Q4 2024 Molson Coors Beverage Co Earnings Call
Good morning and welcome to the Molson Coors Beverage Company fourth quarter and 2024 fiscal year earnings conference call. With that I'll hand it over to Greg Tierney, Vice President, FP&A and Commercial Finance.
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.
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.S. gap 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.
With the exception of earnings per share, all financial metrics are in constant currency when referencing percentage changes from the prior year period.
Also, shared data references are sourced from Cercana in the U.S. and from Beer Canada in Canada, unless otherwise indicated.
and underlying earnings per share, which equates to underlying diluted earnings per share, as defined in our earnings release.
With that, over to you, Gavin.
Gavin: Thank you, Greg. Hello, everybody, and thank you for joining the call.
2024 was another year of progress for Molson-Crook.
Gavin: progress in advancing our strategy and in achieving bottom line growth.
Gavin: And with a challenging macroeconomic environment, we continue to support the health of our brands globally.
Gavin: 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.S.
Gavin: We achieved incredible growth in Canada, broadly across all price segments of our portfolio.
Gavin: We continue to premiumise off a high base in our EMEA and APEC business.
Gavin: We terminated low-margin contract brewing agreements and exited smaller, unprofitable businesses.
Gavin: while investing in areas that we expect will drive long-term, sustainable, profitable growth.
Gavin: 2024 was also another year of continued strong cash generation that contributed to earnings power.
Gavin: We delivered more than $1.2 billion in underlying free cash flow, which combined with our healthy balance sheet enabled us to not only invest in our business, but also invest in our economy.
Gavin: but also to return $1 billion in cash to shareholders through a growing dividend and share repurchases.
Gavin: 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.
Gavin: Now with that high-level summary, let's get into some of the details.
Gavin: In the fourth quarter, consolidated net sales revenue was down 1.9%.
Gavin: Underlying pre-tax income was down 0.9% and underlying earnings per share was up 9.2%.
Gavin: In our America's business, Canada continued to perform strongly, while as expected, the U.S. faced a temporary headwind related to the exit of PEPS contract Britain, which was a headwind of about 450,000 hectolitres.
U.S. brand volume was down 3% in the quarter.
Gavin: 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: These drivers contributed to a 6.7% decline in U.S. financial volume.
Gavin: Related to the deliberate inventory build in the first half of the year, U.S. shipments trailed brand volumes by approximately 150,000 hectoliters in the quarter, resulting in largely shipping to consumption for the full year as intended.
Gavin: In a marionette book, our volumes are impacted by the continued heightened competitive landscape in the UK, as well as a softer industry in Central and Eastern Europe.
Gavin: However, this was largely offset by strong net sales revenue per hectare growth of 7.8%, driven by favourable sales mix, including continued premiumisation and pricing.
Gavin: This, along with fatal net pricing growth in the Americas and mixed benefits from the exit of PEPs, resulted in consolidated net sales revenue for head-to-head growth of 4.8% for the quarter.
For the year, consolidated net sales revenue was down 0.6%.
Gavin: Underlying pre-tax income was up 5.6% and underlying earnings per share was up 9.8%.
Gavin: 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.
Gavin: 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. industry softness in the peak season months of July and August.
Gavin: 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.
Gavin: From a volume perspective, PAFs had a negative 3 percentage point impact on America's financial volume for the year.
Gavin: 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 module.
Gavin: And in what we expect will provide further benefits, we are no longer a contract brewery from the back USA and Canada, with that volume fully exiting our Canadian business as of year 2024. Traci will share more on the impact of that.
Gavin: Consolidated underlying pre-tax income was above the midpoint of our reaffirmed mid-single-digit growth guidance.
Gavin: 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.
Gavin: In addition to better net sales revenue performance, we significantly exceeded our reaffirmed mid-single-digit underlying earnings-per-share growth guidance.
Gavin: which we had narrowed to the high end of the range in early November.
Gavin: The beat was largely supported by a lower-than-expected underlying effect of Taxate due to U.S. geographic sales mix, as well as the better-than-expected top-line performance in the fourth quarter.
Gavin: Our underlying earnings for shared growth was also supported by our share re-purchases.
Gavin: 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.
Gavin: In fact, for the first five quarters since the Share Repurchase Programme was announced, we had already executed approximately 40% under this up-to-five-year programme, which, if you straight-line that number, would have us at only 25%.
Our confidence stems from our progress against our strategic priorities.
I'll start with our core power brains.
Collectively they remain healthy.
Gavin: In the U.S. Coors Light, Middle Light 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 percent of their combined volume share gains on a two-year stack.
Gavin: which is an improvement from both the second and third quarters.
Gavin: And compared to the fourth quarter of 2022, these brands were up 1.7 share points.
Gavin: Coors Bank would continue to perform very well, with brand volume up 16% and growing industry share for the 14th consecutive quarter on top of significant prior year gains.
Gavin: Bankwood was the fastest growing top 15 beer brand in the US in terms of volume percentage growth in 2024 and it's not a small brand in fact it's one of our top five brands globally
Gavin: 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.
Gavin: In Canada, Kurzlach remains the number one black beer in the industry and again grew share of segments in the fourth quarter.
Gavin: The Molson family of brands also gained volume share for both the fourth quarter and the year. This performance has helped us to drive 23 consecutive months of share growth despite the challenging industry backdrop.
Speaker Change: Eddie Murray and APEC, a number of our core power brands are leaders in their respective markets.
Speaker Change: 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.
Speaker Change: 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. This was driven by Ajusca in Croatia, which increased by only 5%, as well as the extremely successful re-launch of Cariman in Romania.
Speaker Change: Tully Mine has already reached over 300,000 hectares since March and has been incremental to the overall portfolio in the country.
Speaker Change: Turning to our premiumisation priority for both Beer and Beyond Beer, our above premium portfolio was 27% of total net brand revenue for the year.
Speaker Change: India Mayor and APEC where over half of our net brand revenue comes from above premium. Our business continued to premiumise.
Speaker Change: Much of EMEA and APAC's premiumisation success has been driven by Madrid, which grew net sales revenue to double digits in the year, and is the number two larger on-premise in the UK in terms of value.
