Earnings call transcript Q1 2023

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Operator

Good day, and welcome to the Molson Coors Beverage Company First Quarter Fiscal Year 2023 Earnings Conference Call.

You can find related slides on the Investor Relations page of the Molson Coors website.

Our speakers today are Gavin Hattersley, President and Chief Executive Officer; and Tracey Joubert, Chief Financial Officer.

With that, I'll hand it over to Greg Tierney, Vice President of FP&A, Commercial Finance and Investor Relations. Please go ahead.

Greg Tierney

hello, and operator, you, everyone. Thank

ask today Following will many and yourself we we Gavin your prepared questions one questions. possible, as remarks take address In Tracey, to limit from an question. you that as to effort

questions the you in please pick IR and the weeks the them If on quarter, with up technical our have days team that follow.

forward-looking Actual differ our forecast. could results materially trends Today's or statements. discussion includes from

the refer please most to the discussed factors our with information, risk recent in filings more SEC. For

no are news assume financial GAAP the from otherwise when GAAP in are update reconciliations for statements. period. dollars year period We prior year discusses all U.S. obligation currency forward-looking discussing included versus and to percentage any indicated, prior constant the results company changes non-U.S. release. measures the our comparable in Unless in

references income, And IRI. will Also, condensed operations. sourced U.S. further, reference equates today, income statements share of on which underlying before to remarks in data formerly from income taxes we Circana, called pre-tax consolidated are our the underlying

over Gavin. you, that, to With

Gavin Hattersley

Greg, of our remain about far cautious so a deliver. sustainable clear over said the line neither accident. of for relentlessly top this bottom reported to have to was When we we XXXX, while strategy. we grow nor anomaly consumer I I joining to XXXX result ability and all North and results, course deliver is the thank morning. our bottom the Star said line us And It's our also Thanks, the an an you this to long-term sticking top continued growth. outlook year, and

the growth line. a are nearly our to driver line as the of of caution was Certainly, by markets But of strong restrictions in doubled strength fundamental I not business apply the clearly of lapping drivers but the some our strong entirety our In the These our single-digits, strong were all high top major year pricing this Omicron-related following simply benefited first and to quarter, in also performance, XXXX you compared from would period. in rate well. XXXX. of expected. a results prior and to grew our particularly the we we These bottom markets we

are As go and detail maintaining guidance, Tracey that we full will shortly. result, on into our year more a

Importantly, truly And business portfolio. strong. the our business and fundamentals of are EMEA growing across We're and changing in our of innovation shape the premium iconic the our our APAC revenue Americas is brands. above and both across units

see continued we landscape. So the consumer for reasons broader caution in

remains levels. aware, from still U.S. our we packaged are by I meaningful which all consumers rising industry are singles in larger And quarter. mentioned quarter, and trade serves. sizes, packs. down inflation, pack away into and consumers seen smaller February, experiencing price-sensitive Those a global towards among packs midsized a packs shift have income particular not single interest consumer the consumers the first impacted also remained larger good business, shifting persisted higher we in rates seen you subset trends while of to seeing we with are As into but first have household the of In in we shifting both to

quarter. industry incredibly and United held the among requires shifting U.S., Trends in Collectively total the and light in our in these dollar by quarter best brands Miller consumers, This, Coors Lite States. growth the Lite was Light with increased suggest starting premium this notwithstanding, brand at and top share, revenue grew a in Miller XX double-digits same on focus the stores. even behavior our resilient the channel multiple an combined with finding shopping it proved quarter, if value brands

our benefited from XX more in years. Bowl campaign brands than Super first immensely These

Light, to both grew due the positive was in plans displays execution. the Coors the Super Bowl strength top to the volume XX and run-up Coors change a versus trend the to During saw brand in activity Super up prior of three Light February display Lite our a and leading all Bowl and Miller weeks. February, for

our of remained in Canadian brands and Canada Canada, Outside volume after the is In brand share volume brand and industry, Light iconic across strong Coors XXXX. velocity the volume the significantly U.S., UK, well. the Carling distribution also as share Europe segment. growth number in XXXX core in growing grew the in again brand ahead grew in one and competition to Canada. in In with Molson returning remains

quarter. in has and been continued our quarter, total in grew major a first Premium in beer. of APAC we now financial in the where broadly, the recently ahead and had UK, in growth portfolio Budweiser six the volume to than now and is grow Madri Above entree is during share Artois Stella larger first More the driver. Excepcional it moved the UK EMEA the number Madrí

months. potential head summer tremendous see the as we brand this We for into continue to

