Item 1. BUSINESS

Unless otherwise noted in this report, any description of "we," "us" or "our" includes Molson Coors Beverage Company ("MCBC," "Molson Coors" or the "Company") (formerly known as Molson Coors Brewing Company), principally a holding company, and its operating and non-operating subsidiaries included within our reporting segments. On January 1, 2020, we changed our management structure from a corporate center and four segments to two segments - North America and Europe. Our International segment was reconstituted with the Africa and Asia Pacific businesses reporting into the Europe segment and the remaining International business reporting into the North America segment. Accordingly, effective January 1, 2020, our reporting segments include: North America (North America segment), operating in the U.S., Canada and various countries in the Caribbean, Latin and South America; and Europe (Europe segment), operating in Bulgaria, Croatia, Czech Republic, Hungary, Montenegro, the Republic of Ireland, Romania, Serbia, the U.K., various other European countries, and certain countries within the Middle East, Africa and Asia Pacific. We recast the historical presentation of segment information as a result of these reporting segment changes accordingly.

Unless otherwise indicated, information in this report is presented in USD and comparisons are to comparable prior periods. Our primary operating currencies, other than the USD, include the CAD, the GBP, and our Central European operating currencies such as the EUR, CZK, HRK and RSD.

Background

For more than two centuries, we have been brewing beverages that unite people to celebrate all life’s moments. From Coors Light, Miller Lite, Molson Canadian, Carling, and Staropramen to Coors Banquet, Blue Moon Belgian White, Blue Moon LightSky, Vizzy, Coors Seltzer, Leinenkugel’s Summer Shandy, Creemore Springs, Hop Valley and more, we produce many beloved and iconic beer brands. While the Company’s history is rooted in beer, we offer a modern portfolio that expands beyond the beer aisle as well. As a business, our ambition is to be the first choice for our people, our consumers and our customers, and our success depends on our ability to make our products available to meet a wide range of consumer segments and occasions.

Molson and Coors were founded in 1786 and 1873, respectively. 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. 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 January 2020, we changed our name from Molson Coors Brewing Company to Molson Coors Beverage Company in connection with our revitalization plan.

As we continue to evolve our strategy and portfolio to appeal to the ever-changing preferences of our consumer base, we are also broadening our range of products and offerings within our portfolio. Expanded offerings include, among others, hard seltzers and a variety of non-alcoholic offerings.

Coronavirus Global Pandemic

The coronavirus pandemic had a material adverse effect on our operations, liquidity, financial condition and results of operations in 2020 and we currently expect it will continue to have a material impact to our financial results in 2021 and possibly beyond. The extent to which our operations will continue to be impacted by the pandemic will depend largely on future developments, which are highly uncertain and cannot be accurately predicted, including new information which may emerge concerning the severity and duration of the outbreak, roll out and efficacy of the vaccines, and actions by government authorities to contain the pandemic or treat its impact, among other things. We continue to actively monitor the ongoing evolution of the pandemic and resulting impacts to our business and have taken various mitigating actions in response to the impacts of the pandemic and to position our business for the long term.

See further discussion of the status of the pandemic and its impacts on our Company, including the on- and off-premise impacts to our segments in Part II. Item 7. Management's Discussion and Analysis.

Industry Overview

The brewing industry has significantly evolved over the years to become an increasingly global beer market. The industry was previously founded on local presence with modest international expansion achieved through export, license and partnership arrangements. Over time the market has become increasingly complex as the consolidation of brewers has occurred globally,

resulting in a small number of large global brewers representing the majority of the worldwide beer market. In addition to the consolidation and the acquisitive nature of the industry, exports, licensing and partnership arrangements continued to be used and these transactions typically occurred between the same global competitors that make up the majority of the market. At the same time, smaller local brewers within certain established markets have experienced accelerated growth as consumers increasingly place value on locally-produced, regionally-sourced products. In addition to the growth of smaller local craft breweries, changing consumer trends are pushing the industry toward above premium beer, flavored malt beverages and beyond beer altogether. In recent years, the hard seltzer market has emerged and has experienced phenomenal growth, particularly in the U.S.. We believe the hard seltzer market will continue to gain traction and be of increasing importance. As the beer industry continues its evolution of consolidation and diversification of its products to meet consumer demand with broadening preferences, we believe large global brewers are uniquely positioned to leverage the scale, depth of product portfolio and industry knowledge to continue to lead the market forward. We believe we are well positioned to compete in this continually evolving market, particularly in beer, hard seltzer and beyond.

