Good afternoon.
Don’t you love Harry’s name for this conference, Phoenix: Back from the Ashes?
It says what all of us who care about the beer business knows. Beer is still a great and important part of the beverage alcohol business. And it is back. In fact, lots of us think it was never gone. It is still the biggest category of the total industry. It always has been, and always will be, one of the most vibrant and innovative categories.
So, all of us ought to be feeling terrific — about the beer business today, about the beer business in the future, in fact, about the whole industry. But the truth is Harry’s title also reflects an underlying feeling that a lot of us have. Things are looking up. But, damn, they ought to be better. We shouldn’t even be thinking about “ashes,” but only roses.
Why is that? Why, even when our business is looking up, do we feel an undercurrent of unease and insecurity about our industry?
Here’s my short answer:
Seventy-four years after the end of Prohibition, we are still seen as a sin industry. That fact is the single biggest constraint we have on our present and future success. And the reason we are still seen as a sin industry is not just because of anti-alcohol activist groups. It is also – and largely – because of what we do to ourselves.
Walt Kelly’s famous character Pogo got it exactly right. Take an unblinking look at the mess in our swamp and you have to come to the same conclusion: we have met the enemy and he is us.
We wear the “sin” label like leg-irons. And, we will only get rid of the “sin” label when we put all of our energy into earning society’s trust and overcoming our common opponents – and stop putting so much of our energy and effort into trashing each other.
I know. In my 40 years in the industry, I’ve been there, done that. So I’m here to testify. The “amen” pew is right down front
For the next few minutes, I want us to:
- Take a close look at all the signs that show, despite all our good efforts, we are still treated like a sin industry
- Then frankly face why we still have that label
- And finally consider what we can do to rid ourselves of it at long last.
By all rights, this industry should have long ago shed the “sin” label. Over the last 25 years, the problems that most concern Americans have about alcohol have dramatically abated. For example, since 1982 drunk driving fatalities have declined nearly 40%, despite an increase in licensed drivers, registered vehicles and miles traveled in that same period.
Underage drinking shows a similar long-term decline. Since 1982, drinking by high school seniors has dropped by 33%, beer drinking among college freshmen is down 41%. And after seeming to plateau at the beginning of the decade, drinking by 8th, 10th and 12th graders has declined over the last five years. In fact, current drinking among 12th graders is now at its lowest level since 1975.
Any drinking by those underage is too much. But these signs are encouraging. The overall trend is clear. And we ought to applaud and encourage it.
What’s more, this industry has made a significant contribution to America making these gains. We are all doing our part to encourage and model responsible drinking by following strong marketing codes. Over the past several years we have all made those Codes stronger. We place our ads where they will reach a preponderance of adults. We make sure the content of our ads appeals strictly to adults. We audit what we do. And we have made it easier for anyone to voice any concerns they have about our ads. We think we do a good job of self-regulation. And in its 2003 review, the Federal Trade Commission agreed.
All of us are also doing our part to fund and support programs that directly help reduce drunk driving and underage drinking. Thanks to the leadership of companies like Anheuser-Bush, Miller, Coors and our own, as well as all our industry associations, more of our consumers than ever make good choices when they enjoy our brands.
They know how to host a party responsibly. They know to take a safe ride home. They know how to be, or go out with, a designated driver. And they are helped along in their responsible decisions by servers trained in watching out for consumers.
All of us are also working with local police and attorneys general to keep beverage alcohol out of the hands of young people and supporting our retailers with ID programs.
And all of us are doing our part to help parents – starting with our own employees — keep their kids safe. Sometimes we do that by providing individual parents with guides on how to talk to their kids about drinking. Sometimes we find common cause with parent groups whose personal tragedy has moved them to take action against drunk driving.
Frankly, few things in my career or life have touched me more than when a father from MADD told me how much our support of legislation to keep alcohol out of the hands of young people has meant to him. Like most of you, I’m a parent, too. I can just imagine what his loss must feel like. That man, that father, has now come to trust us to do the right thing and knows that we, too, do not want any more children hurt – directly or indirectly – by beverage alcohol.
I do not think he is alone. I believe the industry has made progress in earning the trust of Americans – at least some Americans. For example, between 1990 and 2002 the number of Americans who thought our industry was going in the right direction increased from 29% to 38%. And the number who thought we were off track dropped from 62%to 50%. What’s even more encouraging is that 40% of those who thought the industry was headed the right direction felt that way because of our responsibility programs.
Nonetheless – none-the-less – for too many Americans, this industry still wears a scarlet letter.
You can see it in the polling numbers. Our approval ratings may have gone up. But they are still at levels that would be very, very troubling if we were in politics. And, of course, we are in politics.