In in in the grew Peroni quarter. a X.X partnership marketing and Formula U.S. with we campaign Peroni global a the February, team. One U.S., with introduced volume And Martin new the in regions brand select Aston

flavor portfolio the our first true and Beyond quarter across as is same strongly Above our across for Beer, brands the performed Beer. Above in Just Premium Premium

our brands, distinct beyond better we non-alc in will non-beer definitions, and with but hard We spirit our spaces all the speak have types inclusive as align meaning evolution and beer to portfolio, industry products, FABs, given broader [ph]. previously seltzers, of structure Americas referenced now operating these recent in to

also five in in month Spiked and introduced just to XXXX first On the is end brand. significant Simply Spiked FABs quarter last the brand It number growth two its is this top We U.S. Simply the with in Simply Simply total the item the there we of new own, we as to and Lemonade quarter runway innovate in Spiked top continue Spiked in as category. brought Peach. under brand a now Canada industry XX was segment. Starting the a

more than just seltzers. XX despite cycling only our Peace cocktails, later in new beyond growing of across in are released also last our announced March Canada, Chico Tea Spirited hard another we’ve of the launch presence successful continue launch in U.S., national year’s select Topo brand grew Seltzer relationship the Chico building recently, And Hard this we we and share Hard year, the Topo In large brewer our markets. U.S. the markets ready-to-drink Company. branch beer plans with in in And Coca-Cola with to volume

to growing continue are to vibrant and ZOA Five Trail Barmen with XX and will excited whiskey in spirits, with remain we a portfolio, ZOA our focused doubling year. continuing of As our XXXX total well. expand opportunity XXXX, the the Bourbon. we Those packaging. And new new finally volume as this XXXX we our informed by brands in for on its the Of premiumize we strength bottled in about markets are be

just Denver And the International last medals Five at Competition. week Trail awarded two Spirits was gold

marker this and just But one without our total and is be would progress continued beer to Our approach beyond beverage to investments a none our also innovation. of it’s in commitment capabilities. possible of of successful reflection our

here now progress invest innovation our online flavor new our just at made going in involve brewery. packing produce $XX will enhancements in-house. Worth brands capabilities where the be million flavor We’ve our we Fort facility month majority the These the and of this

Just we’ve as modernizing production our capabilities, as modernized structure our well. we’re

unlock In and across This to Officer. capabilities. Jacques next to Americas structure Chief new elevated Michelle February, Commercial St. we phase established geographies brands, the is a new of in and our designed the structure commercial growth

teams First, guiding U.S. will even commercial our working and of marketing one set closely principles. be more sales now together with

these key full changes growth to emphasis capabilities. more on will decisions beer match better areas place even ensure enable We the will our investments also landscape. us digital and innovation all beyond across commercial finally, make ambitions of faster like our and And

no making environment business progress changes matter And might us we and you the is are of team seeing stability. within from message with of leave are want own our becoming the trajectory global how we uncertain the is one I to be. our today portfolio, consistency our around the So across the to clear

drive this shows put we markets line top consistently. grow to The quarter the our The consistent growth they quarter in we global core results stabilize foundation of proves out. bottom brands consecutive and in can and our store first we growth strong and built continue the eighth have across to emphasis revenue underscore achieving

can a The consistency. of consistency. our range power our are in we new, completely new is consumers brands and consumers. in built are preferences. power tiers consistent And that innovation across that there’s business our portfolio strength an strategically shows portfolio And and we in reach progress price premiumize offer of even to of There’s to winning our case, in showing parts a ability

to give more detail hand Financial to the Tracey Officer, I’ll you over Tracey? outlook, now financials Joubert. And and our Chief it on

Tracey Joubert

and our In continuing we the everyone. net currency hello, cash XX.X%, pre-tax underlying grew a while income return business revenue and Thank sales quarter you, and in invest constant Gavin, shareholders. X.X% to first basis, on to

guidance. While global coupled remain three last the softness, provide mindful foundation quarter and a we beer sustainable our mark basis, of performance growth. industry would over on with the environments of first have macroeconomic we guidance years bottom goal our to top laid dynamic our delivering reaffirm line confidence strong us year and XXXX This growth year a of full currency another on constant

from in from premiumization of about geographic increases X.X% both partially lower lead global EMEA first higher due X.X% APAC. XXXX Financial mix net was to as volume higher Now, Strong declined of let’s some net pricing across volume talk brand Americas declined positive favorable and quarter typical in business to benefits sales sales performance. growth. per pricing and drivers by taken Consolidated units X.X%. mix volumes the volume the rollover hectoliter offset and than

And be hectoliter see the inflationary back as can cost, to slides, COGS three pressures expected, up X.X%. in we as the at to areas. quarter, COGS headwind driving into underlying a you from continue per Turning

savings is First cost items. and and includes inflation which cost other depreciation, cost inflation, other

material, of is mix, mostly drove bucket is the was conversion almost The increase Second due cost and higher and energy XX% inflation to costs. third and deleverage.

pressures. of our Cost program helped and cost mitigate to savings some hedging these

to drivers of factored had well which Deleverage the for per a negligible UK largely brands was about impact negative COGS a it’s as COGS hectoliter. per increase. in in per impact As a included premiumization premiumization. gross of margin mix, is the is And as This quarter. positive XX% hectoliter hectoliter while for due the a on the COGS,

business increased by was revenue strong the at from units. growth X.X%, look X.X% grew income geographic results let’s as mix. sales quarterly brand per Americas, largely our favorable pretax Americas up net sales net and net XX.X%. as pricing In underlying benefiting and well Now hectoliter

The higher U.S. benefits than and pricing pricing in included XXXX. from typical strong growth net Canada

first the pricing increase spring of was approximately The than As and and taken a fall, increased a which in we X%. was January XXXX. earlier February, U.S. XXXX, in averaging began the a increases, September spring two in in quarter beginning in the took reminder, and usual fall the each

Financial this contract declined compared volume distributor stronger in American increase softness and for Brand as brewing lower brand inventory by bring offset This X.X% a ago. to position core partially industry were volumes. and down well X% was our volumes our primarily domestic was year X.X%. to shipments to to levels U.S. Latin as due

Looking one at also was software and day brand industry X.X% quarter. performance There the volume by lower the U.S. declined in on more trading region, economy volume.

