Molson Coors Beverage Company · NYSE:TAP
Molson Coors Beverage — Molson Coors Brewing Company — Investor Day (March 2009)
85 slides from Molson Coors Beverage's investor day presentation, Mar 9, 2009
Slide 1: Molson Coors Brewing Company
Molson Coors Brewing Company March 2009 1
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Slide 3: Peter Swinburn, Chief Executive Officer
Peter Swinburn Chief Executive Officer Molson Coors Brewing Company 3
Slide 4: Forward-Looking Statements
Forward-Looking Statements This presentation includes "forward-looking statements" within the meaning of the federal securities laws, commonly identified by such terms as “looking ahead,” “anticipates,” “estimates” and other terms with similar meaning. Although the Company believes that the assumpti
Slide 5: Agenda
Agenda • Peter Swinburn, CEO, Molson Coors – Introductions and opening remarks • Business updates: – Leo Kiely, CEO, MillerCoors – Kevin Boyce, CEO, Molson Canada – Mark Hunter, CEO, Coors Brewers Ltd. – Dave Perkins, President, Global Brands and Market Development • Stewart Glendinning, CFO, Molson
Slide 6: Significant Progress Since the Merger
Significant Progress Since the Merger • “Transforming the business” to build a strong financial foundation • “Executing a portfolio brand-building strategy” to deliver growth and profitability over the long-term 6
Slide 7: U.S. — Industry Transformation and Value Creation through MillerCoors
U.S. — Industry Transformation and Value- Creation through MillerCoors • New 30-share, #2 competitor in industry’s largest profit pool • Accelerating $500 million in synergies • Combined Miller and Coors portfolios to deliver long-term revenue and profit growth 7
Slide 8: Canada — Strong Margins and Operational Improvements
Canada — Strong Margins and Operational Improvements • Optimization of brewery network • Growing the portfolio with nationwide Modelo JV • Taking pricing on the strength of our brands • Maintaining cost discipline throughout 8
Slide 9: UK — Resilient and Innovative
UK — Resilient and Innovative • Tough economic and regulatory environment • Increased capacity utilization above 90% with Heineken UK contract • New revenue stream with Magners draught cider • Carling continues to grow share • Innovation to broaden portfolio and build margins 9
Slide 10: 2008 Headlines
2008 Headlines • Increased net pricing across all businesses • Grew volume 4%; Coors Light up nearly 6% • Exceeded Resources for Growth targets with $87 million in savings • Exceeded underlying cash-generation goal • Reduced size and volatility of pension liabilities • Reduced interest and corporate
Slide 11: Where We Are Today
Where We Are Today • Foundation of the business stronger than ever • Well-positioned to take advantage of profitable growth opportunities • Disciplined approach to cash use and cost management • Continue taking long-term view of our business -- invest for future profit and value growth 11
Slide 12: Looking Forward, We Remain Focused On…
Looking Forward, We Remain Focused On… • Building great beer brands and growing revenue per barrel • Delivering cost savings on or ahead of our commitments • Generating substantial free cash • Growing long-term returns to our shareholders 12
Slide 13: Leo Kiely, CEO MillerCoors
Leo Kiely Chief Executive Officer MillerCoors LLC 13
Slide 14: MOLSON Goods
© MillerCoors” MOLSON Goods
Slide 15: Build a winning culture
• Build a winning culture • Leverage our powerful brands • Win at retail • Save to reinvest in our brands and people • Grow our business the right way 15
Slide 16: Winning in Premium Light
Winning in Premium Light MOLSON Cocds. 16
Slide 17: Taste and Refreshment
Taste and Refreshment Key brand dimensions Correlation with loyalty Refreshment Ultra Light Sociability Advertising Relaxing Control Taste Value Cold Source: Project Volume Consumer Research 17
Slide 18: Winning in Premium Light
Winning in Premium Light 0.2 points volume share 0.2 points dollar share Source: ACNielsen (since July 1, 2008) 18
Slide 19: Winning in Premium Light
Winning in Premium Light a x (Gouarzir) GO FOR COLD 19
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Slide 21: Winning in Premium Light
Winning in Premium Light fl @etal in. ee A Ks} MOLSON CO0U4 7
