In the annals of beer marketing, Anheuser-Busch (AB) stood above the rest for decades. During the reign of August Busch III, affectionately dubbed Three Sticks by his employees, the company was a force with which to be reckoned. No other consumer products company knew their customers, and more broadly, the character of Americans, better than AB.
Many of their ad campaigns became cultural icons, and no one could tug at America’s patriotic heartstrings like they could. Three Sticks’ father, August “Gussie” Busch, Jr., always noted they were in the business of making friends.
Belgium-based InBev purchased AB in 2008, forming Anheuser-Busch InBev (ABI). The megacorporation’s marketing continued to roll along, but it was clear the new teams didn’t know—or even much like—their customers nearly as well as the old AB did.
This developing drama reached its crescendo early last month when the news hit social media that ABI had teamed with “influencer” Dylan Mulvaney to promote Bud Light.
As is popular in some quarters right now, Mulvaney is a man who is “becoming” a woman. And, because it’s 2023, Mulvaney has been documenting this journey on social media and making a pretty penny in the process.
Regardless of one’s feeling regarding the transgender push across the country—as I accept science and reality, I guess you don’t have to wonder about my feelings on the subject—it was beyond a questionable move to make Dylan Mulvaney the face (or, at least, a face) of Bud Light for the nation.
One doesn’t have to be a marketing genius to understand the typical beer drinker probably skews more non-woke than woke. And since the old 80-20 rule works in beer just like everything else, 80 percent of all beer is consumed by 20 percent of all beer drinkers. If you’re the biggest brewer in the country, it would seem to be a wise course not to go out of your way to piss off that 20 percent.
Whether by arrogance or ignorance, the Bud Light marketing team decided to do this by jumping feet first into the culture wars—likely siding against the bulk of their consumers. For what gain? I cannot fathom.
But it’s even worse than that as they ignored—or are ignorant of—a key feature of the beer drinker, the incredible bond the consumer has with the product.
Not all products have the same level of bond with their consumers as others. But the beer or booze you drink, the vehicle you drive (as an example, Ford, Dodge, or Chevy pickups), and back when it was acceptable, the cigarette you smoked, all said something about you.
Thus, these types of products have a much higher customer bond than say the bathroom cleaning products you use. Few products have a higher bond than beer.
They have thousands and thousands of interactions with the brand every year . . . for years. Parties, birthdays, going to bars, football games, NASCAR, just sitting around at home watching TV, and through good times and bad with a friend who’s always there for you.
This brand bond is a reflection of what consumers perceive themselves to be. And having a role-playing guy who says he’s a woman sitting in a bubble bath and crowing about becoming the brand ambassador of your favorite beer is not what these consumers view themselves to be. It is a jarring affront to their perception of reality. It was an almost universal, WTF moment for all Bud Light drinkers.
Thus, ABI violated this bond and set off a firestorm like none before in the beer world, most likely forever changing the beer competitive landscape.
Most analysis focuses on the guy playing a gal, but that is where they are wrong. It’s not fundamentally about Dylan Mulvaney. It’s about the violation of this bond. And the stronger the bond, the greater the feeling of betrayal.
This is why Nike could get away with using this same influencer to sell sports bras—an insane idea if there ever was one. Women might like their sports bra but few have a profound bond with it—and don’t confuse liking a product with being represented by it. Thus, this affront to women in sports had a miniscule effect on Nike while it exploded with Bud Light.
Now if Nike did the same thing with their signature basketball shoes—where a very strong bond does exist—the reaction would have been much more on the scale of Bud Light.
As an analogy, think of a happily married woman who discovers her husband is secretly gay and has been with men for years.
Think of the sense of anger, betrayal, humiliation, and being dumbfounded—all wrapped up in one. Her world is turned upside down. It is a jarring disconnect with what she thought was reality.
She is upset in every possible manner. Yet not a bit of this anger has its roots in her hatred of gays. She probably doesn’t have any to begin with.
Her feelings are based on a profound violation of trust by a partner who is supposed to be an extension of her. The gay part of the betrayal is peripheral if not meaningless in her reasoning.
A new name is trending on social media for ABI—Transheuser-Busch—and that can’t be good for the company’s image.
