As the nation's broadcasters and distillers enter their busiest season, we share high hopes that the economy will improve in the New Year. While many industries have suffered during the past year, the distilled-spirits industry remained strong. Behind that strength—and profits—is the continuing trend by adult consumers to purchase premium and super-premium brands. This trend translates into significant revenue opportunities for broadcasters in the New Year.
A two-year snapshot tells the story of dramatic growth. In February 2000, spirits ads aired on 70 broadcast stations in 59 markets. By June 2002, the figure had jumped to 523 stations (including 490 network affiliates) in 204 markets. Distilled-spirits ads also have aired on 85% of local cable services and more than 35% of cable networks.
This partnership has been a win-win for both the spirits industry and its broadcast partners. While the networks continue to debate internally whether to air distilled-spirits ads, network affiliates and independent and cable stations are reaping the rewards of distilled-spirits advertising. Over the past year alone, distilled-spirits spending on television advertising has increased by more than 90%.
In fact, our television advertising expenditures in the first half of 2002 have already surpassed the previous year's total. We expect this high rate of growth to continue. Projections are that, in the foreseeable future, the spirits industry could spend in excess of $200 million annually on TV advertising.
The broadcast stations airing spirits ads have judged the ads for themselves and understand the inherent hypocrisy of rejecting responsible spirits ads while continuing to air beer and wine ads. They understand the fundamental fact that alcohol is alcohol. This fact is accepted as a matter of policy by federal agencies, including the Department of Health and Human Services, and by Mothers Against Drunk Driving and state motor-vehicle departments.
Just as alcohol is alcohol, the First Amendment protections of commercial speech apply equally to distillers, brewers and vintners. Time and time again, the Supreme Court has reaffirmed this right for spirits, beer and wine, ruling that free speech is a critical component of consumer choice and competition.
The beverage-alcohol industry is extremely competitive. Distillers not only compete with beer and wine but also fiercely compete with each other. Advertising is at the core of this competition, and the broadcast medium is an essential player in America's marketplace. Airing spirits ads on television provides us with the opportunity to communicate to our adult consumers using the same medium that beer and wine have used for decades.
Here's my prediction for 2003: More and more broadcasters—independents, affiliates and, yes, the networks—will air responsible distilled-spirits ads. It just makes good business sense. Spirits ads are legal, tasteful, broadly accepted by the public, and a great source of revenue for the broadcast industry.