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Molson Coors Brewing Co (TAP) Q4 2019 Earnings Call Transcript

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Molson Coors Brewing Co (NYSE: TAP)
Q4 2019 Earnings Call
Feb 12, 2020, 11:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day and welcome to the Molson Coors Beverage Company Full Year and Fourth Quarter 2019 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Participants can find related slides on the Investor Relations page of the Molson Coors website. Our speakers today are Gavin Hattersley, President and Chief Executive Officer and Tracey Joubert, Chief Financial Officer. Please note this event is being recorded. With that, I'll hand it over to Greg Tierney, Vice President of SP&A and Investor Relations. Please go ahead.

Greg Tierney -- Investor Relations

All right, thank you, Andrea and hello everybody. So following prepared remarks from Gavin and Tracey, we will take your questions. Please limit yourself to one question and if you have more than one question, please ask your most pressing question first and then reenter the queue for a follow-up. To the extent that you have technical questions on the quarter, we ask that you pick them up with me in the days and weeks to follow.

Today's discussion includes forward-looking statements within the meaning of applicable securities laws. Important factors that could cause actual results to differ materially from expectations and projections contained in such statements are disclosed in the company's filings with the SEC. The company does not undertake to update forward-looking statements whether as a result of new information, future events or otherwise. GAAP reconciliations for any non-U.S. GAAP measures are included in our news release or otherwise available on the company's website at www.molsoncoors.com. Also, unless otherwise indicated, all financial results the company discusses are versus the comparable prior year period and in U.S. dollars. And with that, over to you, Gavin.

Gavin Hattersley -- President and Chief Executive Officer

Thanks, Greg. Look 2019 was a challenging year for Molson Coors Beverage Company. However, despite significant headwinds and continued volume declines, we grew net sales revenue per hectoliter and improved our mix, we delivered strong free cash flow and cost savings, reduced our debt, sort of making progress toward premiumizing and modernizing our portfolio. We know we still got a lot of work to do, and that's why, last quarter we announced a plan to get Molson Coors back to consistent top-line growth. Plan is designed to streamline the company, allow us to move faster and to free up resources to invest in our brands and capabilities. And as promised in October, we've wasted no time implementing the plan.

To remind you, there are five components to the revitalization plan; investing in our iconic brands, aggressively growing our above-premium business in beer and in flavored beverages, growing beyond beer, strengthening our capabilities, and streamlining our company. So, let me update you on some of the progress that we're making.

We believe in the future of our core brands, that is they have the power to recruit new legal age drinkers which is why investing in our core is a key part of our revitalization plan. In the fourth quarter of 2019 in the United States, we released new creative pieces in the Coors Light Made to Chill campaign and the Miller Lite It's Miller Time campaign, and we have already unveiled more spots in 2020 as well. The early results are positive.

Additionally, global Coors Light performance was flat reflecting its best quarter in over three years and showing improvement in each of our segments. Miller Lite grew in all segments, delivering high double-digit growth in Canada and had its best quarter in the United States since 2014.

As we work to aggressively grow our above premium business, we see progress in our above premium beer and in above premium flavored beverages. Volume in NSR improved for the full year 2019 in above premium with an acceleration in Q4. We will support this acceleration by providing more fuel to our fastest growing brands and new innovations in the above premium space.

Last month we launched new creative for Peroni in the United States, which grew strong double-digits in 2019 and presents a real opportunity for us in 2020. Belgian Moon continues to be one of our biggest success stories in Canada, growing strong double-digits in both the quarter and the year, and delivering its third consecutive year of growth. And Staropramen our Czech logo celebrated its 150th anniversary with volumes up high single-digits on the year with strong momentum heading into 2020 as Q4 volume and revenue grew double-digits.

We have launched two big bid innovations in the United States already with Blue Moon LightSky and Saint Archer Gold. LightSky is a low-calorie, low-carb beer brewed with Tangerine pill. It's a great product that pushes the Blue Moon brand into incremental occasions and consumers. Saint Archer Gold is a premium light logo that offers a better tasting alternative to Michelob Ultra as proven by independent expert beer panel. We introduced consumers to Saint Archer Gold with a broad media campaign that kicked off during the Professional Football Championship Game and showcases how the brand is the better tasting light beer.

Our Black portfolio again outperformed the U.S. craft market in 2019 growing 16% per AC Nielsen versus a flat craft market. In January, we agreed to acquire Edgewater Brewery, a regional craft brewery in Michigan. It fills a geographic void, gives us distilled spirits capability and will help position our craft portfolio to continue outperforming the board across market.