Moreover, for all the gains we have made, 14% of Americans still don’t think it is ever right to have a drink – even with dinner. Ten percent fewer Americans even choose to drink than they did just 30 years ago. In 1978, 71% of adult Americans were our consumers. Today, just 61% are. Obviously, we believe every adult American has the right to make that choice and clearly some people should not drink. Let me be clear, I know all of us respect anyone’s right to choose not to drink. Nevertheless, a decline of this magnitude tells us something important about the standing of our industry today.
Here’s something just as telling. Twenty-eight percent of Americans favor tougher restrictions on our business, keeping us in an even smaller box.
And 20% — one in five – would welcome the return of Prohibition. Think about that. For anything we want to accomplish in this society, we start twenty points behind.
The numbers are one thing. But where we all really feel the sting of being not-quite-accepted is in how we and our products are treated nearly every day.
Go to a supermarket on a Sunday afternoon in too many cities across America and where do you find the Budweiser, Miller Lite, Coors, Heineken, Sam Adams, Guinness, Harp and Red Stripe? Under a tarp. Under a piece of canvas — as if even to be seen – much less bought and enjoyed – is an offense against decency, civil order and the heavens themselves.
We love what we make. Every one of us is proud of the craft and passion that goes into our products. But in too many places in America, they have to be hidden away, shunned, like something unclean. That is just not right.
Here’s something else that’s not right and says it all for me. Let’s say any one of us invites the mayor of our town to visit our offices some afternoon to show how glad we are to be a part of the community.
What do you do?
You offer the mayor a beer, a glass of wine, a cocktail in the spirit of hospitality. You ask the mayor to pose for a picture so you can share this moment with the rest of your organization. And what does the mayor do?
Yeah, you’ve been there, just like I have. The mayor takes the drink and hides it — hands it to an aide, holds it behind the back, even sticks it behind a picture on a credenza — as if it is something to be ashamed of, as if you and I are people to be ashamed of.
Is that the way this industry ought to be treated, that we ought to be treated? NO! So, how do you explain it? Here it is three-quarters of a century after the end of Prohibition in this country, and we still get treated like pariahs. How does that make sense? I know we like to point to all those folks on the fringe of civil discourse that we call the “antis.” And it is true they are as busy as legions of horned devils making mischief.
They loudly proclaim that advertising leads to increased drinking by young people. They assert that they can prove that sales to children are a “critical component” of this industry’s profits. And they attack both our good actions and good intent by belligerently claiming we would lose one-half our market if we really acted responsibly.
But here’s what strikes me about all their busy mischief. Nearly every thing they say and do is so patently trumped up, misleading and distorted that it ought to defy belief.
The claim made earlier this year that advertising leads to increased drinking by young people flies in the face of 30 years of previous research and uses such an obviously flawed methodology that your ordinary undergraduate can see right through it.
And the demeaning assertions that we profit by underage drinking are based on cynical manipulations of prior studies and a misuse of government data.
But does all this hogwash defy belief? No. Reporters who ought to know better are ready to believe it. Parents are ready to believe it. Legislators and their aides are ready to believe it. Regulators are ready to believe it.
Now, if you try, you can get the attention of reporters, parents and regulators. And you can get them to give a second thought to what they were so ready to believe. You can even get reporters to ask the skeptical questions they ought to ask about such outrageous claims. And they will report the astounding responses.
Take this one for example. Recently the AMA issued a survey that purported to show that sex and intoxication were more common among young women on Spring Break. With a little urging, a few reporters asked some tough questions about the validity of the survey. The AMA’s response? The survey was never intended to be “scientific;” it was – and I quote – a “standard media advocacy tool.” And AMA’s spokesperson said that with a straight face. The nation’s physicians don’t do science. They do PR. (You may see me after this speech for your appendectomy!)
You would think such stunts would wholly discredit the extremist anti-alcohol types. And to some degree, it is now a little easier to get folks to take a second look at their claims.
But it is a second look. Reporters, parents and regulators are still pre-disposed to believe them. And they are still pre-disposed to disbelieve us. We still wear the scarlet letter.
But, when you look at the facts, you cannot blame the “antis” for that letter. Their claims against us are built on sand. So that is not what is really hurting us. My friends, when we really want to know why we wear the scarlet letter, we have to look in the mirror. We have met the enemy and he is us. For all the good we do, we continue to make the job of the “antis” easy by the ways we treat each other.
Let me give you an example from my own career. You can think of this as a true
confession.
Thirty or so years ago I was a young PR executive at Miller Brewing Company. We were locked in a tight fight with the reigning king of the industry to capture the attention and loyalty of beer drinkers.
It was a pretty tight and tough competition. We both looked for all kinds of ways not just to win loyalty for our beers, but to wrest it away from their beers. It was pretty much a tit-for-tat battle in which we both gave as good as we got. Frankly, the battle often got closer to a school yard shouting match.
