Bud Light's troubles may extend into fall Oktoberfest season

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One of Bud Light's (BUD) biggest beer rivals is teasing more troubles ahead for the fizz-less brand.

Constellation Brands (STZ) CEO Bill Newlands — who oversees a beer empire led by Corona and Modelo — thinks major retailers and distributors will put less Bud Light on their shelves for the important fall drinking season after months of sagging sales.

"I think one of the things that you're likely to see if some of that challenge [with Bud Light] continues is when we look at shelf resets in the back half of the year," Newlands told analysts on an earnings call just a few days ago. "Many retailers look at velocities as they are doing their shelf resetting, which, again, often happens in the fall. And that always works to our advantage. I think the retailing environment has gotten very, very sophisticated about seeing where the growth profiles are and the velocities against those."

Newlands added that Modelo has gained market share in part because of Bud Light's stumbles.

BMO Capital Markets analyst Andrew Strelzik told clients in a note following Constellation's earnings that Bud Light could see "disruptions" from fall shelf resets.

Any cautious inventory stocking of Bud Light this fall by retailers and distributors would make sense.

Anheuser-Busch InBev's Bud Light sales plunged 27.9% for the week ending June 24 per new Nielsen data. That's a faster pace than the week-on-week drop of 28.5% for the period ending June 17.

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Volumes, meanwhile, cratered 31.3% from the prior week compared to a 31.1% decline the week before.

The declines started after transgender influencer Dylan Mulvaney created an Instagram post during the March Madness basketball tournament endorsing the light beer.

Following the post on April 1, ABInBev saw Bud Light sales trend lower through April — now likely extending into July. The declines appeared to accelerate following an April 3 video from country musician Kid Rock, which spurred a wider boycott by many on the right.

Alissa Heinerscheid — Bud Light's vice president of marketing — left the company in late April amid the controversy.

Cans of Bud Light beer are seen before a baseball game between the Philadelphia Phillies and the Seattle Mariners, Tuesday, April 25, 2023, in Philadelphia. (AP Photo/Matt Slocum)
Cans of Bud Light beer are seen before a baseball game between the Philadelphia Phillies and the Seattle Mariners, Tuesday, April 25, 2023, in Philadelphia. (AP Photo/Matt Slocum)

The situation is still weighing on the rest of ABInBev's expansive beer portfolio too, calling into question fall shelf space allocations.

Nielsen's data for the week ending June 24 showed an 8% decline in the volume of Michelob Ultra, a 16.6% decrease in Budweiser, and an 8.9% fall in Natural Light.

The volume declines for Bud Light spurred the company to take aggressive actions for the key July 4 week-long selling period.

Budweiser is offering Americans in most states a rebate of up to $15 on a 15-pack or larger through July 8. For some locations with excess inventories of Bud Light, that may mean a free 15-pack.

Brian Sozzi is Yahoo Finance's Executive Editor. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn. Tips on deals, mergers, activist situations or anything else? Email brian.sozzi@yahoofinance.com

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