Beverage Alcohol Ad Spending Tracking Downward

For the first time in two years, the distilled spirits industry’s advertising outlays did not see growth last year. After posting totals of $491.5 million in 2012 and $535.6 million in 2013, ad spending totaled $475.0 million in 2014, a 1.1% loss in spending. Looking at the advertising outlays so far this year, the industry appears to be on track to spend less once again.

Ad spend from January through August totaled $209.9 million this year which accounts for 44.2% of the outlays compared to last year. It is not expected that the outlays will reach 2014 levels with four months left to go this year. In addition, 12-month rolling figures through August total $419.0 million which is $56.0 less than 2014. While the industry still saw plenty of product introductions and premiumization, it didn’t get the boost in advertising dollars across the board.

Examining the data from January through August, Vodka was the largest category in regards to spend levels with a 25.3% share coming from $53.1 million. Vodka was also the largest segment of the industry regarding print outlays as the category accounted for 31.3% of print spend.

The second leading category, American Whiskey, held a 19.7% share of spend coming from $41.3 million dollars. Tequila accounted for $40.6 million which translated into a 19.4% share. In addition, Tequila was the largest spender in the broadcast medium accounting for 23.9%. Rum comes in a distant fourth overall with $19.2 million and a 9.2% share.

Broadcast advertising dominated as the medium of choice with an even larger share of overall ad dollars spent; it took a 57.5% share in 2013 and a 61.6% share in 2014 only to account for 63.6% share in the first 8 months of 2015. Categories that dedicated the majority of their spend to Broadcast included Irish Whisky, Canadian Whisky and Brandy & Cognac.

Interestingly, both Scotch Whisky and Gin both preferred the print medium. Vodka and Rum applied a more balanced approach with the two mediums although their shares of spend leaned towards Broadcast with shares of 54.9% and 58.8%, respectively.

2014 Media Spending Mix ($ Thousands)

CATEGORYBROADCASTPRINTTOTAL
U.S. Whiskey56,930.017,534.574,464.5
Canadian Whisky14,099.45,558.919,658.3
Scotch16,276.121,383.237,659.3
Irish Whiskey5,078.01,058.06,136.0
Gin375.711,647.812,023.5
Vodka62,248.444,166.9108,415.3
Rum53,476.012,075.565,551.5
Tequila38,703.931,689.570,393.4
Brandy & Cognac15,008.63,002.618,011.2
Cordials & Liqueurs28,069.015,929.343,998.3
Prepared Cocktails13.61,589.51,603.1
General Promotion104.716,972.417,077.1
TOTALS292,383.4182,608.1474,991.5
Source: Kantar Media Intelligence

 

Lately, beverage alcohol marketers have come under fire for their advertising. It’s said that companies are targeting younger consumers with their ads, which ends up influencing underage viewers. Research studies have supported links between advertising and drinking behaviors that have created a negative buzz, and some researchers have suggested that companies self-regulate more.

In early 2015, Los Angeles banned alcohol advertising on public transit, joining Philadelphia, San Francisco and Boston as cities taking efforts to curb alcohol advertising. However, spirits marketers will continue to spend money in an effort to create an image for their products. Internet advertising is expected to grow as the technology creates more interactive ways to reach consumers.

It is starting to happen in 2015 with Diageo announcing that its Ciroc vodka would be the first alcohol brand to run paid-for advertising on Instagram. It will be interesting to see what happens in the upcoming year with advertising budgets.

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