We are investing more in flavored malt beverage in large spaces that differentiate us and allow us to reach more consumers. Building on our 2019 successes in the United States, we will continue to invest behind Cape Line Sparkling Cocktails, which were Nielsen top-10 growth brand for 14 consecutive weeks in 2019. And we are expanding La Colombe Hard Coffee to additional markets.

In Canada, we will continue to invest in Mad Jack, a popular F&B that was up double-digits on the year and next month we will launch Vizzy in the United States, a hard seltzer that offers differentiated ingredients, which would help it carve out a meaningful space in the seltzer category. And lastly, we're expanding beyond the beer out all altogether. This is a big shift but it presents real growth opportunities.

In November, we announced an equity deal and long term partnership with L.A. Libations, an incubator of better-for-you non-alcoholic beverages. This investment essentially creates a new non-alcoholic innovation team for the Molson Coors Beverage. Something that we simply did not have before. Now I want to be clear, we are not looking to compete in the soda area with Coca-Cola and Pepsi-Cola. Instead, we will be selective about where we compete, always looking to leverage our unique strengths. And of course, next month, we're taking a definitive step into the wine category with the national launch of Movo Wine Spritzers in the United States.

The organizational restructuring is well under way and we are making progress toward our goal of improving efficiency and unlocking an additional $150 million in annual savings bringing our total expected cost savings to $600 million over the 2020 through 2022 program. We have simplified our structure from four business units and a corporate center to two streamlined units, North America and Europe. In North America, our new organizational design is now set, all teams have been selected and people are transitioning to new office locations. In Europe, we have announced all senior leadership changes and anticipate completing the reorganization by the end of March. As part of our updated structure, we have a new data and analytics team and are expanding and developing new commercial and operational capabilities that will make us smarter and more efficient.

We continue to estimate the cost of all these changes will result in total one-time charges in the range of approximately $120 million to $180 million, spread over Q4 of last year, 2020 and 2021. Next quarter we will report our financials under our new operating structure.

And as you can see, we are moving quickly to implement our plans and we're starting to see glimpses of transformation within our portfolio. Also the new structure is really providing greater clarity and accountability. Teamwork has improved and the speed of decision making is substantially quicker. None of this is easy and it won't happen overnight. But the tough decisions we've made and the quick actions and investments we are making will ensure the Molson Coors Beverage Company is bode to succeed in today's marketplace.

And now, I'm going to hand over to Tracey for a review of the fourth quarter and full-year, as well as our outlook. Tracey?

Tracey Joubert -- Chief Financial Officer

Well, thank you, Gavin and hello everyone. I will first cover the quarter and full-year on a consolidated and regional basis and then move on to our outlook. So to recap the quarter, net sales revenue increased 3% in constant currency. We delivered positive global pricing and mix as well as a 1% increase in financial volume including a planned benefit in the U.S. from shipments exceeding brand volume as full year shipment volume and retail volumes converged.

Net sales per hectoliter on a brand volume basis increased 1.1% in constant currency, reflecting continued favorable global pricing and mix. Our Europe business continues to deliver strong NSR per hectoliter increases, driven by both pricing and mix. In North America, we saw a sequentially lower increase in our U.S. business and slightly lower rate in Canada. Remember, general price increases have largely shifted from the fall to the spring in the U.S. with the most recent increase last spring. Our U.S. mixed benefit was neutral in the quarter. Worldwide brand volume decreased 1% and financial volume increased 1% reflecting a planned benefit in the U.S., as we shipped largely to consumption for the full year.

Global priority brand volume increased 1.6%. In the U.S. brand volumes benefited from improving industry volumes. October 2018 was soft following a general price increase and improving premium light segment trends as you heard in Gavin's remarks. Canadian volumes remain challenged in the fourth quarter, driven in part by continued industry softness. In Europe, our brand volume benefited from a broad-based improvement in industry trends and continued premiumization.

Our international business brand volumes grew double-digits, driven by strong performance in Latin America. Underlying COGS per hectoliter increased 1.7% on a constant currency basis, driven by inflation and mix and partially offset by cost savings. The trend was significantly improved versus prior quarters, primarily reflecting fixed cost absorption in our U.S. business resulting from shipment timing between quarters and the starting of one-time costs in our Canadian business from 2018.

Underlying MG&A decreased 6.3% on a constant currency basis due to non-recurring vendor benefit in the U.S., and lower one-time incentive compensation expenses, driven by the anticipated departures as a result of the revitalization plan. These items together account for approximately 50% of the reduction in MG&A. Additionally, our marketing spend was lower in the fourth quarter, reflecting a planned shift of spending to support brand launches earlier in the year and align our marketing pressure with the key selling seasons, particularly within Europe and the U.S.

