Peter S. Swinburn - Chief Executive Officer, President and Director Gavin D. Hattersley - Global Chief Financial Officer Stewart F. Glendinning - Chief Executive Officer and President Tom Long - Chief Executive Officer Mark R.

Hunter - Chief Executive Officer of Molson Coors Europe and President of Molson Coors Europe David Dunnewald - Vice President of Global Investor Relations Gavin D. Hattersley - Director Krishnan Anand - Chief Executive Officer of Molson Coors International and President of Molson Coors International.

Judy E. Hong - Goldman Sachs Group Inc., Research Division Michael Steib - Crédit Suisse AG, Research Division John A. Faucher - JP Morgan Chase & Co, Research Division Ian Shackleton - Nomura Securities Co. Ltd., Research Division Bryan D. Spillane - BofA Merrill Lynch, Research Division Robert E.

Ottenstein - Evercore ISI, Research Division Andrew Holland - Societe Generale Cross Asset Research Tristan Van Strien - Deutsche Bank AG, Research Division Mark D. Swartzberg - Stifel, Nicolaus & Company, Incorporated, Research Division.

Welcome to the Molson Coors Brewing Company Third Quarter 2014 Earnings Conference Call. Before we begin, I will paraphrase the company's safe harbor language. Some of the discussion today may include forward-looking statements.

Actual results could differ materially from what the company projects today, so please refer to its most recent 10-K and 10-Q filings for a more complete description of factors that could affect these projections.

The company does not undertake to publicly update forward-looking statements, whether as a result of new information, future events or otherwise. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. Regarding any non-U.S.

GAAP measures that may be discussed during the call and from time-to-time by the company's executives in discussing the company's performance, please visit the company's website, www.molsoncoors.com, and click on the Financial Reporting tab of the Investor Relations page for a reconciliation of these measures to the nearest U.S. GAAP results.

Also, unless otherwise indicated, all financial results the company discusses are versus the comparable prior year period and in U.S. dollars. Now I would like to turn the call over to Peter Swinburn, President and CEO of Molson Coors..

first, weak consumer demand, which we expect to be exacerbated by the long-term impact of the severe flooding in May; and second, the growth of the low-price value segment.

In the third quarter, Coors Light global volume, including our proportional percentage of MillerCoors volumes, decreased approximately 1% versus a year ago due to underperformance in Canada and the U.S., and we are implementing plans to reverse the trends in these markets.

Meanwhile, Coors Light grew more than 15% in the United Kingdom and much faster in Latin America, and Coors Banquet grew share in both U.S. and Canada.

Volume for Carling, the #1 brand in the United Kingdom, declined in the quarter, as we cycled unusually warm weather a year ago and felt the after-effects of some aggressive World Cup competitive pricing noted in the second quarter. Our Carling and the overall share trends in the United Kingdom improved in the second quarter to the third quarter.

And we still expect to see overall share growth in the second half of the year. Our Europe above-premium portfolio continued to grow strongly, led by Coors Light and Doom Bar.

Staropramen volume in Central Europe, outside of the Czech Republic, also continued its growth trajectory, and additionally, the brand achieved strong growth in the international markets of Germany and the United Kingdom. In the U.S., pretax earnings increased nearly 3% in the quarter, driven by positive pricing, sales mix and cost savings. The U.S.

business has not recovered as quickly as we had hoped, but we were able to grow our above-premium brands.

Premium and Premium Light beers continue to underperform the overall market, but Miller Lite held share of its segment on the strength of its Original Lite package redesign, which now extends to Canada's bottles, aluminum pints and secondary packaging.

In Canada, our termination of the distribution rights to the Modelo brands early this year drove more than 2/3 of the decrease in constant currency earnings in the third quarter. During the quarter, we've also resolved our dispute with SABMiller regarding the Miller brands in Canada.

