Anheuser-Busch InBev (A-B) reported a +13.2% increase in total revenue and a +0.9% increase in total volume worldwide for the first quarter of 2023.
Revenue per hectoliter increased +12.4%, and normalized EBIT increased +14.9% in the quarter compared to Q1 2022. Gross margin declined -35 basis points, from 54.8% in Q1 2022 to 54.1% in Q1 2023.
“We continue to invest for the long-term and these results reinforce our confidence in the resilience of the beer category, the effectiveness of our strategy and the strength of our platform to deliver consistent profitable growth,” CEO Michel Doukeris said in a press release.
In the U.S., A-B recorded declines in both shipments (sales to wholesalers) and depletions (sales to retailers), -1.6% and -3%, respectively. During the quarter, the company grew overall revenue (+4%) and revenue per hectoliter (+5.6%), which it attributed to “revenue management initiatives and continued premiumization.”
Other highlights from the quarter include +15.4% revenue growth of A-B’s global brands (Corona Extra, Stella Artois and Budweiser) outside their home markets, which the company uses as an indicator of premiumization. Corona Extra, which A-B owns outside of the U.S., revenue grew +11.9% outside of Mexico; Stella Artois revenue increased +13.3% beyond Belgium; and Budweiser revenue increased +17.8% outside the U.S. during Q1.
In addition, A-B’s non-alcoholic beer portfolio grew revenue by more than +30%, indicating “occasions development,” and the company’s beyond beer offerings (which include spirits-based, ready-to-drink canned cocktails Cutwater Spirits and NÜTRL) “contributed over $325 million of revenue,” according to Doukeris’ presentation deck.
However, Q1 is a completely different era compared to Q2 for A-B.
On April 1, Dylan Mulvaney, a social media influencer who is a trans woman, posted a video to her accounts as part of Bud Light’s March Madness #EasyCarryContest, a consumer sweepstakes. Mulvaney also shared a picture of a custom can emblazoned with her face that Bud Light sent to commemorate the one-year anniversary of her transition.
When conservative personalities, such as Kid Rock, discovered the post, a tidal wave of outrage rolled across the internet and led to calls for boycotts, boosted by social media virality.
As a result, Bud Light recorded double-digit declines in both off-premise dollar sales and volume in the middle two weeks of April. The week ending April 15 saw -17% in dollar sales and -21.1% in volume, according to NIQ data provided by Bump Williams Consulting. Those declines accelerated during the week ending April 22, with a -21.4% decline in dollar sales and a -26.1% decline in volume.
Bud Light, still the nation’s best-selling beer, lost -6.7% of its dollar share of the domestic premium segment in the second week of April, and -8.3% in the third. It maintains a +7.2% advantage in segment dollar share over its next-closest competitor, Coors Light (23.8% of domestic premium dollars).
But Molson Coors’ Coors Light and Miller Lite (21.1% of domestic premium dollars) have absorbed Bud Light’s recent dollar sales and volume losses. For the week ending April 22, Coors Light recorded double-digit increases in both dollar sales (+20.5%) and volume (+13.3%), as did Miller Lite (+21% in dollar sales and +13.6% in volume).
While Bud Light’s downturn has remained in U.S. news cycles for weeks, the brand’s sales decline during the first three weeks of April amounted to about 1% of A-B’s global volume in that time, Doukeris said.
“With this perspective, and in the context of our global business, we believe we have the experience, the resources and the partners to manage this,” he said, adding the company’s full-year global outlook remains unchanged.
To right the ship, Doukeris said the company “should address the situation through the lens of three areas that are very important: our people, our consumers and beer.”
Those “people” involved “frontline workers: delivery drivers, sales representatives, our wholesalers, bar owners and servers.”
“These people are the fabric of our business,” Doukeris said. “They are our neighbors, family members and friends.”
A-B is “providing direct financial support” to frontline workers and plans to triple Bud Light’s media spend this summer, he said. Earlier this week, the Wall Street Journal reported the company gave a free case of Bud Light to all employees of its distributors and has invited wholesaler executives to a meeting in its hometown of St. Louis next week to discuss its summer marketing strategy.
A key piece of that strategy will be to combat “the misinformation and confusion that still exists,” Doukeris said, referring to the outsize attention drawn to an influencer activation, which is a small lever when compared to the massive marketing support behind a brand as large as Bud Light.
“This was the result of one can,” Doukeris said in his prepared remarks at the beginning of the call. “It was not made for production or sale to the general public. It was one post, not a formal campaign or advertisement.”
A-B USA CEO Brendan Whitworth told wholesalers he was unaware of the partnership with Mulvaney until he received text messages about the blowback, the Journal reported. To prevent unauthorized marketing activations in the future, A-B has “adjusted and streamlined our marketing structure,” Doukeris said.
“The most senior marketeers are more closely connected to every aspect of our brands,” he added.
Amid the controversy, Bud Light VP of marketing Alissa Heinerscheid and group VP of marketing for mainstream brands Daniel Blake were put on leave, which A-B announced to wholesalers on April 21. Heinerscheid, who was the first woman to lead marketing for the country’s biggest beer brand, has been supplanted by Todd Allen, who had been VP of global marketing for Budweiser.
Heinerscheid and another female communications executive were harassed online by people who said the former’s comments in a podcast interview demeaned Bud Light drinkers. In that interview, she said the declining brand needed to update its “fratty” image and “out-of-touch humor” to become “truly inclusive.” Doukeris did not mention Heinerscheid or other A-B employees who were targeted in his remarks, nor did he mention Mulvaney by name.
Instead, Doukeris framed the online outrage as a “debate,” and said that beer should be present, but not focused on.
“While beer will always be at the table when important topics are debated, the beer itself should not be the focus of the debate,” he said. “Bud Light is about being easy to drink and easy to enjoy. That’s what consumers want. And that’s what we are focused on delivering.”
As a brand, Bud Light will return to its core tentpoles – “focus on sports, focus on music and focus on connecting with our consumers,” Doukeris said. He pointed to the brand’s recent high-visibility moments during the NFL draft and the Stagecoach country music festival.
Six days ago, the brand posted a 30-second commercial to YouTube featuring friends drinking Bud Lights while caught in a downpour at a country music festival.