Molson Coors Beverage Company (TAP) Earnings Call Transcript & Summary

Well, good afternoon, everybody, and thank you for joining us today. Before we begin, I need to remind you that today's discussion includes forward-looking statements. So for the disclaimers and for any more information, please see our presentation slides. Now it's been a few years since Molson Coors hosted an event like this and a lot has changed. Today, as a result of 3-plus years of work and a clear commitment to our revitalization plan, Molson Coors is on track to deliver its second straight year of top and bottom line growth. The plan you'll see today is no longer about turning around our business. Getting to growth was the focus of the revitalization plan, and we've completed that task. Our approach for the years ahead can be summed up in one word, acceleration. Acceleration of the growth we've created. And aiming to deliver a third, fourth and fifth and more consecutive years of top and bottom line growth. Now this may be a surprising statement to some of you, but this is not the same old Molson Coors. Some of you might remember that old story. The year before we launched the revitalization plan, our core brands globally were experiencing major declines. That same year, our above premium portfolio was only 23% of our global brand net revenue. Back then, you could credibly argue that the last time that we had any kind of meaningful success beyond beer was with Zima. We had too many sole-source suppliers and limited flexibility in our logistics network. And globally, our business has not delivered top and bottom line growth since Instagram was invented. That was then. That was old Molson Coors. But over the past few years, long before controversy upended the U.S. beer industry. We changed how we invest, we changed how we market and we changed how we operate. And in doing that, we changed our future. Since then, this business has been on the upswing. Since 2019, we have built on the strength of our core brands around the world. Later that year, our team bifurcated how we market Coors Light and Miller Lite, differentiating their positioning in a new way. That set the foundation for the success we've seen over the past few years. In 2021, Coors Light and Miller Lite combined to grow net sales revenue mid-single digits in the United States for the first time since the inception of the Miller-Coors joint venture back in 2008. In 2022, they cycled that performance and again delivered net sales revenue growth. And in the fourth quarter of 2022, for the first time in decades, the combination of Coors Light and Miller Lite surpassed Bud Light's overall industry share. This year, both are growing volume and share with revenue up double digits year-to-date. The combination of Coors Light and Miller Lite are now more than 50% larger than Bud Light in the United States. Alcohol brands globally are gaining strength, too, from Molson and Coors Light in Canada to Carling in the United Kingdom and to Ozujsko in Croatia. Since 2019, we've steadily increased the size of our above premium portfolio with both premium net sales revenue up over 20% since then. Over the past few years, we launched what might be Europe's best above premium alcohol innovation ever with Madri Excepcional, which you'll be able to sample later today. With steady growth, the size of our Americas above premium portfolio surpassed the size of our economy portfolio for the first time. And our global Above Premium portfolio reached a record 28% of our total brand net revenue. Since 2019, we've built a meaningful business beyond beer. We built our own portfolio of award-winning whiskeys, and we acquired another one. We have a strong and growing energy drink brand. In Canada, we're the only large brewer gaining share in hard seltzer and we had the top flavored alcohol beverage innovation in the United States in 2021, in 2022, and the #1 flavor innovation of the summer in 2023. Since 2019, we've increased our aluminum can production capacity. We've adjusted our logistics network. We've adapted our procurement strategy, and we've built a new variety packer in Fort Worth. We've added a can line in our largest Central and Eastern European market. We built a new state-of-the-art brewery in Canada. We've broken ground on a major modernization of our Golden Brewery, and we've added flavor production capabilities in the United States, in Canada and the U.K. But most importantly, most importantly, we are growing. We are growing net sales revenue. We are growing share in our 3 biggest global markets, and we are growing the top and bottom line of our total business. This is the new Molson Coors Beverage Company. 3 years after we launched the revitalization plan, the facts are clear, and there should be no doubt. We turned around Molson Coors. Today, we are built for growth. We expect growth, and we are delivering growth. The team you'll see this afternoon delivered on the promise that we made to you in 2019. You'll hear directly from them exactly how we plan to accelerate that growth. You'll see how our entire global business comes together to make this growth possible from our largest markets in the United States, in Canada and the U.K. to growth opportunities in Central and Eastern Europe, Latin America and beyond. You'll see a portfolio in each of these markets that we believe meets the needs and desires of today's consumer in economy beer and premium beer, in above premium beer in flavored alcohol beverages, in spirits, in non-alc and beyond that. You'll see an agile business that's building new capabilities. You'll see a strategy that's focused on making the right investments, not just the right cuts. And you'll see a business that's achieved its target leverage ratio after years of hard work and that -- one that can now focus on a more dynamic approach to capital allocation, right. So the team you'll hear from today includes Tracey Joubert, our CFO, who most of you, I think, know by now. Tracey brings more than 25 years of experience in the beer business, after leading a finance team in -- at SAB, she served in senior financials in MillerCoors and Molson Coors, and she has been our Chief Financial Officer of either Molson Coors or MillerCoors for more than a decade. And Michelle St Jacques, our Chief Commercial Officer, brings deep commercial experience. She's been with us for nearly 5 years, and previously, she served as our Chief Marketing Officer, before joining us, she led marketing and sales functions in the United States, in Canada, in the United Kingdom and Australia with Kraft Heinz, Unilever and S.C. Johnson. And then Brian Erhardt, our Chief Supply Chain Officer. He's been with the company for more than 20 years, held leadership roles in sales, in strategy and, of course, supply chain, also led the Molson Coors merger for Coors Brewing Company. Sergey Yeskov, is the President and CEO of our EMEA and APAC business. And Sergey, present like we're saying this is literally a rocket scientist, and you can ask him about that at drinks later tonight. But it also brings us 20 years of experience in the beer business with both Anheuser-Busch, Starbev and Molson Coors. He came up in the industry in Central and Eastern Europe, but he also worked in Canada, Asia and Latin America. We're also joined here by the rest of the Molson Coors leadership team. Our Chief Strategy Officer, Rahul Goyal, has been with the company for more than 20 years. He joined us -- Bronco's Brewing company right out of grad school and previously served as our Chief Information Officer in the U.K. business, and he was also our Chief Financial Officer in our India business. Our Chief Legal and Government Affairs Officer, Natalie Maciolek, who's joined us last month from the Kohler Corporation, where she was the General Counsel and the Corporate Secretary and a fun fact when Natalie was in law school more than, 20 years ago, she worked at Miller Brewing Company actually. Our Chief People and Diversity Officer, Dave Oswald, has been with the company for 18 years, leading teams from Legal and HR. And our Chief Communications and Corporate Affairs Officer, Adam Collins joined the company almost 5 years ago, after nearly 2 decades running political communications operations. This is an incredible group of talented individuals. Collectively, between the 9 of us, we have 145 years of experience in the global beer industry. And standing behind this group of leaders are more than 16,000 talented people in virtually every corner of the world to power this company. They are the engine, they are the heartbeat of our business. And combined with the fundamentals of our revitalization plan, they delivered our growth over the past few years. That same team and those same principles will allow us to accelerate our growth. But before the team gets into details, I want to ground the conversation in who we are, where we operate and some fundamental truths about the global alcohol beverage industry. We are the fourth largest brewer in the world by revenue, but we are so much more than that. We're a company whose roots go back many generations, actually several centuries, depending on what part of the world you're in. Through that time, we've created and cultivated some of the most iconic beverages in the world, Coors, Miller, Molson, Carling, Staropramen, Blue Moon, Ozujsko and on and on and on. Those beverages and many others are sold in approximately 100 countries around the world. We've got brewing operations in 10 countries, including our 3 biggest, most well-established markets in the United States, in Canada and the U.K. And in many markets, we operate an asset-light export and license business. Our structure and our global maker are a strategic asset to this company. We are not only competitive in mature markets. We are growing in them. And we have meaningful opportunities in the beers, in the world's highest growth markets. But to win, big beverage companies can't just run the same old playbook of a past. Because geographic consolidation is largely off the table. The reality is, you can count on one hand, the number of global markets that haven't already been acquired by a major brewer. So the playbook of consolidation and driving synergy is limited. The opportunity to win and to grow lies in sound fundamentals. In nurturing your core portfolio, premiumizing the total portfolio and diversifying your portfolio to meet the changing consumer needs. And yes, looking at small investments or small M&A, where need meets opportunity as it did with our increased investment in ZOA or in our recent acquisition of Blue Run Spirits Company. That's what the revitalization plan did. And that's what we're focused on going into the future. So the plan you'll see today refines our strategy. It doesn't overhaul it. Our revitalization plan is centered on 5 key pillars: Building on the strength of our iconic core, aggressively growing our Above Premium portfolio, expanding beyond beer, investing in our capabilities and supporting our people. Under the acceleration plan, we plan to consistently grow our core power brand net revenue. We plan to premiumize our portfolio so that 1/3 of our global brand portfolio sits in this pricing tier. And we intend to scale our beyond beer business. So that half of our above premium net sales revenue growth will come from Beyond Beer. And we plan to make that possible by continuing to invest in our capabilities and by continuing to invest in our portfolio. And the presentations you'll see from Michelle and Sergey is going to put the meat on those bones. In the Americas, we plan to leverage our momentum behind our core brands in the U.S. and Canada to attract and to retain new drinkers. So think about Coors Light, Miller Lite, the Molson trademark and Coors Banquet. These are enormous brands that are growing, both share and volume in 2023. We plan to premiumize our portfolio across the Americas. This could be beer or it could be flavor. We plan to scale our non-alc business with a clear framework on how to both defend and attack incremental occasions. We plan to build full strength spirits as a margin-accretive business. We've built and we bought in this space, and we are really excited about our future in spirits. We also plan to keep building and implementing industry-leading capabilities, whether that's in marketing or sales or brewing. In EMEA and APAC, Sergey and his team are increasing investments behind their core power brands, Carling in the U.K. and Ozujsko in Croatia. As well as other large brands across our geographies. More than half of our brand net revenue in EMEA and APAC already comes from Above Premium products. And the team plans to continue fueling premiumization through export brands like Coors or MGD or Staropramen and of course, through our breakout star Madri. We already have some of the top ciders in the United Kingdom, and we're diversifying our portfolio with new spirits distribution agreements and by launching pure-play non-alc drinks. We plan to tap into new global markets by expanding our asset-light license and export model. And we plan to invest in our capabilities, whether they be commercial or supply chain focused. With these people, and these plans, our continued growth in the year ahead is not only possible, we believe it's probable. Now it hasn't been that long since I worked in finance. So it's not lost on me that we can't have a fourth and a fifth year of growth if we don't have a 1/3. And that means growth in 2024. So we're not here to talk about the second half of 2023. We'll do that in a few weeks on our Q3 earnings call. And we're not yet to give 2024 guidance. We'll do that early next year, like we always do. But we heard from a number of people in the investment community coming out of our Q2 earnings. So I do want to make a couple of things clear. What's happening today sets the baseline for our plan and we believe we can lift these results. While the industry trends may slow from their peak over the summer, we don't see any evidence that they gain backwards. At the same time, right now, today, we are gaining significant amounts of shelf space at dozens of major U.S. retailers as they reset their shelf space to meet the current trends and we have already gained thousands of tap handles in the United States. These will be a structural tailwind that should help us grow off of the current trends in 2024 and beyond. So when you put it all together, for the long term, we expect low single-digit annual net sales revenue growth on a constant currency basis. We expect mid-single-digit annual growth in underlying income before tax ahead of the net sales revenue growth on a constant currency basis and we expect high single-digit annual growth in underlying earnings per share. And you can expect us to take advantage of the greater optionality that we've created for capital allocation. As almost all of you will know, we've worked really hard to improve our leverage ratio over the past few years. And through a lot of hard work, we've taken our net debt from nearly 5x EBITDA to 2.5x EBITDA at the end of June of this year. That hard work is supported by a strong balance sheet that allows us to invest in our business and return cash to shareholders in new ways. And Tracey will have more on that later. Across each of these metrics, across the expectations we have for ourselves and the expectations that you can have for us. There's one more. And it's foundational. Based on our plans, you can expect us to deliver year after year. Because we have proof that we can grow. We have the people to accelerate our growth. And we've got the plans to accelerate our growth. And now to take you through our business in the Americas that will contribute to that growth. I'd like you to introduce you to Michelle St. Jacques, our Chief Commercial Officer. Michelle?