As a consequence, we will no longer distribute these brands after March next year. In above premium, Coors Banquet delivered strong volume and share growth, as did our Creemore craft brand. The combined Coors Light and Banquet brand family grew market share from a year ago.

Canada financial results also benefited from substantial cost savings, higher net pricing and positive mix versus a year ago. Our Europe business grew earnings, despite the ongoing negative impacts of the floods in Serbia, Croatia and Bosnia earlier in the year.

Industry volume was down 6%, with the floods occurring in some of our highest share Europe markets, therefore, just proportionately affecting our business. Nonetheless, our overall share declined only slightly in the quarter, and we grew share in Croatia, Romania and Hungary.

On a year-to-date basis, our Europe business has held share, despite the impact of the floods. Our International business continued improving its top line performance by growing volume and net sales of double-digit rates in the quarter. Coors Light continued to grow at strong double-digit rates in Latin America, and volume more than doubled in India.

Now I'll turn it over to Gavin to give third quarter financial highlights and a perspective on the fourth quarter.

Gavin?.

$1.06 billion of operating cash flow and $55 million of net deductions, mainly $63 million of cash received for the accelerated termination of the Modelo joint venture in Canada, which was partially offset by cash used for restructuring activities. Investing cash flows included $196 million of capital spending.

Our underlying free cash flow included $1.05 billion of cash distributions and $1.1 billion of cash invested in MillerCoors, along with $5 million of positive adjustments from MillerCoors' cash payments for special charges and investments in businesses.

Total debt at the end of the third quarter was $3.45 billion, and cash and cash equivalents totaled $722 million, resulting in net debt of $2.73 billion, which is $422 million lower than at the beginning of the third quarter and $753 million lower than a year ago. Our 2014 guidance is unchanged from last quarter in the following 6 areas.

Although we are not changing our 2014 underlying free cash flow target of $775 million, plus or minus 10%, we currently expect our result for the year to be in the upper half of this range, that is between $775 million and $850 million. Our capital spending guidance is approximately $315 million.

Consolidated net interest expense is approximately $135 million. We expect defined benefit pension expense of approximately $35 million and cash contributions of $60 million to $90 million, including our 42% share of MillerCoors expense and cash.

Corporate MG&A expense of approximately $110 million, and we anticipate our 2014 underlying effective tax rate to be in the range of 12% to 16% and the other low end of our long-term range of 20% to 24% next year, assuming no further changes in tax laws, settlement of tax audits or adjustments to our uncertain tax positions.

In 2014, regional cost outlook in local currency, we now expect international cost of goods sold per hectoliter to decrease in a mid-single-digit rate for the full year, driven by geographic mix and foreign currency movements. Previous guidance was for a low single-digit increase.

We continue to expect MillerCoors and Canada cost of goods sold per hectoliter to increase to the low single-digit rate for the full year and Europe to decrease with a low single-digit rate. So at this point, I'll turn it back over to Peter for outlook, wrap-up and the Q&A.

Peter?.

Thanks, Gavin. We continue to drive our strategy of building our core and above-premium brands and increasing sales for our innovation pipeline. In the U.S., we continue to migrate our portfolio to the high end, and new launches, like Redd's Wicked Apple, are helping to drive positive mix and an NSR per hectoliter growth.

We're in the process of changing all the primary and secondary packaging on Miller Lite to the Original white look that has worked so well on the can. And by early 2015, we will extend the redesign to every consumer touch point.

Coors Light saw a new creative in the period, which brought the breadth of brand closer to the Rocky Mountain Cold Refreshment proposition. We are continuing with our business transformation initiative, and we expect this initiative, combined with brand investments, to drive significantly higher MG&A expense in the fourth quarter versus 2013.

Looking to the fourth quarter in Canada, the termination of our arrangement for the Modelo brands will continue to negatively impact our comparative profit performance by approximately USD 4 million. In core brands, Molson Canadian is now loading out the next chapter of the Beer Fridge campaign, which leverages our NHL partnership.

