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Beer sales were already flat. Now a right-wing backlash against one of the leading U.S. brands is adding to the industry’s problems.
As slowing craft-beer sales continue to drag on the market, a number of politicians and celebrities are boycotting Bud Light. They’re in a lather because of a sponsored partnership between the beer and Dylan Mulvaney, a 26-year-old trans influencer who is big on TikTok.
A strange brew of price hikes, recession fears and a profusion of brands had already taken the fizz out of craft-beer sales. And now the Bud Light–Dylan Mulvaney partnership has sparked a culture-war subconflict, one in which musician Kid Rock has blasted 12-packs of Bud Light with a semiautomatic rifle and U.S. Rep. Marjorie Taylor Greene, a Georgia Republican, has filmed herself buying a Coors product in protest.
For now, there are no hard data on the financial fallout of the Bud Light protest. But the brand, analysts say, had already become less relevant in the U.S. to both beer drinkers and to Budweiser’s parent company, Belgium-based AB InBev
BUD,
AB InBev, which reports first-quarter financial results on May 4, didn’t respond to a request for information about the financial impact, if any, of the controversy. A representative for Mulvaney did not respond to a similar request.
“ Last month, AB InBev CEO Michel Doukeris said fourth-quarter sales climbed 10.2%, helped by price increases, even though volumes dipped 0.6%. He said beer demand was ‘resilient’ and gaining ‘share of throat’ worldwide. ”
“It is too soon to tell from retail sales,” said Jon Berg, vice president of beverage alcohol thought leadership at NielsenIQ. He noted that beer sales aren’t just flat but that craft beer’s share of the total market has declined to 11.6% over the past 52 weeks.
Still, the impact of any right-wing backlash could be eclipsed by a broader slowdown in the beer industry as inflation cuts into consumer purchases, craft beer becomes a barroom staple and brewers crank out a seemingly endless rotation of sours and hazy IPAs that, to some, have fully saturated that market.
Estimated U.S. craft-beer volume declined about 5% in 2022, to 25 million barrels from 26 million in 2021, according to research from Beverage Business Insights. For the 52 weeks ending Jan. 1, craft-beer sales dipped 4.7% to $4.75 billion at U.S. multi-outlets, according to market researcher Circana. Through Feb. 23, craft sales were down 3.7% to $1.02 billion on a year-over-year basis.
Total domestic beer sales were flat at $44.6 billion last year.
Last year, craft-brewery closures rose as more Americans drank at home rather than venturing to bars and restaurants, where craft-beer consumption is proportionally higher, said Bart Watson, senior economist for the Brewers Association, craft beer’s largest trade organization.
Over 300 craft breweries shut their doors in 2022 — up from the 224 closures in 2021 but down from 431 in 2020, during the depths of the pandemic. That leaves more than 9,400 such breweries, Watson said, and openings continue to outpace closings.
“The craft segment has been stagnant the last few years after it hit a peak in 2016-17,” said Ryan Toenies, a consultant at Circana. “Consumers started getting into carbonated seltzers like White Claw Hard Seltzer and flavored malt beverages like Mike’s Hard Lemonade and Boston Beer Co.’s
SAM,
Twisted Tea. Craft-beer brands were heavily saturated in general.”
Craft-beer volume has lost some of its fizz for various reasons, chiefly the industry’s dependence on draft sales at restaurants and bars, which lost traffic during the pandemic.
“Consumers are going to other places [for drinks] and experimenting with other options such as spiked lemonade and spirit-based canned cocktails,” said Chris Shepard, a senior editor at Beverage Business Insights.
Higher beer prices during a period of surging inflation didn’t help matters.
Established brands are also struggling in the face of competition from localized, trend-leading operators.
Craft beer is more sensitive to economic downturns, with sales expected to decline in 2023 amid a potential recession, warn analysts like BMC’s Brian Sudano. IBISWorld analyst Grace Wood warns economic concerns will have a negative effect on craft-beer sales in the coming year.
The world’s largest brewers have leaned on higher prices to push sales higher, even as they sell less beer overall. But some executives have seen no reason to change course.
Bill Newlands, chief executive of Constellation Brands Inc.
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which distributes beers including Corona and Modelo, told Wall Street analysts on the company’s earnings call this month that “we see absolutely no need to be rolling back pricing in any market,” as consumer engagement remained high. Still, he said that while costs for packaging and raw materials were off their highs, contract terms had kept prices for some of those goods above prepandemic levels.
Last month, AB InBev CEO Michel Doukeris said fourth-quarter sales climbed 10.2%, helped by price increases, even though volumes dipped 0.6%. He said beer demand was “resilient” and gaining “share of throat” worldwide, and that demand for Bud Light and Michelob was solid. But he said drinking at home was becoming more common, and that while it was tough to gauge whether beer drinkers were switching to cheaper brands, they were buying bigger packages.
At Molson Coors Beverage Co.
TAP,
CEO Gavin Hattersley pointed to slightly different trends. He said in February that customers were “actively trading down” to smaller beer packages. Yet during the company’s fourth quarter beer accounted for a bigger chunk of the alcohol market. “So consumers are not switching to other alcohol beverages,” he said.
Justin Dalton was once a fervent fan of craft beers, sampling them as he visited breweries along the California coast. But since the pandemic and the lockdown of bars, he’s cut down on craft beers in favor of hard seltzer and cannabis drinks — and he isn’t looking back.
“I probably won’t go back,” Dalton, 38, of San Francisco, told MarketWatch. “After a while, [craft beers] all started tasting the same, and I was gaining weight.”
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