Anheuser-Busch InBev (NYSE:BUD) spent an estimated $50 million to run ads during the Super Bowl last Sunday, and though the Bud Light/Game of Thrones mashup may have been one of the better commercials that appeared during the game (which isn't really saying much), it stirred up controversy with the ad about its competitors' use of corn syrup.
In the commercial that was kept a guarded secret until it aired, medieval knights from Bud Light attempt to return an enormous barrel of corn syrup that was mistakenly shipped to them. They first bring it to the castle of Miller Lite, who tell the knights they already got their shipment, and then to the Coors Light castle, whose knights thank their rival for returning the errant barrel. The ad ends with a tall glass of Bud Light and the declaration it is not brewed with corn syrup.
All corn syrup is not made the same
The implication, of course, is there is something wrong with the beers brewed by the Miller and Coors units of Molson Coors (NYSE:TAP) because they use corn syrup. Consumers have been bombarded over the years with messages saying high-fructose corn syrup is closely associated with obesity, and as they've grown more health conscious, their food and beverage choices have forced manufacturers to eliminate the ingredient from their recipes.
But there are problems with Bud Light's attempt at guilt by association. First, corn syrup and high-fructose corn syrup are two different things. It gets sciencey, but corn syrup is starch that gets broken down into glucose; HFCS has had some of its glucose converted into fructose, which makes food and beverages sweeter. Though both are sugars, the former doesn't have the same negative health connotations that the latter does.
Second, the corn syrup is used merely to feed the yeast during the fermentation process, much the way Bud Light's beer is brewed using rice. Whether it's grapes for wine, honey for mead, or corn syrup, rice, or malted barley for beer, the yeast consumes the sugar and converts it into alcohol. By the end of the brewing process, there is hardly any sugar left (and you're left with something really tasty to drink!).
Last, while corn syrup isn't used to make Bud Light, that's not the case with many other Anheuser-Busch beers, including Bud Ice, Busch, Busch Ice, Busch Light, King Cobra, Natural Ice, and Natural Light -- as well as all the "Ritas." And they actually use high-fructose corn syrup to make them sweeter. The mega brewer apparently has its own dirty little secret that it would prefer you ignore.
Trouble in the heartland
Anheuser-Busch unnecessarily angered a large swath of people who presumably would be a target demographic for its beers. Midwest corn growers and processors alike view the ad as an attack on their livelihood, with the the National Corn Growers Association telling the Des Moines Register, "They decided to use a very expensive Super Bowl ad to attack corn farming and corn syrup."
As with soda, though not necessarily to the same degree, beer consumption is on the decline and its the mega brewers like Anheuser-Busch and Molson Coors who've borne the brunt of the decline. Bud Light remains the most popular beer in America with an 18% share of the market by volume, it has been steadily losing share over time, and in the third quarter of 2018 it lost nearly a full percentage point to the competition. Coors Light is a distant second with a 9% share.
By insinuating that corn syrup the competition uses is bad, Anheuser-Busch may have instead hastened the erosion of support for its own leading brew. And that's the last thing AB needs to do right now.
Rich Duprey has no position in any of the stocks mentioned. The Motley Fool owns shares of Molson Coors Brewing. The Motley Fool recommends Anheuser-Busch InBev NV. The Motley Fool has a disclosure policy.