Bud Light boycott is helping one of the beer’s main rivals, analysts say

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The boycott of Bud Light over its partnership with a trans influencer has endured long enough to help one of its parent company’s main rivals, Molson Coors Beverage Co., analysts at BofA said on Tuesday.

BofA Global Research analysts upgraded Molson Coors — the brewer behind Coors Light and Miller Lite — to neutral from underperform. The analysts also raised their price target on the stock to $68 from $54 and nudged their 2023 per-share profit estimates for the brewer to $4.50 from $4.43.

Shares of Molson Coors rose 0.8% on Tuesday. The stock is up 19.7% over the past 12 months.

In April, Bud Light found itself dealing with a wave of anti-transgender sentiment and calls for a boycott after the brand worked with trans influencer Dylan Mulvaney to promote the light beer in a handful of social-media posts. Shares of Anheuser-Busch InBev Bud Light’s parent company, have fallen in tandem with the resulting drop in weekly Bud Light sales.

“It’s difficult to determine the duration of the boycott, but it has already lasted longer than industry executives anticipated and appears likely to impact the July 4th holiday,” BofA analysts said in a research note. “[Molson Coors] appears able to service the demand spike due in part to supply chain improvement … and learnings from COVID supply chain stress.”

The analysts continued: “We believe that Coors Light and Miller Lite have been the main beneficiaries” of the boycott against Bud Light. Both Coors Light and Miller Lite have also supported LGBTQ+ events in the past.

Since the blowup began over Bud Light, Molson Coors’ total volumes — a measure of liquid sold — have picked up steam. Those volumes were up more than 9.5% year over year for the latest four-week period, the BofA analysts said.

The upgrade came as Bud Light and other brands and retailers including Target Corp. and Kohl’s Corp. have faced calls for boycotts over their Pride-themed merchandise. LGBTQ+ activists have said those campaigns have been coordinated by far-right groups. Pride Month is celebrated in June.

In May, Bud Light said it would donate $200,000 to the National LGBT Chamber of Commerce in an effort to support LGBTQ+-run businesses. But Anheuser-Busch CEO Brendan Whitworth initially waffled in response to the boycott, and the campaigns against Bud Light and other companies have raised questions about corporate America’s commitments to LGBTQ+ people.

With its seven breweries in the U.S., Molson Coors has “plenty of unused capacity” to meet the extra demand, the BofA analysts said. They noted that the company had also taken steps to strengthen operations in the U.S. and drive sales and profits — including consolidating its operating segments and pulling back on some international markets, while more heavily marketing brands like Coors Light and expanding into hard seltzer.

Still, demand for light beer has waned in recent years with the rise of craft beer, seltzer and other alternatives. And even as Bud Light is now selling at a deep discount at some stores, the analysts said AB InBev still has plenty of resources to compete.

“Risks are potential cost overruns to service demand, competitive response from [AB InBev] and the boycott having a broader negative consumer impact on the perception of U.S. domestic beer, which was been growth impaired for years (note Nielsen data suggests the category has slowed slightly since the boycott began),” they said.

“Longer term, the lingering question for [Molson Coors] is the sustainability of U.S. sales,” they continued.

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