The Law of Morality

Here’s something frothy.

Bud Light’s U.S. in-store sales were down 26.2% year-on-year the week ending 22nd April 2023.

The week prior to that, 21.1%. The week prior to that, 11%.

This downward trend has been bubbling up fast.

Around $5 billion has been wiped off parent company Anheuser-Busch InBev’s market cap as a result.

To put that into perspective, this is equivalent to 4.3 billion 16oz bottles of Bud Light — 13 ‘tallboys’ per U.S. citizen. Enough for everyone to get pretty wasted.

For the no.1 selling beer brand in the U.S. such a rapid sales drop-off is both brutally sobering and unprecedented.

And, it’s not some craft beer-fueled ‘flight from light’ phenomenon.

Direct competitors like Coors Light’s and Miller Lite’s sales are both unusually up double-digit percentages.

So, what triggered this brand hop hangover?

Bud Light tried to break what I call ‘The Law of Morality’.

Here’s what that is. 👇

🧭 The Law of Morality

The law: The more a brand takes a moral position, the stronger and weaker it becomes. It can never own both sides.

What? Today, we live in a world where brands are inclined to take moral positions on pertinent issues like climate change, human rights, societal equality, and more.

The logic: customers increasingly want to feel like the products they buy represent their values. They want to know where their brand stands on X or Y issue.

My view? There is some truth to this, but it’s highly context dependent. The category, the brand, the moral issue. How these all interplay with one another.

Let’s take a look at something specific…

A YouGov poll revealed two-thirds of the public wanted brands to take a stance on the Ukraine war. The degree to which this will effect customer behaviour in any given situation is debatable, but there’s an underlying truth influencing it.

Example: the Law of Morality stipulates supporting Ukraine will generally strengthen a brand with pro-Western consumers, but will weaken it with pro-Russian consumers.

And, it works like a scale. So… the more a brand exerts a supportive position on a moral issue, the more appealing it becomes to the stronger supporters of that position and the less appealing it becomes to the stronger opposers of it. Or, vice versa.

As the exertion of the position increases, so does brand strength. But, the volume of people it has that greater strength with decreases. There’s less people that share that same view, so intensely.

Most of the population sits somewhere in the middle of the scale. At both ends, only a handful of the most fanatical. It’s a law of diminishing returns the further a brand pushes from the centre.

Meaning: at a certain point along the scale, the customer is lost or won on either side. This is dependent upon the intensity of their conviction for supporting or opposing a moral position.

For example: if Nike decided to go all out on supporting the Ukraine war by supplying military shoes to Ukrainian forces, it may convert customers from other brands that are heavily pro-Ukraine. But, this move my alienate existing Nike customers who are anti-war. It’s a trade off a brand makes — which group are greater in number and more valuable? Hypothetically, this moral position could sit somewhere between the centre of the scale and the end.

What might the end of the scale look like? Nike supplying guns to Ukrainian forces. To customers who are passionately pro-Ukraine (it’s an essential part of their identity), this would resonate even more than supplying military shoes. Prospects who would otherwise not convert from competing brands to Nike would be inclined to do so. But, there are much less of them. To customers at the centre of the scale (the masses), this move would be alienating and they may switch to other brands. This moral position doesn’t make economic sense, since Nike would be upsetting the majority to please the extreme minority.

Here’s a visualisation of the scale. 👇

Exerting a moral position can be any action that publicly demonstrates a brand has taken one.

From as little as making a public announcement on a website (closer to the centre of the scale) to actively funding and orchestrating publicity-generating political campaigns (closer to the end of the scale). It’s not just the actions themselves that matter, but more importantly the meaning behind them. Is it taking a soft moral position or an extreme one? For example: is it saying “we support Democracy” or is it saying “we must annihilate the Russian forces”?

Distribution is not always equal on either side — it varies per moral issue. Taking a moral position with Ukraine is a no-brainer for Western brands, since the population overwhelmingly sits on one side (standing with Ukraine). It’s a conformist moral position.

But, for other issues that are much more polarising and emotionally charged in society (e.g. key Democrat vs. Republican issues) the split is closer to 50/50. Taking a strong position here is much more strategic. You push away half the population to appeal to the over half more (this is an oversimplification… to convey the point).

Defence vs. Growth Strategies

Brands rarely stray far from the centre of the scale. It’s the safe spot. Exerting a moral position in this territory is usually a defence strategy (e.g. signalling support for Ukraine or mitigating climate change). Insurance.

