Molson Coors Beverage : Bank of America Securities 2024 Consumer & Retail Conference Transcript

March 25, 2024 at 03:34 pm EDT

Corrected Transcript

13-Mar-2024

Molson Coors Beverage Co. (TAP)

Bank of America Consumer & Retail Conference

Total Pages: 20

CORPORATE PARTICIPANTS

Gavin D. K. Hattersley

President, Chief Executive Officer & Director, Molson Coors Beverage Co.

Tracey I. Joubert

Chief Financial Officer, Molson Coors Beverage Co.

.....................................................................................................................................................................................................................................................................

OTHER PARTICIPANTS

Bryan D. Spillane

Analyst, BofA Securities

MANAGEMENT DISCUSSION SECTION

Bryan D. Spillane

Analyst, BofA Securities

Thanks, everybody, for joining us for our fireside chat with Molson Coors. With me today are Gavin Hattersley, CEO; Tracey Joubert, CFO.

QUESTION AND ANSWER SECTION

Bryan D. Spillane

Analyst, BofA Securities

And I'll invite questions as we move along, but maybe just to get started, Gavin, in October you presented the Acceleration Plan to investors. That plan really, I guess, builds on the Revitalization Plan that was introduced in 2019. So, couple of questions related to that. The first one is just looking back at revitalization, like, how would you grade that relative to what you envisioned when you put it in motion in 2019?

Gavin D. K. Hattersley

President, Chief Executive Officer & Director, Molson Coors Beverage Co.

Thanks for having us, Bryan. I'm going to grade it an A+. I think when you look at all the ups and downs that we've had over the last four years that we set out to grow the top and bottom line of our business on a consistent basis and last year was the third year in a row that we grew the top line and it was the second year in a row that we grew the bottom line. Our guidance that we have out there says that we're going to do the same again. So, it will be four years of revenue growth and three years of profit growth on an underlying basis.

Our brands are in a really healthy spot at the moment. We've accelerated our above premium share of our overall revenue and we've expanded nicely into beyond beer. And on top of that, we're significantly further advanced on our capability building runway than we were four years ago. So, yeah, I'm actually very pleased with where we are. And as you rightly say, the Acceleration Plan will build on that.

Bryan D. Spillane

Analyst, BofA Securities

Right. And then, as you think about the three pillars on revenue, right, core, premium, and beyond, are you where you want to be in each one of those?

And maybe just thinking about going forward, like where do you see more of the opportunity for growth or to build upon each, you know, those three?

Gavin D. K. Hattersley

President, Chief Executive Officer & Director, Molson Coors Beverage Co.

Yeah. Sure. Look, I mean, from a core brand point of view, I think our brands are as healthy as they've ever been. And, obviously, we're never going to be satisfied. We're happy, but we're not satisfied, and we're going to continue to build on the tremendous strength of our core portfolio. And that's not just in the United States, but it's in Canada where Coors Light recently became the number one in the biggest beer region in Canada and is well on the way to becoming the number one in the whole country. And it's brands like Ožujsko in Croatia, which is strong, healthy and growing. It's over 50% share. Carling is showing improvement. So our core portfolio everywhere is in a great place and we're going to continue to build on that.

I'm not satisfied with, obviously, our above premium. We want to be bigger. That was the strategy. And now we've made tremendous growth and progress there going from 23% to 27%. We want to get even bigger. EMEA, APAC, our European businesses, already is over half of their portfolio is in the above premium space, and we certainly want the rest of our business to move nicely along that trajectory.

And whilst we've made, as I said, good progress expanding into spaces that we've never been before, like whisky with Blue Run Spirits company and ZOA in the energy space, we want to build on that and become even more relevant in those spaces. So, very happy, but not satisfied.

Bryan D. Spillane

Analyst, BofA Securities

Okay. And then, if we look at the Acceleration Plan, I guess, with revitalization having happened, right, like there's vitality at Molson Coors now, what are the things you can focus on now to really drive the business forward? So, creating vitality is more about fixing and repairing, I guess. Now you're at a point where you've got legs underneath it and you can drive the business. So how does that change, I guess, the way you're thinking about the brand building or the marketing, just how much does it - how much more can you do, right, to really push the business forward versus where you were four years ago?

Gavin D. K. Hattersley

President, Chief Executive Officer & Director, Molson Coors Beverage Co.

