Ardagh’s North American glass packaging revenues fell 12% during the second quarter amid a high-profile beer market disruption.
“Shipments in the quarter were sharply impacted by the controversy related to a major beer brand, to which we are a significant supplier, with a consequent reduction in demand for some of our products,” Chairman Paul Coulson said during Ardagh Group’s second quarter earnings call Thursday. Glass shipments there were down 16%, partly offset by pricing.
Executives did not explicitly name the brand, but Bud Light — a leading brand of Ardagh customer AB InBev — has been involved in controversy since working with transgender influencer Dylan Mulvaney to promote Bud Light on Instagram. Conservative backlash followed and sparked a Bud Light boycott. Bud Light has also been slammed by groups like the Human Rights Campaign for how it responded to the blowback.
During the week ending July 16, sales of Bud Light declined 20.1% and volumes fell 23.6% year over year, according to data from consumer analytics firm Circana that Brewbound reported. Bud Light previously held the distinction of being America’s top-selling beer, but Constellation Brands’ Modelo Especial recently overtook the top spot. Parent company Anheuser-Busch this week announced corporate job cuts; AB InBev will report its second quarter results next week.
During the second quarter, Ardagh reported hundreds of layoffs at two glass packaging plants. It permanently eliminated 337 positions in Wilson County, North Carolina, and planned to close a Simsboro, Louisiana, plant in mid-July, potentially affecting 245 workers. The reduction in beer demand “provided us with the opportunity to earlier eliminate” certain operations and “to absorb continuing business from these plants into other parts of our network,” Coulson said. For more than a decade beer has been losing market share to emerging categories of alcoholic beverages like canned cocktails and hard seltzers.
The North Carolina and Louisiana closures represent about 10% of a targeted 15% net reduction in North American glass capacity over the medium term. Coulson said the company expects the disruption in the U.S. beer market to “remain a drag” into the second half of 2023, which could mute the benefits from the cost-saving footprint and operational changes that Ardagh is pursuing.
