Althouse: What an expensive screwup that turned out to be.

October 31, 2023

What an expensive screwup that turned out to be.

From the London Times.

50 comments:

robother said...: No screwup. Their appeal is just becoming more selective. The frat boy image shed, Anheuser is free to go after an exploding market (over a million have entered into gender affirming therapy the USA this year alone).; 10/31/23, 1:42 PM
Aggie said...: Let me just chew on this one, for a minute..... So InBev, which has been desperate to keep its non-selling product on store shelves, and has been bribing retailers and distributors to accomplish that, is now going to buy back and retire its own shares of stock, to woo back their investors? Why, because the dividend is going to skyrocket from all those shares being liquidated, and the stock value is going to soar, too??

Forget the camel-piss beer - what are these guys smoking? Where's the money coming from, dudes?

And what has happened to that marketing genius 'Ptomaine Mary' Heinerscheid, what are her movements, these days? She was placed 'on leave' back in April. Has she been promoted to 'About to Leave' or maybe even 'Already Left'?; 10/31/23, 1:52 PM
Joe Smith said...: Who the hell spells 'Furore' with an 'E'?

I get it...it's allowed, but it looks weird.; 10/31/23, 1:53 PM
AlbertAnonymous said...: Sure, buy the shares back after you destroyed the market price…; 10/31/23, 1:53 PM
Enigma said...: It gets worse. To rebuild their image AB partnered with (groveled to?) Ultimate Fighting Championship (UFC). UFC star Sean Strickland has posted some very, very, very aggressive and anti-Woke stuff on social media:

https://www.thestreet.com/travel/bud-light-has-a-new-scandal-anheuser-busch-could-have-seen-coming

https://www.msn.com/en-us/sports/mma-ufc/sean-strickland-reacts-to-bud-lightufc-deal-i-am-going-to-fix-you-bud-light/ar-AA1iYbWe

Whatever rainbow flag market share Bud picked up in 2023 may evaporate now. And their core market learned that Bud Light is like making love in a canoe.; 10/31/23, 1:53 PM
rhhardin said...: Share buyback doesn't transfer wealth. Everybody is just as wealthy or poor as they were before.; 10/31/23, 2:05 PM
Tacitus said...: Expensive? Nah. So far they are gettin' off cheap. It is unthinkable that a industry Godzilla like AB would go bankrupt. As the saying goes:

"Hold my beer".

And it ain't Bud Lite.

T; 10/31/23, 2:10 PM
Doug said...: A-B just assumed - like Althouse does so often - that the normies are just going to sit back and take it.; 10/31/23, 2:13 PM
mesquito said...: I want nothing else than to stay below the radar and be unnoticed. I like bud light bud I don’t buy it now because I don’t want to be on a social media video. They fucked themselves. But they make 10-20xmy income.; 10/31/23, 2:23 PM
Jay Vogt said...: Haven't really gotten to the point where I care about this story. However, from a finance point of view, a stock buyback is not a give back to investors. It's taking their cash to give them their cash.; 10/31/23, 2:24 PM
minnesota farm guy said...: As I recall rule #1 in marketing any product is: Know your customer. Obviously, Bud Light and its now defrocked marketing team forgot that commandment. Obviously, Typhoon Mary skipped her marketing classes at HBS or maybe she was one of those "diversity hires"!; 10/31/23, 2:26 PM
Mike (MJB Wolf) said...: That's now TWO big moves they've made over the last week, first partnering with Dana White and UFC and now this. THIS is what trying to undo a fuck-up of that magnitude looks like. The corrective actions have to include rewriting their list of attributes when seeking the next outside marketing VP, which they might have already done when they put Heinershneid on leave and put a veteran EVP in her place to run the Bud Light brand.

Do NOT hire SJW to steer brands they don't understand. The remarks she made, which got wide distribution after the Dylan blow-up, about wanting to shed Bud Light's working class dude image were huge red flags. Maybe the board wasn't paying attention to the type of media she was doing before, but I bet they are now. A brand seems bullet proof when it is on top of the heap, but the brand image is a delicate thing that once sullied is very hard to rebuild.

But I repeat, THIS is how you do it. By going back to the investors and bottlers and employees you fucked over and making amends. For the sake of their thousands of employees I hope it works. They do appear to have hit bottom still clinging to the top ten domestic brands, so they should in theory be able tyo build back better, to coin a phrase.; 10/31/23, 2:32 PM
SDaly said...: I guess it turned out to be more than a "tempest in a teapot, brouhaha in a beer can."; 10/31/23, 2:39 PM
Nancy said...: What kind of a tag is "things"?!; 10/31/23, 2:44 PM
Rabel said...: I don't see in their third quarter financial statement or the accompanying press release any mention of a connection of the buyback to the DM controversy. The implication that this is a payback to investors for that transbroglio is most likely a media fiction. Their stock has held up relatively well.; 10/31/23, 2:46 PM
cassandra lite said...: Seems like a tacit admission that there's no possible way to ever again earn back that market share.; 10/31/23, 2:47 PM
JustSomeOldDude said...: robother - there are a hell of a lot more frat boys than there will ever be trans people drinking crappy beer.

