Anheuser-Busch InBev (NYSE: BUD) announced on Tuesday that it experienced revenue growth in most of its global regions during the third quarter. However, this growth was overshadowed by a significant drop in North American sales, signaling the ongoing repercussions of a controversial partnership with a transgender influencer.
As the world’s largest brewer and the parent company of Bud Light, Anheuser-Busch InBev reported a 5% increase in revenue, reaching $15.6 billion for the July-September period. This figure aligned with the expectations of Wall Street analysts, according to a FactSet poll. Nevertheless, revenue in the United States saw a notable decline of 13.5%.
The troubles for Bud Light began in early April when it sent a commemorative can to transgender influencer Dylan Mulvaney. This gesture led to a backlash from conservatives, resulting in a sharp decline in Bud Light sales. Additionally, supporters of transgender rights were disappointed by what they perceived as Bud Light distancing itself from Mulvaney.
Nielsen data compiled by Bump Williams Consulting revealed that U.S. retail dollar sales of Bud Light were down 29% in the four weeks ending on October 21 compared to the same period the previous year, with a nearly 19% decrease year-to-date.
AB InBev’s CEO, Michel Doukeris, acknowledged the challenges and stated that the company is shifting its U.S. marketing focus towards more traditional outlets, such as college football and concerts. In October, the company announced a multiyear partnership that designates Bud Light as the official beer of the UFC mixed martial arts organization. Notably, Bud Light was one of the original sponsors of the UFC 15 years ago.
Doukeris noted that these efforts are yielding positive results. AB InBev’s share of the U.S. market, which includes brands like Michelob Ultra and Busch Light, had dipped to just over 36% in late April but has remained stable since then. Recent internal polling shows that 40% of lapsed Bud Light drinkers are considering returning to the brand. Doukeris said during a conference call with investors, “This gives us some certainty that we are moving in the right direction. I don’t think we are at a new normal yet, but we have a good grip on what we need to do and how we are proceeding.”
In a display of confidence, AB InBev announced a $1 billion share buyback program on Tuesday, which will be executed over the next year. This news led to a nearly 5% increase in InBev’s shares on the Nasdaq stock exchange during morning trading.
However, the efforts to win back customers have impacted profits, with U.S. pretax earnings dropping by 29% in the third quarter. Doukeris attributed about two-thirds of this decline to lower sales and one-third to increased spending on marketing and payments to support wholesalers.
Globally, AB InBev reported a 3.4% decrease in volumes for the quarter, primarily due to a wet and chilly summer in northern Europe. The company did find some solace in increased sales volumes in South America, Asia, and Africa.
Anheuser-Busch InBev’s net income exhibited a 4% increase, reaching $5.4 billion, or 86 cents per share. This exceeded the 84 cents per share that Wall Street had anticipated, according to FactSet.
Anheuser-Busch InBev last traded at $56.21 on the NYSE.
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