Hello, everyone, and thank you, Gavin, for the warm welcome. I am honored to be here to share our plans to accelerate the momentum in the Americas. Now a little bit about me, I'm Canadian born and raised and I've spent my entire career with large CPG companies in a variety of commercial roles from sales to marketing, from global to local teams from the U.S. to multiple countries abroad. And not surprisingly, I'm a big believer in the power of brands to unlock growth. I'm passionate about driving transformation, revitalizing big iconic brands transforming portfolios via innovation and building the right capabilities to move the business forward. And I am so, so proud to be part of the change we've driven at Molson Coors over the past 4 years. Now as Gavin said, we are delivering much different and much better results today than we were just a few years ago. We've built our brands differently. We're innovating differently. We're investing differently, and we are built differently. Now earlier this year, we restructured our Americas Commercial business. Our goal was to unite our geographies, our portfolio and our capabilities under 1 clear set of priorities and under 1 clear leadership team. As part of this, we elevated 2 long-standing Molson Coors leaders, Brian Feiro, the President of Sales; and Sofia Colucci as our new Chief Marketing Officer. And I couldn't be happier about the progress this entire team has made in just 7 short months. Now as you all know, the Americas represents the majority of our sales revenue and the lion's share of our profit with a stronghold in the U.S. with our core beer brands. But it also includes the #1 craft beer brand in the U.S., the #1 Lite beer brand in Canada, the fastest-growing American beer in Mexico and the fastest-growing flavor portfolio of any major brewer in the U.S. and Canada. We are incredibly proud of our broad portfolio of brands and that in the second quarter, our U.S. and Canada portfolio grew more share than any major brewer. Now Sergey and his team are doing incredible work in EMEA and APAC. But for Molson Coors to deliver against our ambitions of sustainable top and bottom line growth, our Americas business needs to deliver. And we plan to do exactly that. Gavin has already covered our progress over the past 3.5 years on the pillars of our revitalization plan. And as we move forward, we plan to accelerate our momentum in the Americas by going bigger and bolder across each of these portfolio pillars. Now a big question that's been asked is, can we sustain the momentum we have right now? The answer is yes. We feel confident in the portfolio, the plans and the people to deliver. In fact, just a couple of weeks ago, we had our national distributor convention in the U.S. with almost 1,000 distributors in attendance. And after seeing our 2024 plan, they overwhelmingly agreed, 93% of them, in fact, that we had the plans to build on the momentum and accelerate in 2024. So how will we do it? Well, to sustain growth on our iconic core brands, we plan to build on the momentum we have in the U.S. and Canada to drive more physical space while retaining all our new drinkers and continuing to attract new ones. To accelerate the premiumization of our portfolio, we will focus on the places and spaces where we have the biggest right to win in beer and in flavor like national craft, European imports and flavored out beverages. To accelerate our expansion and beyond beer, we plan to scale non-alc and full-strength spirit to become more meaningful parts of our portfolio, and we will invest behind the infrastructure needed to make that happen. And finally, on investing in our capabilities and our people, we plan to continue accelerating our digital transformation and driving marketing and sales excellence to drive smarter and more efficient ways to unlock growth for the entire business unit. Now the pillars behind we are designed to sustain our momentum in beer and grow in new spaces. And the good news is we see a lot of opportunity to continue driving growth in beer. So let's get into it. Today, our core beer brands represent almost 60% of our brand net revenue in the U.S. and Canada, so keeping them healthy is a critical part of our acceleration strategy and provides the fuel to invest in beyond beer. And over the past 4 years, our core has become stronger than ever. In 2023, every single one of our core beer brands are growing dollar share, they're growing net sales revenue, they're growing volume in the U.S. and in Canada. This is something we have not done since the Molson-Coors merger. But we've still heard some criticisms, that our portfolio plays too heavily in the premium light segment, which has been declining for years. Well, here's what I'll say to that. Consumers don't go out looking to buy a premium light beer. They buy products that meet their needs and their occasions and in the case of beer, consumers are often looking for something that tastes bright, it's light and refreshing and it's highly sessionable. The light beer category regardless of price point is almost 50% of the total $115 billion beer category in the U.S. It's big. Huge. In volume, it's 6x bigger than SABs, 7x bigger than hard seltzers and more than 20x bigger than RTD spirits. Look, the truth is the premium light segment is being dragged down by 1 competitor and 1 competitor alone. Because Coors Light and Miller Lite are not only growing share of premium lights but of total light beer. And more importantly, they're growing share of total industry in both the U.S. and Canada. Miller Lite grew share of the industry in 2022 and is doing it again this year. Coors Light has consistently improved their share year-over-year and is now growing share of the industry in 2023 and in Canada, Coors Light became the #1 light beer nationally just this past March. And Molson is also growing share of the industry. This means it doesn't matter if these brands are technically premium lights. They're winning more light beer occasions full stock. And based on the size of this category, we believe there's still significant runway for them to grow in the future. So how did we get here? Well, there are 3 key ways we've strengthened our core beer brands. First, we've worked hard to ensure that Coors Light and Miller Lite have clear swim lanes and differentiated positioning, Coors Light with refreshment and Miller Lite with great taste. These distinct positionings resonate with a broad base of drinkers and allow us to tap into a broader set of occasions. Second, we've been ruthless about building strong brand platforms and bringing them to life at every touch point, from Coors Light's, Made to Chill to Miller Lite's Taste Like Miller Time. These platforms show up in every geography in the Americas and every channel from TV to digital to the on-premise. We've been creating highly effective ads that break through the clutter like these. [Presentation]

Now I'll get into marketing effectiveness later today, but as new drinkers have discovered and rediscovered our core beer brands this past years. We've used strong campaigns and digital expertise to target and retarget them to retain them in our portfolio. Our focus on marketing effectiveness was recognized by the FE's last year. where Molson Coors was awarded the top spot out of all companies in North America for 2022. And finally, the third point. Just as we bolstered our marketing programs across our core brands, we've done the same with our sales execution. This is critical to accelerating our momentum into next year. We've won more share of displays than any other major brewer this year. And to put that into power -- that power of displays into perspective, our core brands in the U.S. see a 20% sales lift when they secure these displays. Which is higher than Bud Light, Mich Ultra, Modelo and Corona. In the on-premise, we've gained 12,000 new tap handles during the peak summer season. And Coors Light and Miller lite are now each nearly the size of Bud Light in that channel. In the off-premise, over 50 of our top retailers are now resetting their sets right now. And according to our data, the space shift from other premium light brands is going overwhelmingly to the most in course portfolio. So as we go into 2024, we have the plans to keep the momentum going on our core beer brands. Now Coors Light is our biggest brand globally, and it's having a 2023 that looks completely different than just 5 years ago. When I started in 2019, the #1 ask from Gavin was to turn around the performance of Coors Light. That's because in 2018, Coors Light was declining by mid-single digits in the U.S. and then came "Made to Chill", which gave us a new way to land our refreshment message, and we immediately saw its impact on our performance. Over the past 4 years, we've consistently seen an improvement in the brand's performance. And now in 2023, Coors Light is growing in every region, every market and every major retailer in America. It's now the #1 light beer in volume share in 11 states from New York all the way to California. [Presentation]

