Bud Light is back in the headlines.
The CEO of Anheuser-Busch InBev (NYSE: BUD), the multinational brewing company behind Bud Light, is reportedly planning to tour this summer to listen to consumers. But Shark Tank star Kevin O'Leary, aka Mr. Wonderful, doesn't think that's going to change anything.
“I don't think that's going to work,” O'Leary said in a recent interview with Fox Business. “He'll get an ear, no question. The problem with this tour and this idea is that it remains at the forefront as press articles.”
Mr. Wonderful then emphasized how unprecedented Bud Light's situation is in the beer industry.
“Beer brands take decades to build and usually they struggle [for] 1% to 2% share per year by spending hundreds of millions of dollars on advertising,” he explained. “It's never happened before. No beer brand has ever lost 25% market share in a matter of hours. It is so unprecedented that there is no playbook for it.”
To teach a lesson
In April, Bud Light partnered with transgender social media influencer Dylan Mulvaney, who has 10.6 million followers on TikTok. The collaboration sparked a backlash on social media and led to a boycott by some beer drinkers.
Bud Light is no longer America's best-selling beer, according to consultancy Bump Williams, which uses data from NielsenIQ. The top spot now belongs to Modelo Especial, brewed by Constellation Brands Inc. (NYSE:STZ).
O'Leary pointed out why Bud Light faced such strong headwinds.
“Beer is a commodity, the only difference is the brand, so you really have to protect your brand in every way you can,” he said.
“If you don't understand who is buying your brand and you're upset about what seems to have happened here, you don't know what the outcome will be. And now we can measure it – 25% market share.”
O'Leary also wants to share the findings with his students.
“This is so extraordinary that I plan to teach it this fall at the colleges I attend and guest lecture at. “I've never seen a branded case like this,” he said, later adding, “Bud Light is the gift that keeps giving.”
Anheuser-Busch InBev's share price also fell. Since April 1, when Mulvaney first promoted the beer on social media, BUD stock has plummeted 15%, resulting in a billion-dollar loss in market cap.
O'Leary's investment strategy
As a Shark Tank star, O'Leary has invested heavily in startups. But he's also a proponent of investing in dividend stocks.
“Over the last 40 years, 71% of stock market returns have come from dividends, not capital appreciation,” he said in a Forbes interview. “So rule 1 for me is never own anything that doesn't pay a dividend. Always.”
Dividends can be a passive source of income for investors. However, it's important to remember that dividend stocks can still fluctuate.
Anheuser-Busch Inbev is a high-dividend-paying company, and its shares have been volatile to say the least.
If you don't like that kind of volatility, you should look for reliable income opportunities outside of the stock market – for example, by investing in rental properties for as little as $100 without having to wait too long.
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This article “So Unprecedented”: Kevin O'Leary says Bud Light is the gift you keep giving and plans to teach college students about the 25% decline in its market share. He originally appeared on Benzinga.com
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