This is a lightly edited transcript of the remarks by Molson Coors Beverage Co.'s chief executive, Rahul Goyat, and chief financial officer, Tracey Joubert, on December 2, 2025.

Host  00:00

To welcome Molson Coors back to our global consumer and retail conference. Before we begin, please see the Morgan Stanley Research website at WWW dot Morgan stanley.com/research disclosures for important disclosures, and if you have any questions, you can reach out to your Morgan Stanley sales rep.

 So joining us today, we have Molson Coors new CEO, Rahul Goyal and CFO Tracy Joubert, while Rahul just became CEO on October 1. He's a 24 year veteran. 24 years of Molson Coors was a key architect of taps beyond beer and overall strategy in his prior role, or his most recent role as Chief Strategy Officer. So Rahul Tracy, thanks so much for joining us.

 Rahul Goyat  00:47

Thank you. Thank you, Eric, thanks for having us. Great.

Host  00:49

So Rahul, you've stepped into the CEO position at a challenging time for both Molson Coors and the US beer industry. Industry, volumes are on track to decline four to 6% this year. Big picture, what do you see as the biggest challenges and opportunities ahead, and What advantages does most of the cores bring to the table to navigate this difficult environment?

Rahul Goyat  01:16

Great setup. Eric, so if you think about, I mean, there's a lot written about the challenges, so I'll, I'll just touch upon that, just for context. But you know more about the opportunity there the way we think about the business. So, you know, there's a lot about the category and the headwinds in the category, whether that's all of alcohol, whether it's beer, that's definitely something we think about. You know, if you think about the cost side inflation relevant to us in our business, we have the Midwest premium. We think about that, those, I would say, are the big things that are outside our control, right in the macro issues that every other CPG company is dealing with. So those are the big macro issues. But I think the opportunities is, what we try to focus on, is what can we control and what can we do? And I break that down for us in our business, is one around our portfolio. So if you look at our brands and our portfolio, right, we have a pretty broad portfolio that meets the needs for different consumers. So I think that's a great opportunity, and I know we'll talk a little bit more about that in the context of core brands, what those mean. And when I say core brands, I mean like world light mill, light banquet, economy category. So economy category is an important aspect, especially in light of what's happening with the consumer and making sure, you know, we have an offering for them. You know, we have so much runway and above premium, both in beer and beyond beer. So the portfolio overall, I think, is exciting. The other aspect I'll call out as opportunities for us is our capabilities and our infrastructure in some of the best profit pools of the world, right? So if you look at our global footprint, we are in markets that we have, you know, very good profit pools, and we have a big infrastructure and capabilities that we can wait in that infrastructure, right? So we have our distribution network, brewery infrastructure, supply chain, commercial capabilities. So I look at that as definitely a strategic advantage as we think about, you know, the category and the challenges, and then the third thing I'd call out is our balance sheet, right? So if you look at us as a business, our free cash flow, our yield in terms of cash, our leverage ratio, and our balance sheets in a much stronger place today than it has been previously, that allows us to go into this next chapter in a strong way. So yes, external context is hard. Category is hard. Some of the things are outside our control, but we got so much opportunity to lean into the places that we can drive our business forward.  

Host  03:52

Great. And then as you look ahead, you know, look in the context of the whole cyclical versus structural debate, which we're not going to solve here. But how are you thinking about growth for the industry, you know, next year and over the midterm and then, you know, realizing you haven't, you haven't come out with your full strategy yet and address the algorithm, but, you know, sort of, how does this tougher industry outlook and competitive environment kind of play into your midterm plan?

Rahul Goyat  04:22

Yeah, no, I think it is. I know that is a question on everybody's mind, right? Cyclical, structural, what does that mean? And the way I contextualize this is, if you go back, you know, just even covid years and pre around that timeframe, and 10 years before that, the beer category has been in the minus one, minus two, space volume wise, right? The last few years has been in the minus three-ish number and then this year, it's in the minus four minus six range, right? So in the minus 4.7 minus five range 

