Good day, and welcome to the Molson Coors Beverage Company Fourth Quarter and Fiscal Year 2021 Earnings Conference Call. You can find the related slides on the Investor Relations page of the Molson Coors website. Our speakers today are Gavin Hattersley, President and Chief Executive Officer; and Tracey Joubert, Chief Financial Officer. With that, I’ll hand it over to Greg Tierney, Vice President of FP&A and Investor Relations.

Thank you, operator, and hello, everyone. Following prepared remarks today from Gavin and Tracey, we will take your questions. [Operator Instructions] Today’s discussion includes forward-looking statements. Actual results or trends could differ materially from our forecast. For more information, please refer to the risk factors discussed in our most recent filings with the SEC. We assume no obligation to update forward-looking statements. GAAP reconciliations for any non-U.S. GAAP measures are included in our news release. And also, unless otherwise indicated, all financial results the company discusses are versus the comparable prior year period in U.S. dollars and in constant currency when discussing percentage changes from the prior year period. With that, over to you, Gavin.

Thanks, Greg. 2021 was a turbulent year all around the world for our industry and for our business. The pandemic ranged and received multiple times, but unfortunately, it surged in the last six weeks of the year. And with it came government restrictions value to bars and restaurants, most notably in Europe and Canada. That impacted our business, creating a whole host of challenges, and yet through it all Molson Coors made tremendous progress in each of the pillars of our revitalization. Our two biggest brands, each grew net sales revenue in the U.S., Americas and globally, an incredible feat given the fact that over the past few years, many folks have been at the belief that this whole segment was in a part of aspiring clients across the U.S. and Canada. We finished the calendar year with a larger global above premium portfolio than ever before, with our hard seltzer portfolio growing at the fastest rate of any major beverage company in the United States. Very strong hard seltzer growth in Canada and standout beer innovations in the UK as well as in Central and Eastern Europe. We are moving to scale beyond the beer aisle on the back of the fastest-growing energy drink in the United States for IRI, and we continue to invest in our future growth all around the world. Folks, in 2021, Molson Coors grew the top line for the first time in a decade. Top line growth is one of the core goals of our revitalization plan and a result our company has not been able to deliver it in a long time. Yes, we started first our guidance on EBITDA as a result of the impact of the Omicron variant surge in the last six weeks of the quarter. But at the same,…

Thank you, Gavin, and hello, everyone. As Gavin highlighted, 2021 was a year of tremendous progress against our revitalization plan. Despite the challenges that we and so many other companies face, we achieved our top line guidance of mid-single digit growth for the year, delivered strong free cash flow, enabling us to further reduce our leverage ratio and return cash to shareholders. We continue to execute our revitalization plan, building a strong foundation for future growth and we issued fiscal 2022 guidance that underscores that progress. Before I take you through our quarterly, our full performance and our outlook, I would like to update on a couple of naming convention changes in our business unit reporting. This does not change our reported results for these segments and was done for the names better effect the geographies within the segment. As of December 31, 2021, our reporting statements are the Americas, formerly called North America and EMEA and APAC formally called Europe. Now let’s discuss the fourth quarter. We delivered strong top line and EBITDA performance. While we benefited from cycling significant on-premise restrictions in the prior year, we were still impacted by the rapid emergence of the Omicron variant in mid-November, which resulted in overall on-premise softness compared to the third quarter. In December, the U.S. on-premise net sales revenue was approximately 86% of December 2019 net sales revenue, down from third quarter levels of a approximately 88%. Canada was approximately 60% of December 2019 net sales revenue, down from third quarter levels of approximately 80%. And the UK was below 80% after being close to 100% in the third quarter. Consolidated net sales revenue increased 13.7% driven by EMEA and APAC growth of 56.5% and Americas growth of 7.1%. Consolidated net sales revenue growth was driven by higher financial…

We will now begin the Q&A portion of the call. [Operator Instructions] Our first question goes to Kevin Grundy with Jefferies. Kevin, your line is open. You can go ahead.

