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CHAPTER 3 Promotions

3.1 Definitions of promotions within the off-sales industry

Promotional strategies to increase purchasing are a common and expected phenomenon within our consumer culture; the sale of alcohol is no different with various strategies being employed to encourage additional and/or unplanned purchasing.

Whilst the range of literature examining the effect of advertising on alcohol consumption is substantial, there is limited literature describing the type of promotions utilised within the off-sales industry and their effects. Diamond (1990) developed a taxonomy of general promotional techniques based on consumer perception which indicated there are three main groups:

• Other product
  • Other product free now
  • Inpack coupon other product
  • Packon established product
  • Other product in mail
  • Inpack premium
  • Packon new product
• Extra product
  • Bonus pack
  • One free with several
  • Packon same product
  • Free same in mail
• Price offer
  • Cents off
  • Percent off
  • Newspaper coupon
  • Inpack coupon
  • Tear off coupon
  • Mail in rebate

However, in today's marketing climate, this is somewhat outdated. A more useful definition of sales promotion can be found in an established and highly edited Wikepedia ² article. Sales promotions are defined as:

"…non-personal promotional efforts that are designed to have an immediate impact on sales. Sales promotion is media and non-media marketing communications employed for a pre-determined, limited time to increase consumer demand, stimulate market demand or improve product availability…Sales promotions can be directed at either the customer, sales staff, or distribution channel members (such as retailers)."

Examples of promotions include:

Consumer promotion techniques:

• Price deal: A temporary reduction in the price.
• Loyalty rewards program: (e.g. collecting points).
• Money-off deal including price percentage reduction marked on the package.
• Price-pack deal: The packaging offers a consumer a certain percentage more of the product for the same price.
• Coupons: Free-standing insert ( FSI) - A coupon booklet is inserted into the local newspaper /magazines for delivery; On-shelf couponing - Coupons are present at product shelf; Checkout dispensers; On-line coupons.
• Loss leader: the price of a product is temporarily reduced in order to stimulate other profitable sales.
• Rebates: Consumers are offered money back if evidence of purchase is sent to the producer.
• Contests/sweepstakes/games: The consumer can enter by purchasing the product.
• Point-of-sale displays.

Trade sales promotion techniques

• Trade allowances: short term incentive offered to encourage a retailer to stock up on a product.
• Dealer loader: An incentive given to encourage a retailer to purchase and display a product.
• Trade contest: A contest to reward retailers that sell the most product.
• Point-of-purchase displays: Extra sales tools given to retailers to increase sales.
• Training programs: dealer employees are trained in selling the product.
• Push money: An extra commission paid to retail employees to push products.

Whilst the examples above cover the general area of consumer products, popular promotional techniques used in the off-sales trade are a subset of the above, and in the 2006 'Drink Pocket Bible' ( WARC, 2005) the main types are listed as:

• Price reduction
• Multibuy/save
• Additional quantity
• Banded pack
• Coupons

3.2 Spending on promotions

The following table illustrates the percentage spend on various types of alcoholic drinks with a range of promotional offers, also the percentage spend on promotions within each of the alcohol categories.

Table 2: Consumer Promotions by Type and Category

What is clear from the tables above is that the important promotional types within the alcoholic drinks sector are price reduction and multibuy/save, with wine being the most promoted product ( WARC Publications, 2005).

Whilst there is fierce competition amongst retailers (for share of retail sales) and manufacturers (for shelf space and share of category) the effectiveness of promotions is questionable as evidence shows they can undermine consumer loyalty (Fearne, 1999). This is a complex subject which cannot be discussed in detail here, however, suffice to say, promotions are used within the alcoholic drinks market to a greater or lesser degree depending upon the type of drink. With core, alcoholic beverages like wine and beer which are consumed more frequently, promotions are a more effective means of gaining share and generating trials of new products (Fearne, 1999).

