By: Mateo Lesizza
Proposing new management capabilities creation
For years the alcoholic beverage industry, which comprises manufacturers, distributors, and retailers, faces the strategic challenge of positioning itself as an agent capable of balancing its potential to generate economic value with filling societal needs in the field of public health. There is no doubt that the alcohol industry contributes to the society in several aspects including employment generation, profit creation for economic agents, and tax revenues at different public instances, and, when alcohol is used responsibly, it may also contribute to individuals’ physical and psychological health. However, harmful alcohol consumption creates many social and economic burdens that might exceed the benefits derived from alcohol commercialization.
Because of the negative effects of alcohol harmful consumption, currently, the alcohol industry faces an increasing hostile external environment that forces its participants to seriously embrace responsible drinking practices as an integrative part of their core commercial strategy. In this regard, an open dialogue and cooperation between policymakers and the manufacturers of alcoholic beverages as well as incorporating the leading retailers and other related industries can be (and in some countries already is) part of an effective policy mechanism to combat the damages caused by the harmful consumption of alcohol. Nevertheless, tackling alcohol harmful consumption and promoting responsible drinking are issues that directly or indirectly involve a variety of stakeholders, which, although manifest a common goal, often present radically opposed positions. Thus, while some actors tend to encourage the promotion of public health without taking into account the destruction of the economic value, others, on the contrary, give the impression to prioritize the economic value at the expenses of public health. Consequently, the role of the alcohol industry as part of the solution has been a matter of debate and, in many cases, it has caused reservations about the real motivations from alcohol industry’s members in funding initiatives to promote responsible consumption.
In a systematic review of alcohol industry-related initiatives published in the prestigious American Journal of Public Health in 2016, after analyzing 266 initiatives related to drinking and driving listed on the web page of the International Alliance For Responsible Drinking (IARD), authors concluded that the majority of the initiatives did not reflect public health recommendations and only 3% reported some evaluations regarding outcomes effectiveness; however, outcomes from those initiatives were not evaluated using methodologically sound techniques. In another study, published in the influential European Journal of Public Health in 2018, researchers assessed evidence from 21 peer-reviewed papers published between 1980 and 2017 regarding alcohol industry corporate social responsibility initiatives. The findings suggest that alcohol manufacturers are not taking their published commitment to avoid alcohol harmful consumption as seriously as they should. According to the investigation, instead of accomplishing harmful alcohol use reduction, many initiatives could result in opposite effects. In like manner, authors suggest that there is good evidence that corporate social initiatives are used to influence the framing of the nature of alcohol-related issues in line with industry interests.
Although the alcohol industry’s contribution to the reduction of harmful alcohol consumption has been questioned, it is interesting that there are also examples in the specialized literature indicating that, when a real commitment is demonstrated through participation in initiatives derived from discussion with multiple stakeholders, it is possible to consider alcohol manufacturers and other members in the alcohol industry as part of the solution. Case in point, in a book published by The Organization for Economic Co-operation and Development (OECD) in 2015, focused on analyzing alcohol-related policies, authors briefly describes the “Public Health Responsible Deal” initiative implemented in England, where economic agents as producers, distributors, and retailers, participate in exerting their influence to combat health challenges, including alcohol harmful consumption, by signing agreements to strive for goals negotiated with the government. Another example cited from the OECD comes from Denmark, where the government set the “Healthier life for all” campaign in partnership with private sector organizations in order to tackle several national health targets, including risky alcohol consumption. Even though the effectiveness of these programs has not yet been assessed, they are structured in a way that combines several actions from different stakeholders in the same direction, following goals designated by government interests considering also economic agents’ interests. According to the OECD, this alignment could increase the likelihood of obtaining positive results. Noticeably, nevertheless, is the fact that from the 240 book pages, less than 10 pages are devoted to examples of public-private’ initiatives.
Given the evidence, the new tactical challenge for managers in the alcohol industry is more than clear, it is necessary to find appropriate ways to position the industry as a reliable interlocutor to policymakers, trying to reconcile visions that are supposed to be opposite, but which are really not. Otherwise, the alcohol industry could be involved in new several stringent regulations that would harm its profitability. The question is how to do it.
From my point of view, a practical approach to face the challenge (but not the only one) is to create capabilities in the alcohol industry related to combining their own strengths derived from their focus on the production and marketing of alcoholic beverages with a new ability to speak the policymakers’ language. This concept is based on the idea that managers in the alcohol industry are consumers’ closest stakeholders and those who also possess the experience and marketing skills to communicate messages effectively, whereas policymakers are specialists having experience in the promotion of health and unquestionable access to researchers capable of providing scientific rigor to the evaluation of public policy interventions. Consequently, it is essential for the industry to translate its capacity to contribute into the language of the regulators, thus, the industry could gain the legitimacy required to be a proactive actor.
Speaking policymakers’ language implies at least two specific changes in the industry’s practices. The first is related to an evolution in the market research competencies as well as a switch in the way results from responsible drinking promotion initiatives are presented and disseminated, incorporating the analysis of consumer behaviors from a scientist perspective besides the traditional market perspective. The second implies a constant update by managers about the debates in the scientist arena in the domain of health promotion and marketing, this update not only would keep managers informed about what is at stake but also could hopefully involve the inclusion of industry’s members into the debate.
Following this line of thinking, in future articles, I will be commenting on studies published in the main scientific journals in the areas of public policies and marketing related to the prevention of harmful consumption and the promotion of the responsible consumption of alcoholic beverages. Articles to be published are the result of a doctoral research project in which I have invested two and a half years of study combining an extensive review of the academic literature with the execution of practical scientific research and my perspective as a strategy manager working for the alcohol industry.
Mateo Lesizza is Doctor of Business Administration; Manager of Strategy at Compañía Cervecera de Nicaragua; Visiting professor in Marketing and Strategy at several business schools, including INCAE Business School and Universidad Thomas Moore.
Esser, M. B., Bao, J., Jernigan, D. H., & Hyder, A. A. (2016). Evaluation of the evidence base for the alcohol industry’s actions to reduce drink driving globally. American journal of public health, 106(4), 707-713.
Mialon, M., & McCambridge, J. (2018). Alcohol industry corporate social responsibility initiatives and harmful drinking: a systematic review. European journal of public health.
Sassi, F. (ed.) (2015), Tackling Harmful Alcohol Use: Economics and Public Health Policy, OECD Publishing, Paris.