Submitted via Portfolio Armor:
Bud Light Sales Continue To Collapse
Bud Light sales continue to decline,
Bud Light sales reportedly continue to crater with in-store sales down 26%. The company first sent in the Clydesdales, https://t.co/XN6WRsaHL4, and then the conservatives, https://t.co/tCzQCwD7Ji. It hasn't helped. Customers view the brand as a vehicle to express frustration…— Jonathan Turley (@JonathanTurley) May 2, 2023
And their current approach doesn't seem to be working,
It's insulting to try to rebrand into an anodyne Americana aesthetic that is itself heavily politicized from their previous "yay castration" position.— The American Sun (@NewAtlantisSun) May 2, 2023
But given they internally probably can't support capitulation to The Official Beer Of Fascism, what are their options? https://t.co/Sgeox1hlj0
So I've been wondering what Anheuser-Busch Inbev SA/NV (BUD) could do to dig itself out of the hole it dug for itself with its transgender misadventure. One idea I suggested, half in jest, was for them to hire the popular country singer Morgan Wallen, who sparked a kerfuffle a while back when he was caught on video repeating a rap lyric including the taboo word.
Then he starts playing “Whiskey Glasses” and a black guy in the crowd smiles and clinks Bud Light cans with his diverse pals.— David Pinsen (@dpinsen) May 2, 2023
Tag line: “No offense”https://t.co/X48eY1OjpF
I decided to ask advertising industry veteran Isaac Simpson what he'd do. Simpson is the founder of WILL, a marketing agency in Los Angeles, and also writes a popular Substack called The Carousel. I've posted his thoughtful answer below. Before we get to that, two quick updates on previous posts.
Update: Regional Banks Tank Again
In our previous post (Regional Banks Tank), I mentioned exiting puts on one of them, First Foundation, Inc. (FFWM) for a 200% gain and that I probably sold them too early. That turned out to be true. With PacWest Bancorp (PACW) evaporating after hours, FFWM has fallen below $4 per share. Speaking of which, ZeroHedge commenter "BunkerHunt" deserves credit for speculating PACW would be the next domino to fall. I thought of buying $3 strike puts on PACW today, like I did with First Republic Bank (FRC) last Thursday, but didn't pull the trigger. I wish I did. In hindsight, that was an obvious trade. Thursday update: exited puts on another regional bank today, Bank of Hawaii (BOH), for an 80% profit.
Update: Christmas Comes Early
In the post before that (Cheer Up, It's Christmas Morning), I mentioned a successful earnings trade we had earlier this week on Sprout's Farmer's Market, Inc. (SFM) after that company posted an earnings beat after the close on Monday. In that post, I mentioned that SFM was one of two earnings trades I shared on the Portfolio Armor trading Substack on Monday, and the other one was scheduled to release earnings Thursday.
My mistake: the other company, which was Wingstop, Inc. (WING) released earnings before the market open today, and beat on both top and bottom lines, and posted 20% same-store sales growth, blowing away expectations. As a result, the stock closed up 9.35% today, putting our call spread on the stock in-the-money. If you exited our trade at the midpoint of the spread today, you would have had an 88% gain. Thursday update: exited my WING call spread at $6.12 for a 100% gain today.
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Now on to Isaac Simpson's advice about Bud light.
How To Save Bud Light
I'm actually working on an article about this, how I would pitch Bud Light. I'll tell you what I would do. Formerly, Bud and Bud Light marketing was great because it wrote to the brand’s natural audiences, blue-collar working Americans, and squarely middle class men. Not necessarily white. A lot of Mexican construction workers absolutely love Bud Light, they bring the tall cans to the construction sites with them.
Their previous marketing did a beautiful and hilarious job bridging the gaps between these two audiences via the things they share in common. Namely two things: 1) tongue in cheek, sardonic, sarcastic, masculine humor and 2) traditionalism, patriotism, Christmas, etc. The former: the Clydesdales, changing its name to America/Freedom, cowboy stuff. The latter: "What's aaaahhh"; the frogs
I would continue with this pattern with a new idea that celebrates both the working and middle classes with humor, but also folds in the "freedom can" concept at the same time. I'd build a campaign around "everyday freedom," with the can standing for the little breaks/indulgences that working and middle class men take throughout the day. There's a lot of content like this on TikTok---little secrets and winks shared among genuine working dudes. This is what Bud always stood for.
My campaign would be very edgy—a construction worker slipping a generic soda sleeve over a Bud Light freedom can on a construction site, with the Bud logo barely visible, a slight wink to the audience to say "hey, take your freedom where you can get it." A middle class computer jockey keeps a can hidden in the toilet paper dispenser—everyone in the office thinks he has IBS. Two friends, work-from-home bros, tell their wives they're having a very serious business lunch, flash to them shotgunning Bud Lights in their garages. It takes their old "freedom" branding, and updates it for today, in a way that both of their core male audiences can relate to.
From a strategic perspective, what's missing is a genuine connection to these audiences, speaking in the way that these audiences speak and think—and this just isn't replicable when their entire team is run women and gays and rich hype dads. They need to hire some "normal dudes," who 95% of advertising copywriters used to be. Instead, they’re just America-signaling with deep voice cowboys, which nobody buys. They think that working people aren't smart enough to have a sense of humor, but they're projecting. It’s actually they (the marketing elite) who don't have a sense of humor.
Ending The Boycott
I don't think this is a Bud Light "Boycott" per se. As someone else just tweeted, this is really more of a funnel problem. At the moment of purchase, Bud Light drinkers are faced with several identical options. If they have a negative view of one of them, it's just going to absolutely shred the brand’s revenue. This is less so of brands like Nike and Gillette, who were less impacted by their own controversies. So I wouldn't consider this a hard boycott, more of a soft one, if I would even call it that.
Also, as I've said before, I still believe that AB Inbev will double down on this, but I suppose I could be wrong and that, perhaps because working people have become increasingly savvy to this stuff, this is genuine loss that will make AB Inbev change its course and re-embrace working and middle class dudes AKA conservatives.
I think a genuine victory would start with firing Alissa Heinerscheid and her boss, who are still just technically "on leave." Beyond that, one thing that we could ask for is that Bud Light hire an agency that specializes in relating to working (see conservative) Americans. Some agencies that do that are Beck and Stone in Texas, Bailey Lauerman in Nebraska, Britton in Indiana, and of course my agency WILL in Los Angeles.
I think that would be an incredible symbol that it was working to reconnect with its real customers, instead of forwarding ridiculous political ideologies. Or simply replacing its marketing team with dudes who are known as conservatives, or making a statement that it will work to provide more balance on its marketing team, because it knows that representation is important, not just across identity but across class and beliefs.