3.3 Governance of promotions

There are guidelines issued by the Committee of Advertising Practices ( CAP) which govern the promotion of alcohol. Within the area of off-sales, this principally means that sales promotions that require multiple purchases of an alcohol product should not encourage or condone excessive drinking with the number of items required for purchase not exceeding Department of Health guidelines for safe drinking. The duration of promotions should be of sufficient length to allow consumers to participate without drinking excessively or irresponsibly. Other promotions, such as competitions with alcohol as prizes, need to consider how the prize is to be given, for example, with large amounts of alcohol should it be given in one go or offered over a period of time with the winner to collect consignments of the product over time. Also, promoters who send alcohol product samples to consumers should try to ensure that they are packaged and promoted in a responsible way; for example, people under 18 should not be targeted ( CAP, 2005).

3.4 Effects of promotions on purchasing and consumption habits

There is limited literature surrounding the effects of promotions on purchasing and consumption habits. A UK study by Garner (2002) explores the concept of reduced purchasing intervals after multibuying, i.e. the purchasing interval after multibuying two products (in this case shampoo) is less than double for one purchase (substantially less). In this case, consumers are bolstering home stocks, however it would be interesting to know if alcoholic goods are consumed more quickly, or also stockpiled.

Categories of alcoholic drinks brands which are not technically promotions however, should be included in this discussion are 'value' and 'own label' brands. The growth in these types of brands may also explain the divergence of expenditure and volume growth. An increase from 9.9% to 12.4% of 'value' whisky in 1995-6 illustrates this effect as the average price of 'value' whisky is 75% of branded whisky (Fearne, 1999). If this phenomenon has continued, and is repeated across the spectrum of alcoholic drinks, then it means there are a large number of products available at permanently low prices.

3.4.1 Low cost drinks promotions

There has been a growing trend in the design of alcoholic beverages which are specifically intended to appeal to young people, and are promoted using well informed and precisely targeted marketing strategies (e.g. "happy hour" promotions). This has led to mounting anxiety about the implications for public health; and a resultant demand for tighter control to regulate alcohol marketing practices. However, this criticism is notably directed towards on-sale promotions, with convincing arguments made that off-sale promotions do not contribute to alcohol related harm.

For example, the Portman Group, in a Code of Practice compliance help note for the third edition entitled Avoiding the Encouragement of Excessive Consumption in Multi-Purchase, On-Trade Promotions by Producers makes clear its lack of concern with regard to off sales:

"Rule 3.2(f) of the Portman Group's Code of Practice on the Naming, Packaging and Promotion of Alcoholic Drinks requires that a drink's promotional material should not encourage immoderate consumption and drunkenness…Promotions in the off-trade are less likely to be problematic in this way because even if the promotion encourages the purchase of a large volume of alcohol, that alcohol may be consumed at the purchaser's leisure over many weeks or months" (Portman Group, 2003).

Similarly the Northern Ireland Drinks Industry Group Joint Industry Code of Practice Sales and Marketing booklet (2005) states:

"It is clear that promotional activity in a retail outlet is different from on-license promotions. Customers cannot consume alcohol on the premises and purchases may be stored for a significant period of time before consumption" (p. 10).

Brain and Parker (1997), in a report commissioned by the Portman Group, found that off- sales promotions do influence the drink choice of young people who routinely frequent shops, parks, canals etc; and that the reported 'ideal' purchase was affected by finance in terms of favouring drinks of higher strength, good value and acceptable status. Such findings are supported by MacAskill et al (2001) and MacKintosh et al (1997).

Evidence regarding whether off- sales promotions encourage excessive alcohol consumption comes from a recent US study. Kuo et al (2003) found that among 1684 off-sales premises surrounding 118 college campuses, the: availability of large volumes of alcohol (24- and 30-can cases of beer/ kegs/ party balls), low sale prices, and frequent promotions and advertisements at both on- and off-premise establishments were associated with higher binge drinking rates on the college campuses [studied] (p. 204) . In other words, large volume and cheaper priced alcohol was associated with higher binge drinking rates. However it must be pointed out that the groups looked at were US college students and not wider populations.