So there's definitely something happening this year. Now, is it consumer health? Is it, you know, span? Consumers, is it, you know, folks pressured under just generally, what's happening in the macro environment? All of that is true. So we don't we do believe that that this cycle will pass, right? This cycle will pass and and we need to get our business, you know, this category back in, into a place where you're back into the three ish range in terms of what the category can do. Now, there is a responsibility on us and the category as a whole to make sure we are investing in the category and making sure we talk about beer in a way that is meaningful and engages consumers. You know, I was thinking talking to some folks earlier today. You know, beer and alcohol gets a little bit of a bad rap, but I'm sure you guys have all seen the studies that you know something affecting younger population today, bigger than anything else is isolation, right? And that's one of the issues. And if you think about beer, it is a choice of moderation, it is a way of bringing people together. So I think there's a category thing that we need to lean in us as a company and us as a category. 

But then to your question of for us. Molson Coors, you know, if you break down our portfolio, we have good core brands that we need to make sure a healthy and winning share. We have economy portfolio that we haven't talked about lots in the in the in the recent times, but we just need to make sure we're keeping that healthy. There is a consumer that loves those brands. We need to make sure they are relevant. Our brands are relevant, and we just got to stop the leaky bucket in a way, and then above premium beer is just opportunities for us. So while we have made good progress in Canada, in the UK, we have more work to do in the US. So for us, all of that is upside. And then beyond beer is again, new vectors of growth that we did not have previously. So you know, with that combination, once the category gets a little bit more settled, I think we can find our way getting back to our growth of top line and bottom line, great.

Host  06:59

And then so digging into your portfolio segments as you laid out, looking at the US so your core brands, Millerite, Coors, light banquet, huge progress in terms of brand health and market share, if we take a multi year horizon, but in the past year or so, we are seeing some heightened competition, some improved market share trends from abi, whether it's ultra, whether it's bushy, light. So I guess what's the playbook from here to improve the core brand, market share, eventually, top line?

Rahul Goyat  07:36

No, no. I think that's a great question, and I think you're right. If you look at our share performance this year compared to last year, as a total company, we have lost share. But if you break that down, the two areas that we've lost majority of our share is the economy, portfolio and flavor. We've lost some share in core brands, as you said, Coles, light metal, line and banquet. And if you go deeper into that, but that's a very small part of what we've lost share. But if you look at that place, you know, quiz banquet is doing really well. We're gaining share. Even quills lights pretty strong, if you compare just quiz light, right? I mean, we have, we have to do some work on Miller Lite in particular regions, but we have, you know, this is part of the portfolio that we just have to win share. I mean, that's, that's the thesis. So, you know, I think we're pretty excited as we turn the corner this year going into next year. If you look at Coors Light, we have, I think, 30 plus college affiliations in terms of sports and how we bring the brand to life. You know, with Miller Lite, we have, I think, 19 NFL partnerships. You know, we're excited about some of the new campaigns we're going to be bringing forward, starting next year, around sociability. And how do we make sure we bring people together using our big brands? So so while we have work to do in our total portfolio, I think, you know, it's important for these brands to be healthy, it's important for these brands to be gaining share, and again, our regional execution on the way we're going to do things you know, will help make sure we address some of the gaps we have in things like mill alive in a particular region. So, you know, overall headline is these three brands obviously super important to us, very focused on it being sure we have the right level of investment. Change a few things on execution, but, you know, feeling good about our ability to keep, keeping the share and gaining shared in this the in the core good

Above Premium Portfolio

Host  09:32

so, you know, turning to your above premium portfolio, you know, you've had some successes, like Peroni, other areas have been a bit more mixed, Blue Moon progress, you know, some signs of progress, but a little bit slower than, I think we'd all like, some ups and downs with your flavored offerings, which, you know, not unlike the category. So can you talk a bad bit about what you're doing to accelerate the growth for the above premium business? Business and sort of how that fits with your target to increase your global above premium mix, from was it 27% to about a third over the next few years? 

Rahul Goyat  10:10

Yeah, no. So if you look at our above premium agenda, you know, I think your 27% is the right reference point now, I think we were 23-24 when we started this journey, four or five years ago. So we have been making progress, and most of our progress, frankly, has been in countries outside the US, right? So in Canada, we've done a great job of premiumizing. UK, we've done a great job of premiumizing, but, yeah, we've been in the US. That's been a challenge and and if I break it down into three buckets for premiumization, it's about premium beer. It's flavors, as you said, and then, you know, call it pure play, non alcoholic, if that third bucket. 

