The boycott of spirits advertising by the US national networks still exists, but the growing reach of cable and satellite TV channels has begun to make this position increasingly less important. And though alcohol advertising remains a contentious issue, as Monica Dobie reports, the allure of the spirits industry's deep pockets may soon prove hard to resist.

US spirit producers have certainly been able to tone their marketing muscles in recent years, thanks to the broader scope for advertising they have enjoyed since the end of a 50-year self-imposed ban on electronic media advertising, a hangover from the prohibition mentality.

It has only been since 1996 - when Seagram defied this moratorium - that distillers have been able to realise this advertising potential. It has been a restricted experiment though, because the country's national networks NBC, ABC, CBS and Fox have so far refused to air ads for spirits.

That said, the last four years have seen a boom in cable and satellite stations, providing a wealth of advertising opportunities for US distillers. Indeed, according to the Distilled Spirits Council of Economic and Strategic Analysis (DISCUS), spirit advertising on local and cable stations has increased dramatically.

In 1996, distillers spent US$700,000 television advertising. In 2002, US$18.6m was spent, more than US$14m on cable stations.

Lisa Hawkins, spokesperson from DISCUS, said that network affiliates have been especially keen to take distillers' advertising money. "In January 2000 there were 70 stations that aired distilled spirits ads and in 2004, it increased to 540 stations. While the national networks continue not to air the spirit ads, their affiliates are, and they are making quite a bit of revenue from that," she said.

DISCUS said the leap into television has been a smooth one and that one of the reasons it has been allowed continued success is due to spirits companies being vigilant about not overstepping the mark when promoting their brands.

In a report to the US Congress in the summer of 2003, America's Federal Trade Commission (FTC) concluded the distilled spirits industry's self-regulatory measures had continued to be rigorous and effective.

As a result, Diageo spirit ads, for instance, now appear on more than 500 independent American television stations, cable networks and network affiliates around the country. Whether this is their top choice remains unclear. Diageo, after all, had its fingers seriously burned in the infamous network deal with NBC, which was pulled in 2002 after noisy Congressional disapproval.

What spokesman Gary Galanis told was that, although marketing their brands on national networks would certainly be beneficial for the company "in terms of efficiencies" if it were an option, "we are focused on the marketing tools we have in place. What's really positive about being able to focus on these stations is that you can really target your message, and your demographic," he said.

Brown-Forman, whose brands include Jack Daniel's, said it is also still interested in advertising on the large television networks but indicated that its current marketing deals with smaller affiliates and cable are effective.

Spokesperson Phil Lynch said: "Obviously, we don't have quite the economy of scale that we would if we had access to national network advertising. But as cable viewership has increased over the last five years and network television has decreased, the economies of scale are beginning to balance out even more."

But has the extra exposure and spending paid off?

The sales figures suggest they have. Volume sales of US-supplied distilled spirits rose 3% in 2002-2003 from the preceding year, to 158 million nine-litre cases. The total gross revenues of US spirit suppliers' came to US$45.87 billion in 2003, a significant increase from 1999's US$37.86 billion.

DISCUS said increased advertising is improving sales of spirits in the US and, despite calls from anti-alcohol campaigners, "there has been broad acceptance, no public outcry in the markets where these ads are airing." Hawkins added: "We're able to reach a wider audience to introduce new products. It has made a huge difference. Sales are up. Last year was the biggest single-year growth in over a decade. The bottom line is that the consumers do not differentiate between beer, wine and spirits ads. Alcohol is alcohol and we feel very strongly that all advertising should be held to the same responsible standards," she said.

She continued: "TV advertising has had an impact in helping us increase our market share vis-à-vis beer and wine. This market share increase is tied to the increase in sales. Advertising does not cause someone who doesn't drink to begin drinking, rather it can be effective in getting adults who currently choose to drink beverage alcohol to switch brands or try a new a product."

Galanis added: "We're doing very, very well. There's no doubt that advertising helps us get our message across and it is helping." However, like Hawkins, Galanis was careful not to directly attribute advertising to sales increases, a possibly diplomatic caution shared by Brown-Forman, where Lynch said sales began increasing before they started to advertise on television.

The drinks industry, in the face of criticism that advertising is linked to alcohol overuse, has long argued that advertising only fosters brand loyalty rather than increases sales directly. For some marketing experts, however, these claims are misleading.

John Tyllee, associate editor of UK advertising specialists Campaign magazine said: "If it didn't sell more then companies wouldn't be advertising. They might make the same arguments that cigarette manufacturers have always used; that advertising doesn't broaden the market, it simply is an attempt to get consumers to switch brands. I suppose alcohol manufacturers would offer the same argument."

Wherever the truth lies, in an admittedly complex guessing game, one major question still remains - will the big networks ever allow spirits advertising? For now, their stance remains the same. No.

However, DISCUS believes that the national networks are seeing the spoils of spirit advertising and will want a piece of the pie especially considering the public willingness to watch them.

"We think it's just a matter of time before the national networks change their minds.
The networks are seeing their affiliates take these ads and the revenue from them and they're seeing that there's been public acceptance in the markets where the ads are airing," said Hawkins.

And Diageo's Galanis said the general American attitude toward the spirit industry and advertising has been changing dramatically.

He said: "It's interesting because now we get press packs from the television stations wanting business from us. And when you think the medium of television was so scarce five, six years ago..."