Slide 22: Winning in Premium Light: Actual Price Change vs YA
Winning in Premium Light • We took price up on Miller Lite in Q4 … faster than any leading competitor … which has contributed to some of the volume softness experienced $1.20 Miller Lite, Coors Light and Bud Light Actual $1.00 Price Change Actual Price Change vs YA $0.80 $0.60 Miller Lite Coors Ligh
Slide 23: Winning in Premium Light
Winning in Premium Light 23
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Slide 25: Winning in Premium Light
Winning in Premium Light She 64 Calaste Collection 25
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Slide 27: Deliver our synergy commitment
• Deliver our synergy commitment • Maximize cash flow and capital investment returns • Reduce fixed costs to lower our break-even 27
Slide 28: Network Transformation: Where We're Headed
Network Transformation: Where We’re Headed Coors Miller MillerCoors 28
Slide 29: Capture Synergies
Capture Synergies • Talent Selection Completed – Significant organizational synergies • Brewery Optimization • $500 Million in Synergies – Ahead of schedule – Expect to realize $128 million by June 30 29
Slide 30: MillerCoors Six Month Financials
MillerCoors Six Month Financials • Total Net Sales 2.6% • Underlying Net 22.2% Income • STRs -0.7% • Net Revenue per 5.3% Barrel *MillerCoors results in U.S. GAAP, excluding special and other one-time items. 30
Slide 31: Where We Expect to Be
Where We Expect to Be … • Driving value and volume in premium light • Driving value and volume for High Life and Keystone Light • Driving value and volume in above-premium • Strong net revenue management • Growth in chain outperforming the company • Ahead of synergy targets 31
Slide 32: Kevin Boyce, CEO Molson Canada
Kevin Boyce Chief Executive Officer Molson Canada 32
Slide 33: Looking Back on 2008 – Canada
Looking Back on 2008 – Canada • Overall, challenging year with strong headwinds and lower profit • Like-for-like share declined -0.1 share points, excluding the addition of Corona West volume • Industry grew 1.1%, similar to 1% long-term trend • Best two-year share performance for Molson in 7 years
Slide 34: Looking Back on 2008 – Quebec
Looking Back on 2008 – Quebec • Market Overview – Represents just over 25% of the beer volume in Canada – 40% grocery, 40% off-premise independents, 20% on-premise – Regulated minimum price laws based on alcohol content • Current Situation – In 2008, price discounting driven by grocery retailers saw
Slide 35: Looking Back on 2008 – Strong Brands
Looking Back on 2008 – Strong Brands • Strategic Brands grew at almost four times the rate of the industry • Double-digit growth on Coors Light for the 4th consecutive year • Rickard’s and Creemore experienced high- single-digit growth • Continued share gains on partner-import brands • Heineken, Cor
Slide 36: 2008 Underlying Profitability Declined 3%
2008 Underlying Profitability Declined 3% 2008 Pretax Income* (US$ millions) Factors driving profit -3.3% (% change vs LY, in CAD$) $500 • Positive net pricing (+2.3%) $400 – Price Increases in all major markets, reduced by promotional activity in $300 Quebec 485.8 • Comparable COGS increase 469.3 (
Slide 37: We Remain Focused on Delivering Against Our Vision
We Remain Focused on Delivering Against Our Vision and Our Five Strategic Thrusts Vision Build a Consumer Preferred Portfolio Canada’s favourite brewer, winning with inspired employees who Become a Customer are passionate about Preferred Supplier building brands that are the heart and soul of every
Slide 38: Focusing on Priority Initiatives to Deliver Vision
Focusing on Priority Initiatives to Deliver Vision • Grow Strategic Brands • Olympic Sponsorship Build a Consumer • Leverage Innovation • Grow Price Realization Preferred Portfolio • Improve Molson TM Become a Customer • Continue Customer Relationship Marketing Preferred Supplier (CRM) roll-out Buil
Slide 39: 2010 Winter Olympics in Vancouver
2010 Winter Olympics in Vancouver 39
Slide 40: Investing in Brands
Investing in Brands • Continue momentum behind strategic brands • Balance priorities to deliver profit growth and volume growth • Brand-building company • Win by being innovative and investing in our brands • Latest ads – Molson Canadian, Rickard’s White, Molson Dry and Coors Light 40