So on down adjusted volume X.X%. basis, U.S. day a was trading brand

markets X.X% Latin, In In to XX.X%, in in in down America, brands industry Latin core softness the region. some period. year was Canada, volume major due driven restrictions increased volume by the Omicronon-premise in brand brand largely of growth prior our and

COGS underlying Americas side, was increased while flat. cost the hectoliter MG&A per X.X%, On

and increased XXXX. from Favorable strength of hectoliter sales and drove pricing XX.X%. the pretax included to XX.X%. by Net positive increases Positive net the Turning mix per of fueled sales geographic XX.X% brands growth revenue underlying APAC. on net benefits taken increased like sales and Madrí rollover EMEA premiumization in continued income mix

volume. and brand X.X% Financial of portfolio volume X.X%. above the on grew Brand volume premium our declined strength high effective

in brand of offset which the by pressures exited the Ukraine, as impacts market, but we declines well Europe UK, volume and more export in license by in by XXXX, in inflationary our Russia Looking by to the in March as in this due markets Eastern war Central and impacted consumer. than decline grew the was business on

the cash a materials, improvement On mix million income XX.X%. hectoliter side, is energy, increased million, cash capital the well an was free higher cost flow and as for largely impact lower per to quarter, negative due premiumization This Underlying as and underlying was and inflation from related to primarily the transportation of COGS $XXX to this of due net $XXX brands. expenditures. and cost factored

Capital net of line capital efficiencies, $XX reduce million expenditures and debt to was capital projects. to paid allocation, for million our Turning to our to due to quarter. return invest and cash priorities the remain were in timing the holders. was drive business growth and top down This $XXX

focus in variety to the expenditures that and brewery mentioned efficiencies savings, essentially net modernization and Capital ended of all that Golden and We capabilities rate. which continued our is drive on areas billion, expanding earlier. debt quarter factors with our Gavin of at fixed $X.X

floating balances to rate to facilities, outstanding at is and revolving end. has zero which commercial exposure Our paper limited our debt credit quarter

was the of debt Xx, we the per we share. with a quarter aligns approximately we EBITDA dividend X% our cash represents net It ratio time longer-term in to the rating our XXXX just intention return dividend. increase increase strive improving reinstated grade sustainably committed to it to underlying and leverage to our is with under since Our remain of maintaining towards our from investment and XXXX $X.XX And X.Xx. cash fourth target level. dividend ratio shareholders any increase quarterly of The dividend and a an second

our the is discuss first cite we quarter and year, relation our quarter. constant smallest please quarter let’s when our first remember first full to recall growth But Now rates in currency the year-over-year outlook. that considering in

in basis. smaller are So much first off the percentage changes quarter

our guidance. Onto

and growth are growth underlying pressures. full and underlying of inflationary which global for This XX%. and billion our cash reaffirming income anticipates year the industry, free $X the cost includes net beer minus flow guidance revenue in continued digit softness of sales around XXXX We caution guidance, single low despite or plus pre-tax impacts consumer both

rates to discussed fourth our As continue top benefits our XXXX as quarter volume is call, as assume in we that underlying took well net global the portfolio more that we line assumptions premiumization. growth from as than on driven, we benefit from strong pricing

which timing while we disproportionate our Keep had And another to XXXX it’s fall X%. quarter in U.S. return early, of to we point this pricing possible a of year. of the due potential in could at year pricing anticipate mind general the is first levels historical increase that until see X% more its in the the taking this benefit we U.S. it to don’t of increases,

begins its In volume, agreement a the large contract recall as brewing terms that to have a XXXX. of down at headwind financial end of termination wind we of ahead

We in as adjusted end expect U.S. quarter contract under distributor at shipment mentioned, year the fourth ahead previously the half versus the quarter. points we levels And with trends significant the acceleration first of in year trading declines with second stronger brand volume percentage prior day this I of the volumes. the posted U.S. inventory roughly four of

will inventory maintain consumption ship quarter this expect the We for in the bolt subsequent to unwind goal our to as year. we

continue the of quarter for In second we before year. we to it’ll remain in inflation of moderating year. And elevated the second COGS expect impact headwind terms in a the half of on to the be expect cost, the

hectolitre ongoing pricing, which dollars in hedging expect per full both utilizing increase business we to cost our premiumization, leaders, margin savings continued gross our the and year units. program include However, efforts, for

to our strongly brands core beer particularly key support We innovations, in and continue selling to key the season. also expect

result, marketing dollar prior year. As the plan XXXX in we to a investments increase versus

to our pleased enables to segments closing, continue business, macro with invest that across portfolio financial first in performance to confident our ability XXXX our and In beyond. ability manage prudently are the in With a sustainably full quarter of our environment. growth us price flexibility we dynamic brands and in all are and year to the strong we deliver

forward With answering we your that, to Operator? question. look

Operator

Bonnie Herzog the from question Instructions] Goldman [Operator Our Sachs. line with is first of

