What changed in this filing

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Item 1. Business

2021-02-11 compared with 2020-02-12 · 288 added, 349 removed, 182 unchanged (78% of the section changed)

Unless otherwise noted in this report, any description of "we," "us" or "our" includes Molson Coors Beverage Company ("MCBC" or the "Company") (formerly known as Molson Coors Brewing Company), principally a holding company, and its operating and non-operating subsidiaries included within our reporting segments and Corporate.

At December 31, 2019, our reporting segments included:

MillerCoors LLC ("MillerCoors" or U.S.

segment), operating in the United States;

Molson Coors Canada ("MCC" or Canada segment), operating in Canada;

Molson Coors Europe (Europe segment), operating in Bulgaria, Croatia, Czech Republic, Hungary, Montenegro, the Republic of Ireland, Romania, Serbia, the United Kingdom and various other European countries;

and Molson Coors International ("MCI" or International segment), operating in various other countries.

As further discussed below, in January 2020, we changed our management structure to two business units, our North America and Europe businesses.

Accordingly, the segment reporting implications will not be reflected until the first quarter of 2020.

Unless otherwise noted in this report, any description of "we," "us" or "our" includes Molson Coors Beverage Company ("MCBC," "Molson Coors" or the "Company") (formerly known as Molson Coors Brewing Company), principally a holding company, and its operating and non-operating subsidiaries included within our reporting segments.

On January 1, 2020, we changed our management structure from a corporate center and four segments to two segments - North America and Europe.

Our International segment was reconstituted with the Africa and Asia Pacific businesses reporting into the Europe segment and the remaining International business reporting into the North America segment.

Accordingly, effective January 1, 2020, our reporting segments include:

North America (North America segment), operating in the U.S., Canada and various countries in the Caribbean, Latin and South America;

and Europe (Europe segment), operating in Bulgaria, Croatia, Czech Republic, Hungary, Montenegro, the Republic of Ireland, Romania, Serbia, the U.K., various other European countries, and certain countries within the Middle East, Africa and Asia Pacific.

We recast the historical presentation of segment information as a result of these reporting segment changes accordingly.

Unless otherwise indicated, information in this report is presented in USD and comparisons are to comparable prior periods.

Our primary operating currencies, other than USD, include the CAD, the GBP, and our Central European operating currencies such as the EUR, CZK, HRK and RSD.

We are one of the world's largest brewers and have a diverse portfolio of owned and partner brands, including global priority brands Blue Moon, Coors Banquet, Coors Light, Miller Genuine Draft, Miller Lite, and Staropramen , regional champion brands Carling , Molson Canadian and other leading country-specific brands, as well as craft and specialty beers such as Creemore Springs , Cobra , Sharp's Doom Bar, Henry's Hard and Leinenkugel's .

With centuries of brewing heritage, we craft high-quality, innovative beverages with the purpose of uniting people to celebrate all life’s moments.

Our primary operating currencies, other than the USD, include the CAD, the GBP, and our Central European operating currencies such as the EUR, CZK, HRK and RSD.

For more than two centuries, we have been brewing beverages that unite people to celebrate all life’s moments.

From Coors Light , Miller Lite, Molson Canadian, Carling, and Staropramen to Coors Banquet, Blue Moon Belgian White, Blue Moon LightSky, Vizzy, Coors Seltzer, Leinenkugel’s Summer Shandy, Creemore Springs, Hop Valley and more, we produce many beloved and iconic beer brands.

While the Company’s history is rooted in beer, we offer a modern portfolio that expands beyond the beer aisle as well.

As a business, our ambition is to be the first choice for our people, our consumers and our customers, and our success depends on our ability to make our products available to meet a wide range of consumer segments and occasions.

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Our brands are designed to appeal to a wide range of consumer tastes, styles and price preferences.

Our largest markets are the U.S., Canada and Europe.

Coors was incorporated in June 1913 under the laws of the state of Colorado.

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Upon completion of the Merger, Adolph Coors Company changed its name to Molson Coors Brewing Company.

In January 2020, we changed our name from Molson Coors Brewing Company to Molson Coors Beverage Company, as further discussed below.

Revitalization Plan

On October 28, 2019, we initiated a revitalization plan designed to allow us to invest across our portfolio to drive long-term, sustainable success.

As part of our revitalization plan, we made the determination to establish Chicago, Illinois as our North American operational headquarters, close our existing office in Denver, Colorado and consolidate certain administrative functions into our other existing office locations.

Effective January 2020, we moved from a corporate center and four business units to two business units - North America and Europe.

The North America business unit consolidates the United States, Canada and corporate center, enabling us to move more quickly with an integrated portfolio strategy.

The Europe business unit allows for standalone operations, developed and supported by a European-based team, including local leadership, commercial, supply chain and support functions.

The existing International team was reconstituted to more effectively grow our global brands - with the Africa and Asia Pacific businesses reporting into the European business unit and the remaining International business reporting into the North America business unit.

The change in structure to two business units and the resulting financial reporting segment changes will not be reflected until our first quarter 2020 results.

We also changed our name from Molson Coors Brewing Company to Molson Coors Beverage Company, in January 2020 in order, to better reflect our strategic intent to expand beyond beer and into other growth adjacencies in the beverage industry.

In January 2020, we changed our name from Molson Coors Brewing Company to Molson Coors Beverage Company in connection with our revitalization plan.

As we continue to evolve our strategy and portfolio to appeal to the ever-changing preferences of our consumer base, we are also broadening our range of products and offerings within our portfolio.

Expanded offerings include, among others, hard seltzers and a variety of non-alcoholic offerings.

Coronavirus Global Pandemic

The coronavirus pandemic had a material adverse effect on our operations, liquidity, financial condition and results of operations in 2020 and we currently expect it will continue to have a material impact to our financial results in 2021 and possibly beyond.

The extent to which our operations will continue to be impacted by the pandemic will depend largely on future developments, which are highly uncertain and cannot be accurately predicted, including new information which may emerge concerning the severity and duration of the outbreak, roll out and efficacy of the vaccines, and actions by government authorities to contain the pandemic or treat its impact, among other things.

We continue to actively monitor the ongoing evolution of the pandemic and resulting impacts to our business and have taken various mitigating actions in response to the impacts of the pandemic and to position our business for the long term.

See further discussion of the status of the pandemic and its impacts on our Company, including the on- and off-premise impacts to our segments in Part II.

Management's Discussion and Analysis .

Industry Overview

The brewing industry has significantly evolved over the years, becoming an increasingly global beer market.

The brewing industry has significantly evolved over the years to become an increasingly global beer market.

The industry was previously founded on local presence with modest international expansion achieved through export, license and partnership arrangements.

More recently, it has become increasingly complex, as the consolidation of brewers has occurred globally, resulting in fewer major global market participants.

In addition to the acquisitive element of this industry consolidation, the market continues to utilize export, license and partnership arrangements;

however, these are often with the same global competitors that make up the majority of the market.

This industry consolidation has resulted in a small number of large global brewers representing the majority of the worldwide beer market.

At the same time, smaller local brewers within certain established markets are experiencing accelerated growth as consumers increasingly place value on locally-produced, regionally-sourced products.

Changing consumer trends are also pushing the industry toward above premium beer, flavored malt beverages, and beyond beer altogether.

As the beer industry continues its evolution of consolidation and diversification of its products to meet consumer demand with broadening preferences, large global brewers are uniquely positioned to leverage the scale, depth of product portfolio and industry knowledge to continue to lead the market forward.

Over time the market has become increasingly complex as the consolidation of brewers has occurred globally,

resulting in a small number of large global brewers representing the majority of the worldwide beer market.

In addition to the consolidation and the acquisitive nature of the industry, exports, licensing and partnership arrangements continued to be used and these transactions typically occurred between the same global competitors that make up the majority of the market.

At the same time, smaller local brewers within certain established markets have experienced accelerated growth as consumers increasingly place value on locally-produced, regionally-sourced products.

In addition to the growth of smaller local craft breweries, changing consumer trends are pushing the industry toward above premium beer, flavored malt beverages and beyond beer altogether.

In recent years, the hard seltzer market has emerged and has experienced phenomenal growth, particularly in the U.S..

We believe the hard seltzer market will continue to gain traction and be of increasing importance.

As the beer industry continues its evolution of consolidation and diversification of its products to meet consumer demand with broadening preferences, we believe large global brewers are uniquely positioned to leverage the scale, depth of product portfolio and industry knowledge to continue to lead the market forward.

