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.
Speaker Change: Thank you, Operator, and hello, everyone. Following prepared remarks today, we look forward to taking your questions.
Speaker Change: Also shared data references are sourced from zircon in the U S and from beer, Canada in Canada, unless otherwise indicated.
Speaker Change: Further in our remarks today, we will reference underlying pre tax income, which equates to underlying income before income taxes and underlying earnings per share, which equates to underlying diluted earnings per share as defined in our earnings release with that over to you Gavin.
Gavin: Thank you Greg Hello, everybody.
Gavin: And thank you for joining the call.
Speaker Change: 224 was another year of progress for Molson Coors progress in advancing our strategy and achieving bottom line growth.
Speaker Change: Amid a challenging macroeconomic environment, we continue to support the health of our brands globally.
Speaker Change: We returned a substantial portion of our sizable share gains from 'twenty to 'twenty three.
Speaker Change: I'm, Chris it into levels of shelf space for our coal power brands in the U S.
Speaker Change: We achieved incredible growth in Canada broadly across all price segments of our portfolio.
Speaker Change: We continued to premium was off a high base in a remote area in APAC business.
Speaker Change: We terminated low margin contract brewing agreement and exited smaller unprofitable businesses.
Speaker Change: While investing in areas that we expect will drive long term sustainable profitable growth.
Speaker Change: 224 was also another year of continued strong cash generation contributed to earnings power.
Speaker Change: 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 to return $1 billion in cash to shareholders through a growing dividend and share repurchases.
Speaker Change: We entered this year confident issuing 2025 guidance at both reflects the favorable fundamentals of our business and it aligns with our long term growth algorithm.
Speaker Change: Now with that high level summary, this given just some of the details.
Speaker Change: In the fourth quarter consolidated net sales revenue was down one 9%.
Speaker Change: Underlying pre tax income was down <unk>, 9% and underlying earnings per share was up nine 2%.
Speaker Change: In our Americas business, Canada continued to perform strongly as.
Speaker Change: As expected the U S first a temporary headwind related to the exit of <unk> contract.
Speaker Change: Which was a headwind of about 450000 takes leaders.
Speaker Change: U S brand volume was down 3% in the quarter, which improved as compared to the third quarter as did the industry with a moderating of the more pronounced value seeking behavior seen during the summer.
Speaker Change: These drivers contributed to a six 7% decline in U S financial volume.
Speaker Change: Related to the deliberate inventory build in the first half of the year U S shipments trailed brand volumes by approximately 150000 picture leases in the quarter, resulting in largely shipping to consumption for the full year.
Speaker Change: Got it.
Speaker Change: I think our volumes are impacted by the continued heightened competitive landscape in the U K.
Speaker Change: What is a softer industry in central and eastern Europe.
Speaker Change: However, this was largely offset by <unk>.
Speaker Change: Strong net sales revenue per hectoliter growth of seven 8% driven by a favorable sales mix, including continued premium amortization and pricing.
Speaker Change: This along with favorable net pricing growth in the Americas and mixed benefits from the exit of Pips resulted in consolidated net sales revenue per hectoliter growth of four 8% for the quarter.
Speaker Change: For the year consolidated net sales revenue was down 6% underlying pretax income was up five 6% and underlying earnings per share was up nine 8%.
Speaker Change: There is also better than our revised top line guidance of down approximately 1% due to better than expected U S industry performance in the fourth quarter.
Speaker Change: As a reminder, our 302004 top line guidance was revised lower would be reported our third quarter results early November due to macro driven U S industry softness in the peak season months of July and August.
Speaker Change: It is also important to point out that excluding the impact of the wind down of pips contract brewing volume.
Speaker Change: The implied annual topline revenue growth was positive and in alignment with our long term growth algorithm.
Speaker Change: Volume perspective, perhaps at a negative three percentage point impact on Americas financial volume for the year.
Speaker Change: Again, while this is our current volume hit with the reduction of this contract brewing volume is expected to have a positive impact in 2025 and beyond on our brewery network effectiveness as well as on mix and margin.
Speaker Change: And then what we expect will provide further benefits we no longer contract briefly back USA and Canada with Ed volume fully exiting our Canadian business as of year end 2020 for.
Speaker Change: Tracy will share more on the impact of deck.
Tracy: Consolidated underlying pretax income was above the midpoint of our reaffirmed mid single digit growth guidance.
Tracy: 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.
Tracy: In addition to better net sales revenue performance, we significantly exceeded our reaffirmed mid single digit underlying earnings per share growth guidance, which we had narrowed to the high end of the range of edema.
Tracy: The beat was largely supported by lower than expected underlying effective tax rate due to U S geographic sales mix as well as the better than expected top line performance in the fourth quarter.
Tracy: Our underlying earnings per share growth was also supported by share repurchases, which have been tracking at an accelerated pace as we continue to view our valuation is compelling given our confidence in our business and in our long term growth algorithm.
Tracy: In fact for the first five quarters since the share repurchase program was announced.
Tracy: It already executed approximately 40% under this up to five year program.
Tracy: If you straight line that number would have us at only 25%.
Tracy: Our confidence stems from our progress against our strategic priorities.
Tracy: I'll start with our core power brands.
Collectively they remain healthy in the U S Coors light, but allowed to and Coors banquet continue to retain a substantial portion of our share gains.
Tracy: Demonstrating the stickiness of these step change gains in the fourth quarter that returned over 80% of the combined volume share gains on a two year stack.
Tracy: Which is an improvement from both the second and third quarters.
Tracy: Third to the fourth quarter of 2022. These brands were up one seven share points.
