Bud Light should not get involved in ‘divisive political issues’: Anson Frericks
Former Anheuser-Busch executive Anson Frericks discusses the sales of Miller Lite and Coors after the Bud Light controversy on ‘The Bottom Line.’
Conventional wisdom holds that controversies blow over, news cycles cycle, and noisy protestors eventually quiet down. That’s certainly what Anheuser-Busch is hoping for amid the controversy surrounding its partnership with transgender activist Dylan Mulvaney. "It’s too early to have a full view," said Anheuser-Busch CEO Michel Doukeris during the company’s Q1 earnings call recently but "our full-year EBITDA growth outlook is unchanged."
Yet five weeks into the debacle, sales of Bud Light continue to plummet. Its year-over-year sales are down 17% from this time in 2022. All signs indicate that the Bud Light controversy isn’t going away. Why not?
Social science may hold the key. For years, business school researchers have been studying why some consumer boycotts are successful, while others fail. The results are telling. And does not bode well for Anheuser-Busch.
Perhaps intuitively, one key factor is whether consumers believe they have the power to impact the company’s bottom line. If a boycott would be futile, there’s no point. Bud Light’s customers, however, are witnessing their success in real time. While most companies report sales figures on a quarterly or annual basis, often on a significant delay, Bud Light sales are released each week. And there’s not much Anheuser Busch can do about it: The figures are reported by a trade publication, based on surveys sent to liquor stores, convenience stores and supermarkets. Anheuser-Busch cannot force the media storm to die down by starving it of data.
Then there’s the cost of the boycott to would-be consumers. Research tells us that two key determinants of a boycott’s success are consumers’ "preference for the boycotted product and their access to its substitutes." When it’s easy to switch to a competitor’s product, boycotts are easier to sustain.
Real life examples bear this out. One of the most-cited examples of a successful boycott is the 1995 Shell boycott, where consumers boycotted Shell gasoline over the company’s plans to sink an oil platform into the Atlantic Ocean. A critical factor was that the boycott was virtually costless to consumers: Gas is gas, and the cost of filling up at a different station was quite low.
BUD LIGHT PARENT COMPANY'S STOCK DOWNGRADED BY HSBC AMID BRANDING 'CRISIS,' HUGE SALES DROP
When switching is hard, by contrast, boycotts tend to fail. Take Disney’s decision to wade into a political debate with Florida Governor Ron DeSantis. Some disgruntled customers called for boycotts, but Disney’s 2022 revenues ultimately rose 22.7% over the previous year. But what choice did Disney’s customers really have? Are parents no longer going to take their kids to Disney World?
Or take the calls to boycott the NFL after San Francisco 49ers quarterback Colin Kaepernick kneeled during the national anthem. Scores of offended fans flocked to Twitter to vow they’d never watch football again. But they did. This year’s Super Bowl was the most-watched of all time.
Bud Light is different. As beer goes, it is not particularly unique. Pour a Bud Light into an unmarked Solo cup, and most people can’t distinguish it from a Coors Light or a Miller Light or a Pabst Blue Ribbon. Nor do consumers have strong preferences based on taste alone.
Bud Light continues to face backlash more than a month after its polarizing pact with transgender influencer Dylan Mulvaney prompted outrage. (Getty)
In a sense, Bud Light’s easygoing, generic, inoffensive appeal was the appeal. That appeal is now gone. But other brands have retained their inoffensive status. That’s likely why as Bud Light’s sales have fallen, Coors and Miller have enjoyed 20.5% and 21% sales boosts in the third week of April, respectively. It might be easy to drive to a different gas station, but it’s really easy to reach for something else from 7-Eleven’s beer fridge.
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There’s another reason why Bud Light’s sales have continued to fall, one that seems to elude most commentators: The Bud Light boycotts aren’t driven exclusively, or even primarily, by radical extremists.
Certainly, the most politically devout patrons are the most dissatisfied with Bud Light’s recent brand strategy. And the noisiest. But for every Kid Rock shooting bullets into Bud Light cans on Tik Tok or gay bar loudly dumping the brand for not being LGBT-friendly enough, there are hundreds if not thousands of Americans who just don’t want their choice in beer to be political—not pro-trans, not anti-trans, not any-trans. Anheuser-Busch’s CEO alluded to this in last week’s earning call: "The beer itself should not be the focus of the debate."
But it is. And that doesn’t seem to be changing anytime soon. The Bud Light controversy is therefore more than the latest flash point in the culture wars. It is part of a larger cultural shift. In 2020 and 2021, much of corporate America saw advocating for social issues as an easy way to score points with customers. Boycotts were rare; most people either supported socio-corporate political activism or were too afraid to say otherwise.
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Now, the tide has turned. A poll conducted earlier this year shows that 68% of Americans think that companies that speak out on social issues do it as a marketing ploy. And a study out earlier this month shows that Americans are much more likely to distrust institutions they view as politicized—even when they take political positions that align with their views. In today’s heated political environment, the surest course for companies—particularly those in high-visibility, competitive markets—is to focus on their brand and stay out of the debates.
Anheuser-Busch is no exception. To correct course, Anheuser-Busch must publicly commit to staying out of political issues moving forward. Anheuser-Busch may have had to learn this lesson the hard way, but for other companies, the lesson should be much easier to swallow.
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