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Good morning, and welcome to the Molson Coors Beverage Company Fourth Quarter and 2024 Fiscal Year Earnings Conference Call. With that, I'll hand over to Greg Tierney, Vice President, FP&A and Commercial Finance.

Thank you, operator, and hello, everyone. Following prepared remarks today, we look forward to taking your questions. In an effort to address as many questions as possible, we ask that you limit yourself to one question. If you have technical questions on the quarter, please reach out to our IR team. Also, I encourage you to review our earnings release and earnings slides, which are posted to the IR section of our website and provide detailed financial and operational metrics. Today's discussion includes forward-looking statements. Actual results or trends could differ materially from our forecast. For more information, please refer to the risk factors discussed in our most recent filings with the SEC. We assume no obligation to update forward-looking statements, except as required by applicable law. The definitions of or reconciliations for any non-U.S. GAAP measures are included in our earnings release. Unless otherwise indicated, all financial results we discuss are versus the comparable prior year period and are in U.S. dollars. With the exception of earnings per share, all financial metrics are in constant currency when referencing percentage changes from the prior year period. Also share data references are sourced from Circana in the U.S. and from Beer Canada in Canada unless otherwise indicated. Further in our remarks today we will reference underlying pretax income which equates to underlying income before income taxes and underlying earnings per share, which equates to underlying diluted earnings per share as defined in our earnings release. With that, over to you Gavin.

Thank you, Greg. Hello, everybody, and thank you for joining the call. 2024 was another year of progress for Molson Coors, progress in advancing our strategy and in achieving bottom line growth. Amid a challenging macroeconomic environment, we continue to support the health of our brands globally. We retained a substantial portion of our sizable share gains from 2023 and earned unprecedented levels of shelf space for our core power brands in the U.S. We achieved incredible growth in Canada broadly across all price segments of our portfolio. We continued to premiumize off a high base in our EMEA and APAC business. We terminated low-margin contract brewing agreements, and exited smaller unprofitable businesses while investing in areas that we expect will drive long-term sustainable profitable growth. 2024 was also another year of continued strong cash generation that contributed to earnings power. We delivered more than $1.2 billion in underlying free cash flow, which combined with our healthy balance sheet, enabled us to not only invest in our business, but also to return $1 billion in cash to shareholders through a growing dividend and share repurchases. We entered this year confident issuing 2025 guidance that both reflects the favorable fundamentals of our business and that aligns with our long-term growth algorithm. Now with that high level summary, let's get into some of the details. In the fourth quarter, consolidated net sales revenue was down 1.9%, underlying pretax income was down 0.9% and underlying earnings per share was up 9.2%. In our Americas business, Canada continued to perform strongly while as expected, the U.S. faced a temporary headwind related to the exit of Pabst contract brewing, which was a headwind of about 450,000 hectoliters. U.S. brand volume was down 3% in the quarter, which improved as compared to the third quarter as did the industry with a moderating of the more pronounced value seeking behavior seen during the summer. These drivers contributed to a 6.7% decline in U.S. financial volume. Related to the deliberate inventory build in the first half of the year, U.S. shipments trailed brand volumes by approximately 150,000 hectoliters in the quarter, resulting in largely shipping to consumption for the full year as intended. In EMEA and APAC, our volumes were impacted by the continued heightened competitive landscape in the UK as well as a softer industry in Central and Eastern Europe. However, this was largely offset by strong net sales revenue per hectoliter growth of 7.8%, driven by favorable sales mix, including continued premiumization and pricing. This, along with favorable net pricing growth in the Americas and mixed benefits from the exit of Pabst, resulted in consolidated net sales revenue per hectoliter growth of 4.8% for the quarter. For the year, consolidated net sales revenue was down 0.6%, underlying pretax income was up 5.6% and underlying earnings per share was up 9.8%. Results were better than our revised top line guidance of down approximately 1% due to better-than-expected U.S. industry performance in the fourth quarter. As a reminder, our 2024 top line guidance was revised lower when we reported our third quarter results in early November due to macro-driven U.S. industry softness in the peak season months of July and August. It's also important to point out that excluding the impact of the wind down of Pabst's contract brewing volume, our implied annual top line revenue growth was positive and in alignment with our long-term growth algorithm. From a volume perspective, Pabst had a negative 3 percentage point impact on America's financial volume for the year. Again, while this is a current volume headwind, the reduction of this contract brewing volume is expected to have a positive impact in 2025 and beyond on our brewing network effectiveness as well as on mix and margin. And in what we expect will provide further benefits, we no longer contract brew for Labatt USA and Canada, with that volume fully exiting our Canadian business as of year-end 2024. Tracey will share more on the impact of that. Consolidated underlying pretax income was above the midpoint of our reaffirmed mid-single digit growth guidance. This was achieved due to the better-than-expected top line as well as measured cost controls without sacrificing the right levels of brand marketing support. In addition to better net sales revenue performance, we significantly exceeded our reaffirmed mid-single-digit underlying earnings per share growth guidance, which we had narrowed to the high-end of the range in early November. The beat was largely supported by a lower-than-expected underlying effective tax rate due to U.S. geographic sales mix as well as the better-than-expected top line performance in the fourth quarter. Our underlying earnings per share growth was also supported by our share repurchases, which have been tracking at an accelerated pace, as we continue to view our valuation as compelling given our confidence in our business and in our long-term growth algorithm. In fact, for the first five quarters since the share repurchase program was announced, we had already executed approximately 40% under this up to five-year program, which if you straight line that number would have us at only 25%. Our confidence stems from our progress against our strategic priorities. I'll start with our core power brands. Collectively, they remain healthy. In the U.S. Coors Light, Miller Lite and Coors Banquet have continued to retain a substantial portion of our share gains, demonstrating the stickiness of these step change gains. In the fourth quarter, they retained over 80% of their combined volume share gains on a two-year stack, which is an improvement from both the second and third quarters. Compared to the fourth quarter of 2022, these brands were up 1.7 share points. Coors Banquet continued to perform very well with brand volume up 16% and growing industry share for the 14th consecutive quarter on top of significant prior year gains. Banquet was the fastest growing top 15 beer brand in the U.S. in terms of volume percentage growth in 2024 and it's not a small brand. In fact, it's one of our top five brands globally. We see much more opportunity ahead as we invest in building the brand's awareness, its national scale and loyal consumer base, particularly among new Gen

