3 Beverage Stocks that Could Win on Bud Light's Bad Publicity

Editor’s Note: In this piece, we look at how Bud Light’s self-inflicted pain could become its rivals’ gain.

Bud Light’s support for diversity and inclusivity backfired when an Instagram video by trans influencer Dylan Mulvaney featuring herself drinking a Bud Light as part of an ad campaign by the brand to celebrate the end of March Madness and promote a sweepstakes contest for the company drew flak from some its outspoken conservative fans.

With Mulvaney sharing a photo of a commemorative Bud Light can with her face on it celebrating her "365 days of girlhood" series on TikTok documenting her gender transition, affiliate brands such as Bud Light and Maybelline have become a target of the ire of conservatives over transgender rights.

The vocal and explicit outrage ranged from calls to boycott the brand, with rapper-singer Kid Rock going as far as shooting up cases of Bud Light with an automatic rifle while wearing a MAGA hat, to death threats to Anheuser-Busch InBev SA/NV (BUD) marketing executives who supervised the campaign with Dylan Mulvaney.

This has prompted Alissa Heinerscheid, vice president of marketing for Bud Light, and her boss, Daniel Blake, Budweiser's group vice president for marketing, to take a leave of absence.

In an attempt to pacify its irked consumers and restore their images, Bud Light’s sister brands have pivoted away from their inclusive messaging. On April 14, Budweiser released an ad featuring its signature Clydesdale horse mascot to invoke patriotic sentiments in its patrons.

According to the experts, changing demographics suggest that Bud Light’s inclusive ad campaigns make good sense in the long run and are expected to keep the brand in what, according to BUD’s CEO, is “the business of bringing people together over a beer.”

However, the soup the brand has landed in might warm up the prospects of other beverage stocks. While the “woke-free” beer being brewed by “Conservative Dad” may not make the cut, here are some contenders to look out for.

Ambev S.A. (ABEV)

Ambev S.A. (ABEV), a subsidiary of Interbrew International BVT, is a beverage company headquartered in Sao Paolo, Brazil, that distributes and sells beer, carbonated soft drinks (CSDs), and other non-alcoholic and non-carbonated (NANC) beverages across the Americas.

The company operates through three geographical segments: Latin America North; Latin America South; and Canada.

On April 25, ABEV’s Board of Directors approved and homologated the issuance of new common shares as a result of the exercise, by certain beneficiaries, of stock options, within the scope of the Company’s Stock Option Plan. This reflects the investors’ confidence in the company’s prospects.

Despite a challenging macroeconomic environment, consistent execution of its platform model, coupled with commercial momentum in its home market in Brazil, helped ABEV ensure a top-line growth of 19.8% year-over-year and a 17.1% year-over-year consolidated growth in normalized EBITDA in the fiscal year 2022.

Constellation Brands, Inc. (STZ)

Constellation Brands, Inc. (STZ)is an international beverage and alcohol company operating in the United States, Mexico, New Zealand, and Italy. Its segments include Beer; Wine and Spirits; and Canopy.

The beer brands sold by the company include Modelo Especial, Corona Premier, and Victoria, Pacifico, while its portfolio of Cook’s California Champagne, Mount Veeder, My Favorite Neighbor, Casa Noble, Mi CAMPO, Kim Crawford, Ruffino, Robert Mondavi Winery, Copper & Kings, and others.

For the fiscal year ending February 28, 2023, STZ outperformed its net sales and operating income growth outlook. The company’s top line grew by 7% year-over-year to a record $9.45 billion, while its operating income increased by 22% year-over-year to $2.84 billion.

Robust financial performance has enabled STZ to exceed its goal of returning $5 billion to its shareholders in the form of repurchases and dividends.

With spirits, such as gin and vodka, overtaking beer’s U.S. market share, riding on the momentum of high-end cocktail trends, the company expects to build on its momentum and deliver value to its shareholders in the fiscal year 2024 as well.

Molson Coors Beverage Company (TAP)

Molson Coors Beverage Company (TAP)is a holding company that operates through two segments: Americas and EMEA&APAC.

The Americas segment consists of the production, marketing, and sales of its brands and other owned and licensed brands in the United States, Canada, and various countries in the Caribbean, Latin, and South America.

The EMEA&APAC segment consists of the production, marketing, and sales of its primary brands as well as other owned and licensed brands in various European countries and certain countries within the Middle East, Africa, and Asia Pacific.

For the fiscal year that ended December 31, 2022, TAP’s net sales increased by 4.1% year-over-year, primarily due to positive net pricing and favorable sales mix. During the same period, the company has also been able to reduce its net debt by $562.4 million.

On February 28, a week after announcing its top and bottom-line growth, TAP announced the creation of a centralized commercial function in its Americas business unit designed to accelerate its growth in the years ahead.

By uniting multiple teams and geographies around a single strategy, the function is expected to drive clearer total portfolio and geographic prioritization and allow the company to scale new white spaces, brands, and capabilities more quickly.