Tracy: Coors banquet continued 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.
Tracy: <unk> was the fastest growing top 15 beer brand in the U S. In terms of volume percentage growth in 2024.
Tracy: Not a small brand in fact, it's one of our top five brands globally.
Tracy: We see much more opportunity ahead as we invest in building the brands awareness its national scale and loyal consumer base, particularly among new Gen Z and millennial legal drinking age consumers.
Tracy: In Canada Coors light remains the number one light beer in the industry and again grew share of segment in the fourth quarter.
Tracy: The Molson family of brands also gain 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.
Tracy: In EMEA and APAC, a number of our core power brands are leaders in their respective markets.
Tracy: <unk> remains a top lager in the UK with strong brand equity amid a highly competitive environment, we took a value over volume approach, which weighed on volume performance during the year.
Tracy: And while co brand performance was impacted by the soft industry in the fourth quarter in central and Eastern Europe. Our results was strong for the year. This was driven by Jessica in Croatia, which increased 14, 5% as long as the extremely successful relaunch of cardamom and Romania.
Tracy: <unk> has already reached over 300000 Pixie dust since March and has been incremental to the overall portfolio in the country.
Tracy: Turning to our premium amortization priority for both beer and beyond beer.
Tracy: Above premium portfolio was 27% of total net revenue for the year.
Tracy: In EMEA and APAC, where over half of our net brand revenue comes from above premium or business continued to premium mass.
Tracy: Jimmy married and apex premium amortization success is being driven by <unk> III, which grew net sales revenue double digits in the year and is the number two lager in the on premise in the U K in terms of value.
Tracy: But there is also exceeding expectations in Bulgaria, following a very successful launch there last year.
Tracy: In the Americas, our above premium share of mid brand revenue was 22% for the year.
Tracy: This was supported by candidate, which also continued to premium mass with its above premium niche brand revenue up double digits in 2024.
Tracy: This was driven by the success of Miller Lite, which is the fastest growing major beer brand in this market or a percentage basis as well as by our flavor portfolio.
Tracy: We are growing more share flavor than any other major broad Canada and Madrid is also performing ahead of expectations at Canada. Following last year's March.
Tracy: In the U S. There is work to do but we see this as an opportunity and we have big plans in 2025.
Tracy: 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 of brands, both here and beyond.
Tracy: In beer, we are moving in the right direction with the Blue Moon brand family as we are starting to see signs of stability.
Tracy: In fact, the Blue Moon brand firmly held share of industry in both the third and fourth quarters and took share of Kraft during both periods.
Tracy: This includes positive momentum behind some of our new innovations like the repositioned Blue Moon light as well as Bluebird non health, which has quickly become a top 10 non alcoholic beer brands.
Tracy: And we have plans to build on these results for the Blue Moon brand family in 2025.
And we are bidding big on Peroni as we have discussed we have onshore production, which offers a number of benefits.
Tracy: It significantly improves consistency uncertainty of supply, which has previously been a challenge when we tried to scale the brand.
Tracy: 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.
Tracy: Our commercial plans kick off in the second quarter and while we'll of course take term ultimately we see no reason locker ready can't rival the size of other major European imports in the U S. As a term.
Tracy: In beyond Air, which is a big part of our premium amortization plans non elk is a key focus area at.
Tracy: It provides us the opportunity to capture more occasions, particularly among younger legal age Gen Z consumers.
Tracy: So we are investing behind the growing areas in <unk>, where we believe we have a right to win.
Tracy: This too will take some time, but we're making progress.
Tracy: We spoke in detail on our last quarter call about our increased investment in <unk> to a majority stake.
Tracy: And plans to accelerate the brand are well underway.
Tracy: It's early days of the integration within the last four weeks to India Zurich brewery in both dollar and unit share in total U S food.
Tracy: 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.
Tracy: And speaking of opportunities to advance our knowledge of plans. We are so pleased to have entered into a strategic partnership agreement with the world's leading supplier of premium carbonated mixes.
Tracy: The partnership agreement gives us the exclusive commercialization rights to the fever tree brand in the U S. This is a significant step forward in our strategic ambition to build a total beverage portfolio for a wide range of consumer preferences across both traditional alcohol and non allocations.
Speaker Change: Now before I pass it to Tracy I'll conclude by saying that we remain confident we have the right strategy to achieve our long term growth objectives.
Tracy: And our 2025 guidance is aligned with those objectives.
Tracy: Collectively our global coal power brands are healthy and we have great commercial plans in 2025 to continue to support it.
Tracy: We are changing the shape of our global portfolio with premium amortization successes anybody at APEC in Canada, and we have targeted plans for the U S.
Tracy: Our operations outside of the U S are performing well and contributing meaningfully to our growth.
Tracy: Our capabilities across our organization support premium amortization and focused innovation.
Tracy: <unk> efficiencies in commercial effectiveness, which helped drive sustained long term profitable growth.
Tracy: And without 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.
Tracy: So we are pleased with our progress and confidence in our ability to achieve our long term growth algorithm trade 25 and beyond.
Tracy: With that I'll pass it to Tracy.
Tracy: Thank you, Kevin we made strong progress in enhancing our profitability and financial flexibility in 2024.
Tracy: We delivered a $1 $2 billion in underlying free cash flow in line with our expectations.
Tracy: And it was supported by underlying pre tax income margin expansion of nearly 80 basis points for the year.
Tracy: This expansion was driven by positive net pricing mix impact.
Tracy: Rising inflation and cost savings, which more than offset volume deleverage, which had a particularly significant impact in the second half of the year related to the shipment timing.
