Liquor Brands Prove Responsible Self-Regulation Can Serve Consumers

Source: https://www.mediapost.com/

by Wendy Melillo 

October 25, 2019

With the repeal of Prohibition, liquor industry leaders knew they needed to address public concerns about their products, limit attacks from temperance groups and prevent government regulation.

The answer was the industry advertising code, which turns 85 on October 27.

Consumers are better off with a strong voluntary industry code that does more than police for false, deceptive or misleading ads – especially since the government can’t make the same demands of industry without risking First Amendment violations.

Add in the lack of convincing data proving the ads harmful. That means the voices calling for the government to ban alcohol ads are not likely to win any time soon.

Researchers like David J. Hanson, professor emeritus of sociology at SUNY Potsdam, see no evidence that ads increase consumption. Hanson studied alcohol-ad effects for more than 40 years; other macro-level analyses support his findings. A 2015 University of Texas at Austin study examined the relationship between beer, wine and liquor ad spending and sales from 1971 to 2012 – it found “no relationship or a weak one” between advertising and consumption.

The industry’s lobbying organization, the Distilled Spirits Council of the U.S., argues alcohol ads don’t prompt underage people to misuse alcohol, either. It points to government alcohol abuse data showing underage binge drinking at historic lows in the U.S.

The National Institute on Drug Abuse’s 2018 survey of college students and adults found that binge drinking dropped one-third, from 43% to 28% between 1991 and 2018. The Substance Abuse and Mental Health Services Administration’s 2018 data shows a steady decline in underage alcohol abuse among 18-to-25-year-olds – from 17.4% in 2008 to 10.1% last year. That drop was steeper for 12-to-17-year-olds, decreasing from 5.4% in 2007 to 1.6% in 2018.

Studies suggesting correlations between the ads and consumption exist, though experts like Hanson refute them. Conflicting data and lack of agreement won’t end the debate – and it shouldn’t.

But even regulators agree the industry code has advantages over what they can do.

In its 2014 beverage alcohol industry report, the FTC called self-regulation “more prompt and flexible.” The current administration says the positive support for self-regulation “remains the same regardless of who is at the Commission,” said Andrew Smith, director of the FTC’s Bureau of Consumer Protection, in a speech last year.

First adopted on October 27, 1934, the DISCUS code covers member companies representing about 70% of all liquor sold in the U.S., but is widely respected by non-members. Updated in 2003 to include the wine and beer brands of member companies, the code prohibits ads from appealing to underage audiences.

The ads must be placed in media where at least 71.6% of the audience is over 21 or within 500 feet of a church, elementary or secondary school. Ad images can’t appeal to children, meaning no mention or picture of Santa Claus, no ads on the comic pages, and no advertising of alcohol as a “rite of passage” to adulthood. The ads can’t use sex as a way to sell the brand, and the code has specific guidelines for social-media placements.

Eleven code reviewers elected by the DISCUS board of directors decide complaint outcomes. An advertiser has 15 days to respond and the review board decides within one week.

The Better Business Bureau’s Lee Peeler, who served as the FTC’s associate director for advertising practices from 1985 to 2001, said three things distinguish a strong self-regulation program from what the FTC would consider “cosmetic”: an independent enough review board, a transparent review process, and consequences for not complying.

Peeler said the distillers code does a “good job.”

Three advisors from outside the industry provide guidance, pre-review ads upon request and serve as the tie-breaking vote if agreement on complaints can’t be reached. The advisors don’t routinely decide violations, but are three independent heavy hitters with federal, academic and media expertise. Notable is Jodie Bernstein, the former first woman director of the FTC’s Bureau of Consumer Protection, who considers the code a vehicle to “protect consumers.”

All complaint decisions are published on the DISCUS website. While no specific consequences exist for violators, public transparency with the compliant process has proved effective. DISCUS reports “100 percent” compliance from members and “overwhelming” compliance by non-members, since no company wants to be publicly shamed as irresponsible.

True, the code would be stronger if the outside advisors had voting rights in deciding all complaints.

Still, the scorecard is a strong one and others have taken notice. The code serves as a model for other industries, most recently gaming. That’s worth celebrating.