Bill Gates, the seventh-richest person in the world according to the Forbes 2023 list, has been experiencing financial loss in one of his recent investment ventures.
Gates, who amassed his wealth as the co-founder and former leader of Microsoft Corp., has shifted his focus to investing in private corporations and publicly traded companies since retiring in 2008.
In the second quarter of fiscal year 2023, Gates acquired over 1.7 million shares of Anheuser-Busch InBev (NYSE:BUD), the maker of popular beer brands like Bud Light and Corona. Anheuser-Busch InBev, headquartered in Brussels, is the largest brewer in the world and one of the top alcohol companies globally.
However, Anheuser-Busch InBev has faced controversy in recent months after hiring transgender influencer and social media personality Dylan Mulvaney to promote Bud Light on Instagram. This resulted in a decline in the popularity of the Belgian brewery in the U.S., with numerous prominent figures calling for a boycott of its flagship Bud Light beer.
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Anheuser-Busch InBev’s Performance So Far In 2023
In the second quarter ended June 30, AB InBev experienced a 10.5% decrease in U.S. revenue primarily due to declining sales volume of Bud Light. The company’s core profit fell by 28.2%, while total global sales volume dropped by 1.4% compared to the previous year’s quarter. However, the company’s strong global presence helped offset losses from the U.S., with its total revenue increasing by 7.2% year over year.
Although AB InBev’s normalized earnings before interest, taxes, depreciation, and amortization (EBITDA) rose by 5% in the same period, its net profits and earnings per share (EPS) declined compared to the second quarter of 2022.
During the height of the Bud Light controversy, Constellation Brands Inc.’s Modelo became the top-selling beer in the United States, causing AB InBev’s sales to plummet by nearly 25%.
AB InBev aims to distance itself from Mulvaney’s social media posts following the controversy, which has alienated both conservatives and progressives, according to Zak Stambor, a senior analyst at Insider Intelligence.
AB InBev’s Pivoting Strategy To Regain Momentum
“In the U.S., we are listening and actively engaging with our consumers,” said AB InBev CEO Michel Doukeris during a quarterly earnings call. “They want to enjoy their beer without a debate, they want us to focus and concentrate on platforms that all consumers love.”
To address this, the company conducted a survey of Bud Light consumers through a third party, with approximately 80% of the 170,000 respondents remaining neutral or favorable.
AB InBev also found through customer engagement that they want “their beer without a debate” and “Bud Light to focus on beer.”
Analysts expect AB InBev’s revenue and EPS to improve sequentially in the upcoming third quarter, as the company’s efforts to put the controversy behind them are expected to yield positive results. The consensus revenue estimate for the third quarter ending Sept. 30 is $15.71 billion, indicating a 2.2% improvement quarter-over-quarter. Additionally, analysts project an EPS of $0.83 for the last quarter, up from $0.68 generated in the second quarter.
Gates’ Portfolio: YTD Performance
Gates acquired 1,703,000 shares of AB InBev in the second quarter, totaling nearly $100 million through the Bill & Melinda Gates Foundation Trust. However, due to the recent controversy and declining U.S. sales, Gates has suffered a loss of over $6 million on his investment in the beer company.
While Gates’ recent investment may be in the negative, his other investments, particularly in Warren Buffett’s Berkshire Hathaway Inc. (NYSE:BRK), have seen a surge of over 9% year-to-date. As of June 30, Gates holds nearly 25.14 million shares of Berkshire Hathaway, which accounts for 20.4% of his portfolio.
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This article Bill Gates Has Already Lost Millions On His Bud Light Comeback Bet originally appeared on Benzinga.com.
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