Has It Affected Bud Light’s Sales?
Harry Schuhmacher, publisher of Beer Business Daily, told Barron’s that the controversy started gaining steam the week of April 10, after mainstream media picked up the story. Dollar sales of Bud Light dropped nearly 7% the week ended April 8, and fell 17% the week ended April 15, according to NielsenIQ scans.
Total beer dollars were up 5.7% the first week of April, and grew 1.7% the second week, but “Bud Light dollars are down almost 12%” for the first two weeks of April, he said.
Molson Coors Beverage ‘s (TAP) Miller Lite and Coors Light appear to be the “clear beneficiaries of Bud Light’s dip,” Schuhmacher said. Coors Light dollars rose 10.7% the week ended April 8, and jumped 17.6% the week ended April 15. Miller Lite dollars increased 16.9% the first week, and increased 17.6% the second week.
Coors Light and Miller Lite have gained as much case share as Bud Light lost in the first half of April, suggesting that it’s directly because of consumer backlash and not some other reason, he said.
Bud Light’s dollar share of the domestic premium beer segment declined to 32.7% for the week ended April 15, down from 37.8% previously. Coors Light share is 23%, and Miller Lite is 20.5% for that week, Schuhmacher said.
What Does Wall Street Think?
Anheuser-Busch InBev’s ADRs have slipped 1.8% since March 31, while the S&P 500 is up 0.6%, and Molson Coors Beverage is up 12.8% during that same period.
Fernand de Boer, a senior equity analyst at Belgium-based Degroof Petercam, said the Bud Light saga will likely take top billing when the brewer reports earnings in May. In a worse-case scenario, he estimates the second-quarter impact will be a 30% drop in Bud Light sales, easing to a drop of 20% in the third quarter and a drop of 10% in the fourth.
Under this scenario, de Boer estimates the total sales impact to be around $700 million, and “total damage” of $250 million, or 1% of earnings before interest, taxes, depreciation and amortization. “We believe that AB InBev has sufficient safety margin for that,” he added. He rates the stock a Buy.
AB InBev’s market value has dropped by $2.4 billion since the close of March 31, according to Bloomberg.