Global Competitors' Market Capitalization

We evaluate ourselves in relation to other global brewers using various metrics, including overall market capitalization, volume, net sales revenue, gross margins and net profits, as well as our position within each of our core markets, with the goal to be the first choice for our people, consumers and customers. To provide a perspective of the relative size of the major participants in the global brewing market, the market capitalization of our primary global competitors, based on foreign exchange rates as of December 31, 2020, were as follows:

			Market Capitalization
			(In billions)
Anheuser-Busch InBev SA/NV ("ABI")			$	140.6
Heineken N.V. ("Heineken")			$	64.2
Carlsberg Group ("Carlsberg")			$	23.9
Asahi Group Holdings, Ltd. ("Asahi")			$	20.8
MCBC			$	10.0

Our Products

We have a diverse portfolio of beloved and iconic owned and partner brands including Blue Moon, Coors Banquet, Coors Light, Miller Genuine Draft, Miller Lite and Staropramen. We continue to invest in and focus on growing these brands. In addition to these iconic brands, we offer premium, premium lights, economy, above premium and craft beers. Further, we offer a modern and growing portfolio that expands beyond the beer aisle as well. We craft high-quality, innovative beverages with the purpose of uniting people to celebrate all life’s moments. Additionally, as we continue to evolve our strategy and portfolio to appeal to the ever-changing preferences of our consumer base, we are also broadening our range of products and offerings within our portfolio. This includes our current and emerging plans in the non-alcoholic beverage segment. The following includes our primary brands sold in each of our segments.

Brands sold in North America

Arizona Hard Green Tea*(3)*						Henry's Hard						Pilsner Urquell*(1)*
Arnold Palmer Spiked*(3)*						Hop Valley						Redd's*(4)*
Atwater Brewing brands						Icehouse						Revolver
Belgian Moon						Keystone						Rickard's
Belgian Moon LightSky						Le Trou du Diable						Saint Archer
Blue Moon						Leinenkugel's						Smith & Forge
Blue Moon LightSky						Mad Jack						Staropramen
Brasseurs de Montréal brands						Mickey's						Steel Reserve
Carling						Miller64						Terrapin brands
Carling Black Label						Miller Genuine Draft						Vizzy
Coors Banquet						Miller High Life
Coors Edge						Miller Lite
Coors Light						Milwaukee's Best						Licensed premium import brands**(2)**
Coors Original						Molson Canadian						Dos Equis
Coors Seltzer						Molson Dry						Heineken
Coors Slice						Molson Export						Heineken 0.0
Creemore Springs						Molson Ultra						Moretti
Crispin						Movo						Sol
Exel						Old Style Pilsner						Strongbow cider
Granville Island						Olde English
Hamm's						Peroni Nastro Azurro*(1)*
(1) Under perpetual royalty-free license from Asahi.
(2) Under license from Heineken. The brand Heineken is under license in Canada only. The brand Sol is under license in the U.S. and Canada.
(3) In partnership with Hornell Brewing, an affiliate of Arizona Beverages.
(4) Under perpetual royalty-free license from ABI.

Brands sold in Europe

Aspall Cider						Cobra*(1)*						Ozujsko
Bavaria*(1)*						Coors Light						Rekorderling Cider*(1)*
Beck's*(1)*						Corona Extra*(1)*						Sharp's Doom Bar
Bergenbier						Jelen						Staropramen
Blue Moon						Kamenitza						Stella Artois*(1)*
Borsodi						Lowenbrau*(1)*						Thunderbolt
Branik						Miller Genuine Draft
Carling						Niksicko
(1) The European business has licensing and distribution agreements with various other brewers through which it also brews and distributes Beck's, Lowenbrau, Stella Artois and Spaten, as well as a distribution agreement for the exclusive distribution of the Corona brand, throughout the Central European countries in which we operate. We have an agreement with Dutch brewer, Bavaria, for the exclusive on-premise and off-premise rights to the sales, distribution and customer marketing of Bavaria and its portfolio of brands in the U.K. We have an agreement for licensed brewing and distribution of the Bavaria portfolio in Croatia, Bosnia and Herzegovina, Serbia and Montenegro. We also distribute the Rekorderlig cider brand in the U.K. and the Republic of Ireland. In the U.K., we also sell the Cobra brands through the Cobra Beer Partnership Ltd. joint venture. Additionally, in order to be able to provide a full line of beer and other beverages to our U.K. on-premise customers, we sell "factored" brands, which are third-party beverage brands for which we provide distribution to retail, typically on a non-exclusive basis.

Our Segments

In 2020, we operated the following segments: North America and Europe. A separate operating team manages each segment and each segment manufactures, markets, and sells beer as well as offers a modern and growing portfolio that expands beyond the beer aisle. No single customer accounted for more than 10% of our consolidated sales in 2020, 2019 or 2018.

North America Segment

• Headquarters: Chicago, Illinois

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

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

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

The North America segment also includes a partnership arrangement related to the distribution of beer in Ontario, Canada, Brewers' Retail Inc. ("BRI"), and in the western provinces of Canada, Brewers' Distributor Ltd. ("BDL"). BRI and BDL are accounted for under the equity method of accounting. The majority of ownership in BRI resides with Molson Coors Canada ("MCC"), Labatt Breweries of Canada LP (a subsidiary of ABI) and Sleeman Breweries Ltd. (a subsidiary of Sapporo International). BDL is jointly owned by MCC and ABI. In addition, we have an agreement with Heineken that grants us the right to import, market, distribute and sell certain Heineken products in Canada. The North America segment also includes Truss, our joint venture with HEXO Corp. ("HEXO") in Canada, which launched its first non-alcoholic cannabis infused product, Veryvell Drops, and its ready to drink beverage portfolio across the Canadian market in 2020. Separately, in April 2020, we completed the formation of a new joint venture with HEXO and it launched its first non-alcoholic hemp-derived cannabidiol ("CBD") beverages in Colorado.

