Why Are Corporate Boards Doing the Opposite of What Consumers Want?
By Kimberly Whitler, Julia Mahoney and Mary Kate Cary for Directors & Boards
The recently released third-quarter results for AB InBev, the company formerly known as Anheuser-Busch, were stark. U.S. revenue and EBITDA declined by 13.5% and 29.3%, respectively, driven by a decline in Bud Light sales following the April 2023 Dylan Mulvaney influencer debacle. And the freefall on Bud Light isn’t stopping, with volume down 30% year-over-year for the four weeks ending Oct. 7, according to NIQ data.
On the earnings call, AB InBev CEO Michel Doukeris indicated that the firm has engaged with over 260,000 consumers since the April crisis and management now realizes that consumers “want Bud Light to focus on beer” and that they want “beer without a debate.”
In other words, by working with Dylan Mulvaney, a social media influencer who chronicled her transition from male to female through social media posts, Bud Light was perceived by consumers to have focused on an irrelevant discussion — which consumers did not want.
Bud Light is not alone. A number of companies have made comments or taken actions that have damaged their brands and businesses.
Consider Disney. Bob Iger, Disney’s current CEO, spoke to CNN in March 2022 about the Florida “Parental Rights in Education Bill,” dubbed the “Don’t Say Gay Law” by the media. Iger indicated he believed that the bill was wrong: “To me, [the bill] wasn’t about politics. It is about what is right and what is wrong … I just think you have to do what is right and not worry about the potential backlash to it.” As in the Bud Light case, Iger’s views did not represent his consumers’ views. A Morning Consult / Politico Poll showed that only 35% agreed with Iger and opposed the Florida bill. Disney’s stock has plummeted from roughly $140 a share in March 2022 to around $85 as of November 2023.
What makes this statement so interesting is that Iger is redefining a “right” decision. Instead of decisions made in the best interest of the company, his decisions are based on his own personal view of what is “right.” This conflict highlights a new agency problem, one in which executives make decisions on behalf of themselves and not their companies.
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