Molson Coors Beverage Company · NYSE:TAP
Molson Coors Beverage — Molson Coors Brewing Company — Investor Day (December 2010)
71 slides from Molson Coors Beverage's investor day presentation, Dec 1, 2010
Slide 1: Molson Coors Brewing Company London Analyst/Investor Meeting
Molson Coors Brewing Company London Analyst/Investor Meeting December 1, 2010
Slide 2: Peter Swinburn, Chief Executive Officer
Peter SSwinburn P i b Chief Executive Officer M l Molson Coors C Brewing B i CCompany 2
Slide 3: Forward-Looking Statements/US GAAP Reconciliations
Forward‐Looking Statements/US GAAP Reconciliations Forward‐Looking Statements: This presentation may include estimates or projections that constitute “forward‐looking statements” within the meaning of the U.S. federal securities laws. Generally, the words “believe,” expect,” intend,” anticipate,” “p
Slide 4: Today's Agenda
Today’s Agenda • Peter Swinburn, CEO, Molson Coors • Stewart Glendinning, CFO, Molson Coors • Mark Hunter, CEO, Molson Coors UK • Steve Ellis, Strategy Director, Molson Coors UK • Chris McDonough, Marketing Director, Molson Coors UK • David Heede, Finance Director, Molson Coors UK • Closing Remarks
Slide 5: Molson Coors Brewing Company Overview
Molson Coors Brewing Company Overview • Brewing Heritage: 350 years of brewing heritage with Molson and Coors families retaining significant ownership • Extraordinary Brands: A long‐standing commitment to building strong brands that excite and inspire beer drinkers • Leading Innovations: A passion f
Slide 6: Performance Profile by Market - 2009
Performance Profile by Market ‐ 2009 * US volumes represent MillerCoors at 42%. * US nett sales l representt MillerCoors Mill C att 42%. 42% ** Represents the % of pretax underlying profit from our 3 major markets and excludes our Corp / MCI segment results. 6
Slide 7: Expanding Global Footprint
Expanding Global Footprint MCBC Markets by Size, CAGR & Profit Pool Russia China • 442 M/HL • 103 M/HL • 7.5% CAGR (‘09-’12) • 5.5% CAGR (‘09-’12) • $1.0B Profit Pool (EBIT) • $1.8B Profit Pool (EBIT) UK Canada • 50 M/HL • 23 M/HL • -0.5% CAGR (‘09-’12) • 0.5% CAGR (‘09-’12) • $0.5B Profit Pool (EBI
Slide 8: Strategic Direction
Strategic Direction Drive sustainable, long‐term shareholder value: • Investing in a portfolio of extraordinary brands • Driving innovation at a packaging and brand level • Ensuring rigorous cost management discipline • Applying a strong, disciplined process to all our cash‐use decisions with strict
Slide 9: Investing in a Portfolio of Extraordinary Brands
Investing in a Portfolio of Extraordinary Brands • Drive value and volume in US premium lights Coors Light taking share and outperforming market Miller Lite – new “Man Man Up Up” ad campaign and vortex innovation improving the trend MGD 64 maintaining share in its category, leveraging g g firs
Slide 10: Investing in a Portfolio of Extraordinary Brands
Investing in a Portfolio of Extraordinary Brands • Expand & Innovate UK Portfolio Continue Cobra expansion Introducingg Blue Moon Leverage new Modelo partnership Expanding category: BitterSweet Partnership Adding excitement through new packaging and brand innovations • Improve Molson Trade
Slide 11: Driving Value Enhancing Innovation
Driving Value Enhancing Innovation Molson Coors is focused on innovation: • Innovation = Consumer Value • Innovation = Differentiation • Increases drinker loyalty and adds excitement • Provides competitive advantage • Grows brands and margins • Drives top‐line growth • Two main categories of innovat
Slide 12: Rigorous Cost Management Discipline