Additionally, in the third quarter of 2020, we, in collaboration with D.G. Yuengling & Son, Inc. ("Yuengling"), formed The Yuengling Company LLC ("TYC"), a joint venture equally owned by MCBC and DGY West Holdings, LP ("DGY West") that was formed to expand commercialization of Yuengling's brands with operations currently expected to commence in the second half of 2021.

Sales and Distribution

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

In the United States, beer is generally distributed through a three-tier system consisting of manufacturers, distributors and retailers. A national network of approximately 360 independent distributors and one Company-owned distributor, Coors Distributing Company, purchases our products and distributes them to on- and off-premise retail accounts. Coors Distributing Company distributed approximately 2% of our total owned and non-owned volume in 2020.

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

In Ontario, beer is primarily purchased at retail outlets operated by BRI, at government-regulated retail outlets operated by the Liquor Control Board of Ontario ("LCBO"), at approved agents of the LCBO, at certain licensed grocery stores, or at any bar, restaurant, or tavern licensed by the LCBO to sell alcohol for on-premise consumption. The BRI retail outlets operate under The Beer Store name. Brewers may deliver directly to BRI's outlets or may choose to use BRI's distribution centers to access retail stores in Ontario, the LCBO system, the grocery channel and licensed establishments. In June 2019, the Ontario government adopted a bill that, if enacted, would terminate a 10-year Master Framework Agreement that was originally signed between the previous government administration and Molson Coors, Labatt Brewing Company Limited, Sleeman Breweries Ltd., and BRI in 2015 and governs the terms of the beer distribution and retail systems in Ontario through 2025. See Part I, Item 1A. Risk Factors, Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations and Part II, Item 8 Financial Statements and Supplementary Data, Note 18, "Commitments and Contingencies" for further discussion.

In Québec, the distribution and sale of beer is governed by the Quebec Alcohol Corporation ("SAQ"). Beer is distributed to retail outlets directly by each brewer or through approved independent agents. We are the agent for the licensed brands we distribute. The brewer or agent distributes the products to permit holders for retail sales for on-premise consumption. Québec retail sales for off-premise consumption are made through grocery and convenience stores, as well as government operated outlets.

BDL, which we co-own with ABI, manages the distribution of our products throughout British Columbia, Alberta, Manitoba and Saskatchewan. Our products are distributed and sold by local liquor boards in the Maritime Provinces, except

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

In the Caribbean, Latin and South America, we use a combination of export models and license agreements to sell Blue Moon, Coors Light, Miller Genuine Draft, Miller High Life, Miller Lite and other brands. In our export model markets, we import beer from the U.S. and sell it through agreements with independent distributors. In license markets, we have established exclusive licensing agreements with brewers and distributors for the manufacturing and distribution of our products. In certain of our markets, we rely on a combination of these agreements.

Channels

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

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

The following table reflects the industry channel share trends over the last five years in the largest regions in our North America segment of Canada and the U.S. Percentages reflect estimates based on market data currently available.

			Industry channel trend
			2020						2019						2018						2017						2016
On-premise			9		%				16		%				16		%				16		%				16		%
Off-premise			91		%				84		%				84		%				84		%				84		%

We continue to monitor the coronavirus pandemic, which has had a material adverse effect on our North America operations, liquidity, financial condition and results of operations in the second quarter of 2020 due to on-premise closures. The pandemic continued to have a significant adverse effect during the third and fourth quarters of 2020 due to the on-premise locations only being open at partial capacity and at reduced hours. We currently expect these significant adverse effects to continue into 2021 as on-premise locations have experienced, and we believe will continue to experience, capacity and hour limitations. The effects of the pandemic remain highly uncertain especially around the duration of the outbreak and actions by government authorities to contain the pandemic or address its impact, among other things.

We estimate that approximately 9% and 9% of 2020 North America volume and net sales, respectively, were from the on-premise channel. This compares to our 2019 estimate that approximately 16% and 17% of our volume and net sales, respectively, were from the on-premise channel which tends to be more profitable than the off-premise channel as a result of its higher above premium brand mix, higher net sales revenue per hectoliter and lower package costs due to the higher volume of kegs sold. We have seen some of the on-premise demand shift to the off-premise; however, this shift has not been proportionate to the severe declines in volume lost from the on-premise closures and weakened demand. As a result of the coronavirus pandemic and resulting government-imposed restrictions and related on-premise closures, this portion of our business effectively ceased entirely from the middle of March 2020 into June 2020. Additionally, continuing governmental or societal impositions on bars and restaurants and restrictions on public gatherings including the growing risk of a return of shutdowns, especially if prolonged in nature, we expect will continue to have adverse effects on on-premise traffic and, in turn, our business performance, cash flows and liquidity. See Part II. Item 7. Management's Discussion and Analysis, "Executive Summary" & Results of Operations—"North America," for further details.