proceed. may You

Bonnie Herzog

Thank you. morning. Good right. All

your guidance. had on I So a question

of QX from implying Light the Bud especially guidance conservative, a share your the in pretty So single you last for seeing in year. guidance income feels strength weeks decline your you’re then gains remain on digit pressures, few with maybe given and pre-tax the saw low probably the the

sustainable? line. won’t top now I’m maybe up guess, of of you incremental on to the letting you’re reinvestments stepping you’re of to and short-term line the I this strengths are possibly drivers not necessarily some bottom So seeing the trying flow be understand any if gains assuming these planning Or

you. that color would So helpful. be on any Thank

Gavin Hattersley

lot Thanks, But Bonnie. a saw the performance really expecting. it even peak we the uncertainty for quarter many drivers got small QX you’re Good the have obviously first pleased yet. quarter base. we morning. are really we and out in impact a were Look, is haven’t us environment a did of season There’s might setting in from a that. we impact macroeconomic And of there or how and we frankly, consumer that right. not to Yes, strong and that about the

the that in We they’re haven’t into how seen I The to guidance. and has of this any nobody our that guidance is our going factored really are factored these other long we point continue, not I’m any make sure we’ve point. so into at trends April idea would

didn’t this reasons. we at time yes, So raise our guidance for those

Operator

question Grundy The next line of you. Thank with from Jefferies. is Kevin the

You proceed. may

Kevin Grundy

Great. Good just and here. on back maybe a to to on Gavin, come this. morning, the Thanks. spend results just strong congrats everyone moment

sounds like, of key your I it it’s elephant the issue room the So like kind competitor, with and because here. in feel the specifically

this So to embedded you strong do history How off to out? of April to know there’s difficult sort How playing based of industry, in question just your uniqueness potentially in the on out? I a playing a know be see you really this to your I clear, long it’s see this. answer, do guidance, there’s sort but start. nothing clearly

you’re of naturally from the your of marketing guidance competitors, and a of April. you’re price, talking what trends. trends contemplate up likely would sort And favorable be your seen we’ve in talking in whether they investment, you to stabilize key will step of may embedded to sort maybe sort have cushion not attempt advertising some there across, in whether Is

time you’re this terms a more on I to interest would think So little bit of in contemplating maybe just folks. a it, be how great

thank very much. So you

Gavin Hattersley

three additional that. is focus Kevin. not are us looking we’ve right that we’ve built strategy particularly a on And the our that. our now because very years across points Thanks, Yes, our progress our done Obviously, work the proud result of maybe portfolio at a as is seeing just over working. tells couple last our And completely doing. what our of and brands I’m we’re to that deliberately. that brands Kevin, competitors

the of going make to competitors, long-term what matter are and brands. our right happens health we no So, the to brands our with decisions continue for our

haven’t guidance to going it to I our And our situation on stay we say brands. holding current is. factored in you, our is situation focus As how said the guidance current long can’t into to where the last. is going the Honestly, – we

meaningful Our guidance a Day go in in did into guidance after we brands the our year increase did the include in contemplate I and guess our we this particularly of into July, previously in And head can of about spend that’s an way. say that as on Xth all part – supporting Memorial I that the marketing as Kevin. at our point, summer

Operator

from TD from next Azer Cowen. The question you. the Thank Vivien line of is

may You proceed.

Victor Ma

Ma is you for Hi. the Victor Vivien on This question. Azer, and thank for

to to Coors flexibility consumer and accommodate will can for chain faster outsize be, Light in prove you April in the speak While your in it’s the durable demand supply hard growth U.S.? Miller know the how to to

Gavin Hattersley

and we year the this Yes. good do really inventories I’ll quarter her that certainly Thanks ahead shipped in good Tracey starting remarks, was as the And I of first can that, for do well. And as saying in came Thanks, we point. question. then by with said Victor. that that. into consumption that shape Yes, in

our have weeks. came shape four and view, the healthy in So out remained last stable QX our an of good in inventories of point inventories from were we inventory

point view. Many are the nimble we sharp seeing position skew our rationalization, So have quite and April. we made better changes last have improved that be base to with And that we business of our some we’ve overall from we than made demand an of point a in more allowed so in And if time. as a from economy up been certainly ability the we’re just much that you our of and view we us or that’s for supply. remember a decisions us much over put react result, expanded supply to the potential to keeping chain supplier in year changes

So thanks the for question.

Operator

question from next JPMorgan. The you. of from Teixeira Thank is line the Andrea

proceed. may You

Andrea Teixeira

you. Gavin, bit a you in the demand spoke on April. Thank little

of this kind wouldn’t forces can points, perception you’re is think of I continue these dynamics to would a resonates how change those I a it envisioning? And the think pack brands history package into brand. right? price of in having and you summer? how say changes just or U.S., – described So any happen of the of specific does that But how not your you you correct, that all prudent, consumer you if that how what the of it’s the about and shift in thinking kind how architecture little going going as assume were can bit

the shift think some as places March, more You’ve data? that better? some seen, Are that as consumers have also you trade looking you that places of packs? value the bigger in you seeing you the in pointed back challenging happening the through saw the or still actually we at in to the got I decceleration weather on And on-premise. seen is that weather end conversely, seeing out, the most Are for

talk in out about you and that how seeing you those your can are Thank guide? So dynamics play you.