Tracy: Also contributing to the margin Friedman with Larry in G&A, largely juicy stocking innovated levels in 2023.
Tracy: G&A the times, and lastly related to higher incentive compensation in 2023.
Tracy: Marketing declines in menu result of hiring statements in the prior year.
Tracy: In the second half of the year, when we increased spend by an incremental $100 million.
Tracy: The accelerated demand in the U S.
Tracy: And importantly, we continue to support our brands globally with high levels of marketing engagements for back a quarter and the year and completed with Victor <unk> <unk> Chief.
Tracy: In addition to investing in our brands and business, we continued to return cash to shareholders.
Tracy: 24, we paid $369 million in cash dividends and $643 million TV pages, $10 9 million change.
Tracy: Since the plan was announced in October 2023, we have repurchased six 7% of our class E. G is outstanding.
Kevin: It's an up to $5 billion Tam and as Kevin mentioned, we had each lies approximately 40% in just the first five quarters.
Kevin: We ended the year with a healthy balance sheet and a net debt to underlying EBITDA ratio was two one times, which is in line with that our long term target of under two and a half times and we have no debt coming due in 2025.
Kevin: This provides us significant financial flexibility offering more optionality in the ways that we engaged in the business.
Kathleen: Kathleen investments that drive productivity improvement, which is also on M&A that supports our strategic growth objectives, Okay recently statement and CVT.
Kevin: It also provides us the opportunity to return even more cash to shareholders.
Kevin: And we're pleased to see that today, we announced a quarterly dividend of 47 same sushi to be paid on March the 14th.
Kevin: This is an increase of $6 eight and represents our fourth consecutive year of increases clearly demonstrating our attention to sustainably increase our dividend.
Kevin: And now conclude with our financial outlook.
Kevin: For 2025, we are issuing guidance that is in line with our long term growth algorithm.
Kevin: However, the global met my environment is rapidly evolving, resulting and uncertainty around the effects of geopolitical and.
Kevin: And global trade policy, including the impacts on consumer chain.
Kevin: As a result as it does not reflect the impact of these activities or any imposition of import tariffs and potential actions by other countries.
Kevin: Also please remember that net sales revenue and underlying pretax income growth guidance on a constant currency basis and underlying earnings per share on NAS safer.
Kevin: Stifel continued strength in the U S. Dollar will result in a headwind to our reported results as well as underlying earnings per share growth.
Kevin: And then the effective period using the current exchange rates.
Kevin: With that let's review our guidance metrics.
Kevin: Low single digit net sales maybe it was on a constant currency basis.
Kevin: Mid single digit underlying pretax income growth on a constant currency basis.
Kevin: High single digit underlying earnings per share growth.
Kevin: Underlying free cash flow of $1 $3 billion, plus or minus 10%.
Kevin: Underlying depreciation and amortization of $675 million plus or minus 5%.
Kevin: Net interest expense of $215 million, plus or minus 5%.
Kevin: Underlying effective tax rate in the range of 22% to 24%.
Kevin: And capital expenditures of $750 million, plus or minus 5%.
Drivers that underpin our guidance include anticipated annual net cost increases of 1% to 2% in North America in line with the average historical range and for other markets to trend in line with inflation.
Kevin: Mix should be a meaningful growth driver as we advance toward at medium term goal of reaching about one third of our global Mcbrien revenue from.
Kevin: Premium portfolio.
Speaker Change: We expect this to come from continued premium amortization in EMEA, APAC and Canada as well as progress in the U S. We as Kevin said, we are starting to see some initial traction with <unk> at Janesville variety and outstanding in non al.
Speaker Change: While <unk> and the consolidation of that that provide incremental benefits to the top line. We will also be stocking revenue from the smaller regional craft breweries will be debated in the third quarter and more significantly in 2020 for pets in the bed contract brewing volume as these contracts terminated at the end of last year.
Speaker Change: On a combined basis, we expect the related approximate $1 9 million hit to lead a headwind to Americas financial volume in 2025.
Speaker Change: We produced about one 2 million hate to use the pet in the U S and 700000 liters of Labatt brands in Canada in 2024.
Speaker Change: Given the volume wound down sequentially over the course of 'twenty 'twenty four the headwind is more pronounced in the first half of the year, particularly in the first quarter.
Speaker Change: In the 2020 full of bet volumes for a typical seasonal trend.
Speaker Change: There are several additional shipment phasing considerations.
Speaker Change: In the first quarter, we are stocking, particularly strong demand for coal power brands in the U S. In the prior year period when U S brand volumes were at five 7%.
Speaker Change: Also in the first quarter of 2024, we benefited from higher than typical inventory, both given our anticipation of the fourth with Scott.
Speaker Change: This contributed to U S financial volume, increasing seven 6% in the first quarter of 2024.
Speaker Change: Spot the exit of 350000 hectoliter Pep slugging.
Speaker Change: This heightened political inventory bolt extended into the second quarter of 2024, and we do not anticipate the 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 <unk> partnership which will be reported in our underlying results.
Speaker Change: The cost 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 premium amortization moderating inflation on input cost and productivity improvements and cost savings.
Speaker Change: We also expect to continue to put the right commercial pressure behind our brands driving.
Speaker Change: 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 step changes in our marketing investments.
Speaker Change: In closing we are pleased with our progress in 2020 full we believe we have the rock strategy and with strong brands are highly cash generative business model and our healthy balance sheet. We have the ability to continue to invest in our business to achieve long term financial and strategic goals, while also returning cash to shareholders.
Speaker Change: As to a growing dividend and a meaningful share repurchase program.
