Molson Coors Beverage Q4 2024 Earnings Report

Molson Coors Beverage EPS Results

• Actual EPS: $1.30
• Consensus EPS: $1.17
• Beat/Miss: Beat by +$0.13
• One Year Ago EPS: N/A

Molson Coors Beverage Revenue Results

• Actual Revenue: $2.74 billion
• Expected Revenue: $2.71 billion
• Beat/Miss: Beat by +$29.95 million
• YoY Revenue Growth: N/A

Molson Coors Beverage Announcement Details

• Quarter: Q4 2024
• Date: 2/13/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, February 13, 2025
• Conference Call Time: 8:30AM ET

Molson Coors Beverage (NYSE:TAP) Company manufactures, markets, and sells beer and other malt beverage products under various brands in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. The company offers flavored malt beverages including hard seltzers, craft, spirits and energy, and ready to drink beverages. It provides its products under Aspall Cider, Blue Moon, Coors Original, Five Trail, Hop Valley brands, Leinenkugel's, Madri, Miller Genuine Draft, Molson Ultra, Sharp's, Staropramen, and Vizzy Hard Seltzer above premier brands; Bergenbier, Borsodi, Carling, Coors Banquet, Coors Light, Jelen, Kamenitza, Miller Lite, Molson Canadian, and Niksicko, Ozujsko under the premium brands; and Branik, Icehouse, Keystone, Miller High Life, Milwaukee's Best, and Steel Reserve under the economy brands. The company was formerly known as Molson Coors Brewing Company and changed its name to Molson Coors Beverage Company in January 2020. Molson Coors Beverage Company was founded in 1774 and is based in Golden, Colorado.

Molson Coors Beverage Q4 2024 Earnings Call Transcript

Presentation

[Operator]

Good morning, and welcome to the Molson Coors Beverage Company Fourth Quarter twenty twenty four Fiscal Year Earnings Conference Call. With that, I'll hand it over to Greg Tierney, Vice President, FP and A and Commercial Finance.

[Greg Tierney, Vice President of FP&A, Commercial Finance & Investor Relations at Molson Coors Beverage Company]

Thank you, operator, and hello, everyone. Following prepared remarks today, we look forward to taking your questions. In an effort to address as many questions as possible, we ask that you limit yourself to one question. If you have technical questions on the quarter, please reach out to our IR team. Also, I encourage you to review our earnings release and earnings slides, which are posted to the IR section of our website and provide detailed financial and operational metrics.

[Greg Tierney, Vice President of FP&A, Commercial Finance & Investor Relations at Molson Coors Beverage Company]

Today's discussion includes forward looking statements. Actual results or trends could differ materially from our forecasts. For more information, please refer to the risk factors discussed in our most recent filings with the SEC. We assume no obligation to update forward looking statements except as required by applicable law. The definitions of or reconciliations for any non U.

[Greg Tierney, Vice President of FP&A, Commercial Finance & Investor Relations at Molson Coors Beverage Company]

S. GAAP measures are included in our earnings release. Unless otherwise indicated, all financial results we discuss are versus the comparable prior year period and are in U. S. Dollars.

[Greg Tierney, Vice President of FP&A, Commercial Finance & Investor Relations at Molson Coors Beverage Company]

With the exception of earnings per share, all financial metrics are in constant currency when referencing percentage changes from the prior year period. Also, share data references are sourced from Circana in The U. S. And from Beer Canada in Canada, unless otherwise indicated. Further, in our remarks today, we will reference underlying pretax income, which equates to underlying income before income taxes and underlying earnings per share, which equates to underlying diluted earnings per share as defined in our earnings release.

[Greg Tierney, Vice President of FP&A, Commercial Finance & Investor Relations at Molson Coors Beverage Company]

With that, over to you, Gavin.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

Thank you, Greg. Hello, everybody, and thank you for joining the call. 2024 was another year of progress for MolsonCrews, progress in advancing our strategy and in achieving bottom line growth. Amid a challenging macroeconomic environment, we continue to support the health of our brands globally. We retained a substantial portion of our sizable share gains from 2023 and earned unprecedented levels of shelf space for our core power brands in The U.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

S. We achieved incredible growth in Canada, broadly across all price segments of our portfolio. We continue to premiumize off a high base in our EMEA and APAC business. We terminated low margin contract brewing agreement and exited smaller unprofitable businesses, while investing in areas that we expect will drive long term sustainable profitable growth. 2024 was also another year of continued strong cash generation that contributed to earnings power.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

We delivered more than $1,200,000,000 in underlying free cash flow, which combined with our healthy balance sheet enabled us to not only invest in our business, but also to return $1,000,000,000 in cash to shareholders through a growing dividend and share repurchases. We enter this year confident, issuing 2025 guidance that both reflects the favorable fundamentals of our business and that aligns with our long term growth algorithm. Now with that high level summary, let's get into some of the details. In the fourth quarter, consolidated net sales revenue was down 1.9%, underlying pretax income was down 0.9% and underlying earnings per share was up 9.2%. In our Americas business, Canada continued to perform strongly, while as expected The U.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

S. Faced a temporary headwind related to the exit of PAP's contract which was a headwind of about 450,000 hectoliters. U. S. Brand volume was down three percent in the quarter, which improved as compared to the third quarter as did the industry with a moderating of the more pronounced value seeking behavior seen during the summer.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

These drivers contributed to a 6.7% decline in U. S. Financial volume. Related to the deliberate inventory build in the first half of the year, U. S.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

Shipments trailed brand volumes by approximately 150,000 hectoliters in the quarter, resulting in largely shipping to consumption for the full year as intended. In the Marriott Bank, our volumes were impacted by the continued heightened competitive landscape in The UK as well as a softer industry in Central And Eastern Europe. However, this was largely offset by strong net sales revenue per hectoliter growth of 7.8% driven by favorable sales mix, including continued premiumization and pricing. This along with favorable net pricing growth in The Americas and mixed benefits from the exit of PAPS resulted in consolidated net sales revenue per hectoliter growth of 4.8% for the quarter. For the year, consolidated net sales revenue was down 0.6%, underlying pretax income was up 5.6% and underlying earnings per share was up 9.8%.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

Results were better than our revised top line guidance of down approximately 1% due to better than expected U. S. Industry performance in the fourth quarter. As a reminder, our 2024 top line guidance was revised lower when we reported our third quarter results in early November due to macro driven U. S.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

Industry softness in the peak season months of July and August. It's also important to point out that excluding the impact of the wind down of Pep's contract brewing volume, our implied annual top line revenue growth was positive and in alignment with our long term growth algorithm. From a volume perspective, PEPs had a negative three percentage point impact on Americas financial volume for the year. Again, while this is a current volume headwind, the reduction of this contract brewing volume is expected to have a positive impact in 2025 and beyond on our brewery network effectiveness as well as on mix and margin. And then what we expect will provide further benefits, we no longer contract brew for the BAT USA and Canada with that volume fully exiting our Canadian business as of year end twenty twenty four.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