Althouse - buying back shares of your own stock does not indicate an expensive screw up. It just means that AB feels that it's stock is undervalued enough that buying back some shares makes economic sense. Many very successful companies (Apple, for instance) buy back shares on a regular basis. It really indicates that the company has no better use for its' cash right now, and that putting cash back out on the market for reallocation is the best thing for it right now. This is usually done through a dividend, but there are restrictions that buybacks can avoid, and buybacks will also boost the stock price since there will be fewer shares to share in the value of the company.; 10/31/23, 3:07 PM
Michael K said...: Too much influence by the "Influencer." Hilarious.; 10/31/23, 3:12 PM
SDaly said...: Share buybacks mean that the company has no idea of how to use that money to further its actual business and increase profitability.; 10/31/23, 3:17 PM
Rocco said...: Joe Smith said...
"Who the hell spells 'Furore' with an 'E'?"

1) It's a town in the Campagnia region of Italy.
2) A young nephew had a writing assignment and asked me what type of car Magnum drove. He wrote down "Furare".; 10/31/23, 3:32 PM
Jim at said...: If it was a screw-up, they would admit it as such and apologize. They haven't.

In their minds, the only 'screw-up' was the rest of us rubes not going along with it.; 10/31/23, 3:33 PM
Robert Marshall said...: Most of the 'impact' of this go-woke-go-broke lesson will be behind the scenes, as a lot of previously clueless high management types get a look at the whopping-big price tag for rubbing your customers' noses in a lot of woke crap. They won't talk about it, but they'll note the price and tuck that little bit of intelligence away for future use.

"Don't crap on your customers for being normies." Who would have guessed at that?

Well, now they know.; 10/31/23, 3:37 PM
Dave Begley said...: This will only work out as a net positive IF the stock is now undervalued. That assumes that Bud Light can make a comeback.

I watched the 1976 version of "A Star is Born." Schlitz beer cans in the movie. At that time, Schlitz was the number one beer in America. Gone today.; 10/31/23, 3:40 PM
Original Mike said...: "Sure, buy the shares back after you destroyed the market price…"

Hmmm…; 10/31/23, 3:57 PM
rehajm said...: Back when there were consequences for bad decisions by management of publicly traded companies, share buybacks made sense when management believed the market was undervaluing their shares below returns on alternative options of capital allocation. Now companies do it to prop up their share price after big fuck ups.; 10/31/23, 4:02 PM
TreeJoe said...: InBev is making a strong profit and their stock is down - as Warren Buffett has pointed out, there are good reasons to do share buybacks. This might be a good time for them (I'm not close enough to know).; 10/31/23, 4:14 PM
n.n said...: Progressives do trans/social with pride. Women, second, baby.; 10/31/23, 4:55 PM
Ann Althouse said...: "Who the hell spells 'Furore' with an 'E'?"

This is a London newspaper, and, if I may go by the OED, they maintain a distinction between the words "furore" and "furor" -- 2 separate entries.

The OED gives different etymologies. "Furor" is "Partly a borrowing from French. Partly a borrowing from Latin. Etymons: French fureur, Latin furōr-em" and "furore" is "A borrowing from Italian. Italian form of furor n."

And the British pronounce "furore" with 3 syllables.

"Furore" — according to the OED — means "Enthusiastic popular admiration; a ‘rage’, ‘craze’." or "Uproar, disturbance, fury."

"Furor" means "fury, rage, madness, anger, mania" or "The inspired frenzy of poets and prophets; in weaker sense, a ‘glow’, excited mood." And then there's a third definiition that says: "Great enthusiasm or excitement, a ‘rage’ or craze which takes every one by storm. Now chiefly North American. (Cf. furore n.)"; 10/31/23, 5:01 PM
Paul said...: I'm now a Heineken man.. 30+ years a Michelob man... F*ck AB.

They can reap what they sow.; 10/31/23, 5:02 PM
Ann Althouse said...: So, basically, if you feel as though you're saying it in Italian and you are British, put the "e" on the end.; 10/31/23, 5:08 PM
Ann Althouse said...: They see it as in their interest to support the price of the stock and they are moving $1 billion into that. The collapse of the stock, because of what I'm calling a screwup, is a costly problem. Yes, they're getting their own stock cheap, the market price, so initially they have $1 billion worth of stock.; 10/31/23, 5:22 PM
Rich said...: Maybe ABI can buy back the stake held by Altria, similar to L'Oréal / Nestlé.

A couple of issues at play here:

1. The lazy conflating of gay rights and transgender rights. These really are separate things and the media should not follow the activists down this road.

