May 30, 2023

NAD Refers Bacardi to the FTC for Digital Marketing Compliance

Pernod Richard Challenges Bacardi's Ad for “Havana Club” Rum

If you're a rum drinker, this latest chapter in the legal wars between Pernod Ricard and Bacardi will be interesting from a historical context.

If you're not a rum drinker, it should be interesting about how NAD works with the FTC. 

The National Advertising Division (NAD) of the Better Business Bureau and the Federal Trade Commission (FTC) are two separate entities, but they share a collaborative relationship when it comes to regulating and monitoring advertising practices in the United States.

NAD is a self-regulatory organization that reviews advertising claims.

NAD closely follows FTC policy and precedent.

Pernod Ricard and Bacardi have been involved in a long-standing dispute regarding Bacardi's “Havana Club” rum brand.

In this case, Pernod Ricard filed a challenge with NAD, arguing that Bacardi is misleading consumers due to the fact Bacardi's “Havana Club” rum is and was “never made in Cuba” (the rum is, in fact, made in Puerto Rico).

NAD ruled that it had jurisdiction over the challenge following an initial disagreement over some of the related ad claims at issue.

After NAD's ruling, Bacardi notified NAD that it would not participate in a NAD review of the challenged claims.

The result: NAD referred Bacardi's advertising claims to the FTC.

Takeaway

It will be interesting to see to what extent, if any, the FTC elects to get involved with the dispute.

The FTC may defer, given the complex diplomatic relationship between the United States and Cuba.

In any event, U.S.-based marketers should understand that their failure to participate in the NAD self-regulatory process may result in an FTC enforcement action.