Speaker Change: Madrid is also exceeding expectations in Bulgaria following a very successful launch there last year.
Speaker Change: In the Americas, our above-premium share of mid-brand revenue is 22% for the year.
Speaker Change: This was supported by Canada, which also continued to premiumize with its above-premium net brand revenue up double digits in 2024.
Speaker Change: This was driven by the success of Miller Light, which is the fastest growing major beer brand in this market on a percentage basis, as well as by our flavour portfolio.
Speaker Change: We are growing more share of flavour than any other major brewery in Canada and Madrid is also performing ahead of expectations in Canada following last year's launch.
Speaker Change: In the U.S., there is work to do, but we see this as an opportunity. And we have big plans in 2025.
Speaker Change: 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.
Speaker Change: In beer, we are moving in the right direction with the Bloomer and Brand family as we are starting to see signs of stability.
Speaker Change: In fact, the Blumenbrand family held share of industry in both the third and fourth quarters and took share of craft during both periods.
Speaker Change: 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 bear brand.
Speaker Change: And we have plans to build on these results for the Blumenbrand family in 2025.
Speaker Change: And we are betting big on Peroni. As we have discussed, we have onshore production which offers a number of benefits.
Speaker Change: It significantly improves consistency and certainty of supply, which has previously been a challenge when we've tried to scale the brand.
Speaker Change: 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.
Speaker Change: Our commercial plans kick off in the second quarter and while it will of course take time, ultimately we see no reason why Peroni can't rival the size of other major European imports in the US over time.
Speaker Change: In Beyond Beer, which is a big part of our premiumization plans, non-ALK is a key focus area.
Speaker Change: It provides us the opportunity to capture more occasions, particularly among younger legal age Gen Z consumers.
Speaker Change: So we are investing behind the growing areas in non-alk where we believe we have a right to wood.
Speaker Change: This, too, will take some time, but we are making progress.
Speaker Change: We spoke in detail in our last call to call about our increased investment in ZOA to a majority stake, and plans to accelerate the brand are well underway. 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 US food.
Speaker Change: 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.
Speaker Change: And speaking of opportunities to advance our Non-LAOC plans, we are so pleased to have entered into a strategic partnership agreement with the world's leading supplier of premium carbonated mixes.
Speaker Change: The partnership agreement gives us the exclusive commercialization rights to the Fevertree brand in the U.S.
Speaker Change: This is a significant step forward in our strategic ambition to build a total beverage portfolio for a wide range of consumer preferences across both traditional alcohol and non-alcohol occasions.
Speaker Change: Now before I pass it to Traci, 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.
Speaker Change: Collectively, our global core power brands are healthy and we have great commercial plans in 2025 to continue to support them.
Speaker Change: We are changing the shape of our global portfolio, with premiumization successes in EMEA at APEC and Canada, and we have targeted plans for the US.
Speaker Change: Our operations outside of the U.S. are performing well and contributing meaningfully to our growth.
Speaker Change: Our capabilities across our organisation support premiumisation and focused innovation, supply chain efficiencies and commercial effectiveness, which help drive sustained long-term profitable growth.
Speaker Change: 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.
Speaker Change: 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 Traci.
Traci: Thank you Gavin. We made strong progress in enhancing our profitability and financial flexibility in 2024.
Traci: We delivered over $1.2 billion in underlying free cash flow, in line with our expectations.
Traci: And it was supported by underlying pre-tax income margin expansion of nearly 80 basis points for the year.
Traci: This expansion was driven by positive net pricing, mixed impact, moderating inflation and cost savings which more than offset volume de-leverage, which had a particularly significant impact in the second half of the year related to US shipment timing.
Traci: Also, contributing to the margin improvement was lower NG&A, largely due to cycling innovative levels in 2023.
Traci: GNA declines were mostly related to higher incentive compensation in 2023.
Traci: 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 million, given the accelerated demand in the U.S.
Traci: 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.
Traci: In addition to investing in our brands and business, we continue to return cash to shareholders.
Traci: In 2024, we paid $369 million in cash dividends and $643 million to repurchase 10.9 million shares.
Traci: Since the plan was announced in October 2023, we have repurchased 6.7% of our Class B shares outstanding. It's an up to 5 year, $2 billion plan and, as Gavin mentioned, we have utilised approximately 40% in just the first five quarters.
Traci: We ended the year with a healthy balance sheet and our net debt to underlying EBITDA ratio was 2.1 tonnes, which is in alignment with our long-term target of under 2.5 tonnes.
and we have no debt coming due in 2025.
Traci: 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&A that support our strategic growth objectives, like our recent investment in fever trees.
Traci: It also provides us the opportunity to return even more cash to shareholders.
Traci: And we are pleased to share that today we announced our quarterly dividend of 47 cents per share to be paid on March the 14th. This is an increase of 6.8 percent and represents our fourth consecutive year of increases, clearly demonstrating our intention to sustainably increase our dividends.
And now I'll conclude with our financial outlook.
Traci: For 2025, we are issuing guidance that is in line with our long-term growth algorithm.
Traci: However, the global map environment is rapidly evolving, resulting in uncertainty around the effects of geopolitical events and global trade policy, including the impact on consumer trends.
Traci: As a result, our outlook does not reflect the impacts of these activities or any imposition of import tariffs by the U.S. and potential retaliatory actions by other countries.
Traci: Also please remember that net sales revenue and underlying fee tax income growth guidance are on a constant currency basis and underlying earnings per share are not.
Traci: Therefore, continued strength in the US dollar will result in a headwind to our reported results as well as underlying earnings for share growth, and in the affected period using the current exchange rates.
With that said, let's review our gardens matrix.
Traci: Low single-digit net sales revenue growth on a constant currency basis.
mid-single-digit underlined pre-tax income growth on a constant currency basis
High single-digit underlying earnings per share growth
Traci: underlying free cash flow of 1.3 billion dollars plus or minus 10 percent
Traci: Underlying depreciation and amortization of $675 million plus or minus 5%
Traci: net interest expense of 215 million dollars plus or minus 5 percent
Traci: underlying effective tax rates in the range of 22 to 24 percent and capital expenditures incurred of 750 million plus or minus 5 percent.