Speaker Change: 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 one on your telephone keypad.
Speaker Change: Your mind or you feel like your question has already been answered you can press star and then two to withdraw yourself from the queue.
Speaker Change: As a reminder, we ask that you please limit yourself to one question per participant.
Speaker Change: Our first question comes from Chris Carey with Wells Fargo.
Speaker Change: Please go ahead.
Chris Carey: Hi, good morning, everyone.
Speaker Change: Good morning, Chris.
Speaker Change: Hey, Gavin.
Speaker Change: <unk>.
Speaker Change: I was wondering if you could comment a bit on <unk>.
Speaker Change: What we're seeing in the beer category.
Speaker Change: Specifically year to date or whatever near term right.
Speaker Change: And you'd like to use I think there's been a debate about increased volatility in recent weeks and months.
Speaker Change: Other thats, whether or changing consumer preferences.
Speaker Change: To get your thoughts on some of the near term evolution of what we're seeing in the data and how you see it.
Speaker Change: Industry dynamics.
Speaker Change: And perhaps how you are thinking about this in the context of your full year guidance.
Speaker Change: And then more of a just sneak in a question, but Tracy are you.
Speaker Change: Factoring any share repurchases in the outlook or any any context on share buybacks for this year. Thanks, so much for us.
Speaker Change: Thanks, Chris So I'll, let Tracey answer Youre sneaking question, but I'll deal with the industry's first.
Speaker Change: Chris.
Speaker Change: Look I mean, if you look at if you look at 2024 and it was there was a lot of noise right. So I mean, we talked about a lot of that overall earnings calls was trading days in holiday timing and.
Speaker Change: And weather and all sorts of things going on.
Speaker Change: Some of it was it was not particularly.
Speaker Change: Good, but we did see.
Speaker Change: We did see progress in Q4 instead of in Q4 ended up being the base quarter of industry performance.
Speaker Change: <unk> that we experienced last year.
Chris Carey: And Chris as it relates to.
Speaker Change: Current trading.
Speaker Change: I would say what we said on the last call I think the call before that God is as I think I think.
Speaker Change: Being cautious of short term trends is important.
Speaker Change: I think once you get to the full quarter and you remove nor.
Speaker Change: Noise that exists on a week to week basis, do you get a much bigger things.
Speaker Change: What's happening in EMEA.
Speaker Change: In the industry.
Speaker Change: Even with what Youre seeing in the first publicly.
Speaker Change: Publicly available data for 2021st I'm terribly dissimilar to what we were experiencing in <unk>.
Speaker Change: 2024.
Speaker Change: Okay.
Speaker Change: In noise around.
Speaker Change: Weather and timing of holidays.
Speaker Change: I was just cautioning logical assumptions based on a very short period of data Chris.
Speaker Change: Okay.
Speaker Change: And just in terms of share repurchases.
Speaker Change: We do pay to continue to execute our share repurchase program and a reminder.
Speaker Change: Despite the systematic as well as an opportunistic execution component that allows us to consistently execute the program, but it's also the ability to do.
Speaker Change: If our models indicate if appropriate.
Speaker Change: Based on our $2 billion program, which we announced in October 2023, and as Kevin said, we've already you've got about 40% of its just the feedstock quarters and it is a five year program. So I think it's a.
Speaker Change: Our commitment to share repurchases.
Speaker Change: But the execution of the 10-K theory can be driven by a number of factors, including the timing of our capital commitment for example.
Speaker Change: Our planned investment in Stephen Curry.
Speaker Change: Drive that but.
Speaker Change: As I said, we are committed to the share repurchase program that we put in place.
Chris Carey: Thanks, Chris.
Speaker Change: Thank you. Our next question comes from Peter Grom with UBS. Please go ahead Peter.
Peter Grom: Thanks, operator, good morning, everyone.
Speaker Change: I really wanted to just follow up on Chris's question. There just some perspective on the top line guidance.
Speaker Change: I know the various puts and takes Tracy as you alluded to contract brewing fever tree etcetera, but I guess, just how are you actually thinking about underlying category growth.
Speaker Change: Prosperity geographies are you assuming category growth rates improve as we move into the summer cycle easier comps or are you kind of assuming that the steady state of category growth and for us that would be more of a source of upside.
Speaker Change: Thanks Peter.
Speaker Change: If you look at our major markets right.
Speaker Change: In Canada, we've seen past inflation.
Speaker Change: Interest rates continue to weigh on the economy.
Speaker Change: So we have seen interest rate cuts, we've seen inflation start to come down.
Speaker Change: Canada beer industry trends.
Speaker Change: Similar to the to the U S.
Speaker Change: As I said to Chris we don't see anything meaningfully different from the previous trends that we've that we've shared in the in the in the U S.
Speaker Change: Are you conscious consumers are still looking to engage in channel.
Speaker Change: Peg shifting and at the same time the industry continues to see premium amortization, which plays perfectly into our overall acceleration plan in.
Speaker Change: In the UK.
Speaker Change: <unk> is improving inflation is slowing down it is it is competitive.
Speaker Change: At the moment.
Speaker Change: But not a lot different from from what we've been seeing through the through the back end of <unk>.
Speaker Change: 2024, and as you rightly point out we do have puts and takes in our topline guidance right.
Tracy: And take as Tracy said his contract brewing in the at the Port as <unk> for example.
Speaker Change: But more broadly.
Chris Carey: Chris that we're making on our overall acceleration plan, that's our co brands globally with us the premium amortization.
Speaker Change: Yes.
Speaker Change: We are making all whether it's you know.