Great. Thanks, good morning, everyone. And congratulations on the continued progress, particularly in the difficult environment. I want to start with the sales guidance for the year. Tracey, this may be for you. Maybe just spend a moment on how you expect that to break down between volume and net sales per hectoliter within net sales per hectoliter. Maybe just comment broadly on the contribution you’re hoping for between price and mix, particularly from a pricing perspective, given the difficult input cost environment? And then, Gavin, maybe just at a high level coming off of what’s been a strong year for your key brands. Just offer some thoughts, if you wouldn’t mind on your outlook for Coors Light and Miller Lite in the upcoming year. And then I’ll pass it on. Thank you for that.

Thanks, Kevin, and good morning. Let me start, and then Tracey can take you through some of the guidance around cost of goods sold and so on for 2022. But from a pricing point of view, obviously, we’re experiencing inflationary pressures. We expect into continue well into this year. And while we take – have historically take price increases in the spring of every year, this year, we actually announced price increases a little earlier than that. And we went for the price increase of between 3% and 5% that took place mostly in January and the early part of February. And obviously, the amount and the timing of pricing increases does vary by market. We do have more levers than just pricing, of course, right, we have the mix shift which is fundamentally part of our revitalization plan is to shift our mix into the above premium and emerging growth. And emerging growth is almost entirely of both premiums. So I spoke about that in my opening remarks. And Tracey, why don’t you talk about hedging – the hedging program maybe, then I’ll circle back on the brand.

Okay. Yes. I mean, we’ve spoken before about our robust taking program and how we cover all our key commodities. So as we look into 2022 and 2023, we’re really comfortable with that our hedge position and that hedging program is going to play a part in mitigating some of the inflation that we seen.

Thanks, Tracey. Kevin, look, I mean our business at the end of 2021 is fundamentally more sound than it was at the beginning of the revitalization plan, particularly with our brands, and you reference Coors Light. We ended the year with both of those brands growing the top line, which we haven’t done for Coors Light the Made to Chill campaign continues to work for us, both regionally, nationally and at a local level. It’s resonating and attracting 21 to 29-year-old consumers. And Miller Lite has – despite some of the inventory challenges and some of the tough comps, we had to overcome a just sequentially improved over the year. They continue to focus on a true beer’s beer through all sorts of different brand acts like the beer and managed more recently the exploration into the metaverse. So we feel like those two brands are really well placed hitting into 2022. And then looking beyond that both premium Blue Moon has bounced back very strongly – our emerging growth division, as I said, is ahead of our plan to get to $1 billion. Canada is growing. Coors Light has grown share. It’s as healthy as it’s been for a while. And Europe is bouncing back now that we’re heading through the Omicron variant and restrictions have been lifted, and we’ve got strong above premium innovation, which is a very strong on-premise bias. Yes. I think hopefully, that answers your question, Kevin.

Yes. That’s very thorough. Thank you very much. I have a number of questions I’ll take offline with Greg and Traci, but continued success. Thank you.

Thank you.

Thank you, Kevin. Our next question goes to Rob Ottenstein with Evercore. Rob, your line open. You can go ahead.

Great. Thank you very much. Gavin, I was wondering if you can talk a little bit about how business is starting off this year? I mean we all see the public information January was a very tough start for the whole industry. How much of that do you think is the maybe sticker shock from price increases, Omicron, the weather? Maybe people had a lot of a lot of beer in their pantries given that a lot of holiday parties may have gotten canceled. I’m just trying to get a little bit more of a sense of what the beer industry and your business looks like and maybe what you’re seeing in February to give you confidence to underscore your guidance? Thank you.

