Founded in 1913, Stanley, a brand owned by Pacific Market International, LLC, originally began manufacturing products mainly for men, camping and outdoor activities, with its thermos being used by pilots in World War II.1 Over a century later, Stanley products are most popular amongst a demographic of teenagers and young women, with its 'Quencher' model being almost solely responsible for increasing Stanley's revenue from USD 73 million in 2019 to a projected USD 750 million in 2023.2 Today, the reusable Stanley cup finds itself at the intersection of two culturally relevant conversations: sustainability and self-care.
Its increased popularity can be traced to marketing strategy including the release of limited-edition products, collaborations with celebrities and brands like Starbucks (with some collections reportedly selling out in minutes), which have also flooded the resale market. By creating limited edition products, 'exclusive' products and restricting the quantity of goods manufactured and available for purchase, the scarcity and limited availability creates a sense of urgency, and the perceived value of the goods thereby increases in the mind of the consumer. The uniquity of the Stanley cup is also due, in no small part, to social media. With influencers and celebrities posting pictures with the Stanley tumblers, and #WaterTok (a sub-culture on the social media app TikTok flooded with videos of people flavoring or 'dressing up' drinking water with syrups and powders, often mixed or poured into a Stanley Quencher tumbler).3 Through a deal with The Buy Guide to promote and sell Stanley tumblers in 2020 and the use of affiliate marketing (a promotional method whereby the promoter shares links to earn referral-based commissions) and collaborating with influencers,4 the Stanley cup has become a reachable and relatively affordable status symbol for millions.
While the Stanley cup has not achieved the same cult status in India, the domestic influencer economy has increased with Indian content creators growing at annualised rate of 115%, and a number of brands now use influencers extensively in their marketing strategies. Recently, there has been increased regulatory scrutiny on the growing creator economy in India, including on social media influencers providing information or advise on financial issues including investments or 'finfluencers.' The Securities and Exchange Board of India ("SEBI") released a discussion paper on August 25, 2023 ("Discussion Paper") in order to "seek public comments on a proposal to restrict the association of SEBI registered intermediaries/regulated entities with unregistered 'finfluencers.'"5 The Discussion Paper, inter alia, proposed to prohibit SEBI registered intermediaries or regulated entities (and their respective agents and representatives) from having any association or relationship in any form (whether directly or indirectly, monetary or non-monetary) for the promotion or advertisement of their services/products with any unregistered entities (including finfluencers).
In January 2023, the Department of Consumer Affairs, Ministry of Consumer Affairs ("Ministry") introduced the 'Endorsement Know-Hows' ("Know-Hows"), a set of regulatory and binding rules on influencer advertising through social media. The Know-Hows sought to regulate the manner in which influencers, celebrities or virtual celebrities, being individuals or groups who, "have access to an audience and the power to affect their audiences' purchasing decisions or opinions about a product, service, brand or experience, because of the influencer's or celebrity's authority, knowledge, position, or relationship with their audience" are now required to disclose certain information with respect to paid promotions. The Know-Hows also explicitly stated that such influencer advertising was now regulated by the Ministry and the provisions of the Consumer Protection Act, 2019 and the regulations framed thereunder, including the Guidelines for Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements, 2022. Further to the Know-Hows, the influencer or celebrity is required to disclose when there is a material connection between an advertiser and an endorser which may impact the weight or credibility of the representation made by the endorser. Such disclosures made pursuant to the Know-Hows must be placed in a clear, prominent manner that makes it extremely hard to miss, and should not be mixed with a group of hashtags or links. While making the disclosures, simple and clear language should be employed. Additionally, these disclosures are required to be made in the same language as the post and must be separate from the disclosures made via any platform disclosure tools. A 'material connection' has been defined to include, but not be limited to, benefits or incentives such as gifts, discounts, coverage and awards, monetary compensation, and contest and sweepstakes entries.
Importantly, some of these 'material connections' have also been regulated under the Indian taxation regime. For instance, the Finance (Amendment) Act, 2022 inserted Section 194R of the Income-tax Act, 1961, whereby tax at the rate of 10% of the value or aggregate value of any benefit or perquisite, whether convertible into money or not is required to deducted at source, whereby the value of the benefit or perquisite is greater than Rs. 20,000. The Central Board of Direct Taxes later clarified that, in the case of influencers, this will only be applicable on any products that are retained by influencers, and if the products are returned to the manufacturing company after the influencer renders their services, then it will not be treated as a benefit/perquisite for the purposes of section 194R of the Income-tax Act, 1961.6
Just as the Stanley legacy has come a long way since 1913, the regulations surrounding influencer marketing in India is also undergoing a seismic shift, with increased scrutiny on content creation, particularly with respect to promotional content.
Footnotes
1. https://www.npr.org/2024/01/09/1223491078/stanley-tumbler-craze-target-starbucks
3. https://www.nytimes.com/2023/05/16/dining/watertok-tiktok-recipes.html
4. https://www.nytimes.com/2022/05/17/style/stanley-tumbler.html
6. https://www.incometaxindia.gov.in/communications/circular/circular-no-12-2022.pdf
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