Gavin Hattersley

versus certainly directed in at the March industry so Thanks, which – Pacific softer did of year. see view the specifically volume didn’t little a performance, from slow But We and keep the the point it quarter. on-premise comments off-premise of number because California. the mostly overall in offset the quarter, dynamics reasonably questions on-premise In was bit, out the remained we my we played in more us happening in region to were was trends out the trend benefited Andrea. prior a provide January what that I’ll Look had first certainly us there. cycling Omicron, for your and because of positive which U.S., an

frankly, That world. weather due you part and particularly view, that Andrea, of And softening gain geographic of the pleased the when about. perform Pacific part, couple the that least industry California, region of current driver and that we macroeconomic point three change California, and at our that the of was haven’t in ahead with in we all left at our industry strategically of the dynamic years share the us done very environment probably did to From in bit it’s situation biggest are we we mostly But which environment of the in over trend fact our a that into confident current we’ve we’re positioned last this guidance, to cautious has short-term. just any the built portfolio, the us navigate work seeing. the the that

thanks for that So question.

Andrea Teixeira

super on same the Europe? Yes, helpful. view you then similar helpful. super Can talk That’s

Gavin Hattersley

Yes, sure.

So consumers remained, UK in the remarkably a view, resilient. from frankly, Europe of point

there discretionary seen on-premise we And in impact and in it of than above degradation disposable is moving trends different less and have more consumer Eastern in is – so view, a consumer from sorry, in in where the are particularly our seen with durables, being sales were goods UK. little Europe, we’ve haven’t they in Central the inflation XXXX. and the point income much an in we not fast consumer Eastern Europe revenue consumer mean, Central what durables the And behavior of and A I certainly UK.

were fact in pleased the – volumes excluding the California the in U.S., Canada, the In we our that as with were we obviously, And Canada a saw up, we very trend X.X%. did situation. similar

Andrea. that, for thanks So

Andrea Teixeira

Thank you.

Operator

you. from Thank question line of with Rob next is Evercore. the The Ottenstein

may You proceed.

Rob Ottenstein

much. thank industry Gavin, very beer the Great, high very costs. you is fixed

chain And from a volumes, leverage the lot increase will operating So in windfall knows a time, get profitability. least seems of any to shape who of and great terms long very demand kind period some at of you ability meet supply have that given in short you how increased your of that. in sounds solid for

– How it's in of for right, books the already, April. and kind

even step Just you more? the Do you get trying up capital how that thinking you – brought think about Do we spinning money? So you're of sense to should bring windfall. to you marketing different about Would spending allocation? think that how a bottom about it line?

Gavin Hattersley

more through our brilliant as right. supply get I they've in better mean right, is Robert, of along. breweries, said, the a job chain I several we've And And But shape your is. I earlier, opposite that of happens how is April forward comes our or we what's of see deleverage as gone and the none it said this fixed ago. the it than see guidance into sustaining cost play. it you're years more of going in any done was volume meeting much what assess and as – happening you're as demand you

We marketing fact, headed going spend to in Xth into into always Day whole Memorial as July, we increase were and of for our the of and summer summer.

States or our core Asian. So here strong we feel Canada in that across in of brands, whether United up all the they or we have really plans for behind summer the

got spend our right an we'll could into If that's factored is opportunity, we So we guidance that change we brands. but behind obviously, it now. what think saw our to continue we as

Rob Ottenstein

perhaps the that advantage given have you that of you take we in So we – momentum the up market, perhaps and in have to would look expect wind behind your pick while back? marketing, should that would you the spending

Gavin Hattersley

great Yes, Robert, made our not brands doing. three and are really brands our where as on portfolio. And focus built and we've very progress we've the you're our kind competitors over on what last on our the of implying I as focused our years, remains deliberately said, focus is and

coming spot core particularly XXXX health core point is portfolio portfolio, an great our our in quarter. of continued view. out really of into The overall think I the our from saw brands momentum first we

happening this happened. strong really we're marketing of set a for in that the plans a strength environment. brand we're to from And view, support sales of up all our believe and we And summer execution point regardless what's support before plans designed broader

Rob Ottenstein

you thank much, very Gavin. Okay,

Gavin Hattersley

Thanks Robert.

Operator

the Thank Spillane with you. next from America. question line is The of Bryan Bank of

proceed. may You

Bryan Spillane

Thanks morning, will. if quick and you good actually Tracey. had two operator I and Gavin questions,

that is in in the the is first more shipping consumption, right. seasonality, one first of a of really getting quarter The to back U.S., the just just kind normal ahead

to shoulder some build peak. have try enough in in to inventory the seasons the You

the would the quarter? what have that of with So ahead first is really supply chain in And shipped – normalizing, why I kind have you a follow-up. then

Gavin Hattersley

it we I top times been at look, practice to that frankly, we be. we're like in our uncertain sure can living Bryan, the to inventory when end where volatile of we're our mean, that has make would such

how over of why that's were been years, XXXX, of last end we right. so three something, there's that's the the and where felt were And the we out first feels at like It coming we always quarter.

