Molson Coors at 2025 dbAccess Conference: Strategic Shifts Amid Challenges

On Tuesday, 03 June 2025, Molson Coors (NYSE:TAP) participated in the 2025 dbAccess Global Consumer Conference. The company, led by CEO Gavin and Tracy, acknowledged the challenges of a tough macroeconomic environment while expressing optimism in its strategic pillars. Despite industry-wide volume declines, Molson Coors remains committed to strengthening its core brands, expanding into non-alcoholic beverages, and capitalizing on premiumization.

Key Takeaways

• CEO Gavin will retire at the end of the year, leaving a strong cultural legacy.
• Molson Coors is focusing on premiumization and expanding its above-premium portfolio.
• The company plans to navigate economic uncertainties by leveraging its distribution network.
• Financially, Molson Coors maintains a strong balance sheet and capital allocation plan.
• Strategic acquisitions and innovation are central to reshaping its portfolio.

Financial Results

Volume and Revenue:

• Industry volume fell by 5% in Q1, with expectations of a 3% decline for the rest of the year.
• Contract brewing wind-down led to a loss of 1.9 million hectoliters year-over-year.
• Fever Tree and ZOA consolidation are anticipated to boost volume and revenue.
• Premiumization efforts, particularly with Peroni and Madri, are expected to drive top-line growth.

Costs and Margins:

• G&A expenses rose due to Fever Tree transition costs, with $30 million spent in Q1.
• Marketing will focus on core brands and above-premium innovations.
• An extensive hedging program helps manage commodity costs.

Capital Allocation:

• Molson Coors has a $2 billion share buyback program, with 40% already utilized.
• The company is committed to growing its dividend sustainably.

Operational Updates

Strategic Initiatives:

• Emphasis on core brands like Coors Banquet, Coors Light, and Miller Lite.
• Expansion of Peroni includes onshoring production to the US for cost benefits.
• Integration of Fever Tree into the distribution network supports non-alcoholic brands.

Geographic Performance:

• Canada has gained market share for eight consecutive quarters.
• The UK market remains resilient, while Central and Eastern Europe are volatile.

Production and Supply Chain:

• Investments in automated breweries and modernization of the Golden Brewery enhance efficiency.

Future Outlook

Industry Trends:

• Molson Coors views current challenges as cyclical rather than structural.
• The on-premise channel is performing better than off-premise.

Strategic Priorities:

• Continued focus on strengthening core brands and expanding into non-alcoholic beverages.
• Evaluation of M&A opportunities that align with strategic goals.

Q&A Highlights

• Gavin highlighted the company’s strong culture and advised his successor to maintain it.
• Molson Coors sees significant potential in the Beyond Beer category.
• AI is being used to optimize the supply chain and market strategies.

In conclusion, Molson Coors remains steadfast in its strategic direction despite industry challenges. For further details, please refer to the full transcript below.

Full transcript - 2025 dbAccess Global Consumer Conference:

Steve: Time for for q and a, and we’ll just jump right in. And, Gavin, I wanted to start with you. As many in the room probably know, you you’ve recently announced your intention to retire at the end of the year. So this will be your final time with us in Paris as CEO. So we we’re sad to sad to see you go, but excited for your future.

I guess as you reflect on your on your tenure, first as CEO of MillerCoors and now as as Molson Coors since ’19. I guess, would you say are the accomplishments you’re most proud of? And what is your assessment of the company’s positioning against future challenges and opportunities?

Gavin, CEO, Molson Coors: Yeah. Well, thanks for having us again, Steve. Look, I mean, the the the thing I I am most proud of, and it’s, I mean, it’s probably less maybe important to the investment community, but it’s really important to us as our people and our culture. I mean, we’ve been around for hundreds of years, and so our culture has been developed over a long time. And I think we’ve really made some great strides over the last six years, and I think that has allowed us to weather innumerable challenges that we’ve had to weather over the last six years, some which other companies have had to weather as well, but some have been unique to us.

So I think I leave a legacy of great people, strong bench and a really cohesive and and strong culture. So I feel really good about that. I feel really good about our balance sheet. I think our balance sheet compared to what it looked like when when Trace and I took over Molson Coors six years ago, it is in a substantially better place. Our our leverage is below two and a half times.

