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What changed in Molson Coors Beverage Company's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Molson Coors Beverage Company's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+452 added−511 removedSource: 10-K (2024-02-20) vs 10-K (2023-02-21)

Top changes in Molson Coors Beverage Company's 2023 10-K

452 paragraphs added · 511 removed · 365 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

97 edited+16 added−37 removed26 unchanged
Biggest changeThe following presents the primary brands sold: Owned Brands Above Premium Brands - Aspall Cider, Blue Moon, Coors Original, Hop Valley brands , Leinenkugel's, Miller Genuine Draft, Molson Ultra , Sharp's, Staropramen, Vizzy Hard Seltzer Premium - Bergenbier, Borsodi, Carling, Coors Banquet, Coors Light, Jelen, Kamenitza, Miller Lite, Molson Canadian Lager, Molson Dry, Molson Export, Niksicko, Ozujsko Economy - Branik, Icehouse, Keystone, Miller High Life, Milwaukee's Best, Steel Reserve Partner Brands Our partner brands are licensed through various agreements with third parties, such as license, distribution, partnership and joint venture agreements.
Biggest changeThe following presents the primary brands sold: Owned Brands Above Premium Brands - Aspall Cider, Blue Moon, Coors Original, Five Trail, Hop Valley brands , Leinenkugel's brands , Madri, Miller Genuine Draft, Molson Ultra , Sharp's, Staropramen, Vizzy Hard Seltzer Premium - Bergenbier, Borsodi, Carling, Coors Banquet, Coors Light, Jelen, Kamenitza, Miller Lite, Molson Canadian brands , Niksicko, Ožujsko Economy - Branik, Icehouse, Keystone, Miller High Life, Milwaukee's Best, Steel Reserve Partner Brands Our partner brands are licensed through various agreements with third parties, such as license, distribution, partnership and joint venture agreements and include: Arnold Palmer Spiked, Beck's, Blue Run, Cobra, Corona Extra, Heineken, Lowenbrau, Peroni Nastro Azurro, Pilsner Urquell, Redd's brands , Simply Spiked, Sol, Stella Artois, Topo Chico Hard Seltzer, ZOA Competition The beer industry is highly competitive and our portfolio of beers competes with numerous brands in all segments which are produced by international, national, regional and local brewers.
In October 2003, Coors merged with and into Adolph Coors Company, a Delaware corporation. In February 2005, Adolph Coors Company merged with Molson Inc. ("the Merger"). Upon completion of the Merger, Adolph Coors Company changed its name to Molson Coors Brewing Company.
In October 2003, Coors Brewing Company merged with and into Adolph Coors Company, a Delaware corporation. In February 2005, Adolph Coors Company merged with Molson Inc. ("the Merger"). Upon completion of the Merger, Adolph Coors Company changed its name to Molson Coors Brewing Company.
In the European countries in which we operate, beer is generally distributed through either a two-tier system consisting of manufacturers and retailers, or a three-tier system consisting of manufacturers, distributors and retailers. Distribution activities for both the on-premise and off-premise channels are conducted primarily by third-party logistics providers. Most of our beer in the U.K. is sold directly to retailers.
In the European countries in which we operate, beer is generally distributed through either a two-tier system consisting of manufacturers and retailers, or a three-tier system consisting of manufacturers, distributors and retailers. Distribution activities for both the on- and off-premise channels are conducted primarily by third-party logistics providers. Most of our beer in the U.K. is sold directly to retailers.
Unallocated 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.
Unallocated 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, realized and unrealized changes in fair value on instruments not designated in hedging relationships 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.
EMEA&APAC Segment The EMEA&APAC segment consists of our production, marketing and sales of our primary brands as well as other owned and licensed brands 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.
EMEA&APAC Segment The EMEA&APAC segment consists of the production, marketing and sales of our primary brands as well as other owned and licensed brands 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 regions.
Employee Wellbeing We strive to be a provider of meaningful experiences and a safe and healthy workplace for all employees. • Wellness - We promote healthy lifestyles across our global enterprise by offering health benefits, wellness and work/life balance programs that are tailored to employees' needs and culture by work location.
Employee Wellbeing We strive to be a provider of meaningful experiences and a safe and healthy workplace for all employees. • Wellness - We promote healthy lifestyles across our global enterprise by offering health and insurance benefits and wellness and work/life balance programs that are tailored to employees' needs and culture by work location.
Our Americas segment operates in the U.S., Canada and various countries in the Caribbean, Latin and South America and our EMEA&APAC 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.
Our Americas segment operates in the U.S., Canada and various countries in the Caribbean, Latin and South America. Our EMEA&APAC 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 regions.
Unless otherwise indicated, information in this report is presented in USD and comparisons are to comparable prior periods. Our primary operating currencies, other than the USD, include the CAD, the GBP and our Central European operating currencies such as the EUR, CZK, RON, HRK and RSD.
Unless otherwise indicated, information in this report is presented in USD and comparisons are to comparable prior periods. Our primary operating currencies, other than the USD, include the CAD, the GBP and our Central European operating currencies such as the EUR, CZK, RON and RSD.
Our executive leadership team and the chief people and diversity officers for the Americas and EMEA&APAC segments are tasked with managing all employment-related matters including recruitment, retention, leadership and development, compensation planning, succession planning, performance management, and diversity, equity and inclusion.
Our executive leadership team and the chief people and diversity officers for the Americas and EMEA&APAC segments are tasked with managing all employment-related matters including recruitment, retention, leadership and development, compensation planning, succession planning, performance management, and diversity, equity and inclusion ("DEI").
The Board receives regular reports and recommendations from management and the Board committees to help guide our ESG strategy, from Planet goals related to water, packaging and climate change, to People initiatives focused on retaining and developing a diverse and talented workforce.
The Board receives regular reports and recommendations from management and the Board committees to help guide our strategy, from Planet goals related to water, packaging and climate change, to People initiatives focused on retaining and developing a diverse and talented workforce.
In Western Europe, we created ERGs for gender, sexual orientation, disability and ethnicity and these groups are expected to play a key role in development of our strategy, initiatives and in encouraging and supporting all employees to bring their whole self to work. • EMEA&APAC Governance Structure - In EMEA&APAC, we have implemented a governance structure that strives to (i) link DEI to business strategy, (ii) demonstrate senior level accountability, (iii) provide a voice to diverse talent at all levels of our organization and (iv) allow for regional autonomy to attempt to assure relevancy.
In Western Europe, we created ERGs for gender, sexual orientation, disability and ethnicity and these groups are expected to play a key role in development of our strategy, initiatives and in encouraging and supporting all employees to bring their whole self to work. 11 Table of Contents • EMEA&APAC Governance Structure - In EMEA&APAC, we have implemented a governance structure that strives to (i) link DEI to business strategy, (ii) demonstrate senior level accountability, (iii) provide a voice to diverse talent at all levels of our organization and (iv) allow for regional autonomy to attempt to assure relevancy.
It is also common in the U.K. for brewers to distribute beer, wine, spirits and other products owned and produced by other companies, which we refer to as factored brands, to the on-premise channel (bars and restaurants). Approximately 17% of our EMEA&APAC segment net sales in 2022 represented factored brands.
It is also common in the U.K. for brewers to distribute beer, wine, spirits and other products owned and produced by other companies, which we refer to as factored brands, to the on-premise channel (bars and restaurants). Approximately 17% of our EMEA&APAC segment net sales in 2023 represented factored brands.
We also hold several patent and design registrations with expiration dates through 2040 relating to brewing methods, beer dispensing systems, packaging and certain other innovations. We are not reliant on patent royalties for our financial success. Therefore, these expirations are not expected to have a significant impact on our business.
We also hold several patent and design registrations with expiration dates through 2043 relating to brewing methods, beer dispensing systems, packaging and certain other innovations. We are not reliant on patent royalties for our financial success. Therefore, these expirations are not expected to have a significant impact on our business.
Our commitment to producing the highest quality beers is a key part of our heritage and remains so to this day. Our brands are designed to appeal to a wide range of consumer tastes, styles and price preferences. Coors was incorporated in June 1913 under the laws of the state of Colorado.
Our commitment to producing the highest quality beers is a key part of our heritage and remains so to this day. Our brands are designed to appeal to a wide range of consumer tastes, styles and price preferences. Coors Brewing Company was incorporated in June 1913 under the laws of the state of Colorado.
As detailed in our annual ESG report, we continued the implementation of energy and water efficiency improvements across our facilities, including a multi-year renovation project of our Golden Colorado brewery, a renewables contract for our Fort Worth, Texas brewery and a wind-power based power purchase agreement in the U.K.
As detailed in the annual Our Imprint Report, we continued the implementation of energy and water efficiency improvements across our facilities, including a multi-year renovation project of our Golden, Colorado brewery, a renewables contract for our Fort Worth, Texas brewery, and a wind-power based power purchase agreement in the U.K.
In addition, the Canadian 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 2022, our Canadian business excise taxes, federal and provincial, were approximately $56 per hectoliter sold on a reported basis.
In addition, the Canadian 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 2023, our Canadian business excise taxes, federal and provincial, were approximately $56 per hectoliter sold on a reported basis.
See Part II—Item 8 Financial Statements and Supplementary Data, Note 13, "Commitments and Contingencies" under the caption " Environmental" for additional information regarding environmental matters. 13 Table of Contents Global Intellectual Property We own trademarks on the majority of the brands we produce and have licenses for the remainder.
See Part II—Item 8 Financial Statements and Supplementary Data, Note 13, "Commitments and Contingencies" under the caption " Environmental" for additional information regarding environmental matters. Global Intellectual Property We own trademarks on the majority of the brands we produce and have licenses for the remainder.
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.
As the beer industry continues its 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.
In Canada, provincial governments regulate the production, marketing, distribution, selling and pricing of beer and other alcoholic beverage produced or imported into Canada (including the establishment of minimum prices), and impose commodity taxes, mark-ups and license fees in relation to its production, distribution and sale.
In Canada, provincial governments regulate the production, marketing, distribution, selling and pricing of beer and other alcoholic beverages produced or imported into Canada (including the establishment of minimum prices), and impose commodity taxes, mark-ups and license fees in relation to its production, distribution and sale.
To operate breweries and conduct our business in these countries, we must obtain and maintain numerous permits and licenses from various governmental agencies. The government(s) of each country in which we sell our products levies excise taxes on alcohol beverages.
To operate breweries and conduct our business in these countries, we must obtain and maintain numerous permits and licenses from various governmental agencies. The government(s) of each country in which we sell our products levy excise taxes on alcohol beverages.
The prices we pay for such items are subject to fluctuation, and we manage this risk through the use of fixed-price contracts and purchase orders, pricing agreements and derivative instruments, including commodity swaps and options. In 9 Table of Contents addition, risk to our supply of certain raw materials is mitigated through purchases from multiple geographies and suppliers.
The prices we pay for such items are subject to fluctuation, and we manage this risk through the use of fixed-price contracts and purchase orders, pricing agreements and derivative instruments, including commodity swaps and options. In addition, risk to our supply of certain raw materials is mitigated through purchases from multiple geographies and suppliers.
Further, the CHR Committee is responsible for overseeing our progress against our social initiatives related to human capital management. Putting People First We believe that people are the heart of our Company and strive to create a culture where people are encouraged to and feel comfortable about bringing their diverse perspectives and experiences to the table.
Further, the CHR Committee is responsible for overseeing our progress against our social initiatives related to human capital management. Putting People First We believe that people are the heart of our Company and strive to create a culture where people are encouraged to and feel comfortable to bring their diverse perspectives and experiences to the table.
As of December 31, 2022, approximately 31% and 24% of our Americas segment and EMEA&APAC segment workforces, respectively, are represented by trade unions or councils, which are subject to collective bargaining agreements that come due for renegotiation from time to time.
As of December 31, 2023, approximately 30% and 24% of our Americas segment and EMEA&APAC segment workforces, respectively, are represented by trade unions or councils, which are subject to collective bargaining agreements that come due for renegotiation from time to time.
Price segment classifications may vary between the Americas and EMEA&APAC segments and the naming conventions and classifications may be different in the various countries that we operate based on local terminology, for example in our EMEA&APAC segment brands categorized in the Premium classification such as Carling would be described as Core Brands in the local market.
Price segment classifications may vary between the Americas and EMEA&APAC segments and the naming conventions and classifications may be different in the various countries that we operate based on local terminology. 6 Table of Contents For example, in our EMEA&APAC segment, brands categorized in the Premium classification such as Carling would be described as core brands in the local market.
In 2017, we launched Our Imprint 2025 Planet goals for climate and water and, in 2019, incorporated our ambition to make our packaging more sustainable.
In 2017, we launched Our Imprint goals for climate and water and, in 2019, incorporated our ambition to make our packaging more sustainable.
In the U.S. and Canada, employees can participate in our wellness programs that incentivize healthy habits and lifestyles. These resources include connections to virtual healthcare, remote fitness and wellness support, and a free employee assistance program for coping with stress, feelings of isolation and anxiety.
In the Americas, employees can participate in our wellness programs that incentivize healthy habits and lifestyles. These resources include connections to virtual healthcare, remote fitness and wellness support, and a free employee assistance program for coping with stress, feelings of isolation, and anxiety.
In addition, consumer preferences have continued to shift within the industry to above premium products, with volume growth in recent years seen in flavored malt beverages (including hard seltzers), imports and super premium portfolios.
In addition, consumer preferences have continued to shift within the industry to above premium products, with volume growth in recent years seen in flavored malt beverages, imports and super premium portfolios.
Our 2022 initiatives and progress include: • Month of Inclusion - In order to further increase awareness around DEI issues, we launched a Month of Inclusion in 2021, which built on the Week of Inclusion we introduced in 2020.
Our 2023 initiatives and progress include: • Month of Inclusion - In order to further increase awareness around DEI issues, we launched the Month of Inclusion in 2021, which built on the Week of Inclusion we introduced in 2020.
We believe our compensation rewards and incentive programs motivate us to be bold and decisive and ignite growth and hold us accountable for living out our values to achieve our short- and long-term goals. • Talent Development - Our aim is to help employees unlock their full potential so they can thrive in their current job and realize new, potential growth opportunities.
We believe our compensation and incentive programs motivate us to ignite growth and help to hold ourselves accountable for living out our values to achieve our short- and long-term goals. • Talent Development - Our aim is to help employees unlock their full potential so they can thrive in their current job and realize new, potential growth opportunities.
Americas Segment Our Americas segment consists of the production, marketing and sales of our brands and other owned and licensed brands in the U.S., Canada and various countries in the Caribbean, Latin and South America. We currently operate nine primary breweries, nine craft breweries and two container operations.
Americas Segment Our Americas segment consists of the production, importing, marketing, distribution and sales of our brands as well as other owned and licensed brands in the U.S., Canada and various countries in the Caribbean, Latin and South America. We currently operate nine primary breweries, nine craft breweries and two container operations.
Consumption of beer in the Americas segment is seasonal, with nearly 37% of sales volume occurring during the months from May through August. In EMEA&APAC, the peak selling seasons typically occur during the summer months and during the Christmas and New Year holiday season.
Consumption of beer in the Americas segment is seasonal, with nearly 39% of financial volume occurring during the months from May through August. In EMEA&APAC, the peak selling seasons typically occur during the summer months and during the Christmas and New Year holiday season.
The majority of our EMEA&APAC segment sales are in the U.K., Croatia, Czech Republic and Romania with the U.K. representing over 55% of the segment's net sales in 2022. Our portfolio includes beers that have the largest share in their respective countries, such as Carling in the U.K., Ozujsko in Croatia and Niksicko in Montenegro.
The majority of our EMEA&APAC segment sales are in the U.K., Croatia, Czech Republic and Romania with the U.K. representing over 55% of the segment's net sales in 2023. Our portfolio includes beers that have the largest share in their respective countries, such as Carling in the U.K., Ožujsko in Croatia and Niksicko in Montenegro.
Our Total Rewards program in general provides a competitive base salary, incentive plans, health, dental, and vision insurance plans, a deferred compensation option in certain regions with a potential employer match, paid time off plans, including parental leave policies in many locations, an engaging Wellness Program and an Employee Assistance Program.
Our Total Rewards program in general provides a competitive base salary, incentive plans, health and insurance benefits, a deferred compensation option in certain regions with a potential employer match, paid time off plans, enhanced parental leave policies in many locations, an engaging Wellness Program and an Employee Assistance Program.
In 7 Table of Contents 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.
In Ontario, beer is primarily sold 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.
The information provided on our website (or any other website referred to in this report) is not part of this report and is not incorporated by reference as part of this report. Information About Our Executive Officers The following table sets forth certain information regarding our executive officers as of February 21, 2023: Name Age Position Gavin D.K.
The information provided on our website (or any other website referred to in this report) is not part of this report and is not incorporated by reference as part of this report. 13 Table of Contents Information About Our Executive Officers The following table sets forth certain information regarding our executive officers as of February 20, 2024: Name Age Position Gavin D.K.
The on-premise channel includes sales to bars, pubs 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, which is Canada's largest beer retailer.
The on-premise channel includes sales to bars, pubs and restaurants while the off-premise channel includes sales to convenience stores, grocery stores, liquor stores and other retail outlets including The Beer Store in Ontario, which is Canada's largest beer retailer. Industry channel trends vary by segment.
The Compensation and Human Resource Committee (“CHR Committee”) of the Board is responsible for establishing and reviewing the overall compensation philosophy of our Company and providing oversight on certain human capital matters, including our talent retention and development, leadership development, talent pipeline, programs and systems for performance management and Diversity, Equity & Inclusion ("DEI") initiatives.
The Compensation and Human Resource Committee ("CHR Committee") of the Board is responsible for establishing and reviewing the overall compensation philosophy of our Company and providing oversight on certain human capital matters, including our talent retention and development, leadership development, talent pipeline, programs and systems for performance management and DEI initiatives.
A separate operating team manages each segment and each segment manufactures, markets, distributes 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 net sales in 2022, 2021 or 2020.
A separate operating team manages each segment and each segment manufactures, markets, distributes 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 net sales for the years ended December 31, 2023, 2022 or 2021.
As such, there are similarities in the regulations that apply to many parts of our EMEA&APAC segment's operations and products, including brewing, food safety, labeling and packaging, marketing and advertising, environmental, health and safety, employment and data protection and regulations.
The U.K. left the EU during 2020. As such, there are similarities in the regulations that apply to many parts of our EMEA&APAC segment's operations and products, including brewing, food safety, labeling and packaging, marketing and advertising, environmental, health and safety, employment, data protection and regulations.
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.
In addition to the consolidation of brewers and the acquisitive nature of the industry, exports, licensing and partnership arrangements continue to be used and these transactions typically occur between the same global competitors that make up the majority of the market.
We gauge our employees’ sentiments through Employee Experience surveys three times a year in the Americas and biannually in EMEA&APAC. In addition, our CEO regularly hosts live online question and answer sessions available to all employees.
We gauge our employees’ sentiments through Employee Experience surveys three times a year in the Americas and yearly in EMEA&APAC. In addition, our Chief Executive Officer regularly hosts live online question and answer sessions available to all employees.
For example, our Above Premium classification includes brands that are sold at a price point higher than the market 6 Table of Contents average.