Tracy will share more on the impact of that. Consolidated underlying pretax income was above the midpoint of our reaffirmed mid single digit growth guidance. This was achieved due to the better than expected top line as well as measured cost controls without sacrificing the right levels of brand marketing support. In addition to better net sales revenue performance, we significantly exceeded our reaffirmed mid single digit underlying earnings per share growth guidance, which we had narrowed to the high end of the range in early November. The beat was largely supported by lower than expected underlying effective tax rate due to U.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

S. Geographic sales mix as well as the better than expected top line performance in the fourth quarter. Underlying earnings per share growth was also supported by our share repurchases, which have been tracking at an accelerated pace as we continue to view our valuation as compelling given our confidence in our business and in our long term growth algorithm. In fact, for the first five quarters since the share repurchase program was announced, we had already executed approximately 40% under this up to five year program, which if you straight down that number would have us at only 25%. Our confidence stems from our progress against our strategic priorities.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

I'll start with our core power brands. Collectively, they remain healthy. In The U. S, Coors Light, Miller Lite and Coors Banquet have continued to retain a substantial portion of our share gains, demonstrating the stickiness of these step change gains. In the fourth quarter, they retained over 80% of their combined volume share gains on a two year stack, which is an improvement from both the second and third quarters.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

When compared to the fourth quarter of twenty twenty two, these brands were up 1.7 share points. Coors Bancorp continued to perform very well with brand volume up 16% and growing industry share for the fourteenth consecutive quarter on top of significant prior year gains. Bancorp was the fastest growing top 15 beer brand in The U. S. In terms of volume percentage growth in 2024.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

That is not a small brand. In fact, it's one of our top five brands globally. And we see much more opportunity ahead as we invest in building the brand's awareness, its national scale and loyal consumer base, particularly among new Gen Z and millennial legal drinking age consumers. In Canada, Coors Light remains the number one light beer in the industry and again grew share of segments in the fourth quarter. The Molson family of brands also gained volume share for both the fourth quarter and the year.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

This performance has helped us to drive twenty three consecutive months of share growth despite the challenging industry backdrop. In Ameri and APAC, a number of our core power brands are leaders in their respective markets. Carling remains a top lager in The UK with strong brand equity. Amid the highly competitive environment, we took a value over volume approach, which weighed on volume performance during the year. And while core brand performance was impacted by the soft industry in the fourth quarter in Central And Eastern Europe, our results were strong for the year.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

This was driven by Juska in Croatia, which increased volume 5% as well as the extremely successful re launch of Caliman in Romania. Caliman has already reached over 300,000 hectares since March and has been incremental to the overall portfolio in the country. Turning to our premiumization priority for both beer and beyond beer, our above premium portfolio was 27% of total net brand revenue for the year. In EMEA and APAC, where over half of our net brand revenue comes from above premium, our business continued to premiumize. Much of EMEA and APAC's premiumization success has been driven by Madrid, which grew net sales revenue double digits in the year and is the number two livery in the on premise in The UK in terms of value.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

Madrid is also exceeding expectations in Bulgaria following a very successful launch there last year. In The Americas, our above premium share of mid brand revenue was 22% for the year. This was supported by Canada, which also continued to premiumize with its above premium mid brand revenue up at double digits in 2024. This was driven by the success of Miller Lite, which is the fastest growing major beer brand in this market on a percentage basis as well as by our flavor portfolio. We are growing more share of flavor than any other major brewer in Canada and Madrid is also performing ahead of expectations in Canada following last year's launch.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

In The U. S, there is work to do, but we see this as an opportunity and we have big plans in 2025. After further fine tuning our portfolio last year, including divesting underperforming craft breweries, our resources are focused on scalable opportunities within our expanding above premium portfolio brands in both beer and beyond beer. In beer, we are moving in the right direction with the Blue Moon brand family as we are starting to see signs of stability. In fact, the Blue Moon brand family held share of industry in both the third and fourth quarters and took share of craft during both periods.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

This includes positive momentum behind some of our newer innovations like the repositioned Blue Moon lite as well as Blue Moon non ALK, which has quickly become a top 10 non ALK beer brand. And we have plans to build on these results for the Bloomin brand family in 2025. And we are betting big on Peroni. As we have discussed, we have onshore production, which offers a number of benefits. It significantly improves consistency and certainty of supply which has previously been a challenge when we try to scale the brand.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

It allows us to introduce different pack sizes which consumers are asking for and it also unlocks meaningful cost savings which we intend to deploy toward increasing distribution and awareness to drive scale and margin for this brand. Our commercial plans kick off in the second quarter. And while it will of course take time, ultimately, we see no reason why Pironi can't rival the size of other major European imports in The U. S. Over time.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

In Beyond Bear, which is a big part of our premiumization plans, non ALK is a key focus area. It provides us the opportunity to capture more occasions, particularly among younger legal age Gen Z consumers. So we are investing behind the growing areas in non ALK where we believe we have a right to win. This too will take some time, but we are making progress. We spoke in detail on our last quarter call about our increased investment in ZOWA to a majority stake and plans to accelerate the brand are well underway.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

It's early days of the integration, but in the last four weeks to end the year, Zoa grew in both dollar and unit share in total U. S. Food. Taking this increased stake allows us to lead the entirety of the brand's marketing, retail and direct to consumer sales development as we drive brand awareness and distribution, leveraging the strength of our network. And speaking of opportunities to advance our plans, we are so pleased to have entered into a strategic partnership agreement with the world's leading supplier of premium carbonated mixes.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

The partnership agreement gives us the exclusive commercialization rights to the Fever Tree brand in The U. S. This is a significant step forward in our strategic ambition to build a total beverage portfolio for a wide range consumer preferences across both traditional alcohol and non alcohol occasions. Now before I pass it to Tracy, I'll conclude by saying that we remain confident we have the right strategy to achieve our long term growth objectives. And our 2025 guidance is aligned with those objectives.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

Collectively, our global core power brands are healthy and we have great commercial plans in 2025 to continue to support them. We are changing the shape of our global portfolio with premiumization successes in May of APAC and Canada and we have targeted plans for The U. S. Our operations outside of The U. S.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

Are performing well and contributing meaningfully to our growth. Our capabilities across our organization support premiumization and focused innovation, supply chain efficiencies and commercial effectiveness, which help drive sustained long term profitable growth. And with our compelling cash generation and a healthy balance sheet, we have substantially improved our financial flexibility, allowing us to continue to invest in our business and return cash to shareholders. So we are pleased with our progress and confident in our ability to achieve our long term growth algorithm in 2025 and beyond. With that, I will pass it to Tracy.