Early in 2015, Coors Light will see more retail activity and new advertising as part of our effort to turn around our largest brand. In above-premium, consumer demand remained strong for Coors Banquet, recently relaunched Molson Canadian Cider and newly launched Mad Jack Apple Lager.

During the third quarter, we agreed to extend our partnership for the marketing and distribution of the Heineken and Strong Brew brands. And starting in January, we will also be selling the rest of their top-end import brands, including Dos Equis, Tecate, Sol, Moretti and Desperados.

In Europe, in the fourth quarter, we will be increasing market investment to further strengthen our share position. Carling is being supported with heavyweight advertising like consumer promotional activity. Coors Light will be concluding its successful advertising-led ice bar activity.

The Sharp's portfolio will continue to be expanded through new beer styles and Jelen will be supported by the launch of a new creative platform in Serbia. Despite weak consumer demand in Central Europe, our team continues to improve our brand health and sales execution.

Our International business plans continue to invest to drive strong growth and make additional progress towards its goal of achieving profitability by 2016. In the fourth quarter, across all of our businesses, we anticipate higher brand investments in local currency.

And at today's rates, foreign currency will be a significant headwind, primarily in Canada. Finally, here are the most recent volume trends for each of our businesses early in the fourth quarter. In the U.S. to October 25, STRs decreased to the low single-digit rate. In Canada, for all of October, they were up high single digits.

Excluding the Modelo brands last year, our Canada STRs in October increased a low double-digit rate due to our switch to the Gregorian calendar, which includes 3 more days in the period this year versus last year.

Our October sales volume in Europe increased at a high single-digit rate, primarily due to the change in the Gregorian calendar in the U.K. On our international sales volume, including royalty volume, increased to the double-digit rate.

As ever, please keep in mind these numbers represent only a portion of the current quarter and trends could change in the weeks ahead.

To summarize our discussion today, our third quarter results were impacted by weak consumer demand in our core markets, higher marketing spending, the loss of the Modelo brand's income Canada and unfavorable foreign currency movements. On a U.S. GAAP basis, we also had the impairment of the Jelen and Ožujsko brands in Europe.

Despite these headwinds, we continue to build a stronger brand portfolio, deliver value-added innovation, invest in our core brands and increase our share of the premium. We remain focused on the fundamentals of our business. We have leading brand position in the world's most profitable beer markets.

We are improving the efficiency of our operations, and we are successfully combining our distribution muscle with our proven ability to innovate and grow both large and small brands.

This strategy is delivering expanded gross margins, positive pricing and sales mix and cost reduction, along with steady, strong underlying EBITDA and cash returns to shareholders. On a more personal note, with my retirement at the end of the year, I wanted to express my sincere appreciation for your interest in Molson Coors Brewing Company.

It's been my great pleasure over the past 6.5 years to lead the team here and to get to know all of you.

As I wrap up my final earnings conference call, I want to assure you that my transfer of leadership to Mark is progressing smoothly, and I'm confident that he and the team here will continue to drive our growth strategy and our path model through the organization, all with a goal of enhancing long-term shareholder value.

Now before we start the Q&A portion of the call, a quick comment. As usual, our prepared remarks will be on our website for your reference within a couple of hours this afternoon. Also, at 1 p.m.

Eastern Time today, Dave Dunnewald will host a follow-up conference call, which is an opportunity for you to ask additional questions regarding our quarterly results. This call will also be available for you to hear via webcast on our website. So at this point, Jonah, we'd like to open it up for questions, please..

[Operator Instructions] Your first question comes from Judy Hong with Goldman Sachs..

So I guess, my first question is just a little bit more color around Canada. It looks like the year-to-date volume, obviously, was relatively weak, but if you exclude the profit impact from the loss of Modelo business, it looks like your profit eggs [ph] is actually trending more positively. So I just wanted to understand how sustainable that is.

