In April this year, the American beer brand Bud Light made what’s now widely recognised as a fatal error. Since 2001, Bud Light has been America’s best-selling beer, but this record was ended abruptly after the company released an advert featuring prominent transgender activist Dylan Mulvaney. The appearance caused a huge backlash amongst conservatives, who resented divisive politics being embraced by what should be a non-political enterprise.
Perhaps more significantly from Bud Light’s perspective, the beer became associated so closely with the transgender movement that increasing numbers of consumers simply found the idea of being seen drinking the beer embarrassing. The conservative commentator Megyn Kelly has said Bud Light have suffered a “national humiliation” in light of the ill-fated advert.
The move was certainly a costly one. Sales in the US to wholesalers dropped by 15% in the second quarter, with a 14% drop to retailers. Pre-tax profit was down almost 30%. Some retailers have reported a 50% decline or more in sales of Bud Light – which is now cheaper than water in some places. The whole fiasco is predicted to have cost the company up to $20 billion. The share price of Bud’s parent company, Anheuser-Busch, has shed almost 15% in value since their peak in April before the ad.
Is this a case of “go woke, go broke?” There certainly seems to be an identifiable trend emerging – companies which promote radical left-wing values lose money. It’s not just Bud Light. Ben & Jerry’s have come to the conclusion that the duty of an ice cream retailer isn’t to shove ice cream down consumers’ throats, but radical, “progressive” politics. If you scroll through their Twitter feed, you’ll find commentary on everything from supposed “white supremacy” to American gun ownership to abortion rights.
Ben & Jerry’s ran into trouble, however, when they called for their consumers to “recognise that the US exists on stolen indigenous land and commit to returning it.” This apparently didn’t apply to their own HQ though, which was “stolen” from an indigenous tribe. The company has since been the subject of scorn and ridicule ever since, sentiments which have fed through into poor share performance. Unilever, the global consumer goods brand which owns Ben & Jerry’s, has had $2 billion wiped off its market cap. An expensive tweet.
Starbucks has also become the subject of a boycott in May. Not learning the lesson provided by Bud Light the previous month, the coffee company broadcast an advert to consumers in India which featured a transgender model, provoking similar levels of uproar. Is it wise to deliberately antagonise consumers in the world’s single largest market? Probably not, hence a 15% drop in the Starbucks share price since the start of May.
The clothing brand Target found this out even more harshly, after stocking trans-friendly clothing for children back in May. Activist groups including Gays Against Groomers called for a boycott of the store on account of the “indoctrination” that’s “highly inappropriate and disturbing.” Soon enough $6 billion had been wiped off the company’s value and sales across the States plummeted. On the New York Stock Exchange, where Target is listed, the company has shed almost 20% of its value since the start of the year.
The fortunes of these companies over the last few months demonstrate the perils that come with corporate wokeness. While companies, or individuals within those companies, may feel morally good for expressing the views they do, it’s now clear that doing so comes with a cost – a cost of billions of dollars. A single tweet or “bold” advert can wipe a quarter off the value of a company’s market cap at a stroke.
Are executives prepared to take the risk of this happening to their company just so they can feel good about themselves – and will shareholders let them?
Author: Harry Clynch
#BudLight #Woke #NYSE #Shareholders