Thanks, Rob. Look, I’m not going to repeat what I said to Kevin, as far as our overall brands are concerned. But if you look to the January, yes, I mean the data that’s publicly available, will say that the whole industry, it wasn’t the easiest of months. I don’t think pricing has got anything to do with it because the pricing increases came in the month of – even into February to impact January trends. So I don’t think it’s got anything to do with it. And frankly, the price increases, as I just said, for us, 3% to 5%, well lower than inflation rates, which are speaking in the consumers’ minds. I’d point a finger squarely at the second point you raised there, which is Omicron, right? Consumers were resistant to going out into the on-premise December and into January. And as we’ve got further into January and now into February, we’ve seen the consumers come back to the on-premise, particularly in our European businesses where restrictions have been largely lifted, but also in the United States and, to a lesser degree, in Canada. So I’m going to point the finger squarely at Omicron, Rob.

And so I guess, tied to that, it would be your sense, you’re not expecting much in the way of demand elasticity on the price increases, maybe be less than historical.

Well, we always – we understand pricing elasticity in a normal world, right? And I think we’re operating in somewhat unknown territory. So I think it’s a little too soon to tell exactly what the various price increases that have gone into the market, what impact that will have from a volume perspective, Rob. I think as we head into spring and summer, we shall see.

Terrific. Thank you very much.

Thank you, Rob. Our next question goes to Andrea Teixeira with JPMorgan. Andrea, your line is open. You can go ahead.

Thank you. Good morning. So my question is the assumption of the G&A savings because your earnings guidance embeds faster growth, if I understood correctly, on the bottom line, and I understand from Tracey’s comments that gross margin will go – will be pressured this year in spite of the timing of the hedges, which I’m assuming are going to be better in the first half of the year and then give back some in the second half. So are you embedding your EBITDA margin were expanding 2022 to reach your profit guidance? And then related to that, I think the investors that I got that spoke this morning were asking about what drove the EBITDA miss in the quarter and also the year. And also the reason to refrain from giving guidance on an EBITDA basis for 2022 and use earnings before tax income, just a clarification there. Thank you.

Thanks, Andrea. I think, Tracey, why don’t you take all those?

Okay. So first of all, I think you spoke of – you asked about the margin expansion. So to add our mid-single-digit top line and high single-digit income before tax line, there’s a couple of things that need to be considered. So first of all, you’re right. I mean, we are seeing an inflationary environment. We expect to see inflation continue on commodities and packaging materials, and we also expect the freight market to remain tight. So that will create a COGS headwind. But to mitigate that, we have a very robust hedging program. As you mentioned, we typically hedge the first year, somewhere between one and three years, depending on the commodity and the liquidity of that commodity. But in the first year, our hedges are obviously higher than the outer years, which are typically lower. So we have a robust seating program. As we look now into 2022 and 2023, we are very comfortable with our hedge positions. In addition to that, we’ve got the cost savings program. This is part of that $600 million program. We’ve already delivered $490 million of that. We’ve got items like the new state-of-the-art more efficient breweries in Canada, that we spoke about that have come online. So that’s certainly going to help from a cost point of view. We’ve got the continued premiumization of our portfolio, which is really all about what the revitalization plan is driving. We obviously have spoken a little bit about. And then this year, we have a full year of contribution of our equity income from our Yuengling joint venture. So we’ve got a couple of those items that will play out in 2022. But having said that, we’re going to continue to invest in our business and behind our brands as we saw in Q4…

Thanks, Tracey.

Thank you.

Thank you, Andrea. Our question goes to Bill Kirk with MKM Partners. Bill, your line is open. You can go ahead.

Thank you. Good morning, everybody. Tracey, plus with some 1Q phasing items, I think you have about 2 million hectoliters shifting back into the first quarter related to the Texas freeze and the cybersecurity events. But I guess what about prior year cost comparisons, are they easier in some ways since the prior year had those disruptions and maybe made servicing the wholesalers more expensive?

