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The price of AB InBev’s mishandling of Bud Light-Dylan Mulvaney backlash? $395m


By Kendra Barnett | Senior Reporter

August 3, 2023 | 8 min read

Analysts question if the beer behemoth's stock will make a full recovery as it faces continued losses in the US market on the tails of Bud Light boycotts.

Boxes of Bud Light six-packs in grocery store

AB InBev sales fizzled in the US during the last quarter / Adobe Stock

A significant decline in Bud Light sales in the US following a controversial brand partnership with transgender creator Dylan Mulvaney has seriously hurt the financial success of parent company Anheuser Busch InBev (AB InBev).

The global beer maker, which posted its second-quarter results today, revealed the extent of the declines in sales and profit in the US. Revenue in the region dropped $395m – over 10% – compared with the same period a year prior. Sales to US retailers also fell 14%. Operating profit in the US, meanwhile, dropped by nearly 30%.

The numbers reflect a tumultuous period for the company, which suffered widespread boycotts of its top-performing US brand, Bud Light, after the brand teamed up with transgender influencer Dylan Mulvaney.

As it grappled with the reaction of conservative consumers, those on both sides of the controversy criticized the company for its botched response, which included a lukewarm statement about “accountability” and layoffs of marketing leaders.

On a call with investors Thursday morning, AB InBev’s chief executive Michel Doukeris said that the company is “listening” actively to consumer feedback and that it has found consistent themes from across consumer segments. “One, they want to enjoy their beer without the debate,” he said. “Two, they want Bud Light to focus on beer. Three, they want Bud Light to concentrate on the platforms that all consumers love, such as NFL … and music.”

But many market analysts and PR specialists share the conviction that the company’s acquiescence to consumer backlash and unwillingness to defend its partnership with Mulvaney has only hurt it financially.

“Bud Light’s problem isn't that it sought to introduce itself to Mulvaney’s audience. Bud Light’s problem is that it folded,” says Andrew Graham, founder and head of strategy at Bread & Law, a New York-based PR firm. "Consumers want modern brands to stand for something.”

Graham predicts that while Bud Light’s sales are likely to improve over time among its core demographic, the brand has created a rift that won’t easily be bridged. “Its standing among younger, diverse consumers who embrace inclusivity is irreparably damaged, and that’s what I'd be most concerned about if I were an AB InBev shareholder,” he says. “You just can’t grow revenue over the long term by pandering to an aging, intolerant customer base and you can’t mean anything, as a brand, by running away from criticism, because that only invites more of it.”

“Management does not have control of the Bud Light brand,” he adds. “That's the main takeaway from today's earnings.”

Others agree with Graham’s assessment. Insider Intelligence senior analyst Zak Stambor added: “While AB InBev may have miscalculated in its initial outreach to Mulvaney, the company’s much bigger misstep was its decision to walk back the sponsorship and place the executives responsible on leave. That showed a weak backbone and kept the story alive. By kowtowing to the loudest voices in the room, AB InBev managed to alienate both conservatives and progressives in one fell swoop.”

Stambor suggests that the company’s mishandling of the situation has created space in the US market for competitors to get a leg up. “Because Bud Light is not a markedly different product from other macrobrewed light lagers, such as Miller Lite and Coors Light, it has long leaned on marketing to convince consumers to buy its beer rather than those produced by its competitors. But its repeated missteps pushed consumers to rethink their buying habits, which opened up an opportunity for Modelo and other competitors.”

Just days before AB InBev reported its Q2 results, rival Molson Coors, the maker of Coors, Miller Light and Blue Moon, recorded its best sales quarter since the 2005 merger of Molson and Coors.

Molson Coors’ chief executive Gavin Hattersley said: “Coors Light and Miller Lite, combined, were 50% bigger than Bud Light by total industry dollars and 30% bigger than Modelo Especial” during Q2. The company also reported strong sales of its premium labels.

Hattersley alluded to the Bud Light-Mulvaney controversy, saying: “Beer drinkers are incredibly loyal … what really matters here for us is that more consumers are reaching for our beers versus our competitors’.”

Green shoots of recovery

Despite its blunders in the US, AB InBev’s quarterly earnings showed decent performance in other markets. “We delivered broad-based growth this quarter with double-digit topline increases in four of our five operating regions,” Doukeris said. Growth in Asia Pacific in particular was strong.

Total global revenue grew 7.2%, and net revenue per liter increased by 9%, thanks in part to pricing changes made by the company. Nonetheless, total volumes dropped 1.4% year-over-year.

Doukeris expressed confidence in the direction of the company: “While this quarter was not without challenge, the strength of our brand portfolio, global footprint and our focus on discipline resource allocation continues to enable us to invest for the long term while delivering profitable growth.”

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The executive also sought to assuage concerns about Bud Light’s brand equity on a call with investors, citing new AB InBev consumer research that suggests that many consumers still see the brand in a positive light. “With respect to Bud Light’s brand performance, we have actively engaged with over 170,000 consumers since April,” he said. “Most consumers surveyed are favorable towards the Bud Light brand, and approximately 80% are favorable or neutral.”

He went on to say: “The consumer will always be at the center of everything we do. All of us at ABI deeply care about and respect all our consumers.”

But experts believe the damage is already done. “The moment that the brand chose to throw Mulvaney under the bus, that was it,” continues Bread & Law’s Graham. “The LBGTQ community isn’t going to come back to it after that betrayal. So while the topline global numbers reported today are fine, a low- to no-growth assumption for the company’s flagship brand in the US market will in all likelihood become baked into the stock price moving forward.”

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