As a result, underlying EBITDA increased 15.8% on a constant currency basis. Recapping the year, net sales revenue decreased 0.6% in constant currency. We delivered positive global pricing and mix, but this was offset by a decline in global volume. Net sales per hectoliter on a brand volume basis increased 2.9% in constant currency, driven by favorable pricing and mix as we continue to focus on premiumizing our portfolio. Worldwide brand volume decreased 3.5% and financial volume decreased 4%. Global priority brand volume decreased 2.2%. Underlying COGS per hectoliter increased mid single-digits at 4.9% on a constant currency basis, driven by inflation, mix and volume deleverage, partially offset by cost savings. Underlying MG&A decreased 0.9% on a constant currency basis, corporate underlying MG&A was $158 million coming in below prior year and below our prior estimate, driven largely by lower incentive compensation expense and other targeted spending reductions.

Marketing spend per hectoliter was up for the year in each of our segments. As a result, underlying EBITDA decreased 2.6% on a constant currency basis. Depreciation and amortization expenses were $827 million, in line with prior results but below our prior estimates, driven by later and lower than planned capital expenditures. Net interest expense of $273 million was in line with our third quarter estimate. We delivered underlying free cash flow of $1.370 million in line with our estimates and 3.7% below the prior year driven by lower underlying EBITDA and higher cash tax payments, partially offset by lower capital expenditures, favorable changes in working capital and lower cash interest payment.

Capital expenditures of $593 million were lower than our prior estimate driven by savings and the timing of capital spending as we evaluated and made capital decisions to drive stronger returns. In 2019, we completed our three-year savings program associated with the MillerCoors acquisition and integration delivering $230 million during 2019 and bringing our three-year total savings to $725 million. Cost to capture the savings over the three years were $208 million coming in at the low end of our most recent estimate of $230 million, driven by the addition and delivery of high-value low-cost project. This takes me to our financial outlook.

We expect 2020 to be a transition year and anticipate net sales revenue to be flat to down low-single digits on a constant currency basis. We expect underlying EBITDA to be down high single-digits on a constant currency basis from fiscal year 2019 underlying EBITDA of $2.364 billion. Our estimated underlying effective tax rate is 20% to 24%. We expect interest expense of $280 million plus or minus 5% and we expect depreciation and amortization expense to be approximately $850 million. We estimate capital spending of $700 million plus or minus 10% and underlying free cash flow of $1.1 billion plus or minus 10%, reflecting lower expected EBITDA performance as well as higher cash taxes than in 2019.

And as mentioned on our Q3 earnings call, we increased our total cost savings program for the period 2020 to 2022 to $600 million as a result of the revitalization plan to be spread more or less evenly over that period. As a reminder, we are planning to reinvest these additional cost savings behind our brands, and as a capability building. With the exception of costs that would qualify for special items treatment, all other costs to achieve the $600 million in savings are included within our underlying EBITDA guidance. Examples of special items included in the $120 million to $180 million of cost to achieve are severance, retention and relocation costs associated with the revitalization plan. Accelerated depreciation and other direct costs associated with the Irwindale Brewery closure will also be reported as special items. We expect 2021 and thereafter to deliver net sales revenue and underlying EBITDA growth versus 2020. We intend to maintain our investment grade credit rating and as our full year 2019 trailing annual underlying EBITDA has our current annualized dividend within our target range of 20% to 25%, we do not anticipate the Board of Directors will change our dividend rate at this time. The change in structure to two business units went into effect at the start of the year. Therefore, the resulting financial reporting changes will be reflected in our first quarter 2020 results, including allocation of corporate MG&A expense to our two business segments. And also please consider the following related items. Our estimate of 2020 EBITDA is unchanged versus our estimates on October 30, 2019 in spite of a strong fourth quarter benefiting from one-time items, shipment timing and deferred spending as we refined our revitalization plan. Our business continues to face a number of headwinds, including inflation and we are committed to investing to improve our top-line performance. While we expect the full year's underlying EBITDA to be down high single-digits on a constant currency basis, we expect the second half EBITDA to be better than the first half for two main reasons. Our full-year increase in marketing investments will begin in half one as we launch new products and add support to our premium brands and the cost savings that we expect to realize in 2020 will be skewed to the back half of that year.

