At least one cable network has said it will accept liquor ads, giving distilled spirits marketers their first national TV outlet since repealing a decades-old ban on TV and radio ads.
Black Entertainment Television's decision to run liquor commercials came one day after the Distilled Spirits Council of the U.S. Nov. 7 voted unanimously to drop the 60-year voluntary ban, a move that drew bitter criticism from the Federal Communications Commission and others.
But while some spirits marketers are naming products they hope to advertise on TV in time for holiday purchases and others are rebudgeting the $228 million the industry's players spend annually on print and outdoor ads, BET so far seems to be alone on the national media level.
Local TV and radio stations in some markets have already been running ads for various Seagram Co. brands. But despite the potential to open up a new category that could represent hundreds of millions of dollars in spending, the Big Four broadcast TV networks, leading radio networks and several other cable networks have said they won't accept liquor ads.
FEAR OF LOSING MONEY
Their reluctance is fueled in part by a fear of losing money from beer and wine marketers if the government seeks to ban TV and radio advertising of all alcoholic beverages.
But BET CEO Robert Johnson sides with liquor marketers in saying that last week's vote by DISCUS simply levels the competitive playing field.
"We agreed . . . that spirits should be allowed to advertise just as beer and wine are," said Mr. Johnson, adding that BET has already talked to several ad agencies that handle liquor brands.
Mr. Johnson said he was particularly interested in matching spirits advertisers with the network's new 24-hour jazz channel.
"Liquor companies advertise a lot at jazz festivals," he said. "It's a revenue stream that's big at a lot of black magazines."
FCC Chairman Reed Hundt, while repeatedly blasting the distilled spirits industry's move at a news conference Nov. 8, sidestepped questions about how the FCC could regulate liquor advertising without also regulating the more than $750 million in beer and wine broadcast advertising.
"I would not like to see these ads on television," said Mr. Hundt. "Where we are is the distilled spirits industry is showing some of the long green to broadcasters, and we are all trying to save this country."
Mr. Hundt finally said that there are strength differences between beer and spirits that could offer a scientific basis for a distinction. But he also admitted he was hopeful his use of a "bullying pulpit" would enable the FCC to avoid taking regulatory measures by convincing TV stations not to take the ads.
DISCUS waited less than 96 hours after the election to change its voluntary industry Code of Good Practice. It kept in place portions of the code blocking the use of cartoon characters and other images that appeal to children.
Seagram, a member company, broke the ban earlier this year. The council's other members include Brown-Forman Corp., Bacardi Corp., Grand Met's IDV Americas (which includes Heublein, Paddington and Carillon), Allied-Domecq, Schieffelin & Somerset Co. and Jim Beam Brands.
INDUSTRY SHARE DROP
DISCUS officials said the industry felt it was hurt by beer and wine competitors, to which it has been losing share in recent years.
"They have been on television all this time and we felt we should get equal access," said DISCUS President Fred Meister.
Roy Burry, analyst for Oppenheimer & Co., supported that view.
"The growth and performance of spirits marketers is far behind those of other segments," he said. "You can make a strong argument that is at least partly due to their inability to advertise."
Spirits marketers had been expecting the change and were already reviewing ad plans.
Schieffelin & Somerset said it hopes to break spots for Johnnie Walker Black whisky in time for fourth-quarter sales growth.
"We've obviously been keeping a close eye on this with Seagram's activity and preparing for this," a spokeswoman said. "We have the advantage of having done ads in other parts of the world, so we can pull creative for the brand."
A spokesman for IDV Americas said advertising is being considered for several brands.
IDV EYEING BRANDS
"Smirnoff, Jose Cuervo and Bailey's are among our big advertisers currently," he said. "It certainly would be fair to say those are among the brands we're taking a look at." Brown-Forman is still weighing its options.
"There are number of questions still to be answered, the biggest being budget," a spokesman said. "Obviously for fiscal '96, TV was not a part of that."
He said Brown-Forman might draw on its European broadcast and cinema ads for Jack Daniel's and Southern Comfort for domestic creative. He added that Early Times has been successful in Japan with broadcast, but stopped short of specifying which of the three might be first on a U.S. list.
Allied-Domecq, which has advertised its Presidente brandy on the Telemundo Hispanic network for the past eight years, with additional Hispanic radio support for Don Pedro brandy and Hornitos tequila, has not committed to general-market broadcast, according to a spokeswoman.
DOMECQ BUYS POSSIBLE
She said it was "entirely possible" Domecq would consider broadcast buys for its largest brands, including Kahlua, Beef-eater gin and Sauza tequila, though she cautioned any buy could be small.
"If you look at the total amount of media expenditure for spirits companies right now, you can not make a rational argument that they are suddenly going to pour boatloads of money into broadcast," she said.
Although a Seagram Americas spokeswoman said the company supported the DISCUS move, "It really doesn't change our plans one way or the other."
One group definitely not thrilled by the decision is magazine publishers, who currently provide the spirits industry with its primary national media outlet. Liquor spending in magazines rose 20% last year to $192.6 million, making it the 15th-largest category by revenue. Some categories of magazines, including men's titles and those aimed at the gay market, rely heavily on liquor ads.
James Guthrie, exec VP-marketing development, Magazine Publishers of America, said print is still the best medium for targeting adult audiences.
"On TV, there can be a lot of spillover" to viewers under the legal drinking age, he said. "Careful targeting may be the single most important factor in preserving [spirits marketers'] ability to advertise without further government regulation." he said.
MADD MAD AT BAN DROP
As expected, dropping the ban angered critics of alcohol advertising, who urged the FCC to act.
"We have been concerned about the beer ads as well," said Katherine Prescott, president of Mothers Against Drunk Driving. "This makes the situation even worse because the companies within the industry will all be wanting to run ads. It opens a floodgate."
U.S. Rep. Joe Kennedy, (D., Mass.), who has offered legislation to ban the ads, called the DISCUS decision "outrageous" and said he will "vigorously push ahead with legislation that will give this code the force of law."
While broadcasters would seem to have the most to gain, some actually stated opposition to lifting the ban.
"Despite the National Association of Broadcasters' staunch support of the First Amendment rights of broadcasters to advertise legal products, we are disappointed with DISCUS' decision to end its voluntary code," said NAB President-CEO Eddie Fritts.
Beer and wine marketers generally declined comment, but the National Beer Wholesalers Association sought to refute the argument that all alcohol ads should be treated equally.
`ALCOHOL IS ALCOHOL IS ALCOHOL'
Association President Ron Sarasin said in a statement, "The characterization by the distillers that `alcohol is alcohol is alcohol' is just plain foolish. Ounce for ounce, liquor contains eight or nine times more alcohol than beer."
Some observers believe spirits marketers will succeed in getting a level playing field whether or not the move to advertise on TV and radio succeeds.
"It's a very sly move," said Tom Bedecarre, chairman of Citron Haligman Bedecarre, San Francisco, agency for E&J Gallo Winery's Gossamer Bay. "Either they win or everyone goes down with them."
Contributing: Michael Wilke, Alice Z. Cuneo and Keith J. Kelly
Copyright November 1996, Crain Communications Inc.