Manufacturing, Production and Packaging

Brewing Raw Materials

We use high quality ingredients to brew our products. Hops used in our North American products are purchased from suppliers in the U.S. and Europe. These contracts vary in length based on market conditions and cover our supply requirements through 2021.

We malt a portion of our production requirements in North America, using barley purchased primarily under annual contracts from independent farmers located predominately in the western United States and Canadian Prairies. In addition, we source barley malt from three other commercial providers, from which we have a committed supply until at least 2022. Other

brewing adjuncts are sourced from three main suppliers, all in North America, through 2022. Other malt and cereal grains are purchased primarily from North American suppliers.

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

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

Packaging Materials

The following summarizes the percentage of our largest regions of Canada and the U.S. in our North America segment's packaging materials by type for the year ended December 31, 2020. The below chart shows a meaningful shift to aluminum cans in 2020, largely as a result of changes in consumer behavior throughout the coronavirus pandemic. In fiscal year 2019, aluminum cans made up 69% of packaging materials in North America.

Aluminum cans or bottles (collectively, aluminum containers):

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

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

• The RMMC joint venture agreement along with the cans and ends purchase agreement each expire on December 31, 2021. We are currently in negotiations and do not anticipate any issues in renegotiating and extending these contracts.

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

Glass bottles:

• A portion of the glass bottles was provided by Rocky Mountain Bottle Company ("RMBC"), our joint venture with Owens-Brockway Glass Container, Inc. ("Owens"), whose production facilities, which are leased from us, are located in Wheat Ridge, Colorado. The RMBC joint venture agreement expires on July 31, 2025.

• In addition to the supply agreement with RMBC, we have a supply agreement with Owens for requirements in excess of RMBC's production, which expires on December 31, 2021. We are currently in negotiations and do not anticipate any issues in renegotiating and extending these contracts.

• In Canada, we single source glass bottles and have a committed supply through December 2021. We are currently in negotiations and do not anticipate any issues in renegotiating and extending these contracts.

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

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

Stainless steel kegs:

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

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

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

In recent years, we have experienced a shift in the allocation among different packaging types toward aluminum cans and bottles and away from glass bottles. This accelerated in 2020 due to the coronavirus pandemic where we observed a shift in volume to off-premise channels and aluminum cans and away from on-premise channels and glass bottles. In general, aluminum cans allow for lower packaging costs compared to most other types of packaging materials. The trend away from glass bottles could result in higher fixed cost deleverage related to these assets and an ultimate decreased need for the assets that support this packaging, which could adversely impact profitability. In Canada, the standard returnable bottle requires significant investment behind our returnable bottle inventory and bottling equipment. While we have experienced some challenges in obtaining supplies required for certain packaging materials in 2020 as a result of the pandemic, particularly certain types of aluminum containers in North America, these supply constraints are improving with most packaging materials, including certain glass and paperboard in North America, returning to normal material supply. We currently anticipate aluminum container supplies returning to normal in the near term.

Contract Manufacturing

We have an agreement to brew, package and ship products for Pabst Brewing Company, LLC and an agreement with North American Breweries, Inc. ("NAB") to brew and package certain Labatt brands for export.

Seasonality of the Business

Total industry volume is sensitive to factors such as weather, changes in demographics, consumer preferences and drinking occasions. Weather conditions consisting of high temperatures and extended periods of warm and dry weather favor increased consumption of our products, while unseasonably cool or wet weather, especially during the summer months, adversely affects our sales volumes and net sales. Accordingly, consumption of beer in the North America segment is seasonal, nearly 40% of sales volume occurring during the summer months from May through August.

Known Trends and Competitive Conditions

2020 North America Beer Industry Overview

The beer industry in North America is highly competitive, and the two largest brewers, ABI and MCBC together represented the majority of the market in 2020. However, we estimate the two largest brewers lost share in 2020 due to volume growth in the import and flavored malt beverage (including hard seltzers) categories as consumer preferences continue to shift within the industry to above premium priced beers, flavored malt beverages, ready to drink alcoholic beverages and hard seltzers. We believe growing or even maintaining our market share will require stabilizing our core brands and increasing our presence in the fast growing areas of the industry.

In Canada, the market is characterized by aggressive competition for volume and market share from regional brewers, microbrewers and certain foreign brewers, as well as our main domestic competitor. These competitive pressures require significant annual investment in marketing and selling activities. In 2020, the Ontario and Québec markets accounted for approximately 62% of the total beer market in Canada. There are three major beer price segments: above premium, which includes craft and most imports; premium, which includes the majority of domestic brands and the light sub-segment; and value (below premium). Since 2001, the premium beer segment in Canada has gradually lost volume to the above premium and value segments.

Competition from outside of the beer category, as well as an aging population in Canada, continues to be a challenge for the beer industry. The following table summarizes the estimated percentage market share by volume of beer (including flavored malt beverages) and other alcohol beverages, including wine and spirits, as a component of the overall North America alcohol market over the last five years. We anticipate that the 2020 data, when available, will reflect a continuation of the recent consumer trends. Percentages reflect estimates based on market data currently available.