For example, our Above Premium classification includes brands that are sold at a price point higher than the market average.
A Divisional DEI Council leads, advocates and is accountable for DEI progress in EMEA&APAC and aims to provide a common, coordinated approach across the regions. Further, Regional DEI Councils, with representatives sitting on the Divisional DEI Council, then attempt to ensure divisional connectivity while recognizing the need for flexibility.
A Divisional DEI Council leads, advocates, and is accountable for DEI progress in EMEA&APAC and aims to provide a common, coordinated approach across the regions. Further, Regional DEI Councils, with representatives sitting on the Divisional DEI Council, attempt to ensure divisional connectivity while recognizing the need for flexibility. Membership of these councils includes senior leaders and employee representatives.
Sales of wine and spirits have grown faster than sales of beer in recent years, driven by, among other things, increased spirits advertising, a narrowing price gap with wine and spirits and increased wine and spirits sales execution. This has resulted in a reduction in the beer segment's lead in the overall alcohol beverage market.
Sales of spirits have grown faster than sales of beer in recent years, driven by, among other things, increased spirits advertising, a narrowing price gap with spirits and the growth of spirits-based ready to drink products. This has resulted in a reduction in the beer segment's lead in the overall alcohol beverage market.
During the year ended December 31, 2020, we experienced a significant adverse impact resulting from the closure of the on-premise channel and increased restrictions as a result of the on-set of the coronavirus pandemic which effectively shut down the on-premise channel for various portions of time across the geographies in which we operate.
With the onset of the coronavirus pandemic during the year ended December 31, 2020, we experienced a significant adverse impact on the operating results of our Company resulting from the closure of the on-premise channel and increased restrictions which effectively shut down the on-premise channel for various portions of time across the geographies in which we operate.
We have beers that rank in the top two in market share in their respective segments throughout the region, such as Bergenbier in Romania, Jelen in Serbia and Borsodi in Hungary . Additionally, we sell Staropramen and Miller Genuine Draft in various countries.
We have beers that rank in the top five in market share in their respective segments throughout the region, such as Staropramen in the Czech Republic, Bergenbier in Romania, Jelen in Serbia, Borsodi in Hungary and Kamenitza in Bulgaria. Additionally, we sell Staropramen, Coors , Madri and Miller Genuine Draft in various countries.
In Canada in 2022, we developed a unique "In Canada, For Canada" Empathy Experience. Through education, stories and activities, the participants in these empathy experiences explore how biases, microaggressions and stereotypes affect others in hopes of fostering a better connection through empathy.
In 2023, we launched an "In Canada, For Canada" Empathy Experience based in Toronto. Through education, stories and activities, the participants in these empathy experiences explore how biases, microaggressions and stereotypes affect others in hopes of fostering a better connection through empathy.
As of December 31, 2022, we employed approximately 16,600 employees within our business globally with approximately 10,000 within our Americas segment and 6,600 within our EMEA&APAC segment. Approximately 650 of our employees are in our Global Business Services Centers based in Milwaukee, Wisconsin and Bucharest, Romania.
As of December 31, 2023, we employed approximately 16,500 employees within our business globally with approximately 10,100 within our Americas segment and 6,400 within our EMEA&APAC segment. Approximately 750 of our employees are in our Global Business Services Centers based in Milwaukee, Wisconsin and Bucharest, Romania.
In addition to the supply agreement with RMBC, we have supply agreements with Owens and other vendors for requirements in excess of RMBC's production. The standard bottle for beer brewed in Canada is the 341 ml returnable bottle and represents the vast majority of our bottle sales.
In addition to the supply agreement with RMBC, we have supply agreements with Owens and other vendors for requirements in excess of RMBC's production. The standard bottle for beer brewed in Canada is the 341ml returnable bottle and represents more than half of bottle sales in Canada.
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.
All countries which are members of the EU apply laws on excise taxes that are consistent with the EU Directives and use measurements based on either alcohol by volume or Plato degrees. Non-EU countries use various taxation methods, including a flat excise rate per volume or methods similar to those used in the EU.
During the years ended December 31, 2021 and 2022, we began to see a progressive return to the on-premise channel at varying degrees across geographies.
We began to see a progressive return to the on-premise channel at varying degrees across geographies throughout the years ended December 31, 2021 and 2022 and observed a more normalized level of on-premise volume during the year ended December 31, 2023.
Hops used to brew our products are purchased under various contracts from suppliers in the U.S. and Europe with EMEA&APAC primarily sourced from Germany, U.K., U.S., Czech Republic and Slovenia. These contracts vary in length based on market conditions.
Hops used to brew our products are purchased under various contracts from suppliers in the U.S. and Europe primarily sourced from Germany, the U.K., Czech Republic and Slovenia.
We are North America's oldest beer company and second largest brewer by volume in North America, representing approximately 20% of the total 2022 North America beer market, which is the largest region of our Americas segment. The Americas segment also includes a partnership arrangement related to the distribution of beer in Ontario, Canada, Brewers' Retail Inc.
We are North America's oldest beer company and the second largest brewer by volume in North America, representing approximately 23% of the total 2023 North America beer market, which is the largest region of our Americas segment. The Americas segment also includes partnership arrangements with Brewers' Retail Inc.
Our business units comply with applicable maternity leave laws and, in many countries, we go further to provide flexible work schedules and extended 12 Table of Contents leave for new parents.
Our business units comply with applicable parental leave laws and in many cases go further to provide flexible work schedules and extended leave for new parents.
Regulation Our business is subject to various laws and regulations in the jurisdictions around the world in which we operate. These regulations govern many parts of our operations, including brewing, marketing and advertising, transportation, distributor relationships, sales and environmental issues. The U.S. beer business is regulated by federal, state and local governments.
Regulation Our business is subject to various laws and regulations in the jurisdictions around the world in which we operate. These regulations govern many parts of our operations, including brewing, marketing and advertising, transportation, distributor relationships, sales and environmental issues. Excise taxes remitted to tax authorities are government-imposed excise taxes on beer.
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. Molson and Coors were founded in 1786 and 1873, respectively.
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. Our primary founders, the Molson, Coors and Miller families date back to over two centuries ago.
U.S. governmental entities also levy taxes and may require bonds to ensure compliance with applicable laws and regulations. In 2022, our U.S. business excise taxes on malt beverages were approximately $15 per hectoliter sold on a reported basis. Excise taxes are also levied in specific state and local jurisdictions at varying rates.
In 2023, our U.S. business excise taxes on malt beverages were approximately $15 per hectoliter sold on a reported basis. Excise taxes are also levied in specific state and local jurisdictions at varying rates.
In January 2020, we changed our name from Molson Coors Brewing Company to Molson Coors Beverage Company in connection with our expansion beyond the beer aisle.
In January 2020, we changed our name from Molson Coors Brewing Company to Molson Coors Beverage Company in connection with our expansion beyond the beer aisle. In October 2023, we announced our Acceleration Plan, building off the successes achieved under the Revitalization Plan.
Additionally, high potential employees in the regions of EMEA&APAC were able to undergo leadership development through a range of formal programs, experiential focused talent development, coaching and mentoring. • Employee Engagement - We believe that engaging our employees, through surveys during the onboarding process and throughout the employee journey, provides us with valuable insight into how we can develop our company culture to help ensure that our people feel supported and able to thrive at our company.
These programs include a blend of classroom training, coaching and mentoring and experiential action learning projects. • Employee Engagement - We believe that engaging our employees through surveys during the onboarding process and throughout the employee journey provides us with valuable insight into how we can develop our company culture to help ensure that our people feel supported and are able to thrive at our company.
("BRI"), and in the western provinces of Canada, Brewers' Distributor Ltd. ("BDL"). In addition, we have an agreement with Heineken that grants us the right to produce, import, market, 5 Table of Contents distribute and sell certain Heineken products in Canada. The Americas segment also includes Truss, our Canadian joint venture with HEXO Corp.
("BRI") for the distribution of beer in Ontario, Canada, and Brewers' Distributor Ltd. ("BDL") for the distribution of beer in the western provinces of Canada. In addition, we have an agreement with Heineken that grants us the right to produce, import, market, distribute and sell certain Heineken products in Canada.
Our EMEA&APAC segment includes the sale of factored brand sales (beverage brands owned by other companies but sold and delivered to retail by us) and our consolidated joint venture arrangement for the production and distribution of Cobra brands in the U.K.
Our EMEA&APAC segment includes the sale of factored brands and our consolidated joint venture arrangement for the production and distribution of Cobra brands in the U.K.
We believe growing or even maintaining our market share will require building on the strength of our core brands, premiumizing our portfolio and continuing to increase our presence in the fast-growing areas of the industry and beyond the beer aisle.
We believe accelerating our growth and increasing or maintaining our market share will require us to build on the strength of our core power brands, aggressively premiumize our portfolio and scale and expand in the fast-growing areas of the industry and beyond the beer aisle.
The Month of Inclusion continued in 2022 and brought together our U.S. and Canada employees, and our EMEA&APAC employees, respectively, to focus on prioritizing inclusion, equity and workplace respect.
The Month of Inclusion continued in 2023 and brought together our U.S., Latin America and Canada employees, and our EMEA&APAC employees, respectively, to focus on prioritizing inclusion, equity and workplace respect. The theme for the 2023 Month of Inclusion focused on Belonging and included a variety of presentations, discussions and external speakers.
While our Company’s history is rooted in beer, we offer a modern portfolio that expands beyond the beer aisle as well.
While our Company’s history is rooted in beer, we offer a modern portfolio that expands beyond the beer aisle as well, including flavored beverages like Vizzy Hard Seltzer , spirits like Five Trail whiskey as well as non-alcoholic beverages.
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. Industry Overview The brewing industry has significantly evolved over the years to become an increasingly global beer market.
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.
We currently operate eleven primary breweries, six craft breweries and one cidery. Our EMEA&APAC segment is Europe's second largest brewer by volume, on a combined basis, within the countries in which we operate, with an approximate aggregate 18% market share (excluding factored products) in 2022.
Our EMEA&APAC segment is Europe's second largest brewer by volume, on a combined basis, within the countries in which we operate, with an approximate aggregate 18% market share (excluding factored products which are beverage brands owned by other companies but sold and delivered to retail by us) in 2023.
While we saw a shift back from aluminum cans to kegs during 2021 and 2022 as the on-premise progressively reopened, aluminum cans continue to represent a greater percentage of packaging materials as compared to the years prior to the coronavirus pandemic.
We saw a shift back from aluminum cans to kegs during 2021 and 2022 as the on-premise progressively reopened after being shut down during the coronavirus pandemic.
Our Vice President of Sustainability & EHS, which is a new role in our Company filled in 2022, works closely with the Steering Committee on ESG strategy development and initiative implementation and progress for our People and Planet focus areas.
At the management level, our ESG Leadership Steering Committee ("ESG Steering Committee") is composed of senior executives and is responsible for the evolution of Our Imprint Strategy. Our Vice President of Sustainability & EHS works closely with the ESG Steering Committee on strategy development and initiative implementation and progress for our People and Planet focus areas.
In the Americas segment, we malt a majority of our production requirements in the U.S. and Canada, using barley purchased primarily under annual contracts from independent farmers located predominately in the western U.S. and Canadian Prairies. In addition, we source barley malt from three other commercial providers, from which we have a committed supply through 2025.
These contracts vary in length based on market conditions. 8 Table of Contents In the Americas segment, we malt a majority of our production requirements in the U.S. and Canada, using barley purchased primarily under annual contracts from independent farmers located predominately in the western U.S. and Canadian Prairies.
Hattersley 60 President and Chief Executive Officer Tracey I. Joubert 56 Chief Financial Officer Sergey Yeskov 46 President and Chief Executive Officer, Molson Coors EMEA&APAC Peter J. Marino 50 President, Emerging Growth Anne-Marie Wieland D'Angelo 46 Chief Legal & Government Affairs Officer and Secretary Michelle E. St. Jacques 45 Chief Marketing Officer
Hattersley 61 President and Chief Executive Officer Tracey I. Joubert 57 Chief Financial Officer Sergey Yeskov 47 President and Chief Executive Officer, Molson Coors EMEA&APAC Natalie Maciolek 45 Chief Legal & Government Affairs Officer and Secretary Michelle E. St. Jacques 46 Chief Commercial Officer
Seasonality of the Business Total industry volume is sensitive to factors such as weather, holidays, changes in demographics, consumer preferences and drinking occasions including major televised sporting events.
In addition, we continue to make investments to improve the sustainability and resources of our agricultural supply chain, including the development of our initiative to advance sustainable farming practices by our suppliers. 9 Table of Contents Seasonality of the Business Total industry volume is sensitive to factors such as weather, holidays, changes in demographics, consumer preferences and drinking occasions including major televised sporting events.
We promote leadership and development opportunities which include our First Choice Learning Center in the Americas, in-person and online training programs, and experiential training opportunities to support employee health and safety, assist in building core competencies, share best practices, and develop leadership capabilities.
At Molson Coors, First Choice Learning serves as the global home for development resources to support the unique needs of our employees around the world. First Choice Learning invests in our people through in-person and online training programs, and experiential training opportunities to support employee health and safety, assist in building core competencies, share best practices and develop leadership capabilities.
Transportation of our products to distributors in the U.S. is primarily contracted through third-party logistics providers and shipped by truckload. We have long-term contracts in place with third-party logistics providers to mitigate price fluctuations in freight costs. In instances where transportation needs cannot be met by contracted freight carriers, we utilize the spot freight market.
Coors Distributing Company distributed approximately 5% of our total owned and non-owned Americas segment net sales for the year ended December 31, 2023. Transportation of our products to distributors in the U.S. is primarily contracted through third-party logistics providers and shipped by truckload. We have long-term contracts in place with third-party logistics providers to mitigate price fluctuations in freight costs.
The information provided on our website (or any other website referred to in this report) is not part of this report and is not incorporated by reference as part of this report.
The information provided on our website (or any other website referred to in this report) is not part of this report and is not incorporated by reference as part of this report. 10 Table of Contents Governance of Our People and Planet Strategy Our Board of Directors ("Board") is responsible for overseeing and monitoring Our Imprint Strategy, with specific areas of oversight delegated to the committees of the Board.
Other brewing adjuncts are sourced from three main suppliers, all in the U.S. and Canada, with committed supply through 2023. Other malt and cereal grains are purchased primarily from suppliers in the U.S. and Canada.
In addition, we source barley malt from three other commercial providers, from which we have a committed supply through 2025. Other brewing adjuncts are sourced from three main suppliers, all in the U.S. and Canada, with a portion of our supply committed through 2024 and a portion committed through 2025.
In Canada, because provincial governments regulate the beer industry and provincial liquor boards control the distribution and retail sale of alcohol products, distribution strategies and transportation of products vary by province.
In the Americas, we have taken steps to diversify transportation modes to reduce the impact of truck market volatility including shipping via railcar and intermodal shipping containers. 7 Table of Contents In Canada, because provincial governments regulate the beer industry and provincial liquor boards control the distribution and retail sale of alcohol products, distribution strategies and transportation of products vary by province.
Adjuncts are purchased under various contracts with local producers, which are typically crop year contracts commencing in October of each year. In the U.S. and Canada, 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 the U.S. and Canada, 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 EMEA&APAC, water used in the brewing process is sourced through water rights for water wells, river water use or supply contracts with water suppliers.
In EMEA&APAC, during the year ended December 31, 2022, our malt requirements were sourced from third-party suppliers, with the majority of our brewing materials provided by suppliers based in Europe. We have multiple agreements with various suppliers that cover almost all of our total required malt, with terms ending in 2022 through 2029.
Other malt and cereal grains are purchased primarily from suppliers in the U.S. and Canada. In EMEA&APAC, during the year ended December 31, 2023, our malt requirements were sourced from third-party suppliers, with the majority of our brewing materials provided by suppliers based in Europe.
Preserving the Planet We have a long legacy of commitment to environmental sustainability, dating back to Bill Coors’ invention of the two-piece aluminum can in the late 1950s and implementation of some of the first recycling programs in the U.S.
We believe these sessions also help create a company culture where open, honest dialogue is supported and encouraged, and where people are empowered to raise questions and concerns about our business and our culture. 12 Table of Contents Preserving the Planet We have a long legacy of commitment to environmental sustainability, dating back to Bill Coors’ pioneering efforts to bring the two-piece aluminum can to market in the late 1950s and implementation of some of the first recycling programs in the U.S.
Some highlights of our progress in Putting People First include: Diversity, Equity & Inclusion We believe DEI should be deeply embedded in our corporate culture and how we operate, from how we work together to how we grow as a company.
Diversity, Equity & Inclusion We believe DEI should be deeply embedded in our corporate culture and how we operate, from how we work together to how we grow as a company. We have created roadmaps and action plans for the Americas and EMEA&APAC segments based on an assessment of our existing culture, programs and talent management processes.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeSuch a default would adversely affect our credit ratings, may allow our creditors to accelerate the related indebtedness, and may result in the acceleration of any other indebtedness to which a cross-acceleration or cross-default provision applies. 23 Table of Contents Our significant debt level and the terms of such debt could, among other things: • make it more difficult to satisfy our obligations under the terms of our indebtedness; • limit our ability to refinance our indebtedness on terms acceptable to us, or at all; • limit our flexibility to plan for and adjust to changing business and market conditions, including successfully execute our revitalization plan, and increase our vulnerability to general adverse economic and industry conditions, such as the economic climate caused by the Russia-Ukraine conflict; • require us to make unfavorable changes to our financing structure; • require us to dedicate a substantial portion of our cash flow to make interest and principal payments on our debt, thereby limiting the availability of our cash flow to fund strategic opportunities, including acquisitions or other investments, working capital, business activities, and other general corporate requirements; • limit our ability to obtain additional financing for working capital, capital expenditures, strategic opportunities, including acquisitions or other investments, to fund growth or for general corporate purposes, even when necessary to maintain adequate liquidity, particularly if any ratings assigned to our debt securities by rating organizations were revised downward; and • adversely impact our competitive position in the industry.
Biggest changeOur current and future debt levels and the terms of such debt could, among other things: • make it more difficult to satisfy our obligations under the terms of our indebtedness; 22 Table of Contents • limit our ability to refinance our indebtedness on terms acceptable to us, or at all, or obtain additional financing for working capital, capital expenditures, strategic opportunities, including acquisitions or other investments, to fund growth or for general corporate purposes, even when necessary to maintain adequate liquidity; • limit our flexibility to plan for and adjust to changing business and market conditions, including successfully execute our Acceleration Plan, and increase our vulnerability to general adverse economic and industry conditions; • require us to make unfavorable changes to our financing structure or require us to dedicate a substantial portion of our cash flow to make interest and principal payments on our debt, thereby limiting the availability of our cash flow to fund strategic opportunities, including acquisitions or other investments, working capital, business activities, and other general corporate requirements; and • adversely impact our competitive position in the industry.
For example, as a result of our acquisition in October 2016 of the remaining portion of MillerCoors LLC (which we refer to as the "Acquisition"), we allocated approximately $6.3 billion and $7.6 billion to goodwill and indefinite-lived intangible assets, respectively.