It also looks like price mix was up 3% in the third quarter, which was also better than what we've seen. So can you just also talk about what's driving that improvement? And then the October number, I know there's a timing change with the Gregorian calendar.

But just -- it also looks like maybe it's a better number than what we've seen, even adjusting for that calendar change.

So can you just talk about the October performance in the context of what we've been seeing in Canada?.

Okay. Judy, I'll give Stewart a bit of thinking time, and yes, he makes a note of all those questions. But just generally, I think as far as Canada is concerned and the whole business is concerned, I mean, what you're seeing, I think, is just a continuum of what we've experienced here in Europe.

Overall, nothing much has changed in the macro environment. But as we signaled in Canada, I think there's a number of things we are doing in the revenue management space, in the cost savings space. But overall, the market remains much the same, as we've experienced for the first half.

Stewart, do you want to pick up the detail on the -- on Judy's questions?.

Yes, sure. Thanks, Peter. So Judy, yes, look, looking at the third quarter, I mean, the biggest impact on the quarter was, as you cite, Modelo. If you remove Modelo, then the factors that really contributed to the negative were much higher spending around marketing in Q3. We called that out last quarter.

And that's just due to phasing during the year, and that would've been also overcoming higher-than-expected -- oh, sorry, lower-than-normal incentive comp in Q3 of last year. So I'd say, yes, overall, results were positive. I think what we were most pleased about was the results at the gross margin line.

Having said that, we still face the volume challenge, and that is the area that we're faced in our business. And in terms of your point about sustainability, volume will be important for us looking ahead.

From a price mix perspective, very positive quarter, about half of that was driven by price and about half by mix, and with respect to October volumes, if you strip out the extra days, then the trends aren't dramatically different than they were in the third quarter.

Does that help?.

That helps. On the price mix side, Stewart, just -- I know you've made some efforts in introducing some of the products in the high end.

But just any granularity in terms of that 3% sort of price-mix combination? How sustainable is that piece?.

Well, I mean, I'll just tell you the drivers of mix. I'm not going to comment on what the future looks like, but the drivers of the positive mix have been our driving harder against the above-premium space. That's the strategy for our company and that is something that, of course, we are driving harder in Canada.

Second of all, we have been focused around our revenue management and have been pretty clearly focused on the returns of various promotions. So the combination of those things is what's driven the positives. Having said that, I mean, the environment, as a whole, is still very competitive..

And then I guess, Gavin, just the free cash flow generation clearly coming in at the high end of your expectation, wanted to just get your view on the timing in which you get to sort of your leverage target. I think before, you said, by year-end this year or early next year. It seems like maybe that timing is getting a little bit expedited.

And then just in the context of thinking about capital allocation, I know we've asked this question in the past. But with the stock price having run up year-to-date, how do you think about sort of cash return versus investing in the business versus acquisition? Just any thoughts on any changes to that strategy..

Well, the short answer to your last question, Judy, is no, no changes to the way we look at capital allocation. We will continue to look at returning cash to our shareholders. We will continue to strengthen our balance sheet and we'll continue to look to invest behind growth opportunities, specifically behind our global brands.

So no, that won't change. What I did say in New York and I think I said it again in Boston was that we expect to get back to our StarBev pre-acquisition leverage ratios in the earlier part of next year.

And at that point in time, obviously, share buybacks come back on to the table as a consideration set, and we'll make whatever decisions we think are in the best interest of our shareholders as we go along..

All I would add to that, Judy, is whatever decisions we make will go through our path model, and that will drive the consideration as to how we allocate our capital..

Your next question comes from Michael Steib with Credit Suisse..

Can I switch to the U.S., perhaps? In the press release this morning, you highlighted higher expenses relating to the business transformation initiative. I wonder if you could give us a bit more background on your initiatives there and also whether these expenses were higher than what you had initially planned.

And then following on from the earlier question, do you see any opportunities in the U.S. to pursue sort of bolt-on acquisitions in the above-premium segment? Clearly, your biggest competitor there is doing exactly that..