[Tracey Joubert, CFO at Molson Coors Beverage Company]

Thank you, Gavin. We made strong progress in enhancing our profitability and financial flexibility in 2024. We delivered over $1,200,000,000 in underlying free cash flow in line with our expectations. And it was supported by underlying pre tax income margin expansion of nearly 80 basis points for the year. This expansion was driven by positive net pricing, mix impact, moderating inflation and cost savings, which more than offset volume deleverage, which had a particularly significant impact in the second half of the year related to U.

[Tracey Joubert, CFO at Molson Coors Beverage Company]

S. Shipment timing. Also contributing to the margin improvement was lower MG and A, largely due to cycling innovative levels in 2023. G and A declines were mostly related to higher incentive compensation in 2023. Marketing declines were mainly a result of higher investments in the prior year, particularly in the second half of the year when we increased spend by an incremental $100,000,000 given the accelerated demand in The U.

[Tracey Joubert, CFO at Molson Coors Beverage Company]

S. But importantly, we continue to support our brands globally with higher levels of marketing investments for both the quarter and the year as compared to the respective periods in 2022. In addition to investing in our brands and business, we continue to return cash to shareholders. In 2024, we paid $369,000,000 in cash dividends and $643,000,000 to repurchase 10,900,000.0 shares. Since the plan was announced in October 2023, we have repurchased 6.7% of our Class B shares outstanding.

[Tracey Joubert, CFO at Molson Coors Beverage Company]

It's an up to five year two billion dollars plan And as Gavin mentioned, we have utilized approximately 40% in just the first five quarters. We ended the year with a healthy balance sheet and our net debt to underlying EBITDA ratio was 2.1 times, which is in alignment with our long term target of under 2.5 times. And we have no debt coming due in 2025. This provides us significant financial flexibility, offering more optionality in the ways that we invest in the business, be it through capital investments that drive productivity improvements or through bolt on M and A that support our strategic growth objectives, like our recent investment in Fevertree. It also provides us the opportunity to return even more cash to shareholders.

[Tracey Joubert, CFO at Molson Coors Beverage Company]

And we are pleased to share that today, we announced our quarterly dividend of $0.47 per share to be paid on March. This is an increase of 6.8% and represents our fourth consecutive year of increases, clearly demonstrating our intention to sustainably increase our dividend. And now I'll conclude with our financial outlook. For 2025, we are issuing guidance that is in line with our long term growth algorithm. However, the global macro environment is rapidly evolving, resulting in uncertainty around the effects of geopolitical events and global trade policy, including the impact from consumer trends.

[Tracey Joubert, CFO at Molson Coors Beverage Company]

As a result, our outlook does not reflect the impact of these activities or any imposition of import tariffs by The U. S. And potential retaliatory actions by other countries. Also, please remember that net sales revenue and underlying pre tax income growth guidance are on a constant currency basis and underlying earnings per share are not. Therefore, continued strength in the U.

[Tracey Joubert, CFO at Molson Coors Beverage Company]

S. Dollar will result in a headwind to our reported results as well as underlying earnings per share growth and in the effective period using the current exchange rate. With that said, let's review our guidance metrics. Low single digit net sales revenue growth on a constant currency basis, mid single digit underlying pretax income growth on a constant currency basis, high single digit underlying earnings per share growth, underlying free cash flow of $1,300,000,000 plus or minus 10% underlying depreciation and amortization of $675,000,000 plus or minus 5% net interest expense of $215,000,000 plus or minus 5%, underlying effective tax rate in the range of 22% to 24% and capital expenditures incurred of $750,000,000 plus or minus 5%. Drivers that underpin our guidance include anticipated annual net price increases of 1% to 2% in North America, in line with the average historical range and for other markets to trend in line with inflation.

[Tracey Joubert, CFO at Molson Coors Beverage Company]

Mix should be a meaningful growth driver as we advance toward our medium term goal of reaching about one third of our global net brand revenue from our above premium portfolio. We expect this to come from continued premiumization in EMEA APAC and Canada, as well as progress in The U. S. Where as Gavin shared, we are starting to see some initial traction with Blue Moon, a big change for Peroni and are expanding in non ALK. While Fevertree and the consolidation of Zoa provide incremental benefits to the top line, we will also be cycling revenue from the smaller regional craft breweries we divested in the third quarter and more significantly twenty twenty four Pat's and Labatt contract brewing volume as these contracts terminated at the end of last year.

[Tracey Joubert, CFO at Molson Coors Beverage Company]

On a combined basis, we expect to relate an approximate 1,900,000 hectoliter headwind to America's financial volume in 2025. We produced about 1,200,000 hectoliter of PAPS in The U. S. And 700,000 hectoliter of Labac brands in Canada in 2024. Given that PAPS volumes wound down sequentially over the course of 2024, the headwind is more pronounced in the first half of the year, particularly in the first quarter.

[Tracey Joubert, CFO at Molson Coors Beverage Company]

And the 2024 Labatt volumes follow typical seasonal trends. There are several additional shipment phasing considerations. In the first quarter, we are cycling particularly strong demand for our core power brands in The U. S. In the prior year period when U.

[Tracey Joubert, CFO at Molson Coors Beverage Company]

S. Brand volumes were up 5.7%. Also in the first quarter of twenty twenty four, we benefited from higher than typical inventory growth given our anticipation of the fourth worst strike. This contributed to U. S.

[Tracey Joubert, CFO at Molson Coors Beverage Company]

Financial volume increasing 7.6% in the first quarter of twenty twenty four despite the exit of 350,000 hectoliters of tax volume. This higher than typical inventory build extended into the second quarter of twenty twenty four and we do not anticipate a similar level of first half inventory build in 2025. Turning to costs, in the first quarter, we anticipate incurring one time transition and integration fees related to the Fever Tree Partnership, which will be reported in our underlying results. The costs will be determined over the next few months based on discussions, which are ongoing. We also expect full year margin expansion coming from a number of drivers.

[Tracey Joubert, CFO at Molson Coors Beverage Company]

They include mixed benefits from lower contract brewing and increased premiumization, moderating inflation on input costs and productivity improvements and cost savings. We also expect to continue to put the right commercial pressure behind our brands globally, focusing on retaining existing customers and attracting new ones. Given our deep capabilities and return oriented strategy, our growth outlook does not require us to make steep changes in our marketing investments. In closing, we are pleased with our progress in 2024. We believe we have the right strategy and with strong brand, a highly cash generative business model and a healthy balance sheet, we have the ability to continue to invest in our business to achieve long term financial growth and our strategic goals, while also returning cash to shareholders through a growing dividend and a meaningful share repurchase program.

