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Liquorland ads: Another cloud for industry

At a time where controversy and speculation act as a dark cloud over the beverage and grocery industry, Wesfarmer’s (ASX: WES) Liquorland has been found to be in breach of a voluntary advertising code of practice.

Forty-nine separate complaints have been lodged since the chain’s ads went to air in January, accusing the chain of encouraging binge drinking, underage drinking and suggesting an improper link between alcohol and sport.

The commercials – which were often aired during the afternoon, attracting an audience of all ages – showed young adults partying with excessive alcohol whilst playing sport, each with a large glass or bottle of alcohol in hand.

The chain has defended its series of advertisements by stating that they were aimed at capturing Australian values of optimism, free spiritedness and sharing great times with friends, however, the Alcoholic Beverages Advertising Code (ABAC) disagreed. They stated that the ads were contrary to the aim of preventing binge-drinking and the idea that alcohol consumption was a necessity in order to have a good time.

Whilst the breach of the advertising code does not warrant any punishment, it has sparked suggestions from Geoff Munro, the Australian Drug Foundation national policy manager, that Australia should adopt an advertising regime whereby if alcohol is advertised, there are to be no people or images of people present in the advertisement.

According to IBIS, the wine production industry is currently in the midst of a downturn, whilst manufacturers such as Treasury Wine Estates (ASX: TWE) and Brand New Vintage (ASX: BNV) lose their bargaining power against the supermarket giants.

Foolish takeaway

This news merely ads a layer to recent speculation within the industry. The ACCC is investigating Wesfarmers and Woolworths (ASX: WOW) after companies such as Coca-Cola Amatil (ASX: CCL) accused them of selling their products at unreasonably low prices, putting heavy pressure on other grocers such as Metcash’s (ASX: MTS) IGA or Aldi.

Whilst Wesfarmers and Woolworths battle for a higher percentage of market share, any poor publicity could see devastative effects for either company.

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The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.  This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned in this article.

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