Some of Bud Light’s problems in the wake of a boycott over its partnership with Dylan Mulvaney could be permanent, according to an analyst in a new note about the beleaguered brand.
“We believe recent underperformance implies a permanent reduction in ABI’s U.S. business,” Deutsche Bank analyst Mitch Collett wrote for Barron’s, referring to Anheuser-Busch InBev, the parent company of Bud Light. “Our proprietary survey data suggests these headwinds are likely to fade even if we do not expect the U.S. business ever to fully recover from its current challenges.”
Collett also upgraded shares of AB InBev to “buy” from “hold,” increasing the price target to $65.92 from $64.83, according to Barron’s.
In a note to analysts, Collett wrote that data gathered by Deutsche Bank suggest that 24 percent of Bud Light’s consumers no longer purchase the brand. Another 18 percent are buying less, he said.
Data also show that 21 percent of consumers are buying more, while 37 percent are buying the same amount, according to the report.
“Taken together, our survey data shows that Bud Light as a brand faces significant challenges—particularly with older consumers. However, we believe the forward-looking data sets imply that the challenges will at least partially fade,” he wrote, noting that data show the firm hasn’t lost shelf presence.
But another analyst said Bud Light could see tough times ahead.
The analyst, Evercore’s Robert Ottenstein, said Bud Light will “permanently lose” between 15 and 20 percent of its volume. After that, “declines will resume at about the average rate of the prior 10 years,” he said.
“Budweiser will also see a similar pattern, with consumers lost in 2022 not coming back,” Ottenstein said in a note reported by Yahoo Finance. The report also quoted Collett as saying Anheuser-Busch and Bud Light are “at the end of the tunnel” of the controversy.
Weeks ago, in mid-May, Anheuser-Busch was downgraded after an HSBC analyst revised the stock down to “hold” and claimed that the company is dealing with a “Bud Light crisis.”
That HSBC analyst speculated there may be “deeper problems” at Anheuser-Busch.
“Is ABI’s leadership getting the brand culture transformation right? It’s mixed,” he said. “At Ambev, we think the answer is ‘yes’; in the U.S., we think it’s ‘no.’ The way this Bud Light crisis came about a month ago, management’s response to it and the loss of unprecedented volume and brand relevance raises many questions.”
Since its ill-fated promotional exercise in early April with Mulvaney, a transgender TikTok influencer, Bud Light has seen its weekly sales decline. Recent data from Bump Williams Consulting and Nielsen IQ show that for the week ending on June 10, Bud Light’s year-over-year sales have declined by 26.8 percent, representing the worst week so far.
Read More: Bud Light Will Permanently Lose Nearly a Fourth of Its Business: Analysts
