We knew Molson Coors (NYSE: TAP) was upset over the corn syrup ad that Anheuser-Busch InBev (NYSE: BUD) ran during the Super Bowl, but now the matter's landed in court and that doesn't make sense. The ad didn't say anything untrue.
Anheuser-Busch may have been trying to insinuate that Coors Light and Miller Lite were using high-fructose corn syrup (HFCS), knowing public ill will toward that sweetener would turn off consumers. But Molson's MillerCoors unit taking its rival brewer to court for saying it uses corn syrup -- when the company actually does use it -- seems a bit of a stretch.
Image source: Getty Images.
The seeds of the "corntroversy"
The now infamous Bud Light ad shows the Bud Light king attempting to return a giant barrel of corn syrup mistakenly delivered to his castle to the castles of Miller Lite and Coors Light. At the end of the ad, Bud Light proclaims it does not use corn syrup to make its beverage, which is made using only rice, water, and yeast.
After a brouhaha erupted, with not only MillerCoors angered but also corn farmers, Anheuser-Busch responded by having the king declare there was nothing wrong with using corn syrup in beer, though he also suggested only cheap beer used the ingredient and it wasn't his "job to save money."
Anheuser-Busch went on to partner with Farm Rescue, a nonprofit organization that helps farmers in the country's Corn Belt who are experiencing financial distress; it ended up donating $500,000 to the group.
While MillerCoors originally made light of the situation, initially dubbing it a "corntroversy," executives apparently thought a stronger response was necessary and are now suing Anheuser-Busch, alleging the commercial represented "false and misleading advertising" meant to "deceive beer consumers into believing that there is corn syrup and high-fructose corn syrup in Miller Lite and Coors Light to increase sales of Bud Light."
Muddying the waters
In the suit, MillerCoors quotes a Bud Light executive who reportedly said the brewer "did focus-group the heck out this ad" and found consumers didn't differentiate between corn syrup and high-fructose corn syrup, and didn't want corn syrup in their beer if it wasn't needed.
The ad leaves the impression there is corn syrup in the beer, but since it's an additive used only to feed the yeast during the fermentation process, no residual corn syrup is present in the finished product. MillerCoors claims that the ad fails to provide "context" for consumers and that by spending upward of $40 million to promote the campaign since the Super Bowl, A-B knew the confusion it would cause in consumers' minds.
The brewer also said the ad was disingenuous because other Anheuser-Busch beers use corn syrup in their brewing processes, including some of A-B's premium brands like Stella Artois. Moreover, some A-B brands also use HFCS.
MillerCoors is looking to have Anheuser-Busch stop running the ad, and be forced to run a new one to educate consumers.
Fumbling the opportunity
I'm no lawyer, but while Bud Light may have hoped viewers would assume "corn syrup" meant HFCS, the ad never actually said that and only stated what was true: Coors Light and Miller Lite use corn syrup; Bud Light uses rice, water, and yeast. It seems a dubious argument to hold Bud Light legally accountable for the ignorance of consumers.
Rather than running to the courts, maybe MillerCoors should just graciously accept the PR win. There was a lot of backlash against the Bud Light ad, and Anheuser-Busch was cajoled into aligning with a charity to make amends. The half-million dollars it donated may be small compared to how much it spent on promoting the campaign, but it may have lost more anyway.
MillerCoors points to Nielsen data indicating Bud Light sales have suffered as a result of the ad. Where sales had been down 6.7% year-over-year in the 12 weeks leading up to the Super Bowl, they've tumbled 9.2% year-over-year in the four weeks since the game.
By suing its rival, maybe MillerCoors is simply driving the point home, extending the "corntroversy" to its benefit by reminding consumers of the campaign. But spiking the football on what was a fumble by Anheuser-Busch is a bit of unsportsmanlike conduct.
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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.