Peroni has done well, you know, we have so much runway, so much opportunity in that, in that brand, with the green bottle, and really winning in the United States. But Blue Moon's been hard, and frankly, we have work to do on that. If you look at Blue Moon as a brand, the innovation is starting to show some progress. So if you look at non al, if you look at the high ABV brand, high ABV Blue Moon, that stuff is starting to put some, you know, support for the total brand family, but our core brand needs some work. And if you look at q3 numbers, I mean, if you go back to Blue Moon, Blue Moon was built on premise, right? It was built with the orange and q3 on premise. Trends for Blue Moon got better. So we have work to do on Blue Moon. It is something we're going to be super committed to. It is taking more time. So I think that is, that is true. We have a new campaign now. It's called Yoast coming in, Joel, sorry, I mispronounced his name, but, you know, we're excited. It is a brand that is important to us. It's a brand that we're going to stay committed to.

But yes, you're absolutely right. We have work to do on the core Blue Moon brand. It's just taking a little longer to your question on flavors. You know, flavors is a volatile category. I mean, we had some good success with Topo Chico. We had some good success with simply initially, you know, got some scale, but this category is volatile, and, you know, we got to stay fleet of foot and make sure we're winning in a way that the consumer pivots in this category. And I think we've been able to do that with Topo Chico. You know how we pivoted from seltz to a more full flavor beverage, Margarita. But we have work to do on simply, you know, simply is, is where the majority of our drag is in the flavor side. We have some new launches with a high, higher ABV products, smaller packaging, but flavor is volatile, and, you know, it is something we have to make sure we're not over proliferating in terms of brand, in flavor, etc, but it is something we'll have to continue to work on. And there's some gaps in solving in the RTD space that we need to lean in on.

And then just the last part, and above premium is, you know, I would say, non alcoholic, pure beyond there is you're making progress. I mean, this year we have Fever Tree. It adds to our premiumization effort. It it's complementary to our portfolio. It works well between non ALC and ALC. So it is an execution, you know, and we can execute it well within our business, within our infrastructure.

So I think all of those three things will help us move the journey on the premiumization piece, I again go back to if you look at the consumer today, in our core markets, it's a bifurcated consumer. You got the top end of the consumer that's doing well, and you know, our brands, like Peroni, like fever tree, are relevant to that consumer. On the other hand, we need to make sure our economy portfolio and other parts of our portfolio are relevant to the rest of the consumer.

 Economy brands

Host  14:07

Yeah, it is a good segue into, you know, my next question at the other end of the of the portfolio spectrum, you know, you said on the third quarter call a few times that all, all segments matter, which I don't think I've heard from Molson Coors in a few years, maybe, maybe back when Gavin was CFO, I heard, heard some talk about that. So you also said that you'll be increasing investments behind a few economy brands like Miller High Life and Keystone light. So I guess what's driving the change here, and what's the goal for the economy portfolio within the US business? Are you just trying to hold share? Are you trying to go back on the offensive?

Rahul Goyat  14:51

Yeah, no, I think that's a great question, and I would ask you to think about in the context of the consumer first, right? Again, I go back to the US consumer. Consumer in Canada, to some degree. In UK, you do have a bifurcated consumer, right? You have folks that things are going pretty well for them, and that's that's why Peroni sells well. That's why fever tree sells well. And but then you have a consumer that is under economic pressure. And, you know, our economy portfolio is sizable part of our business. I just use this as a frame of reference.

Our economy portfolio, (is) probably the fifth largest beer company in the country, so it is an important part of our portfolio, and we need to make sure we're giving it the right it's important to us, it's important to our distributors. So it is relevant from a consumer perspective, it is relevant from our business perspective, and now we need to find a way to win in that space, right? We have been bleeding share. We've been bleeding volume there. And I would say there's two goals there. One, this is a very regional business, right? The economy portfolio is very regional. There's few brands that work in very specific geographies. You know, high life and Keystone are big brands that are more national, but even those have a very different geographical footprint on how these brands show up. So we got to win with these brands again.