So to keep Coors Light growing, we'll continue to lean into "Made to Chill", but in an even bigger way. This year, we increased our media investment by 15% in the U.S. and by 25% in Canada. And next year, we'll continue to have strong media, and it starts with our first ever dedicated Super Bowl spot. We'll evolve our campaign platform to choose chill to drive a clear call to action to drinkers everywhere to reach for Coors Light. And we'll have more high-profile partnerships that unite our existing drinkers and new ones through shared passion points, like music, which we believe is the universal language of chill. We'll launch in a big new program for 2024 that spans all musical genres to appeal the Coors Light drinkers, new and old rural and urban with 1 inclusive message. But the momentum we're seeing on course isn't confined to Coors Light. Coors Banquet is also one of the fastest-growing brands in the U.S. beer industry right now. This 150-year-old icon is on the path to becoming a national powerhouse. In the U.S., it's growing by nearly 30% year-to-date and has gained nearly 80,000 new placements this year across channels. [Presentation]

Consumers, new and old, love this brand. I love this fact. It was ranked as a top brand for Gen Z by Ad Age earlier this year. But again, this is not a fluke. We've built this brand deliberately with strong campaigns and strong partnerships like Yellowstone that have helped us connect with a new generation of legal-age drinkers, but there is still so much growth to be had. Right now, Banquet is distributed in only 50% of the places that Coors Light is and has only a fraction of Coors Light's awareness. So in 2024, we plan to increase our media spend, deepen our roster of national partnerships and focus on closing those distribution gaps to keep our momentum going. Now Miller Lite has found similar success by leaning into one of its most recognizable equities. It's great taste. Miller Lite's growth is not new. It's driven strong share performance improvement over the past 5 years. But similar to Coors Light, Miller Lite is now growing in every U.S. region, every channel and every major retailer. And in the on-premise, Miller Lite is winning big time. For example, it climbed to the #2 draft beer in the U.S. during the NFL kickoff week, compared to #4 last year. In 2022, we launched our new Taste like Miller Time campaign to connect 2 of Miller Lite's most recognizable equities. Miller Lite's distinct taste and the most important beer drinking occasions. So now summer taste like Miller Time, football taste like Miller Time. And here's how we brought this platform to life. [Presentation]

So based on the success of this new platform, we are increasing our media investment during football season, right now and continuing to lean into sports as a key unifier and the #1 occasion where new drinkers try Miller Lite. Miller Lite has 17 of the best alliances in the NFL and more than 60 localized campaigns across the country like the 1 you see right here. We also just signed J.J. Watt and plan to expand the partnership with 2024. Okay. So let's round at our core beer with Molson. Molson is the oldest brand in our Americas portfolio, and it's built from national pride. And over the past 4 years, it's gone from declining high single digits every single year to now being on track to grow share, volume and revenue for the full year. This started by building a clear positioning about what Molson stands for. Or everyone in campaign showcases what it means to be Canadian today, attracting diverse LDA consumers while retaining and nurturing our core consumers who have chosen Molson for generations. [Presentation]

It doesn't hurt that Drake is also a Canadian. We're putting more media behind this campaign and building a portfolio of beers that attracts more Canadians to this brand. From Molson Ultra in the lower-cal space to Molson Excel and non-alc. Now there is truly a Molson for everyone. These 4 brands, Coors Light, Miller Lite, Banquet and Wilson are the heartbeat of our portfolio. They have over 500 collective years of heritage and brewing tradition and yet, they're currently growing volume by double digits across the U.S. and Canada. This just shows that they are just as relevant today as they were hundreds of years ago. And with the plans we have, we are confident we can keep this growth going, so they stay relevant for the next 100 years. Now let's shift gears and let me share with you a few examples on how we're driving premiumization in beer. Blue Moon is an iconic brand. It has the #1 craft beer in the country and the #1 light craft beer in the category and it's one of our most profitable brands in our beer portfolio. Now 2023 hasn't been the strongest year for this brand or for craft for that matter, but we have done our homework, we understand the issues, and we have a clear plan to address them. It starts with consistency and realigning everything we do behind what makes a Blue Moon so special. Next year we're rolling out a new visual identity and extending our made brighter campaign platform to the whole family of brands. This will give Blue Moon the same level of consistency that's worked so hard for brands like Miller Lite and Coors Light. [Presentation]

We'll also lean into the brand strengthening the on-premise. Did you know that Blue Moon has the second most tap handles in the country out of all of beer. Well, we do, and we are currently closing the gap to #1. Just this year alone, we closed the gap to Bud Light by 25%. And it's no surprise Blue Moon was born in the on-premise. And when you see a Blue Moon being poured, you can't help but want one. We're also innovating to attract new drinkers to the brand with the launch of Blue Moon non-alc and the repositioning of LightSky to Blue Moon Lite, which we believe will unlock more growth for the #1 light craft beer in the category. Now non-alc beer is still less than 1% of total beer sales. but it's growing by double digits, and the above premium offerings are the ones that are winning. Blue Moon non-alc will be our lead national play in non-alc beer for 2024. And we chose this brand because it brings instant awareness, a recognizable taste profile and strong existing consumer loyalty. Now another great example of driving premiumization is with our core brands in other markets. Miller Lite launched in Canada nearly 8 years ago at an above premium price point. And in the past year, it's delivered revenue growth of 50%. And Miller High Life in Mexico is the fastest-growing American beer brand. and it also commands an above premium price. This year alone, it's growing revenue by 40%, these are just 2 examples of how we're driving our premiumization agenda in different ways across the total Americas. Now the last example I'll share in above premium beer is the success of Peroni in the U.S. which in Q2 was the fastest-growing European import in the country. The Peroni still has a lot more potential growth ahead, especially by building stronger awareness. As Peroni's awareness is only 40% compared to Stella at 90%. So next year, we're investing in more media, more Formula One, and we're expanding Peroni 0.0% to more markets. So this brand can achieve its full potential. Our above premium beer brands are critical to driving premiumization, but they are not alone. As part of our acceleration plan, we've said that half of our above premium revenue growth will come from beyond beer. And we define beyond beer as anything that's literally not a traditional beer. So that includes flavor offerings in our aisle and outside of our aisle. And in this space, we have 3 priorities: one, to win in flavor with a diversified portfolio; two, to go big and non-alc with an increased focus on where to win; and three, build full strength spirits as a discrete business unit to drive profitability. We've leveraged a combination of Build, Brew and Buy as our strategy in beyond beer to drive fast scale in flavor while balancing profitability. So let's start with flavor in our aisle. Five years ago, this grouping of SABs, hard seltzers and RTDs represented just 5% of total alc-bev sales. That number has now almost tripled to 13%. Now there's been a lot of talk about hard seltzers because we know the segment is down more than 20% in volume over the last 52 weeks. And while hard seltzers plays a meaningful role in the segment, we have long said that it doesn't define flavor. Total flavor accounts for well over $9 billion in dollar sales and it's growing. But what's interesting is how this space operates differently to beer. Consumers are less loyal to flavor brands and they shop with a kind of treasure hunt mentality. Our data shows that seltzers were an entry point into flavor for many consumers. And once they discovered flavor, they start to experiment and trade into SABs and RTDs, depending on what they were looking for. More flavor, better ingredients, better nutritionals to name a few. That's why we've built a diversified portfolio of brands to deliver against each of those needs. Over the last 3 years, we've seen a big success with our partnership with Coca-Cola, allowing us to build scale and flavor with trusted, differentiated brands. And as of Q2, we've launched the top new flavor innovation every single year with the past 2 years being with simply site. This brand launched last year in the U.S. and is already a 5 share of the SAB segment, growing faster than any other brand in the space. And in Canada, where simply Spike is even newer, it's poised to become a top 10 brand this year. [Presentation]

