Kids who start drinking young are seven times more likely to be in an alcohol related crash. Teen alcohol use kills about 6,000 people each year, more than any illegal combined drug. Car crashes are the leading cause of death for teens and one out of three of those are alcohol related. Based on the abovementioned statistics, it is evident that underage drinking is a growing epidemic that continues to plague the American social landscape. Although many attribute parents, peers and other environmental factors to shaping teenager’s perception of alcohol and alcohol consumption, “research on alcohol advertising and youth has shown small but significant correlations between exposure to alcohol advertising and drinking beliefs and behaviors.” Regardless of the statistics, beer and alcoholic beverage companies continue to bombard the American public with alcohol marketing, often placing advertisements with youth-oriented themes in medium where audiences are predominantly underage. Despite public outcries for change with the industry’s placement of advertisements during programs that are predominately viewed by underage audiences, beverage companies and their respective ad agencies would justify their practices with a Milton Friedman approach to stakeholder’s management. By focusing on a profit-driven model, companies can validate their practices, further perpetuating the growing rate of teen alcohol consumption. Ultimately, companies should adopt an Edward Freeman outlook on stakeholder theory, for ethically, it would satiate the demands and concerns of their apprehensive stakeholders while also acting in a more socially responsible manner.
An array of watch groups, government based agencies and other alcohol related organizations have taken the initiative to explore the numbers of teens who partake in underage drinking. According to research released by the U.S. Department of Justice in 2002, although in the past month there were higher numbers of young people who did not engage in drinking, the study emphasized that those teens who did drink, were at higher risk to binge drink. “While about 43 percent of adult drinkers report heavy drinking one or more occasions in the past month, 50 percent of 12 to 14 year-old drinkers, 65 percent of 15 to 17 year-old drinkers and 72 percent of 18 to 20 year-old drinkers report heavy drinking in the past month.” In congruence, The Center for Disease Control reported in 2009 that 42 percent of high school students during the past 30 days had drunk some amount of alcohol, 24 percent binge drank, 10 percent drove after drinking alcohol and 28 percent rode with a driver who had been drinking alcohol.” Even at the state level, according to statistics collected by Mothers Against Drunk Driving, in the past month, in Pennsylvania alone, 28.30% of people (or 445,000 people) between the ages of 12 and 20 have consumed alcohol and 18.70% of people (or 294,000 people) have binged on alcohol.  Cumulatively, the data proves that the number of underage drinkers and those that binge drink is supported by the widespread acceptance of drinking as part of the American culture. By encouraging minors to partake in an illegal activity, alcohol companies are reassuring that drinking underage is socially acceptable and encouraged.
Based on these alarming statistics, why exactly do beverage companies find it a necessity to target the teen demographic? In order to answer this question, it is important to understand the significance that teens hold in today’s marketplace. According to James A. Pooler in his book, Demographic Targeting: The Essential Role of Population Groups in Retail Marketing, “Even though the teen demographic does not seem large in size, it is big in its marketing clout. The total disposable income of this group is in the billions of dollar… There are some sectors where teens just dominate, and their considerable influence cannot be ignored.” Furthermore, “Teen attitude is also engendered by the fact that they are young and healthy, and so firmly belief that they are invincible. They feel strongly that they are independent and they feel they should be treated like adults. Their shopping and buying habits reflect their self-indulgent attitude.” As the coming of age generation, it is critical for any company to, “win the hearts and wallets,” of this demographic. If companies ignore the growing power of the teen market, one can assume that they are neglecting a huge sales opportunity and guaranteed future customer loyalty for their business. It is clear that alcohol companies take the time to understand the teen demographic and have realized the importance of capturing them, despite the fact they cannot legally consume their products, in order to generate profits. Based on the conclusions streamlined by Pooler, one can assume that beverage companies would favor positioning their advertisements in a way that entices and persuades teens to buy and consume their products.