Well, four years ago we were making a lot of changes and we were taking a lot of cost out of our business. We're well past that phase right now. And certainly the success we had last year, the best year we've ever had from a revenue and a profit point of view sets us up really well for this year and into the future in terms of investing the right amount of money behind our brands and building on the strength of what we've done over the last four years. It's not, you know, some folks think that the health of our portfolio was a point in time, which was April of last year. And that just couldn't be further from the truth, right. I mean, the health of our portfolio and brands was improving every year sequentially from 2019 onwards, and we came into last year with strong momentum. We're going to build on that now.

So, I think you can see that in the work that's out there. I mean, Coors Light has just recently become the number one in the grocery channel. Miller Lite is knocking on the heels of number two. And we've got some great programs coming in the summer that we're going to build on. So, yeah, it's an exciting time to be in Molson Coors.

Bryan D. Spillane

Analyst, BofA Securities

Just to follow up on that, three brands, I was thinking about as you were responding. One is Carling, the other is Coors Light, and Miller Lite. And with Carling, right, that brand also maybe doesn't get as much play with our audience, but in this revitalization plan, the Carling brand has actually performed pretty well.

Gavin D. K. Hattersley

President, Chief Executive Officer & Director, Molson Coors Beverage Co.

It has. I mean, it is a core brand. It's been a...

Bryan D. Spillane

Analyst, BofA Securities

Yeah.

Gavin D. K. Hattersley

President, Chief Executive Officer & Director, Molson Coors Beverage Co.

...core brand in the UK, obviously, for a long time. Somewhat ignored actually for above premium brands. But last year we started to put even more focus behind it. And we're starting to see the results of that. It recently becamethe sponsor of not only the Men's FA Cup football, but also the Women's FA Cup football. And we've had tremendous positive feedback on that given that - Carling is a brand that's so associated with football. So when I say that our core brands are improving, it's globally. It's not just with Miller Lite and Coors Light.

Bryan D. Spillane

Analyst, BofA Securities

Right. And that's been a focus on marketing, a focus on brand building. Like that has yielded, right, much more...

Gavin D. K. Hattersley

President, Chief Executive Officer & Director, Molson Coors Beverage Co.

It has.

Bryan D. Spillane

Analyst, BofA Securities

...stability with Carling?

Gavin D. K. Hattersley

President, Chief Executive Officer & Director, Molson Coors Beverage Co.

It has. Because the core portfolio is important to us and it gives us the wherewithal and the strength to move into both premium and into beyond beer. So having a core that is healthy is really important to us...

Bryan D. Spillane

Analyst, BofA Securities

Right.

Gavin D. K. Hattersley

President, Chief Executive Officer & Director, Molson Coors Beverage Co.

...and we've got that now.

Bryan D. Spillane

Analyst, BofA Securities

And I guess thinking about that as well in Canada with Molson, I've covered this company for years, right, and Molson was lot of ups and downs, right, over the years. But Molson also more stable, right?

Gavin D. K. Hattersley

President, Chief Executive Officer & Director, Molson Coors Beverage Co.

It is. We had a really good year with Molson last year. And we're excited about the plans we've got for Molson this year. I mean, we just recently launched a campaign which I don't know if you remember the Molson Canadian fridge campaign, which was...

Bryan D. Spillane

Analyst, BofA Securities

Yeah.

Gavin D. K. Hattersley

President, Chief Executive Officer & Director, Molson Coors Beverage Co.

...so widely recognized. And I think the latest campaign, which we've just launched around making women hockey player's names more visible on their jerseys...

Bryan D. Spillane

Analyst, BofA Securities

Names, yeah.

Gavin D. K. Hattersley

President, Chief Executive Officer & Director, Molson Coors Beverage Co.

...and obscuring the Molson sign has received tremendous positive feedback broadly, not just in Canada. So, I think their team is knocking it out of the park, and I think we'll see the benefits in the brand going forward.

Bryan D. Spillane

Analyst, BofA Securities

And then, turning just to Coors Light, Miller Lite in the US, I guess, one of the things I thought was going to be a difficult task is how do you position both of those brands to grow at the same time without them fighting each other, right? I started my career selling in a business that sold both Canada Dry and Schweppes. And it was just, you know, Cain and Abel, like you were always fighting the people across the hall. So, just how did you sort of thread that needle and get them both to grow?

Gavin D. K. Hattersley

President, Chief Executive Officer & Director, Molson Coors Beverage Co.