You know, we’ve got a really strong capital allocation plan, which we’ve executed against, I think, very nicely. Our cash flow is substantially more than it was at that time. So I feel I feel really good about that, and and and I think the legacy that that we’re that I’m leaving for whoever succeeds me is from a balance sheet point of view is is strong. We’re making a lot more money, which is also pretty pretty helpful. Our our core brands are in a great place.

I think we proved a number of our skeptics wrong when we had the the dislocation in the premium light space and we’ve retained almost all of the share that we gained and we’ve certainly retained and actually gained a little bit more shelf space than we had got about a year ago, mostly through Coors Banquet, but Coors Light and Model Light have held their own quite nicely. So I’m feeling really good about that. We’ve launched the best innovation we’ve had in twenty five years. It’s a top 10 brand already for us. You know?

In Madrid, it’s expanded into into a few other countries. We’ve got Peroni, which, you know, we’re we’re just about to, and and and you will see it in the in the in the in the data that’s out there, the public consumer data, Nielsen IRI, how Peroni started to do what we said it was gonna do, which is which is accelerate as as we as we we got all the stars aligned around that brand. And then of course there’s our move into the non ALK space. I think that the acquisition of Fever Tree is exciting. This year is obviously a transition year for us as we bed it down in our network, but it plays a nice role in the intersection between alcohol and non alcohol.

And I think the opportunities through our distribution network are strong. So I could probably go on for a bit longer, Steve, but I think those are the those are the high points. So I’ll cover that one.

Steve: Well, as you can see from Gavin’s answer, he’s not done yet. Still sprinting to the finish line. So I I in that context, I I know, when we zero in on the here and now, look to complete 25 against the you know, diff just a difficult backdrop. You know, what what are you most focused on in terms of making sure you get right executing on over the balance of the year?

Gavin, CEO, Molson Coors: Yeah. So, I mean, you’re right. It is a tougher economic environment, macroeconomic environment, consumer sentiment’s tough. And so we’re really focusing in on the pillars of our strategy. So we are focusing and making sure that we don’t drop the ball from a share point of view on our core brands, that we keep the momentum of Quiz Banquet going.

We’ve talked for a while now about the potential behind Pironi, and we also talked about the fact that a lot of those plans were gonna hit in the second quarter, and they are hitting now. And so there’s there’s a lot of focus on on on Pironi inside our our team to make sure that we we execute appropriately. Right? I mean, we’ve we’ve now got all the stars aligned on that on that brand. It’s it’s it’s being produced in the in The US.

Our cost of goods sold is a lot less. Producing it in The US allows us to introduce SKUs that we haven’t perhaps been able to use utilize before. You know, the significant margin expansion that we’ve got from onshore, and we’re now able to invest through additional marketing, which we’re doing. And all of that has given us a really great story to take to retail, and we’re seeing the benefit of that in substantially enhanced shelf space. And so a lot of focus going on that.

Obviously, bedding down and transitioning Fever Tree is really important. I am excited about that brand. I think it really has the potential to accelerate our non ALK portfolio meaningfully. I think Zoho will will benefit from that because we’re putting a lot of extra couple of hundred extra, you know, folk behind our non ALK activities who won’t only be focusing on Phoebe Tree, they’ll also be focusing on on Zoho. So I’m I’m feeling really good about that.

But now is the time for us not to drop a ball because we are busy transitioning across to our our our largely our our beer distributor network. And, you know, that’s it’s really important that we that we keep the momentum of that of that brand growing. Mhmm. You know, north of the border, Canada, we’ve we’ve we’ve gained share for eight consecutive quarters. So making sure that we keep the foot on the accelerator up there with with brands like Quiz Quiz Lite and and and Molson Canadian is seeing a a resurgence.

Miller Lite, which plays in the above premium space up there, is is is doing really nicely, so making sure we don’t drop any any balls there either. So, you know, I’m pretty much, Steve, doing what I’ve been doing my whole career. Right? I’m gonna run through the tape and and then then head off.

