Thailand's free-spending alcoholic beverage category saw advertising spend plunge to almost half year-earlier levels in the month after new government restrictions on alcohol advertising came into effect.
Despite the sharp fall, it's widely believed the implications will moderate once the dust settles.
"Many didn't expect that the laws would be passed, or that they would be implemented so quickly," a media agency source says of the restrictions which came into effect in the last quarter of 2003. "They were just not prepared."
The new regulations, which ban television and radio ads for alcoholic beverages between 5am and 10pm, and restrict their content to socially responsible messages, are aimed at helping to reduce the number of traffic accidents in the country.
While the new restrictions on content affect all alcoholic beverages, the time restrictions mainly impact beer companies, as similar regulations on hard liquor have been in place for several years.
According to Nielsen Media Research, adspend by alcohol companies hit just 153.3 million baht (US$3.9 million) in October compared with 284.4 million baht a year ago, and 235.4 million baht in September.
Advertising by the top five beer advertisers dwindled to 25.6 million baht in October compared with 113.9 million baht in the same month a year earlier.
The first month has been rough, according to Parames Rachjaibun, president of the Advertising Association of Thailand. "Not many people knew what defined a corporate image ad."
For international brands, the regulations dictating acceptable content present a different dilemma. "An international brand like Heineken will find it quite challenging to develop commercials that promote Thai cultural values while staying on equity," says Jeffrey Kimble, commercial director at Thai Asia Pacific Brewery.
Heineken decreased its TV budget by 20 per cent this year and will increase its use of billboards, press ads, events and sponsorship this year.
For most other players, however, the slowdown on this count is temporary "as brands go back and re-shoot and create new advertising," Kimble adds.
"Most should be on air with their new commercials in the first quarter of the year."
More problematic to advertisers is the greatly reduced advertising window that will leave many out in the cold. Media sources estimate between 60 to 80 per cent of beer ads are currently screened between 6pm and 10pm.
"These will now have to compete with whisky brands and cognac and everyone else for airtime - essentially the slot between 10pm and 12am because it doesn't make sense to advertise in the middle of the night," one notes.
So far, competition for the post-10pm slots has been moderate. This is expected to heat up in the new year as the various players launch their new material.
Witawat Jayapani, CEO of Creative Juice\G1, expects the competition for timeslots to impact hardest the brands working with smaller media houses who have less bargaining power. He sees TV adspend eventually settling around 30 per cent below pre-regulations levels, both due to the smaller advertising window, and less expensive ad slots.
"After 10pm is not prime-time and the cost of airing then is much lower compared to between 8pm and 9pm," he points out.
Meanwhile, with posters and other point-of-sales materials being used to make up for the lack of TV exposure, these are quickly becoming the next areas likely to be regulated.
"Right now, they are not being strictly controlled, but with so many players in the market focusing on them, they will attract attention," Witawat notes.
The advertising association is scheduled to meet with government authorities in March to evaluate the effectiveness and consequences of the new regulations.
ALCOHOL SPENDING: taking a hit
August September October
Alcoholic Baht '000 Baht '000 Baht '000
Alcoholic beverages 31,382 34,839 50,484
products range
Alcoholic ready-to-drink 7,261 11,766 12,353
Beer and stout 119,260 111,633 62,533
Brandy/Cognac 16,671 21,401 9,976
Champagne - - 67
Gin 244 333 276
Liqueur 77 - -
Rum 125 168 395
Whisky 22,767 35,082 16,448
Wine 22,699 20,178 771
Total 220,486 235,400 153,302
Source: Nielsen Media Research Thailand Estimated spend.