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Slide 42: Mark Hunter, CEO Coors Brewers Limited
Mark Hunter Chief Executive Officer Coors Brewers Limited 42
Slide 43: Despite the Tough UK Beer Industry, We Delivered on Our 2008 Commitments
Despite the Tough UK Beer Industry, We Delivered on Our 2008 Commitments We Delivered… We Said We Would… • Market share growth in both the on- and off- • Deliver ambitious, consumer-focussed premise channels due to brand strength. brand building, innovation and portfolio development. • Pricing growt
Slide 44: Beer Industry Volume Declined by 5.5%
Beer Industry Volume Declined by 5.5% Total Trade Volume (000 UK barrels) 47,000 42,000 37,000 Beer (000 brls) 32,000 27,000 Lager 22,000 17,000 12,000 1983 1993 2003 1980 1981 1982 1984 1985 1986 1987 1988 1989 1990 1991 1992 1994 1995 1996 1997 1998 1999 2000 2001 2002 2004 2005 2006 2007 2008 Pre
Slide 45: The UK Beer Market 2009 Headwinds
The UK Beer Market 2009 Headwinds • Falling consumer confidence due to the UK recession • Market volume decline acceleration • Volume shift and associated margin shift from on- to off-premise and from independents to multiples • Trade debt/credit risk potential • Continuing significant inflationary
Slide 46: We Have Initiated a Number of Offsetting Actions
We Have Initiated a Number of Offsetting Actions that Flow through 2009 and Beyond • Ensuring a “value ahead of volume” orientation in all customer negotiations • Continue to invest in our brands and portfolio innovation: – Grolsch vitalization • Reduction in Carling ABV allows re-investment in incr
Slide 47: Our Commitment to Build a Portfolio of Extraordinary Brands
Our Commitment to Build a Portfolio of Extraordinary Brands Grow Aggressively Grow Harvest Selectively/Incubate - - Scale investment, widely Targeted investment, pursuing - Tactical investments to sustain available “Breakout” profitability 47
Slide 48: Carling – The UK's Number 1 Beer Brand
Carling – The UK’s Number 1 Beer Brand In 2008, we brought Carling’s ‘Sociable British Refreshment’ positioning to life through world-class advertising, live events, extra-cold experiences and local sourcing… • As a result of the British sourcing message…a 25% increase in purchase intent • Our spons
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Slide 50: Carling Swept the Board at the 2008 Advertising Award Ceremonies
Carling Swept the Board at the 2008 Advertising Award Ceremonies • Major Awards Include: – Creative Circle (UK) – BTAA (UK) – APA (UK) – Campaign (UK) – Cannes (World-wide) • Awards for Our Digital Communication: – Campaign: Campaign of the Year – NMA: Best Brand Website – BIG Awards: Digital Gold 5
Slide 51: CBL Has a Clear Leadership Position in Digital Communication
CBL Has a Clear Leadership Position in Digital Communication Carling’s iPint – “ The Future of Advertising ” “Lager is much more interesting this morning, because Carling has launched a new ad campaign and it just might point to the future of advertising…” “The new Carling campaign is not only the b
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Slide 53: Carling Will Receive Increased Marketing Investment in 2009
Carling Will Receive Increased Marketing Investment in 2009 • Award Winning TV Ads Return Q1 - Getting 2009 off to a Fast Start • First Major “Feel Good Factor” Event of ’09 - Carling Cup Final at Wembley Stadium 1st March • 100% British Barley Campaign - Advertising and In-store Spring/Fall ’09 • C
Slide 54: Coors Light Growth Accelerated by Amazing Customers in 2008
Coors Light Growth Accelerated by Amazing our Customers in 2008 • The Commitment… – Collaborate with J D Wetherspoon to achieve sales of 400k pints per week. • The Activity… – Coors Light adverts “tagged” with JDW availability – visitors to outlet see the brand 9 times before purchase. – Co-create a
Slide 55: Coors Light Plans for 2009
Coors Light Plans for 2009: Building on the Momentum from 2008 Q3 ‘09 Q1 – Q2 ‘09 3 PHASE Q4 09 AWARENESS AND BUILD ACTIVITY MAKE IT AVAILABLE REASONS TO BELIEVE REWARD LOYALTY ‘NFL PROGRAMME AND DRIVE THROUGH COORS LIGHT ENDZONE PARTY’ DISTRIBUTION “WORLD OF REFRESHMENT” Supported by £10m media inv
