Ready-To-Drinks

Our Thinking

In recent decades, there has been a significant shift in the nature of criticism about the beverage alcohol industry—from a focus on the nature of our products to a focus on how our products are marketed and sold. Yet when it comes to RTDs, the criticism still tends to focus on the product itself.

At Brown-Forman, we would like to see all RTD products, regardless of alcohol base, treated the same as other beverage alcohol products with regard to matters such as regulation, taxation, and marketing guidelines. We work hard to produce good-tasting beverages such as RTDs, and we are proud that adults enjoy our products, whether pre-mixed or otherwise. RTDs have the added convenience and appeal of pre-measuring, pre-mixing, and pre-packaging. We will continue to market these products only to adults of legal drinking age, and will continue to encourage consumers to drink them responsibly.

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BASED ON THE FINDINGS AND OBSERVATIONS NOTED IN THIS REPORT, BROWN-FORMAN SUPPORTS AND ENCOURAGES:

Alcohol producers making and selling RTDs in the most responsible manner possible
  • This includes a diligent focus on a range of key factors, including how beverages are packaged, advertised, and marketed.
  • Taking a responsible approach includes no packaging of RTD beverages that could be perceived as being overtly attractive to those under the legal drinking age.
Conspicuous labeling of RTDs under all circumstances, in all markets—clearly signaling that the beverages are made with alcohol
The establishment of distributor and retailer guidance and recommendations for product placement and shelf management

This includes responsible attention to details about proximity of RTDs to items such as candy, soda, and other items popular with underage youth.

Through continued self-regulation, a strong commitment by all beverage alcohol companies that they will market only to people of legal drinking age in any given market
  • It is important that this commitment extend to all types of beverage alcohol.
  • We are concerned that undue focus on one type of alcohol product—e.g., RTDs—might draw away attention from the critical over-arching issue of irresponsible consumption.

As part of the Global Actions on Harmful Drinking commitments, we commit to take independently verifiable measures so that print, electronic, broadcast, and digital media in which we advertise our products have a minimum 70% adult audience. Our performance against these targets can be viewed at www.brown-forman.com/responsibility.

In addition, our Global Commitments involve plans to take steps to communicate certain information about alcohol beverages, such as alcohol strength, as well as information reminding consumers about the risks of excessive or inappropriate drinking on their health to help them decide what to drink and when and whether to drink or not.

Strong industry-based support and sponsorship of education programs as well as public awareness campaigns about the dangers of underage drinking, and the importance of preventing it
  • In addition to school- and community-based education and prevention programs and a steadfast commitment to responsible marketing, this should entail a continued investment in marketing responsibility (i.e., using our brands to encourage responsible decisions, attitudes, and behaviors among consumers).
  • Beer- and wine-based RTDs typically have an alcohol content similar to, or less than, beer and wine (respectively). Spirits-based RTDs are pre-measured drinks with consistent alcohol content, typically the amount associated with a single serving of the spirit(s) used to make the beverage.

    The often sweet taste of RTDs, combined with attractive packaging, has led critics to charge that the drinks are appealing to underage youth—as well as young drinkers of a legal age who may be prone to consume them in excess. Critics have also expressed concern in certain markets that the alcohol content of these beverages has increased in recent years, and/or that retailers have placed RTDs in close proximity to items popular with underage youth (e.g., candy and soda).

    For beverage alcohol producers, RTDs are another way of marketing good-tasting, high-quality beverages—with the added convenience and appeal of pre-measuring, pre-mixing, and pre-packaging.

  • THE READY-TO-DRINK CATEGORY AND RELATED DEBATE

    Ready-To-Drink products—whether spirits-based, wine-based, or beer-based Flavored Malt Beverages (FMBs)—are beverage alcohol offerings which were initially produced and marketed in the 1960s in Australia and in the 1980s in other markets, including the U.S. While the first RTDs were largely various types of wine coolers, by the 1990s, beverage alcohol companies were introducing citrus-flavored FMBs (e.g., such as “hard” lemonades). Other RTDs with a variety of tastes have been introduced over the past decade, from combination beer/fruit flavors to wine coolers and cocktails (such as bourbon and cola), including Brown-Forman’s Jack Daniel’s Country Cocktails in the U.S., our el Jimador New Mix (flavored carbonated beverage and tequila) in Mexico, and Jack & Cola beverages sold broadly in Europe, Australia, and other countries1.

