Anheuser-Busch blundered badly by indulging ESG.
Anheuser-Busch is losing customers over Bud Light’s partnership with transgender activist Dylan Mulvaney, but the company’s problem is more fundamental. The brewer has fallen in line with other companies engaged in “stakeholder capitalism,” which prioritizes broad social issues over shareholder value.
It wasn’t always this way. I worked at Anheuser-Busch for 11 years, rising to U.S. president of sales and distribution before leaving in 2022. The firm was focused on increasing shareholder value and did so in part by offering a high-quality and, at the time, decidedly apolitical product: Bud Light.
In 2018, BlackRock’s Larry Fink encouraged CEOs to “serve a social purpose” beyond “financial performance.” This new trend pushed many companies, including Anheuser-Busch, away from delivering deliver value to shareholders and toward “stakeholder capitalism,” in which companies serve all stakeholders, including customers, suppliers, employees and communities. To implement this shift, companies like BlackRock tout ESG— environmental, social, and governance—reporting.
Anheuser-Busch fell in line with the ESG fad, despite evidence showing it harms shareholder value. In 2020 it launched a Global Diversity and Inclusion Council. In 2021 it trained about 9,800 workers in “bias breaking” and over 2,000 in “psychological safety.” It subjected all senior executive to individualized “D&I”—diversity and inclusion— dashboards, tracking the demographic composition of their teams. This corporate embrace of stakeholder capitalism is carried out by people like Alissa Heinerscheid, Bud Light’s vice president of marketing. Shortly before the Mulvaney partnership, Ms. Heinerscheid claimed Bud Light needed to be more “inclusive” and said its “fratty image” was “out of touch.”
CEO Brendan Whitworth’s response made matters worse. He issued a generic statement about Bud Light’s “proud history supporting our communities, military, first responders, sports fans, and hard-working Americans” without mentioning the specific controversy, angering both conservatives who wanted an apology and liberals who wanted a defense. When stakeholder capitalism demands you be everything to everyone, you become nothing to anyone.
What Ms. Heinerscheid and Mr. Whitworth need to understand is that Bud Light is already an inclusive brand because it brings people together. Ms. Heinerscheid offended many Bud Light drinkers, who already appreciate that the beer is “Easy to Drink, Easy to Enjoy,” whether at a football game, a barbecue or, yes, a frat house. Bud Light is a nonpartisan alcoholic beverage enjoyed by both Democrats and Republicans. It should stay in that lane, rather than alienate customers in the name of “inclusion.”
Mr. Whitworth can still right the ship. That means staying out of politics and telling employees to do the same. He wouldn’t be alone. That strategy has worked for successful companies like Netflix, which in 2021 refused to censor Dave Chappelle’s comedy special after certain employees claimed it was offensive.
Anheuser-Busch can do the same by ditching stakeholder capitalism. It can return to a strategy with proven success: focusing on the celebratory moments that bring people together and steering clear of divisive politics. Shareholders and customers can all say cheers to that.
Mr. Frericks is a co-founder of Strive Asset Management and a former Anheuser-Busch executive.