I think I shared this anecdote with folks. Anybody here heard about the hams convention in Minnesota? No, and you probably didn't hear about the Hamms convention in Minnesota, but Hamms is a great brand and but it's sold in four states and and you have, and you have consumers that love the brand.

By the way, we don't sponsor that convention. They just make this stuff up on their own, but it is, I talk about the love for these brands, right? It's relevant, and now it's on us to make sure we can bring that relevancy for those folks in a way, and engage them on this. So it is both a play of making sure we meet the consumers where they are, but then also making sure we have the right investment. These are not we're not talking about big national campaigns around sports et cetera. We're talking about very localized, focused efforts around economy portfolio on where these brands are relevant, great.

Host  17:15

And then your performance on premise over the past couple of quarters has been notably stronger than off premise. So a little surprising given, as you talked about that, that consumer bifurcation, or at least the low end consumer weakness. So you know what's driving this, and you know how sustainable is it, as you look to 2026, and beyond, you know when you win tap handles, how sticky is that real estate?

Rahul Goyat  17:42

Yeah, and I think I go back again to a couple of points, is, you know, about sociability, right? I mean, beer is the product of sociability. Beer is the product of bringing people together. It is about, you know, celebrating moments together. As an industry, on premise in Q2 was slightly better than off premise trends, you know, I think about two plus points.

And then our performance, I think, was a little bit better than that in the on premise. So if you look at on premise for us, obviously we have the big brands that matter Coors. Lite. 

But the things I'd call out is Banquet.  It’s a 150 year old brand, and is one of the most popular brands with Gen Z. It's one of the most popular brands with Hispanic consumers. So you got to find the right connection of these brands with consumers. And I think, you know, Banquet has done a phenomenal job of omaking that connection. And I think you saw that in the on-premise numbers.

And then I go back to Blue Moon. We have work to do, and Blue Moon as a core brand, but on premise trends in Q3 got better than Q2 so, so I do think on-premise is important. I think generally, consumers want that connection. . . Want to find a way of coming together, and sociability. Obviously beer plays an important role in that. And our job is to make sure our brands are front in that game, right? And I think we've been able to do that with our core brands, but we need to keep doing that with a bunch of other bands in our portfolio.

International 

Host  19:17

So turning to your international operations, you've had a nice run of market share improvement in Canada despite a soft industry, although, think I read earlier in the week a Wall Street Journal article about the industry picking up a bit in Canada. And then you've had some continued momentum from from Madri in the UK, despite a soft industry there and some pretty tough competitive activities. (Molson Coors partners with the Spanish company La Sagra Brewery to produce Madrí Excepcional, a popular European-style lager in the UK, brewed at Molson Coors' facility in Tadcaster, Yorkshire. It was the No.4 seller in the UK in 2024.

So how are you thinking about the outlook for your international business over, you know, next 12 to 18 months, and then, you know, the over the medium term, given these cross currents?

Rahul Goyat  19:53

If you think about our business, we are operating in sets of geographies. U.S., Canada, UK, and a few countries in Central Europe. And I again, go back to this: Tthese are great profit pools to be in.

In Canada, you rightly said, the category has not been as volatile as the US, which is surprising, right? Usually, Canada is a lot more volatile than the US, but Canada has been volatile month by month, but generally it's been much healthier than the US this year and and we've been growing share. 

Look at different provinces, we've been growing share. So, you know, we're making good progress. Canada again, Coors Light is the No. 1 brand. You know, we keep fighting for that spot, but it is the No. 1 brand. The UK, it is a competitive market. It is a super-competitive market. But we've continued the journey of premiumization. Madrid continues to grow. We have some work to do in our core, in calling, but you know, we're doing the right things in terms of winning in UK and then in Central Europe, 

I would say, just pockets of growth in places where we have a big footprint, right? Croatia, Romania, I think we've done a good job of making sure we can both keep our core brands healthy, but also premiumized. Central Europe has a lot of other macro issues around geopolitical concerns in that part of the world, energy pricing, etc.

But if you step back and look at our business premiumization, we've done a good job across most of our markets, except the US. If you look at our European business and the growth profile we've had on that business since, even pre-covid, right? We mean we're bigger business, top line and bottom line, you know, the growth rates have been comparable or better than America's business. So those parts of the business are doing well.