Yes. So we don’t specifically give quarter-by-quarter guidance, but maybe some of it being think about is from a marketing point of view, marketing will particularly – will be higher in the first half of the year as we cycle some of the on-premise shut downs and things like that. But we are expecting our full year marketing in 2022 to be higher than 2021, but really more so in the first half. In terms of other COGS, obviously, we’re still going to be impacted by inflation as I’ve said. But some of the other things to consider is, assuming that we don’t see levels of on-premise restrictions in the first half of 2022. We’ll expect to see some benefit from volume leverage, particularly in our EMEA and APAC business. We’ll also expect to see both channel and geographic mix benefits as we cycle the first half restrictions in EMEA and APAC, which have a lower overall cost per hectoliter, COGS per hectoliter. And then again, I just do want to mention our robust hedging program where we cover all commodities, and we’re really comfortable with where we’re sitting. Obviously, we’ve also got our cost savings program, which will deliver as well. So I’d say those are some of the things to consider for at least the first half of this year.

The only other thing I’d add to that, Bill, is the other side of some of that positive, which you mentioned, which is a Texas storm and cybersecurity is obviously our economy of SKU reduction and rationalization, right? So we still have the headwind of that, particularly in the first quarter and then for a chunk of the second quarter. So that will be a negative from a volume perspective. But if you recall in the fourth quarter, we – actually, all of our volume loss in the fourth quarter in the U.S. was driven by economy as premium lights grew as the above premium as well. And of course, we came into the year with robust inventory. So we’re not expecting any meaningful out of stocks. And I think as I said in my opening remarks, we are – we’re actually operating at levels lower than pre-pandemic at the moment, which obviously we’re very pleased about, and I’m sure our distributors are, too.

Thank you, Gavin. And as a follow-up there. I think you mentioned Topo Chico was – the hard seltzer was the number two turning hard seltzer. Retailers are finishing up their spring shelf resets right now, did they respond the way you wanted to with Topo Chico here with their resets given those velocity stats?

Yes, they did. We’ve got – our national rollout of Topo Chico has been very well received by both big and small retailers.

Okay. Thank you.

Thank you.

Thank you, Bill. Our next question goes to Steve Powers with Deutsche Bank. Steve, your line is open. You can go ahead.

Yes. Hey, thank you very much. A couple of follow-ups on things, I guess, mostly for Tracey, we’ve covered before. On the hedging program, I guess, are you able to be any more specific around where you think your COGS per hectoliter. I guess, what your outlook is for the coming year before any productivity offsets? I just – I think the spot market would indicate potentially double-digit type inflation. It sounds like you’re going to be well below that. I’m just trying to get a sense for order of magnitude and how much inflation may be deferred into 2023? That’s question number kind of one. And then two, I know I’m supposed to only have one, but if you can – on the second one, on EBITDA, just remove away from explicit EBITDA guidance, I think all the peace parts that you gave us, do allow us to back into EBITDA, but I think it results in a wider range and you might typically land on. So is that intentional, so would be thinking kind of the midpoint of all those things, low single-digit type EBITDA increase? Just – or do you – are you intentionally leaving a little bit wider? So thank you for both those.

For you, Tracey.

Yes. So let me try that. So Steve, look, we didn’t give COGS per hectoliter guidance, but it is both into our bottom line guidance. So the high single-digit net income or income before tax guidance that is built in there. Some of the things maybe that can just help put a bit of color around our COGS outlook is we’ll continue to be impacted by inflation on our commodities and our packaging materials in particular. And we do expect the freight market to remain tight. In Q4, we actually saw some notable impact from inflation on our EMEA and APAC business, and we expect to see that continue into 2022. But it’s basically just one component of our COGS charge and maybe a couple of additional items just to consider to add some color. So again, assuming we don’t see the similar levels of on-premise restrictions as we saw in the first half of 2021, we do expect to see some benefits, particularly in EMEA and APAC business around volume leverage. I also mentioned earlier that we expect to see channel and geographic mix benefits again in EMEA, APAC, which has a lower overall COGS per hectoliter cost. I had mentioned our hedging program, we don’t get into specific details around that other than saying that we typically hedge anyway between one and three years, depending on commodities, depending on liquidity, depending on our outlook of the commodities. And again, at this point, we are comfortable with our hedge positions as we look forward over the next couple of years. Maybe just one more item to consider around COGS is we also are expecting some depreciation benefits as we are cycling out of a five-year period of the asset fair value exercise, which related to the MillerCoors acquisition. So you’ll see some benefit coming out of that. Other than that, we provide a number of actions across our supply chain and other levers that we can pull to deliver our top and bottom line, but the COGS outlook is built into our bottom line guidance. And then just in terms of EBITDA, I mean, really, the intention is to more closely align the metric guidance, metrics with our revitalization plan goal. So that’s all about driving both top and bottom line growth. There’s no intention other than that. We just want to more closely align with how we run the business. So again, we have added the other metrics that hopefully will get you to an EBITDA range, I mean, without giving you specific numbers. But yes, that it, Steve.