The company would do well to remember that you can’t really hate something unless you once loved it. Bud Light drinkers may not use the word love, but their bond was something akin to that. It was strong and positive. Today? The revulsion is equal in measure. And for what upside? I can think of many other things Bud Light could have done to violate the trust of their consumers but they’d never be stupid enough to do them—instead they chose to die on this hill. Why?
The usual suspects in the press are saying this is all silly. From their perspective it might be, but these folks don’t feel the violation Bud Light drinkers feel because they never shared the bond in question. Few, if any, of these pontificators are big consumers of Bud Light. They didn’t see themselves reflected in that brand—in fact they probably looked down their noses at both the brand and its consumers. Yet now they lecture loyal Bud Light drinkers to “get over it.”
The condescension is palpable.
Moreover, to “make up” for their violation of trust, Anheuser-Busch quickly released a patronizing patriotic ad in the wake of this controversy, further damaged the trust of their consumers by insulting their intelligence.
But wait! The pain doesn’t stop there. Here’s one business professors will be examining for decades.
When InBev was analyzing the Anheuser-Busch acquisition, it determined substantial profits could be gained by consolidating the AB wholesaler network.
In reality, InBev thought it could erase the AB network and take over distribution entirely. The multinationals soon learned just how politically powerful U.S. beer distributors really are, and came to accept this likely would never happen.
But the financial allure of consolidating the AB network remained strong. They started a program where distributors were chosen to be a “preferred” distributor. These folks were given the opportunity to make acquisitions and act as consolidators. These were also the folks most likely to go along with ABI desires.
In ABI’s mind, these were the best of the best distributors. Over the past five years or so, a lot of the country saw these consolidators making significant acquisitions of other ABI distributors. And these deals don’t come cheap.
Owning a beer distributor is as close to printing money as is possible, so it took a substantial amount to convince an ABI distributor to leave the industry. The vast majority of these were family businesses, many of them multigenerational. Selling any family business is no small deal. So that created an even bigger hurdle to convince these folks to leave.
Thus, they sold but at astronomical values. The preferred ABI distributors stepped to the plate and paid these amounts because they trusted ABI would continue to be good stewards of the brands and historically there were few investments better than an ABI distributorship. So, they paid many years of cash flow. And remember, the distributor is the only one of this entire crew who actually has skin in the game.
In a lot of the country, the ABI distribution network went from smaller, generally debt-free family businesses to much larger wholesalers with either a far bigger distribution footprint and/or they began operating in multiple markets—all sitting on a mountain of debt. In total, I’d guess the debt number is well over a billion, likely billions.
If this Bud Light fiasco turns out to significantly impact volume—and it sure looks like it will—the geniuses at Bud Light marketing will have severely injured, if not killed, the best, chosen distributors in their network.
The impact of this will be felt for decades. Historically ABI distributors have been the top-dog on the street. They had so much more money than their smaller competitors they could purchase dang near whatever they desired. They generally had the best of everything and far more personnel than the competition.
It will be impossible to see, but how many sales won’t happen because of an end-cap or display that never appeared? Or a cooler set that doesn’t go ABI’s way—expect to see Bud Light cooler space slashed. And then multiply that by thousands across the country.
How many tap handles will go with other brands? This will be a classic “what-if” analysis, but the long-term impact may be significant. It won’t show up in any sales report, but it is quite real all the same.
The economics of distribution allowed ABI distributors to drive a ton of money to the bottom line. But the opposite is also true, these sales decreases will come directly from their bottom line. And trust me, being in serious debt impacts every decision you make.
Payback periods will now be years longer, keeping these distributors mired in debt for far longer than they planned. If refinancing is needed, the interest charges will increase by 100 to 300 percent! If these sales declines are bad enough, some won’t make it.
So, in this one move, Bud Light marketing seriously damaged the top beer brand in the country, hurt all associated brands, especially those under the Bud Light superbrand, and damaged, possibly for decades, what had been the strongest distribution network in the country—certainly wounding and perhaps killing the best of the best.
Going back to an old AB marketing campaign, these are some real men of genius. And all of this . . . for what? What was the upside other than some virtue signaling? I don’t know what the goal here was so I don’t know if AB thinks it was all worth the effort. But I know my MillerCoors distributor friends think it was.