Now I also say that that recognizing that we have work to do right. And if you look at a European business, we have work to do on improving our ROIC. We have work to do in making sure our margin structure and really making sure we can get a good margin structure that's comparable to our peers. So there is definitely more work to do. But you know, good progress, good progress in making sure our brands are showing up in the right way, both in Europe and in Canada.

Midwest Premium

Host  22:33

Good. So, Tracy turning to costs, you noted on the last earnings call that the Midwest premium was it sort of the upper end of your third quarter expectations and slightly above it in October. So, you know, I know you're not giving guidance yet, and you don't give guidance by line item, but you know, how are you thinking about COGS pressure as you close out 2025 and then you know, inflation in your commodity basket and into 2026 given that you have a pretty extensive hedging program. But then Midwest premium is sort of the outlier.

 CFO Tracy Joubert  23:08

I mean, our biggest challenge is the Midwest premium (the regional price of aluminum in the Midwestern United States) right now, on our COGS line, we've spoken about this extensively at the beginning of the year, the Midwest premium was, you know, trading around 20 cents. October, it hits its all time high, and now it's trading around 86-87 cents. I mean, there's no reason for that.

We've spoken about the fact that, you know, the Midwest premium price is basically set by one entity. There's no liquid market. It's not transparent. We do hedge it, but, but it's one of our least hedged commodities, and the reason for that is because it is difficult to hedge.

It's difficult to hedge it far out. I mean, some of our commodities we hedge out in, you know, three years. We can't do that with Midwest premium. It's difficult to hedge. It's very expensive to hedge. And because it's so volatile, it makes it it makes it expensive. So, you know, as I said, we do hedge it, but it's difficult.

At the at the levels that it's at, it will continue to be a headwind for us, a big headwind. You know, we spoke about the year-over-year impact for us this year, just the Midwest premium. We said in Q2 it was going to be 40 to 55 million well kept on climbing. And so, you know, we got it to at the high end of that range. But if it continues at these levels, it's going to continue to be a big headwind for us. So what do we do? You know, we mitigate that as much as we can through cost savings programs. A lot of our cost savings programs are focused on the COGS line, you know, with our breweries, you know, with our network. So, we have made some difficult decisions closing, you know, some smaller, underperforming breweries in Wisconsin earlier this year, but we've also made investments in the past couple Of years that have helped us to keep our costs low. 

So, capital investments that we've made in our breweries, and we built new breweries in Canada, we just completed the modernization of our golden brewery that was hundreds of millions of dollars over multiple years. But we're starting to see those cost savings and those efficiencies come through as well.

All of the other commodities, we know how to hedge and they're easy to hedge. I think we do a really good job. If you look at our cogs per hectare, you'll see it's well below, you know, inflation and so all other commodities, I think we do a really decent job.

It's the Midwest premium that continues to be a big challenge. And we're not sitting back and not doing anything. We trying to shine a spotlight on it, as we have for a while now, you know, trying to get people to look at it and really try and understand, like, what is, what is driving this? Because there's no apparent reason. As we touch on some of our European operation, you know, obviously the inflation is a little bit higher, as it has been since covid. And, you know, there's a lot of geographical political turmoil in those areas, so inflation is still a little bit high there. But we again, mitigated through cost savings, and really having a look at what efficiencies we can drive through our breweries. 

Marketing Support

Host  26:23

So moving down the P and L, are you running currently at the right level of marketing and brand support, or, you know, do you see any need for any kind of a step change going forward? And then, you know, as you look a bit more holistically at capabilities and investments, whether it's the breweries that Tracy mentioned, or supply chain digital you know, are there areas where you need a further step up? Or, you know, are you comfortable with the level after the you know, big increases under the revitalization plan?

Rahul Goyat  27:02

If you look at our brands, we talk a lot about the category, we talk a lot about what's happening, cyclical, structural, but I think what we're going to stay focused on making sure our brands are well supported, right? Again, your question about, do we think we need a significant increase in spend?

We probably don't need that. I mean, we, I think we're doing the right level of spend. You know, we need to optimize our spend. We have some new brands that we've added on to our portfolio, like the non ALC portfolio, like Fever Tree. So we will, you know, spend the appropriate amount of brand marketing to really lean into some of those brand things. On the G&A front, I think there's a little bit of just, you know, if you think about this year and next year, there's a little bit of recycling of things.

