AB InBev, a major player in the beer industry, finds itself grappling with a notable setback as its Bud Light brand suffers a substantial decline in sales volume in the wake of a controversy involving trans influencer Dylan Mulvaney. The US-based boycott initiated as a result of this controversy has taken a toll on AB InBev’s commercial performance, with volume sales in the second quarter seeing a decline of 1.4%.

This decline was most pronounced in North America, with a staggering drop of 14.1%, while EMEA experienced a more modest decline of 0.1%. Meanwhile, Asia Pacific managed to buck the trend by achieving an impressive growth of 9.5%.

The ripple effect of this boycott extended to sales figures, as AB InBev witnessed a 14% decrease in sales to retailers within the US market during the same quarter. This dip was primarily attributed to the waning demand for Bud Light. The financial impact was also felt in the company’s earnings before tax in the US, which plummeted by 28%, a decline attributed to diminishing market share. It’s noteworthy that the US accounted for more than a sixth of AB InBev’s total sales in 2022, with Bud Light reigning as its flagship brand in the country.

The chain of events leading to this predicament began in April when Bud Light briefly collaborated with trans woman influencer Dylan Mulvaney as part of its ‘March Madness’ promotion. The partnership incited backlash from certain right-wing public figures and catalyzed calls for a boycott. Despite not engaging in further collaborations with Mulvaney, the aftermath of the partnership continues to exert a significant influence on the company’s performance.

Gavin Hattersley, CEO of Molson Coors, seized the opportunity to highlight the shift in the competitive landscape, revealing that Coors Light and Miller Lite combined now outsize Bud Light in terms of total industry dollars. This reversal marked a stark contrast from 2022, when Bud Light had managed to outshine both brands combined.

As Bud Light grapples with its tarnished brand image, AB InBev reported financial results for the second quarter of 2023 that managed to surpass expectations. Revenues surged by an impressive 7.2% year over year, reaching $15.12 billion, while earnings before tax (EBITDA) grew by 5% to $4.91 billion. These figures exceeded analysts’ predictions of a 6.4% revenue increase and a mere 0.4% uptick in EBITDA for the quarter.

Despite the dip in Bud Light’s fortunes, AB InBev maintains that the backlash against the brand is not as widespread as it may seem. Citing commissioned research involving over 170,000 respondents, the company asserts that around 80% of consumers in the US have either positive or neutral sentiments towards Bud Light. Although the brand has witnessed a decline in market share since the controversy, AB InBev contends that this decline has remained stable from the end of April through the end of June.

Addressing these challenges, CEO Michel Doukeris affirms that the US team is diligently working to regain lost ground. He suggests that consumers across the US desire a return to universally-loved channels like the NFL, aiming for a harmonious enjoyment of their beer without the divisive debate.

AB InBev emphasizes its commitment to supporting the brand by continuing to invest in strategic areas such as sports partnerships. Notably, the company ramped up marketing and sales expenditures by 12.8% in the first half of the year, totaling approximately $3.5 billion. This bolstered investment has yielded increased portfolio brand power in a significant 60% of AB InBev’s markets.