Steve: Right. Because you were mentioning fever dreams, maybe I’ll ask about it now. Just, you what is the opportunity there that that you see? I mean, like, both, you know, for each brand individually and then as you say, the the linkages between them and how they may sort of reinforce each other, especially with your distributor distributor network?

Gavin, CEO, Molson Coors: Yeah. Well, I mean, just at at at at at, you know, the very bottom of the pyramid, I suppose, is is that we’re we’ve we’ve taken on roughly half a million hectoliters, which is a meaningful size brand for our for our distributor network, it’s profitable. And that doesn’t often happen when you when you try something new. So we’ve we’ve taken on an established brand, and and and I’m not saying it’s gonna be easier, but it will be easier than, for example, building a brand from the bottom up like we’ve had to do with Zoho. And and with all the extra resourcing that we’re gonna put behind Fever Tree, at the same time, they will be focusing on Zoho.

They’ll be focusing on naked life, which is the nonalcoholic cocktail that we’ve that we’ve brought from from Australia. So, you know, we’ve we’ve now got critical mass in that in that non op portfolio. Distributors know we mean business. Their their reaction to the RFP was very strong. They they are clearly excited about it based on their on their reaction.

And and and I think the capability of our distribution network and the number of additional points of distribution that the optics that they’re going to get to is is is gonna be meaningful. It’s also fairly underdeveloped, if at all, in the c store chain, which which when you couple that with our our push into the higher alcohol space through singles, through Blue Moon and and Simply and and Turbo Chico, you layer onto that fever tree. And I think we’ve got now an even better message to take to our c store customers than we’ve than we’ve ever had before. So Yeah. Okay.

Steve: Very good. So like a lot of companies in general and and here at the conference, most, of course, recalibrated lower 25 financial targets alongside calendar 1Q results. I’ll go I’ll Trace, I’ll have you weigh in here in a bit, but just, I guess, walk us back, you know, in time and kind of the major drivers of of that that revision. And as we sit here today, how do you see demand shaping up relative to your revised outlook? Well, I

Gavin, CEO, Molson Coors: mean, the singular big issue that we didn’t have coming into this year is, you know, we certainly didn’t predict. I don’t think anybody predicted that the industry was gonna be down as down as much as it was in the first quarter. We certainly didn’t have a down five on our bingo card. And and, you know, as we as we looked at that and as we looked into the into the future, we did see and and and and, you know, our guidance is is is predicated on an improvement in that And, you know, getting back to not sort of where it’s been for the last three years on an annual basis, but certainly for the balance of the year, we saw it migrating back to the sort of down three level, which is which is where it’s been for the last for the last several several years. Why did we think that?

Well, you know, we we had the data points in April, which showed that it had migrated back to to 3%. And if you remember, Steve, we had a particularly tough summer last year from an industry point of view. And and certainly, that makes our comps June, July, August a lot easier. And so when we factor all in all of that in and settling down of the consumer environment and sentiment, that that’s what we baked into our ongoing forecast. Now, you know, we we saw that for April.

We saw that for, you know, a couple of weeks in the May, and we’ve we’ve had some really tough industry numbers that have come out more recently. You know? You know? I hate blaming the weather and then yet have the data to blame the weather entirely, but I think based on the markets which seem to have been most affected over Memorial Day, they were the ones that had really poor weather. It was rainy in the Northeast, and temperatures were 20 degrees lower than they were last year.

And so, you know, once you’ve got a more fulsome assessment of what happened at Memorial Day, I’ll be able to share it with you. We don’t have that yet, but that certainly is the emerging hypothesis. It’s a lot of what happened over Memorial Day weekend was

Steve: Cold wet.

Gavin, CEO, Molson Coors: Was cold weather Yeah. And wet. Yeah. Yeah.

Steve: Okay. Tracy, so, you know, building on what Gavin just ran us through, there are just a number of timing puts and takes this year in the outlook. Just general shipment versus depletion considerations that you’ve got recycling last year’s contract brewing extras. We talked about ZOA and Pever Tree layering on. Maybe just help us with the kind of level set on those factors and and maybe walk us through the financial implications as we think about the balance of the year.