 I mean, this year we're going to end up with low to no incentive for our teams. And therefore, you know, there's a little bit of cycling. But as we think about capabilities and investment in capabilities, we always think about, what is it doing for the business? Is it driving some sort of a bottom line impact? Is it driving top line impact? You know, there is definitely areas of technology, etc, we want to lean in on.

 But in terms of, I know, this probably is a question in the context of, what does 26 look like, you know, but if you look at it, I mean, there will be, you know, we're going to keep looking at ways to optimize things, but nothing significant, I would say, is the way to think about it.

 No Cut to Marketing

 CFO Tracy Joubert  28:31

I mean, I think the only thing that I would add, and you know, it is true for this year as well, despite it being a difficult year, I mean, we're not going to cut our marketing to hit the bottom line targets. You know, we'll continue to put pressure behind the brands, our core brands, in particular, behind Peroni, as we've seen, you know, Peroni is growing close to 30%. We’re going to put continued pressure behind FeTer tree. We'll have it for a full year next year, that brand's still got a lot of awareness, you know, gaps that we need to go after.

 And so, we'll put the right amount of pressure behind our brands. And then, as Rahul said, certainly capabilities is something that we focused on right now, whether it be, you know, in the AI range around insights and tools, etc, whether it be, you know, systems work with ERP systems, etc. It's really important for us to, you know, to continue to stay, maybe not ahead of the curve, but with the curve in terms of technology. 

M&A

Host  29:31

turning to M&A, you know, Rahul,  on the third quarter call, and since then, you've, you've really sounded much more open about the role of M and A going forward, calling out portfolio gaps like spirits-based RTDs, implying that transactions could be larger than the former String of Pearls approach. 

So can you talk a bit about the strategic and financial criteria? Or evaluating potential M & A. And then, you know, the question I get from people as well, how big theoretically are they willing to go? Is this going to be transformative, or somewhere in between string of pearls and and something much larger? And you know, relatedly, how central is this to the to your beyond beer aspirations?

Rahul Goyat  30:22

So I break it out into two parts. So first is portfolio. What problem are we trying to solve in our portfolio? And if you look at our portfolio, we have a great beer portfolio. We talk about core, we talk of economy, we talk about above premium. We're always going to look at beer, but, you know, we have a growth good beer portfolio, and that has to be healthy and strong for our business to grow, period, right? That has to work. So a lot of energy and time is going to be around that piece.

“Some Beyond Beer Gaps to Fill”

 Now we also recognize where consumers are going, and this is why you have the beyond beer approach. And in that, we need to solve some gaps in our portfolio. We're not talking of 10 different brands. We don't need 1010 new brands. We have some gaps we need to fill, like an RTD spirit, as you said, right? And flavor is a very volatile category, and we need to make sure we get an asset that makes sense to us and we can execute well on so we will look at deploying capital in terms of gaps we have in our portfolio in a very measured way.

I think second part of your question was in the context of capital deployment and size, right? So if you look at our business, you know, our balance sheet is in a very healthy place. You know, we are pretty strong, free cash flow yield company, and we're going to keep disciplined about what we've done over the last few years.

Leverage ratio and the debt pay down is important criteria. We're going to keep making sure we have that as a key criteria. Returning money to shareholders through stable dividend and buyback is important. And then thinking through capital investment and M&A, you know, that's where it needs to make sure it has the right return, whether it is capex and investments we make in a brewery, 

Tracy talked about some of the investments we made in our brewery is really delivering bottom line benefits. Whether it is flavor capabilities or or variety packing things like that. So, so we will definitely look at an ROI approach to all that investment in terms of your question of size. You know, I know we haven't shared any specific metrics around this, and I look forward to sharing that down the road.

What Criteria Must an Acquisition Meet?

Think of our business, you know, $11 plus billion revenue. We need to have brands that move the needle for us, right? If it's too small, it doesn't do anything. It just, it's a lot of energy, lot of, you know, just institutional work to take care of them. So it has to be brands that move the needle for us. You know it is, has to be, in a way, it's disciplined for top and bottom line.