Traci: Drivers that underpin our gardens include anticipated annual net price increases of 1-2% in North America, in line with the average historical range, and for other markets to trend in line with inflation.
Traci: Mixed 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.
Speaker Change: We expect this to come from continued premiumisation in the NMEA APAC and Canada, as well as progress in the UEEs, where, as Gavin shared, we are starting to see some initial traction with LUMU, have big plans for Peroni, and are expanding in non-ALC.
Speaker Change: While fiduciary and the consolidation of ZOA provide incremental benefits to the top line.
Speaker Change: We will also be cycling revenue from the smaller regional crop breweries we divested in the third quarter.
Speaker Change: and, more significantly, 2024 Pat and Labatt contract brewing volume, as these contracts terminated at the end of last year.
Speaker Change: On a combined basis, we expect a related approximate 1.9 million hectolitre headwind to America's financial volume in 2025.
Speaker Change: We produced about 1.2 million hectolitres of peps in the US and 700,000 hectolitres of Labatt breads in Canada in 2024.
Speaker Change: Given the PEPS 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.
and the 2024 Labatt volumes follow typical seasonal trends.
There are several additional shipment phasing considerations.
Speaker Change: In the first quarter, we are cycling particularly strong demand for our core power brands in the US in the prior year period, when US brand volumes were at 5.7%.
Speaker Change: Also, in the first quarter of 2024, we benefited from higher than typical inventory goals given our anticipation of the fourth worst strike.
Speaker Change: This contributed to US financial volume increasing 7.6% in the first quarter of 2024, despite the exit of 350,000 hectolitres of PEPS volume.
Speaker Change: This higher than typical inventory build extended into the second quarter of 2024 and we do not anticipate a similar level of first half inventory build in 2025.
Speaker Change: 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.
Speaker Change: The costs will be determined over the next few months based on discussions which are ongoing.
Speaker Change: We also expect full year margin expansion coming from a number of drivers.
Speaker Change: They include mixed benefits from lower contract brewing and increased premiumisation, moderating inflation on input costs, and productivity improvements and cost savings.
Speaker Change: We also expect to continue to put the right commercial pressure behind our brands globally.
focusing on retaining existing customers and attracting new ones.
Speaker Change: 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.
Speaker Change: We believe we have the right strategy, and with strong brains, a highly cash-generative business model, and a healthy balance sheet.
Speaker Change: 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.
Speaker Change: With that, we would like to open it up to your questions, operator.
Speaker Change: Thank you. We will now begin the question and answer session. If you would like to ask a question today, please do so now by pressing star followed by the number 1 on your telephone keypad. If you change your mind or you feel like your question has already been answered, you can press star and then 2 to withdraw yourself from the queue.
Speaker Change: As a reminder, we ask that you please limit yourself to one question per participant.
Chris Carey: Our first question comes from Chris Carey with Wells Fargo. Please go ahead.
Thank you.
Hi, good morning, everyone.
Morning, Chris.
Hey, Gavin.
I was wondering if you could comment a bit on.
what we're seeing in the beer category.
Chris Carey: specifically, you know, 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.
Chris Carey: 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.
Chris Carey: And then more of a just sneak-in question, but Traci, are you factoring any share purchases in the outlook or any context on share buybacks for this year? Thanks so much for those.
Thank you.
Speaker Change: I'll let Traci answer your question, but I'll deal with the industry first, Chris.
Speaker Change: Look, I mean, if you look at 2024, there was a lot of noise, right? I mean, we talked about a lot of that over our earnings calls with trading days and holiday timings and turbulent weather and all sorts of things going on. And
Speaker Change: You know, summer was not particularly good, but we did see progress in Q4. And in fact, I think Q4 ended up being the best quarter of industry performance that we experienced last year.
And you know, Chris, as it relates to...
Speaker Change: current trading. I would say what we said on the last call and I think the call before that is, you know, I think, I think
Speaker Change: Being cautious of short-term trends is important, right? Because I think once you get to the full quarter and you remove, you know, noise that exists on a week-to-week basis, you get a much better sense of what's happening in the industry. And, you know, even with what you're seeing in the first...
Speaker Change: publicly available data for 2025. It's not terribly dissimilar to what we were experiencing in 2024. Again, there is noise around.
you know, weather and timing of holidays.
Speaker Change: I would just caution you not to draw assumptions based on a very short period of data, Chris.
Speaker Change: Just in terms of share repurchases, we do intend to continue to execute our share repurchase program. And a reminder, it includes both a 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 it's appropriate.
Speaker Change: So, based on our $2 billion program, which we announced in October 2023,
Speaker Change: And as Gavin said, you know, we've already utilised about 40% of it in just the first five quarters, and it is a five-year programme. So I think it's clear our commitment to share repurchases.
Speaker Change: 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,
Speaker Change: planned investment in fever tree could drive that. But as I said, we are committed to the share repurchase program that we put in place.
Thank you.
Thanks, Chris.
Speaker Change: Thank you. Our next question comes from Peter Graham with UBS.
Please go ahead, Peter.
Peter Graham: Thanks, operator. Good morning, everyone. I really wanted to just follow up on Chris's question there.
Just some perspective on the top line guidance.
Peter Graham: I know there are various flips and takes, Traci, as you alluded to, contract brewing, fever tree, et cetera. But I guess just how are you actually thinking about underlying category growth?
Peter Graham: across your key geographies? Are you assuming category growth rates improve as we move into the summer, cycle easier comps, or are you kind of assuming the steady state of category growth improves that would be more of a source of upside?
Thanks, Peter. Look, if you... If you... If you...
Peter Graham: 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, you know, Canada beer industry trends are fairly similar to the US.
Peter Graham: As I said to Chris, we're not seeing anything meaningfully different from the previous trends that we've shared in there.
Peter Graham: in the US. Value-conscious consumers are still looking to engage in channel and pack shifting. At the same time, the industry continues to see premiumization, which plays perfectly into our overall acceleration plan.
Peter Graham: Chris that we're making on our overall acceleration plan, that's our KOL brands globally with us the premium monetization progress.
Peter Graham: Taking all weather.
Peter Graham: No.
Peter Graham: Acceleration in beyond beer.