As the perception of drinking alcohol continues to be reinforced by popular culture and advertising, the more it will become widely accepted and ingrained into teen behavior. In the same U.S. Department of Justice report aforementioned, “survey studies on alcohol advertising and young people consistently indicate that children and adolescents who are exposed to alcohol advertising have more favorable attitudes towards drinking, are more likely to be underage drinkers, and intend to drink more when they are adults.” Alcohol advertisements are often characterized with various themes; ones that encourage teens that bars are a good place to hang out, having a few beers is a good reward, drinking makes it easier to get to know people, drinking alcohol is a good way to relax and good friends drink together. These two assertions lead to the question, how often are teenagers exposed to alcohol related advertising that accentuate the abovementioned themes? In July of 2005, The Center on Alcohol Marketing and Youth published a study entitled, Striking a Balance: Protecting Youth from Overexposure to Alcohol Ads and Allowing Alcohol Companies to Reach the Adult Market, in which the center examines, “the impact of the 70 percent threshold on reducing underage youth exposure to alcohol advertising. In the process of accomplishing this goal, they thoroughly demonstrate that overexposure, the disproportionate advertising exposure to youth as compared to adults per capita, does not meet the intended 70 percent threshold in both print and commercial advertisements. For example, “On National television from January through October 2004, six brands exposed youth to proportionately more alcohol advertising than adults 21 and older on a per capita basis.” As a means to demonstrate this overexposure, the center studied 25 brands that placed advertisements on a number of programs above the 30 percent youth audience composition cap (see Exhibit 1). Most of these brands commercials were positioned during highly watched youth programs such as BET’s 106 & Park, Fear Factor, VH1’s Top 20 Countdown and the Chappelle’s Show. One example that the study delineates is the, “75 percent of youth exposure to Modelo Especial Beer television advertising which was generated by ads that were seen by proportionately more youth than adults of a per capital basis.” Although teenage drinking behaviors are not solely influenced by advertising, based on this particular study, one could attribute the high frequency and commonality of underage drinking in the country to the fact that the youth demographic has been overexposed to alcohol advertising.
Because there are such high numbers of teenagers that engage in alcohol related activities, as well as evidence that companies are exposing the demographic to significantly more alcohol advertisements then there should be, beverage companies’ stakeholders would all hold varying perspectives of whether advertising to teens is an ethical practice. While investors would encourage companies to continue to seek profits from their biggest target market, this would come at the cost of the not only the customers, but the community as well. According to Mothers Against Drunk Driving, a grassroots organization that encourages, “social change in the attitude and behavior of Americans towards drunk driving,” “kids who start drinking young are seven times more likely to be in an alcohol-related crash, high school students who use alcohol or other substances are five times more likely to drop out of school or believe good grades are not important, and kids who engage in underage drinking are more likely to be involved in alcohol related accidents.” Overall, these statistics negatively affect a community’s environment, hence why beverage companies would be harming their community stakeholder. Lastly, if the of age consumer stakeholder and other agencies concerned with alcohol advertising practices were to take legal action, companies’ suppliers would be at risk. Although this particular stakeholder only provides the actual product to the company, hypothetically, if say a Budweiser was put out of business because of their advertising practices caused extensive damage to the underage community, the suppliers could be put out of business.
If beverage companies’ stakeholders are all directly or indirectly affected by the advertising pursuits of alcohol agencies correlated with the notion that it is ethically wrong to encourage teenagers to drink, why do beverage companies continue to target the demographic? One explanation could be that alcohol companies maintain a Milton Freidman mindset; that the primary concern of the business is to increase its profits and sustainable business practices without taking into account social responsibility, will only deter the enterprise from achieving the abovementioned goal. Friedman asserts that by engaging in socially responsible activities, a company is putting itself and all its shareholders at a disadvantage, causing it to be less competitive and produce less value. Those companies that engage in sustainable business practices ultimately distract companies from truly being profitable. It is clear that because of the significance of the teen demographic into today’s marketplace and the true value they create when their segment is captured, it would be detrimental to a company to neglect them. From a Freidman standpoint, by not pursuing this segment, companies are deterring themselves from acting in the best interest of their stakeholders; more specifically, their investors who want to be assured a profit will be generated. At the same time however, by encouraging this type of model, companies are directly encouraging underage drinking behaviors and adversely affecting the communities in which the demographic resides. In essence, by being profit driven, companies are fostering and supporting ethically immoral behaviors of today’s youth. By partaking in such practices, companies ultimately sacrifice the well-being of this particular stakeholder as a means to seek greater revenues.
