Fox News articles are now available for listening! Bud Light, the former best-selling beer in America, has lost its crown after a twenty-year reign. This decline was expected due to the backlash from Bud Light’s controversial partnership with Dylan Mulvaney, which has been negatively impacting the company for months. Anheuser-Busch’s response to the controversy has been less than stellar. Initially, the company mishandled the situation by not addressing or apologizing for the controversy. Since then, they have remained silent, despite a significant drop in sales and a loss of market value.
While Bud Light may be losing customers, they can’t escape the scrutiny of shareholders. In an upcoming earnings call, Anheuser-Busch will have to address shareholder concerns. To prevent further damage, they must prepare for this now. Earnings calls are typically well-scripted events where CEOs discuss business plans and provide updates on projected earnings. Shareholders and analysts take note of this information to adjust their predictions for the company’s stock performance. If projections are positive, stock prices tend to rise. On the other hand, if sales fall short or expectations decrease, stock prices usually decline.
However, earnings calls also give participants the opportunity to ask questions. Shareholders have the power to hold Bud Light accountable in a way that customers cannot. They have the chance to do so before Anheuser-Busch’s current strategy leads to further declines. It’s evident that the company is at risk of failing to meet projections. In 2021, CEO Michel Doukeris predicted 4-8% annual EBITDA growth from 2022-2025, a modest target. In 2022, they exceeded expectations with 7.1% earnings growth. Analysts expected even better results in 2023, projecting 7.4% earnings growth.
Anheuser-Busch seemed poised to deliver on these projections, but everything changed on April 1. Sales plummeted, causing the company’s stock to decline over 10%. Meanwhile, the S&P 500 saw a 7% increase, and Molson Coors, Bud Light’s main competitor, experienced nearly 30% growth. During the earnings call in May, Doukeris expressed confidence in meeting the 2023 earnings goal, downplaying the Bud Light controversy. Shareholders are unlikely to be satisfied with this response. They will demand more details on earnings growth and Anheuser-Busch’s plans to recover.
Analysts have already downgraded Anheuser-Busch’s ratings, and the consensus on 2023 earnings growth is expected to decrease from 7.4% to 6.5%. More downgrades and projections cuts are anticipated. To reverse this decline, Anheuser-Busch needs to reveal clear plans to regain Bud Light sales. Bud Light represents a significant portion of the company’s earnings, making up about 30% of its US earnings and 9% of total sales. The current sales decline of around 30% is negatively impacting earnings. Analysts should ask specific questions about Bud Light’s strategies to win back consumers and the financial trade-offs being made to support these efforts.
Anheuser-Busch has tried various tactics, such as camouflage bottles, discounts, and increased advertising spend on less controversial Bud Light ads, but these have proven ineffective. The company must address the issue directly to regain consumer trust. Additionally, analysts should inquire about the source of funding for Bud Light’s support and how sustainable it is. Anheuser-Busch’s commitment to protecting jobs and providing financial assistance is costly and may not be viable in the long term.
Ultimately, Anheuser-Busch must respond effectively to the controversy and prepare for the upcoming shareholder meeting. They can no longer avoid addressing the issue directly. The company’s current PR moves seem to be avoiding the controversy rather than implementing a comprehensive long-term strategy. Anheuser-Busch has much to answer for, and they need to do so promptly, as there will be no hiding from shareholders on July 28.
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