But 1 out of every 2 households have not out simply in their fridge. And that means that there's a lot more runway ahead. So we're going to continue to innovate in 2024 with more flavors and drive more awareness and trial driving activities. We recently expanded our partnership with Coca-Cola with the launch of Peace Hard Tea in the Southeast region. Now we're only weeks in, but customer feedback has been promising and we're really excited for the potential of this brand. Now we aren't just borrowing brands in flavor. We're also building them, especially ones focused on the next generation of legal-age drinkers. Over the past 4 years, we've overhauled our approach to innovation with a fewer, bigger and bolder mindset and the results are undeniable. We increased our innovation revenue by 50% with half of the products. These new products are being developed with consumer insights at their heart. This past year, we developed a legal age Gen Z culture panel that allows us to tap into the insights and hear directly from this generation. We did this because 21 to 27-year-old are spending 88% more on flavored out beverages than the previous generation. And they're twice as likely to buy flavored out bevs than total households. So if we want to build what they want, we need to know what makes them tick. Vizzy is one of our build brands that over-indexes with this demographic, more than any other seltzer brand in the U.S. And in Canada, where Vizzy is the #4 hard seltzer we're leaning into its bright, fun and inclusive brand positioning to continue to build it with the next generation in mind. And next year, we're going to launch a brand-new brand in this space with a clear white space in the SAB category that was built from the ground up with LDAC Gen Z insights. We're proud of our progress and flavor. In 2023, we are on track to double our revenue since 2018. But look, there's still a lot of opportunity outside of our aisle with non-alc and full strength spirits. So let's start with non-alc. Did you know that 30% of LDACs don't drink alcohol or that Gen Z is drinking 20% less alcohol per capita than millennials did at the same age. So as part of our acceleration plan, we need to make sure we not only defend our traditional beer occasions but also attack incremental occasions where we currently don't compete. Our Americas commercial structure was designed to put an even bigger focus on non-alc and we'll apply a much more disciplined framework on where and how to win moving forward. Let's first start with our defense spaces. These include tap replacement and tap adjacent and are in direct competition for alcohol consumption occasions. Drinkers continue to replace alcohol with products like non-alc beer and mocktails. So we must defend our core beer brand occasions with brands like Coors Edge, Blue Moon non-alc, and Peroni 0.0% and launch new non-alc innovations in this space down the road, a tongue twister. Then we have our attack spaces. We call this pure-play non-alc. And it's a big one, $150 billion big. This is where we can truly drive big incrementality for ourselves and our distributor network. But we're going to be choiceful about where we play, and we have 2 priority spaces. First, driving ZOA to be a force in the energy segment, and we're going to launch into a second pure-play segment next year. So how do we choose which segments to play in? Well, we start with ones that have similarities to beer, big badge value, great consumer marketing, lots of innovation. And importantly, we focus where our distributor network has a proven track record of winning in these segments. So yes, we're a lot more focused than ever in non-alc, but let's talk about our big bet in energy, ZOA. We believe deeply in this brand, and that's why we recently increased our investment. The better-for-you Energy Drinks segment is up almost 120% year-to-date, and it shows no sign of slowing down. And since launching a partnership with Dwayne, The rock, Johnson, ZOA instantly made a name for itself becoming the fastest energy drink to hit $50 million in sales. The changes we've made over the last 9 months from packaging to liquid to marketing has the brand moving in the right direction. Within 6 weeks of launching at a leading C-store chain ZOA became a top-3 energy brand. In 2024, our increased investment in ZOA will allow us to double our planned marketing spend to bring new consumers and drinkers into this brand. We'll also have our presence on ZOA's Board of Directors for the first time, which will give us closer access to how the brand is commercialized. Now for the last part of our beyond beer priorities, let's talk about both strength starts. There's a big opportunity to continue to capture new drinkers, occasions and higher margin, Tracey, with full strength spirits. But we're staying disciplined, knowing that this is a long-term bet that needs to be nurtured and that means we're focusing on whiskey and high-end whiskey at that. Whiskey is now the largest spirit type consumed in the U.S. And like beer, it starts with fermenting grain. And the premium plus price point continues to grow. Consumers are looking for differentiated brands with a strong value proposition, authentic story and great liquid, and that's where we come in. With our recent acquisition of Blue Run, we have a powerful group of brands to build from. Now I'm not sure how familiar this group is it Blue Run. But what this brand has achieved in just 3 short years is nothing short of incredible. We can't wait to leverage the new capabilities and expertise from Blue Run to scale our total full-strength spirit business moving forward. We've learned over the past few years that we can play and execute in beyond beer. From basically a standing start, we've launched a winning portfolio in flavor, a meaningful player in the energy space, we've developed 2 award-winning whiskey brands while acquiring a fast-growing luxury one. And we're still just at the beginning of our transformation with lots of room for acceleration ahead. So we've covered our portfolio, and I hope you can see that we're thinking differently about this business to accelerate across beer and beyond beer. But the path to acceleration isn't just about what we're producing, marketing or selling today. It's about building the capabilities to unlock more efficient and effective ways to do so. This work underpins every part of our portfolio. So let's get right into it with the moves we're making in digital transformation. We've made big strides in the past few years. We're gaining share in e-commerce. Our digital media percentage of spend is massive and growing. We've made substantial investments in MarTech and built a new stand-alone digital team, and we're continuing to build and test and learn in AI. Net-net, we are committed to winning in the digital space. And we have a clear framework to keep winning across consumers, customers and distributors moving forward. Let's take one example, e-commerce. Our sales are up by 22% in B2B and B2C is growing by more than 15%. B2B e-commerce is the fastest-growing distributor to retailer selling channel, which means it's another great way to get more of our brands in bars and stores across America. Now in the U.S., we believe a competitive environment where distributors choose their e-commerce portal is the best approach for the 3-tier system. Molson Coors has a history of building category solutions that elevate the entire beer category. Therefore, our B2B approach is to partner with our distributors to build stronger e-commerce capabilities that drive more value for all 3 tiers. For example, from our testing, we saw that when we lend the right reason to buy message for retailers, it can drive a 3.5x lift in sales. That means our retailers have the right products on the floor and in their programs at the right time to drive their sales. Our distributors and, of course, our own. Based on the partnership and expertise we've brought, we're not only growing this business by double digits. Our distributor network recently voted us the #1 in B2B e-commerce support in their network. We believe that our approach is the right one for the U.S., and it gives us the potential to be the leader in this space. Now from a B2C point of view, we continue to make incredible progress. We are gaining sales and share faster than the strong in-store results I shared with you earlier today. We have best-in-class digital shelf solutions, content optimization and shoppable digital solutions to drive that conversion. One of the benefits we have found with B2C is that if we do it right, that allows us to attract new, younger, legal age drinkers to our brands. For example, at 1 leading B2C retailer, almost 30% of our ad attributed sales are from new buyers. Our thought leadership in B2C has secured ourselves captaincy with key strategic accounts and has driven our online baskets faster than the category at large key retailers. So moving forward, we're going to keep our foot on the gas with both B2B and B2C e-commerce to keep this growth going. Okay. Let's shift to marketing excellence. We transformed our approach to marketing in 2019 to build strong, relevant platforms that work for both existing and new drinkers and also balancing the art and the science of connecting with drinkers and building our brands. Now on the science side, we've overhauled our approach to measuring marketing effectiveness to make every single dollar count. We've changed the way we pretest our campaigns, leveraging neuroscience to optimize our campaigns before they even launch. We've changed where we're investing our media. We've shifted to more than 60% of our media spend in digital in the U.S. And we've pioneered new spaces like OTT and podcasts ahead of the industry. We've also built our own proprietary tool that measures short-term volume lift attributed to ad spend via purchase-based data. This allows us to optimize our creative in our media channel mix in real time for our biggest brands, driving a significant improvement in marketing effectiveness. So for example, in 2022, Coors Light and Miller Lite's return on ad spend increased by more than 50% versus 2021. Now we balance the science side with building brands that are part of culture and drive earned conversation. That includes partnerships like Yellowstone for Banquet or Luke Combs for Miller Lite along with Brand X, like one of the recent ones you may have seen that we did with Patrick Mahomes on Coors Light. And a great example of balancing this art and science was our first Super Bowl ad in more than 33 years, that happened just this past February. We were recognized as the top beer commercial by major trades, and we drove serious buzz by letting consumers predict every detail of the ad something that had never been done before. But we also drove major efficiency with our strategic approach. We were able to spend less, yes, less money than the previous year and deliver over 60% more impressions across our 3 key brands from January to February, which is something my boss did not expect. Success for our marketing is balancing this art and science to deliver our short-term sales objectives while building the long-term brand health. And now finally, let's talk about our sales capabilities. The recent shift to new America structure ensures that our commercial team, sales and marketing is operating with one set of priorities across all categories and driving excellence and execution with our distributors at retail. Now from a distributor point of view, I mentioned earlier today that our national distributor convention happened just a few weeks ago. And the early feedback is simply incredible. 91% of our distributors agreed that we were the best long-term strategy partner, up from 73% in 2019. 88% agreed that they were confident investing with us at a higher level, up from 55% in 2019. 95% agreed that they were confident in our leadership. That was up from 68% in 2019. And they're confident in our 2 biggest brands, Miller Lite and Coors Light was huge at 95% each. We have never had our 2 big brands at these types of levels before and had both of them so positively received at the same convention. This is a testament to all the hard work from our sales, marketing and supply chain teams to drive belief and more importantly, execution in the market. We've also built strong credibility with our retailers with our proprietary approach to category management, which we call "purpose drives purchase". We are the category captain for half of the major retailers in America. Now you may have heard Constellation talk about the 13,000 sets that they influence. Well, our Spacelabs draw or validates 74,000 planograms annually. And that doesn't even count those that we also influence. This fall alone, more than 50 retailers are redrawing their planograms to reflect the consumer demand shifts they are seeing. One of our top 10 retailers is adding 48 more units per store for our brands this fall. Another one is adding 22 more units. And in total, we have secured tens of thousands of cubic feet of additional floor space. We are winning more space at retail based on the strength of our brands. and our capabilities, and that will pay dividends in 2024. And finally, I want to spend some time focusing on the convenience channel, a channel that accounts for 1/3 of all beer sales and one where Molson Coors has historically under-indexed. Now you've heard us talk about our momentum here before. We're up nearly 2 share points in the latest 13 weeks, and our ambitions in this channel are big. Achieving our fair share would account for hundreds of millions of dollars of retail revenue. So we're focused on accelerating our performance by embracing a true convenience first mindset, to close our assortment gaps and to build the right brand plans and innovation plans to convert. For example, this summer and fall, we increased our shopper and retail media spend by more than 500% in the convenience channel because we want to strike when the iron was hot and convert more of those shoppers in that class of trade. So between our digital transformation across sales and marketing, our continued focus on creative effectiveness and the changes we've made in sales execution and channel strategy, it is clear that we are not the same Molson Coors you have may have known in the past. It's true for our capabilities, it's true for our portfolio, and it's definitely true for our mindset. As I said at the beginning, I am honored to be part of the transformation we've achieved over the past 4 years. But I can also say, we have never had this level of clarity or felt as confident on the future and where we are going. We have the portfolio, we have the plans and we have the team to get there. So thank you for your time today. And now to show you some of the investments we've made from our brewing capability. Here's a video from our Chief Supply Chain Officer, Brian Erhardt. [Presentation]