Yeah, it was the challenge that we had coming into the revitalization plan, right, because if you go back in history when Miller Lite did well, Coors Light did not and vice versa, right. And when you came out of a distributor convention, either the Miller distributors were happy or the Coors distributors were happy, but never both of them. And over the last two years I think, maybe even stretching back three years, it's been a revelation that because we do - not all of our houses are consolidated. It's been wonderful to listen to distributors. It might be a Miller-only house or a Coors-only house saying how excited they were at the same time. And that is something that's been hard fought and long awaited and now we're there. And we've got both of those brands actually growing very nicely. Both of them are healthy, our distributors are happy and excited and putting a lot of time and effort behind them. The retailers are reacting to it. So, the team have done a really nice job differentiating those two brands and getting them to - obviously both play in the Premium Light space, but differentiating them. And part of that is just having a consistent message. If you go back 10, 15 years, and follow those two brands, Miller Lite in particular would have a different - it was confusing, right, because they didn't understand what Miller Lite stood for. And we've been maniacally consistent over the last four years. We bring them to life in obviously different new and creative ways. But the underlying thread of what those brands stand for has remained consistent for four years. And you can see the consumer reacting to that.

Bryan D. Spillane

Analyst, BofA Securities

Right, Yeah. I mean, it's - I think it's underappreciated just the ability to do that...

Gavin D. K. Hattersley

President, Chief Executive Officer & Director, Molson Coors Beverage Co.

Right.

Bryan D. Spillane

Analyst, BofA Securities

...both of those brands and big brands that are competitors, but under the same roof is...

Gavin D. K. Hattersley

President, Chief Executive Officer & Director, Molson Coors Beverage Co.

Right.

Bryan D. Spillane

Analyst, BofA Securities

...not an easy task. Maybe just a couple of shorter term questions. Maybe the first one is just, Gavin, I think at CAGNY, you talked - I think you made a comment about effectively the year's gotten off to a good start in the US. And so maybe, Tracey, if you could talk a little bit about how we should think about phasing in 2024, some of the items that...

Tracey I. Joubert

Chief Financial Officer, Molson Coors Beverage Co.

Yes.

Bryan D. Spillane

Analyst, BofA Securities

...we should - or remind us, I guess, what we should be...

Tracey I. Joubert

Chief Financial Officer, Molson Coors Beverage Co.

Yeah.

Bryan D. Spillane

Analyst, BofA Securities

...thinking about in terms of phasing?

Tracey I. Joubert

Chief Financial Officer, Molson Coors Beverage Co.

Sure. Thanks, Bryan. So, Q1 normally is a small quarter for beer. And for us, coming into this Q1, we wanted to make sure that we had the right inventory to be able to service as we get into the peak summer selling season. So we always really build inventory in Q1, and it's no different this year. What is incremental this year is because of the strong demand for our brands, we've built incremental distributor inventories to make sure that we can have our beer on the shelves all over for the consumer. So, little bit of an incremental build because of the demand for our brands. And then in addition we have built contingency plans around Fort Worth. And so, we're coming out of this quarter with higher levels of inventory just to make sure that we do have our brands available. So Q1, our shipments certainly outpace the brand volume fairly significantly, but then we expect for the balance of the year for that brand volume to then outpace the shipments, especially as we go through summer peak season. So that's the one thing.

And then from a - that's the top line, you know, volume. From the bottom line point of view, leverage has a big impact, - volume leverage has a big impact on our bottom line. So with a big inventory build in Q1, we obviously had a big volume leverage benefits. And then as our brand volume outpaced the shipment volume for the balance of the year, we wouldn't expect to see that kind of benefits. We always try and ship to consumption, so we will see those converge as we get to the end of the year.

Bryan D. Spillane

Analyst, BofA Securities

Right. And I guess as we think about phasing through the year on marketing investment, because last year you spent more as the year went on as things got better. So is the marketing investment smoother this year versus last year or is it going to kind of have the same cadence as we saw last year?

Tracey I. Joubert

Chief Financial Officer, Molson Coors Beverage Co.

Yeah.

Gavin D. K. Hattersley

President, Chief Executive Officer & Director, Molson Coors Beverage Co.

You go for it.

Tracey I. Joubert

Chief Financial Officer, Molson Coors Beverage Co.