Slide 56: CBL is Investing behind a Program of Relentless Innovation
CBL is Investing behind a Program of Relentless Innovation to build its Portfolio Strategic Brands New Ideas Kasteel Cru, brewed with champagne yeast: strong growth and now available in J Sainsbury, Morrison’s and Waitrose. Kasteel Cru Rosé, with champagne yeast and elderflowers: piloted in 2008 wit
Slide 57: In Summary for 2009 and Beyond…
In Summary for 2009 and Beyond… • The market remains challenging in 2009 • However, our strategic focus and key initiatives will improve our underlying profit trends in 2009 as we continue our focus on: – Beer Champions and supporting the category – Continuing our path to amazing our customers – Inv
Slide 58: Dave Perkins, President, Global Brand & Market Development
Dave Perkins President, Global Brand & Market Development Molson Coors Brewing Company 58
Slide 59: Global Brand & Market Development Mandate
Global Brand & Market Development Mandate To create meaningful value for MCBC through profitable market expansion 59
Slide 60: Global Brand & Market Development Mandate
Global Brand & Market Development Mandate To create meaningful value for MCBC through profitable market expansion Build Enduring Brands Internationally 60
Slide 61: Global Brand & Market Development Mandate
Global Brand & Market Development Mandate To create meaningful value for MCBC through profitable market expansion Build Enduring Brands Internationally M&A 61
Slide 62: Global Brand & Market Development Mandate
Global Brand & Market Development Mandate To create meaningful value for MCBC through profitable market expansion Build Enduring Brands Internationally Build Brewer Relations M&A 62
Slide 63: Global Brand & Market Development Mandate
Global Brand & Market Development Mandate To create meaningful value for MCBC through profitable market expansion Build Enduring Brands Internationally Build Brewer Relations M&A 63
Slide 64: International Development Plays an Important Role in MCBC Strategy
International Development Plays an Important Role in MCBC Strategy • Capture value inherent in MCBC’s brands with international potential • Provide emerging market (high-growth) exposure • Build a stronger, better, more diverse team 64
Slide 65: Existing International Business is Focused in Five Geographic Areas
Existing International Business is Focused in Five Geographic Areas Key Brands Approach Markets China Coors Light •Subsidiary with ~300 member sales force (shares #2 super and local contract brewing premium spot) •On-premise focus to seed brand Japan Zima (#2 FAB) •Subsidiary with ~40 employees and
Slide 66: A Disciplined Approach to Expansion
A Disciplined Approach to Expansion • Establish Coors Light (flagship) before expanding portfolio – Validate other brands for development • Measured approach to brand and market development – Tight geographic focus, with clear market selection criteria – Patient, slow-build as we seed new markets –
Slide 67: China Provides an Example of our Approach to an Emerging Market
China Provides an Example of our Approach to an Emerging Market • Coors Light is the number 2 super premium brand in China • Available in 40 cities • The Molson Coors sales team in China supplements its extensive distribution system with a customer-focused sales and field marketing team • We have a
Slide 68: We Will Build Our Business in Both Developed and Mature Markets
We Will Build Our Business in Both Developed and Mature Markets Volume growth potential in Asia is greater due to increasing per capita rates of beer consumption Negative Growth 0-3% Growth 3+% Growth 2007 Per Capita Consumption Total Mean: 26 L 78 80 73 64 2007 Volume 555 48 Total: 1,746 mhl 272 29
Slide 69: Coors Light has a Strong Track Record of Success
Coors Light has a Strong Track Record of Success • 8th largest brand worldwide with 24.5 million hectoliters • 2nd largest and fastest growing premium light in US • Our biggest brand in Canada – The 2nd largest brand overall in Canada • 2nd biggest bottle brand in the on-trade in the Republic of Ire
Slide 70: Conclusion
