Despite the liberalization of economies in India and other nations, the market is hardly free of state controls. Rules and restrictions govern almost all industries and their associated processes, from manufacture to sale and distribution and even marketing.
Advertising is a relatively unregulated area. It relies heavily on voluntary censorship and is governed by relatively few guidelines. An obvious exception to this general rule is the advertising of alcohol, tobacco and related products. In fact, the level of regulation and restrictions on advertising of these products, which historically began with small prohibitions, has increased enormously, and in the case of tobacco now amounts to the effective banning of promotional activities. Any advertising of these products is tightly controlled and highly restricted.
The harmful health and social effects of alcohol and tobacco are well-known. What remains controversial is whether advertisements of these products cause an increase in the number of consumers, or of levels of alcohol and tobacco consumption among existing users.
According to one argument, advertisements are aimed at building brand loyalty and increasing the market share of a particular brand in relation to its competitors. This theory suggests that adverts have no role to play in the creation of demand for a product, which is based on external factors; they only aid brands by channelling existing demand for their products. The opposing argument suggests adverts do not only channel existing demand to a particular brand, but also create new demand (and thereafter channel it to the brand).
The latter hypothesis is supported by several studies. A study by the CRC Education and Child Studies Research Group in the School of Epidemiology and Health Sciences at the University of Manchester has found a direct link between tobacco advertising and the number of children smoking. It said that children were more likely to begin smoking brands of cigarettes that were heavily advertised than those that were not.
In accordance with global practice, laws are now in place in India to control, regulate and in effect prohibit adverts of tobacco products in almost all forms. The Cigarettes Act of 1975 was the first to impose restrictions. It required all cigarettes and tobacco products to carry a statutory warning about the ill effects of smoking or consuming tobacco. The Advertising Standards Council of India adopted a voluntary code in 1998 for regulating adverts that might otherwise encourage greater alcohol consumption or glorify its effects. However, as often noted, voluntary codes are largely ineffective for any form of regulation, let alone for regulation of a profit-driven activity such as advertising. Recognizing this, several countries, as well as the European Union, have enacted legislation banning all forms of direct or indirect advertising of tobacco products.
In India, the Cigarettes and Other Tobacco Products (Prohibition of Advertisement and Regulation of Trade and Commerce, Production, Supply and Distribution) Act, 2003, prohibited all forms of advertising of tobacco and related products whether in electronic and print media or radio, or in any other direct or indirect manner. The packaging of tobacco products must feature a large and prominent warning about the ill-effects of consumption, with pictorial warnings mandatory. These warnings reduce the advertising space available on the product itself.
Sponsorship has long been regarded by advertisers as an important tool for increasing the visibility of a brand. Tobacco companies have been banned from sponsoring any sporting, cultural or other event, virtually exhausting any option for advertising. “Product placement” in the media – the depiction of smoking in films and television programmes – used to be a successful means of promotion that eluded advertising restrictions. However, the depiction of cigarettes and scenes of smoking is now heavily regulated in Indian cinema. The situation in the US and other countries is similar, with filmmakers needing to satisfy certain criteria before being allowed to show such scenes.
By comparison, alcohol advertising is less restricted. While all forms of advertising have been banned for alcohol products, other promotional avenues remain open: alcohol companies are still allowed to enter into sponsorship deals for sporting and cultural events, and can even use the depiction of their trademarks to promote their products at such events.
Surrogate advertising, a form of indirect advertising, has been extensively used by alcohol companies to market their products. This form of advertising links an alcohol-related trademark with another product: some examples include Bacardi CDs, McDowell’s soda and the Red and White Bravery Awards.
Increased efforts to restrict the promotion of alcohol and tobacco products may have an adverse impact on the legitimate use of trademarks for diversified activities, as in the case of Wills Lifestyle apparel or Kingfisher Airlines. It remains to be seen how the law will reflect changing standards in advertising regulation and how businesses adapt as they seek legal means to promote their products.
Rahul Chaudhry was called to the bar in September 2002. He joined Lall Lahiri & Salhotra in January 2004 and became a partner just four years later. Along with the firm’s founding partners, Anuradha Salhotra and Amar Raj Lall, Chaudhry is regarded as one of the most prominent faces of IP management in India.
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