    The crux of the debate on this topic is relatively well-established, and two-fold. Primarily, critics of the beverage alcohol industry have expressed concern that the marketing of RTDs is irresponsible—asserting that the color, packaging, and sweet taste of the beverages are intended to tempt underage youth to drink. A second key concern is critics’ perception of a “training wheel effect”—the fear that, because they are drawn to RTDs, underage youth will (a) begin to drink and then (b) move on to drinking beverages with higher alcohol content, and/or with increasing frequency.

    FEDERAL TRADE COMMISSION FINDINGS IN THE U.S.

    In 2003, the Federal Trade Commission (FTC) in the United States conducted an independent investigation and issued a Report on Alcohol Marketing and Advertising. Consistent with a 1999 investigation which came to similar conclusions, the report found no evidence of intent to target underage drinkers with RTD products (or as referenced in the report—flavored malt beverages, or FMBs), packaging, or advertising2. Noting that “the products have an established niche in the adult market,” the FTC found “no evidence of targeting underage consumers in the FMB market”3.

    More specifically, the FTC report noted that the internal documentation of RTD producers demonstrated that marketers “tested alternate product and packaging versions on adults aged 21 to 29 to determine the optimal product taste profiles and packaging styles and that they tested the appeal of advertising by surveying adults above the legal drinking age”4.

    OTHER FINDINGS AROUND THE WORLD

    According to the Alcohol Advisory Council of New Zealand (ALAC), 18- to 24-year-olds are the most frequent drinkers of RTDs in that country (where the legal drinking age is 18). ALAC also noted in its September 2008 report that:

    …the research regarding an association between RTDs and earlier onset of drinking or harmful drinking is not conclusive. Some studies have found some associations between RTD consumption and harmful consequences, and others have not found any such association5.

    Nevertheless, in 2010, ALAC issued a policy on RTDs supporting restricted advertising so that they do not “particularly appeal to young people,” minimum pricing in conjunction with other measures, and limiting alcohol content and serving size of containers6.

    There is a mix of findings on this front. For instance, an Australian study found that the palatability of alcohol increases with age, and that young people do not always identify the taste of alcohol when it is mixed in a sweet drink7. Such findings are counter-balanced by studies which consistently show that how, why, and how much young people drink is associated with factors much broader-reaching than the availability of RTDs.

    For example, a recent study of 8th and 9th graders in Switzerland found that:

    Perceived availability and drinking volume appear to be shaped by the adolescents’ social and physical environments. Adolescents who have a variety of opportunities to obtain alcohol might develop the impression that underage drinking is common and socially endorsed. Consequently, preventive actions to curb adolescent alcohol consumption should take into account the social acceptance of drinking and the physical availability of alcohol in the community8.

    In addition, studies have found that adolescents with the highest drinking levels prefer full-strength beer and spirits—and wine and RTDs to a lesser extent9. (For more on other aspects of risky drinking levels, see The Issues Forum’s Binge Drinking section.)

    ADDITIONAL RESEARCH AND COMMENTARY

    Much of the policy and public research about RTDs focuses on underage youth who drink. Research also shows that adults well beyond the legal drinking age are frequent consumers of RTDs around the world.

    There are also advantages to the availability of pre-packaged drinks for consumers who wish to drink responsibly—namely, that the pre-measured amounts of alcohol make it easier for people to more accurately judge the amount of alcohol they are consuming10.

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  • UNDERAGE YOUTH AND ALCOHOL

    As articulated in the 2003 FTC report, “a comprehensive alcohol policy also must address the means by which teens obtain alcohol for consumption.” The report also notes that:

    Younger minors obtain alcohol primarily from noncommercial sources; this social availability can be addressed by changing adult attitudes about teen use. Changes are also needed to reduce underage alcohol purchases from commercial outlets, a source of alcohol for older minors. Support is needed for the efforts of organizations that can conduct rigorous field studies of the efficacy of alternative approaches to improving enforcement of minimum age purchase laws1.