[Tracey Joubert, CFO at Molson Coors Beverage Company]

With that, we would like to open it up to your questions. Operator?

[Operator]

Thank you. We will now begin the question and answer session. You.

[Operator]

Our first question comes from Chris Carey with Wells Fargo. Please go ahead.

[Christopher Carey, Equity Analyst - Head of Consumer Staples Research at Wells Fargo]

Hi, good morning everyone.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

Good morning, Chris.

[Christopher Carey, Equity Analyst - Head of Consumer Staples Research at Wells Fargo]

Hey, Gavin. I was wondering if you could comment a bit on what we're seeing in the beer category, specifically year to date or whatever near term time horizon you'd like to use. I think there's been a debate about increased volatility in recent weeks and months, whether that's weather or changing consumer preferences. But I'd love to get your thoughts on some of the near term evolution of what we're seeing in the data and how you see industry dynamics, and perhaps how you're thinking about this in the context of your full year guidance. And then more of a just sneak in question, but Tracy, are you factoring any share repurchases in the outlook or any context on fair buybacks for this year?

[Christopher Carey, Equity Analyst - Head of Consumer Staples Research at Wells Fargo]

Thanks so much for those.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

Thanks, Chris. Well, I'll let Tracy answer your sneak in question, but I'll deal with the industry first, Chris. Look, I mean, if you look at 2024, there was a lot of noise, right? I mean, we talked about a lot of it over our earnings calls with trading days and holiday timings and turbulent weather and all sorts of things going on. And summer was not particularly good, but we did see progress in Q4.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

And in fact, I think Q4 ended up being the best quarter of industry performance that we experienced last year. And Chris, as it relates to current trading, I would say what we said on the last call and I think the call before that, right, is I think being cautious of short term trends is important, right? Because I think once you get to the full quarter and you remove noise that exists on a week to week basis, you get a much better sense of what's happening in the industry. And even with what you're seeing in the first publicly available data for 2025, it's not terribly dissimilar to what we were experiencing in 2024. Again, there is noise around weather and timing of holidays.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

And I would just caution you not to draw assumptions based on a very short period of data. Chris?

[Tracey Joubert, CFO at Molson Coors Beverage Company]

Chris, so just in terms of share repurchases, so we do intend to continue to execute our share repurchase program. And a reminder, it increased both its systematic as well as an opportunistic execution component. So that allows us to consistently execute the program, but with also the ability to lean in if our models indicate if appropriate. So based on our $2,000,000,000 program, which we announced in October 2023, and as Gavin said, we've already utilized about 40% of it in just the first five quarters and it is a five year program. So I think it's clear our commitment to share repurchases.

[Tracey Joubert, CFO at Molson Coors Beverage Company]

But the execution of the plan can vary, can be driven by a number of factors including the timing of our capital commitments. For example, a planned investment in Fevertree could drive that. But as I said, we are committed to the share repurchase program that we put in place. Thanks, Chris.

[Operator]

Thank you.

[Operator]

Our next question comes from Peter Grom with UBS. Please go ahead, Peter.

[Peter Grom, Equity Research Analyst at UBS Group]

Thanks, operator. Good morning, everyone. I really wanted to just follow-up on Chris' question there, just some perspective on the top line guidance. I know there are various puts and takes, Tracy, as you alluded to, contract brewing, cedar tree, etcetera. But I guess just how are you actually thinking about underlying category growth across your key geographies?

[Peter Grom, Equity Research Analyst at UBS Group]

Are you assuming category growth rates improve as we move into the summer, cycle into your comps? Or are you kind of assuming the steady state of category growth improves that would be more of

[Peter Grom, Equity Research Analyst at UBS Group]

a source of upside?

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

Thanks, Peter. Look, if you look at our major markets, right, in Canada, we've seen past inflation and interest rates that continue to weigh on the economy. But we have seen interest rate cuts, we've seen inflation start to come down. And Canada beer industry trends are fairly similar to The U. S.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

As I said to Chris, we're not seeing anything meaningfully different from the previous trends that we've shared in The U. S. Very conscious consumers are still looking to engage in channel and pack shifting. And at the same time, the industry continues to see premiumization, which plays perfectly into our overall acceleration plan. In The U.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

K, the economy is improving. Inflation is slowing down. It is competitive at the moment, but not a lot different from what we've been seeing through the back end of 2024. And as you rightly point out, we do have puts and takes in our top line guidance, right? The take, as Tracy said, is contract brewing and the pull is Fever Tree, for example.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

But more broadly, the progress that we're making on our overall acceleration plans, whether that's our core brands globally, whether it's the premiumization progress that we're making or whether it's acceleration in Beyond beer. So it's all of those factors taken into account, Peter.

[Operator]

Thank you. Our next question comes from Filippo Saloni with Citi. Please go ahead.

[Filippo Falorni, Director - Equity Research at Citi]

Hi, good morning, everyone. I wanted to ask on margins. So first on the gross margin line, can you provide some context of the puts and takes in terms of pricing, mix benefits and commodity inflation that you expect that you include in your guidance? And particularly on the commodities, I know you have long term hedging programs. So just any thoughts on the potential impact of aluminum tariffs and what that could mean for your COGS?

[Filippo Falorni, Director - Equity Research at Citi]

Thank you.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

I'll let Tracy talk about the margin, Filifai, and thanks for the question. From an aluminum point of view, we did make changes to our sourcing strategy over the last few years. And so almost all of our aluminum is currently purchased in The United States for United States consumption, which is obviously our biggest market. But Trace, do you want to give a more broad

[Tracey Joubert, CFO at Molson Coors Beverage Company]

Yes, sure. So happily that. So in terms of gross margin, look, we don't give specific gross margin guidance, but notably, our underlying gross margin percentage did improve in each of the last two years. So as we look at our 2025 guidance, our long term growth algorithm does anticipate underlying pretax margin expansion. So building on the expansion we saw in 2024.

[Tracey Joubert, CFO at Molson Coors Beverage Company]

Some of the drivers of that, so in 2025, we do expect moderating inflation on input costs. And to your point, we do have multiple leaders that support our growth algorithm. So it includes positive net pricing that we discussed in our guidance, Positive mix from premiumization as well as the lower contract brewing volumes, which will also drive productivity improvements and we also continue to look at cost savings across entire business. So those are some of the things that I would say would drive some of the margin expansion.

[Filippo Falorni, Director - Equity Research at Citi]

Thanks, Tracey.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

Thanks, Filippo.

[Bonnie Herzog, Managing Director at Goldman Sachs]

Our next question comes from Bonnie Herzog with Goldman Sachs. Please go ahead, Bonnie. All right. Thank you. Good morning, everyone.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

Good morning.

