Anheuser-Busch InBev’s (NYSE:BUD) Bud Light has been dethroned from its position as America’s top-selling beer due to the backlash the brand has been facing since April for its partnership with transgender influencer Dylan Mulvaney. Beer brands of other brewers like Constellation Brands’ (NYSE:STZ) Modelo Especial and Molson Coors’ (NYSE:TAP) Miller Light and Coors Light are benefiting from Bud Light’s loss.
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Bud Light Losing Ground in the U.S. Beer Market
Citing Bump Williams consulting firm’s analysis of Nielsen data, the Wall Street Journal noted that Modelo accounted for 8.4% of the U.S. retail-store beer sales in the four weeks ended June 3, compared to Bud Light’s 7.3% share. Modelo is sold by Constellation Brands in the U.S. Anheuser-Busch sold the U.S. rights to Modelo and Corona to Constellation in 2013 to gain regulatory approval for the acquisition of Group Modelo.
Bud Light’s sales declined 24% year-over-year in the week ended June 3. The negative sentiment against Bud Light also spilled over to the other beer brands of Anheuser-Busch, including Budweiser and Busch Light. In contrast, the U.S. sales of Modelo Especial, as well as Molson Coors’ Coors Light and Miller Lite beer brands, increased in the week ended June 3.
While Bud Light’s top position based on the total sales in the first five months of the year is intact, distributors are worried about the continued decline in the brand’s sales since the controversy through May. The situation is concerning as the period from Memorial Day through the Fourth of July is a crucial sales period for brewers. Some Anheuser-Busch distributors said they are now mulling job cuts. Meanwhile, distributors who also sell Constellation Brands’ beer offerings are relatively safe, with Modelo offsetting the weakness in Bud Light volumes.
Nonetheless, concerns about Bud Light being permanently dethroned are rising. Anheuser-Busch has assured distributors that it would buy back unsold beer cases that have gone past their expiration date. The company has also ramped up its Bud Light marketing efforts, focusing on themes like football and country music.
Is BUD Stock a Good Buy?
Wall Street is cautiously optimistic on BUD stock, with a Moderate Buy consensus rating based on three Buys and three Holds. The average price target of $68.32 implies nearly 23% upside. Shares have declined over 7% year-to-date.
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