Anheuser-Busch Stock Pops After Earnings. What Bud Light Controversy?

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Anheuser-Busch InBev stock closed up 3.5% on Thursday after the company beat first-quarter earnings and revenue estimates as demand for beer remained resilient despite higher prices.

From the market’s reaction, there’s little to worry about from the controversy that has consumed Bud Light following its marketing campaign with transgender social media influencer Dylan Mulvaney.

There was no mention of the boycott of Bud Light in the earnings release, which makes sense. That’s partly because Mulvaney promoted Bud Light on April 1, the day after the first quarter ended. There was also no reference to the controversy in the company’s outlook despite Bud Light’s off-premise sales volume falling 26% year over year in the week ended April 22, according to Beer Business Daily.

But

Anheuser-Busch InBev

(ticker: BUD) didn’t ignore it on the conference call. They addressed it in their opening statement, put it in context, and explained why it doesn’t matter all that much.

“Over the years, our global footprint has enabled us to successfully navigate different types of challenges, such as [a] temporary ban on beer sales in certain countries and the most long shutdown of bars and restaurants across the globe,” CEO Michel Dimitrios Doukeris said on the call. “With respect to the current situation and the impact of Bud Light sales, it is too early to have a full view. The Bud Light volume decline in the U.S. over the first three weeks of April, as publicly reported, would represent around 1% of our overall global volumes for that period. 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. And our full year EBITDA growth outlook is unchanged.”

And the numbers were good. Anheuser-Busch reported earnings of 65 cents a share on revenue of $14.2 billion for its first quarter ended in March. Analysts were expecting earnings of 59 cents a share on revenue of $14.1 billion, according to FactSet. The company reported EPS of 67 cents a share on revenue of $13.2 billion in the first quarter of 2022.

Nor does the controversy, which began with Mulvaney’s April 1 Instagram post during March Madness, appear to have an impact on the year. For 2023 as a whole, analysts expect EPS of $3.23, on revenue of $62.2 billion. In 2022, the company earned $3.21 a share on revenue of $57.8 billion.

That’s despite reports from trade publication Beer Business Daily that Bud Light’s sales at grocery, convenience, and liquor stores fell 21.4% for the week ending April 22, after falling 17% the previous week.

“We’ve never seen such a dramatic shift in national share in such a short period,” wrote Harry Schuhmacher, publisher of Beer Business Daily.

Yet Brussels-based Anheuser-Busch InBev is far more than Bud Light. It makes more than 500 beer brands worldwide, including Corona, Stella Artois, and Michelob Ultra. North America may be its largest market, but its $16.6 billion revenue in 2022 made up less than 30% of its global sales of $57.8 billion.

“This was the result of one can,” Doukeris said. “It was not made for production or sale to the general public. It was one post, not a formal campaign or advertisement. The Bud Light campaign is ‘easy to drink, easy to enjoy’.”

Not that the drop in sales hasn’t given competitors a boost. Molson Coors Beverage’s (TAP) Coors Light sales rose 20.5% in the third week of April, and Miller Lite sales increased 21%.

Analysts on a conference call for Coors, which reported earnings on Tuesday, asked in various ways about the Bud Light boycott and a jump in sales for the brewing rival during April. Molson Coors reaffirmed its guidance for 2023, including low single-digit growth in net sales revenue.

“We haven’t factored any of the trends that we’ve seen in April into our guidance,” Molson Coors CEO Gavin Hattersley told analysts. “We really and I’m sure nobody has any idea how long these are going to continue.”

Anheuser-Busch has pledged to its distributors that it will boost its marketing spending on Bud Light, accelerate the production of new ads, and give a case of Bud Light to every employee of an Anheuser-Busch wholesaler, The Wall Street Journal reported. 

As of Wednesday’s close, BUD’s shares are up 9.8% so far this year, and up 15.5% over the past 12 months. Those gains are now getting bigger, controversy or no controversy.

Write to Janet H. Cho at janet.cho@dowjones.com