The "brew-haha" that erupted after Anheuser-Busch InBev (NYSE: BUD) ran a commercial during the Super Bowl earlier this year pointing out that rival Molson Coors (NYSE: TAP) MillerCoors division uses corn syrup in its Miller Lite and Coors Light beer is still going on.
A federal judge just issued an injunction against Anheuser-Busch saying it can't tell consumers on its packaging that there is no corn syrup in Bud Light, because that implies that its rivals' beers do contain it. The judge said the brewer may continue using the packaging manufactured prior to June 6 either until that inventory runs out, or until March 2020, whichever comes first.
While the court has yet to rule on the merits of MillerCoors' lawsuit against Anheuser-Busch, the judge's decisions have so far indicated he believes the brewer has grounds to argue that it has been harmed by the advertising campaign.
Image source: Getty Images.
Much ado about nothing
It was clear from the beginning the megabrewer was trying to imply there was something wrong with its rival's beer because it used corn syrup. Namely, it was betting on consumers confusing corn syrup with high fructose corn syrup, a sweetener that has been connected to obesity. While there was nothing factually wrong with what Anheuser-Busch said -- Miller Lite and Coors Light do use corn syrup in the brewing process -- the subsequent phrasing in the advertising could make it seem as if Molson Coors adds corn syrup to sweeten its beer after the fact, when really, the corn syrup is just providing some of the sugar that the yeast will convert into alcohol.
Whether it's grapes for wine, fruit for hard cider, or malted barley, corn syrup, or the rice used in Bud Light, it's all essentially the same idea. Something has to provide the easily fermentable sugar to generate the alcohol content in those adult beverages. And Anheuser-Busch actually uses regular corn syrup in some of its own beers, including Stella Artois, while some of its other brands even use high fructose corn syrup.
In May, the judge blocked Anheuser-Busch from using the "no corn syrup" phrasing in billboard, TV and print advertising. He specifically refrained, though, from making a decision about packaging until he heard more from both sides in the case. Now, he's extending the injunction to the packaging too.
Yet should he? In the advertising campaign, Bud Light was often juxtaposed against Miller Lite and Coors Light, which could presumably confuse customers, but on the packaging, AB InBev does not mention its competition. Bud Light's packages merely have a small icon indicating there's no corn syrup, and a recommendation that beer drinkers visit the Bud Light website to find out the ingredients used in the brewing process (which was changed from a suggestion that they find out what's "in" the beer after a prior court decision).
But since Bud Light is often displayed right next to Miller Lite and Coors Light in retail stores -- the three beers account for almost 100% of the light beer market -- the judge thinks consumers may still be influenced by the packaging when picking out a beer to buy.
Because Molson Coors has been winning these preliminary decisions, there's no reason to think it won't keep pressing ahead. It may even end up winning a final court victory and receiving monetary compensation from lost sales. Yet maybe it's time for the brewer to let it go.
Getting an earful
The subsequent blowback Bud Light received from Molson Coors' response and media coverage of the "corn-troversy" has pushed the beer back on its heels. Surveys taken following the kerfuffle showed Bud Light sales fell afterwards, a point even the MillerCoors blog noted.
The campaign also angered America's corn growers, and AB InBev was virtually shamed into supporting a fundraising campaign to help the country's farmers. (Bud Light ended up contributing $500,000 to the cause.)
Molson Coors achieved a significant moral victory that it now risks squandering by appearing petty from pressing forward with a lawsuit that prevents Bud Light from making factual claims about its own product. Even if it wins the legal battle, it may not win over those who matter most: beer drinkers. That may ultimately harm its shareholders, who simply want the brewer to be a quality stock to own. It's time for Molson Coors to let it go and get back to brewing beer.
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Rich Duprey has no position in any of the stocks mentioned. The Motley Fool owns shares of Molson Coors Brewing. The Motley Fool recommends Anheuser-Busch InBev NV. The Motley Fool has a disclosure policy.
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