THINK ABOUT IT: How Badly Has the Bud Light Disaster Hurt ABI?
As per the Bud Light debacle debuting Ms. Dylan Mulvay as a Brand Ambassador, I noted in my last blog that sales for the brand declined more than 12% on its first anniversary. But that is only one part of the story, albeit an important part, of the marketing blunder. The other is EBITDA.
EBITDA is the acronym for earnings before interest, taxes, depreciation, and amortization. It is another measure of profitability to net income.
Now, EBITDA is not recognized under Generally Accepted Accounting Principles. Warren Buffet, the Oracle of Omaha, calls EBITDA meaningless. Why? EBITDA omits depreciation and capital costs.
I'm not an accountant, but I gather that EBITDA makes profitability look better than it is. However, it is a benchmark that addresses company performance and health.
Bud Light’s parent company, Anheuser-Busch InBev (ABI), reports that 4th-quarter revenue was down 17%, while EBITDA fell an astounding 34% in the US. They attributed this steep EBITDA decline to, among other factors, "increased sales and marketing investments and support measures for our wholesale partners."
While the beer companies are investing to increase their sales in an industry declining 2 – 3% per annum, I'd wager that the added ABI spending has been to muscle up the troubled Bud Light and shore up wholesaler support for the brand.
So, the real cost to ABI is not merely the barrels, revenue, and profit lost but also what it's continuing to cost the company to restore the damaged brand.
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Peace and best wishes for making your marketing matter more,
Richard D. Czeerniawski