They said our beers weren’t made with “natural” ingredients. And we, well, we decided to debunk the romantic myth of beech wood aging. We pointed out in brochures and press releases that “beech wood aging” amounted to little more than dumping a bunch of wood slats – sort of like bed slats – into a tank of perfectly good beer.
Did all our mutual rock throwing do any good? It certainly felt good at the time, in the way school yard fights can. We did get their attention and they got ours.
But it did not change the loyalty of beer drinkers. If you loved the finish of beech-wood-aged beer, you didn’t particularly care how the wood and beer got together.
If you loved a beer that made you join the “tastes great” versus “less filling” debate, you weren’t much up for a lecture in food science.
And more to the point, it got the industry the kind of attention it did not need. Lots of folks looked at us both like we should be wearing spats and carrying violin cases. We heard that from consumers, especially the more sophisticated who were becoming really important to our industry’s success.
We heard it from customers. A whole bunch of retailers looked at our companies like a couple of punks in a bar fight – and they wanted to know who was going to pay for the broken glass.
And we heard that from the BATF – the TTB’s predecessor. The folks over there acted like they were going to have to put on their Elliot Ness outfits to get us to straighten out.
Well, that’s an exaggeration. They did call us into their office, like the sign on the door should have said “Principal.” They did tell us to knock it off. They did say they were going to keep an eye on us – a very close eye. And that is not what you ever want to hear from one of your most important and powerful regulatory agencies.
Over the past 30 years, I’d like to think we have all learned not to repeat the mistakes we made in those early days of the “beer wars.” I would like to believe that when it comes to our industry’s reputation, we all know we are in the same boat. When we take on water, it’s not your end and it is not my end that is sinking. Our boat is sinking and the last thing any of us should be doing is drilling holes in the bottom.
But too often it looks like we are stuck in the same place. Too often we act as if the fastest way to get ahead is to attack somebody else — their character, their integrity, their motives.
Here are some of my examples; I suspect you have your own.
A little while ago an important part of our industry decided to object to direct shipping, a perfectly reasonable thing to do. But the way they went about it wasn’t. Essentially they said direct shipping was a bad idea because the rest of us in this industry were criminals who couldn’t be trusted. We had to have our every movement closely monitored. In effect, this member of the industry invited Elliot Ness back to slap us in irons.
More recently, some members of the industry have expressed differing viewpoints about beverage alcohol companies participating in motor sports. Beer companies have been doing that effectively and responsibly for 35 years. Over the last two years, some spirits companies, including Diageo, have, too.
We think it makes sense for every company to make its own decision about any promotional opportunity. We do not think it makes sense for one member of the industry to accuse other members of the industry of doing something “inherently dangerous” by being part of motor sports.
Consumers know better than that. Attorneys General, police and traffic safety experts know better than that. Up until now, about the only person who didn’t seem to know better and who would make such an inflammatory accusation was, well, CSPI’s George Hacker …and we all know how George is! Up until now.
My last example comes from the public policy arena. We all know there are lots of different ways to attack the drunk-driving problem. And we know that reasonable people can differ about the best solutions.
Policy disagreements are fine. Character assassinations are not. We may as an industry sometimes disagree with proposals from grieving parents and those who sympathize with them, but it is not appropriate to vilify them – calling them “neo-Prohibitionists,” or claming that ideas they may support amount to “car theft,” or accusing them of being “extremists.” What does it say about our industry, if one of our members responds to the proposals of a mother or father who has lost a child to a drunk driver by saying that they are “extremists?” Is there a way to feel the loss of a child that isn’t extreme?
If our industry is going to finally shed its “sin” label and be fully welcomed into our society’s civil discourse, then every member of the industry in every part must, at the very least, behave with common decency – toward those with whom we may differ, and toward each other. And, of course, it should go without saying that we all need to follow the letter and the spirit of the laws governing our industry, especially in what we provide retailers. It really is tough to shed the “sin” label when you continue to sin.
Let me be clear. What I am talking about is very different from tough, fair, hard-fought competition. Hard-fought competition comes from working very hard to please consumers.
We can, and certainly should, try to out do each other in offering consumers new products and new ways to enjoy products they already love. That kind of rivalry earns the continuing loyalty of consumers and actually expands the market for all of us. Just take a look at the competition in the FMB segment. It brings new consumers to the beer aisle and actually expands the grocery basket for us and our retail customers.
And I applaud the hard-fought competition in the brilliant advertising this industry produces. It shows we understand our consumers and what they expect from us. And it’s fun – even when we are just showing off. I also applaud the kind of hard-fought competition that shows up in making clear the difference between your brand and mine. You want to run a blind taste test and publish the results? Bring it on. Hard-fought competition is good for consumers and good for the industry. But denigrating somebody else’s character, reputation, and intentions is not.
Consumers do not like it. Sure, a few may find it occasionally entertaining or even persuasive, but they are almost always outside the mainstream. The vast majority of consumers simply find it repugnant. They end up saying “a pox on both your houses.” It works that way in politics. It works that way for consumer products.