On the other hand, if beverage companies were to adapt a R. Edward Freeman perspective on stakeholder management, they would be forced to take a cold hard look at their advertising tactics in relationship to the number of underage drinkers their ads reach. Freeman preaches in his article, Stakeholder Theory of the Modern Corporation that “management must keep the relationships among stakeholders in balance. When these relationships become imbalanced, the survival of the firm is in jeopardy.” Freeman defines stakeholders as, “those groups that have a stake or claim in the firm,” and include, “suppliers, customers, employees, stockholders and the local community, as well as management in its role as agent for these groups.” By advertising their products to the teenage demographic, companies are ultimately jeopardizing the well-being of one of their major stakeholders, their customers. Engaging in ethically sound societal marketing would enable companies to maximize utility for the entire enterprise, not just their investors and employees. By promoting their products in a responsible manner, they could encourage favorable publicity and enhance the tarnished images of alcohol that they had previous created. By halting the placement of alcohol advertisements in predominantly seen and read youth medium, companies would recognize the true ethical consequences of their actions. Although they might not generate as many profits, they would ultimately deter underage drinking while also balancing the relationships they have with their general consumer base and suppliers.
With the rise of underage alcohol consumption and binge drinking, complemented with the overexposure of the teen demographic to alcohol related advertisements, it is clear that advertising is having a negative effect on the demographic. One cannot be for certain that decreasing the number of advertisements viewed by teens would directly decrease the number of underage drinkers; but, it would be one step closer to achieving that goal. If the public and other considered agencies or organizations continue to press for change, the more parents and the government would see that severity of the issue at hand. Beverage companies would be forced to adopt a more Edward Freeman approach to stakeholder theory as a means to operate their business which in turn would provoke them to act in a more socially responsible manner.
 Joel W. Grube and Lawrence Wallack, “Television Beer Advertising and Drinking Knowledge, Beliefs and Intentions Among Schoolchildren,” American Journal of Public Health 84, no. 2 (1994): 254.
 U.S. Department of Justice, “Drinking in America: Myths, Realities, and Prevention,” U.S. Department of Justice, 2002. 3.
 IBID, 3.
 Center for Disease Control, “Underage Drinking Fact Sheets.” Last modified: July 20, 2010. http://www.cdc.gov/alcohol/fact-sheets/underage-drinking.htm.
 MADD, Pennsylvania Statistics.
 James A. Pooler, Demographic Targeting: The Essential Role of Population Groups in Retail Marketing (University of Saskatchewan, Canada, 2002), 55.
 IBID, 56.
 Ellen Neuborne, “Generation Y” Business Week Online, last modified 1999, http://www.businessweek.com/1999/99_07/b3616001.htm.
 IBID, 5.
 Grube, 256.
 A floor on adult exposure or a 30 percent cap on youth (2 to 20) exposure depending on context. This means that those considered in the “youth” demographic should only be exposed to 30% of alcohol advertisements in comparison to the total number of advertisements they view.
 “Striking a Balance: Protecting Youth from Overexposure to Alcohol Ads and Allowing Alcohol Companies to Reach the Adult Market,” The Center on Alcohol Marketing and Youth, July 2005, Georgetown University, 1.
 IBID, 2.
 Milton Friedman, “A Friedman Doctrine – The Social Responsibility of Business Is to Increase Its Profits,” New York Times, September 13, 1970.
 R. Edward Freeman, “Stakeholder Theory of the Modern Corporation,” General Issues in Business Ethics, 44.
 IBID, 39.
 R. Edward Freeman, Jeffrey S. Harrison, Andrew C. Wicks, Bidham L. Parmar & Simone De Colle, Stakeholder Theory: The State of the Art (Cambridge: Cambridge University Press, 2010), 157.