As the chairman of O’Leary Ventures and a star on the reality TV show “Shark Tank,” Kevin O’Leary has seen a lot of business triumphs and blunders. But what’s been happening to Bud Light lately still strikes him as unprecedented.
In a recent interview with Fox Business, O’Leary said that Bud Light's situation is unheard of in the beer industry.
“Beer brands take decades to build and usually are fighting [for] 1% to 2% share per year by spending hundreds of millions of dollars on advertising,” he explained. “This has never happened before. No beer brand has ever lost 25% market share in a matter of hours. It’s so unprecedented that there’s no playbook for this.”
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Teaching A Lesson
In April, Bud Light partnered with transgender social media influencer Dylan Mulvaney, who has 10.7 million followers on TikTok. The collaboration triggered a backlash on social media and led to a boycott by some beer drinkers.
According to consulting company Bump Williams, using data from NielsenIQ, Bud Light is no longer America’s best-selling beer. The top spot now belongs to Modelo Especial, brewed by Constellation Brands Inc. STZ.
O’Leary pointed out why Bud Light has been facing such strong headwinds.
“Beer is a commodity, the only difference is brand, so you really have to protect your brand every way you can,” he said.
“If you don’t understand who’s buying your brand and you enrage them, which seems to be what happened here, you don’t know the outcome. And now we can measure it — 25% market share.”
O’Leary also intends to share the insight with his students.
“This is so extraordinary that I’m planning to teach it this fall in the colleges that I visit and guest lecture at. I’ve never seen a brand case like this one,” he said, later adding that “Bud Light is the gift that keeps on giving.”
Shares of Anheuser-Busch InBev BUD, the multinational brewing company behind Bud Light, have also taken a hit. Since April 1, when Mulvaney first promoted the beer on social media, BUD stock has tumbled 15%, resulting in the loss of billions of dollars of market cap.
O’Leary’s Investment Strategy
As a “Shark Tank” star, O’Leary has invested plenty in startups. But he’s also an advocate for investing in dividend stocks.
“Over the last 40 years, 71% of the stock market’s return came from dividends, not capital appreciation,” he said in a Forbes interview. “So Rule 1 for me is I’ll never own stuff that doesn’t pay a dividend. Ever.”
Dividends can be a source of passive income for investors. But it’s important to remember that dividend stocks can still fluctuate.
Anheuser-Busch Inbev is a large-cap, dividend-paying company, and its shares have been volatile, to say the least.
If you don’t like that kind of volatility, you might want to look into reliable income plays outside the stock market — such as investing in rental properties with as little as $100 while staying completely hands-off.
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