I'll let Tom pick up on the detail. But as far as business transformation is concerned, obviously, we're not going to talk in detail about how much expenditure we've got in the fourth quarter. Just to say that this is a program that's already been in the organization for a couple of years. It's driven out significant cost savings.

We do have a lot of money to spend on infrastructure, specifically systems, and you're seeing the beginning of that coming through in the fourth quarter.

But Tom, do you want to talk to the detail of business transformation and also the last question on the above premium?.

Yes. Thank you, Peter. So you really hit the question. That portion of business transformation that has increased and will also increase in the fourth quarter is around systems of business process and systems. These are systems investments that we have planned, and now those expenses are coming through. Not much more to say on that.

In terms of bolt-on acquisitions, it's very true that many craft brewers are on the market right now and increasingly so, and we're very engaged in a number of those discussions. We're actively looking at those that would create incremental shareholder value, but it's also no secret that those valuations are extremely high right now..

Thanks, Tom. And again, just to reemphasize on that. I mean, we have, as you know, over the years, had some very successful bolt-on acquisitions, such as Doom Bar and Cobra and Creemore and so on. But the same -- we'll use the same discipline as we talked, that Gavin talked about earlier in terms of capital allocation.

If we can't get a return that we want on any acquisition, big or small, then we will not undertake it..

Your next question comes from the line of John Faucher with JPMorgan..

Wanted to follow up on the European business and sort of trying to decipher the geographic mix, as you look at the better performance in the U.K.

relative to Central Europe and how much -- what's the real sort of pricing environment look like in these markets? And how long do you think you'll continue to benefit from that mix benefit as we look at the -- some of the structural problems involved with the Central and Eastern European business?.

All right, okay. Well, I'll pass it on to Mark in a minute. But just as a headline, we don't deconstruct the yield of business by country, so we can't go into that detail.

But Mark, do you want to give an overall flavor about pricing?.

Sure. I mean, I think what I would do is probably contextualize this with just the summary through the third quarter overall. Sluggish industry demand, we saw across all of the markets that we operate in. Consumers really kind of contracting from a spend perspective. So all markets were negative from an industry shipment perspective.

What we are seeing is, within many of the markets, a shift from core and premium towards the value segment, which I think we've already called out in relation to a couple of our markets in particular. We've had the benefit of the U.K. performing strongly that, again, we've flagged in a couple of our quarterly reports.

But beyond that, I think the pricing environment will be linked very directly to the pace of economic recovery within Europe. And I think everybody in the call will be aware that Europe has got some pretty fundamental macro challenges. As we see those improve over time, then I think the pricing environment will improve..

Great. And if I can just ask a follow-up on the -- to Judy's question on the Canada piece, related to the calendar shift. From high single digits, let's say, down to sort of like mid-singles, that's a pretty big percentage gap for 3 days.

So can you just sort of help us with the math? And when did those 3 days -- I apologize for not knowing this, when did those 3 days sort of come out?.

So John, in terms of when the specific days come out, I'd to go back to the calendar, have a look. Maybe Dave can pick that up in the follow-up. I can't give you too much detail on the calculation, only to say that I've had the benefit of seeing all the numbers.

And I can just tell you that the trends in total don't look dramatically different than what we saw in Q3. So that's really the best advice I can give to you..

I think you're just going to have to trust us on that one. If you look at the like-for-like comparison, shaking out the extra days and you take out the Modelo volume, then Canada is down low single digits..

Okay, great.

But I mean, wouldn't that be better than Q3?.

Well, just -- I mean, look, roughly here, if you got 28 days last year and you got 3 extra days this year, I mean better than 10% right there, so rough order of magnitude, but stick with my guns..

Yes. I think what you're looking -- this is Dave Dunnewald. John, I think what you're looking at is a straight reported STR number in the third quarter for Canada was down 5.9%. That's not what Stewart's talking about.

