The financial firm HSBC has officially downgraded the stock of Anheuser-Busch InBev (ABI) to a “hold” amid growing concerns that backlash against the company’s partnership with a transgender social-media influencer, Dyland Mulvaney, continues to hamper sales.
Carlos Laboy, a managing director with the bank’s global beverage sector, admitted in a note written on Wednesday morning that Anheuser-Busch is currently in the midst of dealing with a “Bud Light crisis” and that there are “deeper problems than ABI admits.”
“Is ABI’s leadership getting the brand culture transformation right? It’s mixed,” Laboy wrote in a development first reported by CNBC. “At Ambev, we think the answer is ‘yes;’ in the US, we think it’s ‘no.’ The way this Bud Light crisis came about a month ago, management’s response to it and the loss of unprecedented volume and brand relevance raises many questions.”
While Anheuser-Busch reported bumper sales in the first quarter of fiscal 2023, Beer Marketer’s Insights – an alcohol industry research outfit – reported a 25 percent decline in beer sales for the company in April.
Anheuser-Busch stock shed over 3 percent by Wednesday afternoon after the HSBC news.
“Why did its US leadership underestimate the risk of pushback given the recent experience of other firms? Is A-B hiring the best people to grow the brands and gauge risk?” Laboy rhetorically asked in his letter.
“If Budweiser and Bud Light are iconic American ideas that have long brought consumers together, why did these marketers fail to invite new consumers without alienating the core base of the firm’s largest brand?”
The news seems to be getting worse for Bud Light, which has sought to plug sales and reassure distributors, even going so far as to offer every employee of the alcohol giant’s wholesalers a free case of beer in early May.
“This can is not a formal campaign or advertisement,” reads a letter to distributors from the company, referring to a special Mulvaney-branded can sent to the influencer. “Our new Vice President of Bud Light and all of us at Anheuser-Busch are committed to reminding all of our consumers why they love Bud Light and why they’ve made it the #1 beer in America.”
The announcement came in response to reports that distributors were losing millions of dollars daily following consumers abandoning the brand in the wake of its sponsorship of Mulvaney in early April.
Since then, the company has released two patriotic-styled advertisements in a bid to push past the controversy, both of which have seemingly failed to staunch plummeting sales.