Welcome, everyone. Let me introduce myself. My name is Sergey Yeskov. I'm Ukrainian, I've been in the industry for whole my career and the last 10 years have been with Molson Coors. [ Prior to ] my current position, I was a different role in the company. Managing Director of Central Eastern Europe, CEO of International Business, Chief Sales and Customer Officer in Canada and GM in Croatia and Bosnia. I'm hugely excited about how our company will play a role in the delivery and acceleration plan and our region has a role, our key role to achieve faster top and bottom line growth and accelerate our conversion from top to bottom line. Our strategy mirrors was just give an outline for Molson Coors. If additions for the geographical expansion. We have consistent growth since pandemic and despite the older challenges in our region, we have double-digit growth of NSR. Our above premium portfolio contributes more than 50% of our NSR, and this contribution has continued to grow. We are growing our EMEA, APAC business and our profit is growing faster. We're already delivering our strategy in life. We are a material player in our key markets in Western Europe and Central Eastern Europe. The fully operate instrastructure in our market with 14 breweries. We employed more than 6,000 people. We have first and second position on the 6 market, [indiscernible] #3 player in U.K. This is a strong footprint with a strong market share in Europe. EMEA, APAC is a huge territory. It's close to the 70% of all beverage consumption and to almost 80% of future beverage growth. Our geography is such a great opportunity for our brand development. Let me show short video about our brand portfolio. [Presentation]

As you can see from the video we have strong performance and great brand. And we will be executing our plan to accelerate our growth through our strategic pillars. Let me take a few minutes to go deeper in each of them. We have a great core brand portfolio. We make a clear priority to invest into the brand on the top of line of the chart because this brand represent the majority share to our core brand contribution. As you can see, this includes Karen, #1 brand in U.K. and Ozujsko, #1 brand in Croatia. Let me talk about this brand a little bit more. Carling, iconic #1 beer brand in U.K. Carling has 36% share in the core beer segment and has a long history of football. Carling is number first official beer to partner with both men's and women FA Cup. Ozujsko, by far #1 brand in Croatia with more than 50% value share of core brands and 31% share of Total beer. The brand is the official sponsor of national football team for 26 years. Ozujsko grew strong share for more than 10 years -- strong growth share for more than 10 years for the brand. And also, Ozujsko won 4 Grand Prix awards for the most efficient campaign. Our premium brands sold more than 50 countries. As I said at the beginning, is delivered more than 50% of our NSR. There are our 4 focus brands: Coors, Staropramen, MGD and Madri. We continue to invest strongly in our premium and above premium brand portfolio and maximize opportunity to scale portfolio across the geography. Let me talk about 2 of those brands, Staropramen. Staropramen sold across 36 countries. We've recently investment in the new campaign [ with Orlando Bloom ], and he's new Staropramen brand ambassador. This large investment in the brand is already bringing positive impact of Staropramen. Madri, our jewel, our biggest and best innovation represent most successful beer launch since record began in U.K. and its most successful alcohol launch in on-trade in U.K. Above premium lager segment has strong growth in U.K., and we expect it to continue to grow just after 3 years after launch, Madri is #3 brand in this segment and continue to grow. Let's watch us to you a video. [Presentation]

Okay. Now let's go in to talk about beyond the beer. We are actively looking on the opportunity to expand our portfolio beyond the beer, with a build, borrow and buy approach, as Michelle mentioned. Our key focus category in beyond beer are cider, spirit and non-alcoholic. We have 2 of the top 10 fastest [ growing ] cider brand in U.K. Our strong sales and distribution muscles help to bring new product on the market and scale them. Beyond Beer portfolio will play the key role as a part of our midterm and long-term growth strategy. Now moving to geographical expansion. We clearly see opportunity for growth for our export license business. EMEA, APAC is a growth accelerator for the company. While export license business is a growth accelerator for EMEA, APAC asset-light model, which has recently established our distribution and license agreement with South Africa, Australia, South Korea, Japan and Ukraine. We continue to invest in our capability in our people. On capability, we are focused on investing in the supply chain excellence, commercial excellence and digital transformation. Our people is our most important assets. And we are so proud that we get top employee status in Europe for the last year. While, in U.K. business, we get to [indiscernible] for 10 times. Just to conclude, we have great assets, our brand and our people. And with current comment and clear strategy, I'm confident that we will deliver faster top and bottom line growth and accelerate the conversion from the top to bottom line. Thank you for your time. And now we have a short break. [Break]

Thanks, everyone. If we could please take your seats again. at 3:10. We'd like to resume promptly then, thank you. Take your seats we're going to resume.

