Since March Madness, Bud Light, owned by Anheuser-Busch, has been mired in controversy over its partnership with transgender influencer Dylan Mulvaney. Usually, social commentary fades after 48 hours. However, Bud Light experienced an unexpected escalation of customer rage, amplified by influential media, resulting in a boycott that defied expectations and is now entering an unprecedented third month.
The first rule of crisis management: Stop the bleeding
Nationwide, Bud Light sales have shrunk by more than 25% versus a year ago during the week ended May 20. Sales of other Anheuser-Busch brands also dropped: Budweiser -11.2%; Michelob Ultra -6.5% and Natural Light -4.9% for the same period.
Weve never seen such a dramatic shift in national share in such a short period of time, Beer Business Daily commented.
Im stunned by how widespread the impact has been felt, said Beer Marketers insights editor Benj Steinman. It tells you that the hit is not just red and rural.
Anheuser-Busch stock fell 18% from Apr. 1 to Jun. 2, losing more than 23 billion in market capitalization due to the crisis, while the S&P500 was up 3.8 % for the same period. The Anheuser-Busch position is particularly perilous now as the crucial summer selling season begins.
In what could turn out to be a new major challenge, the U.S. Environmental Protection Agency announced this week that Anheuser-Busch agreed to pay $537,000 to settle allegations it failed to comply with chemical accident prevention regulations and will improve safety operations at 11 of its flagship breweries that use anhydrous ammonia, which is dangerous to the skin, eyes, and lungs.
The difference between mere management and leadership is communication Winston Churchill
The digital world has become omnipresent. Yet, many corporate cultures, boards, executives, and advisors have not adapted to the immediate nature of its impact.
Evidently, corporate leaders have not learned about the speed and magnitude of social media from the Silicon Valley Bank disaster, the modern-day bank run that was accelerated by instant digital commentary. In a single day, customers withdrew $42 billion.
While these disasters are not equivalent, in the middle of a crisis, Anheuser-Busch seemed to have little understanding of the internets instant influence, probably due to executive hubris and minimal communication with customers.
CEOs and boards must fully embrace their companys public stance. They must exude authority, accountability, leadership, and confidence as they guide the companys public image with unwavering resolve.
Instead, Bud Light issued an ineffective statement four days after the blowback from the campaign began. And it took Anheuser-Busch CEO Brendan Whitworth almost two weeks to issue an indecisive apology.
Part of the fury was undoubtedly triggered by managements failure to take ownership of the campaignor alternatively, address customer concerns over the sponsorship.
If you know neither the enemy nor yourself, you will succumb in every battle Sun Tzu
Since March, no matter which CEO or board I speak with about crisis or reputation, the Bud Light disaster monopolizes the discussion.
What insights did other CEOs gain from this prolonged Bud Light uproar? Apparently, not much. Brands like Maybelline and Target have faced a similar backlash on social media.
It was utterly surprising that Target CEO Brian Cornell took a somewhat analogous approach to Bud Light during the ongoing crisis. Target stock was down 15% and lost more than $11 billion in market capitalization from May 1 to June 2, slipping to the lowest level since 2020, while the S&P was up 3% for the same period. Its almost a living case study of what not to do.
In highly polarized times, no matter the cultural or political issue, broadly, 45% support you, 45% are against you, and about 10% are undecided. The harshness and pushback depend on the gravity of the subject, how poorly or soundly the company manages the crisis, and how undecided lean.
So, why would any CEO take action to instantly alienate half of their customers, employees, investors, and other constituents?
It is not that companies should be quiet on issues, but as my dad always said, Understand all the circumstances, players, timing, and dynamicsthen pick your fights.
Nike has a history of taking a stand on social issues. In 2018, Nike took a risk. However, they understood their customer base, largely millennials and Gen Zers who want brands to be vocal on social issues.
Nikes Dream Crazy ads featured Colin Kaepernick, former NFL quarterback turned civil rights activist. While Nike managed the aftermath quite well, experiencing increased sneaker sales, the campaigns success is also attributed to the inclusion of LeBron James, Serena Williams, and Shaquem Griffin.
However, when later the company contradicted its messaging, it resulted in negative commentary. In May 2019, six-time Olympic gold medal sprinter Allyson Felix, criticized Nike for its treatment of pregnant female athletes. Nike changed its policy after Felixs comments went viral and ensured that pregnancy would not result in financial penalties for female athletes.
Good news happens over time. Bad news is instant and overwhelming
To avoid brand devastation, top executives must keep oversight of brand and social content. When faced with a thorny issue, they must listen to all sides of the argument. Campaigns must be reviewed by non-conflicted public relations professionals who can foresee possible news coverage and how the campaign will be received by customers, investors, employees, and other stakeholders. Its also paramount to be well-informed on opposition groups and the actions they could potentially take.
Nineteenth-century circus impresario P.T. Barnum, who said There is no such thing as bad publicity, was wrongor at least his theory did not stand the test of time. In todays digital media circus, there is such a thing as bad publicity.
Richard Torrenzano is the CEO of The Torrenzano Group, which helps organizations take control of how they are perceived. For nearly a decade, Richard was a member of the New York Stock Exchange Management (policy) and Executive (operations) Committees. Richard is a sought-after expert in leading commentator on financial markets, brands, crisis, media, and reputation.
The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.