Tracy: Yeah. So a lot of puts and takes as you say. So if we look at the the volume, you know, that’s coming out from a contract brewing point of view, you know, that’s 1,900,000 hectoliters that we had in our volume last year. And so, you know, as we wound down the year, we had roughly in q one about 590,000 hectoliters that we were cycling. Q two is a similar amount about 570,000 hectoliters, And then it sort of, you know, continues to decline to the balance of the of of the year where, you know, by the December, we we would have cycled completely out of the the contract brewing arrangement, which we’re really happy with, by the way, but it obviously is a headwind from a volume and a and a deleverage point of view.

If I go back to the top line, you know, we we do have Fever Tree, which is incremental. The consolidation of Zoho now is incremental. It is all set by if you recall, we sold our craft breweries. So there’s a little bit of a headwind from from the craft breweries, you know, that’s gonna impact that. But we’ve got premiumization built into our top line.

So, you know, Gavin spoke about our plans around Peroni. You know, we’ve got Madrid in The UK and now expanded into other markets that he mentioned, you know, that’s above premium. Our Canada business is is doing really well as well. You know, Miller Lite up there is is growing. Miller Lite’s an above premium brand up in Canada.

So so there’s a lot of portfolio shifting. If you recall, you know, we’ve got a medium term target of getting to a third of our our brand revenue coming from the above premium side of the portfolio. And and so about half of that we expect to come from Beyond Beer, which is, you know, things like Viva Tree, Zoa, flavors, etcetera. From a from a, you know, balance of the shipments, if you recall, we also were expecting a strike in our Fort Worth Brewery at the beginning of last year, so we built up inventory going into the summer. That was around 1,100,000 hectoliters for for q one and q two.

Q ’2 was about 350,000 hectoliters. So, you know, as we go through the balance of this year, we expect our shipment and our retail to converge mainly q three and and q four. So, you know, comps will be easier. And then, you know, as we look at g and a, for example, our g and a, you know, we’re expecting that to be higher this year. With the with the transition of Fever Tree, we had transition costs.

We’ve mentioned about $30,000,000 in q one. There’s a there’s another under 10,000,000 coming in q two. And then, you know, marketing, we’re gonna continue to invest behind our brands, our core brands in particular, but also around some of the the above premium innovations, whether that be Fever Tree, Zoho, you know, is getting incremental spend. Peroni, the fact that we’ve on shoring that, you know, it it frees up a lot of costs, and so we’re investing that behind the brand. And then, you know, brands like Quiz Banquet, which just continues to to grow even in in bad weeks, you know, we’re seeing good growth from Quiz Banquet, you know, that’ll get incremental dollars as well.

So that’s how we kind of looking at at the the sort of balance of the year.

Steve: Perfect. And as it relates to costs, you mentioned sort of the the the investment initiatives. But around remind us where you stand on key cost considerations from a input perspective. I guess, any updated thoughts around, you know, how how you’re managing through tariff related volatility and then, you know, the productivity on the offsetting side?

Tracy: Yeah. So from a from a COGS point of view, obviously, again, the deleverage of of the contract brewing, you know, is a is a headwind. Premiumization is also a headwind on on the COGS side because, generally, your above premium brands come at a higher COGS, but comes at a higher margin as well. So so we’re happy, you know, to take that cost. And then from a from a commodity point of view, we’ve spoken about our extensive hedging program.

And and from a from a tariff point of view, you know, the work that we’ve done over the last number of years where we’ve we’ve actually diversified our to The US and to Canada. We we import very little. The only impact that we have from, I’d say, a commodity strike tariff point of view is the Midwest premium. Yep. You know, I think everyone is is really challenged and frustrated by the Midwest premium because it, you know, it it sort of went through the roof as people just mentioned tariff, but there’s no fundamental reason why it should it should behave that way.

We do hedge the the Midwest premium, but it’s it’s difficult and it’s expensive and it’s very Obviously, as it relates to consumer sentiment and inflation and, you know, that’s something that we we’re watching and, you know, every day, it’s a little bit different.

Gavin, CEO, Molson Coors: Yep. So Okay.

