In a surprising, last-minute decision, Qatar banned the sale of alcohol at World Cup stadiums which will negatively impact Budweiser sales during the event. However, the company is going to continue its global advertising campaign during the tournament. There is also the question of whether the company can collect damages from FIFA.
Anheuser-Busch Inbev ADR
As part of its sponsorship of the World Cup, Budweiser had the rights to sell beer around the perimeter of the stadium three hours before and for an hour after every game. The 2014 World Cup in Brazil led to an increase in beer sales in the host country by 140 million liters which translated into 1% additional volume.
However, the party and frenzy around the World Cup were destined to clash with the rules of Qatar which is an Islamic country that bans the public consumption of alcohol.
The challenge for Budweiser and InBev is that the World Cup could have theoretically been an opportunity to showcase its line of non-alcoholic brands which is the fastest-growing alcohol category. Non-alcohol drinks also tend to have higher margins.
However, announcing a ban on alcohol sales two days before the events is a logistical nightmare as it means the company is unable to provide such an offering given the lead time required. Additionally, much of its current inventory could go bad or will have to be rerouted.
According to many legal observers, Budweiser has the right to sue for breach of contract and seek damages for the last-second change. Of course, it's uncertain whether Budweiser would pursue this given that it's been a sponsor of the World Cup since 1981 and may be more interested in maintaining the relationship.
According to FIFA, it did its best to convince the Qatari government but ultimately failed. It's another controversy in what has become a complicated World Cup given that Qatar is a country the size of Connecticut that imports the bulk of its laborers from abroad. Many have accused the country of human rights violations as it built stadiums to host the event, while others are critical of its attitudes towards women and gay people.