In January, we announced the decision to close our Irwindale brewery. The associated cost savings are not considered part of the revitalization plan but are included in the previously announced $600 million cost savings program for 2020 to 2022. Now with that, thank you for your time and attention and I'll turn it back to Andrea for Q&A.

Questions and Answers:

Operator

[Operator Instructions] And our first question comes from Eric Serotta of Evercore. Please go ahead.

Eric Serotta -- Evercore -- Analyst

Good morning. Gavin, hoping you could give us a little bit of color on the seltzer and beyond beer strategy. It seems like you're taking a very different tact than some of your competitors in not extending your core brands. Is there any thought to a Coors Light seltzer or Miller Lite seltzer and what are you hearing from retailers and distributors in terms of initial response to what you're showing them for Vizzy?

Gavin Hattersley -- President and Chief Executive Officer

Thanks, good morning, Eric. Look, we believe that the seltzer category is here to stay. Let's be clear about that and Molson Coors plans to compete in this space aggressively and we are going to have a multi-pronged approach to attacking that space. Having said that, Eric, the key premise with our approach is to drive incrementality by bringing a very clear point of difference to that of the competition. And as you referenced, this year we are introducing Vizzy, which we think does have clear points of difference with the competition. It will be the first hard seltzer made with Acerola Cherry, which is a super fruit higher in the antioxidant Vitamin C and there is no reason to believe that this isn't going to resonate very well with consumers in, particularly, the 25 to 39-year-old male and female that choose to drink, but are looking for potentially better choices.

I'm not going to get into details of how much exactly of that we're investing, but we've got a very robust campaign that launches around the same time as Vizzy hits the shelf. It's going to include national TV, it will have digital, social, out-of-home advertising and a very strong, something effort. And this is going to be our biggest bid yet on our hard seltzer segment, which we think will reach a couple of billion dollars in sales this year.

As far as the response from our distributors and retailers is concerned, we've had an excellent response. There is a lot of excitement and anticipation for this brand. So we're excited about it.

Eric Serotta -- Evercore -- Analyst

And just to follow up on that. Would you rule out -- you talked about a multi-pronged approach. Would you -- and you have Henry's in the market, but would you rule out doing something with one of your core beer brands? I know you've gone down that road in the past with things like Coors Light Summer Brew but decided to stay true to the core product and messaging. Is that something that's on the table or something that you'd rule out?

Gavin Hattersley -- President and Chief Executive Officer

Look, I think just reiterating what I said, right, is we think that we need to have a clear point of differentiation to our competition and where we find a clear point of differentiation, we will drive into that in a meaningful way up -- our current is Vizzy, which is what we are going to put a lot of time and effort behind that.

Eric Serotta -- Evercore -- Analyst

Great, thanks so much, Gavin.

Operator

Our next question comes from Bryan Spillane of Bank of America. Please go ahead.

Bryan D. Spillane -- Bank of America Merrill Lynch -- Analyst

Hey, good morning, everyone.

Gavin Hattersley -- President and Chief Executive Officer

Good morning, Bryan.

Tracey Joubert -- Chief Financial Officer

Good morning, Bryan.

Bryan D. Spillane -- Bank of America Merrill Lynch -- Analyst

So I guess, Gavin, I wanted to touch on just kind of the state of Coors Light, now that you've had the new ad copy in the U..S on air for a few months now and you've kind of gone through this process now of kind of featuring your plans to retailer, selling in for the summer season. So could you just give us a little bit more color about how you feel about not just how the copy has resonated with consumers and for the brand, but also just as you're kind of teeing up merchandising for the summer months. Do you feel like you're getting a little bit more reaction or support from your wholesalers and retailers behind the Coors Light brand?

Gavin Hattersley -- President and Chief Executive Officer

Thanks, Bryan. Look, I mean, the short answer is yes. We're getting a lot of support, a lot of excitement behind Coors Light from our network. Certainly the most since since I've been in this chair than when I was in the middle of Coors chair as well. The Made To Chill platform is strong, results are strong. The brand achieved its best quarterly STR trend since the first quarter of 2017. It accelerated segment share gains in the fourth quarter behind the new creative and we're going to invest meaningfully behind this platform in 2020. It's broad -- relevant spread to the brand again. It's back in the lives of new legal drinking age consumers, it's back in the cultural landscape and it's momentum is hitting in the right direction, Bryan and we're just getting started. But the short answer to your question is yes. I will say this, we are very excited about it.

Bryan D. Spillane -- Bank of America Merrill Lynch -- Analyst

Okay, great. Thank you.

Operator

Our next question comes from Steve Powers of Deutsche Bank. Please go ahead.