And so right them. sure sure that we as make at level our we to wanted inventories our low were can out had as possibly we make stocks have that of to the

so we And was into through would April of QX, perhaps been have May. because years ourselves coming takes someone higher than and in we found previous out the build that for place normally inventory position in

So view in Bryan. it of at good – the was we're point from place an inventory a moment,

Bryan Spillane

first And the of than the I were was think Okay. spend the expecting talked in remarks, Tracey, then little quick about of And your we the year. lower bit middle a you in just quarter. MG&A. on a one what in more It

the the – I there first of in sure So was you'll wanted the that seeing middle sort what quarter have of that in the spend is unusual make or year? the more wasn't just just and we're marketing to that anything anticipation expectation

Tracey Joubert

Yes.

flat. was MG&A So

always we've in a particular, QX, lot Gavin more Lite spent have that spend, three our marketing very you In about around Bowl put ad, Miller weeks before Light Super did said, Coors planned brands. wisely. talking investment money into as but We the went obviously we to of Super at spend dollars and marketing two, XXXX. Bowl, a If we our look in

And actually delivered but were to able spend big so we and a was price less there tag, more.

we brands had increase our QX, key had remind in In Topo the big fact, to and impressions we in over Hard February XX% just the last across that three you Seltzer. of Chico January versus launch year. But also year prior in

that so from And big we year. were there spend was lapping a last

Bryan Spillane

that’s Tracey. Thanks right, helpful. All Thanks Gavin.

Operator

the of Steve with is you. The Deutsche question from next Thank line Powers Bank.

may proceed. You

Steve Powers

Thanks. Good morning.

potential to prove I is these should to supply want there want be season and stocks guess, that back any we the the of all the summer, structural course to summer? and of inventories it way and chain, selling the up can't the think sanity that. trends these going you hit or out that for the I continue shifts Just if just trends and over back check I continue share even over guess, to I risk about kind go just of peak the extend? keep through to

leverage and economies leverage is point of assuming scale the there that on then the trends continue, volume And getting, you're of a faster the volumes. positive too factories these to the supply much become course much chain get through tipping your expected this where to of and handle with of up keep economies than to scale trying sort start again, and you into

about think to that through Just year. we want the the as think remainder Thanks. of

Gavin Hattersley

Thanks, Steve. there answer isn't. question to Look, your no, second first,

forward. of benefit the across our set larger as So a reduction costs have things a fixed spreading volume move doesn't

an obviously, a how From current I would in are terms this, just or where inventories good way. these little said, factor to coming of And long I have big but for out trends planning year. of weren’t had you going the to that question, capacity been. as could how overall predict tell we that it's because bit of a in any as point it's of as wouldn't we right, continue. view, we’re great hard I hypothetical positioned, we So we’re

kept very that inventories up we’ve the supportive first in towards in quarter. the And the end Our distributors were momentum of back building year.

So point view. could as we’re well of supply be from positioned we as a

to Steve. have just out. how Thanks, that we’ll see plays So

Operator

the next Bernstein. from The you. line of question Thank Sarwat Nadine of is

You may proceed.

Nadine Sarwat

morning, me. for good questions Two Hi, everybody.

of in and have that you all or consumer Thank on and longer-term getting your implications share biggest U.S. any space in very preferences? then And we’re scanner between right anticipate the you strong ground you in provide feedback any changes do you’re on your competitors distributors the shifts you. recent share the terms April, obviously first, shelf from question, for could but So what data of retailers second favor? commentary from seeing perhaps now

Gavin Hattersley

XXXX also can Look, going And why first advantage view, taking from a that’s of quarter. long frankly, think the point of view anybody is out of don’t our I to and Thanks, a focus of point consumer and I squarely brands our created last. from out Nadine. momentum coming situation the we say the and – how is distributor on of that

there the In can actually look, on chains changes as have shelf resets seltzers craft, retail to shelf dependent growth into and for the begun seemed across finished was coming their strategy to resets very Most fall. you bigger going do reduction sets changes craft retailers. then FABs and And their retailers resets, coming of have from to spring directly consistent and process. of they and meaningful it’s make be some not with in and terms a only the spring, space minor in ones the RTDs space expect, the retail in

extent, growing have space have where research have picture but growing, premium a imports we physical taken We a growth super for significant all space. and we seen distribution a the do premium complete we’re read, in growing lights both to don’t a and lesser but that and is we’re of have place,

strong And due space our frankly, distribution but seen the well. in in space growth we’re of – core innovation, and portfolio growing we’ve growth also to as

well with biggest for category Simply really opportunity like biggest space craft. our aligns us in the retail seeing in innovation the trends And feeling gain for we’re to good we and additional are segment Spiked. So about seltzers XXXX really bets

Nadine Sarwat

you. Thank it. Got

Gavin Hattersley

Nadine. Thanks,

Operator

Carey of from you. next Chris with question Fargo. the line Thank is Wells The

You may proceed.

Chris Carey

Hi. you. Thank

Gavin Hattersley

Hi, Chris.