[Bonnie Herzog, Managing Director at Goldman Sachs]

I actually had a question. Good morning. I had a question on your guidance, which you mentioned is in line with your long term algo. Your guidance implies a fair amount of operating leverage this year.

[Bonnie Herzog, Managing Director at Goldman Sachs]

And I know you've touched on this, but hoping you could unpack this a bit for us, meaning, you should get some leverage from the top line. But could you give us a little more color on the drivers of EPS growth such as the cost savings and efficiencies you expect to get this year? And then maybe how much that could increase next year and beyond? Maybe if you don't feel comfortable quantifying, maybe you could rank some of these cost savings in order of impact, for instance. I think that would be helpful.

[Bonnie Herzog, Managing Director at Goldman Sachs]

Thank you.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

Thanks, Bonnie. Francesca, you want to take that?

[Tracey Joubert, CFO at Molson Coors Beverage Company]

Yes. So I mean a couple of things that I can point to in terms of the operating leverage and improvements in our operating margin. So number one, we've invested over the last couple of years in our capabilities to drive efficiencies and cost savings. And a lot of that investment is focused on our breweries. So eliminating waste, driving efficiencies there and certainly taking out the contract brewing will further help in terms of costs as well as efficiencies in our brewery.

[Tracey Joubert, CFO at Molson Coors Beverage Company]

So that's one of the bigger drivers around the cost and efficiencies. The other thing just in terms of marketing spend, for example, we spent the last couple of years really driving our return on marketing investments. And even though we do expect our engine rates increase around some of the investments that we're making with innovation, Fever Tree, etcetera. There's also a number of puts and takes that is coming out. So for example, we divested of underperforming craft breweries and we can now redeploy those funds to other brands in 2025.

[Tracey Joubert, CFO at Molson Coors Beverage Company]

So we'll continue to look at that. And then one of the bigger items as well is bringing the Peroni production onshore. And these meaningful ocean freight savings by doing that and we've been able to utilize those cost savings to again support the marketing investment of that brand. So a number of levers that we can pull in a number of capability investments that we've made over the last couple of years that we'll start seeing coming through now that will certainly help our margin as we look at continuing to drive efficiencies in the areas that we operate.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

Thanks, Tracy. Thanks, Bonnie.

[Operator]

Thank you. The next question comes from Andrea Teixeira with JPMorgan. Please go ahead.

[Drew Levine, Equity Research & Vice President - Beverages & HPC at JP Morgan]

Hey, good morning. This is Drew Levine on for Andrea. Thank you for taking our question. Gavin, I wanted to ask on The U. S.

[Drew Levine, Equity Research & Vice President - Beverages & HPC at JP Morgan]

Brand volumes were down three. I think that came in probably a bit better than the track channel data would suggest, despite I think what has been described by some other peers as maybe a shift towards those channels. So, you know, any color would be helpful on what you're seeing from a consumer perspective. I know you'd mentioned, some moderation in the value seeking behavior, but maybe some perspective on different channels if on premise is outperforming, maybe on track channels performing better. So any help there would be great.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

Thanks, Drew. I think one point I'd make is I think there was an extra trading day. So that certainly would have helped. From a consumer point of view, we did see them moving away from C stores earlier in the calendar year in the sort of summertime period. Now we've seen them move back into the C store channel.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

We've also seen on premise continue to slightly outperform. But broadly, I would say those are the three key ones. Thanks, Drew.

[Operator]

Thank you. The next question comes from Gerald Pastorelli with Needham and Company. Please go ahead.

[Gerald Pastorelli, Analyst at Needham & Company]

Great. Thanks very much for the question. I just I wanted to go back to the share repurchase commentary. So as we look at the outlook for 2025, the high single digit growth, Tracy, is it fair for us to assume that you maybe to think about it in terms of like straight lining the remaining authorization with any potential upside to earnings growth being you remaining aggressive on buybacks, but that maybe shouldn't be part of the base case scenario? Just trying to get a little bit more color there.

[Gerald Pastorelli, Analyst at Needham & Company]

Thank you.

[Tracey Joubert, CFO at Molson Coors Beverage Company]

Yes. So a couple of things to consider as we talk about the high single digit underlying EPS growth. I mean, some of that, yes, certainly is being driven by share repurchases. Our guidance assumes at minimum repurchases in line with our 10b5-one plan. But some other factors that play into our EPS growth is also tax and foreign exchange.

[Tracey Joubert, CFO at Molson Coors Beverage Company]

So, our EPS is not on a constant currency basis. So, forex could impact that. And then we have reduced the underlying effective tax rate guide for twenty twenty five to 22% to 24% and that was from the 23% to 25% in 2024. But as I said, we'll continue to look at all of our capital allocation models and make sure that we're returning the right we're making the right investment decisions to return to our shareholders. So, yes, as we said, it could vary.

[Tracey Joubert, CFO at Molson Coors Beverage Company]

The share repurchase is driven by a number of factors, as I said, whether we have planned investments like Fevertree, for example. So that may impact the sort of amount we spend and also just as a reminder, up to five year program and we're only five quarters into this. Thanks, Gerald.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

Next question, operator?

[Operator]

The

[Operator]

next question goes to Rob Ochonson of Evercore. Rob, please go ahead. It looks like Rob has disconnected. He's going on to the next question from Kevin Grundy of BNP Paribas.

[Kevin Grundy, Managing Director at BNP Paribas]

First, quick housekeeping question then a bigger picture question, easy for me to say. A housekeeping question for Tracy, it would seem like the guidance would imply that volumes down 1% to 2% based on your commentary of 1% to 2% price and then some favorable mix. I just wanted to confirm that's your expectation relative to an exit rate that was a bit more challenging that in The U. S. And Europe.

[Kevin Grundy, Managing Director at BNP Paribas]

Gavin, the bigger picture question, is just the demand outlook looking out now over the longer term. We get a lot of questions from investors on potential impact of younger consumers drinking less frequently, negative impact from GLP-one, the recent advisory from the former Surgeon General linking alcohol consumption and cancer risk. I was hoping you could comment on these potential headwinds and how they may impact the industry more broadly. So not just beer, but U. S.

[Kevin Grundy, Managing Director at BNP Paribas]

Alcohol more broadly? And then how it may directly impact your strategy as it pertains to your portfolio? Thank you.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

Thanks, Kevin. Do you want to just comment on the first one, Tracey? I'll take the bigger picture question.

[Tracey Joubert, CFO at Molson Coors Beverage Company]

Yes. Hi, Kevin. So look, the drivers for our top line growth in 2025, I mean, of course, we remain focused on our U. S. Sheet performance.