Steve: Gavin, Tracy mentioned sort of the above premium initiatives that the company has and premiumization within within your I was gonna say within your alcohol portfolio, but within your portfolio overall has been a a big theme. In the current environment where we’ve heard a lot about value seeking behavior amongst amongst consumers, does does premiumization does the role of premiumization change change at all in in how you think about, you know, initiatives and and, you know, allocate allocate strategic capital?

Gavin, CEO, Molson Coors: No. It doesn’t. You know, our our it it it’s an important component of our of our overall strategic pillars and and arguably even more important for us to to really get a bigger share of our net sales revenue into the above premium space. So it doesn’t it doesn’t change our our focus or dilute our focus at at all. From a consumer point of view, we’ve not seen much change in behavior from a certainly from a brand point of view.

Folks are not trading down in any noticeable way from a brand point of view. Now they might be making slightly different pack decisions, but but but certainly, it’s not it’s not changing our focus. You know, Tracy mentioned that, you we’re gonna push hard on Peroni, you know, Miller Lite up in the up in Canada, Madri as it expands into into additional markets. That’ll get extra marketing in our EMEA APAC division. All of our brands in South Central America are in the above premium space, so we’ll continue to push into that space.

So the short answer is no, Steve. It’s not gonna change our focus.

Steve: How do you think about, you know, long term category growth? Maybe, you know, kind of parsing US versus ex US or however you wanna however you however you think about it. And has has your has your thought your thinking around those kind of normalized growth rates changed at all as we’ve seen fluctuations in in more recent demand?

Gavin, CEO, Molson Coors: Well, the industry in The US and Canada have pretty much mirrored each other. You know, there’s they sometimes are a little different. But by and large, I would say they they are pretty pretty similar. And they’ve been pretty similar with the exception of what what happened in in q one for several years now. And so, certainly, that’s that’s that’s a world that that we see.

It is one of the drivers behind us wanting to make sure that we become a total beverage company not just a, you know, a pure play beer company. And we’ve been on that journey now for several years. And I think we’ve laid a really nice platform and springboard for success as far as that’s concerned. We’ve seen The UK, in particular, has been more resilient, and Central And Eastern Europe has been more volatile. You know, last year, we had a pretty good year from an industry point of view.

This year is a little tougher, and it’s it’s also the macro environment, now slightly different macro environment to what we’re experiencing in The US. But still, you know, macro environment is influencing consumer confidence and driving, you know, you know, more more cautious behavior from a from a spend point of view. Okay.

Steve: Maybe to round out the kind of the the category dynamics and and hype. Number one is on premise versus off premise, you know, dynamics we’re seeing evolve over over the current over the over the you know, in the current environment, number one. And then, I guess, the mirror image of the question on premiumization, the the the core kind of power brands in your portfolio, is there is there appetite to lean more into those those those brands, you know, to meet consumers where where they may be economically in the current environment?

Gavin, CEO, Molson Coors: Well, from an on and off premise point of view, on is has is performing slightly better than off, and that’s been a somewhat consistent theme for a while now. And, certainly, we’re seeing that right now. You know, in the in the last few years, it’s been more normalization of folks going to to bars and restaurants post COVID. But I think we’re we’re kind of through that normalization now and and but we’re still seeing folk spend more time in in in bars and restaurants for sure. As far as our core portfolio is is concerned, we’re certainly gonna keep the the our our foot on the pedal there.

You know, if you look at how Canada has gained share for the last eight straight quarters, it’s been on the back of Coors Light and Molson Canadian, a more recent resurgence. So certainly, we’re going to continue to to invest and push what’s working up there, which are those two two brands. In our EMEA a a APAC operation, brand like Ruzhuzco in Croatia is a big brand. It’s strong. Its market share within its space is doing very nicely.

It’s got more than half of the market, so we’ll continue to lean in there. We’ll continue to focus on our value versus volume approach in The UK with Carling. And then if you cross back over to The US, you know, as I said, QuizLight, Miller Lite, Quiz Banquet gained a lot of shelf space over the last year, and it’s and it’s retained that shelf space by and large. And Quiz Banquet, in fact, has actually gained additional shelf space. I think the last number I saw was in the low teens of additional shelf space.

And that’s helped us retain almost all of the market share that we gained a few a few years back. Coors Banquet’s a really interesting brand. Right? It’s been around for hundreds I mean, it’s been around for a long time. It goes back to the beginning.

