Bud Light Will Permanently Lose Nearly a Fourth of Its Business: Analysts

Bud Light beer cans sit on a table in right field during the Baltimore Orioles and Toronto Blue Jays game at Oriole Park at Camden Yards in Baltimore, Md., on Sept. 19, 2019. Rob Carr/Getty Images

Some of Bud Light’s problems in the wake of a boycott over its partnership with Dylan Mulvaney could be permanent, according to an analyst in a new note about the beleaguered brand.

“We believe recent underperformance implies a permanent reduction in ABI’s U.S. business,” Deutsche Bank analyst Mitch Collett wrote for Barron’s, referring to Anheuser-Busch InBev, the parent company of Bud Light. “Our proprietary survey data suggests these headwinds are likely to fade even if we do not expect the U.S. business ever to fully recover from its current challenges.”

Collett also upgraded shares of AB InBev to “buy” from “hold,” increasing the price target to $65.92 from $64.83, according to Barron’s.

In a note to analysts, Collett wrote that data gathered by Deutsche Bank suggest that 24 percent of Bud Light’s consumers no longer purchase the brand. Another 18 percent are buying less, he said.

Data also show that 21 percent of consumers are buying more, while 37 percent are buying the same amount, according to the report.

“Taken together, our survey data shows that Bud Light as a brand faces significant challenges—particularly with older consumers. However, we believe the forward-looking data sets imply that the challenges will at least partially fade,” he wrote, noting that data show the firm hasn’t lost shelf presence.

But another analyst said Bud Light could see tough times ahead.

The analyst, Evercore’s Robert Ottenstein, said Bud Light will “permanently lose” between 15 and 20 percent of its volume. After that, “declines will resume at about the average rate of the prior 10 years,” he said.

“Budweiser will also see a similar pattern, with consumers lost in 2022 not coming back,” Ottenstein said in a note reported by Yahoo Finance. The report also quoted Collett as saying Anheuser-Busch and Bud Light are “at the end of the tunnel” of the controversy.

Weeks ago, in mid-May, Anheuser-Busch was downgraded after an HSBC analyst revised the stock down to “hold” and claimed that the company is dealing with a “Bud Light crisis.”

That HSBC analyst speculated there may be “deeper problems” at Anheuser-Busch.

“Is ABI’s leadership getting the brand culture transformation right? It’s mixed,” he said. “At Ambev, we think the answer is ‘yes’; in the U.S., we think it’s ‘no.’ The way this Bud Light crisis came about a month ago, management’s response to it and the loss of unprecedented volume and brand relevance raises many questions.”

Since its ill-fated promotional exercise in early April with Mulvaney, a transgender TikTok influencer, Bud Light has seen its weekly sales decline. Recent data from Bump Williams Consulting and Nielsen IQ show that for the week ending on June 10, Bud Light’s year-over-year sales have declined by 26.8 percent, representing the worst week so far.

Bottles of beer and cider produced by Belgian–Brazilian group Anheuser-Busch InBev (Budweiser, Corona, Stella, and Beck's) and British brewer SABMiller. Justin Tallis/AFP/Getty Images

And for the month of May, Constellation Brands-owned Modelo Especial was the No. 1-selling brand in the United States, outpacing Bud Light, which fell to No. 2, industry data show.

Bump Williams, chief of the eponymous consulting company, told the New York Post on June 21: “This was a tough week for Bud Light and other beer brands” that are owned by Anheuser-Busch, including Budweiser. Sales of Budweiser were down by 10 percent, Natural Light was down by 2.3 percent, and Michelob Ultra was down by 2.4 percent.

Anheuser-Busch’s CEO, Michel Doukeris, told investors last month that he believes that online “misinformation” was the primary reason for the sales numbers, and he asserted that it was just “one can” that was produced with Mulvaney’s face on it and appeared to deny that there was a partnership. However, Mulvaney posted on social media that there was a partnership.

The can drew the ire of multiple celebrities and conservative influencers on Twitter. Some suggested that consumers boycott the brand in a bid to send a message to corporations who may be pursuing a “woke” leftist agenda.

An executive with Anheuser-Busch recently spoke out about the boycott as he got an award during the Cannes Lions International Festival in southern France.

“It’s tough to see the controversial and divisive debates that have been happening in the U.S. in the last couple of weeks involving lots of brands and companies, including and especially Bud Light,” Anheuser-Busch’s global chief marketing officer, Marcel Marcondes, told the Cannes Lions International Festival, according to an Ad Age report. “It’s tough exactly because what we do is all about bringing people together.”

Marketing Pivot

With summer officially starting last week, Bud Light pivoted and launched a new promotional campaign. But that, too, was derided on social media, with some demanding that the company apologize for its promotional efforts with Mulvaney.

Responding to the latest ad, podcast host Liz Wheeler wrote on Twitter that the company was trying to whitewash the past two months of controversy.

“None of this is funny until & unless you apologize for using Dylan Mulvaney—a man pretending to be a woman—as your spokesperson. It’s insulting that you think an ad about summer will make us forget our principles. The boycott continues,” she wrote in a post.

Anheuser-Busch didn’t respond to a request from The Epoch Times for comment by press time.