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FTC Reviews Ad Plans From Alcohol Clients

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Amid mounting concerns that alcohol ads target underage drinkers, the Federal Trade Commission has asked the E&J Gallo Winery and eight beer and spirits companies to detail their marketing practices, ad content and target audiences, according to several of the companies.

Letters seeking information were sent to Allied Domecq, Anheuser-Busch, Brown- Forman, Coors, Diageo, Jim Beam Brands, Miller Brewing Co. and the Mark Anthony Group, makers of Mike's Hard Lemonade, sources said last week.

The FTC has asked companies how they have followed recommendations the government agency made in its last report to Congress in 1999, sources said. Congress charged the FTC with preparing a six-month study on the issue in the February appropriations bill, and a draft report is expected to be sent to the five FTC commissioners in August.

The 1999 FTC recommendations included creating independent review boards to address public complaints, restricting advertising to media where more than 50 percent of the audience is 21 or older and developing a set of best practices. The best-practices recommendation advised prohibiting ads on TV shows or other media with the largest underage audiences, barring ads with significant underage appeal and restricting ads before movies with R and NC-17 ratings. The FTC did not return calls.

The FTC also contacted the Distilled Spirits Council and, according to sources, the Beer Institute. "We were invited by the FTC to provide information on our code of good practice, and we welcome the opportunity," said Lisa Hawkins, a Distilled Spirits Council rep. She declined to elaborate further. The Beer Institute did not return calls.

Caroline Coleman Bailey, a Gallo rep and Ernest Gallo's granddaughter, said a written response has been filed. "We belong to the California Wine Institute, and they have a code of conduct that we have always tried to adhere to," she said.

Wine Institute CEO John De Luca said he was puzzled Gallo was included. "I know of no intervening events that could possibly have prompted the FTC to send a letter," he said.

Brown-Forman, makers of the "malternative" beverage Jack Daniels Hard Cola, also confirmed it received a letter and sent a response. Philip Lynch, a company rep, said the FTC requested marketing materials dating from 1999 to 2002. "They are reviewing advertising for content and placement to ensure it is reaching the intended adult audience," Lynch said. "We are confident we will have done just that when they conclude this review."

Stephen Lambright, A-B general counsel, said the company had complied with the request. "We believe the [industry's voluntary marketing] code's policies, practices and processes—coupled with the numerous government and network regulations, standards and practices with which we comply—are effective in ensuring that beer marketing and advertising efforts are responsible and focused on the appropriate adult audiences."

Critics of alcohol advertising argue that it is more effective at reaching underage audiences than adult consumers, and recent studies have bolstered this argument. A September report by the Center on Alcohol Marketing and Youth at Georgetown University in Washington found that magazine readers aged 12-20 saw 54 percent more malternative ads, 45 percent more beer ads and 27 percent more distilled-spirit ads than those over 21. The Center also said the alcohol industry falls short of the best-practices guidelines the FTC established in 1999.

The Distilled Spirits Council has questioned those findings.

Another charge against the industry is that "alcopops" like Mike's Hard Lemonade target youth. The Center for Science in the Public Interest asked the FTC to investigate the marketing of these beverages, but last year the FTC concluded there was no basis for concern.

The liquor industry spent $1.7 billion on alcohol advertising last year, according to TNS Media Intelligence/CMR.

Dan Jaffe, evp of government relations for the Association of National Advertisers, said that when the FTC began its study in March, "they said they did not have something independently to suggest anything had changed but would be able to say something definitive after the study. We will all hold our breath."