2. Marketing depts are staffed (particularly those in NY and London) by liberal college grads who are increasing out of step with the customer bases they serve. I have sat in meetings with these guys, they exist in a bubble. As an aside - their focus groups were telling them this but they chose to disregard the findings. Big mistake...

3. A backlash against corporates taking political stances on contested issues. Would not have happened 'back in the day’.; 10/31/23, 6:12 PM
Yancey Ward said...: The marketing team forgot their target demographic wasn't cross-dressing incels like Howard who don't have the money to buy the product without borrowing from their mom.; 10/31/23, 6:23 PM
Josephbleau said...: "Share buyback doesn't transfer wealth. Everybody is just as wealthy or poor as they were before."

Except for executives who have a bonus based on Stock price improvement, they get richer.

Interesting though, if you destroy the price of voting shares, you can buy a lot of control cheaply. Perhaps a way for the management team to buy out the company and take it private.; 10/31/23, 7:09 PM
The Vault Dweller said...: Blogger Jay Vogt said...
Haven't really gotten to the point where I care about this story. However, from a finance point of view, a stock buyback is not a give back to investors. It's taking their cash to give them their cash.

I'm not a finance person, but aren't there two choices for the way a company can give value to it's investors? Either a dividend disbursement or a stock-buyback? And the benefit of a buyback versus a dividend is that the buyback gives those shareholders who want to reduce or eliminate their position in the company a better opportunity to do so?; 10/31/23, 7:14 PM
Jim Gust said...: Destroying the value of company stock so insiders can buy it on the cheap to take over the company was the premise of The Hudsucker Proxy, one of my favorite Coen Brothers films. Very clever rapid fire dialogue, you have to listen very carefully because the jokes go by so fast.

I never drank Bud Light, never intended to, but now I do go out of my way to avoid InBev products.; 10/31/23, 8:07 PM
Jay Vogt said...: Dear Vault Dweller, as with everything there are twists and turns . . . . . . however, basically, at the end of a buyback, an individual
shareholder will now own a greater position of a company, which now has fewer assets (cash) and less book value.

But, it's a good question and not a supper clean answer. But a good CFO on his/her sober day would tell you that.; 10/31/23, 8:11 PM
Narayanan said...: the 'investors' who /surrender shares for the buy[kick]back/ are like the DC swamp critters getting lobbyist funding after helping appropriate for pet projects.; 10/31/23, 8:19 PM
Saint Croix said...: Budweiser is such a horrible beer.

Bud Light is worse, of course.

It was so embarrassing to me when I was in Australia

drinking that great Aussie beer Victoria Bitter (VB)

and the only American beers they had was Bud, Bud Light, Coors, and some other piss I can't remember.

PBR is the great American beer and our spokesman is psychotic!; 10/31/23, 8:21 PM
Narayanan said...: Many very successful companies (Apple, for instance) buy back shares on a regular basis
========
don't they do that for options vesting and to avoid dilution of persharevalue?
which is not the case here.; 10/31/23, 8:25 PM
Lem the artificially intelligent said...: Video of Biden in 2020: "Trump is going to get us in a war with Iran"; 10/31/23, 8:37 PM
Cameron said...: Share buy back can also be a way to consolidate your investor base. Normally they are an opt in type thing, whereas dividends go to all shareholders. So a share buy back can remove small investors from your shareholders.; 10/31/23, 9:16 PM
Josephbleau said...: “Budweiser is such a horrible beer.“

Not really, if you are on a two day canoe on midwestern water you can drink original bud all day singing there is a tavern in the town. As if strayans have any standards about being drunk all day. And if you want to apply Wisconsin standards of drinking, go ahead, it won’t be pretty, mister lininkoogel.; 10/31/23, 10:40 PM
TickTock said...: This comment has been removed by the author.; 10/31/23, 11:24 PM
Bunkypotatohead said...: They're buying back shares to make the board of directors wealthier while leaving the corporation holding the bag for the bond issuance that is paying for it.
The "Dylan controversy" is just the cover for doing this.; 10/31/23, 11:29 PM
TickTock said...: This comment has been removed by the author.; 10/31/23, 11:36 PM
Ann Althouse said...: @Bunkypotatohead

Well put. Thanks.; 11/1/23, 7:00 AM
Rocco said...: Nancy said...
What kind of a tag is "things”?

Well, Dylan Mulvaney is a “Miss Thing” - A conceited gay man.; 11/1/23, 7:17 AM
MacMacConnell said...: Best line I read somewhere, " What's more Halloween than Bud Light trying to claw its way out of a grave".; 11/1/23, 9:30 AM
JAORE said...: I still have not heard of the final solution to this multi-billion dollar screw up.

How is this woman, her team and anyone else in the decision chain still employed?

The only concept I can come up with is, like the original error, most of the AB hierarchy agrees the (now) non-buyers are not the customers we want.

Worked out great for everyone.; 11/1/23, 2:31 PM