Ukrainian Parliament Bans Alcohol Advertising
 
January 22, 2002
 

On November 15, 2001, the Verkhovna Rada or "Supreme Council"-Ukraine's parliament-passed a bill banning alcohol and tobacco advertisements via television, radio, billboards, and print media. The bill was supported by 310 of the 450 deputies on the Council.

Deputies in the Verkhovna Rada argued that such advertisements were damaging the health of the country by causing increased consumption of tobacco and alcohol products. They further argued that such advertisements are harmful to the psychological development of young people. Ukrainians have an average life expectancy of 62 years for men and 73 years for women-one of the lowest in eastern Europe. High rates of drinking and smoking, widespread poverty, and the continuing effects of Chernobyl nuclear disaster are largely responsible for this statistic.

The bill not only bans tobacco and alcohol advertisements but also attempts to remedy social ills. The bill calls for advertisers whose business is fully or partially financed by the government to place social responsibility advertisements by government authorities and public organizations free of charge, as long as such advertisement does not comprise more than five percent of broadcast time or printed area designated for advertising.

Ukrainian President Leonid Kuchma must sign the bill before it can become law. On November 21, 2001, the All-Ukrainian advertising coalition urged President Kuchma to veto the bill. A member of the coalition's board argued that the ban on tobacco and alcohol advertising would significantly reduce the advertising revenues of Ukraine's budget and cut the country's advertising market by 30 percent. Both foreign and local advertisers say the prohibition would cost the sector more than $10 million.

A representative of Video International, one of Ukraine's largest advertising companies, stated that billboard advertisers and television stations will be particularly affected by the decrease in a key source of revenue. Other experts have stated that advertisers will have to resort to other means of promotion such as direct marketing and the offering of free product samples. Further, illegal producers of tobacco and alcohol could benefit from an advertising ban, since such producers do not advertise or control the quality of their products. Many say that the new bill, if signed into law, will not actually reduce alcohol and tobacco consumption.

U.S. companies that market and sell alcohol and tobacco products in Ukraine could be affected if President Kuchma signs the bill into law. It remains to be seen whether advertisers can convince the President to act contrary to an overwhelming majority of the deputies of the parliament

For more information contact Lara Peppard at 888-688-8500 or lpeppard@hklaw.com.