Peter Graham: So it's all of those factors taken into account.
Peter Graham: Yeah.
Speaker Change: Thank you. Our next question comes from Felipe <unk> with Citi. Please go ahead.
Felipe: Hi, good morning, everyone.
Speaker Change: I wanted to ask on margins.
Speaker Change: 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.
Speaker Change: In your guidance.
Speaker Change: And particularly on the commodities I know you have long term hedging program, so, but just any thoughts on the potential impact of aluminum tariffs and what that can mean for for your Cogs. Thank you.
Speaker Change: I'll, let Tracey talk about about the margin for you Brian Thanks for the equation from a revenue point of view.
Speaker Change: No.
Speaker Change: We did make changes to our sourcing strategy over the last few years and so almost all of our aluminum.
Speaker Change: Currency purchased.
Speaker Change: In the United States for United States consumption, which is obviously our biggest market.
Speaker Change: Do you want to.
Speaker Change: Yeah sure happy.
Speaker Change: So in terms of gross.
Speaker Change: Gross margin look we don't give specific gross margin guidance.
Speaker Change: Anthony.
Speaker Change: <unk> gross margins I think you did improve in each of the last two years. So as we look at our 2025 got it a long term growth algorithm does anticipate underlying pre tax margin expansion that building on the expansion in 2024.
Speaker Change: Some of the drivers of that.
Speaker Change: 2025, we do expect moderating inflation on input cost and to your point, we do have multiple levers that support our growth algorithm.
Speaker Change: It's positive make prompting.
Speaker Change: I think we discussed in our guidance.
Speaker Change: Positive mix from premium amortization as well as the lower contract brewing volumes.
Speaker Change: We can also drive productivity improvements and we also continue to look at cost savings.
Speaker Change: Across our entire business. So those are some of the things that I would say.
Speaker Change: Yes.
Speaker Change: Some of the margin expansion.
Speaker Change: Thanks, Tracy Thanks Filippo.
Speaker Change: Okay.
Speaker Change: Sure.
Speaker Change: Our next question comes from Bonnie Herzog with Goldman Sachs. Please go ahead Bonnie alright.
Bonnie Herzog: Thank you good morning, everyone.
Bonnie Herzog: Hi, Good morning, I had a question.
Speaker Change: Morning, I had a question on your guidance, which you mentioned is in line with your long term algo.
Speaker Change: Our guidance implies a fair amount of operating leverage this year and I know you've touched on this but hoping you can unpack this a bit for us meaning.
Speaker Change: 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 do you expect to get this year and then.
Speaker Change: Maybe how much that could increase next year and beyond maybe if you can.
Speaker Change: So you don't feel comfortable quantifying you know maybe you could rank.
Speaker Change: Some of these cost savings in order impact for instance, I think that would be helpful. Thank you.
Bonnie Herzog: Thanks Bonnie.
Speaker Change: Yes.
Speaker Change: I mean, a couple of things that I can point to in terms of.
Speaker Change: The.
Speaker Change: Operating leverage and improvements in our operating.
Speaker Change: Operating margin.
Speaker Change: Number one we think makes it over the last couple of years in our capabilities to drive efficiencies and cost savings and a lot of that in basin is focused on.
Speaker Change: Oh absolutely.
Speaker Change: In any way.
Speaker Change: Driving efficiencies, there and taking out the contract really well through that.
Speaker Change: How intense.
Speaker Change: Cost as well as efficiencies in Appaloosa, So that's one of the bigger.
Speaker Change: <unk>.
Speaker Change: Around the cost and efficiency the other thing just in terms of.
Speaker Change: Marketing spend for example, we spent the last couple of years really driving our return on marketing investment and.
Speaker Change: Even though we do expect our MD&A increase.
Speaker Change: Iran.
Speaker Change: Some of the basis that'd be making with innovation.
Speaker Change: There's also a number of puts and takes that that are coming off that for example.
Bobby: Bobby at all.
Speaker Change: Our underperforming cost.
Speaker Change: And we can now redeploy those funds to other brands.
Speaker Change: In 2025, and we'll continue to look at that and then.
Speaker Change: One of the bigger authors as well is bringing the peroni production onshore.
Speaker Change: And.
Speaker Change: This meaningful ocean freight savings by doing that and being able to utilize those cost savings to gain support support the marketing investment of that brand.
Speaker Change: A number of leaders that we.
Speaker Change: That we can pull in a number of of capability investments that we've made over the last couple of years that will start coming through now that will certainly help our.
Speaker Change: Our margin.
Speaker Change: As we look at continuing to drive efficiencies in the areas.
Speaker Change: Thanks, Tracy Thanks Bonnie.
Speaker Change: Thank you. The next question comes from Andrea Teixeira with Jpmorgan. Please go ahead.
Speaker Change: Hey, good morning. This is truly valens for Andreas Thank you for taking my question.
Speaker Change: Kevin I wanted to ask on the U S brand items were down three I think that came in probably a bit better than the tracked channel data would suggest.
Speaker Change: I think what has been described by some other peers is maybe a shift towards those channels. So any color would be helpful.
Speaker Change: Are you seeing from a consumer perspective, I know you'd mentioned some moderation in the value seeking behavior, but maybe some perspective on different channels.
Speaker Change: Premises outperforming.
Speaker Change: Maybe untracked channels performing better so any help there would be great.
Drew: Thanks drew.
Drew: I think one point I think because I think there was an extra trading day so that.
Drew: Me.
Drew: I certainly would've would've helped from a consumer point of view.
Drew: Didn't see that moving away from C stores earlier in the <unk>.
Drew: In the sort of summer time period, and now we've seen that move back into the into the C store channel.
Drew: We've also seen on premise.
Drew: Continue to.
Drew: To slightly outperform but broadly I would say that those are the three.
Drew: He runs.
Drew: Okay.
Drew: Thanks drew.
Speaker Change: Thank you. The next question comes from Gerald Pascarelli with Needham <unk> Company.
Speaker Change: Please go ahead.
Speaker Change: Great. Thanks, very much for the question I, just I wanted to go back to the share repurchase commentary.
Speaker Change: So as we look at the outlook for 2025 to 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 know.