Steve Powers -- Deutsche Bank -- Analyst

Yes. Great, thanks. Tracey, could you talk a little bit more about the targeted spend priorities for 2020 and just clarify and be confirmed that the cadence of those investments, specifically on the MG&A line will more or less mirror 2019? I think that's what I heard, but I just wanted to clarify. And then related to the -- Gavin, I guess for you, what does success look like in terms of the top-line response or may be a market share response this year on the back of all of the planned initiatives that you outlined versus to what degree may it take till 2021 or beyond for these 2020 investments to show more of a cumulative return? Thanks.

Gavin Hattersley -- President and Chief Executive Officer

Yeah, thanks. Great, thanks, Steve. Look, Tracey you can maybe take some of the G&A side. I'll just talk about marketing. From a marketing perspective, we've got a lot of innovation and new news coming in the first half of this year, Steve. So you can expect our marketing spend to be up weighted in the first half versus the second half and as you -- I mean I know Tracey has given full-year guidance on EBITDA and we're not going to give quarterly guidance, but I think just directionally, we are going to spend more in the first half than we will in the second half. We've already launched two big innovations, Saint Archer Gold and Blue Moon LightSky and we've got two more big ones coming with Vizzy and with the national expansion of Movo.

Obviously, innovation takes a lot of work and a lot of effort and a lot of investment and you don't necessarily get significant uplifts on day one and so we don't necessarily expect that, but we do expect improvement in our above premium portfolio through these innovations. Success for me looks like what I've already said, right, which is, we do expect us to be sort of flat to down low single-digits from a net sales revenue point of view, but we believe everything that we're doing in 2020 is setting us up -- ourselves up for sustainable growth in NSR in 2021 and beyond.Tracey, from a G&A point of view?

Tracey Joubert -- Chief Financial Officer

Yeah, so just maybe to reiterate what I said in the script from a G&A, I mean we are -- the G&A spend is basically in the EBITDA guidance that we've given. Couple of things to think about as we look at half year one and half year two. First of all, as Gavin mentioned, our marketing spend is going to be up. That will be sort of weighted more to the first half of the year as we invest behind our new product launches and add supports our premium brands and then from the cost saving side, it's going to be skewed more to the back half of the year and as we realize the savings related to the revitalization plan and again the revitalization plan's savings will be primarily in the G&A area.

Steve Powers -- Deutsche Bank -- Analyst

Okay, thank you very much for that. I guess, Gavin, just to follow up on the definition of success question. There's a ton of new products from yourselves, from competitors in the beer space hitting the market right now, there's going be a lot of shifts on shelf and within coolers. Is your feeling aggregate that you're going to hold cumulative shelf and cooler space in 2020 versus '19 or do you expect to gain or maybe shed some of that? Just how are you thinking about that? Thank you.

Gavin Hattersley -- President and Chief Executive Officer

Yeah, look, I mean, I would be disappointed if we didn't increase our shelf space. I do think though that there is going to be movements within that. So in large format, I think you'll see some of the slow moving lines in crafts and seltzers and some of the adjacencies like F&Bs side as well will probably take some losses to create new space for a lot of these innovations that are coming, particularly the growth of seltzer. Initial indications would appear that the biggest loss is taking place with craft which -- the assortment of that has just expanded significantly over the past 15 years.

I think in small format it's a little, it's a little different. Seltzer is making aggressive inroads on distribution in both single serves and multi-pack and I would say more space is probably coming from economy as well as craft in less developed which -- because craft is less developed than it is in large format. But again, the short answer to your question is, I'd be disappointed if we didn't increase our shelf space with some of the innovations that we're bringing and certainly the indications from our retailers and our distributor partners is that, that will hold true and we'll expand space.

Steve Powers -- Deutsche Bank -- Analyst

Perfect, thank you.

Operator

Our next question comes from Andrea Teixeira of J.P. Morgan. Please go ahead.

Andrea Teixeira -- J.P. Morgan -- Analyst

Good morning. Thank you. So I wanted to -- if we step back into the organization of the two main regions between the U.S. and Europe. Is that a main strategy to give better visibility and empower the local teams or could you potentially sell the business to fund M&A in seltzer or you want to still grow greenfield in that category? And just a clarification on Gavin's comments about Vizzy. For Vizzy -- so you believe, which launches, I believe, next month. So you -- I think I heard you say that the brand can reach $! billion in sales. And if that's the case, what is the timeline?