Thanks, Tracey.

Thank you.

Thank you, Steve. Our next question comes to Nadine Sarwat with Bernstein. Nadine, your line is open. You can go ahead.

Hi, guys. Thanks for taking my question. I want to push a little bit more on gross margins. Tracey, you mentioned and provided some helpful color on all of the moving parts. And in your prepared remarks, you did say that gross margins were going to continue to be pressured. But pushing in a little bit more on that, can you give more precise expectations as to gross margins for this year? What I’m trying to understand is, do you expect to be able to take enough price plus that positive mix to offset the COGS pressures? Or should we be expecting gross margin compression on a year-on-year basis? Thanks.

Nadine, maybe I can start on that one first. I mean you’ve given all the components of it, right? But I mean if you look at our P&L, obviously, we have a strong push in our revitalization plan to change the shape of our portfolio. And I think we’ve been pretty successful at that last year. I mean – as I said, our brands are healthier – mix is really strong. Coors Light, Miller Lite, our core brands have grown very nicely. So you’ve got a couple of things going on in the top line. You’ve got the pricing, which I referenced, I gave you the U.S. pricing, but obviously, there’s pricing in Europe and Canada coming through as well. We’ve got strong positive mix that will come through as our portfolio reshapes into above premium. We cycled past the economy portfolio in the first sort of first and second quarter will drive positivity from an overall margin point of view. We do have the emerging growth, which is all operating in the above premium, and we’re going to continue to invest in our business. We’re going to continue to put money into marketing. We made that, and Tracey made the point. We were very choiceful in December once we realized that Omicron was going to impact us, we very choicefully chose not to pull the marketing level because we – our brands are reacting so well to the marketing, and we wanted to set ourselves up for a strong 2022, and so that was choice. But and we are going to increase marketing, as Tracey said, in 2022, both in the U.S. and all of our other markets. So we’ve got a lot of levers. And I’m not going to repeat everything, Tracey said about the cost of goods sold line and all the levers that go in there. But we’ve got some positive momentum in the top line. Thanks, Nadine.

Thank you.

Thank you, Nadine. Our next question goes to Chris Carey with Wells Fargo. Chris, your line is open. You can go ahead.

Hey everyone, thanks for the question. So Gavin, I’m trying to just understand a little bit on the – it is a question on – is just how you’re thinking about channel mix in 2022. And you did say that the EBITDA would have been kind of like in line if Omicron had not created the volatility at the end of the quarter. But sales came in line, which I suppose implies a margin impact and specifically channel mix with the on-premise? And if I just run that math on the difference between the full year guide and what kind of came through, maybe it’s like a $70 million difference or a few hundred basis points on margin. Is that how we should be thinking about just the potential benefit of channel mix going into next year as a potential offset in your business. Tracey did mention that in the COGS per hectoliter it is a tailwind to the business just because of different packaging mix, and you’re going to get some volume leverage. So I mean, clearly, we’re all trying to figure out how the cost per hectoliter versus MG&A dynamics plays out. And if you could just maybe offer some perspective on what you think the channel mix is the EBITDA on the quarter? And I think that’s really how we should be thinking about potential tailwind of the business on a profit and margin impact going into next year?

