Economics of Alcohol and Tobacco - Alcohol And Tobacco Advertising

industry metric tons ads

Alcohol Advertising

The Center for Science in the Public Interest (CSPI), a nonprofit health-advocacy organization based in Washington, D.C., estimated in 2001 that the alcohol industry spends nearly $3 billion a year on marketing and promotion. In 2003 alcohol advertising expenditures accounted for approximately $1.7 billion of marketing and promotion expenses.

According to data from Adams Business Media available through the CSPI Alcohol Policies Project, the beer industry spent approximately $1.2 billion in 2002 on advertising, up from $799.7 million in 1999. The liquor industry spent $408.1 million, up from $321.4 million in 1999. The wine industry spent $122.4 million, up from $120.5 million in 1995.

The beer industry focuses most of its advertising dollars on television, the wine industry focuses primarily on both print media (magazines, newspapers, and bill-boards) and television. Traditionally the liquor industry has focused its advertising primarily on print media, but spending on television and radio advertising rose substantially between 1999 and 2002. This dramatic increase is largely the result of the liquor industry's decision to lift its self-imposed ban on radio and television advertising.

LIFTING THE BAN.

The distilled spirits industry, in a self-imposed ban, had not advertised on television and radio for fifty years. In November 1996, however, the Distilled Spirits Council of the United States (DISCUS) announced that it had revised its advertising code and lifted the voluntary ban. DISCUS president and CEO Fred A. Meister said, "The absence of spirits from television and radio has contributed to the mistaken perception that spirits are somehow harder or worse than beer or wine and thus deserving of harsher social, political, and legal treatment." Meister continued, "Distilled spirits advertisement will continue to be responsible, dignified, and tasteful messages for adults and will avoid targeting those under the legal purchase age, regardless of the medium."

In 2001 NBC became the first broadcaster to end the ban on hard liquor advertising. It offered some restrictions: the ads would run only after 9 p.m. and only on programs where at least 85% of viewers are at least

