Vows Continued Use of Outdated Product Claim; Case Referred to FTC

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CHICAGO ( -- Two government agencies last week were asked to step into a yearlong advertising dispute between
Click to see full image of ad with claim.

rival luxury vodka brands after the distributor of Grey Goose refused to abandon the claim it's "Rated the No. 1 Tasting Vodka in the World."

'Inaccurate and misleading'
Sidney Frank Importing Co. said it won't comply with a National Advertising Review Board ruling to halt ads that use Beverage Testing Institute data from 1998 to compare Millennium Import Co.'s Belvedere with its brand. The industry trade panel judged the ads "inaccurate and misleading" because Belvedere has fared better in subsequent Beverage Institute tastings. Millennium filed its case with the National Advertising Division in August 2002; the NARB decision followed an earlier ruling by the National Advertising Division of the Better Business Bureau.

Can't dictate ad content
Sidney Frank argued that because the Beverage Institute doesn't allow advertisers to use cross-test comparisons, the NARB can't dictate that more current Belvedere scores be used in the Grey Goose ads. Grey Goose was last tested in 1998, and Sidney Frank said they haven't been invited to test in recent years, a point Millennium's camp disputes.

"Just because [the NARB has] made a determination, we're not bound to follow it," said Lee Einsidler, executive vice president of sales and marketing for Sidney Frank. "We're following BTI guidelines that say no commingling, and [the NARB] is asking us to violate the BTI guidelines." He added that "if [Belvedere is] concerned about their new rankings, they should go advertise that."

Case referred to FTC
Since New Rochelle, N.Y.-based Sidney Frank told the NARB that it has no intention of complying, the board referred the case to the Federal Trade Commission and the Alcohol and Tobacco Tax and Trade Bureau (a spinoff of the Bureau of Alcohol, Tobacco and Firearms). Now that the case has been referred, Sidney Frank could face stiff penalties, said Jim Guthrie, president of the National Advertising Review Council, which is the policy-making body over the NAD, NARB and the Children's Advertising Review Unit.

Government referrals aren't something the typically civilized arbitration bodies often face. In the 32 years the NARB and NAD have existed, marketers in 95% of cases in these voluntary arbitration processes have complied with rulings.

Both sides have much to gain or lose. Vodka is the largest and fastest-growing spirits category, with 2002 sales up 3.5% to 39.1 million 9-liter cases over 2001, according to Adams Beverage Group.

Sales comparisons
Polish brand Belvedere sold 375,000 cases in 2002 and has grown an average of 35% over the past five years. However, upstart Grey Goose, a 6-year-old French bottled brand, has exploded past the competition from a paltry 50,000 cases in 1997 to 1.15 million 9-liter cases last year, Adams said.

For now, Steve Gill, president of the Millennium, a unit of Minneapolis-based Phillips Beverage Co, is letting the process take its course. "We're playing by the rules and they are not. Their behavior is shameful and it's time somebody stops them."

While arbitration is a far less expensive route for advertisers, in this case, time may be on the Sidney Frank side, according to an industry executive knowledgeable about the government processes. "It would be months before anything would happen," the executive said. "If they've got their heels dug in and if they calculated it's in their best interest to drag it out, they can drag it out."

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