LFMI has examined the draft law on amending Article 29 of the Law on Alcohol Control and formulated its comments and proposals.
Outdoor beer advertising is not restricted in the majority of countries
According to the 2014 Global status report on alcohol and health of the World Health Organisation, outdoor beer advertising is completely prohibited in less than one fifth of the countries worldwide. In comparison to beer advertising restrictions on the radio, television and other media imposed in other countries, Lithuania’s restrictions are among the stringent in the world. Only one fifth of 166 countries completely prohibit beer sales promotion on the radio and television. Even less countries prohibit advertising in the printed media.
There is no reason to claim that other countries seek for stringent regulation of alcohol sales promotion
According to the WHO’s report, the number of countries that apply partial restrictions on alcohol advertising is growing whereas the number of the most restrictive countries and those without any restrictions tend to decline (p. 78). These tendencies and the severity of the current restrictions on alcohol advertising in Lithuania give reason to doubt about the necessity of the proposed regulation.
Alcohol advertising is aimed at convincing a consumer to choose a particular product
Under standard economic theory, monopolistic competition is defined as a market type (other market types – monopoly, oligopoly and perfect competition). The majority of commodity products fall under the category of monopolistic competition. Beer, milk, cigarettes, bottled water, coffee and other commodity products of different producers are very similar. Every manufacturer invests into artificial distinctiveness of its production: a brand, its image, advertising, etc. This is aimed at convincing a consumer to choose a product on the basis of its artificially created reputation rather than price. High costs are inevitable in such markets, especially if the competitors also invest in advertising.
The alcohol market structure and the prevailing fear of losing market shares to a competitor explain significant advertising costs and large investments into a brand and its visibility.
In the light of the aforesaid arguments LFMI calls for the rejection of the proposal.
The full position paper (in Lithuanian) is available at http://www.llri.lt/naujienos/ekonomine-politika/vartotoju-apsauga/ekspertize-ar-reikia-dar-labiau-apriboti-alkoholio-reklama/lrinka