Right. Chris, yes, a lot going on in that question. Let me see if I can help. Look, I mean I think it’s safe to say that in the fourth quarter, we were expecting our revenues to be higher than what we actually ended up with. So although we met the guidance of mid-single digit, our expectation at the end of October was that – was going to be higher. And obviously, it wasn’t because of the Omicron impact. But there’s a range there, right, of I think mid-single digit guidance is 3.6% to 7.4%, roughly, right? So we were expecting that number to be higher. From a channel mix point of view, obviously, particularly in Europe, it’s very positive for us when the on-premise is open, we’re extremely efficient at that and the margins are good. In the U.S., the margins are also good in the on-premise for us, mostly because we skewed higher on the above premium portfolio than we do on economy, for example. I mean, brands like Blue Moon, Peroni, Pilsner Urquell in the U.S. are all higher margin, higher revenue brand. So when the on-premise is open, we benefit from that. And Miller Lite and Coors Light also disproportionately over-indexed versus some of the lower-margin brands in the on-premise. And you have the same impact in Canada and you have the same impact in Europe. So when the on-premise runs into some challenges, obviously, that has a – that’s a mix negative for us everywhere, but particularly in Europe. As we head into this the sort of 2022. Obviously, we’ve got some tailwinds behind us. I mean in the first quarter, we had the well-publicized challenges of the Texas storms and the cybersecurity of tech. And in Europe, we – as I recall in the first quarter last year, we were pretty much shut down in the on-premise for, I think, the whole first quarter, which obviously we don’t have we did a little bit in January. But certainly, I think as of either this Monday or last Monday, they’ve pretty much opened up the UK completely, which will obviously be positive for us. So we’ve got some positive tailwinds behind us from that perspective. And they happen to be positive tailwinds from a channel point of view because we make more margin there. And then of course, you’ve got the negative headwind of cycling the economy portfolio change, which we’ve got, I don’t know, four or five months left of starting on the January 1. But from a margin point of view, that’s actually very positive for us. So hopefully, that’s helpful, Chris.

Yes. Thanks, Gavin.

Thank you, Chris. Our next question goes to Laurent Grandet from Guggenheim. Laurent, your line is open. You can go ahead.

Thanks for us squeezing me in. Two questions actually on the top line as a significant or part of your assumption. So I would like to understand what are you expecting in terms of a sales category growth for this year and the sales you are planning to achieve thanks to Topo Chico and Vizzy? How should – what to expect for Simply? I know it’s not a hotel there, but a different one. And finally, if you can help me try to figure out how much to contribute to the growth of your energy growth division? Thank you.

Thanks, Laurent. And on Simply, look, I mean, obviously, we haven’t even launched it into the market yet. So all I can tell you is how the retailers, distributors and consumers are reacting to it. And they reacted extraordinarily positively to Topo Chico, which is doing amazingly well for us. The reaction to Simply has been even stronger than that. The number of households that have Simply in the one in two households in America, it’s a very well-known brand. So if we just go by a reaction that we’ve had for retailers, distributors and from consumers, we’re going to get more than our fair share of shelf space in the sort of above more flavorful area, which is probably where we’ve lagged a little bit this year. We’re tapping into a new segment of flavor for us. And so we haven’t done anything yet, but the reaction has been particularly strong. If you look at emerging growth, it’s got three big components to it, a solid base business, right? We’ve got our distribution business, our craft business in Tencent, Black and then our Latin American business. Latin America contributed, as I said in our opening remarks, really strongly but, non-alc which comprises ZOA and La Colombe. To all intents and purposes, we’re coming off a 0 base of revenue coming into 2021. So a good chunk of the growth that we’ve experienced in the emerging growth has come from non-alc, which is ZOA and La Colombe, Laurent. I’m not going to break out by brand what that is, but you can assume that big contributors to that growth were Latin America and our non-alc businesses. I think those were the two biggest drivers of us being ahead of plan. Thanks, Laurent.

And regarding after this, so if you can tell us basically what’s your assumption in term of category growth? And what your opinion?