Thank you, Gavin. We made strong progress in enhancing our profitability and financial flexibility in 2024. We delivered over $1.2 billion in underlying free cash flow in in line with our expectations and it was supported by underlying pretax income margin expansion of nearly 80 basis points for the year. This expansion was driven by positive net pricing, mixed impact, moderating inflation and cost savings which more than offset volume deleverage, which had a particularly significant impact in the second half of the year related to U.S. shipment timing. Also contributing to the margin improvement was lower MG&A, largely due to cycling innovative levels in 2023. G&A declines were mostly related to higher incentive compensation in 2023. Marketing declines were mainly a result of higher investments in the prior year, particularly in the second half of the year when we increased spend by an incremental $100 million given the accelerated demand in the U.S. But importantly, we continue to support our brands globally, with higher levels of marketing investments for both the quarter and the year as compared to the respective periods in 2022. In addition to investing in our brands and business, we continue to return cash to shareholders. In 2024 we paid $369 million in cash dividends and $643 million to repurchase 10.9 million shares. Since the plan was announced in October 2023, we have repurchased 6.7% of our Class B shares outstanding. It's an up to five-year $2 billion plan and as Gavin mentioned, we have utilized approximately 40% in just the first five quarters. We ended the year with a healthy balance sheet and our net debt to underlying EBITDA ratio was 2.1 times, which is in alignment with our long-term target of under 2.5 times and we have no debt coming due in 2025. This provides us significant financial flexibility, offering more optionality in the ways that we invest in the business, be it through capital investments that drive productivity improvements or through bolt-on M&A that support our strategic growth objectives, like our recent investment in Fever-Tree. It also provides us the opportunity to return even more cash to shareholders and we are pleased to share that today we announced our quarterly dividend of $0.47 per share to be paid on March 14th. This is an increase of 6.8% and represents our fourth consecutive year of increases, clearly demonstrating our intention to sustainably increase our dividends. I'll now conclude with our financial outlook. For 2025, we are issuing guidance that is in line with our long-term growth algorithm. However, the global macro environment is rapidly evolving, resulting in uncertainty around the effects of geopolitical events and global trade policy, including the impact from consumer trends. As a result, our outlook does not reflect the impacts of these activities or any imposition of import tariffs by the U.S. and potential retaliatory actions by other countries. Also, please remember that net sales revenue and underlying pretax income growth guidance are on a constant currency basis and underlying earnings per share are not. Therefore, continued strength in the U.S. dollar will result in a headwind to our reported results as well as underlying earnings per share growth and in the effective period using the current exchange rate. With that said, let's review our guidance metrics. Low single digit net sales revenue growth on a constant currency basis, mid-single digit underlying pretax income growth on a constant currency basis, high single digit underlying earnings per share growth, underlying free cash flow of $1.3 billion plus or minus 10%, underlying depreciation and amortization of $675 million plus or minus 5%, net interest expense of $215 million plus or minus 5%, underlying effective tax rate in the range of 22% to 24%, and capital expenditures incurred of $750 million plus or minus 5%. Drivers that underpin our guidance include anticipated annual net price increases of 1% to 2% in North America in line with the average historical range and for other markets to trend in line with inflation. Mix should be a meaningful growth driver as we advance toward our medium-term goal of reaching about 1/3 of our global net brand revenue from our above premium portfolio. We expect this to come from continued premiumization in EMEA, APAC and Canada as well as progress in the U.S., where as Gavin shared, we are starting to see some initial traction with Blue Moon, have big plans for Peroni and are expanding in non-alc. While Feeder-Tree and the consolidation of

