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Risks for Bud Light stock persist as rivals still thrive after boycott

Risks for Bud Light stock persist as rivals still thrive after boycott

Over the past six months, the US-listed shares of Anheuser-Busch (NYSE: BUD), the parent company of Bud Light, plummeted by nearly 20% as the brewing giant lost its title as America’s leading beer producer. 

This decline followed a sharp dip in Bud Light’s sales and market share, triggered by nationwide boycotts stemming from a controversial ad campaign earlier in the year. 

Despite the passing of the initial backlash, Bud Light continues to grapple with the repercussions as competitors capitalize on the situation. This vulnerability within one of its flagship brands raises concerns about further risks to Anheuser’s stock.

What happened?

Naturally, Bud Light’s market share loss in 2023 and the rapid decline in its sales have presented its rivals with a unique opportunity. 

One of the companies that took advantage of this opportunity in particular is Constellation Brands’ Modelo Especial. 

It’s been a while since Modelo surpassed Bud Light as the top brewer in America. However, it seems that trend has continued to pick up pace as Model’s sales growth shows no signs of stopping. 

According to its report from last week, the brand’s beer sales jumped 12% in Q2, compared with the same period a year ago. 

“The good news is, there’s just so much opportunity still to go. It’s just terribly exciting to think about all the potential that Modelo has.”

– CEO Bill Newlands said.

The Mexico City-based brewer now accounts for 8.5% of US retail-store sales so far in 2023, while 8.1% belongs to Bud Light. 

Molson Coors

In the meantime, another beer brand, Molson Coors Beverage, has been moving to exploit the recent market uproar.

Notably, the company revealed a $2 billion stock repurchase plan, a move that comes on the back of growing volumes and cash flows helped in part by the Bud Light backlash. 

The plan could signal a significant increase in the pace of buybacks for Molson, which repurchased $51.5 million in shares last year. 

Additionally, the brand secured a credit rating upgrade at the S&P Global Ratings, which lifted its grade by a notch to BBB. 

What does it all mean for Bud Light stock?

Although Bud Light’s shares have found some stability in the short term, ongoing market dynamics and the success of competitors like Modelo and Molson Coors suggest that the challenges are far from resolved. 

If Bud Light’s sales continue to wane while rivals prosper, this could exert additional downward pressure on BUD’s stock, which has already experienced a significant decline in 2023.

At press time, Anheuser’s shares were sitting at $53.64, up more than 2% in the past 24 hours.

Over the past five days, the stock gained around 1.1% but remains down over 4.5% on the monthly chart.

Anheuser’s 1-month stock price chart. Source: TradingView

Year-to-date, BUD tumbled more than 11%, losing more than $13 billion in market cap during this period. 

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