Anheuser-Busch InBev (NYSE:BUD), the multinational brewing company behind Bud Light, is facing a crisis, and a former executive has offered his perspective on the situation.
“It looks like the battle has already been lost,” Anson Frericks, former president of Anheuser Busch Sales & Distribution Co., wrote in a recent column for the Daily Mail.
In April, Bud Light partnered with transgender social media influencer Dylan Mulvaney, who has 10.7 million followers on TikTok. The collaboration triggered a backlash on social media and led some beer drinkers to boycott Bud Light.
Bud Light sales in the U.S. dropped 28% in the four-week period ended July 1 compared to the previous year, according to consulting company Bump Williams using data from NielsenIQ.
In light of the marketing fiasco, Bud Light CEO Brendan Whitworth recently said, “As we move forward, we will focus on what we do best — brewing great beer and earning our place in moments that matter to you.”
Frericks doesn’t like how Whitworth handled the situation.
“What does that mean? Absolutely nothing. And it will only deepen the chasm between the brand and its customers,” he wrote.
“As such — and I take no pleasure in passing this judgment — it’s clear to me that it’s time for the shareholders and board of Anheuser-Busch to ask Whitworth to step down.”
There’s no personal grudge here. Frericks made it clear that he had a good relationship with Whitworth — the Anheuser-Busch CEO promoted him twice, and he left on his own terms.
Shareholders Taking A Hit
Shares of Anheuser-Busch have been impacted as well. Since April 1, when Mulvaney first promoted the beer on social media, the New York Stock Exchange-listed BUD stock has tumbled about 13%, resulting in the loss of billions of dollars of market cap.
That’s a huge blow to the company’s investors.
Fericks said that asset managers The Vanguard Group, BlackRock Inc. and State Street Corp. are the largest shareholders in most publicly traded companies. And as a result, they “call the shots” and are “the key architects of ‘stakeholder’ capitalism, with their now infamous ‘diversity and inclusion’ targets.”
But according to Fericks, these giant asset managers aren’t the real shareholders.
“The real shareholders are the firefighters, police officers and doctors, whose life-savings — held in pensions and 401(k)s — are managed by these monster firms,” he wrote. “These are ordinary Americans — who don’t care for virtue signaling and money-wasting exercises.”
Fericks said that these people — the real shareholders — “should feel entitled to demand a CEO who speaks for them.”
And that’s why he’s calling for a leadership change.
“Whitworth has clearly shown himself to be incapable of solving the Mulvaney crisis,” he wrote. “It’s time he did the right thing and stepped aside to make way for someone capable of righting the sinking Bud Light ship.”
Beer Stocks In The Spotlight
While Bud Light is grappling with declining sales, competitors are seizing the opportunity to swoop in and grab market share.
According to NielsonIQ data, Bud Light is no longer America’s best-selling beer. The top spot now belongs to Modelo Especial, brewed by Constellation Brands Inc. (NYSE:STZ).
Constellation Brands is a leading international producer and marketer of beer, wine and spirits. Other than Modelo Especial, the company has many other popular brands, including Corona beer, Robert Mondavi wines and High West whiskey.
Another company that could benefit from the Bud Light fiasco is Molson Coors Beverage Co. (NYSE:TAP), which has a portfolio of iconic beer brands, including Coors Light, Miller Lite, Molson Canadian, Blue Moon and many others.
If consumers move away from Bud Light, they might opt for Coors Light or Miller Lite instead.
Anheuser-Busch, Constellation Brands and Molson Coors are all dividend-paying companies. Beer companies have the potential to be solid dividend plays because of the resilience of beer sales across economic cycles. But as demonstrated by recent developments at Anheuser-Busch, beer stocks can still be volatile.
If you don’t like such volatility, you might want to look into reliable income plays outside the stock market — such as investing in rental properties with as little as $100 while staying completely hands-off.
Image: Pride SF Bud Light beer advertisement with rainbow bottle – San Francisco, California, USA – 2023. Courtesy of Michael Vi on Shutterstock
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This article ‘He’s Been Paralyzed’: This Former Anheuser-Busch Exec Says The Current CEO Has Failed To Fix The Bud Light Crisis — Must Quit Now And Let Someone Else Save The ‘Sinking Ship’ originally appeared on Benzinga.com
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