Analysts with Bank of America this week upgraded Bud Light parent Anheuser-Busch InBev’s stock from neutral to buy but they stressed that in the United States, it’s “hard not to be negative” amid the monthslong Bud Light boycott.
“Over the last few years, [Anheuser-Busch InBev] has transformed its business in many of its key markets (particularly in LatAm), with a more effective portfolio strategy, stepped-up innovation and digitization of its route-to-market with BEES (B2B), a clear competitive advantage,” said analysts led by Andrea Pistacchi.
Without the Bud Light problem, Ms. Pistacchi estimated that the brewing giant could have boosted its margins by 30 basis points higher than its current forecasts.
“Against an uncertain global economic and consumer backdrop, we like [Anheuser-Busch InBev’s] exposure to LatAm (almost 60% of group EBTDA), where economists are expecting only a slight slowdown in private consumption,” she wrote.
Bud Light’s troubles started when it produced a beer can and offered a March Madness promotional campaign for transgender activist Dylan Mulvaney, who posted the beer can on social media in early April. A number of social media users led by conservative influencers reacted swiftly, calling for a boycott of the brand, causing sales of Bud Light to drop for consecutive weeks.
Reports published in early September revealed that Bud Light’s sales were down about 30 percent nearly six months after the Mulvaney controversy. One analyst said that it’s likely that a number of former Bud Light customers likely will never purchase the brand again.
Mr. Schuhmacher noted at the time that industry analysts believed the Bud Light “would have rebounded by now, but it hasn’t.” He’s now forecasting that Bud Light will “lap the controversy in April or May 2024.
“It’s actually worse than just lost sales because now it’s getting to the point where it’s becoming systemic within the industry, and they’re losing the confidence of the retailers, and that’s when it starts getting bad,” he warned.
Noting that the Bud Light backlash is “nothing like we’ve seen in the beer industry,” Bud Light is likely to face a “rough winter,” according to Mr. Schuhmacher. “They’re somewhat powerless to fix it, except to remain really active in their local communities, which they’ve done and which they’ve always done. And really, that’s kind of the only saving grace for that brand is those local connections that the wholesalers have.”
“The proportion of former Bud Light drinkers who are say they are very unlikely to buy the brand in 3-6 months time has reduced from 18 percent to just 3 percent, a significant improvement,” the Deutsche Bank analysts wrote.
Other Issues?
Meanwhile, other analysts and industry insiders told ABC News on Sept. 15 that Bud Light is now slated to lose shelf space at retailers across the United States if it cannot post an increase in sales amid the boycott.“During a busy shopping period on a Friday or Saturday night, if you don’t have the beer available cold on the shelf, consumers pick something else,” said former Anheuser-Busch InBev executive Anson Frericks, now a frequent critic of Bud Light.
Shelf space, he added, is “the single largest determinant of sales in a store,” concluding: “There will be a dramatic shift.”
In the midst of the sales declines, analysts say that Modelo Especial, a rival beer owned by New York-based Constellation Brands, is now the top-selling brand in the United States, surpassing Bud Light earlier this year. Bud Light had reigned as the No. 1 beer for decades prior to 2023, analysts noted.
The Epoch Times contacted AB InBev for comment on Friday.
