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.
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 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 stated.
Although the company didn’t 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.
The Bud Light Boycott
In June, Bud Light was dethroned as the United States’ best-selling beer after more than two decades in that spot. The brand slipped into second place, with Modelo Especial, which is owned by Constellation Brands, at No. 1.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 made two social media posts showing a commemorative Bud Light can featuring his face, a conservative-led backlash began, and it has turned into one of the most successful boycotts in recent history.
Bud Light sales have been tanking, plummeting by 26.5 percent in the month ending July 15. Modelo’s sales surged by 13.5 percent. Overall, Bud Light controls a 6.8 percent U.S. market share, and 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’s estimated that between 350 and 400 employees will be laid off.
The company has also entered into a political battle.
Florida Gov. Ron DeSantis recently ordered state officials to start 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.
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.
“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,” Mr. Cruz wrote.