Speaker Change:
Speaker Change: Acceleration in beyond beer.
Speaker Change: It's all of those factors taken into account.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Thank you. Our next question comes from Philippe <unk> with Citi. Please go ahead.
Philippe: Hi, good morning, everyone.
Philippe: I wanted to ask on margins so.
Philippe: 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.
Philippe: In your guidance.
Philippe: And particularly on the commodities I know you have long term hedging programs, 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 question from a legal point of view.
Speaker Change: We did make changes to our sourcing strategy over the last few years and so almost all of our aluminum is currently purchased.
Speaker Change: In the United States for United States consumption, which is obviously, our biggest market, but Charles do you want to give them.
Speaker Change: Coach.
Speaker Change: Sure.
Speaker Change: So.
Speaker Change: Gross margin look we don't give specific gross margin guidance, but none of the underlying gross margins I think you didn't present each of the last two years. So as we look at our 2025 got it allow 10 growth algorithm does anticipate underlying pre tax margin expansion.
Speaker Change: On the expansion in 2024.
Speaker Change: Some of the drivers of that 2025, we did expect moderating inflation on input cost and to your point, we do have multiple levers that support our growth algorithm.
Speaker Change: Other tidbit, prompting.
Speaker Change: I think we discussed in our guide is.
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: Yeah.
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 could 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 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 stocks.
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 capability to drive efficiencies and cost savings and a lot of that in basin is focused on.
Speaker Change: Oh, absolutely so eliminating waste.
Speaker Change: Routing efficiencies, there and taking out the contract really well suited to help in terms of.
Speaker Change: That's where there's efficiencies in appaloosa.
Speaker Change: 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.
Speaker Change: Eight of them.
Speaker Change: Our underperforming cost for <unk> and <unk>.
Speaker Change: Cannot 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 items 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 based on top of that brand. So yeah.
Speaker Change: A number of leaders that we.
Speaker Change: That we can pull in a number of our capability investments that we've made over the last couple of years that we'll start seeing coming through now that will certainly help our margin.
Speaker Change: As we look at continuing to drive efficiencies.
Speaker Change: Great.
Speaker Change: Thanks, Tracy Thanks Bonnie.
Speaker Change: Thank you. The next question comes from Andrea Teixeira with Jpmorgan. Please go ahead.
Speaker Change: Yeah.
Speaker Change: Hey, good morning. This is truly an anchor Andreas Thank you for taking my question.
Speaker Change: Kevin I wanted to ask on the U S brand items are down three I think that came in probably a bit better than the tracked channel data would suggest despite I think what has been described by some other peers, maybe a shift towards those channels.
Speaker Change: So any color will be helpful. In what youre seeing from a consumer perspective, I know you'd mentioned some moderation in the value seeking behavior, but maybe some perspective on different channels on premises outperforming.
Speaker Change: Maybe untracked channels performing better so any help there would be great.
Speaker Change: Thanks drew.
Speaker Change: One point I think because I think there was an extra trading day so that.
Speaker Change: Certainly.
Speaker Change: Certainly would've would've helped from a consumer point of view, we don't see that moving away from C stores enter in the.
Speaker Change: Kevin.
Speaker Change: Sort of summer time period, and now we've seen that move back in.
Speaker Change: And to the into the C store channel.
Speaker Change: We've also seen on premise.
Speaker Change: Continue to.
Speaker Change: To slightly outperform before they always say that those are the three.
Speaker Change: He runs.
Speaker Change: Okay.
Speaker Change: Thanks Jade.
Speaker Change: Thank you. The next question comes from Gerald Pascarelli with Needham <unk> Company.
Speaker Change: Please go ahead.
Gerald Pascarelli: Great. Thanks, very much for the question.
Gerald Pascarelli: I wanted to go back to the share repurchase commentary.
Gerald Pascarelli: As we look at the outlook for 2025 to high single digit growth Tracy.
Gerald Pascarelli: 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.
Gerald Pascarelli: You remaining aggressive on buybacks, but that maybe shouldn't be part of.
Gerald Pascarelli: The base case scenario I'm, just I'm, just trying to get a little bit more color there. Thank you.
Gerald Pascarelli: Yes.
Gerald Pascarelli: Today's b as we talk about the the high single digits and underlying EPS, but I mean, some of that is being driven by share repurchases.
Gerald Pascarelli: Got it assumes.
Gerald Pascarelli: Minimum repayments is in line with that at <unk>, but some other factors that play into that EPS growth is also tax and foreign exchange.
Gerald Pascarelli: Our EPS is not on a constant currency basis.
Gerald Pascarelli: Forex could impact that.
Gerald Pascarelli: And then we have reduced our underlying effective tax rate guidance for 2025 and <unk>.
Gerald Pascarelli: <unk>, 22% to 24% for networks from the 23% to 25%.
Gerald Pascarelli: In 2024, but as I said.
Gerald Pascarelli: We will continue to look at all of our capital allocation models.
Gerald Pascarelli: And make sure that the retaining the rod.
Gerald Pascarelli: We are making there.
Gerald Pascarelli: <unk> decision to return to our shareholders.
Gerald Pascarelli: So yes, as we see it.
Speaker Change: It could be me.
Speaker Change: C V patient driven by a number of sanctions as athene.
Speaker Change: Where do we.
Speaker Change: As Sandy basements on <unk> for example.
Speaker Change: It may impact.
Speaker Change: The amount, we spend and just as a reminder.
Speaker Change: Five year program, and we had five quarters into this.
Gerald Pascarelli: Thanks Gerald.
Speaker Change: Next question operator.
