Limiting alcohol advertising spend could boost industry profits while testing the premise underlying our current approach.
Policy is often based on the assumption alcohol advertising is about battling for a share of a market of fixed size.
Cynics, of which I am one, doubt we are unmoved by the billions being spent on influencing our spending decisions.
Proving or disproving either case is nigh-on impossible, with the real world having too many complicating factors.
Accept the premise
With science offering no obvious way forward, the solution may lie taking the premise to its logical conclusion.
So, let’s say it is true, demand for alcohol is indeed immovable. It would mean nearly all advertising money was being wasted.
Most cash spent, say, promoting lager A over lager B, would be adding to the sector’s cost base for no extra income.
The route to higher shareholder returns can only lie in conducting this contest at lower cost.
Alcohol suppliers should, then, agree to cut their mostly fruitless marketing costs by agreeing a cap on advertising expenditure.
To maximise shareholder returns this cap would be best set as low as possible, allowing it to be returned as profit.
There is no reason for shareholders to resist such a cap on wastage, unless the notion of having fixed market size is untrue.
A low adspend cap would also satisfy those doubting that it does not help boost overall alcohol consumption.
If the premise of current policy is right, alcohol sector’s profits will rise, if not, alcohol consumption will fall.
Wherever the truth lies, someone would stand to benefit from putting this critical assumption to the test. ■