For example, as a result of our acquisition in October 2016 of the remaining portion of MillerCoors LLC (which we refer to as the "MillerCoors Acquisition"), we allocated approximately $6.3 billion and $7.6 billion to goodwill and indefinite-lived intangible assets, respectively.
The testing of our goodwill for impairment is also predicated upon our determination of the reporting units. Any change to the conclusion of our reporting units or the aggregation of components within our reporting units could result in a different outcome to our annual impairment test.
The testing of our goodwill for impairment is also predicated upon our determination of our reporting units. Any change to the conclusion of our reporting units or the aggregation of components within our reporting units could result in a different outcome to our annual impairment test.
Potential risks associated with acquisitions and joint ventures could include, among other things: • our ability to identify attractive acquisitions and joint ventures; • our ability to offer potential acquisition targets and joint venture partners' competitive transaction terms; • our ability to raise capital on reasonable terms to finance attractive acquisitions and joint ventures; • our ability to realize the benefits or cost savings that we expect to realize as a result of the acquisition or joint venture; • diversion of management's attention; • our ability to successfully integrate our businesses with the business of the acquired company; • motivating, recruiting and retaining key employees; 29 Table of Contents • conforming standards, controls, procedures and policies, business cultures and compensation structures among our company and the acquired company; • consolidating and streamlining sales, marketing and corporate operations; • potential exposure to unknown liabilities of acquired companies; • potential exposure to unknown or future liabilities or costs that affect the markets in which acquired companies or joint ventures operate; • reputational or other damage due to the conduct of a joint venture partner or the prior conduct of an acquired company; • loss of key employees and customers of an acquired company; and • managing tax costs or inefficiencies associated with integrating our operations following completion of an acquisition or entry into a joint venture.
Potential risks associated with acquisitions and joint ventures could include, among other things: • our ability to identify attractive acquisitions and joint ventures; • our ability to offer potential acquisition targets and joint venture partners' competitive transaction terms; • our ability to raise capital on reasonable terms to finance attractive acquisitions and joint ventures; • our ability to realize the benefits or cost savings that we expect to realize as a result of the acquisition or joint venture; • diversion of management's attention; • our ability to successfully integrate our businesses with the business of the acquired company; • motivating, recruiting and retaining key employees; • conforming standards, controls, procedures and policies, business cultures and compensation structures among our company and the acquired company; • consolidating and streamlining sales, marketing and corporate operations; • potential exposure to unknown liabilities of acquired companies; • potential exposure to unknown or future liabilities or costs that affect the markets in which acquired companies or joint ventures operate; • reputational or other damage due to the conduct of a joint venture partner or the prior conduct of an acquired company; • loss of key employees and customers of an acquired company; and 28 Table of Contents • managing tax costs or inefficiencies associated with integrating our operations following completion of an acquisition or entry into a joint venture.
If shareholder activist campaigns are initiated against us, our response to such actions could be costly and time-consuming, which could divert the attention and resources of our Board of Directors, Chief Executive Officer and senior management from the pursuit of our business strategies, which could harm our business, negatively impact our stock price, and have an adverse effect on our business and financial results.
If shareholder activist campaigns are initiated against us, our response to such actions could be costly and time-consuming, which could divert the attention and resources of the Board, Chief Executive Officer and senior management from the pursuit of our business strategies, which could harm our business, negatively impact our stock price, and have an adverse effect on our business and financial results.
Our financial projections, including any sales or earnings guidance or outlook we may provide from time to time, are dependent on certain estimates and assumptions related to, among other things, our revitalization plan, category growth, development and launch of innovative new products, market share projections, product pricing, sales, volume and product mix, foreign exchange rates and volatility, tax rates, interest rates, commodity prices, distribution through truck versus railcar, cost savings, accruals for estimated liabilities, including litigation reserves, measurement of benefit obligations for pension and other postretirement benefit plans, and our ability to generate sufficient cash flow to reinvest in our existing business, fund internal growth, repurchase our stock, make acquisitions, invest in joint ventures, pay dividends and meet debt obligations.
Our financial projections, including any sales or earnings guidance or outlook we may provide from time to time, are dependent on certain estimates and assumptions related to, among other things, our Acceleration Plan, category growth, development and launch of innovative new products, market share projections, product pricing, sales, volume and product mix, foreign exchange rates and volatility, tax rates, interest rates, commodity prices, distribution through truck versus railcar, cost savings, accruals for estimated liabilities, including litigation reserves, measurement of benefit obligations for pension and other postretirement benefit plans, and our ability to generate sufficient cash flow to reinvest in our existing business, fund internal growth, repurchase our stock, make acquisitions, invest in joint ventures, pay dividends and meet debt obligations.
Our inability to attract consumers to our product innovations relative to our competitors’ products, especially over time, could have a material adverse effect on our growth, business and financial results. Changes in the social acceptability, perceptions and the political view of the beverage categories in which we operate, including alcohol and cannabis, could adversely affect our business.
Our inability to attract consumers to our product innovations relative to our competitors’ products, especially over time, could have a material adverse effect on our growth, business and financial results. Changes in the social acceptability, perceptions and the political view of the beverage categories in which we operate, including alcohol, could adversely affect our business.
The supply and price of these raw materials and commodities can be affected by a number of factors beyond our control, including market demand, inflation, alternative sources for suppliers, global geopolitical events, such as the Russia-Ukraine conflict (especially as to their impact on energy supply prices in general, including crude oil prices and the resulting impact on diesel fuel prices), global or regional disease outbreaks or pandemics, such as the coronavirus pandemic, trade agreements among producing and consuming nations, governmental regulations (including tariffs), frosts, droughts and other weather conditions, changes in precipitation patterns, the frequency of extreme weather events, economic factors affecting growth decisions, plant diseases, theft and industry surcharges and other practices.
The supply and price of these raw materials and commodities can be affected by a number of factors beyond our control, including market demand, inflation, alternative sources for suppliers, global geopolitical events, such as the Russia-Ukraine conflict (especially as to their impact on energy supply prices in general, including crude oil prices and the resulting impact on diesel fuel prices), global or regional disease outbreaks or pandemics, trade agreements among producing and consuming nations, governmental regulations (including tariffs), frosts, droughts and other weather conditions, changes in precipitation patterns, the frequency of extreme weather events, economic factors affecting growth decisions, plant diseases, theft and industry surcharges and other practices.
Our business is highly regulated by national, state, provincial and local laws and regulations in various jurisdictions regarding such matters as tariffs, licensing requirements, trade and pricing practices, labeling, advertising, promotion and marketing practices, relationships with distributors, environmental matters, packaging material regulations, ingredient regulations, unclaimed property and other matters.
Our business is highly regulated by national, state, provincial and local laws and regulations in various jurisdictions regarding such matters as tariffs, licensing requirements, trade and pricing practices, taxation, labeling, advertising, promotion and marketing practices, relationships with distributors, environmental matters, packaging material regulations, ingredient regulations, unclaimed property and other matters.
Risks Related to Ownership of our Class B Common Stock If Pentland and the Coors Trust do not agree on a matter submitted to our stockholders or if a super-majority of our board of directors do not agree on certain actions, generally the matter will not be approved, even if beneficial to us or favored by other stockholders or a majority of our board of directors.
Risks Related to Ownership of our Class B Common Stock If Pentland and the Coors Trust do not agree on a matter submitted to our stockholders or if a super-majority of the Board do not agree on certain actions, generally the matter will not be approved, even if beneficial to us or favored by other stockholders or a majority of the Board.
At the end of March through mid-June 2022, approximately 400 unionized employees in our Montreal/Longueuil, Québec brewery and distribution centers went on strike, which adversely affected our business, operations and financial results during the second and third quarters of 2022.
In addition, at the end of March through mid-June 2022, approximately 400 unionized employees in our Montreal/Longueuil, Québec brewery and distribution centers went on strike, which adversely affected our business, operations and financial results during the second and third quarters of 2022.
Similarly, our bylaws require the authorization of a super-majority (two-thirds) of the board of directors to take certain transformational actions. Thus, it is possible that our Company will not be authorized to take action even if it is supported by a simple majority of the board of directors.
Similarly, our bylaws require the authorization of a super-majority (two-thirds) of the Board to take certain transformational actions. Thus, it is possible that our Company will not be authorized to take action even if it is supported by a simple majority of the Board.
The initial term of the Master Framework Agreement does not expire until December 31, 2025, and the Master Framework Agreement contains a provision requiring two-year advance notice of the government's intention to not renew the Master Framework Agreement.
The initial term of the Master Framework Agreement does not expire until December 31, 2025, and the MFA contains a provision requiring two-year advance notice of the government's intention to not renew the MFA.
If we do not adapt to or comply with new ESG regulations, such as those related to climate change, carbon emissions and related ESG disclosure requirements, or fail to meet the ESG goals under Our Imprint 2025 strategy or evolving investor, industry or stakeholder expectations and standards, or if we are perceived (whether or not valid) to have not responded appropriately to the growing concern for ESG issues, customers and consumers may choose to stop purchasing our products or purchase products from a competitor, and our reputation, business or financial results may be adversely affected.
If we do not adapt to or comply with new ESG regulations, such as those related to climate change, carbon emissions and related ESG disclosure requirements, or fail to meet the ESG goals under Our Imprint 2025 strategy or evolving investor, industry or stakeholder expectations and standards, or if we are perceived (whether or not valid) to have not responded appropriately to the growing and various concerns for ESG issues, customers and consumers may choose to stop purchasing our products or purchase products from a competitor, and our reputation, business or financial results may be adversely affected.
Risks Related to Our Indebtedness, Capital Structure and Financial Condition Our significant debt level subjects us to financial and operating risks, and the agreements governing such debt subject us to financial and operating covenants and restrictions.
Risks Related to Our Indebtedness, Capital Structure and Financial Condition Our debt level subjects us to financial and operating risks, and the agreements governing such debt subject us to financial and operating covenants and restrictions.
For example, net sales in our Americas segment accounted for approximately 81% of our total 2022 net sales. As a result, to the extent that we are unable to maintain or grow our market share in our mature markets, our sales and, in turn, business and financial results could be materially and adversely affected.
For example, net sales in our Americas segment accounted for approximately 81% of our total 2023 net sales. As a result, to the extent that we are unable to maintain or grow our market share in our mature markets, our sales and, in turn, business and financial results could be materially and adversely affected.
The launch of a new product can give rise to a variety of incremental or on-time costs and an unsuccessful launch or short-lived popularity of our product innovations could, among other things, affect consumer perception of our existing brands and our reputation as well as result in inventory write-offs and other costs.
The launch of a new product can give rise to a variety of incremental or one-time costs and an unsuccessful launch or short-lived popularity of our product innovations could, among other things, affect consumer perception of our existing brands and our reputation as well as result in inventory write-offs and other costs.
Additionally, the concerns around alcohol, CBD and cannabis as well as health and well-being could result in unfavorable regulations or other legal requirements in certain markets in which we operate, such as advertising, selling and other restrictions, increased taxes associated with our sales, or the establishment of minimum unit pricing.
Additionally, the concerns around alcohol, as well as health and well-being, could result in unfavorable regulations or other legal requirements in certain markets in which we operate, such as advertising, selling and other restrictions, increased taxes associated with our sales, or the establishment of minimum unit pricing.
The competition for water among domestic, agricultural and manufacturing users is increasing in some of our brewing communities and communities in which we or our suppliers manufacture our other products. Even where water is widely available, water purification and waste treatment infrastructure limitations could increase costs or constrain our operations.
The competition for water among domestic, agricultural and manufacturing users is increasing in some of our brewing communities and communities in which we or our suppliers manufacture our other products. Even where water is widely available, water purification, regulatory requirements, and waste treatment infrastructure limitations could increase costs or constrain our operations.
Our information systems may be the target of cyber-attacks or other security breaches, which, if successful, could, among other things, disrupt our operations, applications and services, cause the loss of key business, employee, customer or vendor information, cause us to breach our legal, regulatory or contractual obligations, prevent us from accessing or relying upon critical business records, cause reputational damage, or impact the costs or ability to obtain adequate insurance coverage.
Our information systems may be the target of cyberattacks or other security breaches, which, if successful, could, among other things, disrupt our operations, applications and services, cause the loss of key business, employee, customer or vendor information, cause us to breach our legal, regulatory or contractual obligations, prevent us from accessing or relying upon critical business records, cause reputational damage, or impact the costs or ability to obtain adequate insurance coverage.
Our brand image and reputation may be negatively impacted by our ability to navigate social media campaigns and trends in pursuit of various dynamic issues facing society on regional and global levels across the markets in which we operate.
Our brand image, reputation and financial results may be negatively impacted by our ability to navigate social media campaigns and trends in pursuit of various dynamic issues facing society on regional and global levels across the markets in which we operate.
For example, in the first few months of 2021, we experienced a labor disruption with our Toronto brewery unionized employees resulting from on-going negotiations of the collective bargaining agreement. This labor disruption resulted in slightly slower than expected production at the Toronto brewery in the first few months of 2021.
For example, in the first few months of 2021, we experienced a labor disruption with our Toronto brewery unionized employees resulting from on going negotiations of the collective bargaining agreement which resulted in slightly slower than expected production at the Toronto brewery in the first few months of 2021.
See Part II—Item 8 Financial Statements and Supplementary Data, Note 14, "Stockholders' Equity" in this Annual Report on Form 10-K for additional information regarding voting rights of Class A and Class B stockholders. 31 Table of Contents Shareholder activism efforts or unsolicited offers from a third-party could cause a material disruption to our business and financial results.
See Part II—Item 8 Financial Statements and Supplementary Data, Note 14, "Stockholders' Equity" in this Annual Report on Form 10-K for additional information regarding voting rights of Class A and Class B stockholders. Shareholder activism efforts or unsolicited offers from a third-party could cause a material disruption to our business and financial results.
Therefore, if either Pentland or the Coors Trust is unwilling to vote in favor of a proposal that is subject to a stockholder vote, we would be unable to implement the proposal even if our board of directors, management or other stockholders believe the proposal is beneficial to us.
Therefore, if either Pentland or the Coors Trust is unwilling to vote in favor of a proposal that is subject to a stockholder vote, we would be unable to implement the proposal even if the Board, management or other stockholders believe the proposal is beneficial to us.
Specifically, the markets in which we operate have experienced vast expansion in above premium products, specifically in flavored malt beverages (including hard seltzers), ready-to-drink beverages, spirit-based beverages, craft beer, cider, CBD and other cannabis beverages and other similar beverages.
Specifically, the markets in which we operate have experienced vast expansion in above premium products, specifically in flavored malt beverages (including hard seltzers), ready-to-drink beverages, spirit-based beverages, craft beer, cider, and other similar beverages.
In addition, we must successfully integrate any new management personnel that we hire within our organization, or who join our organization as a result of an acquisition, in order to achieve our operating objectives, and changes in other key management 22 Table of Contents positions may temporarily affect our financial performance and results of operations as new management becomes familiar with our business.
In addition, we must successfully integrate any new management personnel that we hire within our organization, or who join our organization as a result of an acquisition, in order to achieve our operating objectives, and changes in other key management positions may temporarily affect our financial performance and results of operations as new management becomes familiar with our business.
Additionally, we face intense competition in certain of our European markets, particularly with respect to pricing, which could lead to reduced sales or profitability. In particular, the on-going focus by large competitors in Europe to drive increased market share through aggressive pricing strategies could adversely affect our sales and results of operations.
Additionally, we face intense competition in certain of our European markets, particularly with respect to pricing, which could lead to reduced sales or profitability. In particular, the on-going focus by large competitors in Europe to drive increased market share through aggressive pricing strategies could 29 Table of Contents adversely affect our sales and results of operations.
Negative publicity regarding alcoholic beverages and changes in consumer perceptions in relation to beer, other alcoholic, CBD, or other cannabinoid beverages could adversely affect the sale and consumption of our products, which could adversely affect our business and financial results.
Negative publicity regarding alcoholic beverages and changes in consumer perceptions in relation to beer or other alcoholic beverages could adversely affect the sale and consumption of our products, which could adversely affect our business and financial results.
In addition, consolidation of 25 Table of Contents packaging materials suppliers has reduced local supply alternatives and increased risks of supply disruptions. The inability of any of these suppliers to meet our production requirements without sufficient time to develop an alternative source could have a material adverse effect on our business and financial results.
In addition, consolidation of packaging materials suppliers has reduced local supply alternatives and increased risks of supply disruptions. The inability of any of these suppliers to meet our production requirements without sufficient time to develop an alternative source could have a material adverse effect on our business and financial results.
If we are unable to protect our intellectual property rights, it could have a material adverse effect on our business and financial results. 18 Table of Contents The global beer industry and the broader alcohol industry are constantly evolving, and our position within the global beer industry and the success of our products in our markets may fundamentally change.
If we are unable to protect our intellectual property rights, it could have a material adverse effect on our business and financial results. The global beer industry and the broader alcohol industry are constantly evolving, and our position within the global beer industry and the success of our products in our markets may fundamentally change.
In many of our markets, our primary competitors may have greater financial, marketing, production and distribution resources than we do, and may be more diverse in terms of their geographies and brand portfolios. Furthermore, our competitors may respond to industry 19 Table of Contents and economic conditions and shifts in consumer behaviors more rapidly or effectively than us.
In many of our markets, our primary competitors may have greater financial, marketing, production and distribution resources than we do, and may be more diverse in terms of their geographies and brand portfolios. Furthermore, our competitors may respond to industry and economic conditions and shifts in consumer behaviors more rapidly or effectively than us.
A breach of our information systems, such as the March 2021 cybersecurity incident could subject us to litigation, including class action or derivative lawsuits, regulatory fines, and penalties, any of which could have a material adverse effect on our financial results or reputation.
A breach of our information systems, such as the March 2021 cybersecurity incident, could subject us to litigation, 16 Table of Contents including class action or derivative lawsuits, regulatory fines, and penalties, any of which could have a material adverse effect on our financial results or reputation.
Climate change and other weather events may negatively affect our business and financial results. There is concern that a gradual increase in global average temperatures could cause significant changes in global weather patterns and an increase in the frequency and severity of natural disasters.
Climate change and other weather events may negatively affect our business and financial results. There is concern that the continuing increase in global average temperatures could cause significant changes in global weather patterns and an increase in the frequency and severity of natural disasters.
Our business could be interrupted and our financial results could be materially adversely impacted by physical risks such as 16 Table of Contents earthquakes, fires, hurricanes, floods, acts of war, terrorist attacks, cyberattacks and other disruptions in information systems, such as the March 2021 cybersecurity incident, disease outbreaks or pandemics, such as the coronavirus pandemic, and other natural disasters or catastrophic events that damage, disrupt or destroy one of our breweries or key facilities or the key facilities of our significant suppliers.
Our business could be interrupted and our financial results could be materially adversely impacted by physical risks such as earthquakes, fires, hurricanes, floods, acts of war, terrorist attacks, cyberattacks and other disruptions in information systems, such as the March 2021 cybersecurity incident, disease outbreaks or pandemics and other natural disasters or catastrophic events that damage, disrupt or destroy one of our breweries or key facilities or the key facilities of our significant suppliers.
We are from time to time involved in or subject to a variety of litigation, claims, legal or regulatory proceedings or matters related to our business, our advertising and marketing practices, product claims, product labeling and ingredients, our intellectual property rights, alleged infringement or misappropriation by us of intellectual property rights of others, tax, environmental, privacy, insurance, ERISA and employment matters.