    The FTC’s follow-up study in 2008 referenced the launch of the “We Don’t Serve Teens” (WDST) consumer education program, spreading the message, “Don’t serve alcohol to teens. It’s unsafe. It’s illegal. It’s irresponsible.” WDST is a government program targeted to parents and other responsible adults2.

    Research additionally reflects that a range of factors affect how young people drink and why. For example:

    • The influence and drinking habits of parents has been found to play a strong role in shaping the drinking behavior of their children;
    • Young people who have a close relationship with their parents and are surrounded by strong family support have been found to be less likely to experience problems than those who lack adult support and supervision; and
    • Peers and friends have also been found to play an important role in young people’s decisions about whether and how to drink3.

    MARKETING APPROACHES AND SELF-REGULATION

    Marketing and promoting RTDs is an activity which falls under strict and well-established codes for responsible marketing worldwide. For instance, the Distilled Spirits Council of the United States (DISCUS), a national trade association representing nearly 80 percent of distilled spirits brands sold in the U.S., has a voluntary Code of Responsible Practices for Beverage Alcohol Advertising and Marketing. The Beer Institute and The Wine Institute in the U.S. also have their own codes of responsibility, as does the Distilled Spirits Industry Council of Australia (DSICA).

    spiritsEUROPE acts as the European representative body for producers of spirit drinks. Their membership comprises 31 national associations representing the industry in 26 countries as well as a group of leading spirits producing companies. In April 2012, spiritsEUROPE adopted EU-wide guidelines for the development of responsible marketing communications. They are the first key deliverable of the spiritsEUROPE ROADMAP 2015 (a commitment to the European Alcohol and Health Forum). The guidelines come as an addition to the general principles of responsible marketing communications covered in the ICC Code of Advertising and Marketing Communication Practice4.

    In the United Kingdom, the Portman Group has a Code of Practice for the Naming, Packaging, and Promotion of Alcoholic Drinks5. In fact, the Portman Group code was initially established in 1996 in part as a response to concerns about the growing popularity and sales of RTDs.

    The underlying principles of such codes include:

    • That ads should not feature children, cartoon figures, or anything that appeals primarily to persons below the legal drinking age;
    • That there should be no suggestion that alcohol use represents a “rite of passage” to adulthood;
    • That there should be no suggestion that drinking alcohol is a means to attain success;
    • That ads should not depict situations in which beverage alcohol is consumed excessively or irresponsibly;
    • That there should be prominent responsibility statements in all advertising initiatives; and
    • That we will place advertisements in media where at least 70 percent of the audience is of legal drinking age or older.

    There are criticisms of the self-regulation approach, most of which fall along the lines of “is the fox guarding the hen house?” That said, in its third study on this topic in 2008, the U.S. Federal Trade Commission (FTC) stated that “the current 70 percent baseline standard has helped to ensure that alcohol advertising is not disproportionately directed to those below the legal drinking age.” The report found that more than 97 percent of total alcohol advertising impressions among the 12 DISCUS member companies were in compliance with the 70 percent standard6.

    In Europe, based on a study initiated to measure industry compliance with its own self-regulation initiatives, the European Advertising Standards Alliance (EASA) recently reported a 95 percent compliance rate across 19 EU member states7 (For more on this topic, see The Issues Forum entry on Self-Regulation and Responsible Marketing Code.)

    TAXATION

    Some countries such as Australia, Switzerland, and Germany have established excise tax regimes specifically targeting RTDs—particularly those which are spirits-based or higher in alcohol content. Other governments and government entities, including the European Parliament, are also currently considering higher taxes on RTDs8.

    In this developing arena of policy debate, there are divergent opinions as to whether tax-based approaches will ultimately reduce harms related to irresponsible consumption of alcohol. Some groups claim that higher taxes—and thus higher consumer prices—effectively steer consumers away from purchasing RTDs9. A recent review of such policies by ALAC, however, determined that the “evidence does not show that such policies result in reduced harm, and there is a real risk of RTDs being substituted by other alcohol beverage types, including full strength spirits”10.

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