3.5 Targeted advertising, marketing and packaging

Whilst there is little published evidence of targeted advertising, marketing and packaging on the part of off-licences directly, the general effect of alcohol advertising on young people is certainly worthy of note. This is of particular relevance given the evidence that many young people do drink, and that many acquire their alcohol from off-licences.

The Institute of Alcohol Studies ( IAS) fact sheet entitled Alcohol and Advertising cites work by Saffer and Dave (2003) which found that heavy advertising by the alcohol industry in the US has such considerable influence on adolescents that its removal would lower underage drinking ( IAS, 2005). Further work cited by Dring and Hope (2001), found that alcohol advertisements were identified as the favourite by teenagers in Ireland, that these teenagers believed that a majority of the advertisements were targeted at young people and that these teenagers interpreted the advertisements as suggesting that alcohol is a gateway to social and sexual success and has mind altering and therapeutic properties ( IAS, 2005). One specific example of these concerns is the alcopop and designer drinks market (see section 3.5.1).

The World Health Organisation reports that in the U.S., spending on indirect promotional activities such as sponsorship, product tie-ins, contests and special promotions is around three times higher than spending on direct advertising. If the situation in the UK is similar then the total value of promotional activity is in excess of £500 - £800 million per annum with many campaigns directed at the younger end of the adult market. Growing concerns have led the British Medical Association to call for deliberate targeting of young people to be made illegal, a view supported by Barnardo's Scotland ( IAS - Alcohol and Advertising, 2005; ESRC, 2005; Barnardo's 2003).

3.5.1 'Alcopops' and designer drinks

The available evidence suggests that few peer-reviewed studies have been carried out on 'alcopops' and young people's drinking since their introduction, and in particular, since they became 'mainstream'. For example, Austin (2001) surmises that although Bacardi Breezers were launched in 1993, it was between 1995 and 1998 that the brand really took off, and between 1999 and 2000, that it became supremely popular. ³

Where studies and government reports have become available, they have, however, made headline news. A report by the newspaper Deutsche-Welle states:

Doctors in Britain have put the blame for the surge in teenage drinking squarely on alcopops… According to an international study by the World Health Organization, 3.6 percent of 11 year-olds admitted to drinking alcopops regularly. At age 15, the figure jumps to almost 15 percent. In Germany, a government report last year said every second alcopop sold was purchased by 14 to 19 year-olds… In Germany, sales of Rigo and Breezer -- two popular mixed drinks -- account for 56 percent of Bacardi Deutschland's turnover (Deutsche Welle, 2004)… Rival company Diageo depends on Smirnoff Ice for half its profits (Deutsche Welle, 2003).

Whilst such reports evoke mass media attention due to the perceived 'deliberate' targeting of young people, evidence that alcopops have a significant contribution to young people's drinking is mixed. Brain and Parker (1997) note that preference for alcopops in their study was, in fact rare, and was not linked to delinquent behaviour.

Similarly, in their work with young street drinkers the authors noted that whilst it is recognised that alcopops have entered the under 18s (and even under 15s) drinking sector, they were rarely drunk by street drinkers being regarded as too expensive, too weak, too childish or insufficiently masculine. Instead the authors found brand-name, high alcohol, designer lagers and ciders were the drink of choice; moreover low cost socially acceptable versions of these were usually bought instead due to low funds (Brain and Parker, 1997; McKeganey et al, 1996). Furthermore, Hughes et al (1997) found that the popularity of designer drinks peaked between the ages of 13 and 15 years and declined among 16 and 17 year olds. In contrast more conventional drinks such as beer and spirits showed a consistent increase in popularity with age. Such research suggests that there are identifiable alcohol brands which, by accident or design, appeal predominately to the underage market in terms of their affordability, potency, and attractiveness (both aesthetic and taste). Concluding that whilst there is evidence that particular types of alcoholic drinks appeal predominately to underage drinkers, these are not 'alcopops' but high alcohol designer drinks such as high alcohol ciders and fruit (fortified) wine.