Thank you. [Operator Instructions] Our first question comes from Chris Carey with Wells Fargo. Please go ahead.

Hi, good morning, everyone.

Good morning, Chris.

Hey, Gavin. I was wondering if you could comment a bit on what we're seeing in the beer category, specifically year-to-date or whatever near-term time horizon you'd like to use. I think there's been a debate about increased volatility in recent weeks and months, whether that's weather or changing consumer preferences. But I'd love to get your thoughts on some of the near-term evolution of what we're seeing in the data and how you see industry dynamics and then perhaps how you're thinking about this in the context of your full year guidance? And then more of a just sneak in question, but Tracey, are you factoring any share repurchases in the outlook or any context on share buybacks for this year? Thanks so much for those.

Thanks, Chris. Well, I'll let Tracey answer your sneak in question, but I'll deal with the industry first, Chris. Look, I mean, if you look at 2024, there was a lot of noise, right? I mean, we talked about a lot of that over our earnings calls with trading days and holiday timings and turbulent weather and all sorts of things going on. And summer was not particularly good, but we did see progress in Q4. And, in fact, I think Q4 ended up being the best quarter of industry performance that we experienced last year. And Chris, as it relates to current trading, I would say what we said on the last call and I think the call before that, right, is I think being cautious of short-term trends is important because I think once you get to the full quarter and you remove noise that exists on a week-to-week basis, you get a much better sense of what's happening in the industry. And even with what you're seeing in the first publicly available data for 2025, it's not terribly dissimilar to what we were experiencing in 2024. Again, there is noise around weather and timing of holidays. And I would just caution you not to draw assumptions based on a very short period of data, Chris.

Hi, Chris. So and just in terms of share repurchases, so look, we do intend to continue to execute our share repurchase program. And a reminder, it includes both a systematic as well as an opportunistic execution component. So that allows us to consistently execute the program, but with also the ability to lean in if our models indicate, if appropriate. So based on our $2 billion program, which we announced in October 2023, and as Gavin said, we've already utilized about 40% of it in just the first five quarters and it is a five-year program. So I think it's clear our commitment to share repurchases, but the execution of the plan can vary, can be driven by a number of factors, including the timing of our capital commitments. For example, a planned investment in Fever-Tree could drive that. But as I said, we are committed to the share repurchase program that we put in place. Thanks, Chris.

Thank you. Our next question comes from Peter Grom with UBS. Please go ahead, Peter.

Thanks, operator. Good morning, everyone. I really wanted to just follow up on Chris' question there, just for some perspective on the top line guidance. I know the various puts and takes, Tracey, as you alluded to contract brewing, Fever-Tree, et cetera. But I guess just how are you actually thinking about underlying category growth across your key geographies? Are you assuming category growth rates improve as we move into the summer cycle, easier comps, or are you kind of assuming the steady-state as category growth improves, that would be more of a source of upside?

Thanks, Peter. Look, if you look at our major markets, right, in Canada, we've seen past inflation and interest rates, they continue to weigh on the economy, but we have seen interest rate cuts, we've seen inflation start to come down and Canada beer industry trends are fairly similar to the U.S. As I said to Chris, we're not seeing anything meaningfully different from the previous trends that we've shared in the U.S. Value conscious consumers are still looking to engage in channel and pack shifting. And at the same time, the industry continues to see premiumization, which plays perfectly into our overall acceleration plan. In the UK, the economy is improving, inflation is slowing down. It is competitive at the moment, but not a lot different from what we've been seeing through the back end of 2024. And as you rightly point out, we do have puts and takes in our top line guidance, right? The take, as Tracey said, is contract brewing and the point is Fever-Tree, for example. But more broadly, the progress that we're making on our overall acceleration plans, whether that's our core brands globally, whether it's the premiumization progress that we're making, or whether it's acceleration in beyond beer. So it's all of those factors taken into account, Peter.

