Bud Light Apocalypse

There's no need to dwell at length on what's starting to look like a steady decline in Bud Light's numbers -- for instance:

In the week that ended April 22, the brand’s in-store sales plummeted more than 26%, according to figures reported by Bump Williams Consulting, a Connecticut-based firm that specializes in the alcoholic beverage industry.

And the decline is only accelerating. The week before, sales dropped by 21%. The week before that, it was 11%.

. . . But if the company can’t stop the decline in sales, especially as the peak beer-drinking summer season approaches, “then Bud Light is in serious trouble this year. And I think it runs the risk of losing that No. 1 position at the end of calendar year 2023 to Modelo Especial,” Williams said.

But I think the most significant comments came in Tim Pool's podcast yesterday, where he said at about 0:50,

I'm hearing people talk about how at bars, it's not even political. There are people chatting to us sending us messages saying that at their local bar, the attitude of many of the guys who are ordering drinks is more so that they don't want to look effeminate. That's right. 35-year-old working class guy who doesn't care about politics just doesn't want to be seen as effeminate.

Pool is saying "effeminate" here, possibly to evade the algorithm, but he clearly means "gay".

I've been looking at this all along as primarily a corporate crisis, but I think it's turning into a corporate crisis that's making past crises like the poison Tylenol capsules look piddling. But that crisis for Johnson & Johnson has become the preeminent example of successful crisis management:

Johnson & Johnson, along with stopping the production and advertising of Tylenol, withdraw all Tylenol capsules from the store shelves in Chicago and the surrounding area. After finding 2 more contaminated bottles Tylenol realized the vulnerability of the product and ordered a national withdraw of every capsule.

By withdrawing all Tylenol, even though there was little chance of discovering more cyanide laced tablets; Johnson & Johnson showed that they were not willing to take a risk with the public's safety, even if it cost the company millions of dollars. The end result was the public viewing Tylenol as the unfortunate victim of a malicious crime.

. . . Before the crisis Johnson & Johnson had not actively sought press coverage, but as a company in crisis they recognized the benefits of open communications in clearly disseminating warnings to the public as well as the company's stand.

What happened with the public and Tylenol was that the public immediately recognized that, while the product was potentially dangerous, this wasn't the company's fault, it was doing everything it could to protect the public to the extent of losing millions of dollars in the process. It also conveyed the company's immediate sense of urgency in quickly solving the problem. Johnson & Johnson had run a real risk not just of losing some sales, but of seeing its brand suddenly get a reputation for being fatal, not a good thing for over-the-counter medicine.

Let's contrast this with Bud Light. From the research I've been able to do on the web, I've discovered that the brand had already created a problem for itself over past decades in deliberately marketing to gays, as the meme above from a past campaign reflects. What the Dylan Mulvaney partnership meant was more like Bud Light taking things up a notch, but the overall marketing stance is nothing new.

The problem for even non-political working class guys, as Tim Pool points out, is that past a certain point, if you order Bud Light in a bar, people will start to think you're gay. This has nothing to do with Dylan Mulvaney but everyting to do with what your peers think of you and whether women will find you sexually attractive. In that context, Bud Light can suddenly seem as fatal as cyanide-laced Tylenol.

Johnson & Johnson's response to the Tylenol crisis was textbook brilliant, it recognized immediately that the brand faced an existential threat, it acted with extreme urgency, and it communicated this urgency to the public. Bud Light's errors have been multiple. It did nothing, except to stop communicating with the public, for two weeks after the Mulvaney partnership went south. Then it tried a bromide commercial and announced the executives directly responsible were "on leave".

But this story goes into the background of the controversy's threat to the company's current business model:

One doesn’t have to be a marketing genius to understand the typical beer drinker probably skews more non-woke than woke. And since the old 80-20 rule works in beer just like everything else, 80 percent of all beer is consumed by 20 percent of all beer drinkers. If you’re the biggest brewer in the country, it would seem to be a wise course not to go out of your way to piss off that 20 percent.

. . . This brand bond is a reflection of what consumers perceive themselves to be. And having a role-playing guy who says he’s a woman sitting in a bubble bath and crowing about becoming the brand ambassador of your favorite beer is not what these consumers view themselves to be. It is a jarring affront to their perception of reality. It was an almost universal, WTF moment for all Bud Light drinkers.

. . . A new name is trending on social media for ABI—Transheuser-Busch—and that can’t be good for the company’s image.

The piece goes on to outline the changes in the beer distribution model that Anheuser's Belgian parent implemented after purchasing the brand.

They started a program where distributors were chosen to be a “preferred” distributor. These folks were given the opportunity to make acquisitions and act as consolidators. These were also the folks most likely to go along with ABI desires.

Owning a beer distributor is as close to printing money as is possible, so it took a substantial amount to convince an ABI distributor to leave the industry. The vast majority of these were family businesses, many of them multigenerational. Selling any family business is no small deal. So that created an even bigger hurdle to convince these folks to leave.

Thus, they sold but at astronomical values. The preferred ABI distributors stepped to the plate and paid these amounts because they trusted ABI would continue to be good stewards of the brands and historically there were few investments better than an ABI distributorship. So, they paid many years of cash flow. And remember, the distributor is the only one of this entire crew who actually has skin in the game.

. . . If this Bud Light fiasco turns out to significantly impact volume—and it sure looks like it will—the geniuses at Bud Light marketing will have severely injured, if not killed, the best, chosen distributors in their network.

The impact of this will be felt for decades. Historically ABI distributors have been the top-dog on the street.

I've already noted that Anheuser has had at least one closed-door meeting with unhappy distrubutors, who seem to be the one group that's seeing an existential threat to the brand -- not just to Bud Light, but to Anheuser overall, and I'm thinking this is equivalent to what could have happened to Tylenol but didn't.

So far, Anheuser is looking at a situation that informed observers are suggesting could permanently change the beer business, which is to say, change it in a way where Anheuser is no longer number one. I saw a story yesterday where Anheuser is promising they're going to give every employee of every distributor a whole case of Bud Light. That's worth maybe $20. I guess they think that'll fix it, huh?

At this point, about the only possible remedy will be in fact to fire the whole executive team at Anheuser and bring on a Lee Iacocca level corporate caudillo who'll start making changes and communicating fast. But it may already be too late.