He's saying if you look at more of an apples-to-apples view in the third quarter, then take out the Modelo brands, in other words, you'd be down at a low single-digit rate and that's what we're -- we are also seeing low single-digits on an apples-to-apples basis in October..

Your next question comes from Ian Shackleton with Nomura..

The brand write-offs that you've announced today in Europe, I guess the question is around that. I mean, firstly, why now? I think traditionally, we tend to have these things more at the end of the year.

But also, does that mean that all the other brand in StarBev, you're pretty happy with in terms of the carrying value in brands and goodwill?.

So I'll let Gavin speak to the timing, Ian. But yes, I think your assessment is pretty much spot on. Obviously, we've not taken impairment on the overall business, so that would indicate that there's a balancing factor here. We do have a specific issue with Jelen, to a lesser extent, Ožujsko.

It has been driven, as I said in the script, by generally weak consumer demand, which everyone is aware of. That has moved consumers towards value brands, so it's impacted on -- in that way. And also, the floods really have hit overall volume.

And we try to make an assessment of what that impact will be going forward as well, so we thought it judicious, if you like, to make sure that we put those impairments into the books now.

What I would say is that if you look at both brands within their category and you look at brand health -- excuse me, the brand health of Ožujsko is extremely strong, and it's gaining market share in its category.

And Jelen, equally, with the new advertising that would be coming out in the -- in this -- the end of this year, brand health looks healthy. But the overall macro environment is such that we thought it the right thing to do to take an impairment on the brands.

Gavin, do you want to?.

Yes, Ian, we are required to test up goodwill and brand values on an annual basis, and we do that as at the 1st of July, beginning of our third quarter. So we have tested all our brands. We've tested our -- we've tested Europe and Canada, and these are the 2 brands that required an impairment, based on their testing..

Good. And just a quick follow-up, I think in your update for the guidance for full year on inputs and COGS, I'm not sure you mentioned the U.S.

Is there any change in thinking there?.

No, there was no change in the thinking on the U.S. And again, it was increased low single-digits last year -- last quarter, and it's remained at increasing low single digits..

Your next question comes from Bryan Spillane from Bank of America..

Peter, I'm sure the thing you're going to miss most when you step down is just taking all of our questions..

I will miss it immensely, Bryan..

A couple of questions. First, in terms of the price mix in Europe, I'm assuming -- I'm inferring from your comments that most of the benefit in price per hectoliter was mix and there really wasn't much rate.

Is that right?.

That's correct..

Okay. And then can you give us an update or a progress report, I guess, on the turnaround of -- or re-acceleration efforts for Coors Light in Canada? I'm not sure if you mentioned where -- what Coors Light volumes were in the quarter. But just trying to get a sense for how you've progressed in that turnaround..

Yes. Again, I'll let Stewart give you the detail in a second. But the reality is that we looked at getting new creative in for the third quarter and what we came up with wasn't satisfactory. So we've had to go back to the drawing board on the creative. We're determined to get it right.

That new creative will be hitting the streets in the beginning of 2015. So we've had a bit of a hiatus, if you like, in terms of our plans.

But Stewart, do you want to talk specifically about the third quarter?.

Yes, sure, Peter. I mean, Bryan, if you look to the third quarter, Coors Light was down mid-single digits. Peter summarized it in exactly the right way. And we had 2 problems of -- one was a big, emotional connection, be creative with our consumers and our in-store execution.

I think the second part, the in-store execution, we've got that well in hand now. The creative appears to be going in the right direction. And probably the third thing to just think about here is that there is a cannibalization impact from Coors Banquet, which is now a national distribution.

If you took Coors Banquet and Coors Light as a combined set of brands, then those 2, in total, help share in the quarter. So more work to be done in Coors Light, but Coors Banquet, performing very well..

So with the creative not being where you were looking for, does it mean that you actually spent less on Coors Light media than you would've even ordinarily spent?.