[Tracey Joubert, CFO at Molson Coors Beverage Company]

The NSL guidance is also dependent on a number of factors including price and mix. In 2024, we achieved really strong annual top line contribution from both our EMEA and APAC business and from Canada. We don't specifically give volume guidance. But just as a reminder, we've got puts and takes there as well. So we won't receive a benefit from bringing Fever Tree.

[Tracey Joubert, CFO at Molson Coors Beverage Company]

Gavin mentioned Naked Life, etcetera, that we're going to be launching. But a reminder as well, we're taking up 1,900,000 hectoliters of contract brewing volume out of our system in 2025. So that will have an impact on our financial volume as well.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

Thanks, Tracy. And look, Kevin, I mean, your question is a very broad one, right? So let me try and answer that. From a you referenced the Surgeon General, right? And obviously, there have been several reports from the federal government over the past few months.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

They've had a variety of viewpoints on the science. And I would point out that we've had a Surgeon General's warning on label since the 1980s, which includes that alcohol consumption may cause health problems. I think beer has long been the drink of moderation. We offer consumers a range of options, including no and low alcohol beverages. And we're committed to the transformation of our company into a total beverage company.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

That's why we changed our name to Molson Coors Beverage Company several years ago. And we've got a long term strategy of diversifying our portfolio into Beyond beer and non alc is a key part of that diversification. It supports broader consumer trends as you said around mindful drinking with categories like non out beer and RTDs. And we've got a three pronged approach to that, whether it's alcohol replacement. We've got a great portfolio of brands directed at that with two great above premium non alc beers, Blue Moon non alc and Pronie zero.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

We're launching Naked Life, which is a non alcanned cocktail. Then we've got alcohol adjacencies and that's where Fever Tree is the absolute perfect fit for us because it sits at that intersection between alcohol and non alcohol. And then we've got the Pure Place, which is highly incremental for us at an occasion level, we fear doesn't necessarily exist. And ZO is a great example of that. And then, Kevin, we've proven that we can grow in our traditional beer space.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

I mean, Coors Banquet is a fine example of that, right? It's the number one fastest growing beer brand, beating out Madera. And we're gaining distribution, we're gaining occasion, we're gaining consumers, including younger legal drinking age consumers behind that brand. So we feel very confident that the portfolio that we are building will meet the demands of our consumers both now and on a go forward basis. Thanks, Kevin.

[Operator]

The next question goes to Brian Spillane of Bank of America. Brian, please go ahead.

[Bryan Spillane, Equity Research Analyst - Director at Bank of America]

Thanks, operator. Good morning, everyone. Maybe Gavin, just to pick up on Kevin Grundy's last point. Can you just maybe give us a little bit more color on the decision to engage with Fevertree? And maybe just like what do you think is different, right?

[Bryan Spillane, Equity Research Analyst - Director at Bank of America]

I mean, Fevertree and Molson Coors come together, you're going to have this venture. There must be something that's missing now that Molson Kors can add to it. And I'm just kind of curious to know how you think about that and what that may be?

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

Yes, great question. Thanks, Brian. I think it's building a great portfolio even further, right, to meet the needs of consumers at various occasions. And as I said, non alcoholic beverage is key to that strategy. And in The U.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

S, Fever Tree is the world well, it's actually the world's leading supplier of premium carbonated drinks and mixes. And as I said, it sits really nicely at the intersection of beer and non alcoholic. And its availability is often in stores where beer is actually sold. It's steadily grown its lead as the number one tonic in ginger beer. I think it provides tremendous credibility to our network and broader network that we are serious about, about Not Elk.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

It's a big business. It's a growing business. What do we bring to it? I mean, we've talked about our core competencies and our capabilities in the past before, Brian. And one of them is we have a tremendous network of distributors that deliver to stores which Fevertree has not been delivering to in the past.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

I mean, I think we service over 500,000 different outlets and Fevertree gets to tens of thousands of those at the moment. So our broader reach is substantial. We're also going to increase our non ALK resources quite meaningfully in the first part of this year. So it brings critical mass to us from a non out point of view with solar, which we took a majority stake in late last year. And as I said, we've got Native Life coming and we've got and we've got Fever Tree, which is in our portfolio from last week.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

So I think well, we're very excited about this. It provides real credibility to our system that we are serious about non health and we mean business here.

[Operator]

Thank you. The next question goes to Rob Ottenstein of Evercore. Rob, please go ahead.

[Robert Ottenstein, Senior Managing Director & Partner at EvercoreISI]

Great. Thank you very much. Just a few follow ups, if I may. So Gavin, can you just sticking on the Fever Tree agreement, can you give us a rough idea of what the economics look like and how this could potentially impact your income statement three, four, five years out? Just any way for us to kind of model it, any guidelines at all?

[Robert Ottenstein, Senior Managing Director & Partner at EvercoreISI]

And then second, I know you mentioned that your guidance doesn't include anything for tariffs. And obviously it's impossible to, right, because who knows what's going to happen. But again, can you help us try to model that out in terms of Canada? Did you see when Trudeau talked about boycotting American brands, did you see any impact on Coors Light, Miller Lite, your U. S.

[Robert Ottenstein, Senior Managing Director & Partner at EvercoreISI]

Brands that are in Canada, are they brewed in Canada or do they come from The U. S? And what percentage of your sales in Canada come from those brands? And any other tariff related issues outside of aluminum, which we already talked about that we should be considering as we kind of run our sensitivities for 2025? Thank you.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

Thanks, Robert. Two big questions. Let me start with the second one. We import very little product into The U. S.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

From Canada and Mexico. That's the first point I'd make. Almost all of the brands that we produce that are consumed in The United States from our portfolio are brewed in The United States. The last big one really was that we imported was Peroni. And as you know and we've talked about in the past, we've bought that in house and have we're really excited about the potential for Peroni as we go forward.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

Beyond that, there are a few very minor immaterial from a volume perspective brands that come across from Canada and Mexico. As it relates to Canada, the vast majority of the brand portfolio is again, it's produced in Canada for Canadian consumers. We have a large import agreement with that comes from Europe, so it wouldn't be impacted by U. S. Tariffs.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

But again, the vast majority, Canadian proved, Canadian produced and I think consumers are aware of that. From an input material point of view, again, Robert, the vast majority of our input materials come from the countries in which they are produced. Obviously, not everything, but I spoke about aluminum earlier on being almost entirely sourced in The United States, all The United States markets. All of our agricultural input costs like barley, malt and hops and so on, all is sourced in the markets in which it's consumed, certainly in our bigger markets. But as you say, there is uncertainty, but we're in the same boat as most other businesses as it relates to tariffs with the exception of the fact that we produce almost all of our products in the market in which they consume.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

As far as Fevertree is concerned, look, we don't give that level of detail that you're looking for. But obviously, we've entered into this relationship because we see real potential with this brand. We see growth opportunities from a volume perspective. Obviously, it's 100% incremental to our business, but we see growth off their base. 2025 is going to be a year of integration and absorbing it.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

And as I said, we're expanding our resources behind this, which will take place in the earlier part of the year. Tracy did mention that we will have some onetime costs associated with that, and we're working through to determine what those are. They're not in the hundreds of millions just to give context, right? They're in the tens of millions and we'll resolve that and put a final estimate on it once we've been through all our discussions. But this is a brand that operates right at the top end of both premium.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

So from a revenue per hectoliter point of view, it's going to it might even be our number one now from a revenue per barrel point of view. As we integrate it and look for further opportunities in terms of cost efficiencies, we will certainly be looking at our supply chain and our supply chain partners as we partners as we look to drive value out of this relationship. But we really are excited about it, Robert. I think I covered both of Robert's questions, Tracy. Yes.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

Thanks, Robert.