TABLE 7.8
Tobacco area, yield, and production worldwide, by country, 2001-03

Area harvested Yield per hectare Productionb
2001 2002 2003a 2001 2002 2003a 2001 2002 2003a
Continent and country Hectares Hectares Hectares Metric tons Metric tons Metric tons Metric tons Metric tons Metric tons
North America:
Canada 25,091 25,091 25,091 2.12 1.95 1.70 53,112 49,015 42,683
Mexico 17,851 10,908 10,828 1.90 2.05 2.07 33,842 22,322 22,415
United States 174,992 173,782 173,782 2.57 2.32 2.32 449,745 403,000 403,518
Total 217,934 209,781 35,919 2.46 2.26 3.05 536,699 474,337 468,616
South America:
Argentina 60,000 65,500 72,100 1.64 1.95 1.61 98,110 127,500 116,000
Bolivia 1,060 1,060 1,060 0.92 0.92 0.92 980 980 980
Brazil 328,000 377,000 426,400 1.65 1.79 1.49 542,400 674,000 636,700
Chile 2,509 2,509 2,509 3.23 3.23 3.23 8,100 8,100 8,100
Colombia 23,000 23,000 23,000 1.83 1.83 1.83 42,000 42,000 42,000
Ecuador 1,774 1,774 1,774 0.62 0.62 0.62 1,100 1,100 1,100
Guyana 100 100 100 1.00 1.00 1.00 100 100 100
Paraguay 4,823 4,823 4,823 1.93 1.93 1.93 9,324 9,324 9,324
Peru 2,500 2,500 2,500 5.08 5.08 5.08 12,707 12,707 12,707
Uruguay 830 830 830 3.75 3.75 3.75 3,111 3,111 3,111
Venezuela 6,000 6,000 6,000 2.04 2.04 2.04 12,222 12,222 12,222
Total 430,596 485,096 541,096 1.70 1.84 1.56 730,154 891,144 842,344
Central America:
Costa Rica 105 105 105 1.85 1.85 1.85 194 194 194
El Salvador 600 600 600 1.95 1.95 1.95 1,167 1,167 1,167
Guatemala 8,793 9,232 9,232 2.22 2.22 2.22 19,562 20,540 20,540
Honduras 5,157 5,157 5,157 1.78 1.78 1.78 9,177 9,177 9,177
Nicaragua 844 844 844 1.60 1.60 1.60 1,349 1,349 1,349
Panama 1,160 1,160 1,160 2.04 2.04 2.04 2,367 2,367 2,367
Total 16,659 17,098 17,098 2.03 2.03 2.03 33,816 34,794 34,794
Caribbean:
Cuba 45,000 45,000 45,000 0.78 0.78 0.78 35,000 35,000 35,000
Dominican Rep 12,000 9,200 7,350 1.75 1.74 1.96 21,000 16,000 14,400
Haiti 400 400 400 1.53 1.53 1.53 611 611 611
Jamaica 1,175 1,175 1,175 1.99 1.99 1.99 2,339 2,339 2,339
St. Vincent 70 70 70 1.00 1.00 1.00 70 70 70
Trinidad & Tob. 100 100 100 1.70 1.70 1.70 170 170 170
Total 58,745 55,945 54,095 1.01 0.97 0.97 59,190 54,190 52,590
European Union:
Austria 115 115 115 1.74 1.74 1.74 200 200 200
Belgium-Lux 320 320 320 3.69 3.69 3.69 1,180 1,180 1,180
France 8,940 8,800 8,700 2.77 2.75 2.87 24,723 24,200 25,000
Germany 4,623 4,665 4,740 2.35 2.39 2.34 10,864 11,150 11,100
Greece 57,000 57,000 57,000 2.21 2.16 2.18 126,000 123,000 124,000
Italy 38,950 37,676 36,800 3.38 3.39 3.40 131,761 127,600 125,000
Portugal 2,105 2,100 2,100 2.90 2.91 2.91 6,111 6,111 6,111
Spain 12,669 12,430 12,250 3.32 3.35 3.35 42,100 41,650 41,000
Total 124,722 123,106 122,025 2.75 2.72 2.73 342,939 335,091 333,591
Western Europe:
Switzerland 635 635 635 2.09 2.09 2.09 1,325 1,325 1,325
Eastern Europe:
Albania 7,300 7,300 7,300 1.10 1.10 1.10 8,000 8,000 8,000
Bulgaria 32,460 37,260 37,260 1.26 1.35 1.35 40,885 50,210 50,210
Croatia 5,850 6,700 5,800 2.30 2.23 2.29 13,455 14,961 13,282
Hungary 5,100 5,500 5,800 2.14 1.94 2.07 10,900 10,650 12,000
Macedonia (Skopje) 22,000 22,000 22,000 1.41 1.41 1.41 31,111 31,111 31,111
Poland 12,600 11,300 10,800 1.98 2.12 2.04 25,000 24,000 22,000
Romania 12,000 12,000 12,000 1.23 1.23 1.23 14,750 14,750 14,750
Slovakia 2,000 2,000 2,000 1.75 1.75 1.75 3,500 3,500 3,500
Yugoslavia 6,200 6,200 6,200 1.23 1.23 1.23 7,604 7,604 7,604
Total 105,510 110,260 109,160 1.47 1.49 1.49 155,205 164,786 162,457

twenty-one years of age. Four months of ads promoting responsible drinking would precede the regular liquor spots. The broadcaster's decision was met with nearly universal derision, and a short time later NBC returned to its ban on hard liquor advertisements.

REACTIONS TO LIFTING THE BAN.