And, you know, it it is a it is a big brand, and it’s growing. Even in the weeks where you see the industry performing particularly poorly, quiz banquet is just chugging along. You know? Sometimes it’s most of the time, it’s growing double digits in the really poor industry weeks. It’s still growing, but at a slightly slower pace.

It’s attracting new consumers to our portfolio, whether it’s Latino consumers, whether it’s younger legal drinking age consumers are coming in through banquet. They love the Western heritage. They love the heritage of the brand. They love the the sort of original Stubby bottles, which is unique in the in the marketplace. They love the marketing, whether that’s Yellowstone or whether it’s our our program around firefighters and the first responders in the West.

I think we’ve got a formula with Banquet, which is working really well, and and and and and we’re gaining a lot of share from from that. So, yes, we’re gonna continue to lean into our into our core brands, not because consumers are trading down to them. We haven’t seen that, but consumers want them.

Steve: K. Yeah. Of course, banquet, I mean, it’s a multi decade growth story. It is. Is there is there is it is it kinda lightning in a bottle, so to speak, in terms of is just really unique?

Or are there things that you have done over the course of the last, you know, half decade on Coors Banquet that you can take as learnings and apply to other brands? Well, it

Gavin, CEO, Molson Coors: depends who you talk to in our organization. Right? If you talk to the marketing folk, they’ll say this isn’t entirely marketing. But if you talk to the to the brewing folk, they will tell you it’s a great high quality product. And if you talk to the sales folk, they’ll tell you it’s all the extra distribution we’ve got.

And I would say it’s all three of those things. Right? I mean, I remember a few years ago at a sales conference, we actually put up a chart for our distributors where we showed them where distributors had QuizLight and QuizBanquet distribution and on display together, how both brands actually performed quite a lot better than than than those distributors that just had Coors Light. And so over the last couple of years, we’ve seen a narrowing of the gap on distribution between Coors Light and Coors Banquet, but, you know, there’s still a long way to go. So there’s a lot of distribution upside for that for that brand.

And it was one of those, you know, seminal moments in the distributor convention where you can see and hear that something has landed, and that landed with our with our with our distributor network, and they’ve been executing really well against that. So, Steve, it’s a combination of all three of those things. You know, getting more distribution on QuizLight and Miller Lite’s a little hard because they’ve a lot of distribution. So, you know but closing that gap with QuizBank was a real opportunity for us. Yep.

Steve: Okay. We’ve talked kind of alluded to a lot of change in the portfolio, a lot of reshaping in terms of the the additions of of of Zoa and Fever Tree and the investment of the craft the craft portfolio, etcetera. I maybe a question for both of you in terms of both the strategic desire for more portfolio reshaping and also the financial capacity to undertake it.

Tracy: Yes. So, you know, as I said, I think as we look at our long term growth algorithm of getting to about a third of our net revenue, you know, to come from above premium portfolio, about half of that growth, we expect to come from Beyond Beer. And part of that is expanding into spaces like we’ve done with Fever Tree, which was a white space for us, but also, you know, something that our distributors are really excited about and get behind. So, you know, we’ve said that from an M and A point of view, we like the string of pearls approach. We think it works for us.

The pearls, because of our ability to generate the significant free cash flow that we are able to generate and you know, the fact that our balance sheet is so healthy, it does give us a lot of optionality, but it also means that those pools could be a little bit bigger, like the investment that we made in Fever Tree. So we yeah, I mean, we’ve got the capacity. We wanna do things the property, things that we, you know, that does fill a a space. It does give us a right to win, but also that’s scalable and something like Fever Tree is is the perfect example of that. So, yeah, we’ve we’ve got options and we certainly will look at at things that, you know, fill all of those spaces that I I just spoke about.

Steve: And and, you know, I I know you get this question a lot, but how do you balance that consideration against, you know, the other capital allocation priorities, obviously, investing in the business as we talked about, but you got an ongoing buyback that’s quite considerable. There’s obviously the dividend that is, you know, very healthy. Is there a point at can you do both? Or is it and is there a point at which the M and A would take precedence over the share the share buyback?

