Operator: We now have Bonnie Herzog of Goldman Sachs.
Bonnie Herzog : I guess I wanted to ask a little bit about your MG&A expense. Could you maybe talk a little bit more about the areas where you’re going to be investing incremental marketing dollars as you kind of talk through the end of the year. And then should we think about you continuing to invest at a higher rate we think about next year to support your brands and the growth that kind of Gavin, you mentioned in the stickiness. Just trying to think about or trying to hear how you’re thinking about this.
Gavin Hattersley : Thanks, Bonnie. Yes. Look, without giving a complete look under the tent for competitive reasons, obviously, we’re going to continue to drive strong pressure in the market with our very effective campaigns have made to chill with Coors Light and taste like Miller Lite. We’ve got significant increase is planned and already executed in the third quarter and also in the back half of this year, especially behind the high beer consumption moments like football is. We’re also going to leverage our targeted media and digital tactics to retain the new drinkers, which we’ve got into our brands, primarily Coors Light, Miller Lite and Coors Banquet. We’ve also got some innovation that’s coming in the fourth quarter. Blue Moon non-alc is launching in December, so that we’re ahead of the dry January timeframe.
And we’re going to invest to make sure that we get more space in store. So whether that’s continued to capitalize on the share that we’ve gained of displays, we’ve gained more than any other major brewer. We’re going to invest in appropriate areas to make sure that our retailers understand that the incremental shelf space and the tap handles that we’re getting, that we’re going to support that with strong marketing. And then we’re going to invest in our EMEA, APAC business, particularly behind brands like Madri, Carling and Ožujsko. So those would be the general directions and themes, Bonnie.
Operator: We now have Filippo Falorni of Citi.
Filippo Falorni : I had a question on your U.S. brand volumes even on an adjusted basis, the 6.1 that you quoted, it still looks below what we’re seeing in track channel data. So maybe can you comment on the performance in on track, on-premise and other smaller of premise retailers? And then thinking about Q4, you mentioned you expect brand volume to accelerate by your planning to ship below brand volume. It didn’t seem like the over-shipment in Q3 was that large? So maybe you can comment on where inventories are in the distributor channel that will be helpful as well. And whether we should think if you don’t ship over in Q4, should we see a catch-up in Q1 of next year?
Gavin Hattersley : Thanks, Filippo. Tracey, do you want to take the shipment question, and I’ll take the sort of Circana or Molson number, difference between ours and what you’re seeing in track channels. I would say there’s probably three big differences between the number we disclosed and the track channels you highlighted one of them, which is the trading adjustment. But then the other one is obviously the significant load-in that took place at the end of the third quarter last year, which obviously we didn’t have this year because we had a large price increase last year. And from a track channels point of view, that measures consumer behavior, whether our brand sales represent sales that our distributors put into the retail stores.
So the retailers would be buying ahead of the price increase that doesn’t necessarily mean that the consumer is buying ahead of the price increase. And those would be the two biggest differences between those two numbers, Filippo. From a shipments point of view, Tracey, do you want to take that?
Tracey Joubert : Yes. So look, we’ve spoken about our expectations for our brand volume to exceed our financial volume and really that’s because of the healthy inventory levels that we ended Q3 on — which enabled us to ship ahead of our expectations. So just in terms of our inventory levels, like coming out of Q3 and even today, we are at higher inventory levels than we saw in the prior year. So again, we feel very comfortable with the inventory levels going into Q4, coming out of Q4 and being able to have inventory levels healthy to — as we go into peak selling next year.
Operator: We now have Vivien Azer of TD Cowen.
Vivien Azer : The earnings season thus far, we’ve heard some cautionary from some of your peers around negative mix shift, shifting to smaller sizes, some weakness in the lower income consumer more broadly. Student debt repayments obviously came October 1. I know you guys probably hesitant to comment on intra-quarter trends. But I was just wondering, Gavin or Tracey, some perspective on whether you’re seeing similar dynamics where there might be more refined in terms of spending, more choiceful spending?
Gavin Hattersley : Yes. Thanks, Vivien. You broke up a little bit there, but I think I got the gist of your question. From an overall consumer health point of view, we do remain cautious given the macroeconomic environment that is out there. We’re particularly cautious in Central and Eastern Europe, which has been pretty consistent with our view for a while, right? I mean the tough economy, the high inflation has impacted our Central Eastern Europe business much more than our UK business, which is honestly more weather-related. We do, though, expect conditions to improve as inflation falls in Europe, and we are starting to see inflation falling there. In Canada, we are seeing softness. It’s a tough economic environment out there.
We’re particularly pleased with our own performance in Canada, where we’ve really grown strongly. And actually, our share growth in Canada is higher than it is in the United States. In March, Coors Light took over as the #1 light beer and has maintained that position and even Molson’s growing share of industry volume and NSR. In the U.S., we’re still seeing premiumization with growth in RTDs and spirits albeit at a slower rate because of the falloff in sales consumers, to your point, are seeking more value through purchasing decisions, which they’re making, either into the larger pack sizes like 30 packs or into the smaller pack sizes singles and 6 packs. The on-premise is running pretty at pace with the off-premise business. And we haven’t seen any material trade down into our economy brands.
if it happens, we’re ready. I mean, Miller High Life and Keystone in particular, are well positioned and are showing very nice improvement given where they were. So if it comes, we believe that the portfolio that we’ve got is ready for it.
Operator: We now have Rob Ottenstein of Evercore.
