Bud Light Boycott Cost Anheuser-Busch $395 Million in US Revenue

Cans of Bud Light sit in a cooler in Baltimore, Maryland, on June 30, 2023. (Rob Carr/Getty Images)

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 with 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 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.

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 by about 6 percent year-to-date, trading at about $56 per share. But it jumped up by nearly 3 percent in pre-market trading.

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.

Bud Light beer cans at City Tap House in Philadelphia, Pa., on Feb. 12, 2023. (Mark Makela/Getty Images)

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.

“While we never take these decisions lightly, we want to ensure that our organization continues to be set for future long-term success,” Anheuser-Busch CEO Brendan Whitworth said 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 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.

“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 alcohol. The senator also writes 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,” Mr. Cruz wrote.

Mr. Mulvaney recently moved to Peru, and said in a July social media post: “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. 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.”