No. I mean, we kept our creative -- we have enough creative materials to use. We've used some of our functional advertising around vented can, for example. So no, the answer is we haven't substantially changed that..

Okay. And then just one last one related to Canada. It just -- the overall industry, just how does your adjusted volume performance compared to the industry growth rate? I wasn't sure if you had given an industry growth rate..

So we lost just under 0.5 share point in the quarter..

Industry was down 1.7, Bryan..

Your next question comes from Rob Ottenstein with Evercore..

We don't get a lot of chance to ask Peter Coors questions, so I hope this is all right. I was just wondering if, perhaps, you could give your big picture perspective on the company, on the beer industry, how -- and how you see yourself positioned in the industry and what you're most excited about.

I know that's kind of very broad and very loose, but just wanted to get your general thoughts and the kind of message you'd like to get out there..

Yes. Rob, in fairness to Pete, he literally has just dropped in, so I don't think it's fair dropping that question on him. But I think that the view of the market, that the view of the industry is as we -- you and I have talked about on many occasions. I don't think there's much more to add on that..

Okay. Well, I'll ask a much more mundane question then. And pardon me, if I missed this earlier on. I think you called out a reversal of a reserve in Europe, can you give us any details on that and the size of it..

Sure..

Rob, it's Gavin here. There was a provision that we recorded when we bought StarBev in 2009, and this was regards to a regulatory review that we recorded as liability upon acquisition. During the third quarter, we were excluded from that, filing the reports, and so we released the full reserve.

And if you look at the decrease in Europe MG&A, which was around $11 million, it accounted for roughly half of that..

So $5 million to $6 million?.

Yes, roughly half..

Your next question comes from Andrew Holland with SG..

I was actually also going to ask about that reversal. I think we've now got the size of it.

Can you just tell us what the nature of it was, please?.

No, we don't get into the detail of regulatory issues that we have on a country-by-country basis. Suffice to say, we've resolved the issue. The reserve's no longer required, and we released it..

Can you tell me which country it related to?.

No, we don't get into that level of detail..

Okay. Let me try this one. Your -- just looking at the results of the international division, the size of the losses. Just again, the 9-month figure slightly less than it was this time last year, but it looks as if it's still going to be negative for the full year.

Can you give us an idea of when you might hope for your international division to breakeven, please?.

I'll let can Kandy talk about the specifics in the third quarter, but it's the -- any small movement in expenditure really affects the quarter disproportionally, because it's such a small business. But Andrew, we've been pretty clear over the last few years that we expect this division to breakeven. It should be in profit by 2016.

Kandy, do you want to talk specifically about the third quarter impacts?.

Sure. So Andrew, in the third quarter, we've -- we're actually quite pleased both quarter and year-to-date performance. As you see, our top line has grown 20% plus, specifically Coors Light has grown extremely strong, double digits.

And the difference in just the third quarter, essentially because of increased marketing spend, as we're driving [ph] that top line growth. The International businesses continues to be well on track to deliver the commitment that Peter just said, which is to be breakeven and in profit by 2016..

And is that going to require you to rethink your marketing support then? Because there's quite a big gap between what the run rate is now and what breakeven would imply..

No. I don't think it'll require us to rethink. I think the main thing is our top line grows 20%. It enables us -- if you look at our gross profit, that's also growing in line with our top line. So that enables us to continue to bridge that gap..

[Operator Instructions] Your next question comes from Tristan Van Strien from Deutsche Bank..

Two questions, if I may. The first one is on your Latin American performance, which was pretty good. Can you just give us a bit of color on that and how things are going in Mexico and if you entered any new markets in that region? And the second thing is -- second question. I guess, you solved the issue in Canada with SABMiller.

How secure do you feel your JV in the U.K.

with Grolsch? And do you feel that is in danger at all in the coming year or so?.