Gerald Pascarelli: Yeah.
Gerald Pascarelli: The next question connect your question comes from.
Gerald Pascarelli: Yeah.
Gerald Pascarelli: Okay.
Speaker Change: The next question guys, Hey, Rob Atkinson of Evercore. Please go ahead.
Speaker Change: Yeah.
Speaker Change: Rob has disconnected just getting 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, 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.
Bonnie Herzog: 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 you.
Bonnie Herzog: 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.
Bonnie Herzog: Yeah.
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.
Speaker Change: And any sort of guidance is also dependent on the number of factors, including price and mix.
In 2024, we achieved really strong annual top line contribution from both EMEA and APAC business and from Canada.
Speaker Change: Specifically is.
Speaker Change: Volume guidance, but just as a reminder, we've got puts and takes there as well so.
Speaker Change: We will receive a benefit from bringing fever tree.
Speaker Change: Kevin mentioned and make it last six weeks and that we're going to be launching but a reminder, as well we've taken up one 9 million hit to meet at 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, Youre Christians have stayed boardwalk alright, So let me try.
Speaker Change: Let me try and answer that for me you referenced decision general.
Speaker Change: Obviously, there have been several reports from the federal government over the past few months.
Speaker Change: A variety of few points on the.
Speaker Change: On the science and.
Speaker Change: And I would point out that we've got a surgeon general's warning on label since the 19 eighties.
Speaker Change: <unk>, which includes alcohol consumption may cause health problems I think there has long been the trick of moderation.
Speaker Change: We offer consumers.
Speaker Change: <unk> options, including <unk>.
Speaker Change: And Laura alcohol 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 beer and non out because a key part of that diversification. It supports a broader consumer trends as you.
Speaker Change: As you sit around mindful drinking with with categories like not out there in <unk> Tvs.
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 with.
Speaker Change: Great.
Speaker Change: Both premium non Lps Blue Moon.
Speaker Change: <unk> zero zero launching naked loss, which is which is a non <unk> hotel.
Speaker Change: Got.
Speaker Change: I'll call Adjacencies.
Speaker Change: Steve achieves 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.
Speaker Change: 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.
Brian Spillane: Kevin just to pick up on Kevin Grundy last point can you just.
Speaker Change: Maybe give us a little bit more.
Speaker Change: Color on the decision to engage with fever tree.
Speaker Change: And maybe just like what's what do you think is it.
Speaker Change: Is different right I mean, the fever tree and Multicourse come together, you're going to have this venture.
Speaker Change: There must be something thats missing now 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.
Speaker Change: 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 beer and non alchemists availabilities as.
Speaker Change: Often in stores.
Speaker Change: It is actually solus 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.
Speaker Change: 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.
Brian Spillane: In the past before Brian and one of them is we.
Brian Spillane: As we have a tremendous network of distributors.
<unk> delivered to stores, which fever tree has not been delivered to in the past I mean, I think we service over 500000.
Brian Spillane: Different address and symmetry gets to tens of thousands of ours at the moment.
Brian Spillane: Broader reach is substantial.
Brian Spillane: We're also going to increase our non elk resources quite meaningfully.
Brian Spillane: In the first part of this year. So it brings critical mass to us from a.
Brian Spillane: And our point of view with with solar, which we took a majority stake in <unk>.
Brian Spillane: Late last year and said, we've got <unk> coming in we've got to.
Brian Spillane: And we've got <unk>, which is which is in our portfolio.
Brian Spillane: From last week so.
Brian Spillane: I think.
Brian Spillane: 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.
Brian Spillane: Yeah.
Brian Spillane: Yeah.
Brian Spillane: Thank you. The next question guys you're welcome.
Brian Spillane: Stein of Evercore. Please go ahead.
Speaker Change: Great. Thank you very much just a few follow ups.
Brian Spillane: If I may.
Speaker Change: So Gavin can you.
Brian Spillane: Just sticking on the fever tree.
Speaker Change: Agreement can you give us a rough idea of what the economics look like.
Brian Spillane: And how.
This could potentially impact your income statement 345 years out just any way for us to kind of model it any guidelines at all.
Brian Spillane: And then second.
Brian Spillane: I know you mentioned that your guidance doesn't include anything for tariffs.
Brian Spillane: 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.
Brian Spillane:
Brian Spillane: Did you see when when Trudeau talked about boycotting American brands did you see any impact on Coors light Miller Lite.
Brian Spillane: <unk> brands that are in Canada.
Brian Spillane: Are they brewed in Canada or do they come from the U S.
Brian Spillane: And what percentage of your sales in Canada come from those brands.
And any other tariff related issues outside of aluminum, which we already talked about that we should be considering as we kind of run our sensitivities for 2025. Thank you.
Robert: Thanks, Robert two big questions, maybe start with the second one.
Brian Spillane: We import very little product into the U S.
Brian Spillane: From Canada, and Mexico, that's the first point I'd make almost all of the brands.
Brian Spillane: We produce.
Brian Spillane: Ill consumed in the United States from our portfolio approved 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 brought that in house.
Brian Spillane: We are really excited about the potential for peroni as we as we go forward.
Brian Spillane: Beyond that there are a few very minor immaterial.
Brian Spillane: From a volume perspective brands that have come across from Canada, and Mexico as it relates to Canada. The vast majority of our brand portfolio is a guy that's produced in Canada, All Canadian consumers.
Brian Spillane: We have a large important agreement.
Brian Spillane: Okay.
Brian Spillane: That comes from Europe, so it wouldn't be impacted by U S tariffs, but again the vast majority of Canadian crude Canadian produced.