3.5.2 Pricing and promotion based on community characteristics

A further concern regarding targeted advertising and marketing is with regard to specific communities; essentially the encouragement of low income or minority ethnic people to buy alcohol. In a US study, Harwood et al (2003) suggest that promotion and pricing of alcohol (specifically beer) varies systematically dependent on the individual characteristics of communities, neighbourhoods and stores, i.e. low beer prices (including promotions) were located in predominately white and low-middle income neighbourhoods; and in stores classified as 'large retail establishments' or drug stores, suggesting that alcohol is made readily available to people on low incomes. Nevertheless, no evidence was found of neighbourhood effects such as racial composition, although Harwood et al (2003) believed this could be accounted for by the products they chose to monitor and the lack of minority communities in their sample.

Furthermore, a number of US studies have found that: alcohol availability (including off- sales) and advertising are disproportionately concentrated in racial/ minority ethnic communities ⁴; alcohol outlet density is an important determinant of the amount of alcohol advertising in a community; and African-American and Latino neighbourhoods had proportionally more billboards advertising alcohol than white or Asian neighbourhoods ⁵ (Alaniz, 1998; Alaniz and Wilkes, 1995; Altman et al, 1991).

Finally, a further study by Mack (1997 [see Alaniz, 1998]), found that West Oakland, California - an area in which racial and ethnic minorities and the poor are concentrated - had 1 liquor outlet for every 298 residents. By comparison, Piedmont, a more affluent, predominantly white area of Oakland, had 1 alcohol outlet for every 3,000 residents (Mack 1997). ⁶

Pollack et al (2005) recently investigated the link between neighbourhood deprivation and the availability of alcohol. The authors found that although the most deprived areas had considerably higher levels of accessibility to alcohol (in terms of outlet density etc), it was the least deprived areas which showed heaviest alcohol consumption. This indicates that alcohol availability was not associated with heavy drinking. Therefore, it can be considered that those living in areas dense with off-licences may be disproportionately suffering negative health consequences despite overall lower alcohol consumption.

3.5.3 Pricing and promotion related to alcohol related harm

There is a fundamental lack of evidence regarding the impact of alcohol promotion on alcohol related harm. Although there is a perceived link between alcohol price and consumption, there is little direct support of the relationship of this upon alcohol related crime and disorder (Reid-Howie Associates, 2003).

Section 5.1.1 discusses a study by Matthews et al (2006) who looked at violence related injury and the price of beer in England and Wales, where it is found that an increase in alcohol prices would result in substantially fewer injuries and reduced demand on trauma services. Although it is unclear how much of the element of 'alcohol prices' relates to off-sales the authors indicate the real price of beer within the model acts as a proxy for alcohol prices.

3.6 Potential solutions

3.6.1 Increased pricing/ taxation

There is evidence that increasing the price of alcohol may be an effective method of reducing its use by young people. A number of countries (Germany, Austria and France) have introduced 'sin taxes' on mixed drinks sold in cans and bottles, raising costs by approximately €1, and Deutsche Welle (2004) suggest this has 'left a serious dent' in France's alcohol market. MacKintosh et al (1997) agree with this move, suggesting that taxation increasing in line with alcohol content would mean that products high in alcohol would no longer be relatively cheap.

A study in Sweden examined the effects of altering the tax on alcohol related to its absolute alcohol content (Ponicki, 1997). This allowed for an examination of the purchasing habits of the three classes of alcoholic beverages, namely, beers, wines and spirits. The effects of this tax change were a compression of the range of prices of wines and spirits, and an expansion of the range of prices of beer. Consumers shifted away from drinks that became relatively more expensive. In conclusion, it is suggested that policies to reduce alcohol consumption should consider the entire price/quality spectrum as well as differences in absolute alcohol per volume across the three classes of alcoholic beverage.