Tracy: Yes. So we I mean, we do have models that we run our capital allocation decisions through. But, you know, I I would say that, again, with the with the strength of our our balance sheet and free cash flow, we were able to do all of those things. So if you just look at, you know, what we have done over the last number of years, we we’ve invested in capabilities, whether that be in our breweries, whether that be through systems and tools, whether that be AI, for example, in in our breweries where, you know, we we actually use AI quite a bit or whether that be returning cash to shareholders. So, you know, you mentioned our share buyback program.

It’s a it’s a $2,000,000,000 buyback over five years. In the first six quarters, we’ve we’ve already, you know, utilized 40% of that. So so we’re well ahead of, you know, we if you just take a straight line where we would be, and it’s because we we actually think our share is a good investment, and so we’re investing in our shares ourselves. But also part of that that capital allocation is to sustainably grow our dividend, and and we have been doing that actually for the last last number of years. So again, I think, you know, depending on what gives our shareholders the highest return is is where we’re gonna invest.

But because we we have, you know, the strong free cash flow, we do have the ability to to flex, you know, whether that be m and a or or whether that be returning more cash to shareholders. So, yeah, I mean, it it it depends.

Steve: Okay. Gavin alluded to it a little bit in his his opening, but the and and as did you just just now in terms of advances in organizational capabilities, you know, across across a wide spectrum of initiatives. Are there specific capabilities that you feel you you wanna highlight as something that you’ve made the most the most advanced on just in terms of, like, your own improvement? Or, I guess, more importantly, are there places where you see true advantage versus the competitive set? And I guess the other side of that is, you know, capability if you had one capability, you’d wanna you’d wanna further hone over the next next year or two, what would it be?

Tracy: Okay. Let me start and jump in if I miss anything. So I think we are really proud of the capabilities that we’ve that we’ve invested in, whether it be in the commercial space or the supply space. So if you think about commercial, the the capabilities that we built around our insights and analytics has driven us to make decisions and innovations like happy Thursday. We, you know, we looked at a a cohort of of legal drinking age consumer.

We’ve got a consumer group that that looks at that and, you know, so we brought the bubble free flavored malt beverage in happy Thursday to market. We it also gave us insights around our c store c store strategy. Say that quickly. And and so, you know, it’s it’s things like where we’re investing in higher ABV for our c store single serve. So whether that be Blue Moon Extra or Simply Bold, Topo Chico Max, you know, we haven’t played in that space.

We’ve under indexed in c stores. But what we’ve been able to to, you know, glean from our insights is, you know, this is a a place where the consumer is looking for higher ABV, single serve, c store, you know, quick run-in, run out, and and so we’ve just launched those three brands in c stores, and that’s driven by our commercial insights. And then, you know, from a supply chain of point of view, we’re which I’m mostly proud of because it has driven, you know, returns, and you can see that in our COGS per hectoliter. You can see that in, you know, the ability to mitigate some of the inflation that we’re seeing is, you know, we’ve we’ve built two brand new automated efficient breweries in Canada. We’ve just completed the modernization of our Golden Brewery, which is our largest brewery.

It’s gonna drive a lot of efficiencies, a lot of waste out of the system. We’ve built additional capacity from a brewing and packaging point of view in in our UK business. We’ve we’ve built flavor capabilities, which we didn’t have before, so now we can do all of those flavors simply Topo Chico, Happy Thursday in our breweries. We’ve also built capability around variety packing, is is a lot of cost savings because we we save a lot on logistics. So I would say there’s a number of things that you we’re really proud of.

And again, I mean, you’re starting to see those investments come through, especially on the COGS line where, you know, our COGS per hectoliter is not as high as as, you know, what it has been over the last couple of years, driving a lot of a lot of efficiencies, a lot of cost savings. So, yeah, I don’t know if I’ve I’m very proud of a lot of things.

Gavin, CEO, Molson Coors: So You’ve covered all of them.

Steve: In terms of if what you know, wish list in terms of one or two, whether it’s on on the supply chain, you know, or in in market commercial or or commuter in consumer insight building. You know, is there is there one place or one or two places you’d you’d really like to kinda make the next quantum leap?