Thank you. Our next question comes from Filippo Falorni with Citi. Please go ahead.

Hi, good morning, everyone. I wanted to ask on margins. So first on the gross margin line, can you provide some context of the puts and takes in terms of pricing, mix benefits and commodity inflation that you expect - that you included in your guidance? And particularly on the commodities, I know you have long-term hedging programs, but just any thoughts on the potential impact of aluminum tariffs and what that could mean for your COGS? Thank you.

So I'll let Tracey talk about the margin, Filippo, and thanks for the question. From an aluminum point of view, we did make changes to our sourcing strategy over the last few years. And so almost all of our aluminum is currently purchased in the United States for United States consumption, which is obviously our biggest market. But Tracey, do you want to give a more broad…

Yes, sure. So, hi Filippo. So in terms of gross margin, look, we don't give specific gross margin guidance, but notably our underlying gross margin percentage did improve in each of the last two years. So as we look at our 2025 guidance, our long-term growth algorithm does anticipate underlying pretax margin expansion. So building on the expansion we saw in 2024. Some of the drivers of that, so in 2025, we do expect moderating inflation on input costs. And to your point, we do have multiple levers that support our growth algorithm. So it includes positive net pricing that we discussed in our guidance, positive mix from premiumization as well as the lower contract brewing volumes, which will also drive productivity improvements. And we also continue to look at cost savings across our entire business, so those are some of the things that I would say would drive some of the margin expansion.

Thanks, Tracey.

Thanks, Filippo.

Our next question comes from Bonnie Herzog - Goldman Sachs. Please go ahead, Bonnie.

All right, thank you. Good morning everyone.

Good morning, Bonnie.

I had a question. Good morning. I had a question on your guidance, which you mentioned is in line with your long-term algo. Your guidance implies a fair amount of operating leverage this year. And I know you've touched on this, but hoping you could unpack this a bit for us, meaning you should get some leverage from the top-line, but could you give us a little more color on the drivers of EPS growth, such as the cost savings and efficiencies you expect to get this year? And then maybe how much that could increase next year and beyond? Maybe if you don't feel comfortable quantifying, maybe you could rank some of these cost savings in order of impact, for instance, I think that would be helpful? Thank you.

Thanks, Bonnie. Tracey do you want to take that?

Yes. So I mean, a couple of things that I can point to in terms of the operating leverage and improvements in our operating margin. So, number one, we've invested over the last couple of years in our capabilities to drive efficiencies and cost savings and a lot of that investment is focused on our breweries, so eliminating waste, driving efficiencies there and certainly taking out the contract brewing will further help in terms of costs as well as efficiencies in our breweries. So that's one of the bigger drivers around the cost and efficiencies. The other thing, just in terms of marketing spend for example, we've spent the last couple of years really driving our return on marketing investments. And, you know, even though we do expect our MG&A to increase around some of the investments that we're making with innovations, Fever-Tree, et cetera. There are also a number of puts and takes that are coming out. So, for example, we divested of our underperforming craft breweries and we can now redeploy those funds to other brands in 2025, so we'll continue to look at that. And then one of the bigger items as well is bringing the Peroni production onshore and there is meaningful ocean freight savings by doing that. And we then able to utilize those cost savings to again support the marketing investment of that brand. So a number of levers that we can pull and a number of capability investments that we've made over the last couple of years that we'll start seeing coming through now that will certainly help our margin as we look at continuing to drive efficiencies in the areas that we operate.

Thanks, Tracey. Thanks, Bonnie.

Thank you. The next question comes from Andrea Teixeira with J.P. Morgan. Please go ahead.

Hey, good morning. This is Drew Levine on for Andrea. Thank you for taking our question. Gavin, I wanted to ask on the U.S. brand buyers were down three and I think that came in probably a bit better than the track channel data would suggest despite I think what has been described by some other peers as maybe a shift towards those channels. So any color would be helpful on what you're seeing from a consumer perspective. I know you mentioned some moderation in the value seeking behavior, but you maybe some perspective on different channels, of on-premise is outperforming, maybe untrack channels performing better, so any help there would be great.

Thanks Drew. You know, I think one point I'd make is, I think there was an extra trading day, so that certainly would have helped. From a consumer point of view, we did see them moving away from C stores earlier in the calendar year in the sort of summertime period and now we've seen them move back into the C store channel. We've also seen on-premise continue to slightly outperform, but broadly I would say those are the three key ones. Thanks Drew.

