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Russia: A new law severely restricting beer advertising is so vaguely written that neither brewers nor the government officials responsible for interpreting it are sure what is legal and what is not, Itar-Tass posted on September 21. No one disputes the centerpiece of the legislation, which says clearly that beer ads cannot be aired on television or radio between 7 a.m. and 10 p.m. -- by itself enough to alter dramatically the dynamics of an industry to which brewers contributed more than $10 million a month. But other restrictions included in the law could deal a crippling blow to another popular pastime -- professional sports, just at a time when many teams have reached the point where they can afford big-name players and give some of Europe's richest clubs a run for their money.

Motivated by what they said was a need to disabuse the public of the notion that drinking beer is related to social success, athletic ability and quenching thirst, lawmakers banned ads inside or near sports facilities, schools and cultural institutions, as well as on the front and back pages of magazines.

"The ban may lead to Russia's isolation from the international sports community," the heads of the Russian Soccer Union and the Russian Hockey Federation warned in a joint letter to President Vladimir Putin and both houses of parliament.

Professional sports and beer go hand-in-hand in most countries, and Russia is no exception. While brewers say they can find ways to work around the television ban, restrictions on sponsoring sports teams could do more lasting damage in terms of building brand loyalty.

It is a sobering time for the Russian Brewers' Union, whose members control 85 percent of one of the world's fastest-growing markets. Instead of toasting their five-year anniversary as expected last week, the union huddled behind closed doors at the President Hotel to debate the fate of sports sponsorships and other pressing issues with officials from the Federal Anti-Monopoly Service, or FAS.

"The new beer advertising provisions are very vague. ... Even the FAS, authorized to interpret laws, asked for a time-out in explaining what some [advertising law] provisions mean in practice," Kirill Ustinov, spokesman of Turkish brewer Efes in Moscow, said after the meeting.

Like the brewers, the sports industry is on edge as it waits to hear what the new rules, which went into effect Sept. 5, really mean.

"We are not against sports [or] athletes, but we have to decline [supporting them] to avoid breaking the law," news agencies quoted the head of the brewers' union, Vyacheslav Mamontov, as saying.

Russia's largest brewer, Baltika, has already backed out of its sponsorship of the Russian Premier League, on which the brewer reportedly spent $2 million annually. On Friday, the company also said it is backing out of its own prestigious hockey tournament -- the Baltika Cup, the Russian segment of the European Hockey Tour.

Baltika had sponsored the tournament, dubbed the "little world championship," since 1997. The St. Petersburg-based company explained its decision to back out by quoting what FAS officials told it during their meeting Wednesday. "Even the use of a company's name, when it is the same as the name of a beer brand," will fall under the "weighty restrictions" imposed on brewers, Baltika said it was told.

The FAS said in a statement Thursday that placing beer ads "on athletes' uniforms or on the clothing of cultural events' participants" is illegal. Ironically, the interpretation runs counter to those offered by the very lawmakers who helped draft and pass the legislation.

"Sporting events and their airing are in no way curbed by the [advertising] law," First Deputy State Duma Speaker Lyubov Sliska said last month in remarks that temporarily calmed the fears of athletes and sports fans alike.

Duma Deputy Mikhail Grishankov, a vocal proponent of the law, echoed Sliska, saying clubs could continue wearing uniforms with beer companies' logos on them. Such conflicting signals are making brewers jittery.

Stary Melnik, a major sponsor of the national soccer team, said it might have no choice but to follow Baltika's lead and pull the plug. "We are waiting for the FAS to clarify all points raised by the brewers' union to make our decision regarding sports sponsorship," said Ustinov of Efes, which produces Stary Melnik and several other popular brands, including Warsteiner, Sokol and Bely Medved.

Another major event that could suffer from the ban is the Russian Hockey Championship, which is sponsored by Transmark, a local division of SAB Miller.

When Transmark's beer Tri Bogatyrya became the official partner of Russia's Professional Hockey League and the Russian Hockey Federation two years ago, "our relationship was founded on mutual cooperation," Transmark said in a statement. "The advertising opportunities that Tri Bogatyrya received were an inseparable part of our partnership with Russia's hockey organizations."

Transmark would like "for the Tri Bogatyrya brand to continue collaboration with Russia's professional hockey within the legislative constraints" of the ban, the company said. However, no definite decision for or against hockey sponsorship has been made thus far because SAB Miller's "legal department is [still] reviewing the changes to the advertising law."

About the only brewers who have firmly decided not to cut sports sponsorship are Heineken and Ochakovo. "We will remove our ads from the stadiums and comply with all other regulations," Heineken spokeswoman Anna Melesheva said by telephone from St. Petersburg on Friday. "But we'll continue sponsoring UEFA's Champions League matches in Russia and around the world."

In most countries, Heineken uses its sponsorship agreement with UEFA, European soccer's governing body, to advertise its Amstel brand, but in Russia the company advertises its bestselling local brew, Bochkaryov.

Similarly, Ochakovo said it will not end its sponsorship of Moscow's Dynamo soccer club. "We can promote our nonalcoholic products -- kvas, lemonade, juices -- with the aid of sports sponsorship," said Vyacheslav Merkulov, Ochakovo's sales director. Using similar logic, high-end brewer Tinkoff, which sponsors cultural events instead of sports, will also leave its sponsorship strategy unaltered. "Our concert programs are sponsored by the national restaurant chain Tinkoff, which does not fit under the ban's limitations," said Tinkoff spokeswoman Oksana Grigorova.

The majority of brewers remain undecided about their sponsorship policies, so the full ramifications for the sports industry remain to be seen. For the beer industry itself, however, the pain may only get worse. Another restriction, prohibiting the use of animation and images of people and animals in beer commercials, will come into effect Jan. 1. Meanwhile, the Duma is preparing to vote on a bill that would ban beer drinking in public places.


22 September, 2004