By Ketki Saxena
Investing.com -- Anheuser Busch Inbev (EBR:ABI) NV ADR (NYSE:BUD), the world's largest brewer, has reported a sharp decline in its U.S. sales and profit for the second quarter of 2023 due to a consumer boycott of its Bud Light brand. The boycott was triggered by the company's collaboration with transgender influencer Dylan Mulvaney, which sparked outrage among Bud Light's core consumers.
The company stated that its second-quarter revenue in the U.S. fell by 10.5%, while earnings before interest, taxes, depreciation, and amortization (EBITDA) dropped by 28.2%. The slump in Bud Light sales was primarily responsible for this decline, with sales to wholesalers dropping 15% and sales to retailers falling 14%. North America volumes also fell 14.1% on an organic basis.
The boycott began in April following an Instagram post by Mulvaney featuring a personalized can AB InBev had gifted her. The post incited backlash and led to a widespread consumer boycott of Bud Light, which significantly impacted AB InBev's earnings for the three months to June 30. However, the company noted that its market share in the U.S. beer industry had been stable since the last week of April through to the end of June.
In response to the boycott, Anheuser-Busch accelerated production of new Bud Light ads focusing on football and country music themes. The company also offered to buy back unsold cases of beer that have gone past their expiration date from its distributors.
Despite the backlash against Bud Light, Modelo Especial, a Mexican import sold by Constellation Brands (NYSE:STZ), surpassed Bud Light in dollar sales in May, becoming America’s top beer.
Outside of the U.S., AB InBev reported better results. Volumes in the Asia Pacific region grew 9.5%. Volumes were flat in Europe, the Middle East, and Africa, while they declined 1.9% in South America.
Overall, AB InBev reported a 7.2% rise in second-quarter revenue on an organic basis. Revenue per hectoliter rose 9%, a result of AB InBev raising prices and selling more upscale beer. This offset a 1.4% drop in global volumes.
Net revenue for the three months to June 30 climbed to $15.12 billion from $14.79 billion in the same period last year. Net profit dropped to $339 million from $1.6 billion as the company was hit by losses tied to hedging its share-based payment programs and other shares issued.
Despite the challenges faced by Bud Light, analysts at Morgan Stanley (NYSE:MS) believe that sticking with its profit forecast "should provide relief to investors who have been waiting on the sidelines to see if the Bud Light situation would drive a reset of expectations." However, they warned that the "full hit" of Bud Light’s troubles would appear in the company’s next quarterly report.