There is a significant transformation happening in the US beer market. The globally leading brewery conglomerate Anheuser-Busch InBev, with its Bud Light brand reigning supreme for years, has experienced significant declines in market share – prompting a shift towards markets outside the United States. The company, legally based in Brussels and operationally in Leuven and New York City, is still grappling with the fallout from a controversy surrounding a promotional campaign featuring transgender influencer Dylan Mulvaney.

An Instagram post by Mulvaney, featuring personalized Bud Light cans gifted to her by AB InBev, sparked outrage among conservative beer consumers in April. This led to a weeks-long boycott, causing the brand to lose its status as the best-selling beer in the United States in May. Bud Light's market share in US retail sales dropped from 10.3% in January to 7.6%.

During this time, Modelo Especial, the Mexican beer brand, surpassed the US light beer for the first time, reaching 8.6% of sales. Since then, the gap between the two brands has widened. In September, Modelo reached a market share of 9.3%, while Bud Light's share dropped to 7%. In terms of overall value, Modelo has now overtaken the former front-runner in the beer market in 2023.

Although both brands are part of Anheuser-Busch InBev's portfolio in international markets, within the United States, Constellation Brands has held the licenses since 2013 due to antitrust reasons. Constellation Brands' stock on the New York Stock Exchange remained positive, up nearly 9% from the beginning of the year to mid-September, despite profit-taking. In contrast, Anheuser-Busch InBev's stocks fell by almost 12% on Euronext Brussels.

Investors are enthusiastic about Constellation Brands' performance. 'Since acquiring Modelo's US business, Constellation Brands has consistently improved earnings and expanded its presence in the profitable beer market,' research analysts from Valens explained. In the second quarter of the fiscal year ending in August, Constellation Brands' beer sales increased by another 12%. While there was a slightly weaker performance in the wine sector, the enthusiasm in the beer market continues. CEO Bill Newlands described the potential with Modelo as 'incredibly exciting,' especially in areas of the US where the brand is less known and can grow significantly.

Constellation Brands has raised its profit outlook for the entire fiscal year 2024 from a range of $9.35 to $9.65 per share to $9.60 to $9.80 per share. CEO Newlands now predicts that Modelo will receive additional shelf space during the fall and spring retail resets. Retail chains such as Walmart base their orders and shelf allocations on recent sales performance.

Meanwhile, other US breweries have also boosted their sales amidst Modelo's success. Chicago-based Molson Coors announced in August that the combined dollar sales of its labels Coors Light and Miller Lite surpassed those of Bud Light in the second quarter of 2023 by 50%. Brewery CEO Gavin Hattersley expressed optimism that Molson Coors' beers could maintain their market share gains. The market, he noted, was undergoing a 'permanent shift.'

Molson Coors ranks among the big winners in brewery stocks this year with a gain of 14.9%. CEO Hattersley now expects significant growth in retail space and increased presence in bars for Molson Coors' beers. However, the company is also preparing for further structural shifts in the US market.

Due to health and fitness trends among young customers, Molson Coors is increasing its investments in non-alcoholic products, focusing on both energy drinks and beers. A non-alcoholic version of the Belgian wheat beer Blue Moon is set to hit the market in time for the new year, coinciding with many consumers' 'dry January' initiatives.

In the midst of these changes, Anheuser-Busch InBev is striving to regain its reputation after the spring boycott. The company tripled its marketing budget over the summer. Between early June and late July, 3,400 TV commercials for Bud Light were aired nationwide, according to the analysis firm Ispottv, a multiple of the previous year's figures. At the start of the American football season, AB InBev launched a large-scale campaign featuring videos of purported genuine fans celebrating with Bud Light before games.

In US professional sports, Anheuser-Busch and Molson Coors traditionally engage in a duel for fan attention through sponsorship agreements and marketing. Analysts view the recent Bud Light campaign as a particularly earnest attempt to restore a more down-to-earth image to the brand.

Authenticity and groundedness are also at the core of Modelo's marketing strategy. Constellation Brands targets the expanding Hispanic community in the US with their beer, focusing on advertising that appeals specifically to this demographic. If an advertisement doesn't resonate with this audience, it doesn't get shown to the English-speaking population. Additionally, the conglomerate has been increasing its marketing efforts to attract customers in the Midwest and along the East Coast for several years.

On the other hand, Anheuser-Busch InBev has been focusing on growth opportunities in developing and emerging countries in recent presentations to investors. These markets do not only offer a large and increasingly affluent customer base but also higher margins than in industrialized nations. In Mexico alone, the beer market has grown at an average rate of 5% per year between 2017 and 2022. According to the company's reports, AB Inbev's revenue growth rates are even higher. However, despite their international focus, analysts warn that the weakness in the US beer market could continue to significantly impact the Bud Light brewery.