Regulators, legislators and their staffs loathe the denigration. It makes them more certain than ever that they need to keep us under tight check. To them it says we really haven’t come far from the days of Prohibition.
Most galling to me, is that the denigration makes the most rabid “anti” look credible. When we indulge in it, we seem to be everything they say we are.
Finally, the denigration and character assassination just plain wastes resources – resources that belong to our shareholders and not to us. We’d all be better off putting those resources to different, more valuable, uses: winning current consumers, combating those who really do want to put us out of business, and expanding the pie for all of us. So, what do we need to do to shed the sin label?
I think we all know at least part of the answer to that question. When you are in a deep hole, there’s an important rule: put down the shovel. Said another way, we can put the rocks down and stop doing the anti’s job for them.
But I think there is more that we can do than “just say no” to the temptation to trash each other and what Pogo called “make a mess of our swamp.” And we can do more of what we are all already doing individually to end underage drinking and drunk driving. We can do more of the brilliant work we are already doing to encourage, implore and lead consumers to responsible drinking with our advertising. Frankly, I think the responsible drinking advertising we all do is among the best work that comes from our marketing teams. That’s what our research tells us. And that’s what our eyes tell us.
And finally, I think we can do more together as a unified industry to make a difference, in fact an exponential difference, in the issue that today most concerns parents: underage drinking. It is the right thing to do. It is what parents expect of us. It is what our consumers expect of us, welcome and admire.
And you know what? It does not take some kind of ponderous industry summit where we first debate the size and shape of the table for us to act as a unified industry. Right now, the Federal Trade Commission is in the midst of launching a campaign to prevent underage drinking, one of the things that the Commission does that I think we can all applaud, however some of us may feel about other Commission initiatives.
The program is called “We Don’t Serve Teens.” It is comprehensive. It is well thought-out. It was developed with the help of members of our industry. And almost everyone who has seen the program thinks it is brilliant.
I say “almost” because there has been one, very visible, nay-sayer: George Hacker. And what did he object to? Just the fact that the FTC was willing to work with our industry to do what is right for kids. I think that says all anyone needs to know about George, his organization, and his agenda. Keeping the scarlet letter pinned on us trumps what is right.
Our industry helped get the FTC’s program off the ground. Now, we have the opportunity to make it a stunning success. The campaign works by reminding adults that providing alcohol to teenagers is unsafe, illegal and irresponsible. Responsible adults don’t serve teens in a retail business. They don’t serve teens at parties. They don’t serve teens in their home. They don’t serve teens, period.
We all know that one of the most powerful places to deliver that message is at point of sale. So does the FTC. They’ve developed POS posters, cold case stickers, register signs and lapel pins in English and Spanish. The FTC is making them available to retailers. But you and I need to go one step farther for the FTC and do what we know how to do best. We need to get them into the hands of retailers, just as we would do with any of our brand campaigns and just as some distributors, like Charmer Sunbelt and Alliance Beverage right here in Phoenix, are already doing.
This morning, I am calling on every company and every trade association in this entire industry to send the whole POS tool kit to every retailer that you do business with. I mean every company – Anheuser-Bush, Miller, Coors, Heineken, Diageo. I mean every trade association – NBWA, WSWA, DISCUS, the Beer Institute, the Wine Institute, ABI. And I mean every retailer in the country – from the Wal-marts, Safeways, 7-11s, and Outbacks, to the Red Horse Tavern [Middleburg, VA, where Stuart and Moseby once had dinner] and Elbow Room [Lawyer hang out in Indianapolis.]
And Harry, I ask you to help us keep this commitment. I urge you to run a box on the front page of Beer Business Daily as often as you can that shows which of us is stepping up to this commitment and what each of us has done to fulfill it.
As a down payment on Diageo’s commitment, this week we and our distributor in Phoenix, Alliance Beverage, distributed more than 600 lapel pins in English and Spanish, along with posters, register signs and cold case stickers to retailers here.
My friends, the proposition is really very simple. If we want to finally lose the “sin” label, then let us, together, take a giant step by putting this label on: “We Don’t Serve Teens.”
Let’s take, together, this very visible, very meaningful step by getting the “We Don’t Serve Teens” program wide and deep distribution around the country. Think about our reach – if we choose to reach. Think about the incredibly positive impact of that reach. If we get these images before every stakeholder important to our industry – all of them – them who can say with any credibility that we are a sin industry.
The questions will then be to our antagonists: Why are you not helping us? Why are you not stepping up? Do you not care? If you care, muzzle your negative rhetoric and help us help America’s teens.
As we leave this hall today, I urge us all to take up this effort all across the land. Show the world that the label of sin, the scarlet letter, no longer has safe haven in the alcohol business.
Thank you!
