The Metaverse is Big Alcohol’s next target for marketing and increasing alcohol availability to drive higher consumption and maximize profits.
The metaverse can be described as a three-dimensional version of the internet. It allows users to cross from the physical space to the virtual space. Since it is three-dimensional it offers an experience similar to reality. Therefore, it is more engaging than the two-dimensional internet.
How Big Alcohol attempts to conquer the virtual space
How are alcohol companies cashing in on this new technology? The goal of alcohol companies is to increase their sales by driving higher alcohol consumption to maximize their profits. To achieve this alcohol companies use marketing.
The metaverse has opened up a whole new avenue of marketing for alcohol companies and the alcohol industry is catching up faster than the laws regulating corporate conduct in the virtual space..
Already Big Alcohol companies Jose Cuervo, Heineken, and Pernod Ricard have started alcoholizing the metaverse.
E-commerce
One major way alcohol companies are branching out into the metaverse is through e-commerce. By offering people a virtual liquor store experience, alcohol companies can get even closer to their target consumers than on two-dimensional online alcohol sale platforms. The companies can use the marketing tactics used in physical stores such as shelf placement, labeling, branding, etc. in virtual stores. This strategy can make products more attractive to consumers and more convenient than actually going to the physical store. Coupled with on-demand home delivery, this is a recipe for increasing alcohol availability and invading people’s homes with alcohol products even more.
Non-fungible tokens (NFTs)
Another way that alcohol companies are planning to use the metaverse is through NFTs.
A non-fungible token (NFT) is a non-interchangeable unit of data stored on a blockchain, a form of a digital ledger, that can be sold and traded. Types of NFT data units may be associated with digital files such as photos, videos, and audio. Because each token is uniquely identifiable, NFTs differ from most cryptocurrencies, such as Bitcoin, which are fungible, according to Wikipedia.
While mostly used to certify the ownership of a digital asset, NFTs can also be used to certify ownership of a physical product. Alcohol companies are looking into using NFTs to sell their higher-value products such as vintage wines.
By using NFTs alcohol companies can reach an even wider range of consumers for these products.
For example, companies can sell a product by using NFTs for future ownership of the product before the product has even been completed for example wine that is aged a certain number of years. Through this strategy, alcohol companies get to sell more of their higher-priced products and maximize profits (premiumization). Already alcohol companies Glenfiddich and LVMH are exploring the option of using NFTs redeemable for physical alcohol products.
Sponsorship
The metaverse is also opening up a new virtual event space that alcohol companies are already using to market products through sponsorship.
Movendi International previously reported about Pernod Ricard’s new metaverse platform ‘Absolut.Land’ which is a virtual Coachella event. Virtual events and platforms offer spaces for popular artists to hold concerts and virtual gaming itself is a platform that alcohol companies can invade to market alcohol even more. These metaverse events and spaces are used more by younger people, a demographic that Big Alcohol desperately wants to capture.
For Big Alcohol the metaverse is key to reaching today’s young people
As Movendi International has previously reported more young people, specifically in western countries, are cutting down on alcohol or going alcohol-free. This development is part of the wider health-conscious and sober curious social trend in these societies.
Young people are undoing the pervasive alcohol norms present in Western cultures. In doing so they are creating a more inclusive, health-conscious culture that prioritizes holistic well-being. Youth are increasingly recognizing the illusion Big Alcohol creates around their harmful products, seeing through the lies Big Alcohol sells. At the same time, they are discovering the many gains of cutting down on alcohol or going alcohol-free.
According to a Jeffries survey of 4000 consumers in eight major economies of the world, over half (56%) of 18- to 24-year-olds think consuming even one or two alcoholic beverages a day is harmful, compared with 31% of those aged 65 and over.
Young people were the only age cohort where the idea that alcohol is harmful outweighed more positive attitudes to alcohol.
Movendi International has reported about the trend of youth going more alcohol-free in Sweden, the United States, Germany, Scotland, and Japan. Millennials are consuming less and less alcohol, while Generation Z is the least alcohol-consuming generation in human history.
Young people driving this social change, undoing alcohol norms, and reducing consumption of alcohol products means a better future for everyone, where good health and well-being and sustainability and inclusion are prioritized over private profits of large corporations. This is a future that Big Alcohol fears.
The majority of people who are currently exploring the metaverse is this exact young demographic that is increasingly ditching booze. Possibly a major reason behind Big Alcohol’s push into the metaverse is to re-capture the young consumers they are currently losing.
Current alcohol policy systems not equipped to keep up with Big Alcohol’s expansion into the metaverse
Existing alcohol policy systems in the world are not equipped to handle metaverse alcohol sales, marketing, sponsorships and other aspects.
The metaverse does not have clear ownership like other internet platforms, such as social media sites like Facebook or web hosting providers like Google. Platforms on the metaverse are mostly built on blockchain technology. These platforms do not operate on a single web server. Instead, content is distributed across numerous computer servers via a peer-to-peer network. This means there is no clear owner or jurisdiction for the metaverse.