Well look, I mean, from a hot sales point of view, Laurent, I mean, obviously, it was growing very strongly. It came off a lot, but it still grew low teens in 2021. We’ve got two fastest-growing seltzers in – of any major beverage company that differentiated. We’ve got a lot of momentum behind them. And we think we can do really big things with those two brands heading into 2022. I mean we’ve got two of the top five seltzer brands. So we think we’re well-positioned to take share and grow. It’s a big segment, Laurent. I’m not going to put a number as to what we assess that it’s going to grow. But frankly, it doesn’t – we can gain a lot of share in this space, whether they are in a seltzer category grows or doesn’t grow because of the two brands and offerings that we have. Thanks, Laurent.

Thanks. Appreciate it. Thanks.

Thank you, Laurent. Our next question goes to Lauren Lieberman with Barclays. Lauren, your line is open. You can go ahead.

Great. Thanks so much. Good morning. I wonder if you hone maybe a little bit on expected volume performance for 2022. Just knowing, I guess a, the comments on right so on elasticity and really just sort of not knowing. But if I back into kind of the comments you’ve made on pricing, mix still being positive, I would assume, given you about premium growth. It sounds like you’re planning for volume to be flattish, I’m guessing. And specifically, it through that STRs and thinking about the category backdrop the degree to which if that flattish volume thought process is right, that implies continued market share gain across the portfolio? Or if that’s more of a kind of in-line performance as you’re thinking about how things may well play out next year? Thanks.

Well, Lauren, look, I’m not going to give volume guidance. But what I can say to you is, in the fourth quarter, obviously, the entirety of our loss was driven by the rationalization of our economy portfolio. Both premium grew and our premium lights grew in the fourth quarter. Now obviously, there was an element of stock build in the fourth quarter for some of our premium light brands. But our driving to above premium is reaping a benefit. Honestly, we came within a whisker of being positive from a volume point of view for the whole year for Miller Lite and Coors Light. In fact, now it has a guess that if we didn’t have the Omicron virus in the last six weeks that we might well have got there if we hadn’t had the curtailment in the on-premise. So I don’t want to repeat myself from earlier comments, Lauren. But we are expecting a headwind file on the economy portfolio. It’s a very deliberate decision. We think it’s the right decision. It’s a lot of focus for us. That is to focus in on four economy brands. It removes a ton of complexity from our supply chain, which has really helped us to rebuild our inventory levels to levels that we haven’t seen for a while and really improved the service to our distributors on the brands that really matter, which is Miller Lite, Coors Light and our above premium portfolio. So absent another variant in 2022, we think we’re well placed from an overall portfolio point of view.

Okay. Thanks so much.

Thanks, Lauren.

Thank you, Lauren. Our next question goes to Bryan Spillane with Bank of America. Bryan, your line is open. You can go ahead.

All right. Thanks. Good morning, Gavin. Good morning, Tracey. Just one question on – and Tracey, you touched on this a little bit, I think, in the prepared remarks. Just can you give us an update on where we stand now in terms of the progress on the investments that you’ve made in the brewing – in your brewing facilities? So there’s – I think you referenced Montreal. There’s an upgrade going on in Golden, there’s the seltzer capacity. Just kind of where we stand on those projects and maybe the contribution that we’re getting from cost savings related to that? And then if you could, just give us a perspective on what it implies for capital spending for 2022? And then maybe just are we in the right range in this mid-500s as an ongoing CapEx.

I think that was for you, Tracey.

Yes. Okay. So let me start and then Gavin, you just jump in here. So I mean, we – if we just start with our Canadian breweries, so our new Montreal brewery state-of-the-art brewery that we’re building just outside of Montreal that actually came online at the end of last year. We still have some IT projects around bringing the Canadian business on to our U.S. ERP system. So that’s going to continue at least into this year, maybe a little bit more into the early part of next year. And then we’ve got the transformation and the modernization of our Golden Brewery. That’s a multiyear project. So that’s still ongoing. The investment in our hard seltzer capabilities, so we’re putting in capabilities in Canada and the UK, so that will be this year and next year, that’s big project and then also our packaging upgrade projects that relate to sustainability of our packaging, et cetera, that’s ongoing. So I’d say those are the three big projects. Now we haven’t given specific CapEx guidance, but – what we do expect is our CapEx to return to more historical levels. So if you have a look at around 2019 type of spend, you can expect that for this year.