Tracey Joubert

Chris. Hi,

Chris Carey

the into the pricing So plans built strategies that your in U.S. you in a mentioned think increase Tracey, would market. for be typical in with were probably line I that more price

do price with [indiscernible] competitive Light of And right? are there something concerns one what think a out that are effectively, think this many activity contemplating. that the the is cut I Sagas Bud does I from

delivery thinking Perhaps, over context firm on that a how guess view total work beer? thoughts a makes want to But that you so should just price Can on you that within so price didn’t And broader this to you be sense. just how it. increase, Thanks just through be that, there of volume if gives competition increase and price. marketing the which in any price you frame maybe through fall spending about I you your much. that flexibility maybe sensitivity you’re enough would going to year, fall be increasing

Gavin Hattersley

that seen Chris. a been I the half we brewer some that you are may seen levels, full mean competitive in promotional we full not But not market not the thing. year’s it of full in last not but widespread It’s going. Thanks, you from upfront the point hard isn’t to – increase certainly reported, and I’ll GI, portfolio point as thing media. a that’s certainly funded a as Look, have have moves where seeing certainly read say all make may of to degree have view it’s

to by is market continue we’ve right, do brand, market basis. pricing done it, by We always a as which on brand

X% holding last cycled price X% on the sort this last We’re coming and on call in year range of steady put increase through steady what that now price said full obviously our increases we through last fall. year, was we through to we’ve got the from spring earnings which we’ve holding the

to levels portfolio. But a more we on of of there’s believe that And to that for what historical our sort when X% time increases exactly to pricing price now the determine and we full point still view Thanks, do to will plenty range. X% of Chris. continue a make we’ll decision brand between revert in obviously to that have back for

Operator

the is question with Lauren Barclays. next Lieberman The you. of from line Thank

You may proceed.

Lauren Lieberman

had morning. Great. Thanks. I questions. two Good

knowing context point was But in the and U.S. shared here. just weeks about of who from the between you or momentum is The in the I you’ve that was just brand curious in happens volume said the recent volume spread and four-ish. guidance recent to not first four that included how knows what financial think seen that in the

in thought takes the what be one. all think market we the is it in something year recent guidance that is year trends that gap dynamics was sooner? see that was of yes, in that. – Nielsen, that, So of should share closed we about just kind that quickly? be through work closing volume or that in through would So more question that Would it that the you the kind Should hold

back at you’re to half. down now until was least as know contract And the or accelerating a second in but as and specific you’ve spoken think manufacturing pressure language the exit, the that it sort speaking heard, it significant quite on the of an from wind think to and and gradual the we’d before, I was contract terminates, I fashion, but a in not previously I

any might tying on just such decision you that quantification also hold was kind the wondering, the guidance I so that more So put a the in to with quarter, fourth of despite because outperformance Thanks. QX. could around in and help of in line significant if some

Gavin Hattersley

ship tell going try you where towards go. full to two is And our but point said, comments it’s any Thanks, Lauren. our too overarching of where I the always the Obviously, to she this all into right? soon Tracey, of built question, year. haven’t and take to Tracey’s an plan you’ll Lauren, second point said, from view, we in consumption as guidance reiteration, trends is for current the

– we their in weather rear said, make the issues, through which very to first may remained quarter have I And through summer. our deliberately shipped we could that whole we sure So pretty of April. as any steady as unexpected over levels that, month inventory head

the are able So our the channel scan supply meet been chain – data. demand you available that increased through to obviously of publicly and see has can

about And is add all relates so that’s for to it can I then choice. shipments as for year color brewing contract the and you the

Tracey Joubert

Yes.

It in XXXX. cetera, wind a So and significant the brewing do year the because is contract as again, with but quantify expect a forecasts, down a of it brewing at that Lauren, in is end second mentioned, partner the this we We QX. to receive half based in on agreement. accelerating of it decline I see this do – et does can’t yes, I contract large I related to volumes

being I able we to So as much add than can color as that’s to which about can’t, that. other quantify,

Operator

Thank from you. The Citi. of Falorni next the line with Filippo is question

You proceed. may

Filippo Falorni

good Hey, morning guys.

Tracey Joubert

Good morning.

Filippo Falorni

on Question – morning. good

dynamics, but step activity the competitive How of XXXX? reflect the see are for Thank we I more big beer a seen trade down you know value? promotional obviously looking And beer see to your you year. picture, in or the signs the are lot the you expectations for growth you. talked yet, of within the the industry, industry a again, maybe up assuming do haven’t the mentioned to evolving you pricing in consumers on, really anything you question entire the Just market in need obviously, bigger for share some do that the of that a for dynamics balance industry what about of but more year? balance

Gavin Hattersley

Filippo. Thanks,

of that much not that can’t really is going of line at view, one our we pretty a a to of I’ve fits already – other And more assumptions continue as or So from size will From I on said not than – of I volume. view, that. things From that point than said, don’t a is point and than approach may more rate full have there. pricing to add all. what in – think we’ve brand, pricing growth on market couple year We certainly by a consumer. very at macro from what an lot been come and that. do look effective we a environment for the said, may point pack specifically. view overall uncertainty top a the as from by Tracey impact by of And It’s I there’s

at still seeing pace. though, premiumization, a slower We are albeit

trade We’re significant not segment down. observing

overall And how larger of tradeoffs as into singles midsize are the make that seeing consumers away dollars we and packs stabilizing. from value for brands as value continue trends Filippo. to packs. pricing obviously build our as and with we up segment and of volumes. down, pricing, into and the we continue And industry trips packs. to is units We’re due the said, think And shifts that which all look see being impacting I consumers, about for primarily buyers to that into they Thanks, various

Filippo Falorni

you. Thank

Operator

from The of the is Morgan Stanley. Eric next question line Serotta with

proceed. may You

Gavin Hattersley

Eric?

Operator

Eric, now is your line open.

