Despite Increase in Ads, Liquor Sales Hold Steady

 

Takeaway

  • More advertising doesn’t necessarily lead to more consumption overall
  • But, ads can help individual liquor brands lure customers away from competitors
  • Per capita, alcohol consumption levels in 2000 are about the same as they were in 1900

Despite the increased number of liquor advertisements in recent years, alcohol consumption in the U.S. has remained relatively constant.

This is according to a recent study by Gary Wilcox, an advertising professor at the University of Texas at Austin. The findings are consistent with those of similar evaluations of cigarette and soft-drink markets.

"I've done several studies with controversial products because of the perceived influence of advertising," Wilcox said. "This study is only one of a few from an economic theoretical standpoint examining liquor advertising."

The paper was co-authored by Kyung Ok Kacy Kim, an advertising Ph.D. candidate, and Heather M. Schulz, an advertising Ph.D. graduate and now assistant professor at the University of Nebraska at Kearney.

The researchers examined advertising campaigns that ran between 1971 and 2008. During that period, the spirits industry ended a decades-long self-imposed ban of advertising in electronic media. The ban, established in 1936 for radio and 1948 for television, was lifted by the industry in 1996.

The study finds, however, that increased advertising does affect the consumption of alcohol at the brand level and can result in a shift in market share.

For three of the top brands — Captain Morgan, Smirnoff and Crown Royal — the use of electronic advertising was significantly related to that brand's consumption.

"When the window opened up to seek this competitive advantage, these brands competed well by leveraging the new opportunities," Wilcox said. "The strategies these (brands) used in other media such as print also appeared to translate well into their radio and television campaigns."

Wilcox’s findings support comments made by Roscoe Starek III, former commissioner of the Federal Trade Commission, who sided with the spirits industry at the time the ban was lifted: “Advertising and promotions frequently are undertaken simply to induce consumers to switch from one brand to another,” Starek said. "When this occurs, there may be little or no net increase in total consumption, because one brand's gain is another's loss."

Although the amount of advertising for all alcoholic beverages has increased dramatically in the past century, Wilcox said data show that the consumption of beer, wine and spirits in the U.S. has remained relatively constant. Per capita, consumption levels in the year 2000 did not differ dramatically from those in 1900.

Wilcox said that another relevant public policy issue is the possible effects advertising has on underage drinking. Since alcohol is not legally available to consumers under the age of 21, he said criticism shouldn't be leveled at advertisers unless promotions are specifically targeting underage audiences.

"Certainly, the effects of advertising and promotion that are targeted to special audiences may require further study," Wilcox said. "For the most part, rules are well-followed, but companies that push the limits on consumer ethics may do so to cause controversy and get their brand more visibility."

Wilcox plans to conduct a follow-up study on consumer purchase behavior between selections of alcohol product categories such as beer, wine and liquor based on several factors including the economy, personal income, and advertising expenditures.

— Marc Speir

This article originally appeared on the UT College of Communication website.

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TXE Staff

Staff, Texas Enterprise

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