Speaker Change: <unk> remaining aggressive on buybacks, but that maybe shouldn't be part of.
Speaker Change: The base case scenario I'm, just I'm, just trying to get a little bit more color there. Thank you.
Speaker Change: Yes, so a couple of things because it has been as we talked about the high single digits and underlying EPS, but I mean, some of that CP is being driven by share repurchases and our guide assumes.
Speaker Change: At minimum repayments is in line with that of <unk>.
Speaker Change: Some other factors that play into that EPS growth is also in tax and foreign exchange.
Speaker Change: Our EPS is not on a constant currency basis.
Speaker Change: Our next could impact that.
Speaker Change: And then we have reduced our underlying effective tax rate guidance for 2025 and.
Speaker Change: <unk>, 22% to 24% from the 23% to 25%.
Speaker Change: In 2024, but as I said.
Speaker Change: We will continue to look at all of our capital allocation models.
Speaker Change: And make sure that the retaining the rocks.
Speaker Change: We are making.
Speaker Change: <unk> decision to return to our shareholders.
So yes, as we see it.
Speaker Change: It could be me.
Speaker Change: <unk> patient driven by a number of sanctions as athene.
Speaker Change: Where do we.
Speaker Change: As Sandy basements on fever tree for example.
Speaker Change: It may impact them.
Speaker Change: Whether or not we spend and just as a reminder.
Speaker Change: Five year program, and we had five quarters into this.
Gerald: Thanks Gerald.
Speaker Change: Next question operator.
Gerald: Yeah.
Gerald: The next question connect your question comes from.
Gerald: Yeah.
Gerald: Okay.
Gerald: Yeah.
Rob Atkinson: The next question guys, Hey, Rob Atkinson of ethical Bob. Please go ahead.
Rob Atkinson: Yeah.
Kevin Grundy: Rob has disconnected just going onto the next question from Kevin Grundy of BNP Papa Kevin. Please go ahead.
Kevin Grundy: Great. Thanks. Good morning, everyone first quick housekeeping question, and then a bigger picture bigger picture question easy for me to say a housekeeping question for Tracy.
Kevin Grundy: Seem like the guidance would imply that volumes down 1% to 2% based on your commentary of 1% to 2% price and some favorable mix I just wanted to confirm that's your expectation relative to an exit rate there was a bit more challenged than that in the U S and Europe Gavin a bigger picture question.
Kevin Grundy: It's 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 GOP. One the recent advisory from the former surgeon general linking alcohol consumption and cancer risk I was hoping.
Kevin Grundy: You could comment on these potential headwinds and how they may impact the industry more broadly so not just not just beer, but U S alcohol more broadly and then how it may directly impact your strategy as it pertains to your portfolio. Thank you.
Kevin Jonas: Thanks, Kevin Jonas.
Kevin Jonas: Do you want to comment on the first one first of all take the bigger picture, Chris Yes, yes.
Speaker Change: So the look and the drivers for our top line growth in 2020, not too many if any thoughts I mean of course, we remain focused on our UA shaped performance.
Kevin Jonas: And any thoughts also.
Speaker Change: That dependent on a number of factors, including price and mix.
Speaker Change: In 2024, we achieved really strong annual top line contribution from both EMEA and APAC business and from Canada.
Speaker Change: Specifically <unk>.
Speaker Change: Volume guidance, but just as a reminder, we've got puts and takes there as well.
Speaker Change: We will receive a benefit from bringing fever tree Kevin mentioned.
Speaker Change: They could last six acre that we're going to be launching but a reminder, as well we've taken up $1 9 million hit to me that the contract brewing volume out of our system in 2025 and that will have an impact on our financial volume as well.
Speaker Change: Thanks, Tracy and look Kevin I mean your questions if they boardwalk alright, So let me try.
Speaker Change: Let me try and answer that you.
Speaker Change: You referenced decision general obviously there've been several reports from the federal government over the past few months I've had a variety a few points on the on the science and I would point out that we've had a surgeon general's warning on label since the 19 eighties.
Speaker Change: Which includes.
Speaker Change: Alcohol consumption may cause health problems I think there has long been the been the drink of moderation.
Speaker Change: We offer consumers a range of options, including no.
Speaker Change: Paul beverages.
Speaker Change: We're committed to the transformation of our company into a total 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 into beyond pier and non out because a key part of that diversification. It supports a broader consumer trends.
Speaker Change: As you as you sit around mindful drinking with with categories like not out there in our Tvs and.
Speaker Change: We've got a three pronged approach to that.
Speaker Change: Whether it's alcohol replacement, we've got a great portfolio of brands starting to the debt was.
Speaker Change: Great.
Speaker Change: <unk> premium non Lps Blue Moon on our.
Speaker Change: <unk> zero zero launching nitrogen loss, which is which is a non op Ken hotel.
Speaker Change: Got.
Speaker Change: I'll call Adjacencies.
Speaker Change: We've achieved the absolute perfect fit for us, but as it sits at that intersection between alcohol and non alcohol and then you've got the pure place, which is highly incremental for us of an occasion level.
Speaker Change: We paid it doesn't necessarily exist in <unk>.
Speaker Change: Great.
Speaker Change: Great example of that and then Kevin we've proven that we can grow in.
Speaker Change: Traditional beer space I mean, Coors banquet is a fine example of that.
Speaker Change: Number one fastest growing beer brands, beating Mcdonough.
Speaker Change: We are gaining distribution regarding occasion regaining.
Speaker Change: Consumers, including younger legal drinking age consumers behind that brand.
Speaker Change: 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.
Speaker Change: Thanks, Kevin our next question.
Speaker Change: Thank you. The next question goes to Brian Spillane of Bank of America, Brian. Please go ahead.
Brian Spillane: Thanks, operator, good morning, everyone.
Speaker Change: Kevin just to pick up on Kevin Grundy last point can you just.
Brian Spillane: Maybe give us a little bit more.
Brian Spillane: Color on the decision to engage with fever tree.
Brian Spillane: And maybe just like what's what do you think is it.
Brian Spillane: Is different right I mean, the fever tree and Molson Coors come together, you're going to have this venture.
Brian Spillane: There must be something that's missing now that that Molson Coors can add to it and I'm just kind of curious to know how you would think about that and what that may be.