Gavin Hattersley

this Maybe already. answered had Eric question

Eric Serotta

there. Yes, I my most for there. been that. mute but was you. about mute I was answered, have on one questions of on Sorry

anymore. unit doesn’t your You that emerging revenue target $X unit for billion anymore growth is previously understanding or with exist really had my doesn’t business exist the reorganization,

about you with and you’re growth understand used you wondering that that So about to portfolio reconcile it prospects I thinking seen for that unit. can’t be fully how are the for the that date thinking exactly, if how of brands reorganization? growth progress part the but to we’ve

Gavin Hattersley

that growth. an Eric. to $X emerging support applicable. mean, is don’t Thanks, changes I designed Americas anymore, structure accelerating Look, the have longer mean – we’ve I so the is to the we division here growth right. you’re goal But billion future all in no completely made the

to support leadership. us sales does obviously capabilities and priorities, that of going in to is And more marketing going innovation more. of have and obviously as We’re aligned our and And we’re core collaboration as between more examples well much The Beyond be brands. going to it would be that aligned Beer our more have in accelerate digital. all And aligned it us more allows is initiatives to Beer. allow to have of have then Beyond scale to

Hard they Peace coming of Tea, in Nelk and were like With Five Coca-Cola spirits Spirited like full and total relationships with ZOA. spirit with strength, like sort Beyond Beer expanded housed full brands different Topo because together, and with Chico strength houses, Trail Barmen

with that that this And activity the simply, even faster. with one Zoa, full into seeing spirits. of designed seeing our that fits house now strength is we’re big All drive that to that seeing with we’re we’re

the structure, only but about into clear. that already becoming new XX are days benefits really the we’re So

month of process. two or I’m new pleased sort the our of very So first with

question, for that Eric. thanks So

Operator

The line of the of from Grom next Peter UBS. is question

may proceed. You

Peter Grom

operator. everyone. morning, Thanks, Good

as year, year-over-year more anything we inflation expect And particularly Thanks. year, earlier the the margin phasing how hectoliter I on Tracey, just materially gross then per I inflation inflation you the you a on starts strong commentary increase. changed? the think gross has should about of appreciate the margin basis, versus it kind and broadly moderates. similar? given Is basket of look at But your So, to still know today of when in

Tracey Joubert

Okay.

Peter. that, for thanks So

So is a by little EMEA out brewing the the packaging some and inflation premiumization, But and of coming that especially inflation. what’s gets all different also and materials, are our pretty APAC. similar. brewery It’s bit driven

premiumization, we a I it as does it higher COGS, although as portfolio higher So come our at well. said, at drive as margins comes

So cost as based higher balance portfolio our the on we expected the well our as line by saw on-premise driven a hedging UK year, sight look have a But premiumization, the as contract savings. programs, performance we’ve good we did to QX. passes we in of in with and COGS the performance the of and our at COGS got

year. the And COGS thought, line are so that’s at see. why us with inflation helps moderating able the to this to inflation moderate we in good some half or the – we of the of we moderating least back of And look the increases that

I maybe mean, that different than the think other nothing there’s I premiumization. So significantly

Gavin Hattersley

Thanks, Peter.

Operator

The Wedbush be final you. Securities. Pascarelli question from will the Gerald with Thank of line

may You proceed.

Gerald Pascarelli

Hi, good morning. very question. Thanks much for the

on it’s your simply obviously come Just been you’re your spikes, national to top on incremental launch June. in cycling line to growth and going up

you due that the better to potential Seltzer. been allocated you’ve be you Thank So that shelf And the help Any impact think you. year Hard would cycling see going to to back distribution color Does achieving? may in of less half that fact then back to placement? shelf there think the product helpful. mitigate resets, these you space how do about the see gains likely we do

Gavin Hattersley

the Topo on in meet three massive all the caught hard bit just that view, point And since number able it Because frankly, very by Chico weren’t Vizzy. to a with quarter. coming sparked summer demand the say, Gerald. as and first surprise, number seltzer. track to been, you performance Thanks, of of little XXXX. U.S. we mean we Simply of success has pleased of a launched a it existed. from Look, us out I of four Chico the Topo is be and

our and we’re very work now coming that the in-house And have May, in with going the demand. with variety that to packet meet supply a to done confident able team online elevated chain feel that we be

take been although, we’re advantage to many what and that’s in stronger, of. strong have we’re even going respects, comps, So there against going up could

Spiked retailers. in has our amazingly which Simply just up been been far. early QX days, just with some so it’s no of mean, – on launched, but it’s in which Canada, Simply really got really We’ve to off key launched Peach, very had has start impact successful I also Spiked We’ve late Canada. strong really our in performance But it’s QX, a so

So full now. a of feeling we which good right flavor flavor point at it position we’re about is and from really view, are how our looking

that question. So thanks for

Operator

Q&A to Thank you. remarks. the concludes our morning. I back for session for That the this call would Greg Tierney call over turn to concluding like

Greg Tierney

may there been participating with so as a weeks Investor in many forward team look much additional have Relations the that year Thank so to our everybody and answer today’s please great Thanks come to with of and today, we you, weren’t operator. in follow-up for able we and the you call. progresses. days that I know questions Have talking day. thanks

Operator

Thank today’s call. conference for you concludes participation. That your

You disconnect may now lines. your

Molson Coors Beverage (TAP) 2 May 232023 Q1 Earnings call transcript