			2019						2018						2017						2016						2015
Beer			48		%				49		%				49		%				50		%				51		%
Other alcohol beverages			52		%				51		%				51		%				50		%				49		%

Our Competitive Position

Our portfolio of beers competes with numerous above premium, premium, and economy brands. These competing brands are produced by international, national, regional and local brewers. We compete most directly with ABI brands, but also compete with imported and craft beer brands, as well as flavored malt beverages. Our products also compete with other alcohol beverages, including wine and spirits, and thus their competitive position is affected by consumer preferences between and among these other categories. Driven by, among other things, increased spirits advertising, a narrowing price gap with wine and spirits, along with increased wine and spirits sales execution, sales of wine and spirits have grown faster than sales of beer in recent years, resulting in a reduction in the beer segment's lead in the overall alcohol beverage market.

The following table summarizes the estimated percentage share of the North American beer market represented by Molson Coors, ABI and all other brewers over the last five years. Current year percentages reflect estimates based on market data currently available.

			2020						2019						2018						2017						2016
MCBC's share			22		%				23		%				24		%				25		%				26		%
ABI's share			41		%				41		%				42		%				42		%				43		%
Others' share			37		%				36		%				34		%				33		%				31		%

Regulation

The U.S. beer business is regulated by federal, state, and local governments. These regulations govern many parts of our operations, including brewing, marketing and advertising, transportation, distributor relationships, sales, and environmental issues. To operate our facilities, we must obtain and maintain numerous permits, licenses and approvals from various governmental agencies, including the U.S. Department of Treasury, Alcohol and Tobacco Tax and Trade Bureau, the U.S. Department of Agriculture, the U.S. Food and Drug Administration, state alcohol regulatory agencies, and state and federal environmental agencies.

U.S. governmental entities also levy taxes and may require bonds to ensure compliance with applicable laws and regulations. In 2020, our U.S. business excise taxes on malt beverages were approximately $15 per hectoliter sold on a reported basis. This includes the impact of the U.S. Craft Beverage Modernization and Tax Reform Act which took effect on January 1, 2018 for all qualified large domestic brewers and importers and was made permanent by the U.S. Consolidated Appropriations Act, 2021 on December 27, 2020. This law resulted in reduced excise taxes for MCBC in the U.S. by $2 per barrel on the first six million barrels, which equates to $1.70 per hectoliter on this portion of volume. We transfer a portion of our share of these savings to distributors consistent with the revenue splitting approach of our U.S. business' economic model. State excise taxes are levied in specific states at varying rates. Refer to Part I—Item 1A. Risk Factors for risks associated with the regulatory environment in the U.S.

In Canada, provincial governments regulate the production, marketing, distribution, selling and pricing of beer (including the establishment of minimum prices), and impose commodity taxes, mark-ups and license fees in relation to its production, distribution and sale. In addition, the federal government regulates the advertising, labeling, quality control, and international trade of beer, and also imposes commodity taxes on both domestically produced and imported beer. Both levels of government are also similarly involved in other categories of alcoholic beverages produced or imported into Canada. In 2020, our Canada business excise taxes were approximately $54 per hectoliter sold on a reported basis. Further, certain bilateral and multilateral treaties entered into by the federal government, provincial governments and certain foreign governments, especially with the United States, affect the Canadian beer industry.

Europe Segment

• Headquarters: Burton-on-Trent, U.K.

• Approximately 7,000 employees as of December 31, 2020

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

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

• On January 1, 2020, we changed our management structure and the International segment was reconstituted with the Africa and Asia Pacific businesses reporting into the Europe segment. Accordingly, the Europe segment operates in Bulgaria, Croatia, Czech Republic, Hungary, Montenegro, the Republic of Ireland, Romania, Serbia, the U.K., various other European countries, and certain countries within the Middle East, Africa and Asia Pacific.

The majority of our European segment sales are in the U.K., Croatia, Czech Republic and Romania. Our portfolio includes beers that have the largest share in their respective countries, such as Carling in the U.K., Ozujsko in Croatia, Jelen in Serbia and Niksicko in Montenegro. We have beers that rank in the top three in market share in their respective segments throughout the region, such as Bergenbier in Romania, Kamenitza in Bulgaria and Borsodi in Hungary*.* Additionally, we sell Staropramen and Miller Genuine Draft in various European countries. Our Europe segment includes our consolidated joint venture arrangement for the production and distribution of Cobra brands in the U.K. and the Republic of Ireland and factored brand sales (beverage brands owned by other companies, but sold and delivered to retail by us).

Sales and Distribution

In Europe, 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. We have an agreement with Tradeteam Ltd. ("Tradeteam," a subsidiary of DHL) to provide the distribution of our products throughout the U.K. until April 2029. We utilize several hundred third-party logistics providers across our Central European operations. We also conduct a small amount of secondary distribution in Czech Republic utilizing our own fleet of vehicles. 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 9% of our Europe segment net sales in 2020 represented factored brands.