Brian Spillane: I think consumers are aware of that.
Brian Spillane: Yes.
Brian Spillane: Input material point of view again.
Robert: Robert the vast majority of our input materials come from the countries in which they are produced.
Robert: Everything that I spoke about aluminum earlier on being almost entirely sourced in the in the United States for the United States or markets.
Robert: All of our agricultural input costs like borrowing multiple hops and so on all of these sourced in the markets in which it's in which is consumed certainly enough.
Robert: And our bigger markets.
Robert: As you say there is uncertainty, but we're on the same basis most of the businesses as it relates to tariffs with the exception of the fact that we produce.
Robert: All of our almost all of our products in the market in which they which they consume.
Robert: 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.
Robert: Obviously, it's a 100% incremental too.
Robert: Business, but we see growth will stay off the base.
Robert: 2025 is going to be a year of integration and absorbing it and as.
Robert: As I said, we're expanding our resources behind this which will take place in the earlier part of the year.
Tracy: Tracy did mention.
Tracy: But we think we will have some onetime costs associated with that.
Tracy: We're working through to determine what those all.
Tracy: In order to one hundreds of millions to give context that are in the tens of millions in and we'll we'll resolve that can put a finer estimates 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 might even be a number one now from a revenue per per barrel point of views.
Tracy: As we as we integrate it and look for further opportunities in terms of.
Tracy: And our cost efficiencies, we will certainly be looking at our supply chain and our supply chain partners as you know.
Tracy: As we look to to drive value out of this relationship, but we really are excited about the coverage.
Tracy: I think I covered corpus Christi.
Speaker Change: Thanks Robert.
Tracy: Yeah.
Speaker Change: Thank you. The next question goes to Ken <unk> of Jefferies. Please go ahead.
Tracy: Yeah.
Tracy: Everybody.
Tracy: Good morning, two things the first I guess.
Tracy: Along the lines of steam for treatment.
Tracy: Specifically, when we think about the England deal and let's start which is a partnership with various partnerships with Topeka.
Tracy: So that went from partnership to ownership as we think about all these things and then fever tree of being the newest one how.
Tracy: How do you think about it in the context of M&A, one is sort of.
Tracy: A small stake.
Tracy: Right amount with whatever P&L that contributes to your business versus the P&L that goes to the distributors why not sort of.
Tracy: Being more aggressive on M&A kind of like what you've eventually Don.
Tracy: And have full ownership and then the second question.
Tracy: Which will be a lot more.
Tracy: Narrow is quite a bit of strength out of Canada can you maybe.
Speaker Change: Give us a little bit more on what was behind that you gave us a bit in the prepared remarks, but would love to learn the business.
Speaker Change: Ongoing something thats sort of building or if they were just a couple of nice hits last quarter.
Speaker Change: Continue thanks.
Speaker Change: Yeah.
Speaker Change: Thanks, Ken.
Speaker Change: It's not the latter it is not just a couple of months and 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 our Cds.
Speaker Change: It's driven by the strength of our brands.
Speaker Change: 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 co.
Speaker Change: Coal power brands Coors light and more.
Speaker Change: The trademark we grew share of segment through before.
Speaker Change: Miller Lite, which sells in the above premium tier.
Speaker Change: He is one of the fastest growing beer brands.
Speaker Change: In the category and then inventory, which we launched last year has delivered ahead of it.
Speaker Change: Our expectations and.
Speaker Change: In flavor.
Speaker Change: The fastest growing company in the.
Speaker Change: In the RTD space.
Speaker Change: Canada's success is broad it is it is.
Speaker Change: It's been.
Speaker Change: Going for as I said quite some time now.
And it just gives us a nice useful blueprint for the for the U S, where we've got the opportunities to strengthen our results, particularly in the in the above premiums a space.
Speaker Change: Performance, you kind of has been being strong in summary.
Speaker Change: Fever tree look I mean, we're good at partnerships I think that's one of our core strengths called comprehensive partnerships.
Speaker Change: Partnerships all over the world.
Speaker Change: 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.
Speaker Change: 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.
Speaker Change: But it's still part of the string of pearls approach.
Speaker Change: Why did we do it because we see real potential in and fee retrieved the odd states is the biggest market is the biggest growth market, we are representing them.
Speaker Change: Also we get 100% of the over performance will be will be included in our P&L, but at the same time, we wanted to take.
Speaker Change: Some advantage of the value, which we believe is going to be created at a fever tree level and so we are now the second largest shareholder in and we're comfortable with that with that position.
Speaker Change: Thanks, guys. Thank you the next 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: Coming 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 <unk>.
Your overall ownership in the company.
Speaker Change: Come through the equity income line or is that going to be held at cost.
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 breathing.
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 each.
Speaker Change: Each year, there are minor adjustments to shelf space.
Speaker Change: 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 downstream, but for spring of 2025, we expect that to be the case again and again, while it's early we would 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: In 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.
Speaker Change: We retained in the in the in the 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: Tracey you want to do with accounting Christian Yeah. Thanks, <unk>. So look in terms of how we go into the fourth fever tree.
Speaker Change: And so we have a license agreement to distribute the product and we will make another 100% that there maybe if all of the products sold in the evening.
Speaker Change: And well shaped joined team taking costs, which include marketing set resulting profit sharing at the EBITA level.
Speaker Change: We will also pay them, a royalty which will be included in Cogs.
Speaker Change: In terms of the basement that we've made in the CVT business.
And entity and will be reported on a cost basis annual market mark that to market and will be excluded 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: So Gavin your largest competitor wants to rebrand the domestic beer segment to I think the American beer segment do you agree that the industry should stop using that domestic terminology.