Gavin Hattersley -- President and Chief Executive Officer

No, sorry, Andrea. You misunderstood me. I said the seltzer -- what I meant to say was the seltzer category will get into the $1 billion as a category. I mean, I would be delighted if Vizzy did, but that's not what I meant. That's not what I said. I think the total category will be there. As far as the two business units is concerned, you know, we're obviously setting the European and North American business as a stand-alone operations because we believe that strong regional leadership will be able to make decisions much quicker, it will streamline decision-making, it will remove bureaucracy which perhaps slowed us down. It would certainly make us more nimble and quick and it is a very short distance between asking for decisions and the actual decision makers. So we think that having two separate stand-alone business units is going to make us much better as an organization, much stronger in both Europe and in North America. So we are actually already seeing the signs of that, where we've been able to bring campaigns with some of our global brands to market much quicker than we have in the past outside the Coors Light campaign in the United Kingdom as a fine example of that. So we are particularly excited about the nimbleness that this new structure will bring us.

Andrea Teixeira -- J.P. Morgan -- Analyst

And in terms of capital allocation going forward, if you can kind of elaborate more. How do you see the company like in five years?

Gavin Hattersley -- President and Chief Executive Officer

Obviously, capital allocation is the critical decision that we make. But if you're asking me indirectly, are we planning to sell Europe, the answer is no.

Andrea Teixeira -- J.P. Morgan -- Analyst

Yeah, I guess, I guess, I asked directly and indirectly. And then your M&A in seltzers, you believe that the decision to just do it at greenfield is the best decision at this point.

Gavin Hattersley -- President and Chief Executive Officer

We are very excited about the multi-pronged approach that we're using to attack the seltzer space, Andrea. I think I said on our third quarter earnings call that we will have a string of pearls approach to M&A. It's worked very well for us in the past, and we've had many more successes with the small bolt-on acquisitions that give us capability and exposure to spaces that we haven't had, and it's successful and we intend to continue along that path. We really did that in the fourth quarter with the large but minority stake in L.A. Libations and we have an agreement to acquire Edgewater in the -- hopefully the first quarter of this year. That's an approach that's worked for us, it's worked for us very well in Europe with a number of success stories out there with Doom Bar and Aspall Cyder and the repatriation of our Staropramen brand. So it works for us and we're going to continue driving on that part.

Andrea Teixeira -- J.P. Morgan -- Analyst

Thank you, Gavin.

Operator

Our next question comes from Kaumil Gajrawala of Credit Suisse. Please go ahead.

Kaumil Gajrawala -- Credit Suisse -- Analyst

Thank you. Good afternoon, everybody. I'd like to understand a little bit more about your EBIT guide for 2020. It looks like Coors Light and Miller Lite at least sequentially are showing some momentum. You've got considerable cost savings strategy and benefit next year and then obviously also you have some, I guess, one-times in the G&A line this year from incentive comp and this vendor benefit. So why do you then expect for kind of a similar rate of decline of revenues to lead to quite a bit higher decline in EBITDA? I think this year you'll end that EBITDA down 4%, on revenues down 2% roughly but for next year, you're looking at revenues may be down 2% but EBITDA high single-digits with all of these things, that seem to be going kind of moving in your favor next year.

Gavin Hattersley -- President and Chief Executive Officer

Thanks, Kaumil and good morning to you. Look 2020 is a transition year for us. It's going to take time to get the $150 million of savings out of the business and we're implementing major actions that are fundamentally going to impact our portfolio and many of these actions are going to take time for us to impact the top-line. I think I said earlier on, innovations take time to scale and spending more money on marketing doesn't necessarily have a day one positive impact. We believe that the changes that we're making now which are meaningful will set us up for success in 2021. We're also taking very seriously the industry trends that we're seeing in Canada and the impact that those trends are having on our overall business and the overall top-line of our business.

We're obviously implementing the revitalization plan in Canada as well, and we'll be investing more behind those brands, but Canada has been in decline for quite some time. And it's not a trend that we're going to be able to reverse overnight. Having said that, we are working very hard to do exactly that.

Kaumil Gajrawala -- Credit Suisse -- Analyst

Okay, got it. Thank you.

Gavin Hattersley -- President and Chief Executive Officer

Thanks.

Operator

Our next question comes from Kevin Grundy of Jefferies. Please go ahead.

Kevin Grundy -- Jefferies -- Analyst

Thanks, good morning, everyone.

Gavin Hattersley -- President and Chief Executive Officer

Good morning, Kevin.