Thank you. The next question comes from Gerald Pascarelli with Needham and company. Please go ahead.

Great. Thanks very much for the question. I just, I wanted to go back to the share repurchase commentary. So as we look at the outlook for 2025, the high single digit growth, Tracey, is it fair for us to assume that you maybe to think about it in terms of like straight lining the remaining authorization with any potential upside to earnings growth being, you know, you remaining aggressive on buybacks, but that maybe shouldn't be part of, you know, the base case scenario? I'm just trying to get a little bit more color there. Thank you.

Yes, so a couple of things to consider as we talk about the high single digit underlying EPS growth. I mean some of that, yes, certainly is being driven by share repurchases and our guide assumes at minimum repurchases in line with our 10b5-1 plan. But some other factors that play into our EPS growth is also tax and foreign exchange. So our EPS is not on a constant currency basis, so ForEx could impact that. And then we have reduced our underlying effective tax rate guide for 2025 to 22% to 24% and that was from the 23% to 25% in 2024. But as I said, we'll continue to look at all of our capital allocation models and make sure that we're returning the right, we're making the right investment decisions to return to our shareholders. So yes, as we said, it could vary. The share repurchase driven by a number of factors, as I said, you know, whether we have planned investments like Fever-Tree, for example, so that may impact the sort of amount we spend. And also, just as a reminder, it's up to five-year program and we're only five quarters into this. Thanks, Gerald.

Next question, Operator?

The next question goes to Robert Ottenstein of Evercore. Rob, please go ahead. It looks like Rob has disconnected, so just going on to the next question from Kevin Grundy of BNP Paribas. Kevin, please go ahead.

Great, thanks. Good morning, everyone. First, quick housekeeping question, then a bigger picture question, easy for me to say. The housekeeping question for Tracey, it would seem like the guidance would imply that volume is down 1 to 2% based on your commentary of 1% to 2% price and then some favorable mix. I just wanted to confirm that's your expectation relative to an exit rate. There was a bit more challenge than that in the U.S. and Europe. Gavin, the bigger picture question is just the demand outlook. Looking out now over the longer-term, we get a lot of questions from investors on potential impact of younger consumers drinking less frequently, negative impact from GOP1, the recent advisory from the former Surgeon General linking alcohol consumption and cancer risk. I was hoping you could comment on these potential headwinds and how they may impact the industry more broadly. So not just beer, but U.S. alcohol more broadly and then how it may directly impact your strategy as it pertains to your portfolio? Thank you.

Thanks, Kevin. Do you want to just comment on the first one, Tracey, or I'll take the bigger picture, question.

Yes. So, hi Kevin. So look, the drivers for our top-line growth in 2025, I mean, of course, we remain focused on our U.S. share performance. The NSR guidance is also dependent on a number of factors including price and mix. In 2024, we achieved really strong annual top line contribution from both our EMEA and APAC business and from Canada. We don't specifically give volume guidance, but just as a reminder, we've got puts and takes there as well. So, we will receive a benefit from bringing Fever-Tree, Gavin mentioned Naked Life, et cetera, that we're going to be launching, but a reminder as well. We we've taken out 1.9 million hectoliters of contract brewing volume out of our system in 2025, so that'll have an impact on our financial volume as well.

Thanks, Tracey. And look, Kevin, I mean your question is a very broad one, right? So let me try and answer that. From a -- you referenced the Surgeon General, right? And obviously there've been several reports from the Federal Government over the past few months. They've had a variety of viewpoints on the science. And I would point out that we've had a Surgeon General's warning on labels since the 1980s, which includes that alcohol consumption may cause health problems. I think beer has long been the drink of moderation and we offer consumers a range of options, including low and low alcohol beverages and we're committed to the transformation of our company into a total beverage company. That's why we changed our name to Molson Coors Beverage Company several years ago and we've got a long-term strategy of diversifying our portfolio into beyond beer and non-alc is a key part of that diversification and it supports broader consumer trends, as you said, around mindful drinking with categories like non-alc beer and RTDs. And we've got a three pronged approach to that. Whether it's alcohol replacement, we've got a great portfolio of brands directed at that with two great above premium non-alc beers, Blue Moon, non-alc and Peroni 0.0. We're launching Naked Life, which is a non-alc canned cocktail. Then we've got alcohol adjacencies and that's where, Fever-Tree is the absolute perfect fit for us because it sits at that intersection between alcohol and non-alcohol. And then we've got the pure place, which is highly incremental for us at an occasion level where beer doesn't necessarily exist and

Thank you. The next question goes to Bryan Spillane of Bank of America. Bryan, please go ahead.

