Centre to limit surrogate ads promoting liquor brands; Carlsberg, Diageo, other firms may face fines up to ₹50 lakh

The Centre is planning to prohibit liquor makers in India from using surrogate advertisements and sponsoring events for their key alcoholic products. As per the new draft rules, companies like Carlsberg, Pernod Ricard, and Diageo can face a penalty of up to ₹50 lakh if they continue promoting their key products via surrogate ads in India, reported Reuters, citing sources.

In India, it is prohibited for alcohol manufacturers to promote their liquor brands via direct advertisement. Hence, companies opt for “surrogate ads,” which often circumvent the ban by ostensibly showing less desirable items instead, like water, music CDs, glassware, etc. The logos of these products and other elements of such advertisements bear resemblance to their liquor brands.

"You can't take a circuitous way to promote products," the official, Nidhi Khare, told Reuters, adding that final rules were expected to be issued within a month.

Most of the brands have been promoted by popular Bollywood film stars. The centre could bring fines for companies and bans for celebrities endorsing tobacco and liquor ads deemed misleading, reported Reuters referring a top civil servant for consumer affairs and draft rules.

“This measure is intended to ensure that children and young people, who are potential customers, are not influenced by surrogate advertisements,” a top official told Mint earlier.

The implementation of the new rules will lead to a massive shift in the advertisement and marketing strategy of liquor manufacturers in India, which is touted as the world's eighth-biggest alcohol market by volume, with annual revenues Euromonitor estimates at $45 billion.

India is also considered a lucrative market for companies such as Kingfisher Beer Company, United Breweries, which ispart of the Heineken Group, etc.

About the new govt law prohibiting surrogate ads

Reuters, citing sources, reported that the new laws prohibit the marketing and branding of items like soda, CDs, water, and glasses using “similar label, design, pattern, logo” to that of alcohol products, explicitly targeting efforts to get around current bans.

The penalties under the laws haven't been finalised yet and rely on consumer laws. As per the law, manufacturers and endorsers of surrogate ads can face penalties of up to ₹5 million rupees ( ₹50 lakh), reported Reuters. Promoters can face one to three years of ban.