Speaker Change: Yes, great question. Thanks, Brian.
Speaker Change: Look I think it's it's building a great portfolio even further to.
Speaker Change: To meet the needs of consumers at various occasions.
Speaker Change: And as I said not out there, which is key to that strategy and.
Speaker Change: In the U S fever tree as well, it's actually the world's leading supplier of premium carbonated drinks and mixes.
Speaker Change: As I said, it fits really nicely at the intersection of peer and on our condensed availabilities as.
Often in stores.
Speaker Change: It is actually sold is it has steadily grown its lead as the number one tonic and Ginger beer I think it provides tremendous credibility to our network.
Speaker Change: And broader network that we are serious about about not elk.
It's a big business it's growing.
Speaker Change: <unk> business.
Speaker Change: Where do we bring to it I mean, we've talked about our core competencies and our capabilities.
Speaker Change: In the past before Brian and one of them is we.
Speaker Change: As we have a tremendous network of distributors.
Speaker Change: <unk> delivered to stores, which fever tree has not been delivered to in the past I mean, I think we service over 500000.
Speaker Change: Different objects and <unk> to tens of thousands of ours at the moment.
Speaker Change: Broader reach is substantial.
Speaker Change: We're also going to increase our non elk resources quite meaningfully.
Speaker Change: In the first part of this year. So it brings critical mass to us from a.
Speaker Change: And on our point of view with with solar, which we took a majority stake in <unk>.
Speaker Change: Late last year and said, we've got nature drives coming in we've got.
Speaker Change: And we've got <unk>, which is which is in our portfolio.
Speaker Change: From last week so.
Speaker Change: I think.
Speaker Change: We're very excited about this.
Speaker Change: It provides real credibility to our system that we are serious about Nadal can we mean business here.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Thank you the next question guys.
Speaker Change: Stein of Evercore. Please go ahead.
Stein: Great. Thank you very much just a few follow ups.
Speaker Change: If I may so Gavin can you.
Just sticking on the fever tree.
Speaker Change: Agreement can you give us a rough idea of what the economics look like.
And how.
Speaker Change: This could potentially impact your income statement 345 years out or just any way for us to kind of model it any guidelines at all.
Speaker Change: And then second.
Speaker Change: I know you mentioned that your guidance doesn't include anything for tariffs.
Speaker Change: And obviously, it's impossible to write because who knows what's going to happen, but again can you help us try to model that out in terms of Canada.
Speaker Change:
Speaker Change: Did you see when when Trudeau talked about boycotting American brands did you see any impact on Coors light Miller Lite.
Speaker Change: <unk> brands that are in Canada.
Speaker Change: Are they brewed in Canada or do they come from the U S.
Speaker Change: And what percentage of your sales in Canada come from those brands.
Speaker Change: 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.
Speaker Change: Thank you.
Speaker Change: Two big questions, maybe start with the second one.
Speaker Change: We import very little product into the U S.
Speaker Change: Canada and Mexico, that's the first point I'd make almost all of the brands that we produce.
Speaker Change: Our consumed in the United States from our portfolio of crude in the United States. The last Big one really was that we imported was priority and as you know and we've talked about in the past we've put that in the house.
Speaker Change: We are really excited about the potential for a priority as we as we go forward.
Speaker Change: Beyond that there are a few very minor immaterial.
Speaker Change: Volume perspective brands that have come across from Canada, and Mexico as it relates to Canada. The vast majority of the brand portfolio is a guy that's produced in Canada for Canadian consumers.
Speaker Change: We have a large important agreement with them.
Speaker Change: Good.
Speaker Change: That comes from Europe, so it wouldn't be impacted.
Speaker Change: By U S tariffs, but again the vast majority of Canadian crude Canadian produced.
Speaker Change: I think consumers are aware of that.
Speaker Change: So from a input material point of view again.
Speaker Change: Robert the vast majority of our input materials come from the countries in which they are produced.
Speaker Change: Everything that I spoke about aluminum earlier on.
Speaker Change: And almost entirely sourced in the in the United States for the United States markets.
Speaker Change: All of our agricultural input costs, plus borrowing multiple hops and so on all of these sourced in the markets in which it's in which it's consumed certainly enough.
Speaker Change: The bigger markets.
Speaker Change: As you say there is uncertainty, but we're in the same basis most of the businesses as it relates to tariffs with the exception of the fact that we produce.
Speaker Change: All of our almost all of our products in the market in which they which they consume.
Speaker Change: As far as <unk> is concerned 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 from a volume perspective.
Speaker Change: Obviously, it's a 100% incremental too.
Speaker Change: Business, but we see growth will stay off the base.
Speaker Change: 2025 is going to be a year of integration and absorbing Hudson.
Speaker Change: I said.
Speaker Change: Expanding our resources behind us, which will take place in the earlier part of the year.
Tracy: Tracy you did mention.
Tracy: We think we will have some one time costs associated with that.
Tracy: We're working through to determine what those all.
Tracy: But not in the one hundreds of millions to give context right. There in the tens of millions and we will go we will resolve that can put a finer estimates on it once we've been through all of them.
Tracy: All of our discussions but it's.
Tracy: This is a brand that operates right at the top end of above premium so from a from a revenue per hectoliter point of view.
Tracy: It's going to be our number one now from a revenue per per barrel point of views.
Tracy: As we integrate it and look for further opportunities in terms of.
Tracy: Cost efficiencies, we will certainly be looking at our supply chain and our supply chain partners.
Tracy: As we as we look to to drive value out of this relationship, but we really are excited about the coverage.
Tracy: I think I'll cover bus Corpus Christi.
Speaker Change: Thanks Robert.
Speaker Change: Thank you. The next question goes to <unk> <unk> of Jefferies. Please go ahead.
Speaker Change: Good morning.
Speaker Change: Two things the first I guess.
Speaker Change: Along the lines of steam for treatment not.
Speaker Change: Specifically, when we think about the England deal and let's start which is a partnership with the various partnerships with Topeka.
Speaker Change: So that went from partnership to ownership as we think about all of these things and then fever tree of being the newest one.
Speaker Change: How do you think about it in the context of M&A, one is sort of.
