The Bud Light Boycott and Clueless Corporate Executives
In perhaps one of the most unexpected and sudden shifts in consumer demand in recent years, sales of Bud Light have now fallen sizably for six weeks in a row, with no end in sight. The New York Post reported on Monday that "Sales of the US’s No. 1 beer were down 24.6% for the week ended May 13 compared to a year ago — slightly worse than the 23.6% dip they suffered a week earlier."
But it's not just Bud Light. Sentiment has turned against Bud Light parent Anheuser-Busch Inbev (AB Inbev) to the point that other brands at the company are seeing declining sales as well. Budweiser, Michelob Ultra, Natural Light, and Busch Light all experienced declines during the same period. AB Inbev has lost an "astonishing" $15.7 billion in value over the past six weeks.
Not surprisingly, Bud Light is also losing market share as former Bud Light consumers turn to competitors. Miller Light and Coors Light (both brewed by MolsonCoors) have seen a surge in sales as have independent brands Yuengling and Pabst Blue Ribbon.
Why have so many consumers changed their mind? It appears the shift stems from an ill-fated ad campaign initiated by Bud Light executives in an attempt to pander to "transgender" activists and their ideological allies. In early April, Bud Light promoted social media posts with transvestite Dylan Mulvaney—who claims to be a woman—as a spokesperson. The post featured a newly issued can featuring an image of Mulvaney in commemoration of Mulvaney's alleged "365 days of girlhood."
The response from many ordinary observers on Twitter was less than positive, with many denouncing AB Inbev for pushing a highly divisive politically charged ad campaign that many existing Bud Light drinkers found insulting. Several Conservative media outlets began to promote the boycott as well, and the boycott caught on among both well-known conservative pundits and among a larger number of users on social media platforms. Soon thereafter, sales of Bug Light began to fall quickly. The large numbers abandoning the brand, however, are too large to blame on just a small minority of right-wing political activists. Rather, Bud Light has apparently damaged its image with a large number of consumers, most of whom are likely uninterested in activism, but simply prefer a beer that is less political.
At first, it was unclear that the boycott would have any discernible effect, given the sheer number of other beer brands under the AB Inbev umbrella. However, it soon became clear that the company was feeling the pinch. Two Bud Light executives behind the Mulvaney campaign were put on a "leave of absence" (i.e., fired). The corporation launched new ad campaigns in an attempt to win back consumers who had apparently lost interest in the company's products. These new ads were nostalgic and hyper "patriotic" in character, and were transparently devised to appeal to former core consumers. These efforts, however, were mocked as insincere in social media.
As the latest sales numbers suggest, however, these efforts have apparently not been working. A new report from Beer Business Daily concludes "We've never seen such a dramatic shift in national share in such a short period of time," and that if the boycott continues, Bud Light risks losing its position as the nation's best selling beer.
If Bud Light's decline continues, it will be because company executives committed the most basic sin of entrepreneurship and marketing: they were apparently more interested in their own preferences rather than the preferences of their customers.
Where Did Bud Light Go Wrong?
Specifically, it seems likely that the Bud Light/Mulvaney campaign was an attempt on the part of corporate executives to cater to certain ideological groups—groups favored by wealthy, elite-college-educated managers—rather than to the company's largely middle-class, middle-Americans customers. For example, the executive in charge of the campaign, Alissa Heinerscheid, attended a $60,000 per year private school (the Groton School) in her youth, and went on to get degrees in English and Literature from Harvard. She also obtained an MBA through the Wharton School. This is not someone who would naturally have any common cause or innate understanding of Bud Light's customer base.
Denouncing the Bud Light's current branding as "fratty" and "out of touch," Heinerscheid decided that Bud Light should cease pursuing its existing clientele in favor of partnerships with transgender activists. There is no doubt that this idea would seem attractive to someone of Heinerschied's background. Yet, it's difficult to see how Bud Light could improve its financial situation by enthusiastically partnering with a highly divisive figure such as Mulvaney.
Bud Light is now learning the hard way that it's the consumers—not corporate managers—who decide what goods and services get produced. At the heart of the entire economy is what Ludwig von Mises called the "sovereign consumer" whose unpredictable and subjective valuations ultimately determine all prices in the economy through consumer demands. Mises writes:
Neither the entrepreneurs nor the farmers nor the capitalists determine what has to be produced. The consumers do that. If a businessman does not strictly obey the orders of the public as they are conveyed to him by the structure of market prices, he suffers losses, he goes bankrupt, and is thus removed from his eminent position at the helm. Other men who did better in satisfying the demand of the consumers replace him.
Bud Light executives thought customers wanted the beer to partner with a "transgender" celebrity. Or executives simply didn't care what customers thought. In any case, the executives are now paying the price.
Value Is Subjective—especially When It Comes to Light Beer
The miscalculation on Bud's part may prove to be especially damaging for two reasons. The first is that light beer is extremely dependent on emotional appeal to sustain brand loyalty. The other factor working against Bud Light is that it is extremely easy for consumers to switch to another brand.
All value is subjective to the consumer, of course, but some brands can at least hope to convince consumers of the brand's value based on objective factors. For example, Volvo has long marketed itself—with studies to back up the claims—as a particularly safe automobile. Other brands are able to claim high levels of reliability, such as with Maytag appliances which used to be known for rarely needing repairs.
Needless to say, light beer can't bank on these factors. Blind taste tests have shown that consumers can't even distinguish between brands based on taste. As one researcher put it, light beer is essentially a "a commodity industry." This is why Coors Light began marketing itself not as the "most delicious" light beer, but as the "coldest," complete with a special label that turns blue when the beer gets cold. When flavor doesn't matter much, light beers have to look elsewhere to gain customer loyalty.
Because of this, it is highly likely that most consumers of light beer choose their beer "not for taste but because of the beer's image and reputation that's been developed via advertising, logos, and other marketing efforts." In other words, it's all about emotional appeal. It's about whether or not a beer brand is perceived to be "cool" or if it evokes certain feelings about "the American dream."
Light beer depends almost entirely on cultivating these sorts of subjective feelings in customers and getting them to develop a habit of buying that particular brand. However, if the beer brand disrupts that emotional and habitual response to its product, the brand is in deep trouble.
The second factor pointing to ongoing pain for Bud Light is the fact that it's so easy to switch to other brands. Even the smallest liquor store offers Coors Light and Miller Light as alternatives to Bud Light. Larger liquor stores offer even more choices such as Yuengling, Pabst, and a handful of light beers put out by small craft breweries. Moreover, it is easy to switch to another brand immediately and never look back. By contrast, someone who buys a car and then regrets it may nonetheless be stuck with that car for months or years due to the inconvenience and cost of selling and purchasing cars. On the other hand, picking up a 12-pack of light beer is neither costly nor inconvenient. A consumer who loses interest in Bud Light this afternoon can begin buying up the competition's beers this weekend.
The presence of these factors in the case of light beer suggests that the Bud Light boycott may turn out to be permanent. This should be easy enough for the consumer's standpoint. It's hard to imagine that many consumers who ditched Bud Light for Miller Light will be feeling that they've somehow been depriving themselves of "better" beer. This only highlights the remarkable incompetence and recklessness with which Bud Light executives like Heinerscheid have treated the Bud Light brand. Brand loyalty can be quite fragile, yet executives apparently believed the brand's core customers could be taken for granted. The managers thought they were the ones who decide what the consumers will buy and why. It turns out the executives were wrong.