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Kevin O’Leary, chairman of investment platform O’Leary Ventures, expressed his intent to teach the Bud Light disaster during his college visits because the seasoned entrepreneur believes the brand has misunderstood its core customer base and is now suffering the consequences.
“This is unprecedented in the beer industry. Beer brands take decades to build. And usually, you’re fighting for 1–2 percent share per year by spending hundreds of millions of dollars of advertising,” O’Leary said in a June 20 interview with Fox News. The situation with Bud Light “has never happened before. No beer brand has ever lost 25 percent market share in a matter of hours. It’s so unprecedented that there is no playbook for this.”
“This is so extraordinary that I’m planning to teach it this fall in the colleges that I visit and guest lecture at. I’ve never seen a brand case like this one,” he said. “Bud Light is the gift that just keeps on giving.”
Estimated to have a net worth of around $400 million, O’Leary co-founded SoftKey and O’Leary Fund, and is a well-known face on the popular business entertainment show “Shark Tank.”
Bud Light became a boycott target after partnering with transgender social media personality Dylan Mulvaney in a promotional campaign in April. The company sent custom Bud Light beer cans to Mulvaney featuring the trans-activist’s face—a move criticized as pushing the transgender agenda. The can was created to celebrate a full year of Mulvaney transitioning to “girlhood.”
Boycotts soon followed. In a recent research note, Deutsche Bank analyst Mitch Collett revealed that 24 percent of Bud Light customers are no longer buying the brand, while an additional 18 percent have been buying less, according to Barron’s. He warned that Bud Light, as a brand, faces “significant challenges,” especially with older consumers.
“We believe recent underperformance implies a permanent reduction in ABI’s U.S. business,” Collett wrote in the note, referring to Anheuser-Busch InBev, the parent company of Bud Light.
“Our proprietary survey data suggest these headwinds are likely to fade even if we do not expect the U.S. business ever to fully recover from its current challenges.”
Falling Market Cap and Sales
Anheuser-Busch’s market capitalization has crashed ever since the Mulvaney controversy. Between April 3 and June 26, the market cap has fallen from $134.14 billion to $113.57 billion.
This is a decline of over $20 billion—representing a more than 15 percent fall.
Data from Nielsen IQ and Bump Williams Consulting shows that sales of Bud Light were down 28.5 percent year over year for the week ended June 17, according to the New York Post. Anheuser-Busch’s other brands have also suffered losses. While Budweiser sales are down 12.3 percent, Busch Light fell 8.1 percent, and Michelob Ultra declined by 4 percent.
Sales of the company’s competitors have meanwhile surged, with Yuengling Lager rising by 25.1 percent, Coors Light by 21.8 percent, and Miller Lite by 16 percent.
Meanwhile, Coors Light is also under scrutiny for promoting the Denver Pride Parade. In an interview with Fox, Adam Collins, chief communications and corporate affairs officer for Molson Coors, the parent company of Coors Light, had said that the company would continue backing the event for “decades to come.”
Enraging the Customer
During his Fox interview, O’Leary talked about the “listening tour” that Anheuser-Busch’s CEO Brendan Whitworth is reportedly planning. “I don’t think that’s going to work,” he said. “He is going to get an earful. There’s no question about it. The problem with that tour and that idea is it keeps it as a front-line press item.”
“Beer is a commodity. The only difference is brand. And so, you really have to protect your brand every way you can and understand your consumer and read the room. I mean, obviously, you can have any kind of discussion about gender neutrality or social mores and all of that regardless of your politics,” O’Leary said.
“But if you don’t understand who’s buying your brand and you enrage them, which seems to be what happened here, you don’t know the outcome. And now we can measure it—25 percent market share.”
Despite the consumer backlash, Anheuser-Busch CEO Whitworth reiterated in a recent interview with CBS that the company continues to remain committed to LGBT causes.
“But Light has supported LGBT since 1998. That’s 25 years. And as we’ve said from the beginning, we’ll continue to support the communities and organizations that we’ve supported for decades.”
For more than two decades, Bud Light was the top-selling beer in America. After the Mulvaney controversy, Constellation Brands-owned Modelo Especial became the number-one selling beer brand in the United States in May, dethroning Bud Light, which slipped to the second spot.