Beer, Wine or Spirit? Advertising impact on Alcohol Sales

wineWhat is new about the article?

The article examines the evidence how advertising influences sales of different categories of alcoholic drinks – or rather, how little effect (if any) advertising actually has on people purchasing the advertised product.

Which concepts/theories are discussed in the article?

The theoretical background of the article draws on Albion and Farris’ (1981) Market Power and Advertising as Information models. Market Power asserts that advertising doesn’t get people to purchase products they don’t need, but rather that it affects peoples’ brand choice and loyalty. Conversely, Advertising as Information asserts that consumers obtain information from advertising and gain knowledge about new products from advertising. Consequently, as previously established, in markets that are expanding (and/or in relatively new product categories) advertising may have a positive effect on overall consumption. However, in markets for established products, advertising is more likely to make people switch between similar products or brands in the market.

Where is the data from and what methodology is being used?

The article uses a variety of official and industry statistics to look at the relation of advertising expenditure and other items with consumption of beer, wine and distilled spirits from 1971 until 2012. The other items include demographic details, personal income, taxes levied on alcoholic beverages etc.

What are the main outcomes?

The main finding is that, against a backdrop of relatively steady alcohol consumption in the US, shifts have occurred between different types of alcoholic drinks. However, these shifts appear to be mostly related to shifts in demographics and price – but are largely unrelated to advertising.

Why should you read it?

The article adds more evidence to the argument that, while policy makers, the media and popular perception often blames advertising for “social ills” (such as obesity or alcohol consumption), making such a link is not easy – and the data doesn’t really support a direct link. In fact, a growing body of advertising literature suggests that the effect of advertising alone is very small in relation to aggregate consumption. It can, however, lead to shifts in brand choices. The potential policy implications are that focusing on banning advertising is unlikely to be effective: thus “scapegoating” advertising may be counterproductive and lead to a false sense of security for policy makers currently discussing such bans. Rather, policymakers must take a much wider look at consumption of potentially problematic products (such as alcoholic drinks) if they want to reduce consumption effectively.

Full text link: 
Wilcox, G. B., Kang, E. Y., & Chilek, L. A. (2015). Beer, wine, or spirits? Advertising’s impact on four decades of category sales. International Journal of Advertising, doi: 10.1080/02650487.2015.1019961

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