Diageo Facing Raki Trouble in Turkey After Booze-Ad Ban

The latest ad for Turkey’s Efes beer features an unmarked brown bottle and the cryptic message: “Even if we don’t see each other, we’ll know.”

The slogan refers to a law signed Tuesday by President Abdullah Gul that bans alcohol ads, limits sales, and would even stop TV viewers from watching Homer Simpson enjoy a Duff beer in Moe’s Tavern, as depictions of drinking on television programs are to be blurred out.

Diageo Plc (DGE) called the law “disappointing” in a statement, and Turkish spirits producer Yeni Raki ran a newspaper ad showing a hand shaking a glass of the drink with the words: “Ads are over. Excuse us.” Turkish winemakers have published notices with text in the shape of a wine bottle condemning the curbs.

The law forbids the sale of alcohol at night and near schools and mosques, going against the secular traditions of the Muslim-majority country of 74 million, where many people drink and women often choose not to cover their hair. Protesters who’ve taken to the streets in recent weeks calling for Prime Minister Recep Tayyip Erdogan’s resignation have denounced the alcohol restrictions, among other grievances.

Erdogan, who has dismissed the protests as the work of extremists, says the law is aimed at improving the nation’s health. As a substitute for the traditional anise-flavored spirit raki, last month he declared ayran, a salty yogurt drink, to be the national beverage.

Photographer: Adem Altan/AFP/Getty Images

People toast with alcohol as they party in a public park in the center of Ankara, during a protest against new regulations tightening alcohol sales in Muslim, but secular Turkey. Close

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Photographer: Adem Altan/AFP/Getty Images

People toast with alcohol as they party in a public park in the center of Ankara, during a protest against new regulations tightening alcohol sales in Muslim, but secular Turkey.

‘Healthy Generation’

“We did not ban alcohol; we just introduced a new framework,” Erdogan said in Istanbul last month at a conference on tobacco, which he has also targeted. Bans on smoking in coffee houses and restaurants date to 2008, and on May 31, he extended the restrictions to drivers of private cars. “We want to raise a healthy generation,” Erdogan said.

Diageo, the world’s largest distiller of alcoholic beverages, paid $2.1 billion for raki-maker Mey Icki two years ago. The London-based company’s shares fell 5.3 percent through yesterday from May 23, when Turkey’s parliament passed the alcohol-ad ban.

As protests have rocked Istanbul in recent weeks, the Borsa Istanbul National 100 Index has dropped more than 16 percent since May 23. Anadolu Efes Biracilik & Malt Sanayii AS, which produces Efes beer, rose 2 percent to 22.70 liras at 10:39 a.m. in Istanbul, paring its decline to 25 percent in the same period. Turk Tuborg Bira ve Malt Sanayii AS (TBORG), which also produces beer, was unchanged and has fallen 14 percent since May 23.

Turks consume 3.4 liters (0.9 gallons) of pure alcohol per capita annually, or just more than half the global average, according to the World Health Organization. In the U.S, consumption is 9.4 liters; in Britain it’s 13.4 liters. In Moldova, the global leader, it’s 19.2 liters.

Russian Crackdown

A year ago, Russia -- with annual consumption of 15.7 liters per capita -- began a similar crackdown with higher taxes, limits on where liquor can be sold, and ad restrictions.

Industry regulations in the U.S. only allow ads for spirits when 70 percent of the audience is over the legal drinking age - - TV shows airing after 11 p.m., for instance, or in high-end magazines. Rules for beer are looser.

In India, where alcohol ads have been prohibited for decades, producers have found a way around the ban by promoting other products like soda and bottled water under the same name. Kingfisher beer and Bagpiper’s Scotch Ale, for instance, both sell soda water with logos very similar to their alcohol brands.

“Ad bans are not the way to make people drink less,” said Dominic Lyle, director general of the European Association of Communications Agencies in Brussels. The restrictions are “very much a political move and linked to the views of the government. It’s more about secular versus religious.”

Shifting Tastes

Turkish imports of European liquor declined from 9 million cases in 2002 to 8 million cases last year, although their value more than doubled to 129 million euros ($171 million) as tastes shifted to pricier booze, according to SpiritsEurope, a trade association for distillers. The ban will prevent new products from entering Turkey since they won’t be able to build their brands with ads, according to Paul Skehan, the group’s director general.

“There’s a lot of industry disappointment that this law was rushed through at supersonic speed and there was no consultation of any of the industries affected,” Skehan said.

In a statement, Diageo -- home to brands such as Johnnie Walker whiskey and Captain Morgan rum -- said it believes a “collaborative approach among the industry, government, and third parties would lead to a better outcome.” The Turkish Association of Advertising Agencies, citing “deep tension” with the government, declined to comment on the new law.

While the curbs will hurt them, liquor producers still have high expectations for Turkey, said Spiros Malandrakis, a drinks analyst at Euromonitor International in London.

“The potential for the market is massive,” he said. “It’s one of the few countries in the region that’s growing, so everyone wants in.”

To contact the reporters on this story: Kristen Schweizer in London at kschweizer1@bloomberg.net; Selcan Hacaoglu in Ankara at shacaoglu@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net

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