Is Anheuser-Busch InBev Damaging Its Own Beer Sales?

Hand holding glass of Bud Light beer

Anheuser-Busch InBev (NYSE: BUD) is once again mocking the craft-beer industry, even as it buys up every craft brewer in sight. In a series of ads for its Bud Light brand, the brewer that once reveled in its largeness with a Super Bowl ad proclaiming it to be not just a mega-brewer but a "macro" one is now taking aim at craft beers' penchant for brewing up creative and even exotic taste profiles.

Heavy on sarcasm

Bud Light is America's most popular beer, commanding a 16% share of the market, but as craft-beer sales have continued to grow while mass-produced beer sales have stalled or fallen, its slice of the beer market has slipped since 2010, when nearly one of every five beers sold was a Bud Light.

Anheuser-Busch has made several attempts to inject some froth around the brand, such as last year's campaign featuring comedians Amy Schumer and Seth Rogen pushing the "Bud Light Party" amid heightened political awareness, though the ads themselves took no real stances themselves, even as they hinted at support of gay marriage, pay equality, and gender labels.

That wasn't enough to halt the slide in Bud Light sales, but the brewer pulled the ads early and was forced to cut revenue forecasts for the year, mostly as a result of surprisingly poor performance in Brazil, but also because of flat sales in the United States.

Brewing up controversy

Now Anheuser-Busch is coming back and taking on craft brewers by juxtaposing their supposed laundry list of ingredients with the "four essential ingredients" found in Bud Light: barley, rice, water, and hops.

The ad shows some weird combinations of craft beer that mix in vegetables, spices, whipped cream, and even a lobster claw, then transitioning to Bud Light's more streamlined recipe. It's similar to Heineken 's (NASDAQOTH: HEINY) own advertising that stressed its own "three natural ingredients" of barley, water, and hops.

While it's a fun look at the difference between mass-brewed beer and craft, the enhanced flavor found in craft beer is exactly one of the reasons mass-brewed beers are falling. Anheuser-Busch obviously recognizes this, which is why it's bought up so many craft breweries, but it also risks hurting its own brands on both sides by doing so.

Walking a fine line

Buying independent brewers and making their beers more widely available will inevitably cause more drinkers of mass-brewed beer to leave the likes of Bud Light and other lagers in favor of the craft brews. Attacking craft beer in its ads as being absurdly complex undermines its own high-end portfolio that Anheuser-Busch has cobbled together.

For all of craft beer's insurgence, lagers are still the best-selling flavor of beer. And Bud Light still sells more beer than anyone else. In a market awash in choices, Beer Marketer's Insights says Bud Light has little competition, as Molson Coors ' (NYSE: TAP) Coors Light brand is a distant second with a 7% share, A-B's Budweiser is third at 6.6%, and Miller Light is fourth with a 6.2% share.

The campaign highlights the predicament Anheuser-Busch InBev finds itself in and the fine line it needs to walk. I'm guessing the new campaign is not going to do any better than the previous attempts to buoy Bud Light that were made. Craft beer's growth may be slowing, but it is still growing. The decline at Bud Light has been going on for a decade now, and its continued fall probably can't be stopped with a few cheeky commercials.

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Rich Duprey has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Anheuser-Busch InBev NV. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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