Can Bud Light Overcome Its Recent Sales Decline?
The recent sale of Bud Light took a hit after the brand caused a backlash by sending a commemorative can to a transgender influencer, Dylan Mulvaney, in early April. The backlash resulted in a steep decline in sales, with the company's total U.S. market share for all brands falling from 5 to 36.9% in April. However, the trend has since stabilized, with no major decline observed from the end of April through June.
Current Sales Trends
Although there has been a leveling out of sales, it remains doubtful that there will be a significant comeback to its previous market status. Once consumers have had a negative experience with a product, they often do not return to it, even if the brand makes amends.
Despite the setback, overall sales for AB InBev, the parent company, have risen by 7.8% globally, with a 10% drop in U.S. Bud Light sales. Interestingly, the stock price of AB InBev SA ADRs as of Friday is slightly higher than it was 12 months ago, indicating a general positive outlook for the company.
The Resilience of Consumer Brands
Boycotts tend not to last for long, as the individuals involved are often not rational enough to realize they might encounter the brand again someday. For instance, at a party where Bud Light is served, these boycotting consumers might find themselves in a position where they have to either drink it or diplomatically clarify their situation to the host. This tends to resolve their issue, often without them realizing the resolution came naturally due to the repeated exposure to the brand.
Anheuser-Busch, the parent company of Bud Light, produces a diverse range of beer under 16 different brands and has around 22 craft beers in their portfolio. Furthermore, through In-Bev SA ADRs, they control hundreds of additional brands, providing a robust and diverse lineup to choose from.
In conclusion, while Bud Light faced a significant setback due to the backlash, the resilience and diversification of the AB InBev portfolio suggest a potential path to recovery. However, overcoming a significant brand reputation issue is never easy and will require strategic and continuous effort.