Speaker Change: A small stake.
Speaker Change: Right amount with whatever P&L that contributes to your business versus the P&L that goes to the distributors why not sort of.
Speaker Change: Being more aggressive on M&A kind of like what you eventually Godzilla and has.
Speaker Change: Ownership and then the second question.
Speaker Change: Which will be a lot more.
Speaker Change: Narrow is quite.
Speaker Change: Quite a bit of strength out of Canada can you maybe.
Speaker Change: Give us a little bit more on what was behind that gave us a bit in the prepared remarks, but would love to learn if this is something ongoing something thats sort of building or if they were just a couple of nice hits last quarter that may not continue.
Ken: Thanks, Ken.
Ken: It's not the latter it is not just a couple of months here. So I mean, the performance in Canada has been building over quite some time and for example, we've seen 23 consecutive months of share growth and that includes growth in period includes growth in.
Ken: In our Cds.
Ken: Driven by the strength of our brands is driven by the strength of the execution of our strategy on those core beer brands on premium amortization of our portfolio and are expanding into into into flavor cobo.
Ken: Our core power brands Coors light and <unk>.
Ken: The trademark we grew share of segment through the fall.
Ken: Miller Lite, which sells in the above premium tier.
Ken: He is one of the fastest growing beer brands in the category and then inventory, which we launched last year has delivered ahead of our head of our expectations.
Ken: Any flavor with the fastest growing company in the.
Ken: In the RTD space.
Ken: Canada's success is broad it is it is deep it's been.
Ken: Going forward as I said quite some time now.
Ken: And it just gives us a nice useful blueprint for the for the U S. We've got the opportunity to strengthen our results, particularly in the in the above premiums a space.
Ken: And our performance you're kind of has been been strong in summary.
Ken: Fever tree look I mean, we're good at partnerships I think that's one of our core strengths called comprehensive.
Ken: Partnerships all over the world.
Ken: As it relates to the specific investment, which Tracy alluded to uses of cash I mean, if it fits perfectly into our string of pearls approach right. I mean, we did talk about co is getting a little bigger and so our investment in <unk> is a little bit bigger than some of the ones that we've made.
Ken: But it's still part of the string of pearls approach.
Ken: Why did we do it because we see real potential in it.
Ken: We retrieved the odd states is the biggest market is the biggest growth market, we are representing them.
Ken: Also 100% of the over performance will be will be included in our P&L, but at the same time, we wanted to take.
Ken: Some advantage of the value, which we believe is going to be created at a fever tree level of them. So we are now the second largest shareholder and we're comfortable with that position.
Ken: Thanks, Kevin given that question.
Speaker Change: Next question goes to Eric <unk> of Morgan Stanley Eric. Please go ahead.
Great Good morning.
Speaker Change: First Devin could you talk a bit about shelf space expectations for your brands in 2025.
Speaker Change: <unk> off of a really strong.
Speaker Change: Gains that you had for the core brands.
Speaker Change: Last year and in 2023, and then Tracey just an accounting clarification. So it sounds like you guys are going to be booking just the U S partnership revenue from fever tree.
Speaker Change: Is that correct and will.
Speaker Change: Equity income from your.
Speaker Change: Our overall ownership in the company.
Speaker Change: Come through the equity income line or is that going to be held at cost. Thank you.
Speaker Change: Yeah.
Speaker Change: Thanks, Eric.
Speaker Change: I would say that.
Speaker Change: Shelf resets I mean, we saw an unprecedented shift in shelf resets back in the spring of 2024.
Speaker Change: In the fall of 2024, we held those grains.
Speaker Change: And we even grilling.
Speaker Change: A little so that means that when you compare us to the 2023 base were up significantly.
Speaker Change: Now as we head into spring of 2025 generally.
Speaker Change: Each year, there are minor adjustments to shelf space.
Retail is Ed you onto the stage delete discontinued and slow moving ones in.
Speaker Change: It's a little early days, yet and we haven't got all the dietary but for spring of 2025, we expect that to be the case again and again, while it's early we expect to hold onto the <unk> guidance.
Speaker Change: In the spring.
Speaker Change: In the spring once again so.
Speaker Change: We feel really good about the step change that we've seen in shelf resets and it's certainly been a big contributor to why we've held onto so much of the share gains that we're getting with Coors light and Coors banquet.
Speaker Change: The fourth quarter that actually accelerated a little bit I think we said in Q3, it was around 80% where it is actually more than 80% now that we have.
Speaker Change: We retained in the in the.
Speaker Change: In the fourth quarter.
Speaker Change: We're very very pleased about that.
Speaker Change: Obviously, because if you compare it back to 2023 were about 170 basis points of share higher with those brands.
Speaker Change: And we were before so.
Speaker Change: Yeah, Tracy you wouldn't do an accounting question, Yeah I think.
Speaker Change: Look in terms of how we got into the fourth fever tree.
Speaker Change: And in the U S.
Speaker Change: So we have a license agreement to distribute the product and we will make another 100% of the revenue for all of the products sold in the Geely.
Speaker Change: And well shaped joined team taking costs, which include marketing set resulting profit sharing at the EBITDA level.
Speaker Change: And then we also paid in an environment of royalty, which will be included in our Cogs in terms of the basement that we've made in the CVT business.
Speaker Change: And entity and will be reported on a cost basis annual market mark that to market and we'll exclude it from our underlying results.
Speaker Change: Thanks, Eric.
Speaker Change: Thank you. The next question guys people cut of Roth Capital Partners. Please go ahead.
Speaker Change: Good morning, everyone.
Speaker Change: Kevin 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.
Speaker Change: That segment positioning changes.
Speaker Change: Combined with a broader populist movement do you do you think it would help the brands within that.
Speaker Change: That segment.
Speaker Change: Thanks, Paul and good morning to you.
Speaker Change: Our brands going back many generations in both Canada and in the end in the United States.
Speaker Change: We're obviously very proud of our heritage.
Speaker Change: Would suggest that everybody knows about the roots of our great iconic brands.
Speaker Change: Our focus is on acceleration plans in our portfolio.
Speaker Change: As I've said on this call when we said in the opening remarks, our brands are in a great place, particularly our core brands, which is guidance.