President Bill Clinton called the decision to end the fifty-year-old ban on alcohol advertising a "simply irresponsible move" that would make the job of rearing children harder. In April 1997 he called for an inquiry by the Federal

TABLE 7.8
Tobacco area, yield, and production worldwide, by country, 2001-03 [CONTINUED]

Area harvested Yield per hectare Productionb
2001 2002 2003a 2001 2002 2003a 2001 2002 2003a
Continent and country Hectares Hectares Hectares Metric tons Metric tons Metric tons Metric tons Metric tons Metric tons
FSU-12:c
Armenia 4,304 4,304 4,304 2.79 2.32 2.32 12,000 10,000 10,000
Azerbaijan 6,000 6,000 6,000 2.00 0.50 0.50 12,000 3,000 3,000
Belarus 800 800 800 1.75 1.75 1.75 1,400 1,400 1,400
Georgia 2,100 2,100 2,100 2.38 2.38 2.38 5,000 5,000 5,000
Kazakhstan 4,500 4,500 4,500 1.84 1.84 1.84 8,300 8,300 8,300
Kyrgyzstan 14,500 14,500 14,500 2.64 2.64 2.64 38,333 38,333 38,333
Moldova 25,000 25,000 25,000 0.60 0.48 0.48 15,000 12,000 12,000
Russia 2,000 2,100 2,200 0.90 0.90 0.91 1,800 1,900 2,000
Tajikistan 3,200 3,200 3,200 2.50 2.50 2.50 8,000 8,000 8,000
Turkmenistan 1,600 1,600 1,600 2.24 2.08 2.08 3,578 3,333 3,333
Ukraine 4,500 4,500 4,500 0.99 0.99 0.99 4,444 4,444 4,444
Uzbekistan 6,700 6,700 6,700 3.28 3.28 3.28 22,000 22,000 22,000
Total 75,204 75,304 75,404 1.75 1.56 1.56 131,855 117,710 117,810
North Africa:
Algeria 5,700 5,700 5,700 1.26 1.26 1.26 7,200 7,200 7,200
Libya 650 650 650 2.56 2.56 2.56 1,667 1,667 1,667
Morocco 5,948 5,948 5,948 1.21 1.21 1.21 7,194 7,194 7,194
Tunisia 3,100 4,000 4,000 1.79 1.39 1.39 5,556 5,556 5,556
Total 15,398 16,298 16,298 1.40 1.33 1.33 21,617 21,617 21,617
Other Africa:
Angola 3,950 3,950 3,950 0.99 0.99 0.99 3,900 3,900 3,900
Benin 917 917 917 0.77 0.77 0.77 702 702 702
Burundi 705 705 705 1.00 1.00 1.00 705 705 705
Cameroon 3,400 3,400 3,400 1.38 1.38 1.38 4,700 4,700 4,700
Central African Rep 600 600 600 0.83 0.83 0.83 500 500 500
Chad 145 145 145 1.38 1.38 1.38 200 200 200
Congo (Brazzaville) 4,000 4,000 4,000 0.45 0.45 0.45 1,800 1,800 1,800
Cote d'lvoire 3,700 3,700 3,700 1.11 1.11 1.11 4,110 4,110 4,110
Ethiopia 20,000 20,000 20,000 0.60 0.60 0.60 12,000 12,000 12,000
Ghana 4,500 4,500 4,500 0.74 0.74 0.74 3,333 3,333 3,333
Kenya 3,950 3,950 3,950 0.38 0.38 0.38 1,500 1,500 1,500
Liberia 14,500 14,500 14,500 1.38 1.38 1.38 20,000 20,000 20,000
Madagascar 10 10 10 1.00 1.00 1.00 10 10 10
Malawi 2,110 2,110 2,110 1.05 1.05 1.05 2,222 2,222 2,222
Mali 100,200 100,200 100,200 1.24 1.38 1.36 124,409 138,113 136,200
Mauritius 824 824 824 1.35 1.35 1.35 1,115 1,115 1,115
Mozambique 410 410 410 1.76 1.76 1.76 722 722 722
Niger 7,000 7,000 7,000 1.50 1.50 1.50 10,522 10,522 10,522
Nigeria 1,000 1,000 1,000 0.93 0.93 0.93 930 930 930
Reunion 10,000 10,000 10,000 2.10 2.10 2.10 21,000 21,000 21,000
Sierra Leone 200 2,000 2,000 1.00 0.10 0.10 200 200 200
South Africa; Rep 540 540 540 1.11 1.11 1.11 600 600 600
Swaziland 15,500 1,440 13,700 2.19 2.05 0.21 34,000 29,500 2,900
Tanzania; United Rep 200 200 200 1.00 1.00 1.00 200 200 200
Togo 35,500 35,500 35,500 0.00 0.00 0.00 27,967 27,967 27,967
Uganda 400 400 400 5.00 5.00 5.00 2,000 2,000 2,000
Zaire 7,525 7,525 7,525 3.33 3.33 3.33 25,080 25,080 25,080
Zambia 2,900 2,900 2,900 1.23 1.23 1.23 3,556 3,556 3,556
Zimbabwe 80,412 78,491 59,894 2.58 2.17 1.47 207,253 170,115 88,021
Total 325,098 323,877 204,380 1.58 1.50 1.84 515,236 487,292 376,685

