On Thursday evening, the Sawyer Ice House bar in Houston witnessed a lively crowd of after-work patrons gathering to watch the local Astros baseball team face off against the New York Yankees. Despite the home team’s ultimate defeat of 3-4, pints of Miller Lite and Shiner Bock were flowing freely, while the Bud Light tap remained untouched.
“We don’t really sell it anymore,” said Will, the bartender. “People just aren’t buying it.”
Bud Light sales have taken a significant hit across the US since April, following a strong conservative backlash against the brand’s collaboration with transgender TikTok personality, Dylan Mulvaney. Kid Rock, the rap-rock star, even filmed himself shooting cases of the beer, and Ron DeSantis, a Republican presidential contender, openly expressed his refusal to serve Bud Light to customers at a Veterans of Foreign Wars post in Nevada.
In its recent financial report, parent company Anheuser-Busch InBev announced that its US revenues had declined by 10.5% in the second quarter, revealing the extent of the damage caused by the culture war attacks.
Not only has this backlash affected AB InBev, but it has also given rise to changes in the beer industry, accelerating the shift away from Bud Light’s dominance toward other brands and categories. Craft beers, imported beers, and alternative drinks were already challenging Bud Light’s position in the $115 billion US beer industry, which had been facing sluggish volume sales.
Molson Coors, headquartered in Chicago, reported an 8.7% increase in US volumes for the second quarter, with sales of its Coors Light and Miller Lite brands surpassing those of Bud Light by 50%. Additionally, Modelo Especial, a Mexican beer distributed in the US by Constellation Brands, dethroned Bud Light by becoming the country’s top-selling beer in May.
“We believed that within the next two or three years, we would overtake Bud Light,” said Jim Sabia, Executive Vice President at Constellation Brands. “It happened quicker than we thought.”
According to Sabia, Modelo Especial’s success wasn’t solely due to Bud Light drinkers switching to Modelo, but rather because the company capitalized on the retail and promotional space left vacant by Bud Light.
Analysts pointed out that Bud Light’s decline wasn’t just a result of the recent “marketing issue” but rather an ongoing decline in mass-market domestic beers. Craft beers, imports, and other alternative drinks have been encroaching on the dominance of major beer brands. Ball Corporation, a can manufacturer for AB InBev and other brewers, revealed that its US can volumes experienced an 8.5% decline in the past quarter due to these market trends.
While total US beer volumes declined by 3% last year, craft beers maintained steady sales, and imports saw a 2.8% increase, as reported by the Brewers Association. Ball Corporation’s last quarter also saw an 11% increase in volumes for imported beer and a 41% increase for ready-to-drink cocktails. The spirits category has been gaining market share for the past 13 years and surpassed beer in 2022, according to the Distilled Spirits Council of the United States.
“The US [beer] industry in 2023 has been softer than expected,” said Gavin Hattersley, CEO of Molson Coors. He attributed the decline to factors such as unfavorable weather, but also to “lifestyle choices” and consumers shifting to other beverage categories.
In addition to these challenges, Bud Light also lags behind Corona and Modelo in popularity among Gen Z consumers, as revealed by a Cowen survey last year. This led to a decision by Bud Light’s vice-president of marketing, Alissa Heinerscheid, to adopt a more inclusive marketing approach. In a podcast interview, she acknowledged Bud Light’s decline over the years, attributing it to outdated advertising campaigns and emphasizing the need to appeal to younger drinkers to ensure the brand’s future.
In an attempt to recover, Bud Light recently launched a new summer ad campaign, positioning the beer as “easy to enjoy.” However, analysts doubt whether the consumers alienated by the Mulvaney tie-in will return. Bernstein research estimates that approximately 50% of Bud Light’s market share loss, along with 50% of Coors Light and Miller Lite’s gains, will be permanent.
“ABI is truly stuck between a rock and a hard place,” analysts stated. While conservative consumers are frustrated by the brewer’s lack of apology, liberal consumers criticize Bud Light for not supporting Mulvaney against abusive public comments. AB InBev CEO Michel Doukeris reassured analysts and investors that the support for Bud Light remains strong. After surveying 170,000 US consumers, the company found that 80% held a favorable or neutral view of Bud Light.
“They simply want to enjoy their beer without a debate,” Doukeris told the FT. “They want our brands to focus on what we do best, which is beer, and they want Bud Light to engage with topics relevant to all consumers, like music and sport.”
As part of AB InBev’s efforts to move past the controversy, a Bud Light promotional team recently visited Houston’s Sawyer Ice House, where they offered free beers to patrons. However, none of the patrons wanted their pictures taken.
Bud Light’s journey to recover continues with a fresh summer ad campaign emphasizing its ease of enjoyment.
“They’ve been investing heavily in Bud Light, but the advertising tone still appeals to middle America; they haven’t tried to radically redefine the brand,” noted Bernstein analyst Trevor Stirling.
Analysts remain skeptical that the consumers alienated by the Mulvaney collaboration will return to Bud Light. Bernstein research estimates that half of Bud Light’s market share loss and the gains made by Coors Light and Miller Lite will be permanent.
“ABI finds itself in a difficult situation,” the analysts wrote. Conservative consumers are frustrated by the brewer’s failure to apologize, while liberal consumers criticize Bud Light for not standing up for Mulvaney in the face of abusive comments.
Moving forward, AB InBev’s CEO, Michel Doukeris, assured analysts and investors that the company’s key brand still enjoys strong support. A survey of 170,000 US consumers revealed that 80% held a favorable or neutral view of Bud Light.
“Consumers simply want to enjoy their beer without getting into debates,” Doukeris said. “They want our brands to focus on what we do best, which is beer, and they want Bud Light to engage with topics that are relevant to all consumers, such as music and sports.”
As part of AB InBev’s efforts to move past the controversy, a Bud Light promotional team recently visited Houston’s Sawyer Ice House, where they offered free beers to patrons. However, none of the patrons wanted their pictures taken.
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