategy assumes that the brand and, in some cases, the advertisements, are already well known. Otherwise, such advertising may not serve any purpose. It is difficult to evaluate the effectiveness of surrogate advertising. So far as the present study is concerned , it reveals that for many liquor consumers surrogate advertising is even more influencing than normal advertising, whereas for many others surrogate advertising is less or non influencing than normal advertising. when shedding light in the Indian alcohol advertising climate , only surrogate advertising has been resorted to primarily reason being the ban on direct advertisements and the strong law of not promoting anything which may lead to social controversies. Hence it is seen that surrogate advertising is the only way out. Were the products are advertised indirectly.

Earlier very few liquor companies stepped in as sponsors for surrogate advertising. However, today, more and more companies are coming forward as sponsors to get associated with the elite lifestyle image for their brand building. Which shows that they have realized that it is the only form how can they can market themselves making surrogate advertising exemplary. Instead of an outright ban of surrogate advertising, liquor companies need to underline the need for dialogue and subsequent guidelines outlining dos and donts of advertising. It could specify timings when the ads should be aired, not target children, disallow teenagers in ads, not allow ads that are glamorous or suggest increased attractiveness to the opposite sex after alcohol consumption. The above are the consequences of the impact borne by the surrogate advertisers on the consumers , hence it can be referred to as the role played by surrogate advertisers , where it is concluded that It has to be regulated on various areas .

LIMITATIONS OF THE STUDY

Quite characteristically, academic research is full of limitations, particularly in the contexts of time and resources provided. The present researcher also confronted this
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problem. Thus due to the limitation of resources, the study had to be concluded with only secondary data findings and lesser time provided for the completion of the work led to absence of deep analysis of the acquired data.

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BIBLIOGRAPHY
BOOKS & JOURNALS :
Barnes James G and Bourgeodis and Jacues C , Does Advertising Increase Alcohol Consumption?, Journal of Advertising Research, Vol. 17, No. 3, pp. 35-43. Pradeep S. Mehta , Surrogate AdvertisingNeeded, A Spirited Attack, The Hindu Business Line, May 23. Zinkhan George, Michael Bisesi and Mary Jane Saxton MBAs Changing Attitudes Toward Marketing Dilemmas: , Journal of Business Ethics, Vol. 8 (December), pp. 963-974. Philip Kotler, Marketing Management, Pearson/Prentice Hall of India, New Delhi K. Karunakaran, Marketing Management, Himalaya Publishing House, Mumbai Belch and Belch, Advertising and Promotion, Tata McGraw Hill, New Delhi.

INTERNET:

http://www.isrj.net/june/2011/Commerce_Surrogate_Advertising.html http://www.ascionline.org/index.php/asci-industry/22-cat-industry-rules/16-asci-rules http://www.legalserviceindia.com/article/l346-Surrogate-Advertisements.html http://advertisinglaw.wordpress.com/2006/01/20/hello-world/www.mba.iiita.ac.in http://advertisinglaw.wordpress.com/2006/01/23/group-launches-website-to-counterdtc-ads/www.deccanherald.com http://www.icmrindia.org/casestudies/Case_Studies.asp?cat=Business%20Ethics http://www.iosworld.org/media_coverage.php

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