Rigorous Cost Management Discipline • Cost savings critical for brand momentum and L‐T growth • Increased I dCCanadad and dUU.K. K brand b d investments i • U.S. brands: initial signs of improvement • Near term focus: deliver existing commitments • RFG2 • MillerCoors cost reductions • Commitment: at
Slide 13: Well Positioned to Grow & Shareholder Focused
Well Positioned to Grow & Shareholder Focused STRATEGY OBJECTIVES •Maintain or grow market share Brands & Innovation = •Increase revenue per barrel Consumer Value, Value Growth D li •Deliver iinnovation ti ththatt d drives i Opportunities brand growth •Extend global footprint SHAREHODLER VALUE •Stro
Slide 14: Stewart Glendinning, Chief Financial Officer
Stewart Glendinning Chief Financial Officer Molson Coors Brewing Company 14
Slide 15: Value-Driving Financial Strategies
Value‐Driving Financial Strategies • Molson Coors financial performance update • Financial strategies to drive sustainable, long‐term value for shareholders: Cost savings update Strategies S i to generate substantial b i l cash h and d strengthen h our balance sheet, High‐return cash‐use prior
Slide 16: Performance Highlights - 2010
Performance Highlights – 2010 • YTD 3Q: Positive pricing and cost reductions drive earnings growth and improving momentum, despite challenging volume environment • 3rd Q: Q accelerating l ti momentum, t margin i expansion i Global underlying after‐tax income(1): +12.3% Global underlying pretax i
Slide 17: Molson Coors Cost Reduction Programs
Molson Coors Cost Reduction Programs Annual Cost Savings 2005 2006 2007 2008 2009 2010 Total (US$ millions) YTD RFG2 (‘10‐’12): $150mm goal ‐‐ ‐‐ ‐‐ ‐‐ ‐‐ 55 55 Resources for Growth (‘07‐’09) ‐‐ ‐‐ 91 87 92 ‐‐ 270 Merger synergies (‘05‐’07) 59 66 55 ‐‐ ‐‐ ‐‐ 180 Pre‐existing programs (‘05‐’06) 22 38
Slide 18: RFG2 - Three-Year Goal: $150 million
RFG2 – Three‐Year Goal: $150 million RFG2 Annual Cost Savings 2010 2011 2012 Total ((US$ millions)) Annual Delivery Targets 62 48 40 150 • RFG2 program: $150 million of new savings, savings 2010 2010‐2012 2012 • $55 million delivered YTD through 3rd Q 2010 • Significant reductions in logistics, wast
Slide 19: MillerCoors Cost Reductions on Target
MillerCoors Cost Reductions on Target Annual Cost Savings 2H 1H 2009 2010 Total (US$ millions) 2008 2011 MillerCoors Synergies ‐ Delivered 28 245 172 ‐‐ 445 MillerCoors Synergies – Anticipated ‐‐ ‐‐ 28 27 55 Total 28 245 200 27 500 • On target to deliver $473 million of cumulative synergies by year
Slide 20: Free Cash Flow Update
Free Cash Flow Update 2010 Underlying Free Cash Flow Goal: $900 million, +/‐ 5% Underlying Free Cash Flow (in US$ millions) 39 Weeks Ended September 25, 2010 U.S. U S GAAP: Net Cash Provided by Operating Activities $ 725.9 725 9 Less: Additions to properties (77.7) (1) Less: Investment in MillerCoor
Slide 21: Cash Use Priorities Drive Long-Term Value
Cash Use Priorities Drive Long‐Term Value • YTD 3rd Q 2010: Used free cash for seasonal working capital and to settle high‐risk Brazil indemnities, buy controlling interest in China JV, increase dividend • Potential high‐return cash uses Growth opportunities • Selectively considered and brand‐le
Slide 22: Financial Performance, Strategies
Financial Performance, Strategies • YTD 3rd financial performance: Positive change in momentum • Progress against our strategic priorities • Meet all cost reduction goals – MCBC and MillerCoors • Grow top line, bottom line and cash • Strong, disciplined process for all cash uses to grow long‐ term
Slide 23: Mark Hunter, CEO Molson Coors UK & Ireland