I think it depends on the brand. So when we introduce a new brand, if it's an innovation. So, for example, we just launched a brand called Happy Thursday, which is a refresher type of - it's a hard refresher. So it's got alcohol in it and no bubbles. You put more money behind it to get the brand awareness. But in terms of the big brands, Miller Lite, Coors Light, I mean, we've got really good campaigns that'll sort of be spread throughout the year.

Gavin D. K. Hattersley

President, Chief Executive Officer & Director, Molson Coors Beverage Co.

Throughout the year.

Tracey I. Joubert

Chief Financial Officer, Molson Coors Beverage Co.

Especially in summer, it's important and as we get a fast start into the summer season, you'll see a lot of our brands, whether it be live sports, we've got a lot of big tournaments coming up, March Madness, et cetera. You'll see our brands there.

And then as we get to the back half of the year, I mean, football, et cetera, is really important to us as well. So, I wouldn't say that you see significant peaks and valleys, but there are periods where we would invest more.

Bryan D. Spillane

Analyst, BofA Securities

And maybe just sort of one more shorter term question. I know, Gavin, you get a lot of questions about what happens in April.

Gavin D. K. Hattersley

President, Chief Executive Officer & Director, Molson Coors Beverage Co.

Yes. I can't wait for April to arrive. We're only a couple of weeks away now.

Bryan D. Spillane

Analyst, BofA Securities

My birthday's April 1 actually.

Gavin D. K. Hattersley

President, Chief Executive Officer & Director, Molson Coors Beverage Co.

Oh, good.

Bryan D. Spillane

Analyst, BofA Securities

So, I guess, as we think about - we all know the comparisons are difficult, right, in the US. So that is - but we were talking about this a little bit earlier. Should we be thinking about, like, holding or gaining share in the US as being sort of the objective relative to all - what the difficult comparisons are? I think there's so much focus on if volumes are going to be negative, because it's got a really big comparison. Is that really the way to look at it or is it, hey, you're holding - you've gained all this share and now you're going to hold on to it or maybe gain a little bit more? So just how should we be thinking about what success looks like in the US, given the comparisons?

Gavin D. K. Hattersley

President, Chief Executive Officer & Director, Molson Coors Beverage Co.

Yeah. Well, I mean, that question is obviously asked a lot.

Bryan D. Spillane

Analyst, BofA Securities

Right.

Gavin D. K. Hattersley

President, Chief Executive Officer & Director, Molson Coors Beverage Co.

I think the - we're almost a year into this now, right. It's 11 months and a few weeks. And the share gains that we've made on both a volume perspective and a dollars perspective have held. I mean, they might change a tenth of a point here or there on a week, up or down. But, in fact, in the last few reads we've actually accelerated our share gains. So, we believe very strongly that the share gains are sticky. We're seeing a change in shelf space that I can't remember a time that that's ever happened at this level, right? Normally, you're battling away for one extra facing or two extra facings of something. And the amount of extra shelf space that Miller Lite and Coors Light have been getting in big chains is unprecedented. And we would expect to see benefits from it. I mean, the fact that we're going to have more beer on the shelf and better placed displays is going to continue to help the strength of Miller Lite and Coors Light.

So, absolutely I believe we're going to hold the share gains that we've made. And our job as a team is to make sure that we extend that. And Tracey referenced some of the plans that we've got behind Miller Lite and Coors

Light. And we've already talked about the Coors Light Chill - the Choose Chill program that we launched at Super Bowl. That we're going to build on now as we head into March Madness and the summer, and we've got somegreat executions and partnerships with various organizations like ESPN, which we're going to bring to life. We're going to localize that in 65 local markets between Canada and the United States.

And then Miller Lite, we've got what I think is one of the best campaigns that Miller Lite has had, which we'll launch in the next week or so heading into March Madness. And we've obviously put the pressure, as Tracey said, behind those programs because they're working right.

Bryan D. Spillane

Analyst, BofA Securities

Right. And it appears that, and maybe I'll ask with all of the effort you put behind the Super Bowl, right? You're building awareness going into the summer selling season, but it also, in my mind, was also a check on how much of that brand equity it stuck, right? People respond right to the ads, but not just the ads. It was the buildup to the ads. I didn't get on the cold train. I was little late.

Gavin D. K. Hattersley

President, Chief Executive Officer & Director, Molson Coors Beverage Co.

I don't believe. I don't believe it actually, Bryan.

Tracey I. Joubert

Chief Financial Officer, Molson Coors Beverage Co.

