When NASCAR driver Kurt Busch roared across the finish line in his Ford during the Budweiser Shootout on Feb. 10, last year's NASCAR champ finished a disappointing sixth. But Diageo (DEO), whose Crown Royal Canadian Whiskey logo was plastered across the hood of Busch's Ford Taurus race car, scored a huge win. It was the first time in NASCAR's 56-year history that a liquor logo was displayed on a car.
NASCAR's decision to lift its long-standing ban on liquor sponsorships this season is just the latest marketing barrier the industry has managed to break through. More than 600 local broadcast stations quietly accepted booze ads last year -- up from only 60 in 2002. Sure, network TV still prohibits liquor spots, but cable and local broadcast stations carried more than $100 million worth of them last year. Even CNN is planning to jump in with liquor ads this year. Add that to the industry's recent victories in getting nearly half the states to permit tasting events in liquor stores and a rising number to drop laws forbidding sales on Sunday.
The rash of advertising is fueling a boom in sales. Total U.S. liquor sales last year were $14.7 billion, up 12% from two years ago, while total cases sold were up 7% in two years, to 164 million. It's the first time case sales have been up more than 3% in two consecutive years since the 1980s. Meanwhile, the industry is trying to position itself for a surge in the number of consumers who will turn 21 over the next decade.
Because liquor companies have long had advertising restrictions, they have always spent big on public relations and event marketing. But now ad budgets are fattening, too, to take advantage of new opportunities on TV. Diageo spent $150 million just on ads last year, up almost 30% from a few years ago -- and TV is the big driver. The marketer of Crown Royal, Johnnie Walker, and José Cuervo spent half its budget last year on TV. Brown-Forman Corp. (BFB) spent $27 million last year on Jack Daniel's alone. A third of that was on TV. Absolut, Southern Comfort, Bailey's Irish Cream, and Bacardi Rum hit TV, too, totaling more than $100 million last year, and many analysts say that could double in the next three years.
NO CARTOON CHARACTERS
Still, the national broadcast networks expect to sit out the surge, maintaining their self-imposed ban. NBC (GE) tried in late 2002 to run liquor ads in late-night time slots to test the water. It got slapped down by public pressure. "The reality is that broadcast networks are held to a higher standard," says Alan Wurtzel, head of NBC Standards.
Even with most barriers collapsing, liquor companies are treading cautiously. All the ads connected to NASCAR have a strong responsible-drinking component. Jack Daniel's, a first-time NASCAR sponsor this year, has a TV spot that features its NASCAR car and the slogan "Pace yourself. Especially when you're drinking." Having learned from tobacco's woes and eager to distance themselves from beer spots, liquor companies aren't featuring animals or cartoon characters.
Initially, NASCAR officials were skeptical about lifting its ban. Diageo, Brown-Forman, and Jim Beam Brands started lobbying the racing league in the late '90s, seeing sponsorship as not only a good audience fit but a big symbolic step into the mainstream. "NASCAR and its fans are as representative of the country as you can get," says Guy Smith, Diageo's executive vice-president for North America.
But even as strictures loosen, putting booze ads more on par with beer and wine, critics aren't ready to give in. The American Medical Assn. has an active campaign against NASCAR sponsorships and TV ads and says one of the fastest-growing pieces of NASCAR's audience is 12- to 18-year-olds. "Advertising liquor on the actual race cars that youth idolize sends the wrong message," says AMA President Dr. J. Edward Hill. Right or wrong, the message is a lot easier to get out.
By David Kiley in New York