Coors and Miller Lite Gain at Bud Light’s Expense. It Might Last.

AB InBev stock (BUD) tumbled some 15% last month alone, and it’s off nearly 10% since the start of the year. The stock has been hurt by significant volume declines in Bud Light, as conservative commentators and customers balked at its decision to include transgender social-media personality Dylan Mulvaney in an online ad campaign in April. Investors are worried about the situation’s potential to hurt profits, as the backlash has spread to other AB InBEV brands and may be related to recent price cuts.

One of the main beneficiaries has been Molson Coors, as consumers angry with Bud Light have instead turned to brands such as Coors Light and Miller Lite, which it owns. However Molson Coors distributors have been reluctant to celebrate, for fear that the bump will disappear as the situation normalizes.

Nonetheless, TD Cowen analyst Vivien Azer argues that Molson Coors will enjoy “durable market-share momentum.” Volume data from the last five weeks shows that the “violent” responses to Bud Light’s Mulvaney ad correspond to sales, she notes as both Miller Lite and Coors Light have gained over 200 basis points (2%) of market share from Bud Light over that period.

Although some brands are under fire for their LGBTQ+ friendly policies this year, that’s the default position for many companies now: Even Molson Coors highlights its support on its website.

However, Azer notes that her proprietary survey data show that this may be a bigger problem for Bud Light than most other brands, given that it skews toward demographics that tend to be conservative.

“Relative to Miller Lite and Coors Light, the Bud Light brand seems to skew to white consumers, men, younger consumers and lower-income consumers. The income bias toward Bud Light, we believe, is a key factor in driving the durable market-share gains to Molson Coors.”

She kept her Outperform rating and $75 price target on Molson Coors stock, but raised her full-year earnings per share estimates for this year and next, writing that she expects the company “to continue to consolidate share of beer in the U.S., in particular premium light beer.” She estimates that those gains will moderate to 200 basis points for the rest of the year, versus 270 basis points in the most current week, but even that smaller shift “still translates to a positive revenue revision” leading her to increase her local currency sales growth outlook to 6%, up from 4%.

However other analysts don’t think the Bud bump will be enough to help Molson Coors: Just six of the 21 analysts tracked by FactSet are bullish on Molson Coors, with an average price target roughly on par with where the stock stands today. Nearly a fifth are bearish.

By contrast, nearly 60% of analysts covering AB InBev think that the shares are a buy, including Citigroup, which argued as much earlier this week. Barron’s has also noted that the selloff looks overdone.

Write to Teresa Rivas at [email protected]