Bud Light has been fighting an uphill battle since partnering with transgender social media influencer Dylan Mulvaney in April.
While Mulvaney has 10.6 million followers on TikTok, the collaboration sparked a backlash on social media and led to a boycott from some beer drinkers.
The New York Times recently reported that at Glenn Miller’s Beer & Soda Warehouse in Lemoyne, Pennsylvania, a 30-pack of Miller Lite retails for $24.99. In contrast, a 30-pack of Bud Light was priced at just $8.99 after a discount.
“At this point, it’s cheaper than some of the water cases we sell out the back,” warehouse manager Andy Wagner said. “It doesn’t move like before.”
Wagner pointed out that sales of Bud Light in his store since mid-April have fallen 45% from a year ago. The decline can be attributed to changing consumer preferences.
“It’s not that they quit drinking beer,” he said. “They just stopped buying Bud Light.”
Shares of Anheuser-Busch InBev (NYSE: BUD), the multinational beer company behind Bud Light, also took a hit. Since April 1, when Mulvaney first promoted the beer on social media, BUD stock listed on the New York Stock Exchange has fallen about 15%.
Although this drop in the share price resulted in the loss of billions of dollars in market capitalization, the situation could present an opportunity for contrarian investors.
“Headwinds are likely to fade”
It’s no secret that Bud Light has been losing market share.
According to consulting firm Bump Williams, using data from NielsenIQ, Bud Light is no longer the top-selling beer in the United States. The top spot now belongs to Modelo Especial, brewed by Constellation Brands (NYSE:STZ).
Bud Light’s declining market share poses a worrying outlook for AB InBev (ABI), but Deutsche Bank analyst Mitch Collett sees potential in the company.
“We believe the recent underperformance implies a permanent reduction in ABI’s US business. Our proprietary survey data suggests that these headwinds should subside although we do not expect the US business to recover. completely from their current challenges,” the analyst wrote in a recent research notice.
Collett raised its rating on AB InBev from Hold to Buy and raised the price target for the company’s European-listed shares from €59 ($64.13) to €60 ($65.21).
Considering the stock is currently trading at €52.29 ($56.83), the analyst’s new price target implies 14.7% upside potential.
Collett’s point is that while Bud Light’s situation is unfavorable, there is potential for improvement in the future.
“Taken together, our survey data shows that Bud Light as a brand faces significant challenges, especially with older consumers,” he wrote. “However, we believe the forward-looking datasets imply that the challenges will at least partially fade.”
AB InBev stock has been a volatile name and even the best analysts aren’t right 100% of the time. If you don’t like that kind of volatility, you might want to look into reliable income games outside of the stock market, like investing in rental properties with as little as $100 while remaining completely indifferent.
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This article “They just stopped buying”: Bud Light is now selling for less than water in some US warehouses, but is BUD stock too cheap to pass up? 1 Reason To Pick It Up Now originally appeared on Benzinga.com
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