In modern capitalism, there is a delicate dance that entangles the producer and the consumer.
When perfected, both sides are happy and profits can be fat. When done poorly, it can lead to ruinous results.
Today, we can look no further than Budweiser to see the ramifications of that relationship and how it can so quickly spiral out of control.
Editor
Delaware Business Times
The beer maker has become the target of a conservative backlash after it provided a personalized can of Bud Light to transgender social media influencer Dylan Mulvaney in a promotional post last spring. It was the sort of innocuous 45-second ad that we have come to swipe past daily, but for many in America it was an unwanted politicization of a beloved beer.
Conservative celebrities began to decry the brand’s partnership with Mulvaney, and singer Kid Rock infamously shot cases of Bud Light with a rifle for an extra bit of pageantry. The Republican Party criticized it too, with presidential candidate Ron DeSantis amplifying the case as another example of “woke” ideology run amok.
But most troubling for America’s corporate class was the consumer protest that ensued, as once-loyal Bud drinkers were now seeking out alternatives to express their opposition. Anyone who has shopped in a liquor store in the last six months has probably heard the heated criticism of the brand that has grown.
The resulting sales decline for Bud Light has been, frankly, unprecedented. In June, Bud Light lost its title as the No. 1 selling beer in the country as Modelo Especial, a Mexican beer made by Constellation Brands, overtook it in retail sales, according to Nielsen IQ data analyzed by the consulting firm Bump Williams.
In reporting its second quarter earnings, Budweiser owner Anheuser-Busch InBev said its U.S. revenue fell more than 10% year-over-year “primarily due to the volume decline of Bud Light.” Consequently, operating profit at the U.S. unit dropped nearly 30%.
The fiasco has resulted in a share price decline of about 12% this year, costing billions in Anheuser-Busch’s market cap.
The idea of a consumer boycott is not new with such economic measures date back more than a century, though historically it was reserved for disputes between nations – think the Boston Tea Party as an original example. In the last decade though, consumer boycotts from the political left and right have targeted a menagerie of companies including Nike, Keurig, Target, Starbucks and even Goya Foods over their practices, social promotions, and endorsements of politicians.
Most boycotts left little damage in their wake other than unfavorable press for a few weeks, but Budweiser may have made a key mistake in assessing the market risk of its promotions, according to Kevin O’Leary, the celebrity investor from ABC’s “Shark Tank.”
“Beer is a commodity, the only difference is brand, so you really have to protect your brand every way you can,” he said in a recent Fox Business interview. “If you don’t understand who’s buying your brand and you enrage them, which seems to be what happened here, you don’t know the outcome. And now we can measure it — 25% market share.”
I recently spoke with Lawrence Glickman, a Cornell University history professor who has studied consumer activism, and he agreed that the Bud Light case is different from prior examples.
“This has been a very, very successful boycott campaign, whereas most boycott campaigns, whatever their politics, are miserable failures,” he said, noting that he did not initially expect the Bud Light campaign to find success either. “I think it kind of fits our political moment, especially in conservative politics, really well.”
Whereas Budweiser was once seen as the cheap “every man” beer present in ballparks, bars and barbecues, it now carries an unwanted political tag.
“Brands like to have a positive reputation, but I think very big brands want to be seen fairly neutrally,” Glickman noted. “But now, [Budweiser] has been accused of being on one side of this very vehement culture war that’s going on around us. So, I think other corporations are going to be very concerned about that.”
Anheuser-Busch InBev CEO Michel Doukeris reportedly agrees, as he reported that the company has surveyed tens of thousands of consumers in recent months on what they want from the Bud Light brand. The takeaways: “they want to enjoy their beer without a debate … they want Bud Light to focus on beer. … they want Bud Light to concentrate on the platforms that all consumers love, such as NFL, Folds of Honor and music.”
The outcome of that approach may mean a pull-back from the corporate activism that we have seen over the past decade, including boycotts of North Carolina’s transgender bathroom bill, Florida’s “Don’t Say Gay” bill, and a multitude of Fox News personalities. It may also mean corporations de-emphasize a commitment to the increasingly polarized environmental, social and corporate governance (ESG) or diversity, equity and inclusion (DE&I) movements in order to not impact their bottom lines, especially at a time of economic uncertainty.
Such a reaction may embolden corporate profits in an era of heated political debate, but it could weaken the movement for increased visibility and rights for America’s most marginalized populations. Corporate promotion and support have often been a driver of societal and political change through history.
For now, we’ll have to wait and see how much more longevity the Bud Light boycott has in it, and what lessons other C-Suites will take from it.
