Super Bud Light Debacle
Whether you are a sports fan or not, you probably know that Super Bowl Roman Numerals is going to happen on Sunday. As an actual fan of Uhmurikan football, I plan to watch it, along with millions of others who only watch this one game each year. You probably also know that much of what is written about the Super Bowl every year is actually about the commercials. Firms spend stratospheric amounts for a 15-second spot during this event, and they also spend a lot producing commercials to be shown during the SB that they hope everyone will talk about for days and weeks afterward.
This morning I was reading an article in The Free Press titled ‘The Sad Saga of Bud Light’, written by one Anson Frericks, who spent 11 years as a top executive at Anheuser-Busch InBev, the multi-national company that produces and sells beer all over the world, including here in Canada, where it owns Labatt Brewing, Limited, the largest brewer in the country. Frericks notes that there will be a Bud Light commercial shown during the game, and suggests that it is an attempt by AB InBev, the maker of said beer, to say ‘Sorry’.
Sorry about what? According to Frericks, about what happened back in 2023 (ancient history, I know) when AB InBev launched an advertising campaign for Bud Light that featured a ‘transgender influencer’ named Dylan Mulvaney. So, full disclosure. I do not and never have drank Bud Light, because it has two problems associated with it. Those would be the ‘Bud’ and the ‘Light’. I like beer, but Budweiser is fizzy yellow water that bears a distant resemblance to beer in my estimation, and beer labelled ‘Light’ is like yogurt labelled ‘nonfat’. It isn’t yogurt if it has no fat in it, and it isn’t beer if you added water to it to get the alcohol content down.
But that’s just me, as prior to the ad campaign mentioned above, which launched on April 1, 2023, Bud Light had the highest sales revenue of any beer in the US.
I remember discussions, some heated, most amused, about this ad campaign when it came out, but honestly paid little attention. I do not understand why having some nominally well-known person in a commercial for any product has any impact on anyone’s decision to consume that product. Morgan Freeman, Peyton Manning, Jennifer Garner or Dylan Mulvaney, I am not interested in their views of or association with anything I might consume. Apparently that makes me odd, but we already knew that.
I also knew some kind of boycott of Bud Light was proclaimed by somebody after those ads appeared. Didn’t drink the stuff, didn’t care, but honestly my guess was that it would all blow over as these things do, and the folks who liked Bud Light for reasons I do not understand would go back to drinking it eventually.
Well, according to this Free Press article by Mr. Frericks, I could not be more wrong, and this is what prompted me to write this column.
Here is what he claims, and I have not verified these numbers, but I expect one could.
“Bud Light sales declined 11 percent that week compared to the previous year. By April 15, 2023, sales were down 21 percent. In the ensuing months, the company shed billions of dollars of shareholder value, laid off hundreds of employees across the Anheuser-Busch ecosystem, damaged its reputation, and plunked itself in the middle of a highly contentious political issue.”
Then later he writes –
“Nearly two years later, Bud Light has yet to win beer lovers back; sales remain roughly 40 percent below where they were before the boycott began.”
40 per cent? Really? That’s astounding. That’s big.
Today, according to the article, Bud Light is the third-largest selling brand of beer in the US, after Modelo and Michelob Ultra. Even worse, if you were an AB-InBev shareholder, on March 31, 2023, the day before the Mulvaney campaign launched, AB InBev stock was $66 per share with a market capitalization of $132 billion. Today, the stock price is $49 a share with a market cap of $87 billion, a loss of over $40 billion in value.
Clearly, my original thought that the kerfuffle would end and Bud Light sales would revive was rather wrong. That ad campaign apparently did do some long-term serious damage to the company that ran it. (I hasten to add that we cannot look at the counterfactual: what would sales of Bud Light be today if that ad campaign had not happened? It is entirely possible that other things – good marketing by Modelo, for example – have something to do with the fall in Bud Light sales.)
The Free Press article (you can read it here) goes on to document the path AB-InBev took to get to that point, starting with the appointment of a new CEO, Michel Doukeris, in July of 2021. Frericks lays out the re-orientation of AB-InBev in a new direction, emphasizing ESG and DIE initiatives, that Doukeris led.
Leaving aside my or anyone else’s views of all that sort of thing (and I surely do have a view), it seems to me the most salient question one can ask about this is: what in the hell were these people thinking?
To put it differently, how can the CEO of a multi-national corporation like AB-InBev not realize what an utterly idiotic idea it was to have a ‘transgender influencer’ promoting Bud Light??!! How can anyone – never mind someone being paid an eye-watering salary (plus bonuses, plus…plus…) to run this company – be so hopelessly clueless about the company’s product and customers?
I am sure plenty of folks will point at the whole ‘woke’ mindset as the cluelessness culprit here, and I can imagine that played a role, but I also strongly suspect it is deeper than that. However woke Mr. Doukeris and his fellow C-suite inhabitants might be, I wonder if he ever spent a moment of his time working in the business of making, distributing or selling beer. Did he even drink Bud Light when no reporters were around?
His Wikipedia bio says he has a degree in chemical engineering and post-graduate degrees from U Penn’s Wharton Business School and Northwestern’s Kellog School of Management. He joined AB-InBev in Brazil in 1996, when he would have been 23 years old, but it doesn’t say what he did. I’m betting he wasn’t driving a delivery truck, but I suppose it is possible he was a chemical engineer in one of their breweries to begin his career. However, he seems to have quickly become a rising star in the company, which meant leaving behind any actual association with the business in which AB-InBev was engaged. There lies the path to cluelessness.
So, woke or otherwise, his foolish approval of this ad campaign (with blame to be shared by Alissa Heinerscheid, whom Doukeris had apparently promoted to vice president of marketing) was a clear disaster for AB-InBev’s bottom line. And, here’s the thing – he is still the company CEO.
When I read about people railing against the inefficiency of government, typically asserting that ‘in the private sector if you make bad decisions there are consequences, dammit!’, I think of stories like this one.
In the 21st century, in any LBO, private or public, non-profit or commercial, there are rarely any consequences for fucking up. At least, when you are near enough to the top of the LBO hierarchy.
You do want to be very near the top, however. The article also notes that
“Alissa Heinerscheid was placed on leave in April 2023. According to her LinkedIn profile, she now works with LIV Golf, the professional golf league underwritten by Saudi Arabia.”
Yea, I know. Ms Heinerscheid is in no danger of starving. Do you suppose Saudi-backed LIV Golf has a DIE department? I’m gonna have one of my interns look into that.