Mark Hunter Chief Executive Officer Molson l Coors UK & Ireland l d 23
Slide 24: Our UK and Irish business is a scale business
Our UK and Irish business is a scale business with complete coverage of the UK and Irish markets. Within the UK we are the largest brewer – including contract brewing – and have a No.2 own brand share of market … BREWERIES 1.Burton‐on‐Trent 2 Tadcaster 2.Tadcaster • Founded in 1777 as Bass 3.Alton M
Slide 25: The UK and Irish Beer Market and Economy Remain Extremely Challenging
The UK and Irish Beer Market and Economy Remain Extremelyy Challenging g g… • Continuing underlying volume decline 17% UK volume l decline d li 2005‐2010 2005 2010 • Continuing industry overcapacity Estimated at 6 million barrels, with capacity being cut • Shift of volume to major off‐premise cu
Slide 26: Despite the challenging environment, consistent growth strategy
Despite the challenging environment, the UK and Irish business has a consistent and committed growth strategy introduced in 2008 and focussed on 7 growth platforms which support our enterprise focus … 1. The most admired drinks company Our Goals 2 Significantly improved financial performance 2. …. A
Slide 27: U.K. Underlying Pretax Income
Progress has been made against each growth platform to engineer an improvement in profit performance, which drove earnings growth of 48% in 2009 and profit growth of 33% for YTD 3rd Q 2010 (excluding the impact of the non‐cash pension increase) … U.K. Underlying Pretax Income* (in millions) £75 £70
Slide 28: Key Performance Driver: Value Ahead of Volume
The Key Performance Driver has Been an Absolute Focus on Value Ahead of Volume … Critical in a Shrinking Market … NSR / Barrel NSR % Change g % Change g 2004 – 2008 ‐2% ‐16% 2009 18% 6% 2010 YTD 3rd Q 12% 4% NSR = Comparable Net Sales Revenue for owned brands (excludes factored brand sales, contract
Slide 29: Managed Costs Aggressively to Grow Gross Margins
In Parallel to Our Value Ahead of Volume Focus, We Have Managed g Costs Aggressively gg y to Grow Our Gross Margins g … UK RFG £m 2005 2006 2007 2008 2009 2010 Q3YTD 2.4 9.4 9.5 18.1 33.7 20.6 Total Gross Margin 2005 ‐ 2007 2008 2009 Q3 2010 % 33.7% 32.6% 35.1% 36.2% 29
Slide 30: Progress Across All Growth Platforms
Progress is Being Made in a Sustained Manner Across All Growth Platforms … • Driving Revenue & Attacking Costs – Value ahead of volume, RFG 1 & 2 and gross margin growth. growth • Transformational Change – HUK contract brewing, Carlsberg contract brewing and SAP introduction to transform internal ef
Slide 31: Progress Across All Growth Platforms
Progress is Being Made in a Sustained Manner Across All Growth Platforms … • Amazing Our Customers – Establishment of category teams, joint business planning l and d formation f off Island l d off Ireland l d commerciall team. • A Team of Extraordinary People – Engagement growth of 14ppts to 89% in
Slide 32: The next chapter in our journey
The next chapter in our journey will focus on driving top line and market share growth via our commercial agenda and delivering improved end to end internal efficiency … 2005 – 2007 Stabilisation via cost focus 2008 – 2010 G Growth h via i value l ahead h d off volume l and d asset utilisation: ili
Slide 33: Steve Ellis, Strategy Director
Steve Ellis St Elli Strategy Director, MCBC UK & Ireland 33
Slide 34: The UK & Ireland Covers Three Distinct Markets
The UK & Ireland Covers Three Distinct Markets at Different Stages of Evolution for Molson Coors Northern Ireland On:Off trade = 50:50 Molson Coors Lager g Share 8% In 2010 Molson Coors set up direct Great Britain brand marketing & selling Deeper dive over next infrastructure few slides Republic of