We believe we are well positioned to compete in this continually evolving market, particularly in beer, hard seltzer and beyond.

Global Competitors' Market Capitalization

We evaluate ourselves in relation to other global brewers using various metrics, including overall market capitalization, volume, net sales revenue, gross margins and net profits, as well as our position within each of our core markets, with the goal to be the first choice for our consumers and customers.

To provide a perspective of the relative size of the major participants in the global brewing market, the market capitalizations of our primary global competitors, based on foreign exchange rates as of December 31, 2019 , were as follows:

To provide a perspective of the relative size of the major participants in the global brewing market, the market capitalization of our primary global competitors, based on foreign exchange rates as of December 31, 2020, were as follows:

Market Capitalization

(In billions)

Anheuser-Busch InBev SA/NV

Anheuser-Busch InBev SA/NV ("ABI") $ 140.6

Heineken N.V.

("Heineken") $ 64.2

Carlsberg Group ("Carlsberg") $ 23.9

Asahi Group Holdings, Ltd.

We have a diverse portfolio of owned and partner brands which are positioned to meet a wide range of consumer segments and occasions in a variety of markets, including Blue Moon, Coors Banquet, Coors Light, Miller Genuine Draft, Miller Lite and Staropramen .

We consider these our global priority brands which we continue to invest in and focus on growing globally.

We believe our portfolio encompasses all segments of the beer industry with the purpose of uniting people to celebrate all life’s moments, including premium and premium lights, economy, above premium and craft, as well as adjacencies such as ciders and other malt beverages.

Additionally, as we continue to evolve our strategy and portfolio to appeal to the ever-changing preferences of our consumer base, we are also broadening our range of products and offerings within our portfolio to include other beverage categories outside of traditional beer, including our emerging plans in the non-alcoholic beverage segment.

("Asahi") $ 20.8

We have a diverse portfolio of beloved and iconic owned and partner brands including Blue Moon, Coors Banquet, Coors Light, Miller Genuine Draft, Miller Lite and Staropramen .

We continue to invest in and focus on growing these brands.

In addition to these iconic brands, we offer premium, premium lights, economy, above premium and craft beers.

Further, we offer a modern and growing portfolio that expands beyond the beer aisle as well.

We craft high-quality, innovative beverages with the purpose of uniting people to celebrate all life’s moments.

This includes our current and emerging plans in the non-alcoholic beverage segment.

The following includes our primary brands sold in each of our segments.

Brands sold in the U.S.

Global priority brands

National champion and other regional brands

Craft and import brands

Coors Banquet

Leinenkugel's

Peroni Nastro Azurro (1)

Miller Genuine Draft

Brands sold in North America

Arizona Hard Green Tea (3)

Pilsner Urquell (1)

Miller High Life

Milwaukee's Best

Steel Reserve

Hard cider brands

Flavored malt beverages

Arnold Palmer Spiked (3)

Atwater Brewing brands Icehouse Revolver

Belgian Moon Keystone Rickard's

Belgian Moon LightSky Le Trou du Diable Saint Archer

Blue Moon Leinenkugel's

Smith & Forge

Steel Reserve Alloy Series

Blue Moon LightSky Mad Jack Staropramen

Brasseurs de Montréal brands Mickey's Steel Reserve

Carling Miller64 Terrapin brands

Carling Black Label Miller Genuine Draft Vizzy

Coors Banquet Miller High Life

Coors Edge Miller Lite

Coors Light Milwaukee's Best Licensed premium import brands (2)

Coors Original Molson Canadian Dos Equis

Coors Seltzer Molson Dry Heineken

Coors Slice Molson Export Heineken 0.0

Creemore Springs Molson Ultra Moretti

Crispin Movo Sol

Exel Old Style Pilsner Strongbow cider

Granville Island Olde English

Hamm's Peroni Nastro Azurro (1)

(1) Under perpetual royalty-free license from Asahi.

(2) Under license from Heineken.

The brand Heineken is under license in Canada only.

The brand Sol is under license in the U.S.

(3) In partnership with Hornell Brewing, an affiliate of Arizona Beverages.

(4) Under perpetual royalty-free license from ABI.

Brands sold in Canada

Global priority brands

National champion and other regional brands

Craft and import brands

Brasseurs de Montréal

Coors Original

Creemore Springs

Carling Black Label

Granville Island

Miller Genuine Draft

Le Trou du Diable

Miller High Life

Molson Canadian

Molson Export

Old Style Pilsner

Licensed premium import brands (1)

Strongbow cider

(1) Under license from Heineken.

Brands sold in Europe

Global priority brands

National champion and other regional brands

Miller Genuine Draft

Pardubicky Pivovar

Rekorderlig cider

Aspall Cider Cobra (1)

Coors Light Rekorderling Cider (1)

Corona Extra (1)

Sharp's Doom Bar

Stella Artois

Bergenbier Jelen Staropramen

Blue Moon Kamenitza Stella Artois (1)

Borsodi Lowenbrau (1)

Branik Miller Genuine Draft

Carling Niksicko

(1) The European business has licensing and distribution agreements with various other brewers through which it also brews and distributes Beck's, Lowenbrau, Stella Artois and Spaten, as well as a distribution agreement for the exclusive distribution of the Corona brand, throughout the Central European countries in which we operate.

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on-premise customers, we sell "factored" brands, which are third-party beverage brands for which we provide distribution to retail, typically on a non-exclusive basis.

Brands sold in International

Global priority brands

National champion and other regional brands

Miller High Life

Carling Strong

Coors Banquet

Miller Genuine Draft

Coors Original

Milwaukee's Best

Molson Canadian

In 2020, we operated the following segments:

the U.S., Canada, Europe and International.

A separate operating team managed each segment and each segment manufactures, markets, and sells beer and other malt beverage products.

North America and Europe.

A separate operating team manages each segment and each segment manufactures, markets, and sells beer as well as offers a modern and growing portfolio that expands beyond the beer aisle.

No single customer accounted for more than 10% of our consolidated sales in 2020, 2019 or 2018.

Effective January 1, 2020, as part of our revitalization plan, we changed our management structure to two business units - North America and Europe.

The resulting financial reporting segment changes will not be reflected until our first quarter 2020 results.

United States Segment

North America Segment

• Headquarters:

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• Approximately 10,000 employees as of December 31, 2020

Second largest brewer by volume in the U.S., representing approximately 23% of the total 2019 U.S.

brewing industry shipments (excluding exports)

Currently operating seven primary breweries, six craft breweries and two container operations.

In January 2020, we announced plans to cease production at our Irwindale, California brewery, which is currently expected to occur by September 2020, and entered into an option agreement with Pabst Brewing Company, LLC, granting them an option to purchase the Irwindale brewery.

Products produced in the Irwindale brewery will be transitioned to other breweries in our network.

See Part II—Item 8 Financial Statements and Supplementary Data, Note 7, "Special Items" for additional details.

Sales and Distribution

In the United States, beer is generally distributed through a three-tier system consisting of manufacturers, distributors and retailers.

A national network of approximately 380 independent distributors and one owned distributor, Coors Distributing Company, purchases our products and distributes them to on- and off-premise retail accounts.

References to on- and off-premise sales volumes are the sales to retailers of these distributors, which we believe is a useful data point relative to consumer trends.

In the United States, the on-premise channel industry volume, which includes sales in bars and restaurants, declined approximately 3% in 2019 .

The off-premise channel includes sales in convenience stores, grocery stores, liquor stores and other retail outlets.

The off-premise channel industry volume declined approximately 1% in 2019 versus prior year.

The following table reflects the industry channel share trends over the last five years in the United States.

Note that percentages reflect estimates based on market data currently available.

Industry channel trend

Coors Distributing Company distributed approximately 2% of our total owned and non-owned volume in 2019 .

Manufacturing, Production and Packaging

Brewing Raw Materials

We use high quality ingredients to brew our products.

We malt a portion of our production requirements, using barley purchased under primarily annual contracts from independent farmers located predominantly in the western United States.

Other barley, malt, and cereal grains are purchased from suppliers primarily in the U.S.

Hops are purchased from suppliers in the U.S.

We both own and lease water rights, as well as purchase water through local municipalities, to provide for and sustain brewing operations in case of a prolonged drought in the regions where we have operations.

We do not currently anticipate future difficulties in accessing water or agricultural products used in our brewing process in the near term.

