SEAGRAM'S ON THE BOX

By MICHAEL KRANTZ

The ad itself is nothing special. A dog sits holding a diploma in its mouth over a subtitle reading, "Obedience school graduate." Then a second dog trots onscreen, proudly bearing a purple-velvet pouch with a bottle of Crown Royal whiskey inside. "Valedictorian," reads the subtitle. Typical, right?

Wrong. The 30-sec. spot, now airing on KRIS-TV, an NBC affiliate in Corpus Christi, Texas, is a landmark: the first deviation from the Distilled Spirits Council of the United States' self-imposed ban on TV advertising, adopted in 1948. Reaction was swift. The ad "could open the airwaves to a flood of hard-liquor ads," fumed Democratic Congressman Joseph Kennedy II of Massachusetts, who is well aware that his family's fortune was fortified with liquor profits. He has introduced a bill that would not only ban TV ads for hard liquor but also restrict those for beer and wine. "When advertising shows the way to get a pretty girl or guy is to suck down a brew," he says, "we want to take it off the air except after 10 p.m." President Clinton favors continuing the ad ban but has not endorsed Kennedy's politically riskier bill.

Seagram's ad is p.r. heaven: spend a few bucks on an incendiary TV spot, then let the media spread the word. The industry needs the lift: sales of cases of distilled spirits, according to M. Shanken Communications, shrank from 190 million in 1980 to 135 million in 1995--a drop of 29%. Beer and wine marketers, meanwhile, exploiting the mistaken perception that their products contain less alcohol than distilled spirits, used such icons as Spuds MacKenzie and the Swedish Bikini Team to boost sales by even more than the distillers lost.

Seagram last year earned $725 million in operating profits from worldwide spirits and wine sales of $5.06 billion, but sales growth has been slow. Crown Royal has been a happy exception, with sales totaling 1.8 million cases in 1995 and growing 5% a year.

Nevertheless, Seagram, which spent $21 million in liquor advertising last year, wants to level the TV playing field. Alcohol is alcohol, goes the argument. Thus far, the networks seem inclined to abide by the ban, but that could change if the Crown Royal campaign is a hit. And if instead it goads Congress into action, then maybe beer and wine will get kicked off prime time as well.

The real issue, says Arthur Shapiro, Seagram's executive vice president of marketing strategy, is equal access in a radically fragmented media landscape. "The use of electronic advertising for products like spirits has undergone change," he says, "and so have people relative to those changes." Translation: this is the jaded 1990s, and our ads are nothing compared to the stuff people see on cable and the Internet, so get off our case.

Not likely. "Advertising for distilled spirits is already going after younger people," says Jeffrey Hon of the National Council on Alcoholism and Drug Dependence, citing recent Dewar's Scotch and Southern Comfort campaigns in such youth-culture bibles as Details and Rolling Stone. Shapiro says Seagram has taken "great pains that our advertising doesn't appeal to or aim at children," an iffy claim during a campaign that uses "Valedictorian" as a punch line. Why violate the ad ban? Market share. Hard liquor is slipping, and TV is where tomorrow's customers are.

--By Michael Krantz. Reported by Stacy Perman/New York

With reporting by Stacy Perman/New York