Controversial boycott is sending Bud Light stock… upwards?
You don’t need to be political to be a great investor.
(And you probably shouldn’t be.)
But you do need a good theory of power.
You need to understand who has the power, and how that power can direct the flow of capital.
The conclusions may be cynical… but if you want to make money as an investor in the real world, you need to understand how the real world works.
And right now, Bud Light is giving us a great case study in power.
You’ve probably already seen the news on this:
Bud Light recently launched an influencer campaign with transgender activist Dylan Mulvaney.
Dylan, who was born a man, is dressed in an Audrey Hepburn outfit and drinks special edition cans to celebrate 365 days of living as a woman.
As soon as the campaign went live on Instagram, social media flew into an uproar.
Bud Light has long been considered the beer of the American heartland.
Cheap, ubiquitous and a mainstay at events like NFL games and NASCAR races.
So why would they embrace a transgender activist in their marketing?
Transgender issues are controversial at best and extremely unpopular at worst with the core demographic for Bud Light. Musician Kid Rock, perhaps one of the great spokesmen for the American heartland, certainly thought so. He filmed himself shooting up a Bud Light display.
Country music superstar Travis Tritt went viral on social media after he said he would no longer have Budweiser products at his shows.
People are mad.
The exact people who you would expect to be the major purchasers of Bud Light are furious.
There are reports of boycotts all across more conservative parts of the country.
And yet… the stock is up.
In a difficult market, Anheuser Busch parent company In Bev, is having a terrific month.
Ticker: BUD on the NYSE
So why is this?
Why is “Go Woke, Go Broke” not working?
Well here is the key concept that you need to understand:
We live in a value capture economy.
This wasn’t always the case. In the boom years after World War 2, America was a value creation economy.
People got rich by innovating, creating new products, being bold and creative. It was one of the greatest periods of value creation in world history.
We should be rightfully proud of that as the American people.
But now that’s no longer the case. Now, 70 years later, we are in a much later stage of American capitalism. The baby boom is over and the US population is actually starting to shrink as fertility rates are declining.
New beer breweries and bars and restaurants are much rarer. Good locations for these types of businesses have long been snapped up. Instead of lots of new brands being formed, we see mergers and consolidation.
Bud Light parent company Anheuser-Busch hasn’t even been American for years. It’s owned by InBev, which itself is a conglomerate between a Brazilian and a Belgian firm.
So it’s not surprising that Belgian financial engineers don’t share the values of the American heartland.
And why should they?
Boycotting just Bud Light won’t mean much for the literal hundreds of other beer brands they own including,
In the previous era of value creation a beer company would never have used such a divisive and controversial spokesman.
They would have had to appeal directly to consumers in a way that was aspirational and affirmed their values. They would have had to earn customers to grow.
But in today’s value capture economy, there are just a few giant multinational alcohol companies that control the vast majority of brands.
Instead of appealing directly to the individual consumer, they need to appeal to government regulators, large distributors for grocery stores and sports stadiums and restaurant chains.
So instead of appealing to American heartlanders, they need to appeal to a far smaller number of people who control distribution.
And those people have a very different set of values.
If you understand this, you’ll have a big advantage in the stock market.
And you’ll know that big companies betting on controversial ad campaigns that offend millions of customers…
Can still make money hand over fist.