[Operator]

Thank you. The next question goes to Kail Gajrawala of Jefferies. Camille, please go ahead.

[Kaumilc Gajrawala, Managing Director at Jefferies & Company Inc]

Hey, everybody. Good morning. Two things. The first, I guess, along the lines of Fever Tree, but not specifically, when we think about the Yingling deal and which start, which is a partnership, the various partnerships with Coke, the deal with ZO that went from partnership to ownership. As we think about all of these things and then Fever Tree being the newest one, how do you think about it in the context of M and A?

[Kaumilc Gajrawala, Managing Director at Jefferies & Company Inc]

Why is sort of a small stake the right amount with whatever P and L that contributes to your business versus the P and L that goes to the distributors? Why not sort of being more aggressive on M and A kind of like what you've eventually done on ZOWA and have full ownership? And then the second question, which will be a lot more narrow is quite a bit of strength out of Canada. Can you maybe give us a little bit more on what was behind that? You gave us a bit in the prepared remarks, but would love to learn if this is something ongoing, something that's sort of building or if there were just a couple of nice hits last quarter that may not continue?

[Kaumilc Gajrawala, Managing Director at Jefferies & Company Inc]

Thanks.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

Thanks, Kamil. It's not the latter. It is not just a couple of nice hits. I mean, the performance in Canada has been building over quite some time. For example, we've seen twenty three consecutive months of share growth.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

And that includes growth in peer, it includes growth in RTDs. It's driven by the strength of our brands. It's driven by the strength of the execution of our strategy on those core beer brands on premiumization of our portfolio and of expanding into flavor cobalt. Our core power brands Coors Light and Molson, the trademark, we grew share of segment through the fall. And Miller Light, which sells in the above premium tier, is one of the fastest growing beer brands in the category.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

And then Madrid, which we launched last year, is delivered ahead of our expectations. And in flavor, we're the fastest growing company in the RTD space. So Canada's success is broad. It is deep. It's been going for, as I said, quite some time now.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

And it gives us a nice useful blueprint for The U. S. Where we've got the opportunity to strengthen our results, particularly in the above premiums space. So performance in Canada has been strong in summary. Fever Tree, look, I mean we're good at partnerships.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

I think that's one of our core strengths called competencies. We've got partnerships all over the world. As it relates to the specific investment which Tracy alluded to in uses of cash, I mean it fits perfectly into our string of pearls approach, right? I mean, we did talk about pearls getting a little bigger and so our investment in Fever Tree is a little bit bigger than some of the ones that we've made in the past, but it's still part of the string of pearls approach. Why did we do it?

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

Because we see real potential in Fevertree. The United States is their biggest market. It's their biggest growth market. We're representing them here now. So 100% of the performance will be included in our P and L.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

But at the same time, we wanted to take some advantage of the value, which we believe is going to be created at a FEMA tree level. And so we are now the second largest shareholder and we're comfortable with that position.

[Operator]

The next question goes to Eric Sarota of Morgan Stanley. Eric, please go ahead.

[Eric Serotta, Analyst at Morgan Stanley]

Great. Good morning.

[Eric Serotta, Analyst at Morgan Stanley]

First, Gavin, could you talk a

[Eric Serotta, Analyst at Morgan Stanley]

bit about shelf space expectations for your brands in 2025, coming off of the really strong gains that you had for the core brands last year and in 2023? And then Tracy, just an accounting clarification. So it sounds like you guys are going to be booking just The U. S. Partnership revenue from Zvertree.

[Eric Serotta, Analyst at Morgan Stanley]

Is that correct? And will any equity income from your overall ownership in the company come through the equity income line? Or is that going to just be held at cost? Thank you.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

Thanks, Eric. I would say that shelf resets, I mean, we saw an unprecedented shift in shelf resets back in the spring of twenty twenty four. In the fall of twenty twenty four, we held those grains. And we even grew them a little. So that means that when you compare us to the 2023 base, we're up significantly.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

Now as we head into spring of twenty twenty five, generally, each year there are minor adjustments to shelf space. Retailers add new items. They delete discontinued and slow moving ones. And it's a little early days yet and we haven't got all the data in. But for spring of twenty twenty five, we expect that to be the case again.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

And again, while it's early, we expect to hold on to the share gains in the spring once again. So we feel really good about the step change that we've seen in shelf resets. And that's certainly been a big contributor to why we've held on to so much of the share gains that we gained with Coors Light, Mo Lite and Coors Banquet. I mean, in the fourth quarter that actually accelerated a little bit. I think we said in Q3 it was around 80%, but it's actually more than 80% now that we retained in the fourth quarter.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

And we're very, very pleased about that obviously because if you compare it back to 2023, we're about 170 basis points of share higher with those brands than we were before. So yes, Tracy, you want to deal with the accounting question?

[Tracey Joubert, CFO at Molson Coors Beverage Company]

Yes. Thanks, Eric. So look, in terms of how we're going to report Fever Tree in The U. S. So we have a license agreement to distribute their products in The U.

[Tracey Joubert, CFO at Molson Coors Beverage Company]

S. And we will recognize 100% of the revenue for all of the products sold in The U. S. And we'll share jointly in certain costs, which include marketing, such results in profit sharing at the EBITDA level. And then we'll also pay them via royalty, which will be included in our COGS.

[Tracey Joubert, CFO at Molson Coors Beverage Company]

In terms of the investment that we've made in the Fever Tree business, entity, It will be reported on a cost basis and we'll mark that to market and we'll exclude it from our underlying results.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

Thanks, Eric.

[Operator]

Thank you. The next question go to Bill Kurt of Roth Capital Partners. Bill, please go ahead.

