Anheuser-Busch InBev, the world’s largest brewer and parent company of Bud Light, reported a 5% increase in revenue in the third quarter, reaching $15.6 billion. While this growth was on par with Wall Street’s expectations, the company faced a significant drop in sales in North America, with revenue plunging by 13.5%.
The sales decline in North America can be traced back to a promotion the company conducted with transgender influencer, Dylan Mulvaney. Bud Light sent a commemorative can to Mulvaney, which caused a conservative backlash and led to a negative impact on the brand’s reputation. Bud Light also faced criticism from supporters of transgender rights who felt the brand had abandoned Mulvaney.
According to Nielsen data compiled by Bump Williams Consulting, retail dollar sales of Bud Light in the United States were down 29% in the four weeks ending October 21 compared to the same period last year. Year-to-date, sales were down nearly 19%.
To address these challenges, Michel Doukeris, the CEO of AB InBev, announced that the company is shifting its marketing strategy in the United States towards more traditional outlets, such as college football and concerts. In October, AB InBev also announced a multiyear partnership that makes Bud Light the official beer of the UFC mixed martial arts organization. Doukeris stated that these efforts are already showing positive results, with recent internal polling revealing that 40% of lapsed Bud Light drinkers are considering returning to the brand.
Despite facing an uphill battle, Doukeris expressed confidence in the company’s direction and strategy for recovery. AB InBev announced a $1 billion share buyback program as a sign of their confidence. The program will be executed over the next year, and the company’s shares on the Nasdaq stock exchange rose nearly 5% in morning trading following the announcement.
However, the efforts to win back customers are impacting profits, with U.S. pretax earnings down 29% in the third quarter. Doukeris explained that around two-thirds of this decline is due to lower sales, while the remaining third is attributed to increased spending on marketing and supporting wholesalers.
Globally, AB InBev experienced a 3.4% decrease in volumes during the quarter, partly due to a wet and chilly summer in northern Europe. However, the company reported that sales volumes were up in South America, Asia, and Africa.
Despite the challenges, Anheuser-Busch InBev’s net income rose by 4% to $5.4 billion, surpassing Wall Street’s expectations of 84 cents per share.
InBev will need to continue their efforts to regain market share and rebuild the trust of both loyal and potential Bud Light consumers. With a focused marketing strategy and an emphasis on traditional outlets, they aim to navigate the challenges created by the controversial promotion effectively.