Conclusion • GBMD is focused on MCBC’s expansion beyond current core • We will take a disciplined and patient approach • Coors Light can become a leading global brand • International expansion can enhance MCBC’s growth profile • GBMD will be a source of learning, new capabilities, and important rela
Slide 71: Stewart Glendinning, Chief Financial Officer
Stewart Glendinning Chief Financial Officer Molson Coors Brewing Company 71
Slide 72: Financial Strategies Drive Shareholder Value
Financial Strategies Drive Shareholder Value Disciplined Focus on Fundamentals Strengthens Financial Base • Programs to reduce costs • Drive profitable growth through innovation • Strengthen balance sheet – Debt at attractive, L-T level – Pensions appropriately funded, de-risked • Free Cash generati
Slide 73: Resources for Growth in Home Stretch
Resources for Growth in Home Stretch Annual Cost Savings (US$ millions) 2005 2005 2006 20062007 20072008 TotalTotal Resources for Growth (‘07-’09) -- -- 91 87 178 Merger synergies (‘05-’07) 59 66 55 -- 180 Pre-existing programs (‘05-’06) 22 38 -- -- 60 Total 81 104 146 87 418 $250 mm RFG program: On
Slide 74: Next Generation RFG2 Now Being Developed
Next Generation RFG2 Now Being Developed • Same structure, tracking as merger synergies and RFG • 3-year program, but smaller than predecessors – low-hanging fruit gone, excludes the U.S. business • Plan to target at least $100 million of annual cost reductions by Year Three (2012) • More details la
Slide 75: Driving Value from Innovation
Driving Value from Innovation Key Element of Brand-Building and Margin Growth • Driving more earnings from top-line growth • Innovations add consumer value, competitive advantage • Global structure • Consistent value • 4 year goals locked down Teams are filling our innovation pipeline continuously 7
Slide 76: Strong Balance Sheet in Uncertain Times
Strong Balance Sheet in Uncertain Times • Past four years: – Generated more operating cash (disciplines) – Monetized assets – Reduced debt – Funded and de-risked pensions • Results: – Greater cash-generating capability – Debt at attractive level Maturing debt: none in 2009, $300 million in 2010 76
Slide 77: Pension De-risking Benefits Financial Results
Pension De-risking Benefits Financial Results As of 12/31/2008: Benefits of Global Pension De-risking Efforts Combined CBL, Coors & Molson Funded Status 1200 and Deficit ($M) 100% 87% 1000 98% 90% 953 800 80% 600 70% 400 461 73% 200 60% 74 0 50% 6/30/07 Balance ’08 Actual (de-risked) ‘08 (no de-risk
Slide 78: 2008 Underlying Free Cash Flow
2008 Underlying Free Cash Flow 2008 Underlying FCF = $557 million* Incremental MillerCoors-related cash: $144 million MillerCoors cash held in margin: $71 million Voluntary UK pension contribution: $100 million One-time debt extinguishment: $22 million 2008 Reported FCF = $220 million 2008 FCF inclu
Slide 79: 2009 Underlying FCF Goal
2009 Underlying FCF Goal: $575 million, +/- 10% • $25 Million Higher than ’08 Underlying Goal – Excluding MillerCoors one-time impacts on our cash ‘09 estimate: $70 mm vs. $215 mm in ‘08 • $355 Million Higher than ’08 Reported FCF • Y/Y Drivers: – Changes in operating earnings and working capital –
Slide 80: Dialogue Regarding Cash Use Priorities
Dialogue Regarding Cash Use Priorities Strategic/Transformational • Select new geographies, in-market opportunities • Mergers, acquisitions, joint ventures, alliances Base Growth • Tactical brand investment, market place innovation • Incremental capital expenditure Capital Structure • Share repurcha
Slide 81: Disciplined strategies strengthen financial base
Disciplined strategies strengthen financial base • Programs reduce costs, grow top line and bottom line – RFG, RFG2, MillerCoors synergies – Drive profitable growth through innovation structure • Strengthen balance sheet – Debt at attractive, L-T level – Pensions appropriately funded, de-risked • Fr
Slide 82: Peter Swinburn, Chief Executive Officer
Peter Swinburn Chief Executive Officer Molson Coors Brewing Company 82
Slide 83: Closing Remarks
Closing Remarks • Building extraordinary beer brands and growing revenue per barrel • Delivering cost savings on or ahead of our commitments • Generating substantial free cash • Growing long-term returns to our shareholders 83
Slide 84: Q&A
MOLSON C0024 Q&A 84
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