Packaging Materials

The following summarizes the percentage of our U.S.

segment's packaging materials by type for the year ended December 31, 2019 .

Aluminum cans or bottles:

A portion of the aluminum containers was purchased from Rocky Mountain Metal Container ("RMMC"), our joint venture with Ball Corporation ("Ball"), whose production facilities, which are leased from us, are located near our brewery in Golden, Colorado.

In addition to the supply agreement with RMMC, we have a supply agreement with Ball to purchase cans and ends in excess of what is supplied through RMMC.

The RMMC joint venture agreement along with the cans and ends purchase agreement each expire on December 31, 2021.

Glass bottles:

A portion of the glass bottles was provided by Rocky Mountain Bottle Company ("RMBC"), our joint venture with Owens-Brockway Glass Container, Inc.

("Owens"), whose production facilities, which are leased from us, are located in Wheat Ridge, Colorado.

The RMBC joint venture agreement expires on July 31, 2025.

In addition to the supply agreement with RMBC, we have a supply agreement with Owens for requirements in excess of RMBC's production, which expires on December 31, 2021.

Stainless steel kegs:

Kegs are packaged in half, quarter, and one-sixth barrel stainless steel kegs.

A limited number of kegs are purchased each year, and we have no long-term supply agreement.

Crowns, labels, corrugate and paperboard are purchased from a small number of sources unique to each product.

In recent years, we have experienced a slight shift in the allocation among different packaging types toward aluminum cans and bottles and away from glass bottles.

In general, aluminum cans allow for lower packaging costs compared to most other types of packaging materials.

We do not currently anticipate future difficulties in accessing packaging products in the near term.

Contract Manufacturing

We have an agreement to brew, package and ship products for Pabst Brewing Company, LLC.

Additionally, the U.S.

segment produces beer for export to our Canada and International segments.

Seasonality of the Business

Total industry volume in the U.S.

is sensitive to factors such as weather, changes in demographics, consumer preferences and drinking occasions.

Weather conditions consisting of high temperatures and extended periods of warm and dry weather favor increased consumption of our products, while unseasonably cool or wet weather, especially during the summer months, adversely affects our sales volumes and net sales.

Accordingly, consumption of beer in the U.S.

is seasonal, with approximately 38% of industry sales volume typically occurring during the warmer months from May through August.

Known Trends and Competitive Conditions

Beer Industry Overview

The beer industry in the United States is highly competitive, and the two largest brewers, ABI and MCBC together represented the majority of the market in 2019 .

However, we estimate the two largest brewers lost share in 2019 due to volume growth in the import and flavored malt beverage (including hard seltzers) categories as consumer preferences continue to shift within the industry to above premium priced beers.

We believe growing or even maintaining our market share will require stabilizing our core brands and increasing our presence in the fast growing areas of the industry.

Competition from outside of the beer category continues to be a challenge for the beer industry.

The following table summarizes the estimated percentage market share by volume of beer (including flavored malt beverages) and other alcohol beverages, including wine and spirits, as a component of the overall U.S.

alcohol market over the last five years.

We anticipate that 2019 data, when available, will reflect a continuation of the recent consumer trends.

Note that percentages reflect estimates based on market data currently available.

Other alcohol beverages

Our Competitive Position

Our portfolio of beers competes with numerous above premium, premium, and economy brands.

These competing brands are produced by international, national, regional and local brewers.

We compete most directly with ABI brands, but also compete with imported and craft beer brands, as well as flavored malt beverages.

The following table summarizes the estimated percentage share of the U.S.

beer market represented by Molson Coors, ABI and all other brewers over the last five years.

Note that current year percentages reflect estimates based on market data currently available.

Others' share

Our products also compete with other alcohol beverages, including wine and spirits, and thus their competitive position is affected by consumer preferences between and among these other categories.

Driven by increased spirits advertising along with increased wine and spirits sales execution, sales of wine and spirits have grown faster than sales of beer in recent years, resulting in a reduction in the beer segment's lead in the overall alcohol beverage market.

beer business is regulated by federal, state, and local governments.

These regulations govern many parts of our operations, including brewing, marketing and advertising, transportation, distributor relationships, sales, and environmental issues.

To operate our facilities, we must obtain and maintain numerous permits, licenses and approvals from various governmental agencies, including the U.S.

Department of Treasury, Alcohol and Tobacco Tax and Trade Bureau, the U.S.

Department of Agriculture, the U.S.

Food and Drug Administration, state alcohol regulatory agencies, and state and federal environmental agencies.

Governmental entities also levy taxes and may require bonds to ensure compliance with applicable laws and regulations.

In 2019 , excise taxes on malt beverages were approximately $15 per hectoliter sold on a reported basis.

This includes the impact of the Craft Beverage Modernization and Tax Reform Act which took effect on January 1, 2018 for all qualified large domestic brewers and importers effective for 2018 and 2019, and subsequently has been extended through fiscal year 2020, and resulted in reduced excise taxes for MCBC in the U.S.

by $2 per barrel on the first six million barrels, which equated to $1.70 per hectoliter on this portion of volume.

We transfer a portion of our share of these savings to distributors consistent with the revenue splitting approach of our U.S.

segment’s economic model.

State excise taxes are levied in specific states at varying rates.

Refer to Part I—Item 1A, Risk Factors for risks associated with the regulatory environment in the U.S.

Canada Segment

Headquarters:

Toronto, Ontario (transitioning to North America operational headquarters in Chicago, Illinois in 2020)

Approximately 2,600 employees as of December 31, 2019

Canada's second largest brewer by volume and North America's oldest beer company, representing approximately 31% of the total 2019 Canada beer market

Currently operating five primary breweries and four craft breweries

We brew, market, sell and distribute a wide variety of beer brands nationally.

Our portfolio has leading brands in all major product and price segments.

In 2019 , Coors Light had an approximate 9% market share and was the second largest selling beer brand in Canada, and Molson Canadian had an approximate 5% market share and was the fourth largest selling beer in Canada.

Additionally, in 2019 Belgian Moon was the largest selling craft beer in Canada.

The Canada segment also includes our partnership arrangements related to the distribution of beer in Ontario, Brewers' Retail Inc.

("BRI"), and in the western provinces, Brewers' Distributor Ltd.

• North America's oldest beer company and second largest brewer by volume in North America, representing approximately 22% of the total 2020 North America beer market.

• Currently operating nine primary breweries, eleven craft breweries and two container operations in North America.

The North America segment also includes a partnership arrangement related to the distribution of beer in Ontario, Canada, Brewers' Retail Inc.

("BRI"), and in the western provinces of Canada, Brewers' Distributor Ltd.

BRI and BDL are accounted for under the equity method of accounting.

The majority of ownership in BRI resides with MCC, Labatt Breweries of Canada LP (a subsidiary of ABI) and Sleeman Breweries Ltd.

The majority of ownership in BRI resides with Molson Coors Canada ("MCC"), Labatt Breweries of Canada LP (a subsidiary of ABI) and Sleeman Breweries Ltd.

(a subsidiary of Sapporo International).

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In addition, we have an agreement with Heineken that grants us the right to import, market, distribute and sell certain Heineken products in Canada.

In line with our strategic initiatives to expand our craft portfolio, the Canada segment acquired Le Trou du Diable, a craft brewery in Quebec, in 2017.

There were no additional acquisitions during 2018 or 2019.

Additionally, on October 4, 2018, a wholly-owned subsidiary within our Canadian business completed the formation of an independent Canadian joint venture, Truss LP ("Truss"), with HEXO Corp.

("HEXO") to pursue opportunities to develop, produce and market non-alcoholic, cannabis-infused beverages.

Truss is structured as a standalone start-up company with its own board of directors and an independent management team and we maintain a 57.5% controlling interest in the joint venture.

Truss has been preparing for the launch of cannabis-infused products in the Canadian market, including the construction of a production facility in Belleville, Ontario.

We currently expect that Truss will launch products in 2020, subject to obtaining all of the required licenses and regulatory clearances.

The North America segment also includes Truss, our joint venture with HEXO Corp.

("HEXO") in Canada, which launched its first non-alcoholic cannabis infused product, Veryvell Drops , and its ready to drink beverage portfolio across the Canadian market in 2020.

Separately, in April 2020, we completed the formation of a new joint venture with HEXO and it launched its first non-alcoholic hemp-derived cannabidiol ("CBD") beverages in Colorado.

Additionally, in the third quarter of 2020, we, in collaboration with D.G.