Okay. That’s really helpful. And just, Tracey, if you could just – I guess, if you could just give us a sense of just how much incremental savings or productivity efficiencies? Just like how much more we could expect incremental from here?

Yes. I mean I’d just refer you to our cost savings program. So we – so right at the beginning of revitalization, we spoke about $450 million of cost-savings primarily related to the COGS line. So that would include the Montreal brewery, some of those types of efficiencies that we put in place. And then the $150 million of the revitalization program was primarily around the G&A areas. So we – $490 million of that $600 million, so the balance will be delivered this year. And again, the majority of that would be related to the COGS line. So the more efficient breweries and the lower cost breweries. But I’m not sure that we can say much more than that other than it is included in that cost savings number.

The only other thing I’d add to that, Bryan, is obviously we have been pretty clear, open about the fact that as we bring seltzers into our own facilities. So the margin impact is very positive for us, right? And we started bringing Vizzy in last year into Fort Worth and we’ll bring Topo Chico in 2022. And in Canada, we’ll bring those in-house, and we’ll do the same in the UK. And that’s really positive from a margin point of view. And then, obviously, Tracey mentioned Montreal, right. I mean that brewery there was a couple of hundred years old, and we’ve placed with a state-of-the-art brewery and it has meaningful cost benefits for us. Thanks, Bryan.

All right. That’s really helpful. Yes. Thank you. Thank you, both.

Thank you, Bryan. Our next question goes to Dara Mohsenian with Morgan Stanley. Dara, your line is open. You can go ahead.

Hi, this is actually Eric Serotta in for Dara. Good morning. The first – main question is I wanted to circle back on with shelf space. Seemingly potentially a lot of shelf space up for grabs if the expected trimming in hard seltzer – marginal hard seltzer SKUs happens. Just your thinking about that in terms of opportunities for Molson Coors, what you’re looking at in terms of shelf space position? Who do you think other than Topo Chico is picking up that? And in the broader context of spirits is having one of its best years last year in memory and RTDs being particularly hot. What kind of risk do you see for some of the core brands in terms of shelf space and retailers that are able to hold to carry spirits and RTDs?

Thanks, Eric. Yes, you’re right. I mean, spring is where most of the comprehensive change from a recent point of view takes place. And that’s when most of the large innovations are actually launched. And our team are selling our purpose drives purchase category management strategy, where we believe that all decisions start with occasions. And therefore, all segments matter, and getting the call right for retailers in those segments is really important. And obviously, innovation is incredibly important to that as well. So our team is focusing – driving productivity on our core brands, Coors Light, Coors Banquet, Miller lite, Blue Moon Belgian White, and Leinenkugel’s particularly Summer Shandy. And at the same time, they’re selling what I think is one of the most focused and exciting innovation pipelines that we’ve had in years with Topo Chico Hard Seltzer and Vizzy Mimosa and Topo Chico Margarita and Simply Spiked and Blue Moon Lightsky Tropical Wheat, it’s really focused and exciting. And with that strong performance in our core, which we’re experiencing as well as the innovation we bring, we are expecting to see expanded shelf space for our business in the spring, and that’s what we’re striving towards. Thanks, Eric.

Great. Thank you.

That concludes our question-and-answer session. I will turn the conference back over to the management team for any closing remarks.

Thank you, Greg.

All right. So thank you very much, everyone, for joining us today. Thanks, Gavin and Tracey, and we appreciate all of those who are able to ask questions. Traci Mangini and I are very happy to follow up on any additional questions that you may have over the next couple of days. So with that, thanks, everybody, and have a great day.

That concludes today’s call. Thank you for your participation. You can now disconnect your lines.