The Bud Light marketing debacle that caused one of the most devastating losses of brand equity and shareholder value in history should never have happened.
It all began when transgender social media influencer Dylan Mulvaney – with 1.8 million Instagram followers — posted a video featuring a personalized Bud Light can manufactured and delivered by parent company AB InBev.
“This month, I celebrated my day 365 of womanhood,” Mulvaney enthusiastically declared while sipping the product. “And Bud Light sent me possibly the best gift ever — a can with my face on it!”
Although these cans were never sold to the public — nor were there ever any plans to sell them — the post quickly went viral.
The impact was swift and furious. Sales of Bud Light, then America’s number one beer, dropped more than 25 percent in the weeks that followed and have yet to recover. And the damage didn’t end there. Sales of other popular AB brands such as formerly third-ranked Michelob Ultra ($3.3 billion in annual sales) and former seventh-ranked brand Budweiser ($1.8 billion in sales), also declined in sync with Bud Light, which lost its long-held position as the world’s best-selling beer.
While we’ve seen a leveling off in recent months, there’s no evidence consumers are in any hurry to return to these products. Recently, AB InBev said second-quarter revenues in the U.S. — its largest market — dropped 10.5 percent, while pre-tax earnings fell more than 28 percent largely due to the controversy. AB is reported to have lost $27 billion in shareholder value in the months following the post.
This plunge in sales and corporate reputation is even more destructive when you consider how hard it is to regain market share in the highly competitive beverage market, where companies battle intensely for even a 1 percent shift in sales over any given year. Beverage companies promote and fiercely protect their brands to the tune of billions of dollars in advertising, marketing and other promotional efforts.
One has to ask why Bud Light marketers thought that a tiny nod to a popular social media influencer supporting a controversial issue would benefit the brand or the company itself in the first place. More to the point, it is hard to understand how such a monumental failure in marketing could have occurred at AB, where decisions typically go through a series of stringent reviews and approvals by executives at increasingly higher and higher levels of management.
That clearly didn’t happen in this case, with serious repercussions for those responsible. Group Vice President for Marketing Daniel Blake and Bud Light Marketing Vice President Alissa Heinerscheid soon took “leaves of absence.” But they are not the only ones who deserve blame here.
When we look deeper, it becomes abundantly clear that the problems at AB are systemic in nature, with the primary culprit being surprisingly poor corporate governance. The procedures and practices in place at AB apparently fell well short of what one would expect from such an iconic consumer brand.
In our view, it comes down to AB straying from what publicly held corporations are charged with doing — working on behalf of the interests of its stakeholders, which include not only shareholders and bondholders, but also partners, distributors, employees and customers. Recently, the company announced hundreds of layoffs due to sales declines.
To be clear, in today’s social responsibility-conscious environment, corporate social responsibility initiatives can be powerful components of brand management, but only when they are tied to specific core values of the company. For example, Home Depot supports Habitat for Humanity, because the company and its customers are committed to home building. Security company ADT supports battered women. Avon focuses on breast cancer initiatives.
The list of companies devoted to customer-supported causes tightly aligned with their corporate missions is endless. If AB had followed proven best practices for corporate social responsibility, this inexcusable decision would have never seen the light of day.
A key question we also have to ask is whether AB InBev CEO Michel Doukeris “gets it” — even after all that’s happened. He is reportedly going on a customer listening tour this summer while, according to iSpot.tv, the company has recently increased the frequency of its television ads 100-fold. It isn’t clear whether this outward focus will be enough to turn the tide.
Perhaps a look inward — a deep assessment of the lack of oversight and governance by him, his management team and the AB InBev board of directors — would be a better use of his time and stakeholder resources.
O.C. Ferrell is the James T. Pursell, Sr. Eminent Scholar in Ethics at Auburn University’s Harbert College of Business and former president of the Academic Council of the American Marketing Association. Linda Ferrell is the Globe Life Professor of Marketing at Auburn University’s Harbert College of Business and serves on the board of the Responsible Research in Business and Management. Both are former presidents of the Academy of Marketing Science.