Yuengling & Son, Inc.

("Yuengling"), formed The Yuengling Company LLC ("TYC"), a joint venture equally owned by MCBC and DGY West Holdings, LP ("DGY West") that was formed to expand commercialization of Yuengling's brands with operations currently expected to commence in the second half of 2021.

Sales and Distribution

In Canada, provincial governments regulate the beer industry, particularly with regard to the pricing, mark-up, container management, sale, distribution and advertising of beer.

Distribution and the retail sale of alcohol products involve a wide range and varied degree of Canadian government control through their respective provincial liquor boards.

See below discussion for details by province.

In Canada, the on-premise channel includes sales in bars and restaurants.

In Ontario and western Canada, we use jointly-owned distribution systems to deliver beer to on-premise customers along with products from Labatt Breweries of Canada LP and Sleeman Breweries Ltd.

In Quebec and Eastern Canada, we primarily deliver directly.

The on-premise channel, and

relationships with customers, are highly regulated and the regulations differ significantly across different provincial jurisdictions.

The off-premise channel includes sales to convenience stores, grocery stores, liquor stores and other specialty retail outlets, including "The Beer Store" in Ontario, which is the world's largest beer retailer and is co-owned by Ontario's three largest brewers.

The off-premise channel is highly regulated and differs significantly across different provincial jurisdictions.

The following table reflects the industry channel trends over the last five years in Canada.

Industry channel trend

Province of Ontario

Our go to market strategy differs slightly between the geographic regions of North America due to the differences in regulations among those geographic areas.

In the United States, beer is generally distributed through a three-tier system consisting of manufacturers, distributors and retailers.

A national network of approximately 360 independent distributors and one Company-owned distributor, Coors Distributing Company, purchases our products and distributes them to on- and off-premise retail accounts.

Coors Distributing Company distributed approximately 2% of our total owned and non-owned volume in 2020.

In Canada, because provincial governments regulate the beer industry and provincial liquor boards control the distribution and retail sale of alcohol products, distribution strategies vary by province.

In Ontario, beer is primarily purchased at retail outlets operated by BRI, at government-regulated retail outlets operated by the Liquor Control Board of Ontario ("LCBO"), at approved agents of the LCBO, at certain licensed grocery stores, or at any bar, restaurant, or tavern licensed by the LCBO to sell alcohol for on-premise consumption.

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Management's Discussion and Analysis of Financial Condition and Results of Operations and Part II, Item 8 Financial Statements and Supplementary Data, Note 18, "Commitments and Contingencies" for further discussion.

Province of Québec

In Québec, the distribution and sale of beer is governed by the Quebec Alcohol Corporation ("SAQ").

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Québec retail sales for off-premise consumption are made through grocery and convenience stores, as well as government operated outlets.

Province of British Columbia

In British Columbia, the government's Liquor Distribution Branch controls the regulatory elements of distribution of all alcohol products in the province.

BDL, which we co-own with ABI, manages the distribution of our products throughout British Columbia.

Consumers can purchase beer at any Liquor Distribution Branch retail outlet, at any independently owned and licensed retail store or at any licensed establishment for on-premise consumption.

Establishments licensed primarily for on-premise alcohol sales may also be licensed for off-premise consumption.

Province of Alberta

In Alberta, the distribution of beer is managed by independent private warehousing and shipping companies or by a government sponsored system in the case of U.S.

sourced products.

All sales of liquor in Alberta are made through retail outlets licensed by the Alberta Gaming and Liquor Commission or licensees, such as bars, hotels and restaurants.

BDL manages the distribution of our products in Alberta.

Other Provinces

Our products are distributed in the provinces of Manitoba and Saskatchewan through local liquor boards.

Manitoba and Saskatchewan also have licensed private retailers.

BDL manages the distribution of our products in Manitoba and Saskatchewan.

In the Maritime Provinces (other than Newfoundland), local liquor boards distribute and sell our products.

In Newfoundland, our products are sold through independent distributors.

In Yukon, Northwest Territories and Nunavut, government liquor commissioners manage the distribution and sale of our products.

BDL, which we co-own with ABI, manages the distribution of our products throughout British Columbia, Alberta, Manitoba and Saskatchewan.

Our products are distributed and sold by local liquor boards in the Maritime Provinces, except

Newfoundland, independent distributors in Newfoundland and government liquor commissioners in Yukon, Northwest territories, and Nunavut.

Our products can be purchased by consumers at the government's Liquor Distribution Branch retail outlet, at any independently owned and licensed retail store or at any licensed establishment for on-premise consumption in British Columbia and, in Alberta, at retail outlets licensed by the Alberta Gaming and Liquor Commission or licensees such as bars, hotels and restaurants.

In the Caribbean, Latin and South America, we use a combination of export models and license agreements to sell Blue Moon, Coors Light, Miller Genuine Draft, Miller High Life, Miller Lite and other brands.

In our export model markets, we import beer from the U.S.

and sell it through agreements with independent distributors.

In license markets, we have established exclusive licensing agreements with brewers and distributors for the manufacturing and distribution of our products.

In certain of our markets, we rely on a combination of these agreements.

References to on- and off-premise sales volumes are sales to retailers, which we believe is a useful data point relative to consumer trends.

In North America, the on-premise channel includes sales to bars and restaurants while the off-premise channel includes sales in convenience stores, grocery stores, liquor stores and other retail outlets including The Beer Store in Ontario, Canada which is Canada's largest beer retailer and is co-owned by Ontario's three largest brewers.

The following table reflects the industry channel share trends over the last five years in the largest regions in our North America segment of Canada and the U.S.

Percentages reflect estimates based on market data currently available.

Industry channel trend

2020 2019 2018 2017 2016

On-premise 9 % 16 % 16 % 16 % 16 %

Off-premise 91 % 84 % 84 % 84 % 84 %

We continue to monitor the coronavirus pandemic, which has had a material adverse effect on our North America operations, liquidity, financial condition and results of operations in the second quarter of 2020 due to on-premise closures.

The pandemic continued to have a significant adverse effect during the third and fourth quarters of 2020 due to the on-premise locations only being open at partial capacity and at reduced hours.

We currently expect these significant adverse effects to continue into 2021 as on-premise locations have experienced, and we believe will continue to experience, capacity and hour limitations.

The effects of the pandemic remain highly uncertain especially around the duration of the outbreak and actions by government authorities to contain the pandemic or address its impact, among other things.

We estimate that approximately 9% and 9% of 2020 North America volume and net sales, respectively, were from the on-premise channel.

This compares to our 2019 estimate that approximately 16% and 17% of our volume and net sales, respectively, were from the on-premise channel which tends to be more profitable than the off-premise channel as a result of its higher above premium brand mix, higher net sales revenue per hectoliter and lower package costs due to the higher volume of kegs sold.

We have seen some of the on-premise demand shift to the off-premise;

however, this shift has not been proportionate to the severe declines in volume lost from the on-premise closures and weakened demand.

As a result of the coronavirus pandemic and resulting government-imposed restrictions and related on-premise closures, this portion of our business effectively ceased entirely from the middle of March 2020 into June 2020.

Additionally, continuing governmental or societal impositions on bars and restaurants and restrictions on public gatherings including the growing risk of a return of shutdowns, especially if prolonged in nature, we expect will continue to have adverse effects on on-premise traffic and, in turn, our business performance, cash flows and liquidity.

Management's Discussion and Analysis, "Executive Summary" & Results of Operations— "North America," for further details.

Manufacturing, Production and Packaging

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We use high quality ingredients to brew our products.

We source barley malt from one primary provider, from which we have a committed supply through 2022.

Hops are purchased from a variety of global suppliers in the U.S.

and Europe through contracts that vary in length based on market conditions and cover our supply requirements through 2021.

Other starch brewing adjuncts are sourced from two main suppliers, both in North America, through 2022.

Water used in the brewing process is from local sources in the communities where our breweries operate.

Hops used in our North American products are purchased from suppliers in the U.S.

These contracts vary in length based on market conditions and cover our supply requirements through 2021.

We malt a portion of our production requirements in North America, using barley purchased primarily under annual contracts from independent farmers located predominately in the western United States and Canadian Prairies.

In addition, we source barley malt from three other commercial providers, from which we have a committed supply until at least 2022.

brewing adjuncts are sourced from three main suppliers, all in North America, through 2022.

Other malt and cereal grains are purchased primarily from North American suppliers.