Communications Commission (FCC) into the impact of lifting the ban.

In 1998, prompted by a congressional order, the Federal Trade Commission (FTC) investigated whether the alcohol industry was doing enough to discourage ads that appeal to underage drinkers. In a report to Congress in September 1999, the FTC called for beer, wine, and liquor companies to do more to ensure that minors do not see their advertisements. The FTC recommended that ads for alcoholic beverages should not be shown in theaters with movies rated PG or PG-13, on TV programs aimed at similar audiences, or on college campuses. Additionally, the FTC called for the formation of independent review boards to handle complaints from consumers and competitors about alcohol advertisements. The industry imposed self-regulated guidelines requiring that at least 50% of the audience for alcohol ads consist of adult consumers.

In September 2003 the FTC followed up on the recommendations issued in 1999 by surveying alcohol companies to see if they had followed the self-imposed guidelines and the recommendations offered by the FTC

TABLE 7.8
Tobacco area, yield, and production worldwide, by country, 2001-03 [CONTINUED]
SOURCE: "Table 2-46. Tobacco: Area, Yield, and Production in Specified Countries, 2001-2003," in Agricultural Statistics, U.S. Department of Agriculture, National Agricultural Statistics Service, 2004, http://www.usda.gov/nass/pubs/agr04/04_ch2.pdf%20(accessed March 7, 2005)

Area harvested Yield per hectare Productionb
2001 2002 2003a 2001 2002 2003a 2001 2002 2003a
Continent and country Hectares Hectares Hectares Metric tons Metric tons Metric tons Metric tons Metric tons Metric tons
Other Asia:
Bangladesh 31,161 31,161 31,161 1.12 1.12 1.12 35,000 35,000 35,000
Burma 36,000 36,000 36,000 1.22 1.22 1.22 44,000 44,000 44,000
Cambodia 9,685 9,685 9,685 0.80 0.80 0.80 7,748 7,748 7,748
China 1,339,600 1,327,710 1,262,525 1.75 2.10 2.07 2,349,627 2,783,516 2,617,036
India 395,500 485,000 435,000 1.48 1.49 1.52 585,500 650,000 660,000
Indonesia 205,000 205,000 194,000 0.84 0.83 0.82 172,200 170,150 158,900
Japan 23,411 23,720 23,720 2.59 2.53 2.53 60,565 60,000 60,000
Korea, North 20,000 20,000 20,000 1.33 1.33 1.33 26,640 26,640 26,640
Korea, South 23,940 21,200 21,200 2.32 2.47 2.47 55,587 52,350 52,350
Laos 6,700 6,700 6,700 5.54 5.54 5.54 37,111 37,111 37,111
Malaysia 15,972 14,390 11,000 0.52 0.80 1.09 8,299 11,468 12,000
Pakistan 43,319 46,897 48,150 1.91 1.98 1.97 82,854 92,880 94,700
Phillippines 39,130 31,464 34,585