Bud Light boycott may be losing steam as beer brand holds on to more store shelf space than expected: analyst

By Steve Gelsi

Distributors expect a lower-than-estimated 7% loss in shelf space for Bud Light during the critical spring and summer season, analyst says

Bud Light will continue losing shelf space this summer in the wake of last year's boycott of the brand, which stemmed from a promotion featuring transgender influencer Dylan Mulvaney, but it won't lose as much as expected, according to one analyst.

A survey of distributors estimated a 7% loss in shelf space, while Anheuser-Busch InBev S.A. (BUD) distributors were projecting 5%. That's less than the Wall Street projection of high single digits to low double digits, Jefferies analyst Kaumil Gajrawala said Tuesday.

The results came from the firm's 11th biannual survey of distributors.

More than half of the distributors expect other Anheuser-Busch beer brands such as Michelob and Busch to take up some of the slack from a decline in Bud Light, even as the the company increases its marketing spending.

Ninety-four percent of distributors said they expect Bud Light to lose shelf space.

Molson Coors Beverage Co.'s (TAP) Coors Lite and Constellation Brands Inc.'s (STZ) Modelo are expected to gain the most from Bud Light's sustained woes, according to distributors surveyed by Jefferies.

Analysts at Citi said last month that gains by Molson Coors are coming to an end after the conservative-led boycott that hit Bud Light's sales last year.

Meanwhile, Jefferies upgraded Boston Beer Co. (SAM) to buy from hold partly on strength in its Twisted Tea drink, which has grown to more than $1 billion in sales and is offsetting declines in other drinks from Boston Beer Co.

"Hard teas are gaining traction heading into peak summer months, which includes shelf-space gains," Gajrawala said. "Competition has not taken a foothold and the brand should remain the category leader going forward."

Another plus is Boston Beer finding a bottom for its hard-seltzer brand Truly.

"Truly is showing signs of stabilization, which has been a longstanding drag on the company's valuation given uncertainty around the category's floor," Gajrawala said.

Along with the upgrade, Jefferies boosted Boston Beer's price target by 7% to $360 a share.

Anheuser-Busch InBev's stock has risen about 1% so far in 2024, compared with a 14.6% drop by Boston Beer Co. and a 4.5% year-to-date drop by Molson Coors. Constellation Brands' stock is up 5.1% in 2024, while the S&P 500 has risen by 9.5%.

Also read: Anheuser-Busch InBev tops estimates in last quarter where Bud Light boycott hits growth

-Steve Gelsi

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05-14-24 1201ET

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