Shares in Bud Light parent company Anheuser-Busch InBev (BUD) have fallen more than 17% since the company announced earnings on May 4 as the Dylan Mulvaney controversy continues to weigh on the beer giant's sales.
However, the company saw a slight improvement. For the week ended May 27, Anheuser-Busch InBev said that Bud Light sales were down 23.9% year over year — a smaller drop than the week before, which was 25.7%. Volumes also improved slightly, falling 27.8% for the week of May 27th compared to a 29.5% decline for the week of May 20th. This is according to data from Bump Williams Consulting cited in a communication from Evercore ISI to customers.
“Another week of very weak trends for Bud Light suggests that tracked channels may be reaching a point of stabilization, albeit at significantly lower levels for Anheuser-Busch InBev than before the controversy,” Evercore said.
This is now the second month of the boycott after Mulvaney, a transgender influencer and TikTok personality, penned an Instagram post endorsing the beer during March Madness basketball. Following the release, the company saw sales fall in April and May after the April 3 release of a video by country music singer Kid Rock that appeared to prompt a widespread boycott among certain US consumers.
Anheuser-Busch InBev's other brands in the portfolio are also up, but remain “well below pre-controversy levels as the boycotts against ABI's larger portfolio continue to impact brands outside of Bud Light.”
Budweiser's sales fell 8.5% year-on-year for the week of May 27, but better than the previous week of May 20, which saw the largest decline of 11.2%. Sales of Michelob Ultra fell 0.1% in the last week of May, compared to a 3.8% drop the week before. Busch Light sales fell 3.0% in the last week of May, compared to a 5.2% drop the week before. Natural Light also improved, with sales falling 1.5% for the week of May 27, compared to a 4.9% decline for the week of May 20.
Volumes of all brands across the portfolio also improved. Michelob Ultra volumes showed the largest increase, falling 3.6% compared to a 7.5% drop the week before as the summer season kicked off.
Evercore's Robert Ottenstein said: “Notably, industry volumes improved over the last week to -2.4% versus -4.0%, suggesting that the acceleration in ABI is unlikely to be due to the easing in boycott pressure is.”
After the conference call with investors, where Anheuser-Busch InBev CEO Michel Dimitrios Doukeris downplayed the controversy, the company was boycotted by others, including the LGBTIQA+ community like 2Bears Tavern Uptown in Chicago.
For example: In an Instagram post, the bar said: “Anheuser-Busch's decision to end its support for Mulvaney in response to ignorant and hateful objections from some of its customers shows how little Anheuser-Busch cares about the LGBTIQA+ community.” …”
Ottenstein said that if this weakness continues, “it raises the question of whether Anheuser-Busch InBev and/or its distributors need to make structural changes to lower their cost base if trends don't improve over the next several months.”
According to a note to customers from Jefferies, approximately 65% of retailers expect the impact of the bud light controversy to last longer than six months, including a third of those surveyed who expect the impact to be permanent.
Molson Coors profits, Bank of America upgrades shares to neutral from underperform
Meanwhile, competitor Molson Coors continues to gain market share. All brands named in Evercore ISI's report (Coors Light, Miller Lite, Keystone Light and Miller High Life) posted their best week of sales in the last week of May since the controversy began the week of April 8th. Coors Light led the way in sales growth with sales up 26.3% year-on-year.
On Tuesday, Bank of America upgraded Molson Coors shares to neutral from underperform. The company said, among other things, “Our rating change is based on our belief that recent market share gains in the US related to the bud-light boycott lasted long enough to have a positive impact on sales and profits.”
Molson Coors (TAP) shares are up more than 5% since the company announced its latest earnings results on May 2.
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