International evidence: advertising

International evidence: Is there a link between advertising and consumption levels?

A South African firm of economists, Econometrix http://www.econometrix.co.za/site/default.asp, recently analysed international research on the economic impact of potential impact of an advertising ban on alcohol. According to its analysis, Econometrix found that the balance of the evidence is inconclusive and does not support a direct causal relationship between overall alcohol marketing and drinking levels or harmful drinking patterns (whether chronic or episodic). This applies both to adults and young people.

The following is a brief review of the different types of studies analysed by Econometrix:

Econometric studies
A review of all the econometric studies concluded that econometric studies have found no or only a modest correlation between marketing expenditure and consumption. According to a meta-analysis of 132 international studies, the elasticity of alcohol advertising is very small (0.029), supporting the notion that advertising has a small impact on demand.

Experimental studies
Experimental studies have found mixed evidence. While some report an effect on attitudes and expectancies around drinking, others do not. Such studies have been criticised for their inability to adequately account for the cumulative impact of different factors, including marketing influences, on the shaping of beliefs, attitudes and consumption patterns.

Longitudinal research
Some longitudinal research shows a modest relationship between exposure to marketing and drinking among young people. However, the strength of the association varies between studies. Some evidence suggests that marketing exposure may have a small impact on young people’s beliefs about alcohol and their drinking intentions. However, drinking intentions are not always the same as actual drinking behaviour, and factors other than marketing may have influence on drinking choices. Research has shown that people make drinking choices based on what dominant and/or influential people in their social circle do. Many who abuse alcohol are also not influenced by the image of the brands as such.



Countries that have banned advertising: Did it reduce consumption levels?

Comparing evidence of alcohol consumption trends (sourced from WHO) against the restrictiveness of alcohol advertising in a number of countries is instructive. The results show that there is no clear relationship between alcohol advertising, its regulation, and either drinking patterns or problems among youth.

Denmark has a ban on all broadcast advertising except on low alcohol-content products, as well as various restrictions on print and outdoor advertising. At the same time, Denmark has one of the highest reported rates of intoxication among young people.

Italy, on the other hand, reported one of the lowest rates of intoxication, even though advertising relies heavily on self-regulatory codes.

Greece, another country with low rates of intoxication among young people, has a combination of voluntary self-regulation and some legislated regulations.

The Canadian province of Saskatchewan experienced mixed results when it lifted its total ban on alcohol advertising, reporting increased beer sales, decreased spirits sales, and no effect on wine or on total alcohol sales.

Following a 14-month ban of all alcohol advertising in British Columbia, Canada, in 1971, yearly and monthly analysis showed no substantial effect on sales of beer, wine, or spirits.

Advertising and effects on consumption were studied in France, Germany, the Netherlands, Sweden, and the United Kingdom between 1970 and 1983. Despite significant differences in alcohol advertising policies, alcohol consumption decreased in all five countries.

Despite the repeal of an advertising ban on all types of beverage alcohol in New Zealand in 1992, there was no resulting increase in the consumption of distilled spirits. The already declining spirits market fell even further during the two years following the introduction of broadcast advertising (Distilled Spirits Association of New Zealand 2001).

The result of the initial ban of advertising in Russia did not decrease consumption per capita, but rather there was a pattern which showed that firstly the ban tended to shift brand loyalty and secondly there was migration toward the black market.