We all tried. We all tried [ph] to get in (00:17:44).

Gavin D. K. Hattersley

President, Chief Executive Officer & Director, Molson Coors Beverage Co.

I tried to get on to the train, and I didn't even [indiscernible] (00:17:48).

Bryan D. Spillane

Analyst, BofA Securities

I do get asked now, I offers to buy merchandise, but a free ticket I didn't get. But, no, so can you talk a little bit about - I know it's only been a month or so, but just now that you've been able to kind of measure how consumers have responded to all of that, just what impressions you've had?

Gavin D. K. Hattersley

President, Chief Executive Officer & Director, Molson Coors Beverage Co.

Really, really well. I mean, and the retailers have responded really well too. I mean, we increased our displays and features in that sort of period around the Super Bowl for Coors Light, and that's obviously a very positive thing for us. And as I just - I think I mentioned, I might not have, that Coors Light recently became the number one brand in grocery. That's a big deal, Bryan. And, obviously, that's a testament to the work that that team and our sales team and our distributors are doing to bring that brand to life and it positions us really well as we head into summer.

Bryan D. Spillane

Analyst, BofA Securities

All right. I want to just give anybody in the room a chance to ask questions, if anybody has one. Yeah? Okay. So, maybe just one more shorter-term question, Tracey. We talked little bit earlier about I think you've got a bond maturing this year. So just what will you refinance? Just how will you approach the maturity?

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Molson Coors Beverage Company published this content on 25 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 25 March 2024 19:33:04 UTC.

Market Closed - Nyse Other stock markets 04:00:01 2024-04-26 pm EDT			5-day change	1st Jan Change
62.54 ^USD	-0.45%		-2.63%	+2.17%

Apr. 25	North American Morning Briefing : More Tech -2-	DJ
Apr. 24	Citigroup Downgrades Molson Coors Beverage to Sell From Neutral, Adjusts PT to $56 From $66	MT

North American Morning Briefing : More Tech -2-	Apr. 25	DJ
Citigroup Downgrades Molson Coors Beverage to Sell From Neutral, Adjusts PT to $56 From $66	Apr. 24	MT
Zacks Downgrades Molson Coors Beverage to Neutral From Outperform	Apr. 17	MT
Deutsche Bank Adjusts Molson Coors Beverage Price Target to $65 From $64	Apr. 17	MT
Citigroup Adjusts Molson Coors Beverage's Price Target to $66 From $63, Keeps Neutral Rating	Apr. 16	MT
Consumer Edge Adjusts Price Target on Molson Coors Beverage to $71 From $69	Apr. 15	MT
Barclays Adjusts Molson Coors Beverage's Price Target to $67 From $65, Keeps Equalweight Rating	Apr. 12	MT
Corona beer maker Constellation Brands forecasts annual profit above estimates	Apr. 11	RE
North American Morning Briefing : Traders Await -2-	Apr. 10	DJ
Goldman Sachs Upgrades Molson Coors Beverage to Buy From Neutral, Raises Price Target to $75 From $66	Apr. 09	MT
Piper Sandler Initiates Coverage on Molson Coors Beverage With Neutral Rating, $69 Price Target	Mar. 22	MT
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US spirits exports rise 8% in 2023 following EU tariff suspension	Feb. 28	RE
Molson Coors Announces Leadership Transition in Canada	Feb. 27	MT
Transcript : Molson Coors Beverage Company Presents at 2024 Consumer Analyst Group of New York Conference, Feb-21-2024 05:00 PM	Feb. 21
Barclays Adjusts Price Target on Molson Coors Beverage to $65 From $64, Maintains Equalweight Rating	Feb. 15	MT
Deutsche Bank Adjusts Molson Coors Beverage Price Target to $64 From $61, Maintains Hold Rating	Feb. 14	MT
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Molson Coors forecasts annual sales above estimates on steady demand, higher prices	Feb. 13	RE
Molson Coors Beverage's Q4 Non-GAAP Earnings Fall, Net Sales Rise	Feb. 13	MT
Earnings Flash (TAP) MOLSON COORS Reports Q4 Revenue $2.79B, vs. Street Est of $2.78B	Feb. 13	MT
Tranche Update on Molson Coors Beverage Company's Equity Buyback Plan announced on October 3, 2023.	Feb. 13	CI
Molson Coors Beverage Company Reports Earnings Results for the Full Year Ended December 31, 2023	Feb. 13	CI
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