The Clever World of Surrogate Advertising in India

Ever noticed a blue-colored paan shop on the street selling Kamla Pasand Elaichi (cardamom)? Chances are, finding this product on store shelves is nearly impossible because it’s mostly a front for advertising purposes. Some brands that market themselves as elaichi don’t even have actual elaichi products available.

Mention Kamla Pasand, and your mind probably jumps to pan masala or gutka (chewing tobacco). This isn’t surprising, given that tobacco and liquor ads are banned under Indian law. These products, known as sin goods, have faced advertising bans since the Cable Television Network Rules, 1995 (CTNR) stopped direct and indirect ads for cigarettes, tobacco products, liquor, and other intoxicants.

Surrogate Advertising: A Clever Workaround

Despite the ban, brands have found clever workarounds through surrogate advertising. This strategy originated in Britain, where companies began promoting fruit juices and soda under liquor brand names to sidestep a ban on alcohol ads. This tactic helped increase sales while complying with the law.

In India, brands use similar strategies by advertising other legal products under the same brand names. As long as these products are genuinely available, have substantial sales, and the ad spending aligns with revenue, this isn’t illegal. However, some brands break these rules by advertising non-existent products.

Loopholes and Regulatory Challenges

The Advertising Standards Council of India (ASCI) allows brands to advertise extensions if they meet specific criteria, such as having at least 10% availability of the leading product in that category or reaching ₹5 crores in annual sales. However, pan masala sales, often conducted in cash without bills, make it easy for companies to manipulate figures and appear compliant.

Alcohol companies also exploit legal loopholes by organizing events like music festivals or selling mineral water under their brand names. Despite multiple layers of protection through laws like the Cable Television Networks Regulation Act and the Cigarettes and Other Tobacco Products Act, these regulations have not entirely curbed surrogate advertising.

The Market Impact

According to a 2018 WHO report, India’s alcohol consumption doubled in a decade, reaching 5.7 liters per person in 2016, with projections of 7 liters by 2030. The pan masala industry, though regulated as food, poses health risks due to areca nut and often sells alongside gutka. This market is massive, worth over ₹40,000 crores, highlighting its growing influence.

Authorities may consider a complete ban on surrogate advertising, inspired by countries like Norway, which has reduced alcohol sales through stringent ad bans. However, companies tied to sin goods have diversified into other businesses, maintaining brand visibility and revenue.

Diversification: A Survival Strategy

Kingfisher, known for beer, diversified into aviation, enhancing brand recall despite the airline’s failure. This diversification provides genuine revenue and keeps the core product in the spotlight, making regulatory crackdowns challenging. Tobacco companies like ITC have diversified into luxury hotels, consumer goods, and more, while others engage in innovative marketing strategies.

The Future of New Market Entrants

New players like Bira have adopted unique approaches, positioning themselves as lifestyle brands and diversifying into merchandise sales. Such strategies help them thrive despite advertising restrictions.

Banning surrogate advertising may impact advertising agencies, but it’s the authorities’ way of addressing the issue. Sin goods generate significant revenue, high taxes, and employment, making a full ban difficult.

Conclusion

Surrogate advertising in India exemplifies how brands navigate regulatory landscapes creatively. While authorities may tighten rules, the ability of companies to diversify and innovate ensures their continued presence in the market. This dynamic interplay between regulation and business strategy shapes the future of advertising in the country.