Thanks, operator. Good morning, everyone. Maybe, Gavin, just to pick up on Kevin Grundy's last point, can you just maybe give us a little bit more color on the decision to engage with Fever-Tree and maybe just like, what do you think is different, right? I mean, Fever-Tree and Molson Coors come together, you're going to have this venture. There must be something that's missing now that Molson Coors can add to it. I'm just kind of curious to know how you think about that and what that may be?

Yes, great question. Thanks, Bryan. I think it's building our great portfolio even further to meet the needs of consumers at various occasions. And as I said, non-alc beverage is key to that strategy. And in the U.S. Fever-Tree is the world -- well, it's actually the world's leading supplier of premium carbonated drinks and mixes. And as I said, it sits really nicely at the intersection of beer and non-alc and its availability is often in stores where beer is actually sold. It's steadily grown its lead as the number one tonic and ginger beer. I think it provides tremendous credibility to our network and broader network that we are serious about non-alc. It's a big business, it's a growing business. What do we bring to it? I mean, we've talked about our core competencies and our capabilities in the past before, Bryan, and one of them is we have a tremendous network of distributors that deliver to stores, which Fever-Tree has not been delivering to in the past. I mean, I think we service over 500,000 different outlets and Fever-Tree gets to tens of thousands of those at the moment, so our broader reach is substantial. We're also going to increase our non-alc resources quite meaningfully in the first part of this year. So it brings critical mass to us from a non-alc point of view with

Thank you. The next question goes to Rob Ottenstein of Evercore. Rob, please go ahead.

Great. Thank you very much. Just a few follow ups, if I may. So Gavin, can you just sticking on the Fever-Tree agreement, can you give us a rough idea of what the economics look like and how this could potentially impact your income statement three, four, five years out, just any way for us to kind of model any guidelines at all? And then second, I know you mentioned that your guidance doesn't include anything for tariffs and obviously it's impossible to right, because who knows what's going to happen. But again, can you help us try to model that out in terms of Canada? Did you see when Trudeau talked about boycotting American brands, did you see any impact on Coors Light, Miller Light, your U.S. brands that are in Canada, are they brewed in Canada or do they come from the U.S.? And what percentage of your sales in Canada come from those brands? And any other tariff-related issues outside of aluminum, which we already talked about, that we should be considering as we kind of run our sensitivities for 2025? Thank you.

Thanks, Robert. Two big questions. Let me start with the second one. We import very little product into the U.S. from Canada and Mexico, that's the first point I'd make. Almost all of the brands that we produce that are consumed in the United States from our portfolio are brewed in the United States. The last big one really was that we imported was Peroni. And as you know, and we've talked about in the past, we've brought that in-house and have -- we're really excited about the potential for Peroni as we go forward. Beyond that, there are a few very minor immaterial from a volume perspective brands that come across from Canada and Mexico. As it relates to Canada, the vast majority of the brand portfolio is again, it's produced in Canada for Canadian consumers. We have a large import agreement that comes from Europe, so it wouldn't be impacted by U.S. tariffs. But again, the vast majority Canadian, Canadian produced and I think consumers are aware of that. From an input material point of view, again, Robert, the vast majority of our input materials come from the countries in which they produced, obviously not everything. But you know, I spoke about aluminum earlier on being almost entirely sourced in the United States for the United States markets. All of our agricultural input costs like barley malt or hops and so all is sourced in the markets in which it's consumed, certainly in our bigger markets. But as you say, there is uncertainty, but we're in the same boat as most other businesses as it relates to tariffs with the exception of the fact that we produce all of our, almost all of our products in the market in which they consumed. As far as Fever-Tree is concerned, look, we don't give that level of detail that you're looking forward, but obviously we've entered into this relationship because we see real potential with this brand. We see growth opportunities from a volume perspective. Obviously it's 100% incremental to our business, but we see growth of their base. 2025 is going to be a year of integration and absorbing it. And as I said, we're expanding our resources behind this, which will take place in the earlier part of the year. Tracey did mention that we will have some one-time costs associated with that and we're working through to determine what those are. They're not in the hundreds of millions, just to give context, right? They're in the tens of millions and we'll resolve that and put a final estimate on it once we've been through all our discussions. But this is a brand that operates right at the top end of above premiums from a revenue per hectoliter point of view, it's going to, it might even be our number one now from a revenue per barrel point of view. As we integrate it and look for further opportunities in terms of cost efficiencies, we will certainly be looking at our supply chain and our supply chain partners as we look to drive value out of this relationship, but we really are excited about it, Robert. I think I covered both Robert's questions, Tracey. Yep, thanks, Robert.