Okay. Good afternoon, everyone, and thank you very much for joining us. My name is Tracey Joubert. I'm the Chief Financial Officer at Molson Coors. As Gavin mentioned, I've been with the company for more than 25 years. And prior to my current role, I've served in various senior finance functions at Miller Coors, Miller Brewing Company and SAB Limited in South Africa. So today, you've heard from Gavin about the success we have made against our strategy and how we plan to accelerate our efforts. Michelle, Brian and Sergey have provided operational details on how we plan to execute that strategy. And now I'm pleased to share how it all translates into our long-term financial objectives. And I will also announce some updates on our capital deployment plans. But before I begin, please note that growth rates with the exception of EPS referenced are in constant currency. Our underlying pretax income equates to underlying income before income taxes on the condensed consolidated statement of operations and say that a couple of times quickly. And the leverage ratio equates to net debt to underlying EBITDA. So we have built our business to deliver sustainable, long-term top and bottom line growth. And this growth is fueled by reinvestment in all areas of our business. This means reinvestment in #1, our brands; #2 in innovation; and #3 in capabilities. So first, let me talk about reinvestment in our brands. Our focused return-oriented marketing has driven incredible strength in our core power brands over the last several years. Second, we have reinvested in building and supporting innovation. We've had huge success with brands like Simply sparkling flavor, Madri in beer and also our extensions into other higher growth Beyond Beer categories with energy drinks like ZOA, and in spirits with Bohemian, Five Trail and now Blue Run. All of these innovations and additions support premiumizing our portfolio. Third is reinvestment in our capabilities. Our investments in our breweries, we added production capacity, new capabilities and drove efficiencies. We're also invested in digital spaces and marketing effectiveness. We have invested in our sustainability initiatives and sales execution programs, all of which we drive productivity improvements, operating efficiencies, and we drive cost savings. It's these investments that fuel top line growth, margin expansion and profitability. And the improved profitability further strengthens our highly cash-generative business model. Now this combined with substantial improvements we've made to our balance sheet over the last several years has expanded our options for capital deployment. As we focus on maximizing value for our shareholders. So before we get into specifics of our long-term goals, it's important to ground ourselves on where we have come from and where we find ourselves today, particularly given that this year has been somewhat of an anomaly. As we've explained, we've built a strong foundation over the last 3-plus years. And this foundation has helped to drive meaningful improvements in our compounded annual growth rates in the 3-plus years following the implementation of our revitalization plan back in 2019. In fact, in 2022, we delivered both top and bottom line growth for the first time in more than a decade. And given our guidance that we provided on our Q2 earnings call on 05 August, we're expecting to do it again in 2023. Now we realize 2023 is going to be a tough year to follow. But the fundamental strength of our business are not confined to a few brands in a single market. They span across our entire business, supported by now more diverse and a carefully built portfolio. And while we've benefited in 2023 from accelerated demand for our brands in the U.S. The work we've done and continue to do increases our confidence that these share shifts will be structural. And this benefits us in 2024 and beyond. So let's talk about why we are today and the long-term financial objectives under our strategy. As Gavin referenced earlier, our long-term growth algorithm is to deliver low single-digit net sales revenue growth, mid-single-digit underlying pretax income growth and high single-digit underlying earnings per share growth. We anticipate bottom line growth outpacing our top line growth, which implies margin expansion. Now note these are ranges and where we may land year-by-year depending on the market and the industry conditions. So let's take a closer look at each of these metrics. The low single-digit growth algorithm for net sales revenue is driven by continued strength of our core power brands, mix benefits, largely from premiumization, including our Beyond Beer efforts and the ability to take pricing in our markets in line with historical industry averages. As for margins, we have multiple levers to drive margin expansion. They include pricing and mix, as just discussed as net sales revenue drivers as well as productivity and cost savings. I just mentioned pricing. So let's talk about mix. One of the key pillars of our strategy is to aggressively premiumize our portfolio. We believe premiumization is a long-term trend and we continue to focus on shifting our portfolio structure towards higher growth above premium segments. And when we began the revitalization plan in 2019 above premium comprised only 23% of our global brand net revenue. By the end of 2022, it had reached 28%. And we achieved this largely through strong innovation in both beer and beyond beer, which we've already mentioned, as well as strategic portfolio actions, and this included our Economy rationalization in 2021. We eliminated more than 100 shorter production run and lower profitability SKUs. And by doing this, we refocused our economy portfolio and we improved overall production efficiencies by removing complexity. So as you can see, we've made great progress in changing the shape of our portfolio. Our goal is for our above premium portfolio to reach approximately 1/3 of our global brand net revenue in the medium term. And we expect Beyond Beer to fuel approximately half of that above premium growth. Now we have multiple levers to drive margin expansion through productivity and cost savings. We are investing in capabilities that drive meaningful production efficiencies. As we saw from Brian's video, we've added capacity and capabilities for flavor production and co-packing. We expanded our supplier base. We replaced breweries in Canada with state-of-the-art facilities, we built slim can capacity in our can plant, and we are in the process of modernizing our Golden Colorado brewery. And these efforts have also helped to drive cost savings. Now as you are aware, Molson Coors has a history of successfully delivering cost savings programs. And one example is the benefits of investing in in-house flavor capabilities. Now not only did this increase capacity, but it also drove meaningful cost savings by reducing third-party manufacturing costs and freight costs. So as always, we'll continue to deliver cost savings as a way of life at Molson Coors. And we deliver cost savings through productivity in areas like world-class supply chain that focuses on supply chain efficiencies and reducing waste and optimizing and minimizing changeovers. And with our golden modernization, we intend to drive productivity improvements and advance towards our sustainability goals. And finally, we are able to remove a sizable piece of legacy contract room by the end of 2024. It has long been a drag on our margin. Similar to the benefits of economy SKU rationalization, this should improve our production efficiencies and provide additional capacity during our peak summer production period. Now in addition, we're committed to managing costs and inflation risk. We have a strong line of sight into our costs. And one way we do that is through an extensive hedging program. Now our hedging program is longer term in nature as we hedge commodities over 1 to 3 years. We operate within guardrails, taking a more opportunistic approach rather than being programmatic. And the purpose of our hedging program is to smooth out the impacts of big swings up or down in commodity prices. Now during the recent inflationary period, our hedging program has helped us to insulate from some of those big upward swings. When aluminum spiked to $4,000 per metric ton, during the Russian war in Ukraine, we were well insulated, and we were not forced to add coverage. Now while we hedge all commodities that can be hedged, there are certain things that can't be. So these include freight, material conversions and third-party manufacturers. And these items can be material contributors to our COGS. But we also have longer-term contracts in place with multiple partners to help manage these costs. So let's turn to marketing. As Michelle detailed, we overhauled our marketing strategy several years ago. That included investing in capabilities that have resulted in our marketing dollars working harder for us. We developed in-house capabilities to analyze and evaluate the effectiveness of marketing investments. And this modeling allows us to assess our campaigns almost real time. We built our own in-house agency, making us more nimble and more efficient, and we shifted where we spend media and now more than half of our spend is in the digital channel. And we have meaningfully shifted our percentage of spend to working versus nonworking marketing dollars. In the U.S., we've reduced the percentage of our spend on nonworking dollars by about 7 percentage points since 2019. And those savings enabled us to significantly increase our consumer-facing investments. And all this means we're far more efficient and flexible today. We're able to quickly lean in when something is working, and we pivot when it's not. And because of this, our long-term growth algorithm does not require us to make step-up changes in our marketing spend. And when we put all of this together, our anticipated net sales revenue growth coupled with margin expansion, are expected to drive our long-term algorithm of mid-single-digit underlying pretax income growth. Now our business is highly cash generative. But when you combine our profitability assumptions, strong working capital management, resulting in negative working capital in our business and our disciplined approach to capital deployment, it further strengthens our free cash flow generation capabilities. So this leads me to capital allocation. Our priorities continue to be to invest in our business to drive top line and bottom line growth and efficiencies to reduce net debt with a desire to maintain and improve our investment-grade rating, and to return cash to shareholders. Now we utilize our models to determine which investments offer the highest potential return to shareholders. And given that we have meaningfully delevered our balance sheet over the last several years, we have increased optionality as we balance the allocation of capital among priorities to drive shareholder value. So as I discussed at the beginning, reinvesting in our business is critical to our long-term growth success. We believe we have always taken a very prudent approach to capital expenditures. Aside from inflationary impacts, our paid capital expenditures have been relatively stable over the years with spend in the $600 million to $700 million range. Now that's not to say we haven't undergone major capital investments because we have. For example, our multiyear modernization of our largest U.S. brewery in Golden, Colorado or building new state-of-the-art breweries in Canada. But we've done so in a paced manner, incorporating it within our historical annual spend. As Brian referenced, we're pleased with our brewery footprint and the results of our productivity programs. We're always looking for ways to further improve efficiencies or drive cost savings and achieve our sustainability targets. And we don't expect any notable step-ups in our capital spend for this foreseeable future. Another means to invest in our business is through M&A. But let me be clear, there is no change to our string-of-pearls approach. This means bolt-on deals as approach to larger scale or transformational ones. Now these could be deals around $100 million that can be funded out of cash from operations. As Michelle discussed, we have a build, borrow or buy philosophy. And when we choose to buy, it's because it's the most capital prudent way to fill a white space in our portfolio, and it aligns with our strategy. It also must be something we believe we can scale and in an area that we believe we have the right to win. Michelle talked about our Blue Run acquisition. It's a great example of bolt-on acquisitions that meet our M&A criteria. It's a great brand, we can scale in a growing market at the right price. Now reducing net debt is our second capital allocation priority. We are very proud of our accomplishments over the last few years which has materially strengthened our balance sheet. At the time of the Miller-Coors acquisition in 2016, our net debt reached $11.5 billion, and our leverage ratio was 4.8x. As of June 30, 2023, our net debt was $5.7 billion and our leverage ratio was 2.5x. And we accomplished this while navigating a challenging macro environment, including a global pandemic and very high inflation. And our existing debt is at attractive fixed rates, and that's a really important point, particularly in this high interest rate environment. Our exposure to floating rate debt is limited to our commercial paper and our revolving credit facility, both had 0 balances as of June 30 this year. But our goal is still to improve our investment-grade rating. Now while at certain debt levels, the benefits of deleveraging dissipate, we believe there's value to continue to reduce our net debt when our models deem appropriate. And as a result, we've adjusted our target leverage ratio from 2.5x to maintaining it below 2.5x over the longer term. And then that brings us to our third capital allocation priority, returning cash to shareholders. Now Molson Coors has an incredible track record of paying cash dividends to shareholders. Our goal and intent is to sustainably increase our dividend over time, and we've done that each year for the last 2 years. And given the substantial progress we have made and our continued confidence in our business and our acceleration plan, we believe our shares are an attractive investment opportunity. So with our strong free cash flow and lowest debt level in years, we intend to return even more cash to shareholders. So today, we are pleased to announce a new $2 billion share repurchase program effective immediately to be executed over the next 5 years. Now this program is a mixture of sustained and opportunistic purchases that we believe with our balanced and cohesive approach will improve shareholder value. And further, when combined with our low single-digit top line mid-single-digit underlying pretax income growth, it supports our high single-digit underlying EPS expectations. So now before we take your questions, I'd like to recap by saying that the work we have done over the last 3-plus years under the revitalization plan has built a solid foundation of future growth. Our recent momentum in the U.S. is not temporary and it reflects the efforts of our team to deliver sustainable top and bottom line growth. Our new acceleration plan is rooted in our ability to grow core power brand revenue, aggressively premiumize our portfolio, scale and expand in beyond beer and support our people, communities and planet. And as a result, we are confident in our ability to drive value creation as evidenced by our long-term growth plan. We remain focused on investing in our business, reducing net debt and returning cash to shareholders, supported by our new share repurchase program. So with that, please give us a minute just to prepare the stage, and then we'll take your questions.

Thank you all for your attention, and we hope you enjoy the presentations. So we'll be beginning our 60-minute Q&A in just a moment. Now if you have a question in the room, please just raise your hand, and we will bring you a microphone. Before asking your question, we ask that you state your name and your firm and we'll begin by taking questions in the room, and then we'll check our virtual roster for any additional participants. For those of you that are participating virtually, there is an Ask-a-Question tab on the top right of the navigation menu of the webcast. Please enter your questions there, and we will read it aloud in the room. Thank you.

Robert, I think you put your [ hand ] down first. Do you want to take the microphone, Robert.

Thank you. Terrific presentation. Congratulations on great execution this year and taking advantage of some fortunate opportunities. Two questions. One, do you have any brand health metrics, brand love, brand equity scores on Miller Lite or Coors Lite that can help tease out the difference between what you've done and are responsible for and the mishaps of your leading competitor. So that's question #1. And question #2, in terms of the spirits initiative, I take it that this is all internal cash flows and no borrowing for acquisitions, but maybe kind of review for us or think through for us how you see your right to win in the spirit space and what white spaces are there? What are things that the competition isn't doing?

Okay. As much as I'd like to talk about brand health, it's probably yours. I would just make one observation, though, is that coming out of Q1, our brands were really, really healthy, and we're accelerating, and you saw the numbers from last year as well. So Michelle can talk about the brand health of Miller Lite and Coors Light. You're correct. Our String of Pearls approach from an M&A point of view, as Tracey said, is exactly that, right? No major acquisitions that would require borrowings. So, do you want to take the brand health and spirits one?

Yes. Absolutely. So if we start with the core brands, I go back to the journey we've been on since 2019 on both of them. When you think about the brands, this is not just something that's happening in 2023. It started since 2019. When we purposely bifurcated our core brands around great taste and refreshment and we've built our platforms around Made to Chill and Taste Like Miller Time. You saw the chart that I shared earlier that showed that consistent share improvement that's been happening. And even to Gavin's point, in Q1 of this year, we saw really strong results coming into Q1 on our core brands. The cherry on top was obviously the Super Bowl campaign that we came out with this year. So when we look at current rates, you see that from a brand health perspective, I go back to share being the best metric to be thinking about. Are more people reaching for our core brands than they were before. And whether you look at the 2022 results from Miller Lite, whether you look at the consistent improvement in Coors Light and certainly culminating to 2023 results, it shows that more people are reaching for our brands. and that's evidenced by a lot of different things, whether it's the marketing effectiveness that we referred to earlier or certainly the awesome sales execution that we've driven over the past couple of years. And I think on this full strength. Yes, the right to win there. So as I said earlier, when we think about full strength spirits, our focus there is building kind of a discrete business unit to drive more profitability within our overall portfolio. So we are being really disciplined about where we're going to be focusing specifically in whiskey and premium-plus whiskey at that. Why? Because that's a segment that's growing. And we believe, again, going back to some of the foundations of what makes beer brands great is an area that we have strength. So we're very much focused on that for the next few years. Blue Run is a great opportunity for us to tap into a fast-growing hot brand in that space to learn a lot through that process from a capability perspective to be able to apply to our broader spirits portfolio.

