FTC turns ad scrutiny to malt liquor brewer

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The Federal Trade Commission is looking at the placement of certain Stroh Brewery Co. TV commercials to see if the audience is made up of significant numbers of viewers under 21. If so, the FTC also wants to know the effectiveness of the ads--primarily for Stroh's Schlitz malt liquor brand--on those viewers, said an executive with knowledge of the investigation. The FTC also has similar questions about the placement of certain hard-liquor TV commercials from Seagram Americas. But it is the FTC investigation of Stroh that is particularly significant, because for the first time it directly draws beer marketers into the liquor-advertising fray. Beer marketers spent $736.1 million on advertising last year, 88% of which was on electronic media, according to Competitive Media Reporting.


Stroh advertises Schlitz malt liquor on a number of local broadcast and cable TV outlets. Black Entertainment Television, the only national cable network to date to say it will accept hard-liquor ads, is currently running a schedule for two Schlitz malt liquor spots, both placed by Burrell Communications, Chicago. The spots are seen only after 10 p.m. on the East Coast, said a BET executive, primarily in comedy programming. However, since BET only has one satellite source for program delivery, those spots are seen just after 7 p.m. on the West Coast. Seagram has targeted sports and prime time for most of its ads for Crown Royal Canadian whiskey and Chivas Regal scotch (AA, Nov. 18). Grey Advertising, New York, places the Crown Royal commercials; TBWA Chiat/Day buys the time for the Chivas Regal commercials. Advertising in sports programming, with its big percentage of underage viewers, has been a mainstay of beer marketers for years.


"I hope I'm not seeing my worst nightmare come true," said one TV network executive, referring to a government investigation of beer marketing on TV. "The last thing we need is some sort of a clampdown on beer advertising, especially in sports. That's always been the risk of what Seagram's been doing." The FTC is investigating specific ad placements that may or may not end up affecting other advertising in the category. "You must remember that the FTC starts many investigations and ends up never finding anything wrong," said Dan Jaffe, exec VP of the Association of National Advertisers. The FTC would neither confirm nor deny an investigation. Julius Genachowski, counsel to Federal Communications Commission Chairman Reed Hundt, said the FCC was still focusing on hard-liquor ads, not beer. "The chairman is concerned that the lifting of the voluntary ban on radio and TV ads for hard liquor broke a status quo that had been in place for close to 50 years," Mr. Genachowski said.


He said the FCC chairman made two important distinctions between liquor and beer: they are taxed differently, and grocery stores in most states sell beer but not liquor. Mr. Hundt is struggling to get a majority of FCC commissioners to agree with him that the FCC is the proper agency to investigate hard-liquor commercials. Some beer industry observers said it was possible that Stroh, the nation's No. 4 brewery, was singled out by the FTC because of its high concentration of sales in the malt-liquor segment. The Wall Street Journal first reported the FTC investigation last week. With its acquisition of G. Heileman Brewing Co. in July, Stroh now controls approximately 45% of the malt liquor segment and seven of the top 12 brands, according to Impact Databank. Schlitz malt liquor is the segment's No. 3-selling brand; Heileman's Colt 45 malt liquor is No. 2. The leading brand, Olde English "800," is marketed by Pabst Brewing Co.


Although malt liquor sales account for only 8% of total beer sales, the segment has come under fire because a lion's share of its marketing dollars target minority groups, including African-Americans. The implication, said one beer marketing expert, is the FTC is not only scrutinizing how youths in general might be affected by alcoholic beverage advertising, but specifically which youths. Stroh officials did not return phone calls. Agencies for Stroh's brands referred calls back to Stroh.

Copyright November 1996, Crain Communications Inc.

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