In North America we both own and lease water rights, as well as purchase water through local municipalities and communities, to provide for and sustain brewing operations in case of a prolonged drought in the regions where we have operations.

We do not currently anticipate future difficulties in accessing water or agricultural products used in our brewing process in the near term.

Packaging Materials

The following summarizes the percentage of our Canada segment's packaging materials by type for the year ended December 31, 2019 .

Aluminum cans or bottles:

We source cans and lids from two primary providers with the related contracts ending December 2023.

The distribution systems in each province generally provide the collection network for returnable bottles and aluminum cans.

We single source glass bottles and have a committed supply through December 2021.

The following summarizes the percentage of our largest regions of Canada and the U.S.

in our North America segment's packaging materials by type for the year ended December 31, 2020.

The below chart shows a meaningful shift to aluminum cans in 2020, largely as a result of changes in consumer behavior throughout the coronavirus pandemic.

In fiscal year 2019, aluminum cans made up 69% of packaging materials in North America.

Aluminum cans or bottles (collectively, aluminum containers):

• A portion of the aluminum cans and ends was purchased from Rocky Mountain Metal Container ("RMMC"), our joint venture with Ball Corporation ("Ball"), whose production facilities, which are leased from us, are located near our brewery in Golden, Colorado.

• In addition to the supply agreement with RMMC, we have a supply agreement with Ball to purchase aluminum containers in excess of what is supplied through RMMC.

• The RMMC joint venture agreement along with the cans and ends purchase agreement each expire on December 31, 2021.

We are currently in negotiations and do not anticipate any issues in renegotiating and extending these contracts.

• In Canada, we source cans and ends from two primary providers with the related contracts ending December 31, 2023.

Glass bottles:

• A portion of the glass bottles was provided by Rocky Mountain Bottle Company ("RMBC"), our joint venture with Owens-Brockway Glass Container, Inc.

("Owens"), whose production facilities, which are leased from us, are located in Wheat Ridge, Colorado.

The RMBC joint venture agreement expires on July 31, 2025.

• In addition to the supply agreement with RMBC, we have a supply agreement with Owens for requirements in excess of RMBC's production, which expires on December 31, 2021.

We are currently in negotiations and do not anticipate any issues in renegotiating and extending these contracts.

• In Canada, we single source glass bottles and have a committed supply through December 2021.

We are currently in negotiations and do not anticipate any issues in renegotiating and extending these contracts.

• The standard bottle for beer brewed in Canada is the 341 ml returnable bottle and represents the vast majority of our bottle sales.

Bottle sales continue to decline as we have experienced a shift in consumers' preference toward aluminum cans.

The standard returnable bottle requires significant investment behind our returnable bottle inventory and bottling equipment.

The trend away from returnable bottles could result in higher fixed cost deleverage related to these assets and an ultimate decreased need for the assets that support this packaging, which could adversely impact profitability.

• The distribution systems in each Canadian province generally provide the collection network for returnable glass bottles and aluminum cans.

Stainless steel kegs:

A limited number of kegs are purchased every year, and we have no long-term supply commitment.

Crowns are currently sourced from one major supplier with a contract through December 2021.

Paperboard and labels are currently sourced from one supplier each with contracts through December 2020 and December 2021, respectively.

Corrugate is purchased from a small number of sources with contracts through December 2020 and March 2021.

We do not currently anticipate future difficulties in accessing any of our required packaging materials in the near term.

• Kegs are packaged in half, quarter, and one-sixth barrel stainless steel kegs in the United States and packaged in 58.67 liter, 50 liter, 30 liter, and 20 liter kegs in Canada.

• A limited number of kegs are purchased each year, and we have no long-term supply agreement.

Across North America, crowns, labels, corrugate and paperboard are purchased from a small number of sources unique to each product.

In recent years, we have experienced a shift in the allocation among different packaging types toward aluminum cans and bottles and away from glass bottles.

This accelerated in 2020 due to the coronavirus pandemic where we observed a shift in volume to off-premise channels and aluminum cans and away from on-premise channels and glass bottles.

In general, aluminum cans allow for lower packaging costs compared to most other types of packaging materials.

The trend away from glass bottles could result in higher fixed cost deleverage related to these assets and an ultimate decreased need for the assets that support this packaging, which could adversely impact profitability.

In Canada, the standard returnable bottle requires significant investment behind our returnable bottle inventory and bottling equipment.

While we have experienced some challenges in obtaining supplies required for certain packaging materials in 2020 as a result of the pandemic, particularly certain types of aluminum containers in North America, these supply constraints are improving with most packaging materials, including certain glass and paperboard in North America, returning to normal material supply.

We currently anticipate aluminum container supplies returning to normal in the near term.

Contract Manufacturing

We have an agreement with North American Breweries, Inc.

("NAB") to brew and package certain Labatt brands for export to the U.S.

Seasonality of Business

Total industry volume in Canada is sensitive to factors such as weather, changes in demographics, consumer preferences and drinking occasions.

We have an agreement to brew, package and ship products for Pabst Brewing Company, LLC and an agreement with North American Breweries, Inc.

("NAB") to brew and package certain Labatt brands for export.

Seasonality of the Business

Total industry volume is sensitive to factors such as weather, changes in demographics, consumer preferences and drinking occasions.

Accordingly, consumption of beer in Canada is seasonal, with approximately 40% of industry sales volume typically occurring during the warmer months from May through August.

Accordingly, consumption of beer in the North America segment is seasonal, nearly 40% of sales volume occurring during the summer months from May through August.

Known Trends and Competitive Conditions

2019 Canada Beer Industry Overview

The Canadian brewing industry is a mature market and ABI and MCBC are the two largest brewers.

It is characterized by aggressive competition for volume and market share from regional brewers, microbrewers and certain foreign brewers, as well as our main domestic competitor.

2020 North America Beer Industry Overview

The beer industry in North America is highly competitive, and the two largest brewers, ABI and MCBC together represented the majority of the market in 2020.

However, we estimate the two largest brewers lost share in 2020 due to volume growth in the import and flavored malt beverage (including hard seltzers) categories as consumer preferences continue to shift within the industry to above premium priced beers, flavored malt beverages, ready to drink alcoholic beverages and hard seltzers.

We believe growing or even maintaining our market share will require stabilizing our core brands and increasing our presence in the fast growing areas of the industry.

In Canada, the market is characterized by aggressive competition for volume and market share from regional brewers, microbrewers and certain foreign brewers, as well as our main domestic competitor.

These competitive pressures require significant annual investment in marketing and selling activities.

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Since 2001, the premium beer segment in Canada has gradually lost volume to the above premium and value segments.

The beer industry has declined in five of the last six years.

Aging population and competition from other alcohol beverages have been the main contributors to the declining state of the beer industry.

The following table summarizes the estimated percentage market share by volume of beer (including adjacencies, such as cider) and other alcohol beverages, including wine and spirits, as a component of the overall Canadian alcohol market over the last five years, for which data is currently available.

We anticipate that 2019 data, when available, will reflect a continuation of the recent consumer trends.

Note that percentages reflect estimates based on market data currently available.

Competition from outside of the beer category, as well as an aging population in Canada, continues to be a challenge for the beer industry.

We anticipate that the 2020 data, when available, will reflect a continuation of the recent consumer trends.

Percentages reflect estimates based on market data currently available.

2019 2018 2017 2016 2015

Beer 48 % 49 % 49 % 50 % 51 %

Other alcohol beverages 52 % 51 % 51 % 50 % 49 %

Our Competitive Position

Our brands compete with competitor beer brands and other alcohol beverages, including wine and spirits, and thus our competitive position is affected by consumer preferences among these other categories.

Our brand portfolio gives us strong representation in all major beer segments.

The following table summarizes the estimated percentage share of the Canadian beer market represented by MCBC, ABI and all other brewers over the last five years.

Our portfolio of beers competes with numerous above premium, premium, and economy brands.

These competing brands are produced by international, national, regional and local brewers.

We compete most directly with ABI brands, but also compete with imported and craft beer brands, as well as flavored malt beverages.

Our products also compete with other alcohol beverages, including wine and spirits, and thus their competitive position is affected by consumer preferences between and among these other categories.

Driven by, among other things, increased spirits advertising, a narrowing price gap with wine and spirits, along with increased wine and spirits sales execution, sales of wine and spirits have grown faster than sales of beer in recent years, resulting in a reduction in the beer segment's lead in the overall alcohol beverage market.