Peter Grom, UBS. So Gavin, I had a question for you on Coors Light and Miller Lite. And obviously, you've all done a tremendous job with kind of the marketing over the past few years. But when you go back to early May, you weren't necessarily sure that some of these impacts that you're seeing from Bud Light will be lasting. And as we've gone through the year, there's more and more confidence. And as you sit here today, it's pretty clear in this presentation that you think these changes are going to be permanent. So I guess can you just talk about what you've learned over the last several months that's kind of informed that view and how that's changed?

Yes. I mean, I'll start off and then you can jump in. Certainly, I would say that at the beginning, one didn't have a lot of certainty that this trend change was going to be somewhat permanent. And I think we're now at more than 6 months into it. And we feel very confident that based on all the data that we're seeing -- that this is a permanent shift, right? And we've spoken a lot about the shelf set resets that we're getting. We've talked a lot about the TAP handles. And now our job is to jump on that momentum even further, right? Because we didn't have that additional shelf space at the beginning of April. And we will be getting a big chunk of it now in fall, and we'll get even more in the spring based on the conversations that we're having right now. So Obviously, the big selling season where it really makes a difference is in the summer months, right? So we would expect to see the real impact from both the 4 resets we're getting now, and obviously, the resets that we're going to get in spring will take place next year. From a learning point of view, Michelle?

Yes. I mean I think the 2 biggest questions that we get asked all the time are, are these results going to stick and can we grow off of them moving forward. And I think, to Gavin's point, we feel really confident that some of the changes we've seen are structural in nature at this point. We're many weeks into this situation, and people are continuing to reach for our brands and driving that share growth. I think in terms of the acceleration plan going into next year, of course, is the things that Gavin just spoke to, whether it's about physical space availability that we think is going to continue to drive that growth going into next year. Also our marketing plans where we intend to go bigger and bolder behind what we're doing on Coors Lite and Miller Lite. And I go back to the distributor convention results that we just received. And let's just say like our distributors have a pretty high bar. So the idea that both Miller Lite and Coors Lite, they had so much confidence in the plans that we revealed this year at 95% level, which we've never seen that high of a level and we definitely never see both brands sitting at that same level. To me, is evidence of the confidence that they have behind how we're going to grow these brands next year. We had really strong marketing plans.

One thing if I could just add on that, consumers have a lot of choices and a lot of those consumers chose our brands this summer and they've been coming back and buying it again and again, well, they wouldn't do that if the quality of the product wasn't there. And that's something we have a huge focus on in our operations. So very proud of our beers, and I think consumers like what they have, and that's why you see those gains, those share gains being stable throughout the summer and even through right now.

So I was curious if we could go like up a level, maybe and talk about industry-wide growth. And so while near term, we're into '24, the growth that you're going to yield, produces very material and very clear. When you take a step back and you think about run rate for growth of U.S. beer in general, I know we're not really going about premium Lites because it's just people want light refreshing, but we have to ask the question. So what are your thoughts on kind of the structural growth of premium Lite to this segment? Because the industry volume has been weak and like you said, it's driven by one player, but that still means people are drinking less beer. So just curious if you could frame a little bit that longer-term perspective on category growth.

Yes, I'll start off again, I'm sure you can add. Certainly, I think it's safe to say we've had quite a lot of industry dislocation over the last 4 years, right, for any number of different reasons. And again, industry growth is a little challenged this year driven, as we said, by the largest player. And sometimes, short-term things, I think, for maybe overreact to them. So for example, September has not been a great month from an industry point of view, but that's entirely unsurprising, right? Because last year, we put in significant price increases as an industry, and we had a significant amount of loading in the last 2 weeks of September. So the last 2 weeks of September are going to be a tough month -- a tough couple of weeks for the industry. On the flip side, October will bounce back from that. As we assess the overall alcohol or the Beer market, we think that it will revert back to its more normal levels of sort of down 1% to flattish. And based on everything that you've just seen, we would expect to take a larger share of that going forward.

Yes. And if I can just build for a second. So I think let me take the Light beer and then sort of the broader industry piece as well. So when I think about Light beer, part of the context I was trying to give earlier was Premium Light segment is one definition of how to think about where we're winning occasions versus the broader segmentation of Lite beer that spans price point, et cetera. And we believe there's lots of those occasions that are still ripe for the picking from a Molson Coors portfolio perspective. I think when you think about the broader industry trends were happening. That's what's driving our transformation into a beverage company. So whether it's flavor and expanding our portfolio in flavor, that's because that data point of 88% more of 21 to 27 year olds are drinking full flavors than the previous generation. So we want to make sure that we have a portfolio for them. Or if you think about going into non-alc or full-strength spirits because we do see that there's places where people are making different choices and how can we make sure that we have a solution within our Molson Coors portfolio to deliver against it. So I think if we take a big step back to your point about what's happening with the category, part of that is we need to keep our beer business healthy to your point and continue to attract that 21 to 27-year-old and keep those occasions within our category, but we're also diversifying as a beverage company into different spaces to drive some of those incremental occasions.

[indiscernible] at Jefferies. Have a [indiscernible] could have happened to anybody. So if you can maybe just talk about how you might be running your business differently if there are new guardrails in place or really anything that has changed internally to prevent something like that inadvertently happening to you guys.

I will take that one. So when you think about brands, I go back to our marketing playbook and how we've been building brands over the past 4 years, that starts with giving people a really clear reason to reach for us. And in our case, on our biggest brands, the clear reason to reach for us is the case of refreshment or great taste 96 calories in the case of Miller Lite. So we build our platforms around those things to make sure that those platforms from a campaign perspective can stretch with our existing drinkers, the ones who love us already, who we want to retain in our portfolio and stretch to new places to be able to attract new drinkers to our portfolio. So one of the things we love about may to chill or taste like Miller Time, and if you saw any ads that were playing during the break, is it gives us the flexibility to go again to our existing demographic who love their brands and to some of these newer folks who are trying to attract. But one of the things we do, do is around governance, and we've done this for years as well, which is making sure that we have diverse set of voices around the table to make sure that we understand as we put things out, different reactions. So yes, we do our consumer testing with a broad swath of consumers, of course, but we also have something called MCC at Molson Coors, which is our marketing compliance committee. It's actually run by our legal team and sitting on that committee is a diverse group of people across the organization. So that -- as we come up with new campaigns or new ideas, we hear from a broad swath of folks about what different reactions may be. And that allows us to make better informed decisions as we move forward. So we do that. The other thing that I would call out from a governance perspective is a little less formal than perhaps the MCC, which is part of our natural process is part of what we do is we work really closely with our sales team and our distributor network. We share our creative with them. We make sure they are part of the process. We collaborate. Why? Because a lot of times, our sales team and our distributors have really good insights from their local markets that allow us to think about the creative and the ideas from a different perspective and adjust as necessary. So I think it starts with how we're building our brands with a clear sense of consistency and attracting existing and new drinkers. But then we have the formal governance with our MCC committee, but then also the collaboration between sales, marketing and our distributor network to make sure, again, we understand the decisions we're taking in the market and we are analyzing them at all times.

Andre Texeira JPMorgan. So when you think about -- I have 2 questions, one on the long-term algorithm. When you think about what you're embedding share gains for domestic premium? And I'm assuming, obviously, you're gaining a lot of shelf space, which is natural to seize that again. But as you go, are you embedding any additional pricing for the category or it's mostly driven by mix? that would lead to a margin improvement for the next few years? And then the second question is that -- there was always a talk, Gavin, you mentioned before, which is perfectly fair that you had an opportunity potentially for Mexican imports. And I know you had with Heineken an agreement for so, is there anything that you're thinking in terms of like your string the Pearls M&A an idea of bringing that more in-house or having anything to launch? Or are you going to be sticking with the European side of the Madri at this point?

Okay. Thanks, Andrea. I'll take the first part. You can take the second part. So in terms of our long-term algorithm, we do expect pricing both in North America and in EMEA, APAC to sort of resort -- revert back to the long-term trend lines that we've seen. And in EMEA, APAC, that more closely mirrors inflation, CPI. And in the U.S. we believe, and it's being borne out by what we're seeing now around that sort of 1% to 2% pricing levels. Obviously, with our strategy to aggressively premiumize our portfolio and to move into beyond beer, which is I would safely say all in the above-premium space. We do see mix benefit coming through quite strongly. And then, of course, as we said, we want to take a disproportionate share of category growth, not only here in the United States, but also Canada and in the markets in which we operate, in Europe. So when you put all that together, you get to our long-term algorithm of low single digits. And sort of, obviously, within that is our assessment of contract brewing coming out both this year and the rest of it next year is all built into that long-term algo. In terms of how we're targeting Mexican portfolio.