I emphasize that because it's easy to chase sometimes assets for top line. And I don't think we're going to be in that mode, right? We're going to be disciplined about being sure we can get top and bottom line. It needs to fit the portfolio piece I talked about, and it needs to fit how we execute these brands. And I'll again, use Fever Tree as a great example. You know, we know how to get it on trucks we can probably drive. We are driving a bunch of synergies around that in terms of execution.

But then we see a path in the next 12-18 months of localizing production into the United States, right, instead of getting it from the UK, and that's going to drive a lot more on the bottom line. So I know folks, the way I would best characterize it, you know, discipline, capital allocation, definitely need to fill some gaps in the portfolio, but we'll do that in a prudent way for both the top and bottom line. Eric at this stage, great. 

Host  34:00

So, Tracy, to dig a bit deeper into capital allocation. So, you know, you ended the third quarter net leverage, and just under 900 million left on your five-year $2 billion repurchase authorization. So can you discuss the capital allocation priorities from here.  You know, further buybacks, even beyond the existing authorization. You know, how could that fit in with, you know, the aspirations around M&A  and the portfolio?

CFO Tracy Joubert  34:39

You know, where we are today is obviously in a much stronger position with our balance sheet. So, we had this target of to have our leverage below 2-1/2 times. And as you rightly say, we achieved that much earlier than we thought. But that gives us a lot of options around the rest of our capital allocation. We plan to keep that leverage ratio. We think it's a perfect spot for us.

The rating that we've got, the investment grade, is important to us, and so it's important for us to keep the strong balance sheet. And then, you know, other than the investment in M&A and our business. The third bucket is returning cash to shareholders. And as you rightly say, we've, we've got this 2 billion share buyback program. We're well ahead of where we should be if you just divided it. You know, over five years, we have got eight, 18 million left on that. We will continue to execute behind that share buyback.

We do believe that our share is a compelling investment, and so we'll continue returning cash to shareholders through buying back our own shares, but also paying a dividend. And you know when, when we reinstated our dividend? You know, during covid, we did say that we want to do sustainably, grow our dividend over time, and you can see over the last couple of years, that's exactly what we've done. You know, we want to make sure that we do return cash to shareholders through a dividend, but certainly the share buyback has been a big program for us, and yeah, we will continue to execute the program that we've got in place.

 Wrapping Up

 Host  36:16

So to wrap up, I want to turn back to Rahul with a broader question. You know, certainly bring unique perspective is new to the CEO role, the long term executive with with the company. So you know, what do you think is sort of the most misunderstood or underappreciated part about Molson Coors story today?

 Rahul Goyat  36:38

Yeah, thanks for that. That's a good question. I would call again, go back into three, probably three ways to think about us as a business, right? One is our portfolio. And I know folks sometimes look at our portfolio saying it's too broad, it's too big, but all segments do matter. And then I ask you to look at that from the context of the consumer. Right? The top end of the consumer is driving it. I mean, premiumization has been an important factor in our category in alcohol, and we have so much runway that we can go after right, because we are underrepresented in that part of the consumer.

Our core brands and the economy. Portfolio matters because it matters in all for all consumers, right? So what excites me is the fact that we do have brands that matter in all segments. And obviously our job becomes, how do we make sure our brands resonate with the right consumer, in the right places, in the right channels. So the portfolio is an exciting part for us, especially in the context of the consumer and where they are.

I wouldn't underestimate the capabilities and the infrastructure we have in the biggest profit pools. I go back to that. I mean, our big plants, our ability to get product to 500,000, 600,000 outlets. Twice a week, three times a week. I mean, this is capability that I think is an important factor right in the business we are in, and you're seeing that play out with brands like Fever Tree in terms of scaling them. So it is, I think, another exciting part of making sure we can leverage our infrastructure, leverage our capabilities, to really drive scale.

And then the third aspect is how it's called out, is our free cash flow and our balance sheet, right? So if you look at our balance sheet, I think we've been pretty diligent about it and really disciplined about it. If you look at our free cash flow generation, you know, that's a pretty strong story. So that's what I would leave you guys with, is, you know, our portfolio, our capabilities, and our balance sheet and cash flow. I think those are the compelling reasons for Molson Coors.

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