We are from time to time involved in or subject to a variety of litigation, claims, legal or regulatory proceedings or matters related to our business, the alcohol industry in general, our advertising and marketing practices, product claims, product labeling and ingredients, our intellectual property rights, alleged infringement or misappropriation by us of intellectual property rights of others, tax, environmental, privacy, insurance, ERISA and employment matters.
Even though our sales in Russia have 14 Table of Contents historically been limited, representing less than 0.2% of our 2021 consolidated net sales and less than 1% of our 2021 EMEA&APAC net sales, and we have no physical assets in Russia, the effect of the Russia-Ukraine conflict due to the widespread impact has had and could continue to have a material adverse outcome on our business, financial condition, results of operations, supply chain, availability of critical supplies, intellectual property, partners, customers or employees.
Even though our sales in Russia have historically been limited, representing less than 0.2% of our 2021 consolidated net sales and less than 1% of our 2021 EMEA&APAC net sales, and we have no physical assets in Russia, the effect of the Russia-Ukraine conflict due to the widespread impact, particularly in Eastern Europe, has had and could continue to have a material adverse outcome on our business, financial condition, results of operations, supply chain, availability of critical supplies, intellectual property, partners, customers or employees.
Actual outcomes, including judgments, awards, settlements or orders, could have a material adverse effect on our business, financial condition, operating results, or cash flows and damage our corporate reputation and our brands. 26 Table of Contents Our operations in developing and emerging markets expose us to additional risks, which could harm our business and financial results.
Actual outcomes, including judgments, awards, settlements or orders, could have a material adverse effect on our business, financial condition, operating results, or cash flows and damage our corporate reputation and our brands. Our operations in developing and emerging markets expose us to additional risks, which could harm our business and financial results.
Our brand image and reputation may also be difficult to protect due to less oversight and control as a result of outsourcing some of our operations internationally or entering new or different product lines.
Our brand image and reputation may also be difficult to protect due to less oversight and control as a result of outsourcing some of our 17 Table of Contents operations internationally or entering new or different product lines.
As a result, we are exposed to the risk of default by, or failure of, counterparty financial institutions. The risk of counterparty default or failure may be heightened during economic downturns and periods of uncertainty in the financial markets, including as a result of the coronavirus pandemic.
As a result, we are exposed to the risk of default by, or failure of, counterparty financial institutions. The risk of counterparty default or failure may be heightened during economic downturns and periods of uncertainty in the financial markets.
ESG issues, including those related to climate change and sustainability, may have an adverse effect on our business, financial condition and results of operations and damage our reputation. Companies across all industries are facing increasing scrutiny relating to their ESG practices and policies.
ESG issues and regulations, including those related to climate change and sustainability, and stakeholder response thereto may have an adverse effect on our business, financial condition and results of operations and damage our reputation. Companies across all industries are facing increasing scrutiny relating to their ESG practices and policies.
For instance, the strengthening of the USD against the Canadian dollar, European currencies and various other global 27 Table of Contents currencies would adversely impact our USD reported results due to the impact on foreign currency translation.
For instance, the strengthening of the USD against the Canadian dollar, European currencies and various other global currencies would adversely impact our USD reported results due to the impact on foreign currency translation.
Therefore, unfavorable macroeconomic conditions, such as inflationary pressures, a recession or continued slowed economic growth in the U.S., Canada or countries in Europe, could negatively affect consumer demand for our product in these important markets, which consequently, may negatively affect the results of operations in our Americas and EMEA&APAC segments.
Therefore, unfavorable 15 Table of Contents macroeconomic conditions, such as inflationary pressures, a recession or continued slowed economic growth in the U.S., Canada or countries in Europe, could negatively affect consumer demand for our products in these important markets, which consequently, may negatively affect the results of operations in our Americas and EMEA&APAC segments.
Any future impairment of the Americas reporting unit or our indefinite-lived intangible assets, or reclassification of indefinite-lived intangible assets to definite-lived, may result in material charges that could have a material adverse effect on our business and financial results, as evidenced by the charges incurred during the fourth quarter of 2022 and 2020, as previously noted above.
Any future impairment of the Americas reporting unit or our indefinite-lived intangible assets, or reclassification of indefinite-lived intangible assets to definite-lived, may result in material charges that could have a material adverse effect on our financial results, as evidenced by the charges incurred during the fourth quarters of 2023 and 2022, as previously noted above.
For example, we have a major brewery in the state of Colorado, which has recently experienced several significant wildfires, and we have another major brewery in Texas, which experienced a severe winter weather event in 2021.
For example, we have a major brewery in the state of Colorado, which experienced several significant wildfires in 2022, and we have another major brewery in Texas, which experienced a severe winter weather event in 2021.
Programs have included banning certain types of products, mandating certain rates of recycling and/or the use of recycled materials, imposing deposits or excise taxes on packaging material, and requiring retailers or manufacturers to take back packaging used for their products.
Programs have included recommendations for extended producer responsibility, banning certain types of products, mandating certain rates of recycling and/or the use of recycled materials, imposing deposits or excise taxes on packaging material, and requiring retailers or manufacturers to take back packaging used for their products.
Recessions, economic downturns, price instability, inflation, slowing economic growth and social and political instability in the markets where we compete could negatively affect our revenues and financial performance, and adversely impact our ability to grow or sustain our business.
Recessions, economic downturns, price instability, inflation, slowing economic growth, social and political instability, and violent crime and related matters in the markets where we compete could negatively affect our revenues and financial performance, and adversely impact our ability to grow or sustain our business.
Our suppliers’ financial condition is affected in large part by conditions and events that are beyond our and their control, including: • competitive and general market conditions in the locations in which they operate; • the availability of capital and other financing resources on reasonable terms; • loss of major customers; • disruptions of bottling operations that may be caused by strikes, work stoppages, labor unrest or natural disasters; • the price of certain ingredients and raw materials used in our products to increase and/or we may experience disruptions to our operations; or • any of the foregoing, among other things, as a result of the coronavirus pandemic or otherwise.
Our suppliers’ financial condition is affected in large part by conditions and events that are beyond our and their control, including: • competitive and general market conditions in the locations in which they operate; • the availability of capital and other financing resources on reasonable terms; • loss of major customers; • disruptions of operations that may be caused by strikes, work stoppages, labor unrest or natural disasters; • the increase in price of certain ingredients and raw materials used in our products; or • any of the foregoing, among other things, as a result of the Russia-Ukraine conflict or otherwise.
Misuse, leakage or falsification of information could result in a violation of data privacy laws and regulations, including but not limited to, the European Union's General Data Protection Regulation, California Privacy Rights Act, which took effect on January 1, 2023, or the Virginia Consumer Data Protection Act, which took effect on January 1, 2023, damage our reputation and credibility or expose us to increased risk of lawsuits, loss of existing or potential future customers and/or increases in our security costs, any of which could have a material adverse effect on our business and financial results.
Misuse, leakage or falsification of information could result in a violation of data privacy laws and regulations, including but not limited to, the European Union's General Data Protection Regulation, California Privacy Rights Act, the Virginia Consumer Data Protection Act, or the Colorado Privacy Act, may damage our reputation and credibility or expose us to increased risk of lawsuits, loss of existing or potential future customers and/or increases in our security costs and compliance burden, any of which could have a material adverse effect on our business and financial results.
In particular, investor advocacy groups, institutional investors, stockholders, employees, consumers, customers, regulators, proxy advisory services and other market participants have increasingly focused on ESG practices and policies of companies, including sustainability performance and risk mitigation efforts. These stakeholders have placed increased importance on ESG practices and their effect on companies from an investor, consumer, customer or employee perspective.
In particular, investor advocacy groups, institutional investors, stockholders, employees, consumers, customers, regulators, proxy advisory services and other market participants have increasingly focused on ESG practices and policies of companies. These stakeholders have placed increased importance on ESG practices and their effect on companies from an investor, consumer, customer or employee perspective.
In addition to risks described elsewhere in this report, our operations in these markets expose us to additional heightened risks, including: • changes in local political, economic, social and labor conditions; • restrictions on foreign ownership and investments; • repatriation of cash earned in countries outside the U.S.; • import and export requirements; • increased costs to ensure compliance with complex foreign laws and regulations; • currency exchange rate fluctuations; • a less developed and less certain legal and regulatory environment, which among other things can create uncertainty with regard to liability issues; • longer payment cycles, increased credit risk and higher levels of payment fraud; • increased exposure to global disease outbreaks or pandemics, such as the coronavirus pandemic; and • other challenges caused by distance, language, and cultural differences.
In addition to risks described elsewhere in this report, our operations in these markets expose us to additional heightened risks, including: • changes in local political, economic, social and labor conditions; • restrictions on foreign ownership and investments; • repatriation of cash earned in countries outside the U.S.; • import and export requirements; • increased costs to ensure compliance with complex foreign laws and regulations; • currency exchange rate fluctuations; • a less developed and less certain legal and regulatory environment, which among other things can create uncertainty with regard to liability issues; • longer payment cycles, increased credit risk and higher levels of payment fraud; • increased exposure to global disease outbreaks or pandemics; and • other challenges caused by distance, language, and cultural differences. 25 Table of Contents In addition, as a global company, we are subject to foreign and U.S. laws and regulations designed to combat governmental corruption, including the U.S.
Due to a high concentration of workers represented by unions or trade councils, we could be significantly affected by labor strikes, work stoppages or other employee-related issues. As of December 31, 2022, approximately 31% and 24% of 20 Table of Contents our Americas and EMEA&APAC workforces, respectively, are represented by trade unions or councils.
Due to a high concentration of workers represented by unions or trade councils, we could be significantly affected by labor strikes, work stoppages or other employee-related issues. As of December 31, 2023, approximately 30% and 24% of our Americas and EMEA&APAC workforces, respectively, are represented by trade unions or councils.
Our European businesses have been, and, in the future may be, adversely affected by conditions in the global financial markets and general economic and political conditions, as well as a weakening of their respective currencies versus the U.S. dollar, in each case, in addition to the impacts of the coronavirus pandemic.
Our European businesses have been, and, in the future may be, adversely affected by conditions in the global financial markets and general economic and political conditions, as well as a weakening of their respective currencies versus the U.S. dollar, in each case, in addition to the other impacts of the Russia-Ukraine conflict.
Difficult macroeconomic conditions in our markets, such as further decreases in per capita income and level of disposable income driven by increases in inflation, energy costs, income (and other) taxes and the cost of living, increased and prolonged unemployment or a further decline in consumer confidence, in each case, as a result of the coronavirus pandemic, the Russia-Ukraine conflict or other geopolitical tension, as well as limited or significantly reduced points of access of our product, political or economic instability or other country-specific factors, could continue to have a material adverse effect on the demand for our products.
Difficult macroeconomic conditions in our markets, such as further decreases in per capita income and level of disposable income driven by increases in inflation, energy costs, income (and other) taxes and the cost of living, increased and prolonged unemployment or a further decline in consumer confidence, as well as limited or significantly reduced points of access of our product, political or economic instability or other country-specific factors, could continue to have a material adverse effect on the demand for our products.
In addition, the recently enacted European Union-United Kingdom Trade and Cooperating Agreement resulted in certain disruptions in trade and the movement of goods, including prolonged transportation delays, which affected our ability to source raw materials and packaging for our products as well as our ability to import and export products.
In addition, the European Union-United Kingdom Trade and Cooperating Agreement became effective in May 2021 and resulted in certain disruptions in trade and the movement of goods, including prolonged transportation delays, which affected our ability to source raw materials and packaging for our products as well as our ability to import and export products.
However, evolution in these markets and our other beer markets, together with emerging changes to consumer preferences, have resulted in a significant increase in market entrants, consumer choices and market competition, as well as increased government scrutiny.
Evolution in certain of our beer markets, together with emerging changes to consumer preferences, have resulted in a significant increase in market entrants, consumer choices and market competition, as well as increased government scrutiny.
We may be required to incur further costs to alleviate problems and remedy damage caused by physical, electronic and cybersecurity breaches, including the potential for increased ongoing expenses related to the March 2021 cybersecurity incident, and to address possible increased information system attacks as a result of the incident, which could have a material adverse effect on our business and financial results.
We may be required to incur further costs to alleviate problems and remedy damage caused by physical, electronic and cybersecurity breaches and to address possible increased information system attacks as a result of the incident, which could have a material adverse effect on our business and financial results.
Most recently, intergovernmental organizations such as the Organization for Economic Co-operation and Development and European Commission have proposed changes to the existing tax laws of member countries.
Recently, intergovernmental organizations such as the Organization for Economic Co-operation and Development ("OECD") and European Union ("EU") have proposed changes to the existing tax laws of member countries.
In addition, the March 2021 cybersecurity incident may embolden other individuals or groups to target our information systems and impact the costs or ability for us to obtain adequate insurance coverages moving forward. Furthermore, continued geopolitical turmoil, including the Russia-Ukraine conflict, has heightened the risk of cyberattacks. We expend significant financial resources to protect against cyber threats and cyberattacks.
In addition, the March 2021 cybersecurity incident may embolden other individuals or groups to target our information systems and impact the costs or ability for us to obtain adequate insurance coverages moving forward. Furthermore, continued geopolitical turmoil, including the Russia-Ukraine conflict, has heightened the risk of cyberattacks.
If we were to experience turnover of senior management or if a member of our senior management were to become ill or incapacitated, our stock price, our results of operations, our commercial and supply chain operations and our vendor or customer relationships could each be adversely impacted and such events may make recruiting for future management positions more difficult.
If we were to experience turnover of any key employee or multiple members of senior management at the same time, or if a member or members of our senior management were to become ill or incapacitated, our stock price, our results of operations, our commercial and supply chain operations and our vendor or customer relationships could each be adversely impacted and such events may make recruiting for future management positions more difficult.
If our competitors are able to respond more quickly to the evolving trends within those and similar beverage categories, or if our new products in these categories are not successful, our business and financial results may be adversely impacted.
If our competitors are able to respond more quickly to the evolving trends within those and similar beverage categories, or if our new products in these categories are not successful, our business and financial results may be adversely impacted. Our products also generally compete with other alcoholic beverages.
Similarly, changes in applicable environmental regulations, including increased or 28 Table of Contents additional regulations to discourage the use of plastic may result in increased compliance costs, increased costs, capital expenditures, incremental investments and other financial obligations for us and our business partners, which could affect our profitability.
Similarly, changes in applicable environmental regulations, including increased or additional regulations to discourage the use of particular materials (or encourage or mandate the use of other materials) may result in increased compliance costs, increased costs, capital expenditures, incremental investments and other financial obligations for us and our business partners, which could affect our profitability.
These indemnity obligations are recorded as liabilities on our consolidated balance sheets; however, we could incur future statement of operations charges due to changes to our estimates or changes in our assessment of probability of loss on these items as well as due to fluctuations in foreign exchange rates.
The ultimate resolution of these claims is not under our control. These indemnity obligations are recorded as liabilities on our consolidated balance sheets; however, we could incur future statement of operations charges due to changes to our estimates or changes in our assessment of probability of loss on these items as well as due to fluctuations in foreign exchange rates.
Failure to comply with existing laws and regulations or changes in these laws, regulations, or interpretations thereof, specifically tax and environmental laws or any other laws or regulations could result in the loss, revocation or suspension of our licenses, permits or approvals and could have a material adverse effect on our business, financial condition and results of operations.
Increases in excise taxes, and such compliance taxes and bonds, could have a material adverse effect on our profitability. 27 Table of Contents Failure to comply with existing laws and regulations or changes in these laws, regulations, or interpretations thereof, specifically tax and environmental laws or any other laws or regulations could result in the loss, revocation or suspension of our licenses, permits or approvals and could have a material adverse effect on our business, financial condition and results of operations.
As part of our revitalization plan, our future topline growth will depend, in part, on our ability to timely innovate and develop new products beyond traditional beer. In connection with our revitalization plan, we plan to continue to innovate, test and scale products faster than we have before.
As part of our Acceleration Plan, our future growth will depend, in part, on our ability to timely innovate and develop new products beyond traditional beer. In connection with our Acceleration Plan, we plan to continue to innovate, test and scale products.
Similarly, failure to adequately produce and timely ship our products to customers and consumers could lead to lost potential revenue, failure to meet consumer demand, strained relationships with customers and consumers and diminished brand loyalty.
Failure to adequately produce and timely ship our products to customers could lead to lost potential revenue, failure to meet customer demand, strained relationships with customers, including wholesalers, and diminished brand loyalty.
If we face labor shortages and/or increased labor costs as a result of increased competition for employees, higher employee turnover rates, or increases in employee benefits costs, our operating expenses could increase, which could negatively impact our growth and results of operations.
In addition, labor costs are rising and our industry is experiencing a shortage of qualified workers. If we face labor shortages and/or increased labor costs as a result of increased competition for employees, higher employee turnover rates, or increases in employee benefits costs, our operating expenses could increase, which could negatively impact our growth and results of operations.
Although we have publicly expressed our intention to maintain an investment grade debt rating, ratings are determined by third-party rating agencies and in some cases the events that may cause us to suffer a ratings downgrade are unpredictable and outside of our control, such as the economic climate caused by the coronavirus pandemic and its impact on our business.
Although we have publicly expressed our intention to maintain an investment grade debt rating, ratings are determined by third-party rating agencies and in some cases the events that may cause us to suffer a ratings downgrade are unpredictable and outside of our control, such as the macroeconomic climate or political instability.
In addition, certain of our current and future debt and derivative financial instruments have or, in the future, could have interest rates that are tied to reference interest rates. The volatility and availability of such reference rates are out of our control.
In addition, certain of our current and future debt and derivative financial instruments have or, in the future, could have interest rates that are tied to reference interest rates. The volatility and availability of such reference rates are out of our control and the risks related thereto could have a material adverse effect on us.
We have seen an increase in the number of cyberattacks due, in part, to the large number 17 Table of Contents of our employees that are working and accessing our technology infrastructure remotely because of shifts in working arrangements primarily as a result of the coronavirus pandemic.
We have seen an increase in the number of cyberattacks due, in part, to the large number of our employees and contractors that are working and accessing our technology infrastructure remotely because of shifts in working arrangements.
If we are unable to meet these goals, then we could incur adverse publicity and reaction from investors, activist groups or other stakeholders, which could adversely impact the perception of us and our products and services by current and potential customers, as well as investors, which could adversely impact our business and financial results.
Further, if we incur adverse publicity and reaction from investors, activist groups or other 20 Table of Contents stakeholders related to our ESG efforts and goals, the perception of us and our products and services by current and potential customers, as well as investors, could be adversely impacted which could adversely impact our business and financial results.
From time to time, our collective bargaining agreements come due for renegotiation, and, if we are unable to timely complete negotiations, affected employees may strike, which could have an adverse effect on our business and financial results. There were four collective bargaining agreements in Québec that expired at the end of 2021.
From time to time, our collective bargaining agreements come due for renegotiation, and, if we are unable to timely complete negotiations, affected employees may strike, which could have an adverse effect on our business and financial results.
Despite these new agreements, there may be additional labor strikes, work stoppages, unionization efforts or other employee-related issues, either prior to or following the expiration of these agreements, each of which could significantly affect our business and financial results.