Sure. So I would break it down into 2 different pieces. One from a -- when we talk about winning with, obviously, 21 to 27-year-old. A big piece about that is making sure that our portfolios and our brands connect with a wider, diverse set of consumers. So certainly, winning with Latinos is an important piece of our core brands moving forward. You'll have seen this past year some great investments we've done with -- to do that with our big brands because we believe both refreshment and great taste are fantastic ways to reach that consumer demographic. So for example, this past year, Miller Lite, we had a great partnership with J. Balvin, where we were able to, again, identify an opportunity to better connect those 2 pieces or equally with Coors Lite, we did a big investment as one of the founding sponsors with the leagues Cup from the summer, which was helpful when Miami, got a new recruit on their team, but certainly, there was a lot of people watching those games. And again, it was a great opportunity for Coors Lite to connect with a broader, more diverse set of consumers. So connecting with that more diverse 21 to 27-year-old is certainly a key priority for our biggest core brands. And when we think about above premium, again, we've got lots of great beer brands within our portfolio that we continue to drive. So whether it's Peroni, as we've mentioned, it's growing double digits, and I believe there's a lot of runway ahead for growth or Blue Moon as the #1 craft brand. Again, we think that the performance can be much better than what we've seen this past year. So we're focused on a two-pronged approach, one which is making sure brands certainly connect with the more diverse 21 to 27-year-old but also making sure we maximize the potential of our above premium portfolio.

All right. Thank you. First of all, I think it's going to be a much better stock reaction versus the last target who were in this room.

We did talk about...

We'll start -- we'll start there. So I've got Actually, 3 questions just related to cash flow and the capital return to shareholders. The first one is just Tracy, if you can give us a perspective on free cash flow conversion. I think you said you mentioned negative working capital in your remarks. So if you could just kind of give us some perspective of -- I'm not trying to pin you down to a free cash flow target necessarily, but just how we think about free cash conversion over time versus what it's been recently. The second is I just look at the midpoint of your algorithm, right? It's basically 5% at the operating profit line and 8 at the EPS line, so the 30% the contribution below the line. Is that all share repurchase? Is there anything else we should be thinking about over time that would be a positive contributor between operating income and net income or earnings per share is today? And then the last one, given the change in the algorithm, Gavin, just can you talk to us a little bit about how that's going to change incentive compensation is a pretty big change, obviously. So just how we should think about how you all are being incentivized to hit those targets? I know there's a lot there, but...

I may forget. Yes, I'm definitely going to give you those. I mean I'll talk about the -- maybe the incentive compensation, but why don't you take the first 2?

Yes. So from a free cash flow point of view, obviously, we are a highly cash-generative business. We've really been focused on that. So from a top line, from the EBITDA, that obviously drives the starting point. We're always looking for opportunities around working capital. And yes, we do have a negative working capital, and we've done a great job across all of our business units. In fact, EMEA, APAC probably is world-class in terms of working capital. But we continue to see to look for areas that we can keep driving working capital efficiencies. And then the other thing just to play into that is what I did say is, we've invested in our breweries -- we continue to invest in our breweries, but we haven't needed a massive step up. Even though we have got this big golden modernization project going on. We've built 2 new breweries in Canada, new efficient breweries, but it's been within that sort of capital range, capital spend range of like $600 million to $700 million. So we don't see a need to have a big step up in CapEx. We'll continue to drive working capital. And then our mid-single digit and bottom line growth is what's obviously going to drive a lot of the free cash flow. So without giving guidance, I would say those are the big sort of drivers of continuing to deliver on our free cash flow.

And then nothing else between operating income and net income that we should think about driving EPS growth aside. Just trying to get underneath is you're expecting interest to go down or something with tension.

Yes. I mean, so obviously, with our paydown of the debt, our interest costs are reduced. We haven't had to use commercial paper like we have in the past because we've had the cash on our balance sheet. As we approach paydowns and whatever, we'll assess that when we get there. So there's nothing, I would say, significant on the interest side. The tax, I mean, we built in the same assumptions that we have today, but who knows what could happen with the tax, but that's sort of built into our tax side. So I would say nothing unusual. But obviously, some of the EPS is driven by the fact that we've got the share repurchase program now that has been approved by the Board.

And then obviously, we incent leadership and actually a vast number of our employees in 2 ways, right? Well, there's the short-term incentive and then there's the long-term incentive. The short term is focused directly with the outcomes that we were looking for in our revitalization plan. So top line growth, it had a top line per hectoliter growth rate to try and capture the aggressive drive into premiumization to make sure we're getting the mix right. We weren't trading off between the 2, profit goal and then a cash flow goal. So those we're generally in the past our short-term incentives. And then from a long-term incentive point of view, relative performance against a benchmark group from a return point of view. Going forward, I don't want to get ahead of our compensation committee, right? But the -- this is a very active area for them. And so I would expect our short-term incentives to change a little bit, but not materially from that. The other component we've got there is a small component for a very senior level of leadership kind of looking at them from an ESG point of view. So I would expect a few tweaks to the short-term ones, but really still focused on top line, bottom line and cash flow without getting ahead of them and introducing EPS implies that the long-term incentive will include an EPS component as well. The process we follow is we're actually having those conversations right now. So we had them in our Board meeting last week when they signed off this long-term algorithm and signed off the share repurchase program. So whilst they haven't prove that, that still takes place. But my guess is that the long-term one will have an EPS component to it as well on.

All right. Bonnie Herzog from Goldman Sachs. Tracy, I was hoping you could provide a little bit more color on the buckets of the gross margin expansion that you're expecting over the next few years. Maybe just trying to help frame that for us. And I guess I'm thinking on the context of a few items that you talked about, one in particular, just trying to understand how much volume leverage you're expecting and maybe frame that in the context of the top line growth that you're expecting going forward? Just trying to understand if you are expecting some volume growth in there for that to be one of the key drivers. As well as any expectations for commodity pressures easing, especially when we look into next year. And then the other items you mentioned as far as your cost savings programs.

Okay. So from a top line, the key drivers will be premiumization of our portfolio. Gavin did mention, we expect our pricing to revert back to normal historical levels of around 1% to 2% in the Americas, a little bit different in EMEA-APAC. So that would be -- those would be the key drivers from the top line. From a margin point of view, I mentioned that there's a big contract brewing arrangement that's going to end of 2024. So some of it has already come out of our system. It's going to be accelerated in Q4. So we estimate that, that would have about a 2% to 3% volume impact of our Americas volume. So that isn't a help on the top line. It's a little bit of a headwind on the top line. But from a margin point of view, this is as I said, it has been a drag on our margins for a long time. So having that volume come out and especially in the summer months being able to replace it with our own more profitable volume, and that's certainly going to drive the margin as well. And then a lot of the cost savings and efficiencies that we've been delivering has come out of Brian's area on supply chain. So we've spoken about the more efficient breweries in Canada, for example, the capabilities that we built in-house. So just if you think of something like our flavor capabilities, where we had contract manufacturers doing that for us, we're now doing that in-house. If you think about a variety pack that we've built, instead of having logistics we have it done by manufacturer. We bring it in-house. We then send it out for co-packing, we bring it back. We send it to our distributors. So we've taken all of those legs of logistics and freight out of it because we're doing it now in-house. So those are going to be things that driving cost savings as well as efficiencies in our breweries, and then Brian and his team have got this world-class supply chain program, which they've been running for a couple of years and still got some runway, but it's about lowering our waste, lowering the time for changeovers. All of that makes it more efficient. So those are the kinds of things that we'll drive to expand the margin. Those are the big drivers, I would say.

Yes. If I could just add, Tracy, on the -- as that contract production leaves, it actually has a much longer tail of that portfolio. And so shorter runs, more changeovers, and so we'll be more efficient without that in our breweries and we can resolve our brewery sourcing algorithm so that we can actually put more of our volume in our lowest cost operating brewery. So that will also generate margin expansion just by being able to do it at the lowest possible cost. And we've invested significantly in Fort Worth, Texas and Toronto, and almost all of those flavored out beverages and Selter now are done in-house. So we're doing that ourselves.

Eric Serotta from Morgan Stanley. I wanted to follow up on the question about category growth. Could you talk about your flexibility or your confidence in achieving the algorithm if the U.S. category remains somewhat outside of that flat to 1% range over the medium term? And then I think, rightly or wrongly, some people in the investment community were surprised by the magnitude of the reinvestment in the second half that you guys announced second quarter call. Tracy, you said today that there wouldn't be a step-up in CapEx going forward. Can you make a similar comment with respect to marketing spend in terms of any sort of outsized gains, realizing we're not trying to pigeonhole you and want to leave you the flexibility to invest where the opportunities arise.

A couple of points, Eric, and feel free to add in, team. From an overall volume point of view, one of the reasons that we're moving into areas beyond beer, whether that's non-alc as Michelle said or spirits and so on, is to capture a larger share of growth in a category in which we really underrepresented. So if we have a slowdown in the beer side, we've got other areas to offset it in. Also remember that we're more than just the Americas, right? So I mean, in EMEA, APAC, we're in some high-growth markets, which might be challenged at the moment for obvious reasons. But over time, we'll be unquestionably, it's a cyclical thing, will bounce back. So we are becoming more than a beer company. It's always going to be our roots, but we think there is huge potential for us in the energy drink space in the non-ALC space. And we think there is a real opportunity for us to make a difference to our overall algorithm from a spirits point of view. In terms of marketing, we don't manage our marketing on a quarter-by-quarter basis. We manage it when we think it makes most sense to spend that money at a point in time. So over the past years where we've had maybe challenges from a supply point of view for a variety of reasons, we've dialed marketing back, and that moves marketing around between quarters, right? And so yes, we are spending more money -- a significant amount more money in the back half through summer through our football programs and launching maybe new products I sometimes get confused as to what's public and what's not. That's why I hesitated there. The non-alc launch later this year is public, right? Okay, maybe not.

I'm like...

Blue Moon...

Oh, yes, that is -- yes, you can talk about that now.