Major brands have been taking more aggressive steps toward inclusion and diversity in their advertising campaigns in recent years. However, it seems that some are finding it challenging to navigate these waters without causing controversy, as evidenced by the recent backlash Bud Light faced due to its partnership with TikTok influencer Dylan Mulvaney. Mulvaney, a gay man who documents his so-called journey into girlhood on TikTok, achieved internet fame and secured various brand deals, one of which was with Bud Light. Known for its stereotypical male-centric consumer base, the brand's decision to feature Mulvaney in an advertisement bewildered and even angered some audiences. The backlash was rooted in the fact that Mulvaney, a man, was appropriating womanhood and embodying all the worst stereotypes of femininity. Critics argued that this was not only inappropriate but potentially damaging to women's portrayal in media.
Mulvaney's ads featured him donning a black mini dress, showing off Bud Light beer, and seemingly mocking the concept of women not understanding sports. In another video, he danced in a bathtub surrounded by Bud Light cans. This polarizing representation led to calls for a boycott of the beer, putting Bud Light and its parent company, Anheuser Busch, in hot water. Alissa Heinerscheid, Bud Light's VP of Marketing, defended the decision on a podcast, stating that Bud Light needed to attract younger consumers and modernize its image. The ad campaign aimed to convey an inclusive message and appeal to both women and men. However, following the boycott threats, Heinerscheid was placed on a leave of absence.
While some celebrated this decision as a repercussion of the controversial ad, others argue that the leave is more of a temporary measure to mitigate public outcry rather than a punitive action. As pointed out by a Twitter user, Heinerscheid is unlikely to suffer any major career consequences due to her socio-economic status and connections. Regardless of what happens to Heinerscheid, it's clear that the Bud Light boycott that thus ensued was indeed successful.
Bud Light Sales Dropped $15.7 Billion Due to Boycott over Dylan Mulvaney Controversy
Since the contentious promotion on April 1 during the NCAA March Madness tournament, the market value of Anheuser-Busch InBev, which counts Bud Light as its fourth bestselling brand, has plummeted by $15.7 billion. Over the same period, other major publicly traded global beer brands have seen a $3.2 billion increase in market value, according to S&P Global Market Intelligence.
The boycott has caused Bud Light sales to decrease by more than 23% as of the week ending May 6, according to NielsenIQ data cited by JPMorgan Chase beverage analyst Jared Dinges. He went on to speculate that a 12-13% volume decline on an annualized basis would be a realistic expectation given the current consumer sentiment toward Bud Light.
However, the seeming crisis has not raised alarm bells among analysts. They argue that the sell-off is overdone, pointing to the company's robust performance in other areas. While the U.S. represents the largest revenue source for the Belgium-based Anheuser-Busch, accounting for 25% of the total in 2022, Bud Light represents only 7% of the volume sold in the same year. Dinges forecasts a 12% drop in U.S. beer volumes for Anheuser-Busch this year, which would translate into a 23% decrease in earnings before interest, taxes, depreciation, etc. However, he still sees a positive outlook for the shares with a price target of $76 per share, marking a 29% increase from the close on Tuesday.
Another positive development for the beleaguered company is that while U.S. cash flow is expected to decrease by 26%, the rest of the business's upgrades will offset this. The company's cash flow is only likely to fall by 4%, much less severe than the 45% drop in EBITDA that the current share price seems to suggest. In fact, Anheuser-Busch's adjusted earnings per share are predicted to shrink less than 1% this year before bouncing back in 2024 with an 18% growth. The average target price from analysts stands at $73 per share, and the company's long-term growth is expected to maintain at 9.6%.
Dinges believes that "risk-reward is favorable from here," given the current stock price. While Anheuser-Busch has undoubtedly been affected by the Bud Light controversy, analysts are confident that the company's diverse portfolio and strong financials outside the U.S. will help weather the storm and eventually recover from this hiccup. Perhaps this boycott will only have a temporary impact, but for many people on the right who oppose gender theory and the ever-growing progressive values that are overtaking Hollywood and major corporations, this boycott sends an important message to other brands. It's becoming increasingly clearer that this kind of move from corporations such as Anheuser Busch is worth a temporary dip in sales—it gains them social credit in the world of intersectional politics, as well as favor with LGBT activists. If conservatives want to continue making a dent that will affect these companies, they will have to approach every other boycott with the same fervor in the future, which will hopefully leave more permanent damage on companies that don't have the same reach and wealth as Anheuser Busch does.