Kevin Grundy -- Jefferies -- Analyst

Hey, Gavin. I wanted to come back to the investment question, maybe ask it a little bit differently. So obviously a lot of changes going on concurrently at the company while a lot of investment is going into the portfolio, particularly in the first half of the year. Can you give us a sense of how you are prioritizing these investments? Is this continued sequential improvement in Miller Lite and Coors Light, do you have to establish some level of success in the hard seltzer category? I'd say the market view on that front would be that the hard seltzer dynamic is a net negative for the company at this point given some of the demand source from the light beer category and then the fact that the company has not really leaned in real heavily at this point. Maybe just give us a sense of the top three things, you really have the organization focused on in order to deliver what you've messaged to the Street. Thank you.

Gavin Hattersley -- President and Chief Executive Officer

Yeah. Thanks, Kevin. Look, I mean it's not an either or, right? It's at both end. We need to focus across our portfolio and we've been quite clear about the fact that our core brands in the United States and Europe and in Canada remain a very important part of our business and so we will increase the spend behind those brands going forward. Having said that, the bulk of our increased spend will be in the above premium space. We need, as I've said, to fundamentally reshape our portfolio. We've done that successfully in the United Kingdom, where we're about 30% of the -- of the portfolio is now on the above premium space and if our recall correctly, Canada's at about 20% odd. And obviously we've got a lot of ground to make up in the United States and that's why most of our investment -- increased investment is going to be in the above premium space and beyond beer in in the U.S. To that end, we launched Cape Line in 2019, which was a top share gainer in Nielsen for us, I think it was 14 straight weeks. We've introduced Soju Gelato [Phonetic], we're introducing Sal y Limon, I probably pronounced that incorrectly. We've got Belgian Moon up in Canada, which grew strong double-digits. In Europe, we've made progress and we'll continue to invest in above premium.

I think I answered the seltzer question earlier on. There is not much more I can say to that other than that we are making a big bid behind Vizzy and we're very excited about how it's being received by retailers and distributors alike. We're expanding beyond the beer ale with Movo. I think the speed at which we are moving and the quantity of ideas that we're bringing to the marketplace has energized our network as I haven't seen it this way for quite some time. So we've obviously got a lot of work to do, but I'm pleased with the progress that we've seen across our portfolio.

Kevin Grundy -- Jefferies -- Analyst

That's great. Thanks, Gavin.

Operator

Our next question comes from Lauren Lieberman of Barclays. Please go ahead.

Lauren Lieberman -- Barclays -- Analyst

Great, thanks. Good morning. I just wanted to follow up a little bit on innovation again and I was curious in particular about Blue Moon LightSky. I know it's quite early days, but turning around Blue Moon would take or pay -- be a pretty big step forward for the above premium portfolio. So it's a little bit off season maybe to be launching or to have gotten that brand into market. But I'm just curious on early reads from that, what you're kind of seeing the feedback on the taste profile, is it bringing Blue Moon users back or drinkers back into the category. Anything you could share there would be great. Thanks.

Gavin Hattersley -- President and Chief Executive Officer

Thanks, Lauren. Look, Blue Moon -- just to start at the top, Blue Moon grew in 2019 globally. So very excited about that just for starters. Secondly, we tested Blue Moon LightSky extensively and consumers absolutely love the taste. It's a latte more fashionable beer that is going to really be complementary and provide a halo effect to Blue Moon Belgian White. It's been in the marketplace for two weeks. The reception from our distributors has been very strong where orders are meaningfully higher than what we had anticipated and we're obviously working very hard to make as much Blue Moon LightSky as we can. But I would caution you, Lauren, it's two weeks. But so far it's being extraordinarily well received.

Lauren Lieberman -- Barclays -- Analyst

And how might you rank order the potential impact of like a Vizzy versus a Blue Moon LightSky for this year? Because you have the one hand leveraging an existing and very strong brand and the other very strong category, but new to world brand.

Gavin Hattersley -- President and Chief Executive Officer

Yeah, that's a great question. And obviously, I'm excited about all our innovation and I'm not going to handicap which one is going to turn out to be the best this year, Lauren. Time will obviously tell, but each of them are unique in their own way. They are all taking a different part of the segment. The best way for me to answer that question is, time will tell.

Lauren Lieberman -- Barclays -- Analyst

Okay, great. And then just a follow-up on Canada. I know we -- you talked about putting this having more of a North America organization and the opportunity that gives you to leverage the marketing spend cross border, if you will. I was just curious if any of that started in 2019. So, maybe it's a lot of housekeeping. But for example, like the Coors Light campaign that's been so successful here. Is that in Canada yet? Or is that still to come?