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

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

Channels

In Europe, the on-premise channel includes sales to pubs and restaurants. The installation and maintenance of draught beer dispensing equipment in the on-premise channel is generally the responsibility of the brewer. Accordingly, we own refrigeration units and other equipment used to dispense beer from kegs to consumers that are used in on-premise outlets. This includes beer lines, cooling equipment, taps, and counter mounts.

The off-premise channel includes sales to supermarkets, convenience stores, liquor stores, distributors, and wholesalers. Over the last few years, the off-premise channel has become increasingly concentrated among a small number of super-store chains.

Generally, over the years, industry volumes in Europe have shifted from the higher margin on-premise channel, where products are consumed in pubs and restaurants, to the lower margin off-premise channel, also referred to as the "take-home" market. Further, we continue to monitor the coronavirus pandemic, which had, and we currently expect will continue to have, a material adverse effect on our Europe results of operations for fiscal years 2020, 2021 and, possibly, beyond. In 2020, we experienced a significant adverse impact resulting from the closure of the on-premise channel for most of the second and fourth quarters, as a result of the coronavirus pandemic. Business and consumer behavior in the channel has been uncertain and has not returned to pre-pandemic levels. As perspective, we estimate that in 2019 approximately 40% and 50%-55% of our Europe volume and net sales, respectively, was from the on-premise channel, which tends to be more profitable than the off-premise channel. In addition, the U.K. was further negatively impacted by the on-premise restrictions as the U.K comprises approximately 55% of our Europe net sales, which were $1,986.4 million for the year ended December 31, 2019 (the Europe net sales includes the U.K. factored brand business, which represented approximately 17% of this amount in 2019), and, we

estimate, nearly 60% and approximately 70-75% of the U.K. volume and net sales revenue, respectively, in 2019 originated from the U.K. on-premise channel. As a result of the coronavirus pandemic and resulting government-imposed restrictions and related on-premise closures, this portion of our business effectively entirely ceased through the first lockdown, from the middle of March of 2020 through early June of 2020 across all of Europe and continuing into early July of 2020 in the U.K., and was mostly closed through the second lockdown in the fourth quarter with different levels of restrictions across countries. See Part II. Item 7. Management's Discussion and Analysis, "Executive Summary" & Results of Operations—"Europe," for further details.

Manufacturing, Production and Packaging

Brewing Raw Materials

We use high quality ingredients to brew our products. During 2020, our malt requirements were sourced from third-party suppliers. We have multiple agreements with various suppliers that cover almost all of our total required malt, with terms ending in 2021 through 2026. Hops are purchased under various contracts with suppliers in Germany, Czech Republic, Slovenia, U.S. and the U.K., which contribute to our anticipated requirements through 2025 in line with our planned supply coverage strategy. Adjuncts are purchased under various contracts with local producers, which are typically crop year contracts commencing in October of each year. Water used in the brewing process is sourced from various wells and through water rights and supply contracts. We do not currently anticipate future difficulties in accessing required water or agricultural products used in our brewing process in the near term.

Packaging Materials

The following summarizes the percentage of our Europe segment's packaging materials by type for the year ended December 31, 2020. The below chart shows a meaningful shift to aluminum cans, largely as a result of changes in consumer behavior throughout the coronavirus pandemic. In fiscal year 2019, aluminum cans made up 28% of packaging materials in our Europe segment.

Bottles:

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

Kegs:

• A limited number of kegs are purchased each year from various suppliers, and we have no long-term supply commitment. We are currently in the process of signing new agreements which would cover all of our requirements for kegs in 2021.

Cans:

• We have long-term agreements with various suppliers that cover all of our required supply of cans, with terms ending in 2021 through 2023.

Recyclable plastic containers:

• We have multiple agreements with various manufacturers in the region, covering 100% of our requirements, which expire in 2021. We do not currently anticipate any issues in renegotiating and extending these contracts or in otherwise being able to access recyclable plastic containers.

Crowns, labels and corrugate are purchased from sources unique to each category. We do not currently foresee future difficulties in accessing these or other packaging materials in the near term.

Seasonality of Business

In Europe, the beer industry is subject to seasonal sales fluctuations primarily influenced by holidays, weather and by certain major televised sporting events. Weather conditions consisting of high temperatures and extended periods of warm and dry weather favor increased consumption of our products, while unseasonably cool or wet weather, especially during the summer months, adversely affects our sales volumes. Accordingly, the peak selling seasons typically occur during the summer and during the Christmas and New Year holiday season.

Known Trends and Competitive Conditions

2020 Europe Beer Industry Overview

Europe beer industry retail shipments have fluctuated by approximately 1% to 2% annually over the last five years. These market fluctuations are consistent with the fluctuations within the overall alcohol market in each of the respective years. Since 2010 to 2019, the off-premise market share has increased in our European markets from 55% to nearly 60% of total volume, and the on-premise market share has declined from 45% to around 40%. In 2020, the beer market was significantly impacted by the coronavirus pandemic resulting in full or partial closure of on-trade for the last nine months of the year. Based on current data, we estimate an on-premise market decline in the high single digits in 2020. We also estimate in 2020 that the on-premise share in the market was heavily impacted, declining to approximately 20% share from around 40% share in 2019.