[Bill Kirk, Managing Director at Roth Capital Partners, LLC]

Good morning, everyone. So Gavin, your largest competitor wants to rebrand the domestic beer segment to I think the American beer segment. Do you agree that the industry should stop using that domestic terminology? And if that segment positioning changes, maybe combined with a broader populist movement, do you think it would help the brands within that segment?

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

Thanks, Paul, and good morning to you. Our brands go back many generations in both Canada and in The United States. And we're obviously very proud of our heritage. And And I would suggest that everybody knows about the roots of our great iconic brands. Our focus is on our acceleration plans and our portfolio.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

And as I've said on this call and we said in our opening remarks, our brands are in a great place, particularly our core brands, which have gained substantial shares since 2023 and retained a lot of that. And so that's where our focus is. Thanks, Bill.

[Operator]

Thank you. The next question goes to Lauren Lieberman of Barclays. Lauren, please go ahead.

[Lauren Lieberman, Managing Director at Barclays]

Great. Thanks.

[Lauren Lieberman, Managing Director at Barclays]

Good morning.

[Lauren Lieberman, Managing Director at Barclays]

I'd love to just hear a little bit about your read of the competitive environment in The U. S. We heard a bit kind of through this earning season about a step up in promotional activity, both with premium life, but also in the above premium space. So I was just curious to what degree you're seeing that or not? Thanks.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

Thanks, Lauren, and good morning to you. We haven't seen anything unusual from a promotional point of view. It's common that there is some level of promotional activity. Most of that takes place in the summer though, not in Q4 or in Q1. Most of that takes place in Q2, Q3.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

It's a fairly regular thing. You see different things in different markets. But we haven't seen anything unusual from a promotional point of view. And as we always do, we'll take a strategic approach to evaluating the overall competitive landscape, consumer dynamics and we'll do what's right for our brands.

[Operator]

Thank you. The next question goes to Michael Lavery of Becky Sandler. Michael, please go ahead.

[Michael Lavery, Senior Equity Research Analyst at Piper Sandler Companies]

Thank you. Good morning. Just wanted to come back to innovation and just have seen a lot of the innovation in the space skew towards higher alcohol, some little bit maybe more exaggerated cases, things like beatbox or buzz balls, but you're simply spiked Bold and Blue Moon Extra are moving in that direction with an 8% ABV version. Do you have a sense of just what if any impact that has on category volumes? And if some of that is if that direction of innovation is helping drive weakness?

[Michael Lavery, Senior Equity Research Analyst at Piper Sandler Companies]

And a little bit just related, can you maybe touch on how that sell in went? And do you have a sense for how your innovation is landing on the shelf resets? Also maybe for ZOWA as well, did that did you get ownership in time to move the needle on where that lands on shelf?

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

Thanks, Michael. Yes, lots of questions there. Let me just say that no, I don't see that innovation both from ourselves and our competitors is negatively impacting beer as a category. In fact, I think it's positive. I mean, if you look at beer as an overall industry, we did very nicely against spirits.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

I mean, all of spirits' growth is coming in the RTD space, which is where the beer players where the beer guys are playing. And so if you just look at if you excluded the prepackaged spirits from spirits' performance, it will be quite negative. So all of the growth in spirits is coming from that and we and our competitors play quite meaningfully there. As it relates to higher alcohol, I mean, we did talk about this previously around our first ever convenience led innovation pipeline. And we've got three great new launches that are coming that fit that trend of what consumers are looking for in terms of singles and higher ABV.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

We've got Simply Spike BOLD coming. We've got Topo Margarita Max and we've got Blue Moon Extra. And they're all coming at that sort of 8% level. Another great area of innovation for us is, for example, happy Thursday. I don't know if we've talked about this before, but we did create a Gen Z culture panel last year.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

And as we looked at that and then with broader consumer insights, this panel has really been helpful in how we innovate for new legal drinking age consumers. And happy Thursday came right out of that. Also helps us inform how we market and sell our products, whether it's through e commerce or who we partner with like Lease Cup and Formula One and where we go from a digital space. So I've probably gone a little broader than your direct question, Michael, but hopefully that's helpful.

[Operator]

Thank you. The last question goes to Robert Moskow of TD Cowen. Robert, please go ahead.

[Robert Moskow, Managing Director at TD Cowen]

Hi, thanks. You know, there was a pretty significant slowdown in your EMEA APAC region, and you attributed to heightened competition and just the consumer backdrop. Is there any reason to believe that those divisions can grow as fast as the rest of the company in 2025? Or do you think we're going to be flattish like we were in fourth quarter for the year?

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

Thanks, Robert. Look, I mean, certainly consumer demand in The UK was softer in 2024 when you compare it with 2023. We did see some uplift in the summer through the EuroSockets, but weather obviously offset a lot of that. Christmas season was satisfactory, although we did see consumers coming in late in the season as opposed to earlier. As it relates to our business specifically, for Carling, which is our biggest brand in The U.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

K. And in the EMA APAC business unit, we took a value over volume approach. We certainly will continue to support the brand strength of that versus our competitors. But no doubt, we took a value over volume strategy. But three, we continue to see and drive both volume and value growth across both channels.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

It's launched very nicely a new market in Bulgaria during 2024. We have another market plan for 2025. We've got great brands in EMEA APAC. We've talked about ESHOOSCO in the past. And over time, I see no reason why our EMEA APAC business won't grow quicker than our businesses in North America.

[Gavin Hattersley, President & Chief Executive Officer at Molson Coors Beverage Company]

Thanks for the question, Robert.

[Operator]

Thank you. We have no further questions. This now concludes today's call. Thank you for joining. You may now disconnect your lines.

Participants

Executives

• Greg Tierney, Vice President of FP&A, Commercial Finance & Investor Relations
• Gavin Hattersley, President & Chief Executive Officer
• Tracey Joubert, CFO

Analysts

• Christopher Carey, Equity Analyst - Head of Consumer Staples Research at Wells Fargo
• Peter Grom, Equity Research Analyst at UBS Group
• Filippo Falorni, Director - Equity Research at Citi
• Bonnie Herzog, Managing Director at Goldman Sachs
• Drew Levine, Equity Research & Vice President - Beverages & HPC at JP Morgan
• Gerald Pastorelli, Analyst at Needham & Company
• Kevin Grundy, Managing Director at BNP Paribas
• Bryan Spillane, Equity Research Analyst - Director at Bank of America
• Robert Ottenstein, Senior Managing Director & Partner at EvercoreISI
• Kaumilc Gajrawala, Managing Director at Jefferies & Company Inc
• Eric Serotta, Analyst at Morgan Stanley
• Bill Kirk, Managing Director at Roth Capital Partners, LLC
• Lauren Lieberman, Managing Director at Barclays
• Michael Lavery, Senior Equity Research Analyst at Piper Sandler Companies
• Robert Moskow, Managing Director at TD Cowen