Gavin Hattersley -- President and Chief Executive Officer

Lauren, that is still to come. It's not in Canada yet, but it will be soon. So, as far as the revitalization plan is concerned, obviously the restructuring took place with the U.S. business in the fourth quarter of 2019. But the Coors Light campaign specifically is is still to hit. I'm pleased with the progress that the team has made in aligning innovation and our global brands between the United States and Canada and our North American business unit. And I think you'll start seeing the impact of that as the year progresses.

Lauren Lieberman -- Barclays -- Analyst

Okay, that's great, thank you so much.

Operator

Our next question comes from Laurent Grandet of Guggenheim. Please go ahead.

Laurent Grandet -- Guggenheim -- Analyst

Hey, good morning, Gavin and Tracey. I'd like to come back to the seltzer category but from a different angle. So it's great to see so many growth initiatives coming from you including a differentiated seltzer proposition. So now as the seltzer category is expanding very fast and in many case, at the expense of [Indecipherable] and light beer for the late response. I mean, what do you do to protect your core Coors Light and Miller Lite business and is there any effect, I mean, let's say 20% of the $150 million revitalization plan on those two brand, it may prove to be not enough. So, could you please help us, first, I mean better assess the impact of seltzer on your core two brands and what are you planning to minimize the risk here. Thank you.

Gavin Hattersley -- President and Chief Executive Officer

Yeah, a lot to unpack there, Laurent. Let me try and do that. So I would point you to the performance of Miller Lite and Coors Light in 2019 when seltzers were exploding and according to Nielsen, the trend has continued of gaining share for those two brands for the last five years. Our performance on Miller Lite, it gained its 21st consecutive quarter and it actually grew STR volume in Q4 in the face of this seltzer trend. So the brand is holding its own in the total category. In fact, it was pretty flat, not just in the premium light segment, but in the total beer category. And as a combination, Miller Lite and Coors Light outperformed the combination of Bud Light, Michelob Ultra and Michelob Ultra Gold in terms of industry shares. So this notion that a lot of the seltzer volume is coming from premium lite is not necessarily supported by the fact that are underlying the Miller Lite and Coors Light's performance. Coors Light gained segment share for the third straight quarter, directionally improved its performance at the best quarterly STR trend since 2017.

So we believe that our marketing is resonating. We're going to put more effort and money behind that at the same time as we are going to enter the seltzer category.

Laurent Grandet -- Guggenheim -- Analyst

Thank you.

Operator

Our next question comes from Sean King of UBS, please go ahead.

Sean King -- UBS -- Analyst

Hi, thanks for the question. I don't think you provided guidance for COGS per hectoliter into 2020. Any insights you can provide there. And if you expect any easing pressure from aluminum given the hedging positions.

Tracey Joubert -- Chief Financial Officer

Yeah, so let me answer that, Sean. So for 2020, we've actually given both top-line and bottom-line guidance, which is new this year. And so we didn't feel it was necessary to give the COGS guidance. We thought top and bottom-line was more helpful. And having said that, look, our job is to manage our costs within those boundaries of top and bottom-line. And we do use -- we spoke about our robust hedging programs in the past, and we've got cost savings initiatives, which help us manage those costs. But we expect to still see ongoing commodity inflation going into 2020 probably similar to what we saw in 2019. And, yeah, we will just manage that with our cost savings initiatives.

Sean King -- UBS -- Analyst

Got it. Thank you.

Operator

[Operator Instructions] This concludes our question and answer session. I would like to turn the conference back over to Gavin Hattersley for any closing remarks.

Gavin Hattersley -- President and Chief Executive Officer

Thanks, Andrea. Look, I know there may be additional questions that weren't able to get through. So please follow up with Greg and Tracey and I look forward to talking with many of you as the year progresses. So thanks everybody for participating in the call.

Operator

[Operator Closing Remarks]

Duration: 48 minutes

Call participants:

Greg Tierney -- Investor Relations

Gavin Hattersley -- President and Chief Executive Officer

Tracey Joubert -- Chief Financial Officer

Eric Serotta -- Evercore -- Analyst

Bryan D. Spillane -- Bank of America Merrill Lynch -- Analyst

Steve Powers -- Deutsche Bank -- Analyst

Andrea Teixeira -- J.P. Morgan -- Analyst

Kaumil Gajrawala -- Credit Suisse -- Analyst

Kevin Grundy -- Jefferies -- Analyst

Lauren Lieberman -- Barclays -- Analyst

Laurent Grandet -- Guggenheim -- Analyst

Sean King -- UBS -- Analyst

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