Slide 35: Beer Category Continues to Decline and Lose Share
Beer Category Continues to Decline and Lose Share to Other Alcohol, However, Spending on Leisure Continues to Grow % Alcohol Consumption by Category Leisure spend ‐ £bn current prices 100 100% A t Ho me A way Fro m Ho me 90 90% 80% 70% 80 60% 50% 70 40% 30% 20% 60 10% ‘Away from home’ driven by 0% 5
Slide 36: In GB, We Operate in a Three Tier Market
In GB, We Operate in a Three Tier Market With Three Broad Customer Channels Drinks Brand 2010F Industry Distributors Retailers Owners Beer Vol1 ‘000 HLs Independent 10,000 0,000 On Trade d On Trade Wholesalers Top 10 Customers2 Multiple On = 30% Trade 14,000 Distribution Services Off Trade Top 10 Of
Slide 37: Offering Different Levels of Profitability
… Offering Different Levels of Profitability… Drinks Brand Share of Molson Distributors Retailers Owners Market1 Coors Gross Margin Independent 21% % 2x On Trade d Wholesalers Multiple On Trade 30% 1x Distribution Services Off Trade 49% 1x 1Source BBPA 37
Slide 38: Channel Mix Moving From Multiple On Trade to Off Trade
Channel Mix is Moving From Multiple On Trade to the Off ff Trade… MAT Beer Share of Retailers Volume1 Market2 “W t Led” “Wet L d” L i Leisure With FFood d 2010F 2013F Independent (6%) 21% % 20% 0% On Trade d “Wet Led” High Street With Food Multiple On Trade (8%) 30% 26% Independent Branded Conv Mult
Slide 39: The On Trade is Complicated by Different Business Models
The On Trade is Complicated by Different Business Models Drinks Brand Distributors Retailers Examples Owners Brand Owners Distributors Retailers Brand Owners & Distributors Retailers & Distributors Brand Owners & Distributors & Retailers 39
Slide 40: Customers Who Are Competitors & Suppliers Create Complexities
Dealing With Customers Who Are Competitors & Suppliers Creates Complexities Drinks Brand Distributors Retailers Owners SUPPLY KEY SUPPLY CUSTOMER COMPETE AS EACH COMPETE AS BRAND OWNERS OTHERS WHOLESALERS BRANDS Vertically Vertically Vertically integrated integrated integrated brewer brewer brewer B
Slide 41: Further opportunities to drive earnings growth
We see further opportunities to drive earnings growth … Brands Geographic expansion – Ireland & Scotland Portfolio development – to existing brands and acquiring new brands Customer Development Wetherspoons, Barracuda, etc Independent On Trade Building presence in Off Trade Innovation Ne
Slide 42: A New Market Perspective
A NEW MARKET PERSPECTIVE BUILDING INCREASED CONSUMER CONNECTIVITY WITH THE BEER CATEGORY
Slide 43: Chris McDonough, Marketing Director
Chris McDonough Marketing Director, MCBC UK & Ireland 43
Slide 44: Starting Point: Macro Consumer Trends
Starting Point: Macro Consumer Trends 1: HOME IS WHERE IT’S AT 3: GREY POWER 5: EMPOWERED CONSUMERS 7: HOLISTIC HEALTH A different conversation Think calories & ABV in product Revolutionise in‐home drinking Develop products with across multiple touch points development occasion different sensory pro
Slide 45: Our Ambition is to Unlock Category Growth
Our Ambition is to Unlock Category Growth by Increasing Penetration and Frequency 1pp increase penetration Additional one purchase trip = over 250,000 extra households per year = almost 320,000 = additional 65,504 hectolitres hectolitres more Source: MCBC Estimates based on Kantar Purchase Data Sep-
Slide 46: How We View the Market Will Impact Our Success