Speaker Change: Substantially share since 2023 and retained a lot of that.
Speaker Change: That's where our focus is.
Bob: Thanks, Bob.
Bob: Thank you. The next question go to Ron Lieberman of Barclays. Please go ahead.
Ron Lieberman: Great. Thanks, good morning.
Ron Lieberman: I'd love to just hear a little bit about your read of the competitive environment in the U S.
Ron Lieberman: We heard a bit kind of through this earning season about a step up in promotional activity.
Ron Lieberman: Both with premium life, but also in the above premium space. So just curious.
Ron Lieberman: What degree you're you're seeing that or not thanks.
Ron Lieberman: Thanks, Laura and good morning to you.
Brian Spillane: We haven't seen anything unusual from a promotional point of view.
Ron Lieberman: Yeah.
Ron Lieberman: It's common.
Ron Lieberman: There is some level of promotional activity most of that takes place in the summer that not not in not in Q4 or in.
Ron Lieberman: Q Q1, most of that takes place in Q2 Q3 is a fairly regular thing is do you see different things in different markets, but you know.
Ron Lieberman: We haven't seen anything unusual.
Ron Lieberman: From a promotional point of view and as we always do we will take a strategic approach to evaluating the the overall competitive landscape consumer dynamics.
Ron Lieberman: And we will do what's right for our brands.
Ron Lieberman: Yeah.
Speaker Change: Thank you. The next question goes from Michael Lavery of Michael.
Speaker Change: Michael Please go ahead.
Michael Lavery: Thank you and good morning.
Michael Lavery: Just wanted to come back to innovation.
Michael Lavery: And.
Michael Lavery: Just.
Have seen a lot of the innovation in the space.
Michael Lavery: Skewed towards higher alcohol.
Michael Lavery: Some little bit maybe more exaggerated cases things like Beatboxer bus balls, but youre.
Michael Lavery: Simply spike bold and Blue Moon extra arent moving in that direction.
Michael Lavery: 8% ABV version.
Michael Lavery: Do you have a sense of just what if any impact that has on category volumes and if some of that is.
Michael Lavery: If that direction of innovation is helping drive weakness.
Michael Lavery: A little bit just related can you maybe touch on how that sell in went in do you have a sense for.
Michael Lavery: You know how your innovation is landing on the shelf resets also maybe for XOMA as well did that did you get.
Michael Lavery: Ownership in time to move the needle on where that lands on shop.
Michael Lavery: Thanks, Michael Yeah lots of questions.
Michael Lavery: Let me just say that no I don't see that.
Michael Lavery: Innovation, both from ourselves and our competitors is negatively impacting.
Michael Lavery: Okay. I think we can fit I think it's positive I mean, if you look at beer as the overall industry.
Michael Lavery: We did very nicely against spirits, I mean, all of spirits as growth is coming in the RTD space, which is where the beer player where the beer guys are playing and so if you just look at it.
Michael Lavery: If you excluded.
Michael Lavery: No.
Michael Lavery: The pre packaged spirits from spirits performance it'll be quite negative so all of the growth as experts coming from that and we and our competitors play quite quite meeting fees there.
Michael Lavery: As it relates to.
Michael Lavery: Higher alcohol I mean, we did talk about this previously around.
Speaker Change: First David convenience led innovation pipeline and we've got three great new launches that are coming that fit the trend of what consumers are looking for in terms of singles and higher ABV, We've got somebody spiked bold coming with the type of Margarita Max we were delivering extra they all come in at that sort of.
Michael Lavery: Eight 8% level.
Michael Lavery: Another great area of innovation for US is for example, happy Thursday.
Speaker Change: I don't know if we've talked about this before but we but we did say that Gen Z culture panel last year.
Speaker Change: As we looked at that and then with broader consumer insights. This panel has really been helpful. In how we innovate for forward for new legal drinking age consumers in happy Thursday, It came right out of that.
Speaker Change: Also helps us.
Speaker Change: Inform how we how we market and sell our products, whether it's through e-commerce or who we partner with like League Cup in Formula One.
Speaker Change: Where do we go from a digital space are probably gone a little broader than your direct a question Michael but hopefully that's helpful.
Robert Moskow: Thank you the last question guys, Hey, Robert Moskow of TD Cohen Robert Please go ahead.
Robert Moskow: Hi, Thanks.
Speaker Change: There was a pretty.
Speaker Change: Significant slowdown in your EMEA APAC region.
Speaker Change: And you attributed it to a heightened competition and.
Speaker Change: Just the consumer backdrop.
Speaker Change: Is there any reason to believe that that that that those division can grow as fast as the rest of the company in 2025 or.
Speaker Change: Do you think we're going to be.
Speaker Change: Flattish like we were in fourth quarter for the year.
Speaker Change: Thanks, Robert look I mean, certainly consumer demand in the in the UK was softer in 2024, when you compare it with 2023, we do we did see some uplift in the in the summer.
Speaker Change: Through through the Euro soccer is but where there are obviously offset a lot of that.
Speaker Change: The Christmas season was satisfactory, although we did see consumers.
Speaker Change: Coming in late late in the season as opposed to earlier as it relates to our business specifically for calling.
Speaker Change: Biggest brandon.
Speaker Change: In the U K.
Speaker Change: And in EMEA APAC business units, we took a value over volume approach.
Speaker Change: You know, we certainly will continue to support the brand strength of that versus <unk>.
Speaker Change: Versus.
Speaker Change: Competitors, but no doubt we took a we took a value over volume strategy.
Speaker Change: Three we continue to see drive both volume and value growth across both channels.
Speaker Change: Most very nicely a new market in Bulgaria.
Speaker Change: During 2024, we have another market plan for for 2025.
Speaker Change: We've got great brands.
Speaker Change: Apex.
Speaker Change: Talked about has just gotten in the past and every time I see no reason why our EMEA APAC business won't grow quicker than.
Speaker Change: <unk>.
Speaker Change: And.
Speaker Change: Our businesses in North America.
Speaker Change: Thanks for the question Robert.
Speaker Change: Yeah.
Speaker Change: Thank you we have no further questions that now concludes today's call. Thank you for joining you may now disconnect your lines.