On the 31st of October 2023, AB InBev, the World’s biggest beer manufacturer posted a 5% increase in revenue over the period to $15.57 billion, beating its inhouse forecast of 4.7%. By AB InBev’s standard 4.7% projection was abnormally conservative for the Belgian based firm. But this year has been nothing but normal for the Company especially in their North American and US markets. AB InBev is the parent company of Budweiser and Bud Light with huge market shares in North America, Europe, Middle East, Africa, and Asia-Pacific. The company is having a positive outlook for the first time this year after a conservative-led boycott of the Bud Light brand in mostly North American and the US market. And it all started with a less than 1 minute video posted by a Transgender Tik-Tok influencer named Dylan Mulvaney.
It all started with the company’s strategy to appeal to and perhaps bring the LGBTQ community into their market. In April of this year, Ms Mulvaney, a Transgender and Influencer with more than 10 million followers on Tik-Tok and about 1.8million followers on Instagram, posted a video on her Instagram account promoting a Bud Light Contest. Dylan had previously ran a series on her Tik-Tok titled “Days of Girlhood”. The New York Times’ Amanda Holpuch in her September 18, 2023 article reported that “Her Bud Light promotional post was less than a minute long and was mostly about a $15,000 giveaway that the company sponsored during March Madness. She mentions that the company sent her a tallboy Can with her face on it to celebrate a full year of her “Days of Girlhood” series.”
This triggered a massive boycott of Bud Light in the US and North American markets. The effect was a huge slump on sales. Since then, the downward trend in Sales Revenue had continued. At first AB InBev kept quiet thinking that it would blow over. Apparently, this was not the first controversial campaign which they survived. But the boycott call grew louder, and the company had to sacrifice two of their executives, after releasing a statement promising to focus on Sports and Music.
This was not enough for the conservatives who had championed the boycott since April; for them it was too little too late. Ms Mulvaney had accused Bud of hanging her out to dry while the LGBTQ community were very upset against Bud for not standing firm behind Dylan. “For a company to hire a trans person and then not publicly stand by them is worse, in my opinion, than not hiring a trans person at all,” she said. The Campaign alienated Bud Light core drinkers and didn’t achieve the purpose of onboarding new drinkers in the LGBTQ community.
It is to be emphasized that the LGBTQ community is a small group whose market will make little impact on the market share of Bud light and the balance sheet AB InBev in general. Dave Novosel, an analyst with Gimme Credit, said “The lesson is not to target ultra small segments with marketing that offends huge loyal segments. Targeting new segments needs to be encouraged, but not at the expense of highly profitable existing segments,” Novosel said.
Could it be Brand Arrogance that will propel a company to directly appeal to a controversial small group like Trans at the detriment of alienating its major market segment? Bud Light was a brand that identified with Sports and Music until April 2023. Currently, it is a brand that is struggling with identity due to the arrogance of those who seemed to have been defeated by success.
CNBC reports that in AB InBev’s 3rd Quarter report, the “revenue in the U.S. dropped 13.5%, while earnings before interest, taxes, depreciation, and amortization (EBITDA) in the country plunged 29.3% due to “market share performance,” along with productivity loss and higher marketing spend. It marks the second quarter in which the Bud Light controversy, which includes criticism of the company for failing to support Mulvaney amid the backlash, has hit U.S. sales.”
The Company is optimistic of the end of the boycott. The CEO is upbeat about a recent survey which shows that the Bud Light traditional drinkers are ready to come back. But this same optimism has been expressed earlier in the year with little positive outcome.
Bud Light is the 3rd most valuable beer brand in the world. Has brand arrogance got the better of Bud Light?
#MEMBA12