The following table summarizes the estimated percentage share of the North American beer market represented by Molson Coors, ABI and all other brewers over the last five years.

Current year percentages reflect estimates based on market data currently available.

2020 2019 2018 2017 2016

MCBC's share 22 % 23 % 24 % 25 % 26 %

ABI's share 41 % 41 % 42 % 42 % 43 %

Others' share 37 % 36 % 34 % 33 % 31 %

In Canada, provincial governments regulate the production, marketing, distribution, selling and pricing of beer (including the establishment of minimum prices), and impose commodity taxes and license fees in relation to the production, distribution and sale of beer.

beer business is regulated by federal, state, and local governments.

These regulations govern many parts of our operations, including brewing, marketing and advertising, transportation, distributor relationships, sales, and environmental issues.

To operate our facilities, we must obtain and maintain numerous permits, licenses and approvals from various governmental agencies, including the U.S.

Department of Treasury, Alcohol and Tobacco Tax and Trade Bureau, the U.S.

Department of Agriculture, the U.S.

Food and Drug Administration, state alcohol regulatory agencies, and state and federal environmental agencies.

governmental entities also levy taxes and may require bonds to ensure compliance with applicable laws and regulations.

In 2020, our U.S.

business excise taxes on malt beverages were approximately $15 per hectoliter sold on a reported basis.

This includes the impact of the U.S.

Craft Beverage Modernization and Tax Reform Act which took effect on January 1, 2018 for all qualified large domestic brewers and importers and was made permanent by the U.S.

Consolidated Appropriations Act, 2021 on December 27, 2020.

This law resulted in reduced excise taxes for MCBC in the U.S.

by $2 per barrel on the first six million barrels, which equates to $1.70 per hectoliter on this portion of volume.

We transfer a portion of our share of these savings to distributors consistent with the revenue splitting approach of our U.S.

business' economic model.

State excise taxes are levied in specific states at varying rates.

Refer to Part I—Item 1A .

Risk Factors for risks associated with the regulatory environment in the U.S.

In Canada, provincial governments regulate the production, marketing, distribution, selling and pricing of beer (including the establishment of minimum prices), and impose commodity taxes, mark-ups and license fees in relation to its production, distribution and sale.

In addition, the federal government regulates the advertising, labeling, quality control, and international trade of beer, and also imposes commodity taxes on both domestically produced and imported beer.

In 2019 , our Canada segment excise taxes were approximately $52 per hectoliter sold on a reported basis.

Both levels of government are also similarly involved in other categories of alcoholic beverages produced or imported into Canada.

In 2020, our Canada business excise taxes were approximately $54 per hectoliter sold on a reported basis.

Further, certain bilateral and multilateral treaties entered into by the federal government, provincial governments and certain foreign governments, especially with the United States, affect the Canadian beer industry.

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• Europe's second largest brewer by volume, on a combined basis, within the European countries in which we operate, with an approximate aggregate 18% market share (excluding factored products) in 2020

Currently operating twelve primary breweries, eight craft breweries and one cidery

• Currently operating fourteen primary breweries, seven craft breweries and one cidery

• On January 1, 2020, we changed our management structure and the International segment was reconstituted with the Africa and Asia Pacific businesses reporting into the Europe segment.

Accordingly, the Europe segment operates in Bulgaria, Croatia, Czech Republic, Hungary, Montenegro, the Republic of Ireland, Romania, Serbia, the U.K., various other European countries, and certain countries within the Middle East, Africa and Asia Pacific.

The majority of our European segment sales are in the U.K., Croatia, Czech Republic and Romania.

Our portfolio includes beers that have the largest share in their respective countries, such as Carling in the U.K., Ozujsko in Croatia, Jelen in Serbia and Niksicko in Montenegro.

We have beers that rank in the top three in market share in their respective segments throughout the region, such as Kamenitza in Bulgaria and Borsodi in Hungary .

We have beers that rank in the top three in market share in their respective segments throughout the region, such as Bergenbier in Romania, Kamenitza in Bulgaria and Borsodi in Hungary .

Additionally, we sell Staropramen and Miller Genuine Draft in various European countries.

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and the Republic of Ireland and factored brand sales (beverage brands owned by other companies, but sold and delivered to retail by us).

In January 2018, we purchased Aspall Cider Limited in the U.K., which is a premium top ten cider in the U.K.

In June 2019, we purchased a majority stake in Pardubicky Pivovar in the Czech Republic and in July 2019, we purchased the trade and assets of Hop Stuff Brewery in the U.K., as part of our continued strategy to expand our craft beer portfolio.

Sales and Distribution

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In addition, we have an agreement with Heineken whereby they sell, market and distribute Coors Light in the Republic of Ireland, as well as agreements with ABI to brew and distribute Beck's , Stella Artois , Lowenbrau and Spaten and to distribute Hoegaarden , Leffe , and Corona in Central Europe.

Our operations in Africa, the Middle East and Asia Pacific include markets such as Australia, Japan, South Africa and South Korea, with the sale and distribution completed under local license agreements, or through the import of our brands with sale through local distributors.

In Europe, the on-premise channel includes sales to pubs and restaurants.

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Generally, over the years, industry volumes in Europe have shifted from the higher margin on-premise channel, where products are consumed in pubs and restaurants, to the lower margin off-premise channel, also referred to as the "take-home" market.

In 2019 , approximately 40% of sales were on-premise and 60% were off-premise.

Consistent with prior years, the on-premise channel has continued to experience declines from shifting consumer preference to off-premise partially due to smoking bans in many countries.

Further, we continue to monitor the coronavirus pandemic, which had, and we currently expect will continue to have, a material adverse effect on our Europe results of operations for fiscal years 2020, 2021 and, possibly, beyond.

In 2020, we experienced a significant adverse impact resulting from the closure of the on-premise channel for most of the second and fourth quarters, as a result of the coronavirus pandemic.

Business and consumer behavior in the channel has been uncertain and has not returned to pre-pandemic levels.

As perspective, we estimate that in 2019 approximately 40% and 50%-55% of our Europe volume and net sales, respectively, was from the on-premise channel, which tends to be more profitable than the off-premise channel.

In addition, the U.K.

was further negatively impacted by the on-premise restrictions as the U.K comprises approximately 55% of our Europe net sales, which were $1,986.4 million for the year ended December 31, 2019 (the Europe net sales includes the U.K.

factored brand business, which represented approximately 17% of this amount in 2019), and, we

estimate, nearly 60% and approximately 70-75% of the U.K.

volume and net sales revenue, respectively, in 2019 originated from the U.K.

on-premise channel.

As a result of the coronavirus pandemic and resulting government-imposed restrictions and related on-premise closures, this portion of our business effectively entirely ceased through the first lockdown, from the middle of March of 2020 through early June of 2020 across all of Europe and continuing into early July of 2020 in the U.K., and was mostly closed through the second lockdown in the fourth quarter with different levels of restrictions across countries.

Management's Discussion and Analysis, "Executive Summary" & Results of Operations— "Europe," for further details.

Manufacturing, Production and Packaging

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We have multiple agreements with various suppliers that cover almost all of our total required malt, with terms ending in 2021 through 2026.

Hops are purchased under various contracts with suppliers in Germany, the U.S.

and the U.K., which cover our requirements through 2020.

Hops are purchased under various contracts with suppliers in Germany, Czech Republic, Slovenia, U.S.

and the U.K., which contribute to our anticipated requirements through 2025 in line with our planned supply coverage strategy.

Adjuncts are purchased under various contracts with local producers, which are typically crop year contracts commencing in October of each year.

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The following summarizes the percentage of our Europe segment's packaging materials by type for the year ended December 31, 2020.

The below chart shows a meaningful shift to aluminum cans, largely as a result of changes in consumer behavior throughout the coronavirus pandemic.

In fiscal year 2019, aluminum cans made up 28% of packaging materials in our Europe segment.

• A significant majority of glass returnable bottles are sourced under various agreements with third-party suppliers.

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• We have multiple agreements with various manufacturers in the region, covering 100% of our requirements, which expire in 2021.

We do not currently anticipate any issues in renegotiating and extending contracts or in otherwise being able to access recyclable plastic containers.

We do not currently anticipate any issues in renegotiating and extending these contracts or in otherwise being able to access recyclable plastic containers.

Crowns, labels and corrugate are purchased from sources unique to each category.

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In Europe, the beer industry is subject to seasonal sales fluctuations primarily influenced by holidays, weather and by certain major televised sporting events.

