Interesting brand/marketing stories over the last month or so.
The stories?
In case you missed it, last month, Bud Light, owned by AB InBev, the largest brewer in the world, launched a small advertising campaign that blew up in not a very positive way. Long story short, due to a business goal to increase market share among youth, management saw it fit to use a trans woman as the brand ambassador for the campaign. While it may seem obvious to everyone, Bud Light management didn't see the folly. The result? A Bud Light boycott by their core customers, namely, dudes. To date, a 23% YoY drop in sales and a $5 billion market cap drop. That said, despite all the noise, the US sales account for around 1% of AB InBev’s global sales, so the boycott won’t hurt a lot. Moreover, considering the CEO’s mea culpa, the dismissal of the marketing heads, and the company’s decision to increase their marketing budget in the coming months, they should be okay.
A quieter and significantly more financially impactful business decision was Adidas making a huge fuss of and terminating its partnership with Kanye West for his anti-Semitic comments in October last year. Granted, the Germans have a strong desire to distance themselves from the Holocaust and anything anti-Jew. However, I think the decision was reactionary and not well thought through. The reason being, unlike Budweiser, Yeezys formed almost 15% of Adidas’ net income. That’s huge. Specifically, they had $1.2 billion worth of Yeezys that they couldn’t sell. The divorce cost about $600 million in lost sales in Q4 of 2022, resulting in a net loss of $600 million. If the company destroyed the remaining inventory, that would mean an operating loss of around $800 million. But to the company, it was worth the cost - until it wasn’t.
A few days ago, Adidas decided to sell the remaining Yeezys and donate some of the proceeds to those harmed by West’s anti-Semitism. Yeah. Do you see the conundrum here? If Kanye is anti-Semitic and you virulently oppose anti-Semitism, why are you profiting from him? Shouldn’t you at least donate the shoes to the poor in our famous slum of Kibera? Kids in Mathare have no shoes. They’d look very cool heading off to morning assembly wearing Ksh 40,000 Boost 700s.
Is the lesson here that all fashionistas who are going to buy Yeezys now are anti-Semitic? Or are the Yeezy-wearing population complicit in his anti-Semitism? Or are all Bud Light boycotting men anti-LGBTQ? Of course not. The answer is very simple:
Brands — especially high-ticket ones — are a vehicle for self-expression, self-endorsement, and self-identity: I don’t buy Yeezys because I want to be cool. I am cool, therefore I buy Yeezys. I don’t drink Bud Light because it's masculine to drink beer. I am masculine, therefore I drink Bud Light. Brands reinforce self-perception.
It seems then that many brands are conflating in-house corporate goals with consumer desires. It’s one thing for companies to internally advocate for diversity, equality, inclusion, and other woke values, but another to thrust those values onto the consumer. The average consumer doesn’t care how many women or minorities (color or tribe) or they/them/she/hers are in management. How many times in a year do you think about your phone maker's sustainability position? Have you ever thought about it? Is it even infinitesimally important?I bet not. Most of us just want a product that has decent value for money. That’s it.
More importantly, unlike AB InBev, Adidas has proven itself to be all talk and no walk. It’s revealed itself to be a company that leans towards the expedient. If anti-semitism is a redline, be willing to pay the price when it’ss crossed. Otherwise it’s just posturing. Because at the end of the day, despite its protestations, Adidas has shown that money is what drives it. Not anti-racism. Not inclusivity. Not diversity. Profit. Or in their case, lack thereof. And, there’s nothing wrong with that.
The bottom line?
Know your customer and be true. To yourself.
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