Right. Well, I'll let Kandy answer the question on Latin America in a second. As far as the issue with Grolsch is concerned, no, we have total control of that brand in the U.K. It's not a JV. It's a different setup altogether. So whatever happens with the brand largely is down to -- is up to us. So it's well within our limit as to what happens with it.

Kandy, do you want to talk about Latin America?.

Sure. So we're excited with the progress of Coors Light in Mexico, in Central America and in the Caribbean, which are the main markets that we are in.

This is based on continued impact over the last couple of years of our Rocky Mountain Core Refreshment positioning, working with our partners to execute brilliantly in the markets as well as a lot of in-store efforts, which truly makes the brand disruptive.

In terms of your question on the new markets, the only new market we have in 2014 versus 2013, which is up significant, is Australia, which we added, really, end of December last year. So it's been the first 8 months, and we're extremely pleased right now with the progress on Coors Light.

As you recall, Coors there for legal reasons so far with our partner, Coca-Cola Amatil, over there..

Okay.

Just while you're on the line, in terms of India, your growth in Coors Light, is that mostly in Bihar state or you've expanded that as well?.

In India, we don't have Coors Light. We have local brands. It's the local brands. And our business, as mentioned in Peter's comments, has doubled. But we are basically in Bihar. We export a couple of states, but essentially 90 plus percent of our business is in Bihar..

[Operator Instructions] Your next question comes from Mark Swartzberg with Stifel, Nicolaus..

A couple questions. Firstly, Gavin, just a clarification, if you can, on share repo.

Any sense of when you might actually communicate with us on that, given that you're going to be at that low leverage level early next year?.

Mark, I'm going to give Gavin a rest, because I think he's fed up of answering these questions. No disrespect to you, but we really can't tell you anything more than we've told you. We'll talk to our board as to how we allocate our capital. It's an ongoing conversation.

We'll decide the best allocation between bolt-on acquisitions, dividends and share repurchase. But it is on the agenda. We've been clear about that. And when we got a decision to announce, I promise you'll be the first to know..

Fair enough. Fair enough, okay. And then a question on Canada, and I don't know, Stewart, if perhaps you're the person. But can you update us on the sector side to look at the cost structure.

Obviously, you're not going to give us a number, but just how that exercise is going? And when might we hear of you on the potential for incremental savings in that market?.

Stewart, you probably are the right person to answer the question on Canada.

But just in terms of incremental savings, I mean, what we flagged are the 2 -- we've given you an overall cost-savings target for the business and we said that we'll be in the high end of that in the first couple of years and that takes into account what we planned to do in Canada.

But Stewart, do you want to give a progress report?.

Yes. Look, that makes a lot of the sense, Peter. Yes, Mark, I mean, the cost -- our cost -- the program is going well, that we've been attacking both the aspects of our supply chain and COGS, and at the same time, we've been pushing very harder on our MG&A.

And I think if you run some benchmarks on us versus competitors, you'll start to see that showing up in our results. So it's really all the detail I can give you, other than to say, we've got a team that's actively focused on it and delivering results..

My understanding is the $40 million to $60 million for the total company includes a certain view for Canada. But with your new leadership there, Stewart, there's potential to add to that number as you look at the structure.

Is that a fair understanding?.

Mark, if I could take that, our guidance that we've been fairly consistent on since June of last year in New York was $40 million to $60 million for the next 4 years or so, with us being at the top end of that for the first 1 or 2 years, as Peter said. Last year, a lot of those cost savings came out of Europe.

For the next 1 to 2 years, most of those cost savings are going to come out of Canada. So everything that Stewart is doing is in that guidance number we've given you..

[Operator Instructions] There are no further questions at this time. I'll turn the call back to the presenters..

Okay. Well, thank you very much, everybody. You'll have the pleasure of listening to Mark and exit the exercise for the fourth quarter, and I'm sure he will give you a much more cogent and better answers than I've been able to do for the last 6.5 years. Thank you very much, everybody..

This concludes today's conference call. You may now disconnect..