Seagram india

ASIAN CASE RESEARCH JOURNAL, VOL. 10, ISSUE 2, 161–192 (2006)

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Seagram India
This case was prepared by Ms Y. Malini Reddy of the ICFAI Institute of Management Teachers, as a basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative or business situation. Please address all correspondence to Ms Y. Malini Reddy, 18A, Road Number 2,Jubili Hills, Hyderabad – 500035, Andhra Pradesh, India, E-mail: malinireddy@yahoo.com.

No broadcaster is permitted to show advertisement which promotes directly or indirectly the promotion of alcohol, liquor or other intoxicants...1 Rule 7(2) of the Cable Television Networks Rules Act 2001. Advertising plays the role of creating awareness and delivering imagery. The Indian government’s aim ofreducing exposure of liquor advertisements to impressionable young minds, led the Information & Broadcasting Ministry, to impose a ban on advertisements of tobacco and liquor products on satellite channels. The ban imposed under the Cable Network Rules, 1994, became effective from 6 October 2000. While advertising on Doordarshan2 had always been banned, the restriction on private channels denied animportant channel of communication to the players in the industry. The ban on direct as well as surrogate advertisements3 in both electronic and print media denied an effective tool
1“Country Reports on Advertising, Marketing and Promotion Law Developments”, Global Advertising Lawyers Alliance (Gala) Global Meeting Crowne Plaza Amsterdam — American Hotel Amsterdam, The Netherlands, May 2003.2Doordarshan, a Public Service Broadcaster, in India, started on 15 September 1959 to transmit educational and developmental programs on an experimental basis. As of 31 March 2004, Doordarshan had more than 1200 transmitters with about 50 studio centers and 20 satellite channels. Being a Public Service Broadcaster, it carries various programs related to social and economic welfare apart from thosebased on sports, culture and entertainment. 3Advertising banned products in the garb of an innocent item is totally unrelated to their ‘negative products’ like tobacco and liquor.

© 2006 by World Scientific Publishing Co.

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in brand building to liquor companies. It affected the companies in terms of both cost and reach. The ban also had the consequence of dividing the industrybetween ‘multinationals’ and ‘local home grown companies’. India’s inclusion into the World Trade Organization in 2001, its decision to open up the sector for imports and the subsequent restructuring in 2002–03 led to intensification of competition in the industry. This battle at the marketplace was further fueled by the anticipation of a steep fall in sales as a direct fallout of the ban on liquoradvertising. Existing domestic liquor players, such as United Breweries, McDowell, Shaw Wallace, Radico Khaitan, Jagatjit Industries etc, had several advantages over the multinational companies (MNCs) which were trying to gain a foothold in the Indian market. These advantages included established distribution networks and strong brand equities. The consequences of the ban which were not acute forthe domestic companies, proved to be detrimental for the multinational companies trying to launch and build brands. Global players such as Bacardi, Pernod Ricard, UDV which were already present in the Indian market and essentially relied upon using advertising as their most potent tool for building up their brand equities were severely impacted. Seagram, India’s largest multinational player in thespirits business, had been operating across the entire wine and spirits spectrum in India, since 1995. It had generated consumer pull through effective advertising. In November 2004 however, it was revisiting its marketing communications plans. With an intention to achieve greater market presence, it was drawing up its promotional strategy. The focus was on the ability to achieve differentiation...