Furthermore, there may be additional work stoppages, unionization efforts or other employee-related issues, either prior to or following the expiration of these agreements, each of which could significantly affect our business and financial results. A prolonged labor strike, work stoppage, unionization efforts or other employee-related issues could have a material adverse effect on our business and financial results.
Our consolidated financial statements are subject to fluctuations in foreign exchange rates, most significantly the Canadian dollar and the European operating currencies such as, Euro, British Pound, Czech Koruna, Croatian Kuna, Serbian Dinar, New Romanian Leu, Bulgarian Lev and Hungarian Forint.
Our consolidated financial statements are subject to fluctuations in foreign exchange rates, most significantly the Canadian dollar and the European operating currencies such as, Euro, British Pound, Czech Koruna, Serbian Dinar, New Romanian Leu, Bulgarian Lev and Hungarian Forint. We hold assets and incur liabilities, earn revenues and pay expenses in different currencies, most significantly in Canada and throughout Europe.
Our financial projections are based on historical experience and on various other estimates and assumptions that we believe to be reasonable under the circumstances and at the time they are made, and our actual results may differ materially from our financial projections, especially in light of the increased difficulty in making such estimates and assumptions as a result of the coronavirus pandemic.
Our financial projections are based on historical experience and on various other estimates and assumptions that we believe to be reasonable under the circumstances and at the time they are made, and our actual results may differ materially from our financial projections.
Although the fair values of our indefinite-lived intangible assets are in excess of their carrying values, the fair values are sensitive to the aforementioned potential changes that could have an adverse impact on future analyses.
The fair values of our Americas reporting unit and indefinite-lived intangible assets are sensitive to the aforementioned potential unfavorable changes that could have an adverse impact on future analyses.
Due to the current year testing that resulted in a partial impairment, it was determined that the fair value of the Americas reporting unit is considered to be at risk of future impairment in the event of significant unfavorable changes in the forecasted cash flows (including macroeconomic risks like the continued prolonged weakening of economic conditions and cost inflation along with company-specific risks like the performance of our above premium transformation efforts and overall market performance of new innovations and our expansion in products beyond-the-beer aisle, or significant unfavorable changes in income tax rates, environmental or other regulations, including interpretations thereof), terminal growth rates, market multiples or weighted-average cost of capital utilized in the discounted cash flow analyses.
In addition, as a result of the current year testing, it was determined that the Americas reporting unit and the Staropramen family of brands indefinite-lived intangible asset are at a heightened risk of future impairment in the event of significant unfavorable changes in the forecasted cash flows (including Company-specific risks like the performance of our above-premium transformation efforts, expansion in products beyond beer and overall market performance, including execution of strategic initiatives for the Staropramen family of brands, along with macroeconomic risks like the continued prolonged weakening of economic conditions and cost inflation, or 23 Table of Contents significant unfavorable changes in income tax rates, environmental or other regulations, including interpretations thereof), terminal growth rates, market multiples and/or weighted-average cost of capital utilized in the discounted cash flow analyses.
Increases and decreases in the value of the USD will affect, perhaps adversely, the value of these items in our financial statements, even if their local currency value has not changed.
Because our financial statements are presented in USD, we must translate our assets, liabilities, income and expenses into USD. Increases and decreases in the value of the USD will affect, perhaps adversely, the value of these items in our financial statements, even if their local currency value has not changed.
In addition, we may suffer financial and reputational damage because of lost or misappropriated confidential information and may become subject to legal action and increased regulatory oversight or consumers may avoid our brands due to negative publicity.
Other jurisdictions in which we operate have enacted or are proposing similar laws and regulations related to data privacy. In addition, we may suffer financial and reputational damage because of lost or misappropriated confidential information and may become subject to legal action and increased regulatory oversight or consumers may avoid our brands due to negative publicity.
We have also entered into a joint venture with The Yuengling Company LLC to expand the distribution of Yuengling beer in the western U.S. We also have a joint venture in the U.K. regarding the production and distribution of Cobra beer.
(i.e., Rocky Mountain Bottle Company), for a portion of our aluminum and glass packaging supply in the U.S., respectively. We have also entered into a joint venture with The Yuengling Company LLC to expand the distribution of Yuengling beer in the western U.S. We also have a joint venture in the U.K. regarding the production and distribution of Cobra beer.
Our ability to attract and retain key talent has been, and may continue to be, impacted by challenges in the labor market, particularly in the U.S., which has recently been experiencing wage inflation, labor shortages, a continued shift toward remote work and the continued effects of the coronavirus pandemic.
The labor market for many of our employees is very competitive, and wages and compensation costs continue to increase. Our ability to attract and retain key talent has been, and may continue to be, impacted by challenges in the labor market, which has recently been experiencing wage inflation, labor shortages, and a continued shift toward remote work.

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Item 2. Properties

Properties — owned and leased real estate

6 edited+1 added−3 removed1 unchanged
Biggest change(4) The Wheat Ridge and Golden, Colorado facilities are leased from us by RMBC and RMMC, respectively. 33 Table of Contents (5) The Burton-on-Trent, Prague, Ploiesti, Apatin and Zagreb breweries collectively accounted for approximately 73% of our EMEA&APAC segment production for the year ended December 31, 2022.
Biggest change(3) The Golden, Trenton, Elkton, Albany and Fort Worth breweries collectively accounted for approximately 78% of our Americas segment production for the year ended December 31, 2023. 32 Table of Contents (4) The Wheat Ridge and Golden, Colorado facilities are leased from us by RMBC and RMMC, respectively.
(2) EMEA&APAC segment operational headquarters Chicago, Illinois (1) Americas segment operational headquarters Golden, Colorado Corporate principal executive office and Americas segment administrative office Milwaukee, Wisconsin Americas segment administrative office Montréal, Québec Corporate principal executive office and Americas segment administrative office Prague, Czech Republic EMEA&APAC segment administrative office Toronto, Ontario Americas segment administrative office Americas Segment Brewery/packaging plants Albany, Georgia (3) Brewing and packaging Chilliwack, British Columbia Brewing and packaging Elkton, Virginia (3) Brewing and packaging Fort Worth, Texas (3) Brewing and packaging Golden, Colorado (3) Brewing and packaging Longueuil, Québec Brewing and packaging Milwaukee, Wisconsin Brewing and packaging Toronto, Ontario Brewing and packaging Trenton, Ohio (3) Brewing and packaging Beer distributorship Denver, Colorado Distribution Container operations Golden, Colorado (4) Can and end manufacturing facilities Wheat Ridge, Colorado (4) Bottling manufacturing facility Malting operations Golden, Colorado Malting EMEA&APAC Segment Brewery/packaging plants Apatin, Serbia (5) Brewing and packaging Bőcs, Hungary Brewing and packaging Burton-on-Trent, U.K.
(2) EMEA&APAC segment operational headquarters Chicago, Illinois (1) Americas segment operational headquarters Golden, Colorado Corporate principal executive office and Americas segment administrative office Milwaukee, Wisconsin Americas segment administrative office Montréal, Québec (1) Corporate principal executive office and Americas segment administrative office Prague, Czech Republic EMEA&APAC segment administrative office Toronto, Ontario Americas segment administrative office Americas Segment Brewery/packaging plants Albany, Georgia (3) Brewing and packaging Chilliwack, British Columbia Brewing and packaging Elkton, Virginia (3) Brewing and packaging Fort Worth, Texas (3) Brewing and packaging Golden, Colorado (3) Brewing and packaging Longueuil, Québec Brewing and packaging Milwaukee, Wisconsin Brewing and packaging Toronto, Ontario Brewing and packaging Trenton, Ohio (3) Brewing and packaging Beer distributorship Denver, Colorado Distribution Container operations Golden, Colorado (4) Can and end manufacturing facilities Wheat Ridge, Colorado (4) Bottling manufacturing facility Malting operations Golden, Colorado Malting EMEA&APAC Segment Brewery/packaging plants Apatin, Serbia (5) Brewing and packaging Bőcs, Hungary Brewing and packaging Burton-on-Trent, U.K.
(2) As of December 31, 2022, we have signed a sale and leaseback agreement for the EMEA&APAC segment operational headquarters facility located in Burton-on-Trent. The sale and leaseback agreement is in effect until we relocate to an owned facility location that will serve as the new EMEA&APAC segment operational headquarters.
(2) As of December 31, 2022, we signed a sale and leaseback agreement for the EMEA&APAC segment operational headquarters facility located in Burton-on-Trent. The sale and leaseback agreement is in effect until we relocate to an owned facility location that will serve as the new EMEA&APAC segment operational headquarters.
ITEM 2. PROPERTIES As of February 21, 2023, our major facilities were owned (unless otherwise indicated) and are as follows: Facility Location Character Administrative Offices Bucharest, Romania (1) Global business services center Burton-on-Trent, U.K.
ITEM 2. PROPERTIES As of February 20, 2024, our major facilities were owned (unless otherwise indicated) and are as follows: Facility Location Character Administrative Offices Bucharest, Romania (1) Global business services center Burton-on-Trent, U.K.
Brewing and packaging Zagreb, Croatia (5) Brewing and packaging (1) We lease the office space for our Americas segment operational headquarters in Chicago, Illinois as well as the office space for our global business services center in Bucharest, Romania.
Brewing and packaging Zagreb, Croatia (5) Brewing and packaging (1) We lease office space for our Americas segment operational headquarters in Chicago, Illinois, our global business services center in Bucharest, Romania as well as our corporate principal executive office and Americas segment administrative office in Montréal, Québec.
In addition to the properties listed above, we have smaller capacity facilities, including craft breweries and cideries, in each of our segments. We own and lease various warehouses, distribution centers and office spaces throughout the Americas segment and EMEA&APAC segment countries in which we operate.
(5) The Burton-on-Trent, Prague, Ploiesti, Apatin and Zagreb breweries collectively accounted for approximately 74% of our EMEA&APAC segment production for the year ended December 31, 2023. In addition to the properties listed above, we have smaller capacity facilities, including craft breweries, in each of our segments.
Removed
(3) The Golden, Trenton, Elkton, Albany and Fort Worth breweries collectively accounted for approximately 86% of our Americas segment production for the year ended December 31, 2022.
Added
We own and lease various warehouses, distribution centers and office spaces throughout the Americas segment and EMEA&APAC segment countries in which we operate. We believe our facilities are well maintained and suitable for their respective operations. During the year ended December 31, 2023, our operating facilities were not capacity constrained.
Removed
Additionally, our Truss joint venture in Canada subleased its production facility in Belleville, Ontario from our joint venture partner, HEXO, for a portion of the year and leased directly from an unrelated third party landlord for the remaining portion of the year in 2022. We believe our facilities are well maintained and suitable for their respective operations.
Removed
In 2022, our operating facilities were not capacity constrained.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeA quarterly dividend of $0.38 per share was declared and paid to eligible shareholders of record on the respective record dates throughout 2022 for a total of $1.52 per share or a CAD equivalent of CAD 1.95 per share. 35 Table of Contents Issuer Purchase of Equity Securities The following table presents information with respect to Class B common stock purchases made by our Company during the three months ended December 31, 2022: Issuer Purchases of Equity Securities Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced plans or programs Maximum number (or approximate dollar value) of shares that may yet be purchased under the plans or programs (1) October 1, 2022 through October 31, 2022 — $ — — $ 161,267,874 November 1, 2022 through November 30, 2022 255,000 $ 49.76 255,000 $ 148,578,003 December 1, 2022 through December 31, 2022 — $ — — $ 148,578,003 Total 255,000 $ 49.76 255,000 $ 148,578,003 (1) On February 17, 2022, our Company's Board of Directors ("the Board") approved a share repurchase program to repurchase up to an aggregate of $200 million, excluding brokerage commissions, of our Company's Class B common stock through March 31, 2026, with the program primarily intended to offset annual employee equity award grants.
Biggest changeA quarterly dividend of $0.41 per share was declared and paid to eligible shareholders of record on the respective record dates throughout 2023 for a total of $1.64 per share or a CAD equivalent of CAD 2.19 per share. 34 Table of Contents Issuer Purchases of Equity Securities The following table presents information with respect to Class B common stock purchases made by our Company during the three months ended December 31, 2023: Issuer Purchases of Equity Securities Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced plans or programs Maximum number (or approximate dollar value) of shares that may yet be purchased under the plans or programs (1) October 1, 2023 through October 31, 2023 — $ — — $ 2,000,000,000 November 1, 2023 through November 30, 2023 1,371,697 $ 59.29 1,371,697 $ 1,918,670,260 December 1, 2023 through December 31, 2023 1,102,997 $ 62.30 1,102,997 $ 1,849,958,156 Total 2,474,694 $ 60.63 2,474,694 $ 1,849,958,156 (1) On September 29, 2023, the Board approved a share repurchase program to repurchase up to an aggregate of $2.0 billion of our Company's Class B common stock, excluding brokerage commissions and excise taxes, with an expected program term of five years.
The repurchase authorization does not oblige us to acquire any particular amount of our Class B common stock. The Board may suspend, modify or terminate the repurchase program at any time without prior notice. ITEM 6. [Reserved]
The repurchase authorization does not oblige us to acquire any particular amount of our Company's Class B common stock. The Board may suspend, modify or terminate the repurchase program at any time without prior notice. ITEM 6. [Reserved]
The number, price, structure and timing of the repurchases, if any, will be at our sole discretion and future repurchases will be evaluated by us depending on market conditions, liquidity needs, restrictions under our debt arrangements and other factors. Share repurchases may be made in the open market or in privately negotiated transactions.
The number, price, structure and timing of the repurchases under the program, if any, will be at our sole discretion and future repurchases will be evaluated by us depending on market conditions, liquidity needs, restrictions under our debt arrangements and other factors. Share repurchases may be made in the open market, in structured transactions, or in privately negotiated transactions.
The approximate number of record security holders by class of stock at February 14, 2023, is as follows: Title of class Number of record security holders Class A common stock, $0.01 par value 22 Class B common stock, $0.01 par value 2,909 Class A exchangeable shares, no par value 204 Class B exchangeable shares, no par value 2,237 34 Table of Contents Performance Graph The following graph compares our cumulative total stockholder return over the last five fiscal years with the S&P 500 and a customized peer index including MCBC, ABI, Carlsberg, Heineken and Asahi (the "Peer Group").
The approximate number of record security holders by class of stock at February 13, 2024, is as follows: Title of class Number of record security holders Class A common stock, $0.01 par value 22 Class B common stock, $0.01 par value 2,880 Class A exchangeable shares, no par value 205 Class B exchangeable shares, no par value 2,214 Performance Graph The following graph compares our cumulative total stockholder return over the last five fiscal years with the S&P 500 and a customized peer index including MCBC, ABI, Carlsberg, Heineken and Asahi (the "Peer Group").
A quarterly dividend of $0.34 per share was paid during the third and fourth quarters of 2021, for a total of $0.68 per share or a CAD equivalent of CAD 0.84 per share.
A quarterly dividend of $0.34 per share was paid during the third and fourth quarters of 2021 following the reinstatement of the quarterly dividend on July 15, 2021 by the Board after the quarterly dividend's suspension as a result of the coronavirus pandemic, for a total of $0.68 per share or a CAD equivalent of CAD 0.84 per share.
We have used a weighted-average based on market capitalization to determine the return for the Peer Group. The graph assumes $100 was invested on December 31, 2017, in our Class B common stock, the S&P 500 and the Peer Group, and assumes reinvestment of all dividends.
We have used a weighted-average based on market capitalization to determine the return for the Peer Group.
The below is provided for informational purposes and is not indicative of future performance. 2017 2018 2019 2020 2021 2022 Molson Coors $ 100.00 $ 70.11 $ 69.79 $ 59.21 $ 61.62 $ 70.49 S&P 500 $ 100.00 $ 95.61 $ 125.70 $ 148.82 $ 191.50 $ 156.79 Peer Group $ 100.00 $ 73.53 $ 94.19 $ 81.57 $ 83.43 $ 83.67 Dividends We do not have any restrictions that prevent or limit our ability to declare or pay dividends.
The graph assumes $100 was invested on December 31, 2018, in our Class B common stock, the S&P 500 and the Peer Group, and assumes reinvestment of all dividends. 33 Table of Contents The below is provided for informational purposes and is not indicative of future performance. 2018 2019 2020 2021 2022 2023 Molson Coors $ 100.00 $ 99.54 $ 84.45 $ 87.89 $ 100.54 $ 127.91 S&P 500 $ 100.00 $ 131.48 $ 155.66 $ 200.30 $ 163.99 $ 207.87 Peer Group $ 100.00 $ 128.10 $ 110.93 $ 113.47 $ 113.80 $ 121.72 Dividends We do not have any restrictions that prevent or limit our ability to declare or pay dividends.
Removed
On July 15, 2021, our Company's Board of Directors reinstated a quarterly dividend after it was suspended during the second quarter of 2020 to preserve our liquidity position as a result of the coronavirus pandemic.
Added
A quarterly dividend of $0.38 per share was declared and paid to eligible shareholders of record on the respective record dates throughout 2022 for a total of $1.52 per share or a CAD equivalent of CAD 1.95 per share.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeFor the years ended December 31, 2022 Change December 31, 2021 Change December 31, 2020 (In millions, except percentages and per share data) Net sales $ 10,701.0 4.1 % $ 10,279.7 6.5 % $ 9,654.0 Cost of goods sold (7,045.8) 13.2 % (6,226.3) 5.8 % (5,885.7) Gross profit 3,655.2 (9.8) % 4,053.4 7.6 % 3,768.3 Marketing, general and administrative expenses (2,618.8) 2.5 % (2,554.5) 4.8 % (2,437.0) Goodwill impairment (845.0) N/M — N/M (1,484.3) Other operating income (expense), net (38.6) (13.3) % (44.5) (82.6) % (255.9) Equity income (loss) 4.7 N/M — N/M — Operating income (loss) 157.5 (89.2) % 1,454.4 N/M (408.9) Total non-operating income (expense), net (220.0) 2.1 % (215.4) (8.3) % (235.0) Income (loss) before income taxes (62.5) N/M 1,239.0 N/M (643.9) Income tax benefit (expense) (124.0) (46.2) % (230.5) (23.6) % (301.8) Net income (loss) (186.5) N/M 1,008.5 N/M (945.7) Net (income) loss attributable to noncontrolling interests 11.2 N/M (2.8) (15.2) % (3.3) Net income (loss) attributable to MCBC $ (175.3) N/M $ 1,005.7 N/M $ (949.0) Net income (loss) attributable to MCBC per diluted share $ (0.81) N/M $ 4.62 N/M $ (4.38) Financial volume in hectoliters 82.272 (2.1) % 84.028 (0.5) % 84.479 N/M = Not meaningful Foreign currency impacts on results For the year ended December 31, 2022, foreign currency movements had the following impacts on our USD consolidated results: • Net sales - Unfavorable impact of $298.0 million (unfavorable impact for EMEA&APAC and Americas of $249.0 million and $49.0 million, respectively). • Cost of goods sold - Favorable impact of $211.7 million (favorable impact for EMEA&APAC, Americas and Unallocated of $169.4 million, $36.3 million and $6.0 million, respectively). • MG&A - Favorable impact of $83.4 million (favorable impact for EMEA&APAC and Americas of $66.8 million and $16.6 million, respectively). • Income (loss) before income taxes - Unfavorable impact of $15.1 million (unfavorable impact for EMEA&APAC and Americas of $14.0 million and $2.6 million, respectively, partially offset by the favorable impact for Unallocated of $1.5 million).