Thank you. The next question goes to Kaumil Gajrawala of Jefferies. Kaumil, please go ahead.

Hey everybody. Good morning. Two things. The first, I guess along the lines of Fever-Tree, but not specifically when we think about the Yuengling deal and let's start, which is a partnership, the various partnerships with Coke, that went from partnership to ownership. As we think about all of these things and then Fever-Tree being the newest one, how do you think about it in the context of M&A? Why is sort of a small stake, the right amount with whatever P&L that contributes to your business versus the P&L that goes to the distributors? Why not sort of being more aggressive on M&A, kind of like what you've eventually done on

Thanks, Kaumil. It's not the latter. It is not just a couple of nice hits. I mean, the performance in Canada has been building over quite some time. For example, we've seen 23 consecutive months of share growth and that includes growth in beer, it includes growth in RTDs. It's driven by the strength of our brands. It's driven by the strength of the execution of our strategy on those core beer brands, on premiumization of our portfolio and of expanding into flavor Kaumil. Our core power brands, Coors Light and Molson, the Trademark we grew share of segment through the fall. And Miller Light, which sells in the above premium tier, is one of the fastest growing beer brands in the category. And then Madri, which we launched last year has delivered ahead of our head of our expectations. And in flavor, we're the fastest growing company in the RTD space. So, Canada's success is broad, it is deep. It's been, going for, as I said, quite some time now and you know, it gives us a nice useful blueprint for the U.S. where we've got the opportunity to strengthen our results, particularly in the above premiums space. Performance in Canada has been strong in summary. Fever-Tree look, I mean, we're good at partnerships. I think that's one of our core strengths, core competences. We've got partnerships all over the world. As it relates to the specific investment which Tracey alluded to in uses of cash, I mean, it fits perfectly into our string of pearls approach. Right? I mean, we did talk about pearls getting a little bigger and so our investment in Fever-Tree is a little bit bigger than some of the ones that we've made in the past, but it's still part of the string of pearls approach. Why did we do it? Because we see real potential in Fever-Tree. The United States is their biggest market. It's their biggest growth market. We're representing them here now. So, 100% of the performance will be included in our P&L. But at the same time, we wanted to take some advantage of the value which we believe is going to be created at a Fever-Tree level. And so, we're now their second largest shareholder and we're comfortable with that position. Thanks, Kaumil.

Thank you. The next question goes to Eric Serotta of Morgan Stanley. Eric, please go ahead.

Great. Good morning. First Gavin, could you talk a bit about shelf space expectations for your brands in 2025, coming off of the really strong gains that you had for the core brand last year and in 2023. And then Tracey, just an accounting clarification, so it sounds like you guys are going to be booking just the U.S. partnership revenue from Fever-Tree, is that correct? And will any equity income from your overall ownership in the company come through the equity income line or is that going to just be held at cost? Thank you.

Thanks, Eric. I would say that shelf resets, I mean, we saw an unprecedented shift in shelf resets back in the spring of 2024. In the fall of 2024, we held those grains and, we even grew them a little. So that means that when you compare us to the 2023 base, we're up significantly now as we head into spring of 2025. You know, generally each year there are minor adjustments to shelf space. Retailers add new items. They delete discontinued and slow-moving ones. And it's a little early days yet and we haven't got all the data in. But for spring of 2025, we expect that to be the case again, and again while it's early, we expect to hold onto the share gains in the spring once again. So we feel really good about the step change that we've seen in shelf resets and it's certainly been a big contributor to why we've held onto so much of the share gains that we gained with Coors Light, Miller Light and Coors Banquet. I mean, in the fourth quarter that actually accelerated a little bit. I think we said in Q3 it was around 80%. Well, it's actually more than 80% now that we retained, in the fourth quarter. And we're very, very pleased about that obviously because, if you compare it back to 2023, we're about 170 basis points of share higher with those brands than we were before, so yes. Tracey, you want to deal with the accounting question?

Yes, thanks Eric. So look, in terms of how we're going to report Fever-Tree in the U.S. So we have a license agreement to distribute their products in the U.S. and we will recognize 100% of the revenue for all of the products sold in the U.S. and we'll share jointly in certain costs which include marketing. So it results in profit sharing at the EBITDA level. And then we also pay them via a royalty, which will be included in our COGS. In terms of the investment that we've made in the Fever-Tree business entity, it will be reported on a cost basis and we'll mark that to market and we'll exclude it from our underlying results.

