(Bloomberg) -- Bud Light — a brand built on bro-y fun — was made for joints like the Green Rock Tap and Grill in Hoboken, New Jersey. It’s a rowdy sports bar with $1 wing nights that in 2022 sold $250,000 of what was then America’s best-selling beer.
But its Bud Light business has collapsed — tallying just $37,000 so far this year — in a microcosm of how the brand, owned by Anheuser-Busch InBev, has struggled since April 2023. That’s when an influencer who is transgender promoted it online and sparked a conservative backlash — one that included Kid Rock in a MAGA hat shooting up cases of it and Ted Cruz calling for an investigation.
“It’s definitely taken a hit,” said Brandon Bovino, chief operating officer for the company that owns Green Rock and a handful of other bars in New Jersey. Customers switched to rivals such as Miller Lite as AB InBev’s efforts to claw back market share, including more promotions, haven’t worked, he said.
The same can be said nationally. To revive Bud Light, AB InBev has plowed millions into marketing, including TV ads starring Peyton Manning and a sponsorship deal with UFC, but it’s still losing ground, according to interviews with distributors, bar owners and industry experts and data provided exclusively to Bloomberg News.
In July, the brand slipped to third place in the US after rival Modelo and Michelob Ultra, another InBev brand, according to analysis of NielsenIQ data by industry consultant Bump Williams. Meanwhile, Bud Light’s market share shrunk to 6.4% in the second quarter at the more than 1,000 bars using point-of-sale software made by Union. That’s down from nearly 12% before the backlash.
AB InBev, the world’s biggest brewer, is desperate to move on from the controversy. On Thursday, it will report second-quarter earnings, which will be compared to the year earlier period when the Bud Light backlash began. Sales in North America — generating about a quarter of its roughly $60 billion in total revenue — have declined for four straight quarters. Analysts expect revenue in the region to decrease about 1.5% to $3.89 billion, according to the average estimate.
The company’s stock has fallen about 6% this year. That lowered its market value to roughly $120 billion — about 40% below its high in 2019 before the Covid-19 pandemic hit.
AB InBev declined to make any executives available for interviews for this story.
The company has pitched investors on rebalancing its portfolio in America to focus on other big brands that are growing. At the top of the list is Michelob Ultra — a light beer with ads about spin class and kayaking rather than Bud Light’s brew-fetching pets and pick-up lines gone awry.
Earlier this year, AB InBev Chief Executive Officer Michel Doukeris said Michelob Ultra was primed to keep increasing market share with its “strongest activation” yet coming this summer as the brand sponsors the US Olympic team.
It’s part of a bigger push by AB InBev to leverage the games, which kicked off last week, as it tries to move past Bud Light’s downturn. Corona Cero, a non-alcoholic offering, is the first global beer sponsor for the Olympics. However, the company doesn’t sell any Corona brand in America. (When it acquired Grupo Modelo in 2013, it had to divest US distribution of Modelo and Corona.)
The shift to Michelob Ultra can be seen in recent national TV advertising. Over May and June, spending on Bud Light ads in the US sank by about 80% from a year earlier, according to data from iSpot. During the same period, outlays for Michelob Ultra were 13 times higher than Bud Light. And this year through June, ad spend for Michelob Ultra is roughly 25% more than Bud Light, which usually ramps up marketing in the fall for football season.
The Bud Light controversy erupted amid a decline in US beer consumption. In recent years, young adults have been drinking less beer as they opt for hard seltzers and other options. Bud Light isn’t immune, with its sales consistently falling, according to UBS analyst Sanjeet Aujla.
The Belgium-based company grew through acquisitions, including mega deals for Anheuser-Busch in 2008, which gave it Bud Light and Budweiser, and SAB Miller in 2016 — the world’s second-biggest brewer at the time. Now the conglomerate is a jigsaw puzzle of more than 500 brands with operations in nearly 50 countries.
For years, AB InBev only expanded by buying other brands, according to Aujla, but he said that’s changed under Doukeris, a company veteran who became CEO in 2021, with so-called organic growth perking up outside the US. To maintain that the company has shifted investment to its biggest brands. On a global scale, that’s Budweiser, Michelob Ultra, Stella Artois and Corona. Within each region, the five best-selling beers get about 70% of investment, the company has said.
“That’s a much more efficient way to run a big business,” said Tom O’Hara, portfolio manager at Janus Henderson, a top 30 shareholder in AB InBev, by focusing on “megabrands that can really deliver profitable growth.”
Anheuser-Busch debuted Bud Light in the early 1980s in response to the runaway success of Miller Lite. Silly advertising — including a series of spots with Spuds MacKenzie, a fictitious dog dubbed the original party animal — helped it reach No. 1 in the early 2000s. But the craft brewing boom and the rising popularity of spirits such as vodka slowed down the brand.
In July 2022, AB InBev appointed Alissa Heinerscheid as vice president of marketing for Bud Light. She was the first female VP in the beer’s 40-year history and determined to attract younger drinkers — saying in a podcast that Bud Light had a “fratty, kind of out-of-touch humor.”
The following spring, the company enlisted social media influencers to create a buzz around Bud Light’s contest during the March Madness college basketball tournament. Among them was Dylan Mulvaney, a transgender woman. The brand sent her a Bud Light can with her face on it, and Mulvaney posted on Instagram about it.
The reaction was quick and intense. Videos of upset fans dumping out Bud Light flooded the web as sales cratered. By June, rival Modelo, owned by Constellation Brands in the US, edged in front to become America’s best-selling beer. The anti-Bud Light sentiment got so heated that delivery drivers reported being harassed.
AB InBev shook up the marketing department. The brand, under the guidance of company veteran Todd Allen, turned back to familiar territory. It released ad campaigns about summer fun and football that included a Super Bowl spot with NFL greats Manning and Emmitt Smith.
To help win back alienated fans, Bud Light inked a multi-year deal with UFC in October that was the mixed-martial arts promoter’s biggest-ever sponsorship, topping a previous high of $175 million. UFC CEO Dana White, an outspoken supporter of former president Donald Trump, went on Fox News and lauded the company’s spending with US farmers.
White told Tucker Carlson in a separate interview: “If you consider yourself a patriot, you should be drinking gallons of Bud Light.”
Trump later joined the redemption tour, saying in February on social media that the brand should be given a second chance. “The Bud Light ad was a mistake of epic proportions, and for that a very big price was paid,” Trump wrote.
CNBC reported that Trump backed the brand publicly after being asked to do so by White, who introduced the former president at this year’s Republican National Convention. UFC declined to comment. The Trump campaign didn’t respond to a request for comment.
As AB InBev struggles to revive the brand, some distributors worry that consumers have moved on and aren’t coming back. One of them, asking not to be named discussing private business dealings, has had to cut staff and freeze wages after sales sank.
Switching light beer brands is likely easier than with other drinks because they have little variation in taste, according to Marten Lodewijks, US president of market researcher IWSR.
Steve Tatum, general manager for a distributor in Alabama, said Bud Light sales have steadied, but are still down about 10% since the backlash.
“We might have had one or two accounts that took Bud Light out,” Tatum said. But most retail customers have “come around.”
That can’t be said for Green Rock, a destination for workers commuting home from nearby Manhattan. During a recent weeknight happy hour, co-manager Jake Obid chronicled the past 16 months. The brand took an immediate hit with customers shunning the beer, he said. But that died down and morphed into something that may be even more troubling for AB InBev.
“I’d say more people than not weren't necessarily upset with Bud Light,” the 25-year-old said. “It just became a thing that people just stopped. People got into the habit of drinking other beer.”
©2024 Bloomberg L.P.