Biggest changeFor the years ended December 31, 2023 Change December 31, 2022 Change December 31, 2021 (In millions, except percentages and per share data) Net sales $ 11,702.1 9.4 % $ 10,701.0 4.1 % $ 10,279.7 Cost of goods sold (7,333.3) 4.1 % (7,045.8) 13.2 % (6,226.3) Gross profit 4,368.8 19.5 % 3,655.2 (9.8) % 4,053.4 Marketing, general and administrative expenses (2,779.9) 6.2 % (2,618.8) 2.5 % (2,554.5) Goodwill impairment — N/M (845.0) N/M — Other operating income (expense), net (162.7) 321.5 % (38.6) (13.3) % (44.5) Equity income (loss) 12.0 155.3 % 4.7 N/M — Operating income (loss) 1,438.2 813.1 % 157.5 (89.2) % 1,454.4 Total non-operating income (expense), net (185.7) (15.6) % (220.0) 2.1 % (215.4) Income (loss) before income taxes 1,252.5 N/M (62.5) N/M 1,239.0 Income tax benefit (expense) (296.1) 138.8 % (124.0) (46.2) % (230.5) Net income (loss) 956.4 N/M (186.5) N/M 1,008.5 Net (income) loss attributable to noncontrolling interests (7.5) N/M 11.2 N/M (2.8) Net income (loss) attributable to MCBC $ 948.9 N/M $ (175.3) N/M $ 1,005.7 Net income (loss) attributable to MCBC per diluted share $ 4.37 N/M $ (0.81) N/M $ 4.62 Financial volume in hectoliters 83.772 1.8 % 82.272 (2.1) % 84.028 N/M = Not meaningful 37 Table of Contents Foreign currency impacts on results For the year ended December 31, 2023, foreign currency movements had the following impacts on our USD consolidated results: • Net sales - Favorable impact of $9.5 million (favorable impact for EMEA&APAC of $56.0 million, partially offset by the unfavorable impact for Americas of $46.5 million). • Cost of goods sold - Favorable impact of $1.0 million (favorable impact for Americas and Unallocated of $34.9 million and $1.8 million, respectively, partially offset by the unfavorable impact for EMEA&APAC of $35.7 million). • MG&A - Favorable impact of $1.3 million (favorable impact for Americas of $14.2 million, partially offset by the unfavorable impact for EMEA&APAC of $12.9 million). • Income (loss) before income taxes - Favorable impact of $9.1 million (favorable impact for Unallocated of $15.9 million, partially offset by the unfavorable impact for EMEA&APAC and Americas of $5.3 million and $1.5 million, respectively).
See Part II - Item 8. Financial Statements and Supplementary Data, Note 9, "Debt" for further details on our debt instruments. See Part II - Item 8 Financial Statements and Supplementary Data, Note 11, "Employee Retirement Plans and Postretirement Benefits" for further discussion of pension and OPEB.
Financial Statements and Supplementary Data, Note 9, "Debt" for further details on our debt instruments. See Part II - Item 8 Financial Statements and Supplementary Data, Note 11, "Employee Retirement Plans and Postretirement Benefits" for further discussion of pension and OPEB.
We currently believe that our cash and cash equivalents, cash flows from operations and cash provided by short-term and long-term borrowings, when necessary, will be adequate to meet our ongoing operating requirements, scheduled principal and interest payments on debt, anticipated dividend payments, capital expenditures and other obligations for the twelve months subsequent to the date of the issuance of this annual report and our long-term liquidity requirements.
We currently believe that our cash and cash equivalents, cash flows from operations and cash provided by short-term and long-term borrowings, when necessary, will be adequate to meet our ongoing operating requirements, scheduled principal and interest payments on debt, anticipated dividend payments, capital expenditures and other obligations for the twelve months subsequent to the date of the issuance of this report and our long-term liquidity requirements.
Examples of events or circumstances that could reasonably be expected to negatively affect the underlying key assumptions and ultimately impact the estimated fair value of our reporting units and indefinite-lived intangible assets may include such items as: (i) a decrease in expected future cash flows, specifically, an inability to execute on our strategic initiatives or an increase in costs driven by inflation or other factors that could significantly impact our immediate and long-range results and an inability to successfully achieve our cost savings targets, (ii) adverse changes in macroeconomic conditions or an economic recovery that significantly differs from our assumptions in timing and/or degree (such as a global pandemic or recession), (iii) significant unfavorable changes in tax rates, (iv) volatility in the equity and debt markets or other country specific factors which could result in a higher weighted-average cost of capital, (v) sensitivity to market multiples; and (vi) regulation limiting or banning the manufacturing, distribution or sale of alcoholic beverages.
Examples of events or circumstances that could reasonably be expected to negatively affect the underlying key assumptions and ultimately impact the estimated fair value of our reporting units and indefinite-lived intangible assets may include such items as: (i) a decrease in expected future cash flows, specifically, an inability to execute on our strategic initiatives, including our anticipated innovations or an increase in costs driven by inflation or other factors that could significantly impact our immediate and long-range results and an inability to successfully achieve our cost savings targets, (ii) adverse changes in macroeconomic conditions or an economic recovery that significantly differs from our assumptions in timing and/or degree (such as a global pandemic or recession), (iii) significant unfavorable changes in tax rates, (iv) volatility in the equity and debt markets or other country specific factors which could result in a higher weighted-average cost of capital, (v) sensitivity to market multiples; and (vi) regulation limiting or banning the manufacturing, distribution or sale of alcoholic beverages.
We believe the premiumization of our portfolio will drive sustainable net sales and earnings growth but result in potential volume declines due to the rationalization of certain SKUs and as the portfolio mix shifts towards a higher composition of above premium products.
We believe the continued premiumization of our portfolio will drive sustainable net sales and earnings growth but result in potential volume declines due to the rationalization of certain SKUs and as the portfolio mix shifts towards a higher composition of above premium products.
Discount rates for the indefinite-lived intangible analysis by brand largely reflect the rates supporting the overall reporting unit valuation but may differ slightly to adjust for country or market specific risk associated with a particular brand, among other factors.
Discount rates for the indefinite-lived intangible analysis by brand largely reflect the rates supporting the overall reporting unit valuation but may differ to adjust for country or market specific risk associated with a particular brand, among other factors.
This strategy was intended to drive sustainable net sales growth and earnings growth, despite potential volume declines due to the rationalization or certain SKUs and as the portfolio mix shifted toward a higher composition of above premium products.
This strategy was intended to drive sustainable net sales growth and earnings growth, despite potential volume declines due to the rationalization of certain SKUs and as the portfolio mix shifted toward a higher composition of above premium products.
Our tax rate can be volatile and may change with, among other things, the amount and source of pre-tax income or loss, our ability to utilize foreign tax credits, excess tax benefits or deficiencies from share-based compensation, changes in tax laws and the movement of liabilities established pursuant to accounting guidance for uncertain tax positions as statutes of limitations expire, positions are effectively settled or when additional information becomes available.
Our tax rate can be volatile and may change with, among other things, the amount and source of pretax income or loss, our ability to utilize foreign tax credits, excess tax benefits or deficiencies from share-based compensation, changes in tax laws and the movement of liabilities established pursuant to accounting guidance for uncertain tax positions as statutes of limitations expire, positions are effectively settled or when additional information becomes available.
See also "Cautionary Statement Pursuant to Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995." A discussion related to the results of operations and changes in financial condition for 2021 compared to 2020 has been omitted from this report, but may be found in Part II, Item 7.
See also "Cautionary Statement Pursuant to Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995." A discussion related to the results of operations and changes in financial condition for 2022 compared to 2021 has been omitted from this report, but may be found in Part II, Item 7.
Goodwill and Intangible Asset Valuation We evaluate the carrying value of our goodwill and indefinite-lived intangible assets for impairment at least annually or when an interim triggering event occurs that may indicate potential impairment. Our annual impairment test of goodwill and indefinite-lived intangible assets was performed as of October 1, the first day of the last fiscal quarter.
Goodwill and Intangible Asset Valuation We evaluate the carrying value of our goodwill and indefinite-lived intangible assets for impairment at least annually or when an interim triggering event occurs that may indicate potential impairment. Our annual impairment test of goodwill and indefinite-lived intangible assets is performed as of October 1, the first day of the last fiscal quarter.
None of our other outstanding debt was issued in a transaction that was registered with the SEC, and such other outstanding debt is issued or otherwise generally guaranteed on a senior unsecured basis by the Obligor Group or other consolidated subsidiaries of MCBC. These other guarantees are also full and unconditional and joint and several.
The guarantees are full and unconditional and joint and several. None of our other outstanding debt was issued in a transaction that was registered with the SEC, and such other outstanding debt is issued or otherwise generally guaranteed on a senior unsecured basis by the Obligor Group or other consolidated subsidiaries of MCBC.
Premiumization of our Portfolio In 2021, in order to support the overall premiumization of our portfolio, we strategically de-prioritized and rationalized certain non-core SKUs predominantly in the economy segment. While we rationalized certain non-core economy SKUs, we retained key economy brands allowing us to maintain a portfolio for all socio-economic demographics.
Premiumization of our Portfolio In 2021, in order to support continued premiumization of our portfolio, we strategically de-prioritized and rationalized certain non-core SKUs predominantly in the economy segment. While we rationalized certain non-core economy SKUs, we retained key economy brands allowing us to maintain a portfolio for all socio-economic demographics.
Our short-term credit ratings are A-3, Prime-3 and R-2(low), respectively. A securities rating is not a recommendation to buy, sell or hold securities, and it may be revised or withdrawn at any time by the applicable rating agency.
Our short-term credit ratings are A-2, Prime-2 and R-2, respectively. A securities rating is not a recommendation to buy, sell or hold securities, and it may be revised or withdrawn at any time by the applicable rating agency.
These include customary events 48 Table of Contents of default and specified representations, warranties and covenants, as well as covenants that restrict our ability to incur certain additional priority indebtedness (certain thresholds of secured consolidated net tangible assets), certain leverage threshold percentages, create or permit liens on assets and restrictions on mergers, acquisitions and certain types of sale lease-back transactions.
These include customary events of default and specified representations, warranties and covenants, as well as covenants that restrict our ability to incur certain additional priority indebtedness (certain thresholds of secured consolidated net tangible assets), certain leverage threshold percentages, create or permit liens on assets and restrictions on mergers, acquisitions and certain types of sale lease-back transactions.
We do not have any restrictions that prevent or limit our ability to declare or pay dividends. While a significant portion of our cash flows from operating activities are generated within the U.S., our cash balances include cash held outside the U.S. and in currencies other than the USD.
We do not have any restrictions that prevent or limit our ability to declare or pay dividends. 42 Table of Contents While a significant portion of our cash flows from operating activities are generated within the U.S., our cash balances include cash held outside the U.S. and in currencies other than the USD.
These include the discount rate, long-term expected rate of return on assets, and plan asset fair value determination, 50 Table of Contents which are important assumptions used in determining the plans' funded status and annual net periodic pension and OPEB costs. Further assumptions include inflation considerations and health care cost trends.
These include the discount rate, long-term expected rate of return on assets, and plan asset fair value determination, which are important assumptions used in determining the plans' funded status and annual net periodic pension and OPEB costs. Further assumptions include inflation considerations and health care cost trends.
Refer to Part II—Item 8 Financial Statements and Supplementary Data, Note 9, "Debt" for details. 47 Table of Contents Based on the credit profile of our lenders that are party to our credit facilities, we are confident in our ability to continue to draw on our revolving credit facility if the need arises.
Refer to Part II—Item 8 Financial Statements and Supplementary Data, Note 9, "Debt" for details. 45 Table of Contents Based on the credit profile of our lenders that are party to our credit facilities, we are confident in our ability to draw on our revolving credit facility if the need arises.
We evaluate our other definite-lived intangible assets for impairment when evidence exists that certain events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. Significant judgments and assumptions are required in such 52 Table of Contents impairment evaluations.
We evaluate our other definite-lived intangible assets for impairment when evidence exists that certain events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. Significant judgments and assumptions are required in such impairment evaluations.
See Part II—Item 8 Financial Statements and Supplementary Data, Note 13, "Commitments and Contingencies" for a discussion of our contingencies, environmental and litigation reserves as of December 31, 2022.
See Part II—Item 8 Financial Statements and Supplementary Data, Note 13, "Commitments and Contingencies" for a discussion of our contingencies, environmental and litigation reserves as of December 31, 2023.
See Part II—Item 8 Financial Statements and Supplementary Data, Note 9, "Debt" for details of all debt issued and outstanding as of December 31, 2022.
See Part II—Item 8 Financial Statements and Supplementary Data, Note 9, "Debt" for details of all debt issued and outstanding as of December 31, 2023.
Long-Term Expected Rate of Return on Assets The assumed long-term expected return on assets is used to estimate the actual return that will occur on each individual funded plan's respective plan assets in the upcoming year. We determine each plan's EROA with substantial input from independent investment specialists, including our actuaries and other consultants.
Long-Term Expected Rate of Return on Assets The assumed long-term expected return on assets is used to estimate the actual return that will occur on each individual funded plan's respective plan assets in the upcoming year. We determine each plan's EROA with substantial input from independent investment specialists, including our actuaries and our outsourced investment consultant.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Overview For more than two centuries, we have been brewing beverages that unite people to celebrate all life’s moments.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Overview For over two centuries, we have been brewing beverages that unite people to celebrate all life’s moments.
Our profitability may be impacted by prices that do not offset the inflationary pressures, which may impact gross margins.
Our profitability may be impacted by prices that do not offset the inflationary pressures, which would negatively impact gross margins.
Goodwill Impairment See Part II—Item 8 Financial Statements and Supplementary Data, Note 6, "Goodwill and Intangible Assets" for detail of 41 Table of Contents our goodwill impairments. Other operating income (expense), net See Part II—Item 8 Financial Statements and Supplementary Data, Note 17, "Other Operating Income (Expense), net" for detail of our other operating income (expense), net.
Goodwill Impairment See Part II—Item 8 Financial Statements and Supplementary Data, Note 6, "Goodwill and Intangible Assets" for detail of our goodwill impairments. Other operating income (expense), net See Part II—Item 8 Financial Statements and Supplementary Data, Note 17, "Other Operating Income (Expense), net" for detail of our other operating income (expense), net.
Management's Discussion and Analysis of Financial Condition and Results of Operations in our fiscal 2021 Form 10-K, filed with the SEC on February 23, 2022, which is available free of charge on the SEC's website at www.sec.gov and our corporate website at www.molsoncoors.com.
Management's Discussion and Analysis of Financial Condition and Results of Operations in our fiscal 2022 Form 10-K, filed with the SEC on February 21, 2023, which is available free of charge on the SEC's website at www.sec.gov and our corporate website at www.molsoncoors.com.
Items Affecting Americas Segment Results of Operations Goodwill Impairment During the fourth quarter of 2022, we recorded a partial goodwill impairment charge of $845.0 million related to the Americas reporting unit as a result of the annual goodwill impairment analysis. See Part II—Item 8 Financial Statements and Supplementary Data, Note 6, "Goodwill and Intangible Assets" for further information.
Goodwill Impairment During the fourth quarter of 2022, we recorded a partial goodwill impairment charge of $845.0 million related to the Americas reporting unit as a result of the annual goodwill impairment analysis. See Part II—Item 8 Financial Statements and Supplementary Data, Note 6, "Goodwill and Intangible Assets" for further information.
The decline in the fair value of the Americas reporting unit in the current year was largely impacted by macroeconomic factors including an increase to the discount rate as a result of the recent rising interest rate environment as well as reductions in management forecasts and expectations due primarily to cost inflation pressures in the near to medium term and a softening beer industry in certain markets in which we operate.
The decline in the fair value of the Americas reporting unit was largely impacted by macroeconomic factors including an increase to the discount rate as a result of the rising interest rate environment as well as reductions in management forecasts and expectations due primarily to cost inflation pressures and a softening beer industry in certain markets in which we operate.
These senior notes are guaranteed on a senior unsecured basis by certain subsidiaries of MCBC, which are listed on Exhibit 22 of this Annual Report on Form 10-K (the "Subsidiary Guarantors", and together with the Parent Issuer, the "Obligor Group").
These senior notes are guaranteed on a senior unsecured basis by certain subsidiaries of MCBC, which are listed in Exhibit 22 of this Annual Report on Form 10-K (the Subsidiary Guarantors, and together with the Parent Issuer, the "Obligor Group"). Each of the Subsidiary Guarantors is 100% owned by the Parent Issuer.
As of December 31, 2022, the carrying values of goodwill and intangible assets were approximately $5.3 billion and $12.8 billion, respectively, with the goodwill balance entirely attributed to the Americas reporting unit.
As of December 31, 2023, the carrying values of goodwill and intangible assets were approximately $5.3 billion and $12.6 billion, respectively, with the goodwill balance entirely attributed to the Americas reporting unit.
We believe that our discount rate assumptions are appropriate; however, significant changes in our assumptions may materially affect our pension and OPEB obligations and related expense. As of December 31, 2022, on a weighted-average basis, the discount rates used were 5.01% for our defined benefit pension plans and 4.90% for our OPEB plans.
We believe that our discount rate assumptions are appropriate; however, significant changes in our assumptions may materially affect our pension and OPEB obligations and related expense. As of December 31, 2023, on a weighted-average basis, the discount rates used were 4.74% for our defined benefit pension plans and 4.64% for our OPEB plans.
Annual Goodwill Impairment Test As of the October 1, 2022 testing date, the carrying value of the Americas reporting unit was determined to be in excess of its fair value such that an impairment loss of $845.0 million was recorded.
As of the October 1, 2022 testing date, an impairment loss of $845.0 million was recorded as the carrying value of the Americas reporting unit was determined to be in excess of its fair value.
Cash balances in foreign countries are often subject to additional restrictions and covenants. We may, therefore, have difficulties timely repatriating cash held outside the U.S., and such repatriation may be subject to tax. These limitations may affect our ability to fully utilize our cash resources for needs in the U.S. and other countries and may adversely affect our liquidity.
We may, therefore, have difficulties timely repatriating cash held outside the U.S., and such repatriation may be subject to tax. These limitations may affect our ability to fully utilize our cash resources for needs in the U.S. and other countries and may adversely affect our liquidity.
Based on the above factors and expected asset allocations, we have assumed, on a weighted-average basis, an EROA of 4.91% for our defined benefit pension plan assets for cost recognition in 2023.
Based on the above factors and expected asset allocations, we have assumed, on a weighted-average basis, an EROA of 5.47% for our defined benefit pension plan assets for cost recognition in 2024.