This nature of the metaverse gives rise to a host of issues in terms of regulating the alcohol industry on the metaverse. The problems are compounded by the lack of an internationally binding convention for regulating alcohol, such as the Framework Convention for Tobacco Control (FCTC).
Current alcohol policies differ not only from country to country but also within countries depending on the states or provinces. Such a piecemeal approach to regulating the alcohol industry is outdated and insufficient in the face of the emerging metaverse and Big Alcohol’s effort to exploit for driving alcohol availability.
Metaverse alcohol sales legal ramifications: A case study from the U.S.
The United States (U.S.) is a good example for the varying alcohol policy measures within one country that differ from state to state.
A case study highlights some of the alcohol policy measures in the U.S. and how metaverse alcohol sales can disrupt these existing rules.
Licensing
In all 50 states it is prohibited to sell unlicensed alcohol products.
But how do licesning laws apply when alcohol products are sold via the metaverse through NFTs, which is a digital certification?
There is still no regulation regarding this aspect. It is uncertain whether federal, state, and local alcohol beverage regulators will consider the sale of alcohol products through redeemable NFTs the same as IRL retail sale of alcohol products.
Three-tier system
In the U.S. federal and state laws generally divide the production, marketing, and sale of alcohol products into three tiers:
- Producers/importers,
- Distributors/wholesalers, and
- Retailers.
It is prohibited for entities of one tier to have an interest in another tier. For example, when selling alcohol products, producers/importers must sell to distributors/wholesalers who will then sell to retailers who can sell to customers. Neither producers/importers nor distributors/wholesalers can directly sell to customers.
How would this system work on the metaverse when products are being sold virtually via NFTs?
Jurisdictions are still trying to figure this out. But meanwhile, the alcohol industry is already ahead and expanding to sell through NFTs. For example, in Pernod Ricard’s Absolut.Land people can make virtual cocktails and get the physical product delivered to their homes. Pernod Ricard – a Big Alcohol producer – is then directly selling to consumers, circumventing the three-tier system.
Advertising Specialties
U.S. alcohol laws prohibit producers/importers from giving away things of value to retailers. These laws differ from state to state. In some states, producers/importers are allowed to give to retailers point-of-sale advertising materials and promotional items that are intended to be carried away by consumers such as branded glassware, bottle openers, etc. Several states completely prohibit these permissible advertising specialties and others have restrictions regarding the value or type of item.
How would alcohol companies’ branded NFT signage and items on virtual bars work, within these common sense advertising limits?
Considering that the metaverse is not restricted state by state it would be hard to ensure the virtual space adheres to the same regulations. And the alcohol industry can exploit this to circumvent state alcohol laws.
Sponsorship Agreements
There are specific regulations regarding sponsorship agreements between suppliers and retailers. Most often these regulations are regarding sponsorship agreements between suppliers and professional sports teams or their venue operators, as most venue operators also hold licenses to sell alcohol products.
Through the metaverse, Big Alcohol can circumvent these regulations to sponsor virtual events hosted by retail licensees, including professional sports teams.
Labelling Compliance
Physical alcohol products have labeling regulations such as obtaining a TTB-required Certificate of Label Approval.
But there is no guidance on how these regulations apply to virtual alcohol products in virtual alcohol stores.
As it is, the alcohol industry is failing to properly inform consumers in their labeling of physical alcohol products in all countries, such as the United Kingdom and lobbying against health warning labeling in countries such as Australia.
It not likely that Big Alcohol will follow proper labeling regulations in the metaverse considering the lack of even proper laws surrounding metaverse alcohol sales and marketing.
Underage Advertising
Marketing to young people under the legal age for purchasing alcohol is illegal in the U.S. and around the world. But Big Alcohol has been engaging in this illegal and unethical practice for years.
- A recent report from Alcohol Change UK showed that retailers are failing to adhere to their own voluntary codes of conduct to not deliver alcohol to minors and adults who are already intoxicated.
- The Addictions France Association recently exposed two social media accounts under the same username which are suspected of advertising in disguise for alcohol giant Pernod Ricard. Some of the advertisements even feature children.
- Movendi International recently exposed how Big Alcohol specifically targets young people online.
Checking alcohol industry compliance with laws that prohibit the marketing and sale of alcohol products to underage youth is even harder in the metaverse since there is no central authority. There is no one regulating the metaverse and no guidelines. Chances are Big Alcohol will exploit this loophole to market to those who are underage, considering that alcohol companies already do this anyway even with existing laws.
For Big Alcohol expanding into the metaverse is reaching an unregulated market.
The alcohol industry has a track record of both exploiting gaps in laws and regulations as well as circumventing and violating existing regulations to market alcohol more and maximize profits.
Sources
ArentFox Schiff: “The Metaverse: Alcohol Beverage Industry’s Next Marketing Frontier?“
The National Law Review: “The Metaverse: Alcohol Beverage Industry’s Next Marketing Frontier?“