Accordingly, the peak selling seasons typically occur during the summer and during the Christmas and New Year holiday season.

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2020 Europe Beer Industry Overview

Based on current data, we estimate that the Europe beer market will be nearly flat in 2019 compared to 2018 .

Since 2010, the off-premise market share has increased in our European markets from 55% to nearly 60% of total volume, and the on-premise market share has declined from 45% to just over 40%.

Europe beer industry retail shipments have fluctuated by approximately 1% to 2% annually over the last five years.

These market fluctuations are consistent with the fluctuations within the overall alcohol market in each of the respective years.

Since 2010 to 2019, the off-premise market share has increased in our European markets from 55% to nearly 60% of total volume, and the on-premise market share has declined from 45% to around 40%.

In 2020, the beer market was significantly impacted by the coronavirus pandemic resulting in full or partial closure of on-trade for the last nine months of the year.

Based on current data, we estimate an on-premise market decline in the high single digits in 2020.

We also estimate in 2020 that the on-premise share in the market was heavily impacted, declining to approximately 20% share from around 40% share in 2019.

Our beers compete not only with similar products from competitors, but also with other alcohol beverages, including wines and spirits.

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We anticipate that 2020 data, when available, will reflect a continuation of the recent consumer trends.

Note that percentages reflect estimates based on market data currently available.

Percentages reflect estimates based on market data currently available.

2019 2018 2017 2016 2015

Beer 29 % 30 % 30 % 30 % 30 %

Other alcohol beverages 71 % 70 % 70 % 70 % 70 %

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The following table summarizes our estimated percentage share of the beer market within the European countries where we operate and our primary competitors over the last five years.

Note that current year percentages reflect estimates based on market data currently available.

Current year percentages reflect estimates based on market data currently available.

2020 2019 2018 2017 2016

MCBC's share 18 % 19 % 20 % 20 % 20 %

Primary competitors' share 61 % 60 % 57 % 56 % 57 %

Others' share 21 % 21 % 23 % 24 % 23 %

Each country that is part of our Europe segment is either a member of the European Union ("EU") or a current candidate to join, with the exception of Bosnia, which is a potential candidate, and the U.K., which exited the EU on January 31, 2020.

Each country that is part of our Europe segment where we carry out significant brewing or distribution activities is either a member of the European Union ("EU") or a current candidate to join, with the exception of the U.K., which left the EU during 2020, Bosnia which is a potential EU candidate and India which is part of the Asia Pacific.

As such, there are similarities in the regulations that apply to many parts of our Europe segment's operations and products, including brewing, food safety, labeling and packaging, marketing and advertising, environmental, health and safety, employment and data protection regulations.

To operate breweries and conduct our business in Europe, we must obtain and maintain numerous permits and licenses from various governmental agencies.

exited the EU on January 31, 2020, which subjects our Europe segment to regulatory and market uncertainty as the U.K.

remains in the EU customs union and single market until December 31, 2020, while the full terms of future trade agreements continue to be negotiated.

exited the EU on January 31, 2020 and entered a twelve month transition period.

On December 24, 2020, the deal laying out the future relationship between the U.K.

and EU was agreed, and subsequently endorsed on December 30, 2020.

The treaty became effective on January 1, 2021.

left the single market and customs union on December 31, 2020, the deal guarantees "zero tariff and zero quota" trade on goods.

See Part I—Item 1A Risk Factors under "Risks Specific to the Europe Segment" for further discussion of the risks specific to the U.K.'s exit from the EU.

Each country's government levies excise taxes on all alcohol beverages.

With the exception of Serbia, Montenegro and Bosnia, all countries' laws on excise taxes are consistent with the directives of the EU.

With the exception of Serbia, where a flat excise per hectoliter is used, all European countries use similar measurements based on either alcohol by volume or Plato degrees.

The EU Excise Directives are currently under review which may result in all jurisdictions being required to account by reference to alcohol by volume.

Each country's government levies excise taxes on alcohol beverages.

EU member countries' laws on excise taxes are consistent with the EU Directives and use the same measurements based on either alcohol by volume or Plato degrees.

Non-EU countries use various taxation methods, including flat excise rate per volume or methods that may be similar to those used in the EU.

In 2020, the excise taxes for our Europe segment were approximately $41 per hectoliter on a reported basis.

Refer to Part I—Item 1A, Risk Factors for risks associated with the regulatory environment in Europe.

International Segment

Headquarters:

Denver, Colorado (transitioning to North America operational headquarters in Chicago, Illinois, with Asia Pacific business transitioning to European headquarters in Burton-on-Trent, U.K.

Approximately 400 employees as of December 31, 2019

International beer markets, including emerging markets in Latin America, Asia Pacific and Africa

Currently operating under export models, local third-party contract manufacturing and license agreements, as well as owned breweries, which brew and package brands sold in India

Our International segment strategy is centered on our focus markets and focus brands.

Our focus brands are Coors Light , Miller Lite and Miller Genuine Draft , which are aligned with global priority brands and account for the majority of our volumes.

The International segment's portfolio of beers competes within the above premium category in most of our markets.

Our principal competitors include large global brewers, as well as local brewers.

As our International segment's objective is to grow and expand our business, we are developing scale and building market share in the countries where we operate.

Many of the markets in which we operate are considered emerging beer markets, with other brewers controlling the majority of the

market share.

Our beers compete not only with similar products from competitors, but also with other alcohol beverages, including wines, spirits, and ciders, and thus our competitive position is affected by consumer preferences between and among these other categories.

As part of the acquisition of the Miller International Business, which we acquired in the fourth quarter of 2016, we entered into various Transitional Service Agreements (“TSAs”) with local SABMiller and now ABI owned entities for services including the selling, distribution and production of Miller brands.

We have successfully created a presence and commercial routes to market and have established alternative production arrangements related to the Miller brands.

Latin America

In Latin America, we use a combination of export models and license agreements to sell Blue Moon, Coors Light, Miller Genuine Draft, Miller High Life, Miller Lite and other brands.

In our export model markets, we import beer from the U.S.

and sell it through agreements with independent distributors.

In license markets, we have established exclusive licensing agreements with brewers and distributors for the manufacturing and distribution of our products.

In certain of our markets, we rely on a combination of these agreements.

Asia Pacific and Africa

Our operations in the Asia Pacific region include markets such as Australia, India, Japan and South Korea.

Our business in India consists primarily of operations in the states of Haryana, Punjab and Uttar Pradesh.

Our consolidated India business produces, markets and sells a beer portfolio consisting of Thunderbolt, Miller Ace, Miller High Life and Carling Strong.

We own three breweries in India (one of which is currently not operational as a result of the State of Bihar, India’s enactment of total alcohol prohibition in 2016), where we use high quality ingredients to brew our products, which are sourced through various contracts with local suppliers.

We do not currently anticipate any significant disruption in the supply of these raw materials or brewing inputs in the near term.

Our Japan business imports our brands and sells through independent wholesalers.

Our focus is on the marketing and selling of the Blue Moon, Coors Light, Singha and Zima brands.

In Australia, we license our brands to a local partner that distributes locally produced and imported products including Blue Moon , Miller Genuine Draft, Miller Chill and other products for us.

In South Korea, our brands include Blue Moon , Coors Light , Miller Genuine Draft and Miller Lite and are imported and sold through an independent distributor.

In Africa, we sell Miller Genuine Draft in South Africa and Zambia.

Miller Genuine Draft is produced in South Africa and sold through a local license agreement.

During the first half of 2018, we decided to formally exit our business in China and, during 2019, we completed the liquidation of this business.

Corporate is not a reportable segment and primarily includes interest and certain other general and administrative costs that are not allocated to any of the operating segments.

The majority of these corporate costs relate to worldwide administrative functions, such as corporate affairs, legal, human resources, information technology, finance, internal audit, insurance, ethics and compliance, risk management, global growth, supply chain and commercial initiatives, as well as acquisition, integration and financing costs.

Additionally, Corporate includes the results of our water resources and energy operations in Colorado as well as the unrealized changes in fair value on our commodity swaps not designated in hedging relationships recorded within cost of goods sold, which are subsequently reclassified when realized to the segment in which the underlying exposure resides.

We have certain activity that is not allocated to our segments, and primarily includes financing-related costs such as interest expense and income, foreign exchange gains and losses on intercompany balances related to financing and other treasury-related activities, and the unrealized changes in fair value on our commodity swaps not designated in hedging relationships recorded within cost of goods sold, which are later reclassified when realized to the segment in which the underlying exposure resides.