Speaker Change: And if that segment positioning changes may be combined with a broader populist movement do you do you think it.
Speaker Change: 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 about 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 our opening remarks, our brands are in a great place, particularly our core brands, which is guidance.
Speaker Change: Substantial share since 2023 and retained a lot of that.
Speaker Change: That's where our focus is.
Speaker Change: Thanks, Paul.
Speaker Change: 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 seeing that or not thanks.
Speaker Change: Thanks, Laura and good morning to you.
Speaker Change: We haven't seen anything unusual from a promotional point of view.
Speaker Change: It's common that there is some level of promotional activity most of that takes place in the summer that not not in not in Q4 or in.
Speaker Change: Q Q1, most of that takes place in Q2 Q3 is a fairly regular thing you see different things in different markets.
We haven't seen anything unusual.
Speaker Change: From a promotional point of view.
Speaker Change: We always do we will take a strategic approach to evaluating the the overall competitive landscape consumer dynamics.
Speaker Change: And we will do what's right for our brands.
Speaker Change: Yeah.
Speaker Change: Thank you. The next question guys you Michael Lavery of Michael.
Speaker Change: Michael Please go ahead.
Speaker Change: Yeah.
Speaker Change: Thank you and good morning.
Speaker Change: Just wanted to come back to innovation.
Speaker Change: And.
Speaker Change: Just.
Speaker Change: Have seen a lot of the innovation in the space.
Speaker Change: Skewed towards higher alcohol.
Speaker Change: Lynn.
Speaker Change: But maybe more exaggerated cases things like Beatboxer buzz balls, but youre simply spike bold and Blue Moon extra arent moving in that direction with 8% ABV version.
Do you have a sense of just what if any impact that has on category volumes and if some of that is.
Speaker Change: If that direction of innovation is helping drive weakness.
Speaker Change: A little bit just related can you maybe touch on how that sell in went in do you have a sense for.
Speaker Change: You know how your innovation is landing on the shelf resets also maybe for XOMA as well did that did you get.
Speaker Change: Ownership in time to move the needle on where that lands on shop.
Michael: Thanks, Michael Yeah lots of questions.
Michael: Let me just say that no I don't see that.
Speaker Change: Innovation, both from ourselves and our competitors is negatively impacting.
Speaker Change: The areas of care I think we can fit I think is positive I mean, if you look at beer as the overall industry.
Speaker Change: We did very nicely against spirits, I mean, all of spreads as growth is coming in the RTD space, which is where the beer player where the beer guys are playing and so if you.
Speaker Change: Just look at it.
Speaker Change: If you excluded.
Speaker Change: The pre packaged spreads from spirits performance it'll be quite negative.
Speaker Change: All of the growth is coming from that and we and our competitors play quite quite meaningfully there.
Speaker Change: As it relates to <unk>.
Speaker Change: 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 that trend with what consumers are looking for in terms of singles and higher ABV. We've got somebody spiked bold coming type of Mercury to Max we were delivering extra.
Speaker Change: They all come in at that sort of eight 8% level.
Speaker Change: 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.
Speaker Change: But we did say that Jay Z culture panel last year.
Speaker Change:
Speaker Change: As we looked at that and then with broader consumer insights. This panel has really been helpful in and how we innovate for four new legal drinking age consumers in heavy Thursday 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.
Speaker Change: 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.
Speaker Change: Thank you. The last question does your Robert Moskow of TD Cohen Robert Please go ahead.
Robert Moskow: Hi, Thanks.
Robert Moskow: There was a pretty.
Robert Moskow: <unk> slowdown in your EMEA APAC region.
Robert Moskow: And you attributed it to a heightened competition and.
Robert Moskow: Just the consumer backdrop.
Robert Moskow: Is there any reason to believe that.
Robert Moskow: That division can grow.
Robert Moskow: As fast as the rest of the company in 2025 or <unk>.
Robert Moskow: Do you think we're going to be.
Robert Moskow: Like we were in fourth quarter for the year.
Robert Moskow: Thanks, Robert look having certainly consumer demand in the in the U K was softer in 2024, when you compared with 2023, we do we did see some uplift in the in the summer.
Robert Moskow: Through through the Euro soccer is but where there are obviously offset a lot of that.
Robert Moskow: Christmas season was satisfactory, although we did see consumers.
Robert Moskow: Coming in late late in the season as opposed to earlier as it relates to our business specifically for calling.
Speaker Change: <unk> Brandon.
Robert Moskow: The U K.
Robert Moskow: And in the EMEA APAC business units, we took a value over volume approach.
Robert Moskow: You know, we certainly will continue to support the brand strength of that versus <unk>.
Robert Moskow: This is <unk>.
Robert Moskow: Competitors, but no doubt we took a we took a value over volume strategy.
Robert Moskow: Three we continue to see drive both volume and value growth across both channels.
Robert Moskow: Most very nicely a new market in Bulgaria.
Robert Moskow: During 2024, we have another market planned for for 2025.
Robert Moskow: We've got great brands.
Robert Moskow: Apex.
Robert Moskow: Talked about I, just got in the past and C&I.
Robert Moskow: No reason why are you my APAC business would grow quicker than that.
Robert Moskow: <unk>.
Robert Moskow: And.
Robert Moskow: Our businesses in North America.
Robert Moskow: Thanks for the question Robert.
Robert Moskow: Yeah.
Speaker Change: Thank you we have no further questions. This now concludes today's call. Thank you for joining you may now disconnect your lines.