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Anheuser-Busch InBev was downgraded on Wednesday by an HSBC analyst who said the firm is now dealing with a “Bud Light crisis” after the company produced a can with the face of a transgender influencer last month, sparking widespread backlash.
Carlos Laboy, with the banking giant, downgraded the company’s stock to “hold,” saying there are “deeper problems than ABI admits” after the social media partnership with transgender activist Dylan Mulvaney was announced.
“Is ABI’s leadership getting the brand culture transformation right? It’s mixed,” Laboy wrote Wednesday to analysts, according to reports. “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.”
Amid the controversy, Laboy also questioned the company’s management in his note. Last month, Anheuser-Busch confirmed that two executives would be departing the company, including one—Bud Light marketing vice president Alissa Heinerscheid—who gave an interview saying that the brand should ditch its “fratty” branding to become more “inclusive.”
“Why did its U.S. leadership underestimate the risk of pushback given the recent experience of other firms? Is A-B hiring the best people to grow the brands and gauge risk?” Laboy wrote. “If Budweiser and Bud Light are iconic American ideas that have long brought consumers together, why did these marketers fail to invite new consumers without alienating the core base of the firm’s largest brand?”
But Laboy noted that the company’s strength overseas is helping its stock.
Anheuser-Busch has not responded to an Epoch Times request for comment.
It’s not the first time the company’s stock has been downgraded in recent months. Months before the boycott and controversy, UBS downgraded Anheuser-Busch as it warned the company could see sales drop due to post-pandemic trends.
“Our analysis suggests the beer category is unlikely to benefit from deceleration in premium and above spirits. That said, AB InBev’s offering in the value segment (e.g., Busch) can help mitigate the negative impact of downtrading on volume, at the expense of product mix,” analyst Nik Oliver wrote at the time.
Sales for Bud Light since the Mulvaney controversy erupted plunged 23.4 percent year over year in the last week of April, according to Nielsen data. The company’s flagship Budweiser brand also took a 11.4 percent hit in sales for the week ended April 29, while other Anheuser-Busch-owned properties also saw declines in sales, the data show.
“It’s not just a Bud Light issue,” said Bump Williams, chief executive of a consultancy firm, in a New York Post report this week. “It’s an Anheuser-Busch portfolio problem now.”
Beer Business Daily also reported that Anheuser-Busch sales are down overall by 12.5 percent. Molson Coors’ overall sales is up 7.6 percent, it also said.
“Budweiser was down 11.5 percent while Yuengling was up 14.7 percent and Coors Banquet up 20.5 percent. Even Miller Genuine Draft was up 3.7 percent. Busch down 5.3 percent, Natural down 6 percent, Keystone up 5.3 percent, and Pabst up 14.3 percent,” it said.
In early April, Mulvaney posted a customized Bud Light beer can on social media and wrote a hashtag “#budlightpartner, which suggested a partnership with the brand. That quickly led to boycott calls from conservative influencers and country music singers.
Anheuser-Busch CEO Michel Doukeris attempted to distance his company from the Mulvaney controversy during a call with investors last week, saying that it was “just one can” with Mulvaney’s face that was produced. The CEO also stressed there was no partnership between Bud Light and Mulvaney, who previously said on social media that it should be “illegal” to refer to transgender people by their biological sex.
Going a step further, Doukeris claimed that social media-driven “misinformation” and “confusion” about the company was driving the boycott. “It was not: it was one post. It was not an advertisement,” he said.
“People often talk about this topic in social media like noise,” Doukeris told the Financial Times in a recent interview. “You have one fact, and every person puts an opinion behind the fact. And then the opinions start to be replicated fast on each and every comment. By the time that 10 or 20 people put a comment out there, the reality is no longer what the fact is, but is more [about] what the comments were.”
The company will now triple its investment into Bud Light over the summer, he said. More funds would be given to frontline workers such as delivery drivers and distribution company workers.
Some analysts have publicly questioned Anheuser-Busch’s decision to partner with Mulvaney, suggesting that the company was out of touch with its consumer base.
Robert Lachky, the former chief creative officer at Anheuser-Busch, told the St. Louis Post-Dispatch that Bud Light using a transgender influencer was a major mistake. He suggested that the corporate executives within Anheuser-Busch appear to be out of touch with the consumer base.
”The minute you step into the political or religious spectrum, when you know your target audience is going to have a real issue with this, you know you’ve alienated at least half of your target audience,” he said. ”In the end, people don’t like getting preached to, especially when it comes to drinking beer.”
Lachky noted: ”None of these marketing folks has ever been to a NASCAR race, none has been to a football game or a rodeo.”
“That’s insanity. That’s marketing incompetence,” he added.
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