Additionally, only the service cost component of net periodic pension and OPEB cost is reported within each operating segment, and all other components remain unallocated.

Other Information

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Sustainability

We believe in producing a beer we can be proud of, from barley to bottle.

Our Beer Print i s MCBC's approach to sustainability and the right way to grow our business.

Our Beer Print is integral to how we will build long-term value for society and our shareholders, while leaving a positive imprint on our communities, on our environment and on our business.

We have a long legacy of leaving a positive imprint on the environment and our community.

MCBC has been recognized on the Dow Jones Sustainability North America Index for nine consecutive years for our sustainability performance.

We believe in producing a beer we can be proud of, from grain to glass.

Our Imprint (formerly known as Our Beer Print ) is MCBC's approach to sustainability and the right way to grow our business for a better tomorrow.

Our Imprint is integral to how we will build long-term value for society and our shareholders, while leaving a positive imprint on our communities, on our environment and on our business.

We have a long legacy of leaving a positive imprint on the environment and our communities.

In 2012, MCBC became a charter member of the International Alliance for Responsible Drinking ("IARD").

This collaborative industry body represents the 11 largest global brewers, distillers and vintners, and partners with public sector, civil society and private stakeholders.

IARD works with governments globally to target a 10% reduction in harmful use of alcohol by 2025.

In 2017, we launched Our Beer Print 2025 agenda, Raising the Bar on Beer, a new sustainability strategy for MCBC and a set of ambitious goals to take us to 2025.

This collaborative industry body represents the 12 leading beer, wine and spirits companies, and partners with public sector, civil society and private stakeholders.

IARD works with governments globally to support the WHO NCD Global Monitoring Framework target of 10% reduction in harmful use of alcohol by 2025.

In 2017, we launched Our Imprint 2025 agenda, a new sustainability strategy for MCBC and a set of ambitious goals to take us to 2025.

We focused our efforts where we can have the most positive impact on our business and society.

We established goals across three pillars - Responsibly Refreshing, Sustainable Brewing and Collectively Crafted - that aim to address the expectations of our consumers and stakeholders, while we continue to make our operations even more resource efficient and resilient.

In 2019, we added new global packaging goals to our 2025 agenda, aiming for our packaging to be reusable, recyclable, compostable or biodegradable.

In 2019, we added new global packaging goals to our 2025 agenda, aiming for 100% of our packaging to be reusable, recyclable or compostable.

We are also strengthening our goals to drive down packaging emissions, use more recycled materials in our plastic packaging and improve recycling solutions in our key markets by 2025.

More information about Our Beer Print 2025 agenda can be found on our sustainability website, www.OurBeerPrint.com, which includes:

Our Beer Print Report 2019, which presents the most recent progress made against our 2025 goals and highlights our recently launched packaging goals;

More information about Our Imprint 2025 goals can be found on our sustainability website, www.MolsonCoorsOurImprint.com, which includes:

• Our Imprint Report 2020, which presents the most recent progress made against our 2025 goals;

• ESG (Environment, Social and Governance) Report 2020, which includes more details on the underlying data, processes and policies that support ESG topics;

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See Part II—Item 8 Financial Statements and Supplementary Data, Note 18, "Commitments and Contingencies" under the caption " Environmental" for additional information regarding environmental matters.

As of the end of 2019 , we employed approximately 17,700 employees within our business globally.

Specifically, we employed approximately 7,300 within our U.S.

segment, 6,600 within our Europe segment, 2,600 within our Canada segment, 400 within our International segment, 200 within our Corporate headquarters in Colorado and 600 within our Global Business Services center.

Under our recently announced revitalization plan the company is consolidating business units and offices to streamline the organization and find savings that will be reinvested back into the business.

After taking into account all changes in each of the business units, including Europe, the plan is expected to reduce employment levels, in aggregate, by approximately 500 to 600 employees globally.

The company expects the costs associated with the restructuring to be substantially recognized by the end of fiscal year 2021.

Human Capital Management

We have a global and varied workforce, with major employee centers in the U.S., Canada, U.K.

As of the end of 2020, we employed approximately 17,000 employees within our business globally with approximately 10,000 within our North America segment and 7,000 within our Europe segment.

Of the 17,000 employees, approximately 660 of our employees are in our Global Business Centers based in Milwaukee, Wisconsin and Bucharest, Romania.

As of the end of 2020, approximately 33% and 29% of our North America and Europe workforces, respectively, are represented by trade unions or councils, which are subject to collective bargaining agreements, which come due for renegotiation from time to time.

The Company strives to be a provider of meaningful experiences for its employees and a safe and healthy workplace for all employees.

We believe that building a strong and diverse workforce is a significant contributor to our success as a business and to deliver on our purpose, and that we value and respect our differences.

We believe that diversity with inclusion is the key to collaboration and a winning team culture.

A significant component of the revitalization plan announced in October 2019 was the launch of a refreshed purpose (uniting people to celebrate all life’s moments), ambition (first choice for our people, consumers and customers) and shared company values (the first of which is Putting People First), all designed with a purpose of shifting the culture of the organization to drive stronger employee engagement and business engagement.

With the overarching goals described in the preceding paragraph as guides, the leadership team and the chief people and diversity officers for the North America and Europe business units are tasked with managing all employment-related matters including recruitment, retention, leadership and development, compensation planning, succession planning, performance management, and diversity and inclusion.

The Compensation Human Resource Committee of the Board of Directors is responsible for establishing and reviewing the overall compensation philosophy of the Company and providing oversight on certain human capital matters, including the Company’s talent retention and development, leadership development, talent pipeline, programs and systems for performance management and diversity and inclusion initiatives.

The Audit Committee oversees the Company’s risk management program to identify and mitigate potential risks, including human capital issues.

The Board of Directors then receives regular reports and recommendations from management and the board committees to help guide the Company’s strategy on retaining and developing a diverse and talented workforce.

In North America, we promote and maintain employee resource groups for a number of different communities in our employee population - by race/ethnicity, by gender, LGBTQ+, early professionals, young families, and veterans, amongst others.

We encourage participation in these groups as we believe it provides an open forum for individual employees who may share similar concerns or experiences.

We also promote and emphasize leadership and development opportunities for our employees which includes our First Choice Learning Center, in-person and online training programs, and experiential training opportunities to encourage and promote employee health and safety, assist in building core competencies, learning best practices and developing leadership capabilities.

As we work to a more diverse workforce and management team, the Company has developed programs to encourage the recruitment, retention and training of diverse leaders and working to ensure we have a highly skilled and diverse workforce.

We track and monitor our progress on metrics of gender and race, particularly in the U.S., though data on race is not tracked in all jurisdictions.

We aim to ensure that our employees have a healthy and safe work environment.

Our supply chain has adopted and implemented a framework we call world class supply chain 2.0 at many of our brewery and other locations.

As part of that framework, the Company's environment, health and safety policy guides the Company’s efforts in maintaining safe and healthy workplaces where we take a proactive approach to the identification and control of environment, health and safety risks.

We work to improve our Environment, Health and Safety ("EHS") performance through methodologies that aim to prevent workplace injuries and illness, and reduce environmental impacts of our operations.

Our safety focus was evident during our response to the coronavirus pandemic where we implemented additional health and safety measures in the breweries and our distribution centers, ensuring these federally designated essential operations could continue to operate and we could protect our

We enhanced our cleaning protocols at the majority of our facilities including enhanced sanitization, social distancing, temperature screenings, cloth facemasks and hand sanitizers, instituted a paid leave coronavirus policy and program, adopted a voluntary unpaid leave program, and expanded access to virtual healthcare, remote fitness and wellness support and to our employee assistance program.

Available Information

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The following table sets forth certain information regarding our executive officers as of February 11, 2021:

President and Chief Executive Officer

Chief Financial Officer

President and Chief Executive Officer, Molson Coors Europe

President, Emerging Growth

Chief Legal and Government Affairs Officer

Chief Marketing Officer

Name Age Position

Hattersley 58 President and Chief Executive Officer

Joubert 54 Chief Financial Officer

Cox 53 President and Chief Executive Officer, Molson Coors Europe

Marino 48 President, Emerging Growth

Lee Reichert 54 Chief Legal and Government Affairs Officer

Jacques 43 Chief Marketing Officer

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business