HSBC has downgraded Anheuser-Busch InBev stock to hold amid a "crisis" following Bud Light's marketing campaign featuring transgender activist Dylan Mulvaney.
Carlos Laboy, managing director at HSBC's global beverage sector, told CNBC that there are "deeper problems than ABI admits" after the social media partnership with Mulvaney in April.
"Is ABI’s leadership getting the brand culture transformation right? It’s mixed," Laboy wrote in a note on Wednesday.
"At Ambev, we think the answer is ‘yes;’ in the US, we think it’s ‘no.’ The way this Bud Light crisis came about a month ago, management’s response to it and the loss of unprecedented volume and brand relevance raises many questions," Laboy wrote.
BUD LIGHT PARENT ANHEUSER-BUSCH TO HELP DISTRIBUTORS AMID MULVANEY CONTROVERSY
Laboy cited a Beer Marketer's Insights note which reported a drop in beer sales of possibly over 25% in April.
"Why did its US leadership underestimate the risk of pushback given the recent experience of other firms? Is A-B hiring the best people to grow the brands and gauge risk?" the analyst added. "If Budweiser and Bud Light are iconic American ideas that have long brought consumers together, why did these marketers fail to invite new consumers without alienating the core base of the firm’s largest brand?"
Ambev is a Brazilian brewery also owned by Anheuser-Busch InBev.
In the first three weeks of April, sales in the U.S. of Bud Light dropped to the equivalent of 1% of the company's global volume for the time period.
Sales of Bud Light in retail stores also fell by 21.4% in the week ending April 22 when compared to the same time period last year.
In comparison, Coors Light and Miller Lite saw their sales increase by nearly 21%, according to analysis of Nielsen data by Bump Williams Consulting.
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"This situation has impacted our people and especially our frontline workers: The delivery drivers; sales representatives; our wholesalers; Bud owners; and servers," AB InBev CEO Michel Doukeris said on an earnings call.
FOX Business' Eric Revell contributed to this report.