Thanks, Eric.

Thank you. The next question goes to Bill Kirk of Roth Capital Partners. Bill, please go ahead.

Good morning, everyone. So, Gavin, your largest competitor wants to rebrand the domestic beer segment to, I think, the American beer segment. Do you agree that the industry should stop using that domestic terminology? And if that segment positioning changes may be combined with a broader populist movement, do you think it would help the brands within that segment?

Thanks, Bill and good morning to you. Our brands go back many generations in both Canada and in the United States. We're obviously very proud of our heritage and I would suggest that everybody knows about the roots of our great iconic brands. Our focus is on our acceleration plans and our portfolio. And as I've said on this call, and we said in our opening remarks, our brands are in a great place, particularly our core brands, which have gained substantial share since 2023 and retained a lot of that and so that's where our focus is. Thanks, Bill.

Thank you. The next question goes to Lauren Lieberman of Barclays. Lauren, please go ahead.

Great, thanks. Good morning. I'd love to just hear a little bit about your read of the competitive environment in the U.S. we heard a bit kind of through this earnings season about a step up in promotional activity, both with Premium Life, but also in the above premium space. So just curious to what degree you're seeing that or not. Thanks.

Thanks, Lauren and good morning to you. We haven't seen anything unusual from a promotional point of view. It's common that there is some level of promotional activity. Most of that takes place in the summer, though not in Q4 or in Q1. Most of that takes place in Q2, Q3. It's a fairly regular thing. You see different things in different markets. But, we haven't seen anything unusual from a promotional point of view and as we always do, we'll take a strategic approach to evaluating the overall competitive landscape, consumer dynamics, and we'll do what's right for our brands.

Thank you. The next question goes to Michael Lavery of Piper Sandler. Michael, please go ahead.

Thank you. Good morning. Just wanted to come back to innovation and just have seen a lot of the innovation in the space skew towards higher alcohol, some little bit, maybe more exaggerated cases, things like BeatBox or BuzzBallz, but you're Simply Spiked Bold and Blue Moon Extra are moving in that direction with an 8% ABV version. Do you have a sense of just what, if any, impact that has on category volumes and if some of that is, if that direction of innovation is helping drive weakness? And a little bit just related, can you maybe touch on how that sell in went and do you have a sense for how your innovation is landing on the shelf resets also maybe for

Thanks Michael. Lots of questions there. Let me just say that no, I don't see that innovation both from ourselves and our competitors is negatively impacting beer as a category. In fact, I think it's positive. I mean if you look at beer as an overall industry, we did very nicely against spirits. I mean all of spirits growth is coming in the RTD space which is where the beer guys are playing. And so, if you just look at, if you excluded, the prepackaged spirits from spirits performance, it'll be quite negative. So, all of the growth in spirits is coming from that. And we and our competitors play quiet, quite meaningfully there as it relates to, higher alcohol. I mean we did talk about this previously around our first ever convenience led innovation pipeline and we've got three great new launches that are coming that fit that trend of what consumers are looking for in terms of singles and higher ABV. We've got Simply Spiked Bold coming, we've got Topo Margarita Mix and we've got Blue Moon Extra and they all come in at that sort of 8% level. Another great area of innovation for us is for example, Happy Thursday. I don't know if we've talked about this before but we did create a Gen

Thank you. The last question goes to Robert Moskow of TD Cowen. Robert, please go ahead.

Hi, thanks. There was a pretty significant slowdown in your EMEA and APAC region and you attributed to the heightened competition and just the consumer backdrop. Is there any reason to believe that those divisions can grow as fast as the rest of the company in 2025 or do you think we're going to be flattish like we were in fourth quarter for the year?

Thanks Robert. Look, I mean certainly consumer demand in the UK was softer in 2024 when you compare it with 2023. We did see some uplift in the summer through the Euro soccers, but you know weather obviously offset a lot of that. Christmas season was, was satisfactory, although we did see consumers coming in late in the season as opposed to earlier. As it relates to our business, specifically for Carling, which is our biggest brand in the UK and in the EMEA and APAC business unit, we took a value over volume approach. We certainly will continue to support the brand strength of that versus our competitors, but no doubt we took a value over volume strategy, but really we continue to see drive both volume and value growth across both channels. It's launched very nicely in new market Bulgaria during 2024. We have another market plan for 2025. We've got great brands in EMEA and APAC. Yes we've talked about Ožjusko past and over time I see no reason why our EMEA and APAC business won't grow quicker than our businesses in North America. Thanks for the question, Robert.