Shares of Bud Light’s parent company, Anheuser-Busch InBev (BUD), have fallen more than 17% since the company announced its results on May 4, as the Dylan Mulvaney controversy continues to weigh on sales of the beer giant.
The company, however, saw a slight improvement. In the week ended May 27, Anheuser-Busch InBev said Bud Light sales fell 23.9% from a year ago, a smaller decline than the previous week, down from 25.7%. Volumes improved slightly better too, down 27.8% the week of May 27, compared to a 29.5% drop the week of May 20. That’s according to data from Bump Williams Consulting cited in an Evercore ISI memo to clients.
“Another week of very weak trends for Bud Light indicates that the channels tracked may be reaching a point of stabilization, albeit at significantly lower levels for Anheuser-Busch InBev than before the controversy,” Evercore said.
It is now the second month of the boycott after Mulvaney, a transgender influencer and TikTok personality, made an Instagram post during March Madness basketball endorsing the beer. Following the release, the company saw sales decline in April and May, following an April 3 video by country singer Kid Rock, which apparently sparked a widespread boycott among some US consumers.
Other Anheuser-Busch InBev brands in the portfolio are also rebounding, but “remain well below pre-controversy levels as boycotts on ABI’s largest portfolio continue to impact brands outside of Bud Light”.
Budweiser sales were down 8.5% year over year the week of May 27, but better than the previous week of May 20, which saw the biggest drop, down 11.2% . Sales of Michelob Ultra fell 0.1% in the last week of May, compared to a drop of 3.8% the previous week. Busch Light sales fell 3.0% in the last week of May compared to a 5.2% decline the previous week. Natural Light also saw an improvement, sales fell 1.5% the week of May 27, compared to a drop of 4.9% the week of May 20.
Volumes for all brands in the portfolio also improved. Michelob Ultra volumes showed the biggest improvement, down 3.6% from a 7.5% drop the previous week at the start of the summer season.
Evercore’s Robert Ottenstein said: “Notably, industry volumes improved to -2.4% from -4.0% last week, indicating that ABI’s acceleration was likely not due the easing of boycott pressures.
Following the earnings call with investors, where Anheuser-Busch InBev CEO Michel Dimitrios Doukeris played down the controversy, the company faced boycotts from others, including the LGBTIQA+ community like 2Bears Tavern Uptown in Chicago.
For example: In an Instagram post, the bar said: “Anheuser-Busch’s decision to drop its support of Mulvaney in response to ignorant and hateful objections from some of its customers shows how little Anheuser-Busch cares of the LGBTIQA+ community…”
Ottenstein said that if this weakness persists, it “raises the question of whether Anheuser-Busch InBev and/or its distributors will need to make structural changes to reduce their cost base if trends do not improve over the coming months. “.
According to a Jefferies note to customers, approximately 65% of distributors expect the impact of the Bud Light controversy to last longer than 6 months, including a third of respondents who expect permanent impact.
Benefits of Molson Coors, Bank of America takes its stocks from underperforming to neutral
Meanwhile, competitor Molson Coors continues to gain share. All of its brands cited in the Evercore ISI report (Coors Light, Miller Lite, Keystone Light and Miller High Life) had the best sales week in the last week of May since the controversy began during the week of April 8. Coors Light led the sales growth with sales up 26.3% over the prior year.
On Tuesday, Bank of America upgraded Molson Coors shares from Underperform to Neutral. The company said: “Our rating change is based on our view that recent market share gains in the United States related to the Bud Light boycott have lasted long enough to have a positive impact on sales and earnings.” , among other reasons.
Shares of Molson Coors (TAP) have risen more than 5% since its last earnings release on May 2.
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Brooke DiPalma is a reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email him at bdipalma@yahoofinance.com.
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