How We View the Market Will Impact Our Success FROM…. TO…. A richer and more diverse market A well defined market with clear perspective with opportunities to rules of engagement reinvent beer LDA – 34 year old, lager drinking, LDA +, alcohol drinking, males and males l females 46
Slide 47: Our Market Maps Will Identify Category Growth Opportunities
Our Market Maps Will Identify Category Growth Opportunities pp KEY OPPORTUNITIES Put product back at the heart Allow access to the category at different price points Bring discovery back into beer Celebrate provenance and authenticity Reconnect with key consumers Cross sell different beers Tailor pa
Slide 48: Our Brands Will Evolve to Capitalise on Trends
Our Brands Will Evolve to Capitalise on These Trends and Opportunities Dramatise product Create and Create bold, Celebrate Build Build presence theatre and ‘craft’ showcase a exciting and fun product story distribution in of whole family range of campaigns that and provenance Drive distribution in o
Slide 49: Our 5 Point Plan is Simple and Focused
Our 5 Point Plan is Simple and Focused 1 Build Carling Family 2 Drive Visibility and Availability of Coors Light and Cobra 3 Modernise and Premiumise Grolsch & Ales 4 A Relentless Focus on Innovation Drive Growth through Geographical Stretch and Building 5 Presence in Off‐Trade 49
Slide 50: Our Extraordinary Brand Model
Our Extraordinary Brand Model Provides a Framework for Our Thinking 1.Tell a compelling story 4. Deliver a unique, based on an undeniable relevant, consistent, brand truth experience 2. Live by and refuse to 5. Inspire people to compromise on our become loyal brand principles p p champions p 3. Have
Slide 51: The UK's No.1 Brand is at the Heart of Our Plans
The Uk’s No.1 Brand is at the Heart of Our Plans: Famous for Brand Firsts 1 Build Carling Family UK’ss UK 2002 Launch of Extra Cold CT PRODUC No.1 2004 Launch of UK’s 1st mid strength lager NAL CONSUMMER MEEDIA 1ST’S EXPEERIENCES UK Premiership EEXCEPTIONA London Underground iPint Buskers Live Ads 5
Slide 52: The UK's No.1 Brand Continues to Set the Bench
The UK’s No.1 Brand: Continues to Set the Bench (Past 12 Months Activity) 1 Build Carling Family SFA Sponsorship First Live Beer Ad and HD Giveaway Taste Lock Can and What’s in Your Glass Music Festivals Carlingg Cup p Launch of Home Draught 52
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Slide 54: The UK's No.1 Brand: Leading for the Future
The UK’s No.1 Brand: Leading for the Future… 1 Build Carling Family 1 BRAND REFRESH 2 NEW SUB‐BRANDS STEP CHANGE BAR AND 3 IN AISLE EXPERIENCE IN‐AISLE NEW PACKAGING 4 FORMATS 5 SPONSORSHIP FIRSTS 54
Slide 55: Building the Scale of Coors Light and Cobra
Building the Scale of Coors Light and Cobra Will Give our Portfolio Depth 2 Drive Visibility and Availability of Coors Light and Cobra 55
Slide 56: Repositioning Grolsch and Ales
Repositioning Grolsch and Ales will Drive Portfolio Depth PREMIUMISE EVERY 3 M d i and Modernise d Premiumise P i i Grolsch G l h & Ales Al TOUCHPOINT MODERNISE THE CATEGORY AND RE‐ CONNECT WITH YOUNGER DRINKERS 56
Slide 57: Putting Consumer Needs at the Heart of Innovation
Putting Consumer Needs at the Heart of Our Innovation Will Help Step Change the Category 4 A Relentless Focus on Innovation OUR AGENDA IS SHAPED BY A RELENTLESS FOCUS ON THE CONSUMER EXPERIENCE AND GIVING A CLEAR “REASON TO BELIEVE” Create an A range of beer improved for women in‐home experience Mod
Slide 58: Broadening Our Geographical Footprint
Broadening Our Geographical Footprint Provides Growth Opportunities 5 Drive Growth through Geographical Stretch and Building Presence in Off‐Trade IRELAND – Driving distribution of our core portfolio SCOTLAND – Focus on distribution by careful considered management of the Marketing mix SOUTH EAST –
