'I'm Licking My Chops To Teach This Case': Kevin O'Leary Calls Bud Light's Marketing Gaffe A 'Chestnut Case In Business Schools.' Will The Battered Beer Brand Make A Comeback?

Bud Light’s marketing blunder is changing the beer industry landscape. According to “Shark Tank” star Kevin O’Leary, the impact is so unprecedented that he’s pumped to teach the case to business school students.

“It’s such an incredible story that it’s becoming what’s called a chestnut case in business schools,” O’Leary said in a recent interview with Fox Business.

“Beer is a commodity, the only thing of value is the brand you spent hundreds of millions creating and then to actually lose 25% market share in six weeks has never been achieved in the history of the beer business in America,” he said.

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In April, Bud Light partnered with transgender social media influencer Dylan Mulvaney. While Mulvaney boasts 10.7 million followers on TikTok, the collaboration triggered a backlash on social media and led some beer drinkers to boycott Bud Light.

According to consulting company Bump Williams, using data from NielsenIQ, Bud Light is no longer America’s best-selling beer. The top spot now belongs to Modelo Especial, distributed in the U.S. by Constellation Brands Inc. STZ.

A Chestnut Case

According to O’Leary, Bud Light’s case study reveals the growing importance of managing social media at the corporate level.

He said that traditionally, corporations’ risk committees focused on areas like compensation and compliance. However, in light of what’s been happening to Bud Light, companies are now “contemplating risk committees around social media” so that someone at the board level can oversee “what and what not to say.”

O’Leary then explained exactly what went wrong at what was once America’s favorite beer brand.

“For consumer goods and services, particularly around beer, to say let’s get involved in educating our beer drinkers about gender identity, that did not work in an unprecedented way — unprecedented losses of market cap and value and market share.”

Investors in Anheuser-Busch InBev BUD, the multinational brewing company behind Bud Light, have been hit. Since April 1, when Mulvaney first promoted the beer on social media, the New York Stock Exchange-listed BUD stock has tumbled about 15%, resulting in the loss of billions of dollars of market cap.

Apparently, students are fascinated by the case.

“I’m licking my chops to teach this case,” O’Leary added. “I've tried it twice now. The class lights up like I’ve never seen before.”

Will Bud Light Make A Comeback?

According to Anheuser-Busch’s latest earnings report, the company’s U.S. revenue fell 10.5% year over year in the second quarter.

In the first half of this year, Anheuser-Busch’s sales to wholesalers in the U.S. decreased by 8.5%, while sales to retailers dropped by 9.2%. The company said that its underperformance in the industry was “primarily due to the volume decline of Bud Light.”

But it’s not all bad news. In the second quarter, the beer company’s global revenue increased 7.2% year over year. 

In the earnings conference call, CEO Michel Doukeris said that while the company’s market share in the U.S. declined in the second quarter, “it has been stable since the last week of April through the end of June.”

O’Leary’s Investment Strategy

As a “Shark Tank” star, O’Leary has invested plenty in startups. But he’s also an advocate for investing in dividend stocks.

“Over the last 40 years, 71% of the stock market’s return came from dividends, not capital appreciation,” he said in a Forbes interview. “So Rule 1 for me is I’ll never own stuff that doesn’t pay a dividend. Ever.”

Dividends can be a source of passive income for investors. But it’s important to remember that dividend stocks can still fluctuate. 

Anheuser-Busch InBev is a large-cap, dividend-paying company, and its shares have been volatile.

If you don’t like that kind of volatility, you might want to look into reliable income plays outside the stock market — such as investing in rental properties with as little as $100 while staying completely hands-off.

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