For the years ended December 31, 2022 Change December 31, 2021 Change December 31, 2020 (In millions, except percentages) Cost of goods sold $ (229.9) N/M $ 236.6 119.9 % $ 107.6 Gross profit (229.9) N/M 236.6 119.9 % 107.6 Operating income (loss) (229.9) N/M 236.6 119.9 % 107.6 Total non-operating income (expense), net (206.5) (0.2) % (207.0) (9.3) % (228.3) Income (loss) before income taxes $ (436.4) N/M $ 29.6 N/M $ (120.7) N/M = Not meaningful Cost of goods sold The unrealized changes in fair value on our commodity derivatives, which are economic hedges, make up substantially all of the activity presented within cost of goods sold in the table above for 2022, 2021 and 2020.
For the years ended December 31, 2023 Change December 31, 2022 Change December 31, 2021 (In millions, except percentages) Cost of goods sold $ (93.5) (59.3) % $ (229.9) N/M $ 236.6 Gross profit (93.5) (59.3) % (229.9) N/M 236.6 Operating income (loss) (93.5) (59.3) % (229.9) N/M 236.6 Total non-operating income (expense), net (179.6) (13.0) % (206.5) (0.2) % (207.0) Income (loss) before income taxes $ (273.1) (37.4) % $ (436.4) N/M $ 29.6 N/M = Not meaningful Cost of goods sold The unrealized changes in fair value on our commodity derivatives, which are economic hedges, make up substantially all of the activity presented within cost of goods sold in the table above for the years ended December 31, 2023, 2022 and 2021.
There are proposed or pending tax law changes in various jurisdictions in which we do business. As discussed in Part II—Item 8 Financial Statements and Supplementary Data, Note 12, "Income Tax" , we recognize the impacts of changes in tax law upon enactment, and therefore, proposed changes in tax law, regulations and rules are not reflected within our tax provision.
As discussed in Part II—Item 8 Financial Statements and Supplementary Data, Note 12, "Income Tax" , we recognize the impacts of changes in tax law upon enactment, and therefore, proposed changes in tax law, regulations and rules are not reflected within our tax provision.
While progress has been made on this strategy, including the increasing proportion of our above premium portfolio in the current year and the strengthening of our core brands, there is not enough historical data yet to comfortably predict future impacts and forecasted future cash flows are inherently at risk given that the strategies are still in progress.
While progress has been made on this strategy, including the strengthening of our core brands, there is not enough historical data yet to adequately predict future impacts and forecasted future cash flows are inherently at risk given that the strategies are still in progress.
EMEA&APAC Segment For the years ended December 31, 2022 Change December 31, 2021 Change December 31, 2020 (In millions, except percentages) Net sales (1) $ 2,005.2 11.3 % $ 1,802.3 25.9 % $ 1,431.9 Income (loss) before income taxes $ 61.0 85.4 % $ 32.9 N/M $ (1,603.7) Financial volume in hectoliters (2) 21.955 8.1 % 20.315 3.9 % 19.560 N/M = Not meaningful (1) Includes gross inter-segment sales and volumes which are eliminated in the consolidated totals.
EMEA&APAC Segment For the years ended December 31, 2023 Change December 31, 2022 Change December 31, 2021 (In millions, except percentages) Net sales (1) $ 2,296.1 14.5 % $ 2,005.2 11.3 % $ 1,802.3 Income (loss) before income taxes $ (41.1) N/M $ 61.0 85.4 % $ 32.9 Financial volume in hectoliters (2) 21.286 (3.0) % 21.955 8.1 % 20.315 N/M = Not meaningful (1) Includes gross inter-segment sales and volumes which are eliminated in the consolidated totals.
Even if we are able to raise the prices of our products, consumers might react negatively to such price increases, which could have a material adverse effect on, among other things, our brand, reputation and sales. If our competitors maintain or substantially lower their prices, we may lose customers or mark down prices to match them.
Even if we are able to raise the prices of our products, consumers might react negatively to such price increases, which could have a material adverse effect on, among other things, our brands, reputation and sales. If our competitors maintain or substantially lower their prices, we may lose customers or be forced to lower prices to remain competitive.
Accounting for pension and OPEB plans requires that we make assumptions that involve considerable judgment which are significant inputs in the actuarial models that measure our net pension and OPEB obligations and ultimately impact our earnings.
We also offer defined contribution plans in each of our segments. Accounting for pension and OPEB plans requires that we make assumptions that involve considerable judgment which are significant inputs in the actuarial models that measure our net pension and OPEB obligations and ultimately impact our earnings.
Specifically, the discount rate used in developing our annual fair value estimates for the Americas reporting unit in the current year was 8.75% based on market-specific factors, primarily the recent interest rate environment, as compared to 8.25% used as of the October 1, 2021 annual testing date.
Specifically, the discount rate used in developing our annual fair value estimates for the Americas reporting unit in the current year was 9.00% based on market-specific factors, as compared to 8.75% used as of the October 1, 2022 annual testing date.
However, our liquidity could be impacted significantly by the risk factors described in Part I, Item 1A. "Risk Factors ". Cash Flows from Operating Activities Net cash provided by operating activities of $1,502.0 million for the year ended December 31, 2022 decreased $71.5 million compared to $1,573.5 million for the year ended December 31, 2021.
However, our liquidity could be impacted significantly by the risk factors described in Part I, Item 1A. "Risk Factors ". Cash Flows from Operating Activities Net cash provided by operating activities of $2,079.0 million for the year ended December 31, 2023 increased $577.0 million compared to $1,502.0 million for the year ended December 31, 2022.
The following summarized financial information relates to the Obligor Group as of December 31, 2022 on a combined basis, after elimination of intercompany transactions and balances between the Obligor Group, and excluding the investments in and equity in the earnings of any non-guarantor subsidiaries. 45 Table of Contents The balances and transactions with non-guarantor subsidiaries have been separately presented.
The following summarized financial information relates to the Obligor Group as of December 31, 2023 on a combined basis, after elimination of intercompany transactions and balances between the Obligor Group, and excluding the investments in and equity in the earnings of any non-guarantor subsidiaries.
While cost inflation was high in all of our markets during the year ended December 31, 2022, the impact to COGS on a percentage basis was higher for our EMEA&APAC segment than our Americas segment. In addition, consumers in certain markets in our EMEA&APAC segment were impacted by local inflation leading to a reduction in their discretionary purchases.
While cost inflation has been high in all of our markets, the impact to COGS on a percentage basis was higher for our EMEA&APAC segment than our Americas segment. In addition, consumers in certain markets in our EMEA&APAC segment continued to be impacted by local inflation leading to a reduction in their discretionary purchases.
Additionally, pursuant to the indenture dated July 7, 2016 ("July 2016 Indenture"), MCBC issued its outstanding 3.0% senior notes due 2026, 4.2% senior notes due 2046 and 1.25% senior notes due 2024. The issuances of the senior notes issued under the May 2012 Indenture and the July 2016 Indenture were registered under the Securities Act of 1933, as amended.
Pursuant to the indenture dated May 3, 2012 (as amended, the "May 2012 Indenture"), MCBC issued its outstanding 5.0% senior notes due 2042. Additionally, pursuant to the indenture dated July 7, 2016 ("July 2016 Indenture"), MCBC issued its outstanding 3.0% senior notes due 2026, 4.2% senior notes due 2046 and 1.25% senior notes due 2024.
A 50 basis point increase in our discount rate assumptions would not have resulted in an impairment of any of our indefinite-lived intangible assets.
A 50 basis point increase in our discount rate assumptions would not have resulted in an impairment of the Coors , Miller or Carling brand indefinite-lived intangible assets.
The senior notes and related guarantees rank pari-passu with all other unsubordinated debt of the Obligor Group and senior to all future subordinated debt of the Obligor Group.
These other guarantees are also full and unconditional and joint and several. The senior notes and related guarantees rank pari-passu with all other unsubordinated debt of the Obligor Group and senior to all future subordinated debt of the Obligor Group.
Guarantor Information SEC Registered Securities For purposes of this disclosure, including the tables, "Parent Issuer" shall mean MCBC. "Subsidiary Guarantors" shall mean certain Canadian and U.S. subsidiaries reflecting the substantial operations of our Americas segment.
Guarantor Information SEC Registered Securities For purposes of this disclosure, including the tables, "Parent Issuer" shall mean MCBC in its capacity as the issuer of the senior notes under the May 2012 Indenture and the July 2016 Indenture. "Subsidiary Guarantors" shall mean certain Canadian and U.S. subsidiaries reflecting the substantial operations of our Americas segment.
(1) Represents expected contributions of $4.0 million under our defined benefit pension plans in the next twelve months and our benefit payments under postretirement benefit plans for all periods presented. The net underfunded liability as of December 31, 2022 of our defined benefit pension plans (excluding our overfunded plans) and postretirement benefit plans is $38.4 million and $478.3 million, respectively.
(1) Represents expected contributions of $3.6 million under our defined benefit pension plans in the next twelve months and our benefit payments under postretirement benefit plans through 2033. The net underfunded liability as of December 31, 2023 of our defined benefit pension plans (excluding our overfunded plans) and postretirement benefit plans is $38.1 million and $470.6 million, respectively.
This metric excludes royalty volume, which consists of our brands produced and sold under various license and contract brewing agreements. Factored volume in our EMEA&APAC segment is the distribution of beer, wine, spirits and other products owned and produced by other companies to the on-premise channel, which is a common arrangement in the U.K.
Factored volume in our EMEA&APAC segment is the distribution of beer, wine, spirits and other products owned and produced by other companies to the on-premise channel, which is a common arrangement in the U.K.
Capital Expenditures We incurred $694.7 million, and paid $661.4 million, for capital improvement projects worldwide for the year ended December 31, 2022, excluding capital spending by equity method joint ventures, representing an increase of $136.1 million from the $558.6 million of capital expenditures incurred for the year ended December 31, 2021.
Capital Expenditures We incurred $688.6 million, and paid $671.5 million, for capital improvement projects worldwide for the year ended December 31, 2023, excluding capital spending by equity method joint ventures, representing a decrease of $6.1 million from the $694.7 million of capital expenditures incurred for the year ended December 31, 2022.
See Part II—Item 8 Financial Statements and Supplementary Data, “Consolidated Statements of Operations” for additional details of our U.S. GAAP results comparing December 31, 2022 and December 31, 2021.
Consolidated Results of Operations The following table highlights summarized components of our consolidated statements of operations for the years ended December 31, 2023, December 31, 2022 and December 31, 2021. See Part II—Item 8 Financial Statements and Supplementary Data, “Consolidated Statements of Operations” for additional details of our U.S. GAAP results comparing December 31, 2023 and December 31, 2022.
Likewise, should we determine that we would not be able to realize all or part of our net 54 Table of Contents deferred tax asset in the future, an adjustment to the deferred tax asset would increase income tax expense in the period such determination was made.
Likewise, should we determine that we would not be able to realize all or part of our net deferred tax asset in the future, an adjustment to the deferred tax asset would increase income tax expense in the period such determination was made. There are proposed or pending tax law changes in various jurisdictions in which we do business.
Changes in these assumptions or the use of different market inputs may have a material impact on the estimated fair values or the ultimate amount at which the plan assets are available to satisfy our plan obligations. Equity assets are diversified between domestic and other international investments. Relative allocations reflect the demographics of the respective plan participants.
Changes in these assumptions or the use of different market inputs may have a material impact on the estimated fair values or the ultimate amount at which the plan assets are available to satisfy our plan obligations.
Current projections used for the Americas reporting unit testing reflect growth assumptions associated with our continued plan to build on the strength of our iconic core brands, aggressively grow our above premium portfolio, expand beyond the beer aisle, invest in our capabilities and support our people and our communities, all of which are intended to benefit the projected cash flows of the business.
Current projections used for the Americas reporting unit testing reflected growth assumptions associated with our continued plan to consistently grow our core power brand revenue, aggressively premiumize our portfolio, scale and expand beyond beer, invest in our capabilities and invest in our people, communities and planet, all of which are intended to benefit the projected cash flows of the business.
Our Fiscal Year Unless otherwise indicated, (a) all $ amounts are in USD, (b) comparisons are to comparable prior periods and (c) 2022, 2021 and 2020 refers to the 12 months ended December 31, 2022, December 31, 2021 and December 31, 2020, respectively. 36 Table of Contents Items Affecting Reported Results Items Affecting Consolidated Results of Operations Cost Inflation We continued to experience significant cost inflation, including higher material, transportation and energy costs, which negatively impacted our results of operations during the year ended December 31, 2022.
Our Fiscal Year Unless otherwise indicated, (a) all $ amounts are in USD, (b) comparisons are to comparable prior periods and (c) 2023, 2022 and 2021 refers to the 12 months ended December 31, 2023, December 31, 2022 and December 31, 2021, respectively. 35 Table of Contents Items Affecting Reported Results Items Affecting Consolidated Results of Operations Cost Inflation We have continued to incur significant cost inflation, including materials and manufacturing expenses, which negatively impacted our results of operations for the year ended December 31, 2023, although we experienced moderation in the second half of the year.
Total non-operating income (expense), net Total non-operating expense, net increased 2.1% for the year ended December 31, 2022, compared to prior year primarily due to higher pension and OPEB non-service costs and unfavorable transactional impacts of changes in foreign exchange rates, partially offset by lower interest expense driven by the repayment of debt as a result of our continued deleveraging actions.
Total non-operating income (expense), net Total non-operating expense, net decreased 15.6% for the year ended December 31, 2023, compared to prior year primarily due to lower net interest expense driven by higher interest income as well as the repayment of debt as a result of our continued deleveraging actions and the favorable impact of transactional foreign currency impacts, partially offset by lower pension and OPEB non-service net benefit.
Income taxes benefit (expense) For the years ended December 31, 2022 December 31, 2021 December 31, 2020 Effective tax rate (198) % 19 % (47) % The decrease in our effective tax rate for the year ended December 31, 2022 compared to the prior year was primarily due to the impact of (i) the $845 million partial goodwill impairment, recorded within our Americas segment in the fourth quarter of 2022, which related to goodwill not deductible for tax purposes, and (ii) $18 million of tax expense recognized in 2021, which related to the remeasurement of our deferred tax liabilities following an announced corporate income tax rate increase in the U.K. from 19% to 25%.
Income taxes benefit (expense) For the years ended December 31, 2023 December 31, 2022 December 31, 2021 Effective tax rate 24 % (198) % 19 % The increase in our effective tax rate for the year ended December 31, 2023 compared to the prior year was primarily due to the impact of the $845 million partial goodwill impairment, recorded within our Americas segment in the fourth quarter of 2022, which related to goodwill not deductible for tax purposes.
Additionally, our income tax provision is based on calculations and assumptions that are subject to examination by many different tax authorities. We are periodically subject to income tax audits in various foreign and domestic jurisdictions, which can involve questions regarding our tax positions and result in additional income tax liabilities assessed against us.
We are periodically subject to income tax audits in various foreign and domestic jurisdictions, which can involve questions regarding our tax positions and result in additional income tax liabilities assessed against us.
(2) See Part II—Item 8 Financial Statements and Supplementary Data, Note 13, "Commitments and Contingencies" for further discussion of the majority of the other long-term obligations which includes supply and distribution and advertising and promotions commitments.
(2) See Part II—Item 8 Financial Statements and Supplementary Data, Note 13, "Commitments and Contingencies" for further discussion of the majority of the other long-term obligations which includes supply and distribution and advertising and promotions commitments. The remaining balance relates to derivative payments, information technology services, pre-commencement leases, open purchase orders and other commitments.
Impairment of an Asset Group During the first quarter of 2022, we recognized an impairment loss of $28.6 million related to the Truss joint venture asset group within other operating income (expense), net, of which $12.1 million was attributable to the noncontrolling interest.
Items Affecting Americas Segment Results of Operations Truss Impairment and Sale During the first quarter of 2022, we recognized an impairment loss of $28.6 million related to the Truss joint venture asset group of which $12.1 million was attributable to the noncontrolling interest.
We also have CAD, GBP and USD overdraft facilities across several banks should we need additional short-term liquidity. Under the terms of each of our debt facilities, we must comply with certain restrictions.
We intend to further utilize our cross-border, cross currency cash pool as well as our commercial paper programs for liquidity as needed. We also have CAD, GBP and USD overdraft facilities across several banks should we need additional short-term liquidity. Under the terms of each of our debt facilities, we must comply with certain restrictions.
We continue to monitor these risks and rely on our risk management hedging program, increased pricing to our customers, our premiumization strategy and cost savings programs to help mitigate some of the inflationary pressures. Coronavirus Global Pandemic We have been actively monitoring the impact of the coronavirus pandemic since it started at the end of the first quarter of 2020.
We continue to monitor these risks and rely on our risk management hedging program, increased pricing to our customers, our premiumization strategy and cost savings programs to help mitigate some of the inflationary pressures.
In the U.S., we also participate in, and make contributions to, multi-employer pension plans. Our OPEB plans provide medical benefits for retirees and their eligible dependents as well as life insurance and, in some cases, dental and vision coverage, for certain retirees in the U.S., Canada, and Europe.
Our OPEB plans provide medical benefits for retirees and their eligible dependents as well as life insurance and, in some cases, dental and vision coverage, for certain retirees in the U.S., Canada and Europe. The U.S., Canada and U.K. defined benefit pension plans are primarily funded, but all OPEB plans are unfunded.
There are proposed or pending tax law changes in various jurisdictions and other changes to regulatory environments in countries in which we do business that, if enacted, could have an impact on our effective tax rate. On August 16, 2022, the Inflation Reduction Act of 2022 (“IRA”) was signed into U.S. law.
There are proposed or pending tax law changes in various jurisdictions and other changes to regulatory environments in countries in which we do business that, if enacted, could have an impact on our effective tax rate. 39 Table of Contents The OECD and EU have proposed changes to the existing tax laws of member countries.
Marketing, general and administrative expenses MG&A increased 2.5% for the year ended December 31, 2022, compared to prior year, primarily due to the cycling of lower people-related costs in the prior year and the recording of a $56.6 million accrued liability related to potential losses as a result of the ongoing Keystone litigation case including associated interest, partially offset by favorable impacts from foreign currency movements and reductions in marketing spend on non-core and discontinued brands.
Marketing, general and administrative expenses MG&A expenses increased 6.2% for the year ended December 31, 2023, compared to prior year, primarily due to higher incentive compensation expense and increased marketing investment on core and innovation brands, partially offset by cycling the recording of a $56.0 million accrued liability in the prior year related to potential losses as a result of the ongoing Keystone litigation case.
As of December 31, 2022, the health care trend rates used were ranging ratably from 6.50% in 2023 to 3.57% in 2040, as compared to health care trend rates ranging ratably from 6.00% in 2022 to 3.57% in 2040 as of December 31, 2021.
As of December 31, 2023, the health care trend rates used were ranging ratably from 6.75% in 2024 to 3.57% in 2040, which are in line with our assumed health care trend rates ranging ratably from 49 Table of Contents 6.50% in 2023 to 3.57% in 2040 as of December 31, 2022.
Cash Flows from Financing Activities Net cash used in financing activities of $889.5 million for the year ended December 31, 2022 decreased $282.7 million compared to $1,172.2 million for the year ended December 31, 2021.
Cash Flows from Financing Activities Net cash used in financing activities of $981.4 million for the year ended December 31, 2023 increased $91.9 million compared to $889.5 million for the year ended December 31, 2022.