Slide 59: Improving the In Aisle Experience
Improving the In Aisle Experience is Key to Winning with Shoppers 5 Drive Growth through Geographical Stretch and Building Presence in Off‐Trade 1. Clear pack price and strategy 2. Improved consumer experience i via i llayout flow and signposting p 3. Improved Before f segmentation of category to in
Slide 60: Summary: Broader Portfolio to Target Broader Consumers
Summary: Broader Portfolio to Target a Broader Range of Consumers and Occasions 60
Slide 61: David Heede, Finance Director
David D id Heede H d Finance Director, MCBC UK & Ireland 61
Slide 62: Value Ahead of Volume: NSR Growth
Since pursuing our ‘Value ahead of Volume’ strategy we have grown NSR substantially … Own Brand NSR Growth per unit ‐ Mix 2005 ‐ 2007 2008 – Q3 2010* Price ‐1% +24% Mix ‐2% +9% Total ‐3% +33% Own Brand NSR Growth per unit ‐ Channel 2005 ‐ 2007 2008 – Q3 2010* Independent ‐2% +22% On Trade Multiple O
Slide 63: Relentless Focus on Managing Input Costs
We have retained a relentless focus on managing our input costs so that top line growth is converted into improved gross margins … Total Cost of Goods Sold Growth 2005 – 2007 2008 – Q3 2010* Total ‐8% +4% Total Gross Margin 2005 ‐ 2008 2009 Q3 2007 2010* % 33.7% 32.6% 35.1% 36.2% * YTD 63
Slide 64: Relentless Focus on Managing MG&A Costs
We have retained a relentless focus on managing our MG&A costs so that top line growth is converted into improved bottom line profit … Total Marketing, General & Administrative Overhead 2005 – 2007 2008 – Q3 2010* 2010 Base ‐1% ‐1% Growth e.g. Ireland ‐ +3% / Cobra etc Business ‐ +2% Transformation
Slide 65: Non-Cash Defined Benefit Pension Expense Has Masked Underlying Profit
The non cash Defined Benefit pension expense has masked underlying profit performance … (GBP in millions) U.K. Underlying Pretax Income* 75 75 70 70 65 65 60 60 55 55 50 50 45 45 40 40 35 35 30 30 Q3 2009*1 Q3 2010*1 2005 2006 2007 2008 2009 Underlying Pre Tax Underlying pre tax Before DB pensions *
Slide 66: Improvement in UK Cash Generation
The improvement in UK cash generation has been equally impressive. ROCE is above our global WACC … £m 2005 – 2008 2009 Q3 Q3 2007 2009* 2010* (Cum.) Free Cash Flow 183.9 36.3 85.2 41.2 54.7 Cash Conversion 8 0% 8.0% 5 0% 5.0% 10 9% 10.9% 5 2% 5.2% 9 4% 9.4% Note – Operating Cash 290.2 82.3 122.7 65.
Slide 67: Further opportunities to drive earnings growth and maximise cash flow
We see further opportunities to drive earnings growth and maximise cash flow … Brands Geographic expansion – Ireland & Scotland Portfolio development – to existing brands and acquiring new brands Customer Development Wetherspoons, Barracuda, etc Independent On Trade Building presence in Of
Slide 68: Peter Swinburn, Chief Executive Officer
Peter SSwinburn P i b Chief Executive Officer M l Molson Coors C Brewing B i CCompany 68
Slide 69: Molson Coors Brewing Company
Molson Coors Brewing Company We are committed to delivering sustainable, long‐term shareholder value and to becoming a top global brewer in profitability Diverse and extraordinary portfolio of brands, supported by marketplace innovation, and a growing international presence Exceptional team, foc
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Slide 71: Molson Coors Brewing Company London Analyst/Investor Meeting
Molson Coors Brewing Company London Analyst/Investor Meeting December 1, 2010
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