In addition Heeb et al (2003) found that following the reduction of the price of spirits in Switzerland, consumption of spirits increased significantly by 28.6% with no effect on the consumption of wine or beer. This finding is of particular interest when considering that, in general, alcohol consumption in Switzerland was in decline (Heeb et al 2003). Concerns have been raised that buying alcoholic drinks in many cases can be cheaper than buying non-alcoholic ones (e.g. SAAAT, 2005).

The evidence that tax and price increases reduce alcohol related harm is in fact, stronger than the efficacy of educational measures (Babor 2003), however it is tenuous to suggest this has the capacity to tackle young people's attitudes or the culture surrounding binge drinking. It could be suggested that currently Scotland is at a stage where a concerted effort must be made in more areas than drinks promotion, involving a review of cultural attitudes in general.

3.6.2 Education and harm reduction

It is recognised that government-led education, and mass-media health campaigns, regarding hazardous drinking and 'the designer drinks culture', particularly for young people, is an important factor in encouraging sensible drinking cultures; and that if young people cannot be dissuaded from drinking alcohol then a harm reduction approach must be adopted to minimise the risks of irresponsible, uninformed drinking practices to both themselves, and others (MacKintosh et al, 1997; MacAskill et al, 2001). Despite this recognition of the benefit of education, MacAskill et al (2001) suggest that school-led education may not be as prominent as perhaps it should be. It is also postulated that where such educatory practices are engaged with, a media literacy approach may be most appropriate which demonstrates the power of marketing to young people in terms of how the: '… advertising, retailing and pricing of alcohol products make drinking appear prevalent, acceptable and attractive…' (MacKintosh et al, 1997).

3.6.3 Restricting off-sales promotions

In 2000, Harrison et al demonstrated that a large proportion of underage drinkers obtain their alcohol from social sources such as from friends, older siblings or at parties and few rely exclusively on commercial sources and as such, restrictions on licensing and enforcement of licensing laws may not have much of an impact on adolescent behaviour. However the majority of the other available evidence suggests that the restriction of young person's access to alcohol, (through off- sales) is, in fact, key (see Home Office, 2005; Mackintosh et al, 2003; Kuo et al, 2003; Bradshaw, 2003). And MacKintosh et al (2003) clearly implicate off- licences as the major purchase source of designer drinks for young people suggesting that curtailing the distribution of such products from off- sales premises will limit young person's access. Perhaps more so than focusing on educatory messages and changing behaviour (Kuo et al, 2003 [see section 3.4.1]).

An attitudinal survey, conducted in Scotland, found that in the current climate the general public feel that information regarding drinks promotions is more readily available than health messages to educate/ warn against the dangers of alcohol, or to advise on sensible drinking practices (Lancaster and Dudleston, 2002).

3.6.4 Community responses

Looking at pricing and promotion based on community characteristics, Alaniz (1998) noted that low-income minority ethnic communities are aware of the problems associated with alcohol availability. The author cites a community-based solution to alcohol problems potentially added to by targeted advertising described by Mack (1997).

In 1993 US citizens formed the Coalition on Alcohol Outlet Issues ( CAOI) in an effort to reduce the problems associated with alcohol outlet concentration in Oakland's minority neighbourhoods. The primary purpose of the CAOI was to reduce the density of alcohol outlets. The group's efforts led to the passage of an ordinance creating the Education, Monitoring and Enforcement Program. This program established operating standards for all city alcohol outlets. It mandated that alcohol outlets avoid creating a public nuisance, endangering public health or safety, or violating criminal laws (Mack 1997). If a merchant was found liable, specific conditions were placed on the operation of the outlet. If the conditions were violated, the alcohol outlet was no longer considered "approved" by the city. Based on the success of the pilot program, this ordinance was implemented citywide in Oakland (Mack, 1997).

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