It’s not intended to be a core part of the brand’s image — i.e. its position in the mind of the consumer that instils buying behaviour. This manoeuvring simply reduces the likelihood of a public backlash by extinguishing the perception the brand is actively or passively supporting something bad before those thoughts manifest.

Generally speaking, hovering around the centre is pretty safe. Customers are apathetic and barely notice in either direction. Other words: for people to notice and care, you pretty much have to shock them.

A smaller number of brands stray farther from the centre and utilise the exertion of a moral position as a growth strategy. By being divisive and provocative they generate publicity. Especially with issues that are emotionally charged.

This turns off prospective customers on one end of the spectrum but activates them on the other. Theoretically, raising a brand’s resonance in the mind vs. its competitors.

This is where startups and challenger brands can have a big advantage over global conglomerates that are too timid to ‘take a side’. Particularly if the product sold is intuitively connected to the moral position (e.g. Tesla and Beyond Meat).

Warning: No Double-Dipping!

Brands cannot take both sides of a moral position (whether implicitly or explicitly). That alienates both sides.

Sound obvious? Bud Light got caught in this trap.

Here’s what happened. 👇

🍺 Bud Light

Bud Light drinkers skew conservative and blue-collar.

Over the decades it brewed these customer values into the perception of its previously stars and stripes coloured (today blue-canned) brand, becoming a beverage badge of identity for many Republican-leaning imbibers.

Not so much explicitly in terms of outwardly supporting conservative opinion, but implicitly through the sponsorship choices it made (e.g. country artists and the UFC) and its mass advertising messaging — “fratty” humour, anti-elitist nods, and general vibe.

More significantly, as a line extension, most of Bud Light’s customer value perception was inherited from the strong ‘All American’ positioning of Budweiser, its parent (albeit a diluted version).

In other words, Bud Light has a perceived moral position. A broad conservative values-leaning one.

This has implications.

If Bud Light is perceived to exert a moral position that infringes upon any of those conservative values, it risks alienating a big gulp of its customer base.

That’s exactly what happened.

On April 1st Bud Light sponsored an Instagram post by transgender influencer Dylan Mulvaney. 👇

This cracked open a PR-beer brawl from conservative commentators and social media figures, highlighting the sponsorship doesn’t align with their values (to put it mildly).

The situation was antagonised by a botched response from Bud Light’s parent company, who said too little too late, comforting no one.

Calls for a boycott amongst conservative drinkers followed.

They responded — Week 1 sales down 11%. Week 2 down 21.1%. Week 3 down 26.2%. No doubt draughted by the sense of identity bestowed in their brew.

Meanwhile, Bud Light’s attempt to reach out and expand its customer base into the transgender community has been characterised as “inauthentic and not in-line with Bud Light’s purpose or values”. Particularly for “a beer company steeped in American history.”

You can’t double-dip.

Here’s another example…

🏰 Disney

In early 2022 Disney received pushback for remaining silent on a potent equality issue. This was a proposed bill (HB 1557) that sought to prohibit the discussion of sexual orientation or gender identity in Floridian schools (Magic Kingdom’s home state).

Then CEO Bob Chapek was accused of fumbling the matter through indecisiveness. Walt Disney World was trying to ‘play Switzerland’ in a region customers wanted it to take a side.

After mounting pressure, Disney, under Bob’s command, took a strong moral strong position against the bill by issuing a statement calling for it to be struck down in the courts.

The objective of this action was clearly to increase the strength of the Disney brand with opposers of the bill — i.e. generally left-leaning voters, but more acutely the LGBTQIA+ community.

The Law of Morality stipulates that by doing this Disney would have also weakened their brand with supporters of the bill — i.e. right-leaning voters, but more acutely the far-right (e.g. Ultra Right Beer Dad — who seemingly won’t be taking his kids to Disneyland anymore).

By the end of the year Bob Chapek was out and former CEO Bob Iger was back in.

So… many… Bobs.

📘 Playbook

• Defensive Strategy. Exert a soft moral position to avoid customer backlash on issues brands ‘must take a public stance on’.

• Growth Strategy. Exert a strong moral position to grow through provocative publicity-triggering campaigns and activations.

• Don’t Double Dip. Never take both sides of a moral position.

In the future I will dive into a case study or two for the Growth Strategy approach!

That’s it for today. I’ll be back in your inbox soon.

Martin 👋

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