Our beers compete not only with similar products from competitors, but also with other alcohol beverages, including wines and spirits. The following table summarizes the estimated percentage market share by volume of beer and other alcohol beverages, including wine and spirits, as a component of the overall European alcohol market, within the countries in which we have production facilities, over the last five years, for which data is currently available. We anticipate that 2020 data, when available, will reflect a continuation of the recent consumer trends. Percentages reflect estimates based on market data currently available.

			2019						2018						2017						2016						2015
Beer			29		%				30		%				30		%				30		%				30		%
Other alcohol beverages			71		%				70		%				70		%				70		%				70		%

Our Competitive Position

In European countries where we currently operate, our primary competitors are Heineken, Asahi, ABI and Carlsberg. We believe our brand portfolio gives us strong representation in all major beer categories. The following table summarizes our estimated percentage share of the beer market within the European countries where we operate and our primary competitors over the last five years. Current year percentages reflect estimates based on market data currently available.

			2020						2019						2018						2017						2016
MCBC's share			18		%				19		%				20		%				20		%				20		%
Primary competitors' share			61		%				60		%				57		%				56		%				57		%
Others' share			21		%				21		%				23		%				24		%				23		%

Regulation

Each country that is part of our Europe segment where we carry out significant brewing or distribution activities is either a member of the European Union ("EU") or a current candidate to join, with the exception of the U.K., which left the EU during 2020, Bosnia which is a potential EU candidate and India which is part of the Asia Pacific. As such, there are similarities in the regulations that apply to many parts of our Europe segment's operations and products, including brewing, food safety, labeling and packaging, marketing and advertising, environmental, health and safety, employment and data protection regulations. To operate breweries and conduct our business in Europe, we must obtain and maintain numerous permits and licenses from various governmental agencies.

The U.K. exited the EU on January 31, 2020 and entered a twelve month transition period. On December 24, 2020, the deal laying out the future relationship between the U.K. and EU was agreed, and subsequently endorsed on December 30, 2020. The treaty became effective on January 1, 2021. As the U.K. left the single market and customs union on December 31, 2020, the deal guarantees "zero tariff and zero quota" trade on goods. See Part I—Item 1A Risk Factors under "Risks Specific to the Europe Segment" for further discussion of the risks specific to the U.K.'s exit from the EU.

Each country's government levies excise taxes on alcohol beverages. EU member countries' laws on excise taxes are consistent with the EU Directives and use the same measurements based on either alcohol by volume or Plato degrees. Non-EU countries use various taxation methods, including flat excise rate per volume or methods that may be similar to those used in the EU. In 2020, the excise taxes for our Europe segment were approximately $41 per hectoliter on a reported basis. Refer to Part I—Item 1A, Risk Factors for risks associated with the regulatory environment in Europe.

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

Other Information

Global Intellectual Property

We own trademarks on the majority of the brands we produce and have licenses for the remainder. We also hold several patent and design registrations with expiration dates through 2038 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.

Sustainability

We believe in producing a beer we can be proud of, from grain to glass. Our Imprint (formerly known as Our Beer Print) is MCBC's approach to sustainability and the right way to grow our business for a better tomorrow. Our Imprint is integral to how we will build long-term value for society and our shareholders, while leaving a positive imprint on our communities, on our environment and on our business.

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

In 2012, MCBC became a charter member of the International Alliance for Responsible Drinking ("IARD"). This collaborative industry body represents the 12 leading beer, wine and spirits companies, and partners with public sector, civil society and private stakeholders. IARD works with governments globally to support the WHO NCD Global Monitoring Framework target of 10% reduction in harmful use of alcohol by 2025.

In 2017, we launched Our Imprint 2025 agenda, a new sustainability strategy for MCBC and a set of ambitious goals to take us to 2025. We focused our efforts where we can have the most positive impact on our business and society. We established goals across three pillars - Responsibly Refreshing, Sustainable Brewing and Collectively Crafted - that aim to address the expectations of our consumers and stakeholders, while we continue to make our operations even more resource efficient and resilient.

In 2019, we added new global packaging goals to our 2025 agenda, aiming for 100% of our packaging to be reusable, recyclable or compostable. We are also strengthening our goals to drive down packaging emissions, use more recycled materials in our plastic packaging and improve recycling solutions in our key markets by 2025. More information about Our Imprint 2025 goals can be found on our sustainability website, www.MolsonCoorsOurImprint.com, which includes:

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

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

• SDG (Sustainability Development Goals) Impact Report 2020, which shows how MCBC is taking action to contribute to the 17 global goals set forth by the United Nations by 2030.

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.