Tracy: I mean, I think we’re all talking about AI. And so we really have we’re really actually proud of some of the investments we’ve made around supply chain using AI. So whether that be things like, you know, we call it smart SKU. What is what is the SKU we need in this market, you know, that’s gonna drive, you know, lower out of stocks or no out of stocks, but this this distributor needs it in the market. So we’ve done a lot of things around, you know, what are the smart SKUs that we need.

AI has driven that. So for me, you know, using some of the AI capabilities

Steve: This is all for that.

Gavin, CEO, Molson Coors: Yeah. Okay.

Steve: You a couple of minutes left, Gavin. I wanna you know, going back to today’s operating conditions, you know, there’s a there’s a debate between the the the the structural versus the cyclical. Right? Obviously, skeptics around the industry’s challenges are more structural, whether, you know, rooted in demographic headwinds or health and wellness headwinds or what have you. And, obviously, the more optimistic investors are on the cyclical side.

You where do you stand in that, and how do you how do you separate the cyclical from from any kind of structural considerations?

Gavin, CEO, Molson Coors: Well, I think I think very clearly, Steve, I’m on the cyclical side. I think the the the the macroeconomic environment’s uncertain wherever you are in the world. Right? Perhaps more so in some of the bigger markets in in which we operate. And, you know, that that is a a macro situation that it that will change and it will improve.

Now I can’t tell you when exactly, but I’m I’m I’m certainly on the cyclical side.

Steve: K. So in the last few minutes so, Gavin, final question. If your successor was in the room with us today, what would be your key messages or words of advice for him or her? What’s critical that they get right to best position the company for profitable growth, you know, throughout their their coming tenure?

Gavin, CEO, Molson Coors: I could make some mischief now, couldn’t I? You could. But I won’t. Look. I think I’d I’d start by saying that our board is supportive of our strategy.

So, you know, I think that’s an important point. I think that I think that that my successor needs to treat our culture with care because I think it’s a strong culture, and I think it’s a good culture. And I think that there’s a reason why some of the folk who choose to partner with us do, and that is because of our culture, because of our people. And, you know, I think to, you know, Fever Tree and I think to Yingling. And, you know, we’ve got partnerships with a lot of folks.

Some of them would surprise you. But, yeah, I I think that’s a strength of ours, and I think it’s because of our people and our culture. So I think that would be something I would take care with because it’s been built up over a long time, not just in the last six years. And then I think that obviously, Tracey talked extensively about the balance sheet and the strength of it. You know, we generate a lot of cash.

And I think we’ve been really smart about how we’ve allocated that cash. We obviously believe that we’re undervalued at the current price. And so as Tracy said, we’ve leaned into share buybacks. And I think we’ve got a double digit return cash return in our business. I think we’re one of the best out there, but it does give my successor optionality.

I think we’ve proven particularly good at doing string of pearls and M and A. And, you know, if it was if I was still around, I’d be continuing that process because I think we’ve laid a nice a nice foundation. And then, you know, obviously, any CEO is gonna put their own stamp on an organization. Every CEO does, and I’m sure the next CEO will as as as well. But I think the the foundations of our strategy are laid quite nicely and they can lean hard into some of those areas where perhaps we haven’t been as successful.

Maybe you look at perhaps above premium in The U. S. Market specifically, they could lean harder in there. I think they’ve got a really good brand with Peroni in the beer space and Fever Tree in the non beer space to really go after. So I think there’s a lot of opportunity there.

And I feel good about our long term growth algorithm. I feel good about it partly because of what Tracy said, right, is we’re removing quite a few headwinds that we’ve that we’re experiencing this year from contract brewing and getting out of the craft craft space. So, you know, I look forward to seeing seeing him or his progress.

Steve: Great. Thought you were gonna say, make sure you make sure you always come to Paris in June. That would’ve been

Gavin, CEO, Molson Coors: a good one. Well, yes. This is this is a very good one to come to. So, yes, I’ll give

Steve: him that advice. I think that’s a great place to end it. We’re right at time. You, Gavin. Thank you, Tracy.

Thank you all for joining us. Appreciate it.

Gavin, CEO, Molson Coors: Thank you.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.