Beer boycott sees AB InBev slump $25bn

Nobody expected the boycott of Bud Light to have the impact it has had on Budweiser’s holding company, Anheuser-Busch Inbev (AB InBev), after Budweiser in the US partnered with a so-called social media influencer to promote Bud Light at the beginning of April.

A comedy of errors – and ignorance about developing events affecting consumer sentiment – saw the Bud Light boycott gain momentum and spread to other brands in the AB InBev stable.

In the two months since the controversy started, AB InBev’s share price has fallen 22% – from $66.50 when the campaign with the embarrassing social media influencer was launched – to $52 on Tuesday (30 May).

Its market capitalisation is down by more than $25 billion (nearly R500 billion).

Read: AB InBev: The king of beer

Sales of Bud Light fell some 16% in the week following social media posts by Dylan Mulvaney, a 26-year-old transgender man who dresses as a teenage girl.

Mulvaney mocks sporting events in the paid-for video clip, and many also say his posts over the past year mock women.

At the time, Budweiser wasn’t concerned and the marketing executive who organised the campaign responded to the criticism from beer drinkers by saying customers were in the wrong to oppose Budweiser’s wish to change the image of Bud Light, America’s best-selling beer.

Outrage

Beer drinkers responded with their own posts on social media. A country singer is seen shooting at packs of Bud Light with a semi-automatic rifle, while many others posted video clips pouring Bud Light down the drain and throwing unopened packs into dustbins. One post shows a steam roller driving over hundreds of cases of Budweiser in a parking lot.

The second week of the boycott saw Bud Light sales declining more than 20%, compared to the corresponding week a year earlier, as several retailers, pubs and restaurants reported lower sales.

Budweiser management was not saying a word, apparently hoping that the outrage would blow over. It didn’t.

The controversy intensified over the third and fourth week and sales were still declining, now 23% to 25% lower than in the same weeks a year ago.

Two marketing executives involved in the campaign took a leave of absence and management issued a statement in an attempt to downplay the fiasco, saying the collaboration with Mulvaney wasn’t an official campaign.

Groups degraded … and stock downgraded

This statement put the Bud Light controversy back in the spotlight as LGTBQ people started to boycott the brand as well, because Budweiser did not come out to support Mulvaney.

A statement by Brendan Whitworth, AB InBev CEO for North America, added more fuel to the fire, with customers describing it as a lame attempt to pacify consumers without even mentioning the campaign.

A new television commercial featuring Bud Light’s signature galloping horses and a glimpse of the US flag to play on Americans’ feelings of patriotism did little to stem the criticism.

People were quick to point out that Budweiser is owned by AB InBev, a Belgium company.

A month after the disaster struck, and with the boycott gaining strength, HSBC analysts issued an investment note to its clients advising that it had downgraded AB InBev from “buy” to “hold” on concerns that the consumer boycott of Budweiser would impact shares of the holding company.

Read: AB InBev beats profit expectations on price hike impact

Faced with questions about the boycott, AB InBev Group CEO Michel Doukeris responded during an investor conference call to update shareholders, saying the decline in Bud Light sales “would represent around 1% of our overall global volumes” for the period under review.

Needless to say, this statement unleashed a fresh barrage of social media posts.

Power is power, and social media has it

The beer boycott illustrates the large reach of social media marketing – apparently an advertising medium that companies still struggle to understand.

Popular posts going ‘viral’ can build brand awareness among users who might be less exposed to traditional advertising channels – but the Bud Light fiasco proves that criticism can go viral too. And without a company being able to manage the content of the messages.

Most platforms also offer users the ability to comment and debate, which is much easier than writing a letter to the editor or sending an email. In addition, only the very worst of comments will be moderated.

Critics of the Bud Light and Mulvaney collaboration quickly changed the beer’s slogan from “King of Beers” to “Queen of Beers” and even “Queer of Beers”.

Photoshop software quickly changed Bud Light cans to read Trans Light and Tranny Fluid (recycling an old joke referring to transmission oil).

Many started mocking Bud Light and Mulvaney too, circulating countless clips and memes showing men with beards drinking Bud Light while wearing lipstick and dresses, and clips of large men wearing bikinis and flapping their arms. These posts draw thousands of comments and evolve into lively political and social debate.

Budweiser could have been excused for its mistake in partnering with Mulvaney, but for the fact that its marketing executives should have known beforehand that the campaign would be controversial. One look at Mulvaney’s posts “celebrating” his transformation from a man and celebrating “girlhood” should have made this obvious.

Read: Coca-Cola to delay IPO of Africa bottler on market turmoil

One of his posts tries to explain to his more than 10 million followers that society must accept that “women” do have bulges if they wear tight skirts and pants. Surely earlier posts in which he partnered with Tampax should have been a huge warning to Budweiser too.

Changing social values in the US

In addition, Budweiser should have been aware of the change in social values in the US, such as increasing criticism against transgender men invading women’s sport and other instances where people have become more vocal in what they experience as companies driving a ‘woke’ agenda.

The Bud Light boycott quickly adopted “Go Woke, Go Broke” as its slogan.

Bud Light arguably became the lightning rod for anything from Netflix releasing a documentary stating that Cleopatra was black (because my grandmother told me that) to retail chain Target starting to sell transgender children’s clothing and female swimsuits with a special pocket for men to “tuck”.

The controversy of a male swimmer, who changed his name from William Thomas to Lia Thomas, competing against women was reaching a peak at the time of the Bud Light disaster. Female champion swimmer Riley Gaines became a vocal advocate for women’s rights in sports, relating how college girls were forced to share a changing room with Lia exposing his “male genitalia” while he won races and cost female swimmers their places on the podium, and in one case, a school bursary.

At the same time, Nike partnered with Mulvaney to promote sports apparel in which he posted a video clip dancing around in a sports bra, with female athletes swearing to drop Nike for ever. This also seems to have kept the Bud Light controversy alive.

By far Budweiser’s biggest mistake was that it forgot that beer is a homogeneous product of only water, hops and grain. The biggest differential between beer brands are packaging, promotion and image.

It’s easy and cheap to move on to another beer brand, which some customers did. Figures show that sales of Miller Light and Coors Light increased by very close to the sales Bud Light lost.

Impact on the bottom line

AB InBev still posted good results in its latest quarterly update to the end of March 2023, reporting an increase of 14% on small volume growth and higher prices.

It won’t be until the results for the three months to June are published towards the end of July that the effect of the Bud Light boycott will be shown.

Sales have already been impacted for close to two months, with Budweiser announcing last week that it will buy beer due to expire back from distributors, while offering customers rebates of up to 80% on their next pack of beer.