Gus Carlson is a U.S.-based columnist for The Globe and Mail.
Tucked into HSBC’s downgrade of Anheuser-Busch InBev this week is a statement that the giant brewer doesn’t just have a Dylan Mulvaney problem – it has an internal talent and culture problem that may go beyond the issue that erupted over Ms. Mulvaney’s promotion of its Bud Light beer.
“There are deeper problems than ABI admits,” Carlos Laboy, managing director of HSBC’s global beverage sector, said in downgrading the stock to “hold” because of the Bud Light crisis, adding he had concerns about whether the company was hiring “the right people to grow the brands and gauge risk.”
Mr. Laboy hints that such disconnects between brand managers and their customers is endemic and a perilous mutation in the DNA of the brewer of many of the world’s most popular brands.
Bud Light is a canary in the ABI coal mine when it comes to failing to gauge risk.
In April, ABI had roped in Ms. Mulvaney, a social-media influencer known for publicly documenting her gender transition and who is prominent in the polarizing debate in the United States over transgender issues.
ABI’s move set off a wave of right-wing criticism. Whether that is justified or not is immaterial. What is important – for ABI as a business, at least – is that the entire episode did not sit well with the customer base for its Bud Light, who felt their beloved brand was needlessly taking part in a battle that was not theirs.
Many would have thought the brand’s highly credentialed marketing vice-president, Alissa Heinerscheid, would have checked herself before scorning the brand publicly as having “fratty, kind of out-of-touch humour” – earlier remarks that went viral after the criticism over Ms. Mulvaney.
If, as Ms. Heinerscheid suggested in her now infamous podcast appearance, her mandate was to evolve the brand, she broke a basic rule of marketing in recruiting Ms. Mulvaney: Secure the base before trying to expand your appeal. She not only failed to secure the base, she alienated it.
It’s remarkable, because Nike just went through similar issues with Ms. Mulvaney. What were the brand brains at these companies thinking?
Predictably, since ABI has fumbled every aspect of this crisis, the consequence for Ms. Heinerscheid and her familiars was abysmal. ABI put her and another marketing executive on leave of absence, a favourite HR weasel term that means the company doesn’t have the guts to fire them.
If ever there were cause to terminate, the Bud Light situation is it. Beer Business Daily said this week Bud Light sales tumbled sharply in every U.S. region in April – 29 per cent in the Rocky Mountain area and more than 20 per cent in the Midwest, South and Southeast. And the virus infected other ABI brands, with overall volumes down more than 12 per cent last month. ABI lost significant market value and its stock is underperforming competitors.
So toxic is the reputational environment, ABI has begun paying delivery drivers US$500 each because they are being harassed by distributors and retailers for the Bud Light situation.
If ABI is listening to Mr. Laboy, it should stop trying to thread the needle on this and come clean. Tell customers the company was wrong, apologize for the misstep, assure them the people responsible are gone, reaffirm the company is grateful for the loyalty of beer lovers and move on.
There is nothing wrong per se in using a promoter such as Ms. Mulvaney, who has a big platform and is well-loved in her circles. But different products and different customer bases require different promoters. And there was something grossly tone deaf in the way ABI handled the backlash. ABI might be surprised how willing its customers are to finally hear some straight talk.
As important, the company should launch a wholesale review of every person who touches its brands to determine and understand how to gauge risk.
In the case of Bud Light, put the brand in the hands of some core customer advisers for a while – not just in focus groups but as real shapers of the evolution of the brand. Choose some women sports fans, a few truck drivers and, yes, even a couple of frat brothers. It probably won’t please the social crusaders, but it might be good for business.