The Bud Light controversy hurt Anheuser-Busch InBev’s second-quarter performance in the United States, the world’s largest brewer confirmed in its latest earnings report.
Anheuser-Busch’s U.S. revenue plunged by 10.5 percent year-over-year, “primarily due to the volume decline of Bud Light,” according to the second-quarter corporate earnings data. Overall, revenue in North America declined by $395 million during the three-month period compared to the same time a year ago.
Operating profit also took a hit in North America, with two-thirds of the decline in profits being caused by market share performance. Productivity loss, marketing investments, and support efforts for wholesalers also contributed to the decline.
In the global market, Anheuser-Busch performed much better.
The company reported a year-over-year worldwide revenue increase of 7.2 percent to $15.1 billion, buoyed by Corona and Stella Artois sales. Its organic growth in earnings before interest, taxes, depreciation, and amortization (EBITDA) was 5 percent, topping the consensus estimate of 0.4 percent.
Anheuser-Busch noted that sales-to-retailers (STRs) fell by 14 percent, underperforming in the industry mainly due to the volume decrease in Bud Light. However, this was offset by the significant growth of its “mainstream portfolio” in Colombia and South Africa. In addition, China lifted the company’s second-quarter performance, as regional volumes surged 11 percent.
The Belgium-based Budweiser owner reiterated its full-year and medium-term profit outlook on Aug. 3.
“Our total beer industry share declined this quarter but has been stable since the last week of April through the end of June,” Anheuser-Busch said in a statement.
While the company did not discuss the Bud Light boycott, it did confirm that it hired a third-party firm to conduct consumer research on the brand. Since April, the findings revealed that 80 percent of the 170,000 consumers surveyed were “favorable or neutral” toward the product.
Looking ahead, the analyst consensus rating is “Hold,” and the stock enjoys a price target of $67.06, a roughly 19 percent upside. The short interest is minimal, with 0.34 percent of the float sold short.
Heading into the second-quarter earnings numbers, Anheuser-Busch stock has been down about 6 percent year-to-date, trading at around $56 per share. But it popped nearly 3 percent in pre-market trading.
The Bud Light Boycott
In June, Bud Light was dethroned as America’s best-selling beer after more than two decades. The brand slipped into second place, with Modelo Especial, which is owned by Constellation Brands, earning the top spot.
The blowback over the beer began this past spring when the brand designed a marketing campaign featuring Dylan Mulvaney, a transgender social media influencer.
After the trans rights activist posted two social media posts of the commemorative can that featured Mr. Mulvaney, the conservative-led backlash began and has turned into one of the most successful boycotts in recent history.
Bud Light sales have been tanking, plummeting 26.5 percent in the month ending July 15. Modelo’s sales surged 13.5 percent. Overall, Bud Light controls a 6.8 percent U.S. market share, while Modelo maintains nearly 9 percent.
The brand’s poor performance forced Anheuser-Busch to announce last month that it was terminating close to 2 percent of its workforce “across every corporate function.” It is estimated that between 350 and 400 employees will be laid off.
“While we never take these decisions lightly, we want to ensure that our organization continues to be set for future long-term success,” said Anheuser-Busch CEO Brendan Whitworth in a statement. “These corporate structure changes will enable our teams to focus on what we do best—brewing great beer for everyone and earning our place in the moments that matter.”
The company has also entered into a political battle.
Florida Gov. Ron DeSantis recently ordered state officials to launch an investigation into the Bud Light owner over concerns that the company violated its duties to shareholders by initiating a market agreement with the social media star.
“It appears to me that AB InBev may have breached legal duties owed to its shareholders, and that a shareholder action may be both appropriate and necessary,” Mr. DeSantis wrote in a letter last month. “All options are on the table.”
Sen. Ted Cruz (R-Texas) also called for a probe into Bud Light over claims that the company possibly marketed its products to a younger audience through the collaboration with Mr. Mulvaney.
In a 13-page memo to the Beer Institute, the industry’s self-regulatory body, Mr. Cruz alleged that Bud Light and Mr. Mulvaney violated Instagram’s “age gating.” The social network requires creators to block all U.S.-based users under the age of 21 from viewing branded content promoting or referencing content. The senator also says that the partnership violated the organization’s Ad Code because it featured a celebrity or entertainer with “special attractiveness” to minors.
“For the past two months, independent beer distributors and their employees across America, from truck drivers to salespeople, have suffered the negative consequences of the decision by Anheuser-Busch, which is owned by the global beer conglomerate AB InBev, to partner with social media influencer Dylan Mulvaney,” wrote Mr. Cruz.
Mr. Mulvaney recently moved to Peru, claiming that he did so to “feel safe.”
“The people here are so kind. I feel very safe here. It’s a little sad that I had to leave my country to feel safe. But that will get better eventually,” Mr. Mulvaney said in a July social media post. “For months now I’ve been scared to leave my house, I’ve been ridiculed in public, I’ve been followed, and I have felt a loneliness that I wouldn’t wish on anyone.”
From The Epoch Times