Environmental Matters

Our operations are subject to a variety of extensive and changing federal, state and local environmental laws, regulations and ordinances that govern activities or operations that may have an impact on human health or the environment. Such laws, regulations or ordinances may impose liability for the cost of remediation, and for certain damages resulting from sites of past releases of hazardous materials. Our policy is to comply with all such legal requirements. While we cannot predict our eventual aggregate cost for the environmental and related matters in which we may be or are currently involved, we believe that any payments, if required, for these matters would be made over a period of time in amounts that would not be material in any one year to our operating results, cash flows, or our financial or competitive position. We believe adequate reserves have been provided for losses that are probable and estimable. However, there can be no assurance that environmental laws will not become more stringent in the future or that we will not incur material costs in the future in order to comply with such laws. See Part II—Item 8 Financial Statements and Supplementary Data, Note 18, "Commitments and Contingencies" under the caption "Environmental" for additional information regarding environmental matters.

Human Capital Management

We have a global and varied workforce, with major employee centers in the U.S., Canada, U.K. and Romania. As of the end of 2020, we employed approximately 17,000 employees within our business globally with approximately 10,000 within our North America segment and 7,000 within our Europe segment. Of the 17,000 employees, approximately 660 of our employees are in our Global Business Centers based in Milwaukee, Wisconsin and Bucharest, Romania. As of the end of 2020, approximately 33% and 29% of our North America and Europe workforces, respectively, are represented by trade unions or councils, which are subject to collective bargaining agreements, which come due for renegotiation from time to time.

The Company strives to be a provider of meaningful experiences for its employees and a safe and healthy workplace for all employees. We believe that building a strong and diverse workforce is a significant contributor to our success as a business and to deliver on our purpose, and that we value and respect our differences. We believe that diversity with inclusion is the key to collaboration and a winning team culture. A significant component of the revitalization plan announced in October 2019 was the launch of a refreshed purpose (uniting people to celebrate all life’s moments), ambition (first choice for our people, consumers and customers) and shared company values (the first of which is Putting People First), all designed with a purpose of shifting the culture of the organization to drive stronger employee engagement and business engagement.

With the overarching goals described in the preceding paragraph as guides, the leadership team and the chief people and diversity officers for the North America and Europe business units are tasked with managing all employment-related matters including recruitment, retention, leadership and development, compensation planning, succession planning, performance management, and diversity and inclusion. The Compensation Human Resource Committee of the Board of Directors is responsible for establishing and reviewing the overall compensation philosophy of the Company and providing oversight on certain human capital matters, including the Company’s talent retention and development, leadership development, talent pipeline, programs and systems for performance management and diversity and inclusion initiatives. The Audit Committee oversees the Company’s risk management program to identify and mitigate potential risks, including human capital issues. The Board of Directors then receives regular reports and recommendations from management and the board committees to help guide the Company’s strategy on retaining and developing a diverse and talented workforce.

In North America, we promote and maintain employee resource groups for a number of different communities in our employee population - by race/ethnicity, by gender, LGBTQ+, early professionals, young families, and veterans, amongst others. We encourage participation in these groups as we believe it provides an open forum for individual employees who may share similar concerns or experiences. We also promote and emphasize leadership and development opportunities for our employees which includes our First Choice Learning Center, in-person and online training programs, and experiential training opportunities to encourage and promote employee health and safety, assist in building core competencies, learning best practices and developing leadership capabilities. As we work to a more diverse workforce and management team, the Company has developed programs to encourage the recruitment, retention and training of diverse leaders and working to ensure we have a highly skilled and diverse workforce. We track and monitor our progress on metrics of gender and race, particularly in the U.S., though data on race is not tracked in all jurisdictions.

We aim to ensure that our employees have a healthy and safe work environment. Our supply chain has adopted and implemented a framework we call world class supply chain 2.0 at many of our brewery and other locations. As part of that framework, the Company's environment, health and safety policy guides the Company’s efforts in maintaining safe and healthy workplaces where we take a proactive approach to the identification and control of environment, health and safety risks. We work to improve our Environment, Health and Safety ("EHS") performance through methodologies that aim to prevent workplace injuries and illness, and reduce environmental impacts of our operations. Our safety focus was evident during our response to the coronavirus pandemic where we implemented additional health and safety measures in the breweries and our distribution centers, ensuring these federally designated essential operations could continue to operate and we could protect our

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

Available Information

We file with, or furnish to, the SEC reports, including our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports pursuant to Section 13(a) or 15(d) of the Exchange Act. These reports are available free of charge via EDGAR through the SEC website (www.sec.gov) and are also available free of charge on our corporate website (www.molsoncoors.com) as soon as reasonably practicable after they are electronically filed with or furnished to the SEC. The foregoing website addresses are provided as inactive textual references only. 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 11, 2021:

Name						Age						Position
Gavin D.K. Hattersley						58						President and Chief Executive Officer
Tracey I. Joubert						54						Chief Financial Officer
Simon J. Cox						53						President and Chief Executive Officer, Molson Coors Europe
Peter J. Marino						48						President, Emerging Growth
E. Lee Reichert						54						Chief Legal and Government Affairs Officer
Michelle E. St. Jacques						43						Chief Marketing Officer