Finding a way around Thai curbs

This time last year alcoholic beverage radio and TV advertising in Thailand was brought under the purview of a new department accompanied by new FDA rules and regulations on its marketing. The new regulations, which banned television and radio ads for alcoholic beverages between 5am and 10pm, and restricted their content to socially responsible messages, were aimed at helping reduce the number of traffic accidents in the country. As expected, the industry took a hit. Adspend in most alcohol categories dived to almost half of their year-on-year levels. But once the dust settled and brands and their agencies fully understood the new limitations, they bounced back; with different images, vehicles and -- most innovatively -- a greater use of below-the-line strategies. By the middle of 2004, most companies came up with revised advertising campaigns. Leo took the opportunity to reposition itself as a nice beer for the 'young at heart' with a 'being nice is easy' catchline. Thai Asia Pacific Brewery, meanwhile, eased in a new brand -- Tiger -- using its 'It's what's inside' campaign; all the while playing within the rules of the new regulations. "Though most brands struggled initially to create effective ads, most of them have adapted to the market and government regulations really well," says Sudarampai Soonthornrangsriaign, PR Director, Leo Burnett The restrictions on airtime, however, also contributed to clutter. "The consumers are barraged with so much alcohol advertising with social messages in the two hours before midnight, that by the end of it all, they cannot differentiate one brand from the other," says the head of a leading advertising agency with several liquor clients. Leo Burnett Thailand deputy managing director Phil McDonald said as much at the time of the Tiger launch, pointing out that the new rules would make it "increasingly hard for beer brands to establish attitude and uniqueness, particularly the new (labels)." According to the figures from MindShare, which handles Bacardi's media account, although television remained the favourite above-the-line medium (with 63 per cent of total ad spend), the total expenditure by alcoholic beverages saw a drop of 11 per cent to 2,230 million baht (US$58 million) compared to the year before. The beer category remained the top spender at 963 million baht, followed by whisky at 622 million baht and then brandy at 307 million baht. "Though the top two brands are Singha and Heineken, spending heavily to gain the high-end consumer, the overall ad spends in the beer industry declined 25 per cent compared to the previous year, due to restrictions on advertising," says David Peat Sinthu, executive director of Nielsen Media Research, Thailand. For the agencies, it appears that the drop in spending caused little concern. "As the agencies no longer work on a media commission basis, I don't think their incomes were hurt in any way," answered Witawat Jayapani, CEO, Creative Juice G/1, Thailand. "Though the restrictions shorten the air-time period on TV and some media budget has been cut, most clients transferred the moolah to below-the-line activities. The working time, thus, remains the same and we can still charge the same monthly fee." Indeed, below-the-line -- in the form of experiential marketing --has become crucial. As one industry observer comments, "com- panies are trying to put their brand in as many places as possible to gain visibility and get the consumer to experience the product. It could be taste tests at 7/11 outlets or complimentary free flowing spirits at high profile pubs and supper clubs." "In terms of media, companies are spending more on prints, billboard and cinema as there is no restriction on time (after 10pm)," says Witawat. "There are contests and games, freebies and even musical concerts. As a new trend, several on-going 'annual' events have been initiated, which are now owned by a particular brand. Examples are Heineken Jazz Festival, In-Spy Party Contest and Keep Walking Society (JW Red Label)." This has also had the effect of shutting out competition, says Bacardi Thailand managing director Mahesh Madhavan. "In the name of below-the-line, several deep-pocketed 'Big Boys' are spending huge amounts of money to shut out outlets for competitive brands," he notes. "They are marking their turfs and barring establishments from serving anything other than their products." According to Madhavan, while deep-pocketed whisky majors are able to keep the super-premium segment growing, it is the secondary whisky brands such as 100 Pipers and Master Blend that are under severe pressure. "For the first time, the middle segment consumer is seen downgrading to cheaper brands (local whiskies) and the latter are expected to witness increased shares." Nielsen figures point to a year-on-year adspend increase of 36 per cent in the whisky category. "The secondary whisky brands are not able to infuse too much money into BTL/experiential marketing because the cost-per-contact is very high for them and they do not achieve a bang for their buck," adds Madhavan. "They may soon be facing a problem of out-of-sight, out-of-mind." Though the industry has seen new entrants such as Tiger, Johnnie Walker Red Label and Green Label, these are mostly from cash-rich companies. And if marketers felt the going had gotten tough, the bad news is that it's likely to be much harder. The Government has announced a planned excise tax hike -- the third since 2003 -- and, in addition to the current three health warning lines on all communications, a further three lines are expected in early April. "We will have to use them all on a rotational basis with our future communications," explains Rati Panthawi, management partner, account management, Ogilvy & Mather, Thailand. There is also a growing dread that the Government may impose a complete ban on all advertising activities. Meanwhile, React, a forum and watchdog of sorts that was formed last year by five major importers of international alcoholic drinks in Thailand, has not been particularly effective. "Though we have made policies and identified ways to implement them, there is a huge problem of funds," explains Madhavan. "The companies did contribute a part of their profits for the 'Safe Driving' campaign last year, but to do it on a continuous basis is getting increasingly tough for the players." One year into the new regime, the industry has yet to see any major changes in market share or account alignments. But if competition remains fierce and the restrictions' noose is further tightened, the fear is that the sector could well witness a shake-out, followed by a monopoly-like environment where the richest rule.