Guarantees of the outstanding third-party debt of our equity method investments, which are classified as current on the consolidated balance sheets, have been excluded from the material cash requirements table below. See Part II—Item 8 Financial Statements and Supplementary Data, Note 3, "Investments" and Note 13, "Commitments and Contingencies" for further discussion.
Guarantees of the outstanding third-party debt of our equity method investments, which are classified as current on the consolidated balance sheets, have been excluded from the material cash requirements table below.
As part of the revitalization plan strategy to grow our above premium portfolio and expand beyond the beer aisle, in late 2021 we de-prioritized and rationalized certain non-core SKUs, predominantly in the economy segment.
In late 2021 we de-prioritized and rat ionalized certain non-core SKUs, predominantly in the economy segment, in order to focus our strategy on growing our above premium portfolio and expanding beyond the beer aisle.
Unallocated Segment 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.
Specifically, "Unallocated" activity primarily includes financing-related costs such as interest expense and income, foreign exchange gains and losses on intercompany balances and realized and unrealized changes in fair value on instruments not designated in hedging relationships 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.
Off-Balance Sheet Arrangements Refer to Part II—Item 8 Financial Statements, Note 13, "Commitments and Contingencies" for discussion of off-balance sheet arrangements. As of December 31, 2022, we did not have any other material off-balance sheet arrangements. Critical Accounting Estimates Our consolidated financial statements are prepared in accordance with U.S. GAAP.
See Part II—Item 8 Financial Statements and Supplementary Data, Note 13, "Commitments and Contingencies" for further discussion. Off-Balance Sheet Arrangements Refer to Part II—Item 8 Financial Statements and Supplementary Data , Note 13, "Commitments and Contingencies" for discussion of off-balance sheet arrangements. As of December 31, 2023, we did not have any other material off-balance sheet arrangements.
(2) Excludes royalty volume of 2.719 million hectoliters, 2.507 million hectoliters and 2.052 million hectoliters for 2022, 2021 and 2020, respectively.
(2) Excludes royalty volume of 2.683 million hectoliters, 2.719 million hectoliters and 2.507 million hectoliters for the years ended December 31, 2023, 2022 and 2021, respectively.
Impact to 2022 pension and postretirement benefit costs - 50 basis points (unfavorable) favorable Decrease Increase (In millions) Description of pension and postretirement plan sensitivity item Expected return on pension plan assets $ (22.7) $ 23.9 Fair Value of Plan Assets The fair value of plan assets is determined by us using available market information and appropriate valuation methodologies.
Decrease in expected rate of return Increase in expected rate of return (In millions) (Unfavorable) favorable impact to the 2023 net periodic pension and postretirement benefit cost Net periodic pension and postretirement benefit cost $ (14.1) $ 14.1 Fair Value of Plan Assets The fair value of plan assets is determined by us using available market information and appropriate valuation methodologies.
A 50 basis point change in our discount rate assumptions would have had the following effects on the projected benefit obligation balances as of December 31, 2022 for our pension and OPEB plans: Impact to projected benefit obligation as of December 31, 2022 - 50 basis points Decrease Increase (In millions) Projected benefit obligation - unfavorable (favorable) Pension obligation $ 156.6 $ (142.7) OPEB obligation 20.6 (19.6) Total impact to the projected benefit obligation $ 177.2 $ (162.3) Our U.K. pension plan includes benefits linked to inflation.
The change from the weighted-average discount rates of 5.01% for our defined benefit pension plans and 4.90% for our OPEB plans as of December 31, 2022 was primarily due to a decrease in interest rates at the end of 2023 across all plans. 48 Table of Contents A 50 basis point change in our discount rate assumptions would have had the following effects on the projected benefit obligation balances as of December 31, 2023 for our pension and OPEB plans: Decrease in discount rate Increase in discount rate (In millions) Unfavorable (favorable) impact to projected benefit obligation as of December 31, 2023 Pension obligation $ 161.2 $ (147.7) OPEB obligation 20.1 (18.6) Total impact to the projected benefit obligation $ 181.3 $ (166.3) Our U.K. pension plan includes benefits linked to inflation.
(2) Excludes royalty volume of 1.012 million hectoliters, 1.968 million hectoliters and 1.731 million hectoliters for 2022, 2021 and 2020, respectively.
(2) Excludes royalty volume of 0.935 million hectoliters, 1.012 million hectoliters and 1.968 million hectoliters for the years ended December 31, 2023, 2022 and 2021, respectively.
As of December 31, 2022, approximate ly 76% of our cash and cash equivalents were located outside the U.S., largely denominated in foreign currencies. T he recent fluctuations in 44 Table of Contents foreign currency exchange rates have had and may continue to have a material impact on these foreign cash balances.
As of December 31, 2023, approximately 61% of our cash and cash equivalents were located outside the U.S., largely denominated in foreign currencies. F luctuations in foreign currency exchange rates have had and may continue to have a material impact on these foreign cash balances. Cash balances in foreign countries are often subject to additional restrictions.
We also utilize cash pooling arrangements to facilitate the access to cash across our geographies. Working Capital We actively manage working capital through inventory management as well as management of accounts payable and accounts receivable to ensure we are able to meet short-term obligations and we are effectively using assets to increase cash inflows.
We also utilize cash pooling arrangements to facilitate the access to cash across our geographies. Working Capital We actively manage our working capital to ensure we are able to meet our short-term obligations and to provide more favorable timing of cash inflows. These efforts include optimizing our inventory levels and managing our payment terms on accounts payable and accounts receivable.
Pension and Other Postretirement Benefits Our defined benefit pension plans cover certain current and former employees in the U.S., Canada and the U.K. Benefit accruals for the majority of employees in our U.S. and U.K. plans have been frozen and the plans are closed to new entrants.
Benefit accruals for the majority of employees in our U.S. and U.K. plans have been frozen and the plans are closed to new entrants. In the U.S., we also participate in, and make contributions to, multi-employer pension plans.
Summarized Financial Information of Obligor Group Year ended December 31, 2022 (In millions) Net sales, out of which: $ 8,607.0 Intercompany sales to non-guarantor subsidiaries $ 38.0 Gross profit, out of which: $ 3,020.5 Intercompany net costs from non-guarantor subsidiaries $ (412.4) Net interest expense third parties $ (241.9) Intercompany net interest income from non-guarantor subsidiaries $ 94.0 Income before income taxes $ 47.2 Net income $ (164.4) As of December 31, 2022 (In millions) Total current assets, out of which: $ 1,774.0 Intercompany receivables from non-guarantor subsidiaries $ 202.6 Total noncurrent assets $ 20,153.6 Total current liabilities, out of which: $ 2,441.3 Current portion of long-term debt and short-term borrowings $ 371.7 Intercompany payables due to non-guarantor subsidiaries $ 96.8 Total noncurrent liabilities, out of which: $ 9,055.9 Long-term debt $ 6,102.5 Noncurrent intercompany notes payable due to non-guarantor subsidiaries $ 310.9 Cash Flows and Use of Cash Our business historically generates positive operating cash flows each year and our debt maturities are generally of a longer-term nature.
The balances and transactions with non-guarantor subsidiaries have been separately presented. 43 Table of Contents Summarized Financial Information of Obligor Group Year ended December 31, 2023 (In millions) Net sales, out of which: $ 9,234.4 Intercompany sales to non-guarantor subsidiaries $ 117.1 Gross profit, out of which: $ 3,563.0 Intercompany net costs from non-guarantor subsidiaries $ (360.4) Net interest expense, out of which: $ (208.7) Intercompany net interest expense from non-guarantor subsidiaries $ (2.6) Income before income taxes $ 1,311.1 Net income $ 988.1 As of December 31, 2023 (In millions) Total current assets, out of which: $ 1,814.3 Intercompany receivables from non-guarantor subsidiaries $ 255.7 Total noncurrent assets, out of which: $ 24,641.0 Noncurrent intercompany notes receivable from non-guarantor subsidiaries $ 4,178.6 Total current liabilities, out of which: $ 3,048.4 Current portion of long-term debt and short-term borrowings $ 885.6 Intercompany payables due to non-guarantor subsidiaries $ 117.7 Total noncurrent liabilities, out of which: $ 8,094.7 Long-term debt $ 5,257.6 Cash Flows and Use of Cash Our business historically generates positive operating cash flows each year and our debt maturities are generally of a longer-term nature.
The decrease in cash and cash equivalents from December 31, 2021 to December 31, 2022 was primarily due to capital expenditures, net debt repayments, including the repayment of our $500 million 3.5% USD notes which matured in May 2022, dividend payments, Class B common stock share repurchases and unfavorable foreign currency impact, partially offset by net cash provided by operating activities and from the sales of properties and other assets.
The increase in cash and cash equivalents from December 31, 2022 to December 31, 2023 was primarily due to the net cash provided by operating activities, partially offset by capital expenditures, net debt repayments, including the repayment of our CAD 500 million 2.84% note which matured in July 2023, dividend payments, Class B common stock share repurchases, as well as cash paid for the acquisition of businesses.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeNotional amounts Fair Value Asset/(Liability) Effect of 10% Adverse Change (in millions) As of December 31, 2022 As of December 31, 2021 As of December 31, 2022 As of December 31, 2021 As of December 31, 2022 As of December 31, 2021 Foreign currency denominated fixed rate debt $ 1,594.2 $ 1,701.0 $ (1,557.4) $ (1,763.1) $ (142.6) $ (171.9) Foreign currency forwards $ 176.6 $ 170.8 $ 7.6 $ (1.5) $ (18.3) $ (19.0) Commodity Price Risk We are exposed to volatility in commodity prices as we use commodities in the production and distribution of our products.
Biggest changeApproximately 62% of our outstanding foreign currency forwards mature in 2024, 33% mature in 2025 and 5% mature thereafter. 53 Table of Contents Notional amounts Fair Value Asset/(Liability) Effect of Adverse Change (in millions) As of December 31, 2023 As of December 31, 2022 As of December 31, 2023 As of December 31, 2022 As of December 31, 2023 As of December 31, 2022 Foreign currency denominated fixed rate debt $ 1,260.7 $ 1,594.2 $ (1,248.6) $ (1,557.4) $ (124.8) $ (142.6) Foreign currency forwards $ 219.4 $ 176.6 $ (1.4) $ 7.6 $ (23.6) $ (18.3) Commodity Price Risk We are exposed to volatility in commodity prices as we use commodities in the production and distribution of our products.
Our EUR foreign-denominated debt is a net investment hedge against our investment in our Europe business in order to hedge a portion of the foreign currency translational impacts. The changes in fair value of the net investment hedge due to the fluctuations in the spot rate is recorded to AOCI.
Our EUR foreign-denominated debt is a net investment hedge against our investment in our Europe business in order to hedge a portion of the foreign currency translational impacts. The changes in fair value of the net investment hedge due to the fluctuations in the spot rate are recorded to AOCI.
We specifically hedge our exposure to fluctuations in the price of natural gas, aluminum, including surcharges relating to our aluminum exposures, corn, barley and diesel.
We specifically hedge our exposure to fluctuations in the price of natural gas, aluminum, including surcharges relating to our aluminum exposures, corn, sweeteners, barley and diesel.
We closely monitor our operations in each country and seek to adopt appropriate strategies that are responsive to foreign currency fluctuations. Our financial risk management policy is intended to offset a portion of the potentially unfavorable impact of exchange rates on our earnings and cash flows.
We closely monitor our operations in each country and seek to adopt appropriate strategies that are responsive to foreign currency fluctuations. Our financial risk management policy is intended to mitigate a portion of the potentially unfavorable impact of exchange rates on our earnings and cash flows.
Our objective is to manage our exposures and to decrease the volatility of our earnings and cash flows as a result of changes in underlying rates and costs. Interest Rate Risk We are exposed to volatility in interest rates with regard to our current and future debt offerings. Specifically, we are exposed to U.S.
Our objective is to manage our exposures and to decrease the volatility of our earnings and cash flows as a result of changes in underlying rates and costs. 52 Table of Contents Interest Rate Risk We are exposed to volatility in interest rates with regard to our current and future debt offerings. Specifically, we are exposed to U.S.
We utilize market-based derivatives and long-term supplier-based contracts, specifically a combination of purchase orders, long-term supply contracts and over-the-counter financial instruments to mitigate our commodity price risk by establishing price certainty for select commodities that are used in our supply chain.
We utilize market-based derivatives and long-term supplier-based contracts, specifically a combination of purchase orders, long-term supply contracts and over-the-counter financial instruments to mitigate our commodity price risk by reducing price volatility for select commodities that are used in our supply chain.
For the year ended December 31, 2022, net sales denominated in CAD and GBP both approximated $1.2 billion for each respective currency . We manage our foreign currency exposures through foreign currency forward contracts and net investment hedges.
For the year ended December 31, 2023, net sales denominated in CAD and GBP both approximated $1.3 billion, for each respective currency. We manage our foreign currency exposures through foreign currency forward contracts and net investment hedges.
Department of Treasury rates, Canadian government rates and LIBOR, or any such LIBOR alternative like SONIA, SOFR or EURIBOR, for example.
Department of Treasury rates, Canadian government rates and SOFR, or any such alternatives like SONIA or EURIBOR, for example.
Approximately $3.2 billion, or 30%, o f our net sales were denominated in functional currencies other than the USD for the year ended December 31, 2022. As a result, fluctuations in foreign currency exchange rates other than the USD, particularly 55 Table of Contents the CAD and the GBP, may have a material impact on our reported results.
Approximately $3.6 billion, or 30%, of our net sales were denominated in functional currencies other than the USD for the year ended December 31, 2023. As a result, fluctuations in foreign currency exchange rates, particularly the CAD and the GBP, may have a material impact on our reported results.
Notional amounts and fair values are presented in USD based on the applicable exchange rate as of December 31, 2022 and December 31, 2021. Approximately 63% of commodity swaps mature in 2023, 34% of commodity swaps mature in 2024 and 3% of commodity swaps mature thereafter.
Notional amounts and fair values are presented in USD based on the applicable exchange rate as of December 31, 2023 and December 31, 2022. Approximately 68% of commodity swaps mature in 2024, 29% mature in 2025 and 3% mature thereafter.
The following table includes details of our commodity swaps and options used to hedge commodity price risk as well as the impact of a hypothetical 10% adverse change in the related commodity prices on the fair value of the derivatives.
The following table includes details of our commodity swaps used to hedge commodity price risk as well as the impact of a hypothetical 10% adverse change in the related commodity prices on the fair value of the derivatives. The following table excludes our commodity options because we have offsetting buy and sell positions.
Our foreign currency forward contracts manage our exposure related to certain royalty agreements, the purchase of production inputs and imports that are denominated in currencies other than the functional entity's local currency and other foreign currency exchange exposure. From time to time, we may enter into cross currency swaps.
Our foreign currency forward contracts manage our exposure related to certain royalty agreements, the purchase of production inputs and imports that are denominated in currencies other than the entity's functional local currency and other foreign currency exchange exposure.
Notional amounts Fair Value Asset/(Liability) Effect of 1% Adverse Change (in millions) As of December 31, 2022 As of December 31, 2021 As of December 31, 2022 As of December 31, 2021 As of December 31, 2022 As of December 31, 2021 USD denominated fixed rate debt $ 4,900.0 $ 5,400.0 $ (4,295.9) $ (5,952.7) $ (223.4) $ (200.0) Foreign currency denominated fixed rate debt $ 1,594.2 $ 1,701.0 $ (1,557.4) $ (1,763.1) $ (11.1) $ (10.5) Forward starting interest rate swaps $ 1,000.0 $ 1,500.0 $ 40.0 $ (170.8) $ (73.8) $ (160.5) Foreign Exchange Risk Foreign currency exchange risk is inherent in our operations primarily due to operating results that are denominated in currencies other than the USD.
Notional amounts Fair Value Asset/(Liability) Effect of Adverse Change (in millions) As of December 31, 2023 As of December 31, 2022 As of December 31, 2023 As of December 31, 2022 As of December 31, 2023 As of December 31, 2022 USD denominated fixed rate debt $ 4,900.0 $ 4,900.0 $ (4,608.2) $ (4,295.9) $ (414.4) $ (223.4) Foreign currency denominated fixed rate debt $ 1,260.7 $ 1,594.2 $ (1,248.6) $ (1,557.4) $ (13.5) $ (11.1) Forward starting interest rate swaps $ 1,000.0 $ 1,000.0 $ 41.6 $ 40.0 $ (78.9) $ (73.8) Foreign Exchange Risk Foreign currency exchange risk is inherent in our operations primarily due to operating results that are denominated in currencies other than the USD.
The following table presents our fixed rate debt and forward starting interest rate swaps as well as the impact of an absolute 1% adverse change in interest rates on their respective fair values. Notional amounts and fair values are presented in USD based on the applicable exchange rate as of December 31, 2022 and December 31, 2021, respectively.
As of December 31, 2023, the following table presents our fixed rate debt and forward starting interest rate swaps as well as the impact of an absolute 1% adverse change in interest rates on their respective fair values.
Notional amounts and fair values are presented in USD based on the applicable exchange rate as of December 31, 2022 and December 31, 2021. Approximately 69% of our outstanding foreign currency forwards mature in 2023, 29% mature in 2024 and 2% mature thereafter.
Notional amounts and fair values are presented in USD based on the applicable exchange rate as of December 31, 2023 and December 31, 2022.
Notional amounts Fair Value Asset/(Liability) Effect of 10% Adverse Change (in millions) As of December 31, 2022 As of December 31, 2021 As of December 31, 2022 As of December 31, 2021 As of December 31, 2022 As of December 31, 2021 Swaps $ 525.2 $ 722.1 $ 69.0 $ 300.8 $ (55.8) $ (95.7) Options $ 19.7 $ 68.2 $ — $ 0.1 $ — $ — 56 Table of Contents
Notional amounts Fair Value Asset/(Liability) Effect of Adverse Change (in millions) As of December 31, 2023 As of December 31, 2022 As of December 31, 2023 As of December 31, 2022 As of December 31, 2023 As of December 31, 2022 Swaps $ 653.5 $ 525.2 $ (30.4) $ 69.0 $ (58.1) $ (55.8) 54 Table of Contents
Further, we may enter into forward starting interest rate swaps to manage our exposure to the volatility of interest rates associated with future interest payments on a forecasted debt issuance. See Part II - Item 8. Financial Statements and Supplementary Data, Note 9. "Debt" for the maturity dates of our outstanding debt instruments.
Further, we may enter into forward starting interest rate swaps to manage our exposure to the volatility of interest rates associated with future interest payments on a forecasted debt issuance. In May 2023, we amended our 2026 forward starting interest rate swaps to replace LIBOR with SOFR. Subsequent to this transition, we are no longer exposed to LIBOR.
Removed
We had no cross currency swaps outstanding as of December 31, 2022 and December 31, 2021.
Added
As of December 31, 2022, the following table presents our fixed rate debt and forward starting interest rate swaps and the impact of an absolute 1% adverse change in interest rates on our forward starting interest rate swaps and a 10% adverse change in the yield on our fixed rate debt.
Added
Notional amounts and fair values are presented in USD based on the applicable exchange rates as of December 31, 2023 and December 31, 2022, respectively. See Part II - Item 8. Financial Statements and Supplementary Data, Note 9. "Debt" for the maturity dates of our outstanding debt instruments.

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