Good day. Welcome to the Molson Coors Beverage Company fourth quarter and fiscal year 2020 earnings conference call. You can find related slides on the investor relations page of the Molson Coors website. Our speakers for today's call are Gavin Hattersley, President and Chief Executive Officer, and Tracey Joubert, Chief Financial Officer. Please note that this event is being recorded. With that, I'd like to turn the call over to Greg Tierney, Vice President of FP&A and Investor Relations. Mr. Tierney, please go ahead.
Thank you, operator, and hello, everyone. Following prepared remarks from Gavin and Tracey, we'll 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 re-enter the queue to follow up. If you have technical questions on the quarter, please take them up with our IR team in the days and the weeks to follow. Today's discussions include forward-looking statements, and actual results or trends could differ materially from our forecasts. For more information, please refer to the risk factors discussed in our most recent filings with the SEC. We assume no obligation to update forward-looking statements. GAAP reconciliations for any non-U.S. GAAP measures are included in our news release or otherwise available on our website.
Also, unless otherwise indicated, all financial results the company discusses are versus the comparable prior year period and in US dollars. With that, over to you, Gavin.
Thank you, Greg. Thank you all for joining us today. 2020 was an incredibly challenging year for everyone, Molson Coors included. In many respects, I consider us lucky. The revitalization plan we put in place in October of 2019 positioned our company well to weather the storms of 2020. Our business was leaner and more nimble, which put us in a better position to conserve resources as the circumstances dictated, and to deploy them effectively as the circumstances allowed. The results bear that out. When you consider what we set out to do on our revitalization plan, we accomplished an incredible amount in 2020, and that has given us a tremendous springboard for 2021. Our two largest brands, Coors Light and Miller Lite, our iconic core, grew 6.1% and 8.6% in the U.S. off-premise respectively.
Our above-premium brands in the U.S. reached a record high percentage of the portfolio in the H2 of 2020. Beyond beer, our first foray into non-alcoholic cannabis beverages through the Truss Joint Venture has netted the number one dollar share spot in the entire Canadian cannabis beverage market. We increased our production capacity for our fast-growing seltzers by approximately 400%, and we approximately doubled our annual investments in our hometown communities. That is the story of Molson Coors in 2020. You may be wondering why I have such confidence, especially if you only look at our consolidated top-line results in the fourth quarter. That number alone does not tell the full story. If you only look at that piece of data, you'll miss it. Our top-line results in the fourth quarter were overwhelmingly due to losses resulting from government restrictions in the European on-premise channel.
To put it more bluntly, Europe alone accounts for 92% of our fourth quarter top-line decline. Those results are not reflective of the performance we've seen across the rest of the business, and the story is very different in our largest markets. How different? In the fourth quarter, Molson Coors grew net sales revenue in the United States. We grew the top line in the United States. Our plan is working. Let's look deeper at our results in 2020 and what we have in store for 2021. Our first pillar under the revitalization plan was to build on the strength of our iconic core. In the U.S., our largest beers, Coors Light and Miller Lite, delivered 6.1% and 8.6% respective growth in the off-premise. They again grew share in the premium light beer segments, and they finished 2020 with stronger brand health.
We're pleased but not satisfied with those results. In 2021, we're going to put even more marketing behind these two iconic brands, and we're thinking big, as you may have noticed around the big game last weekend. Again, I want to point something out here. We are demonstrating our ability to grow in seltzers and expand beyond beer while strengthening our core brands. We are demonstrating we can do both. The Revitalization Plan was specifically designed to free up resources so we can meaningfully invest behind our core, our growth and above premium, and our expansion beyond beer. In the H2 of 2020, above premium products hit a record high portion of our U.S. portfolio relative to any prior year comparable period. We doubled our share of seltzers in the U.S., moving towards our double-digit share goal by the end of this year.
Vizzy has been a top 10 growth brand for nearly six straight months. Vizzy's incredible growth has been accomplished with basically just one pack. In a few weeks, we plan to add more firepower to that brand with a second variety pack, a few weeks later, we plan to launch Vizzy Lemonade Hard Seltzer. The lineup we believe is tailor-made for Vizzy given its unique antioxidant vitamin C attributes. We are excited about the opportunity for Coors Seltzer, which launched at the end of September. We are seeing promising signs, including repeat rates that are stronger than Bud Light Seltzer and Corona Hard Seltzer at the same point during their launch. In 2021, we have strong plans to accelerate marketing support behind Coors Seltzer, as well as its commitment to help save America's rivers. That's just the beginning.
We are about to launch Topo Chico Hard Seltzer, which is getting a lot of attention from retailers and distributors alike. Topo Chico Mineral Water is beloved in the biggest markets throughout the United States, especially in Texas, a high potential market. Quickly on its heels, we plan to bring Topo Chico Ranch Water to market. Again, we see this brand as best positioned to take advantage of the ranch water craze that has been inspired by Topo Chico Mineral Water enthusiasts mixing up ranch water at home. Still to come is Proof Point, our first spirited seltzer. When all four seltzers are in market later this spring, we believe we will boast the strongest, most differentiated seltzer lineup in the United States. While we started behind others in the United States, in Canada and Europe, we are early entrants in the hard seltzer category.
In the next couple of weeks, we are taking both Vizzy and Coors Seltzer into Canada. In Europe, building on an existing brand partnership already in market, the launch of our own Three Fold brand seltzer is planned for March, and we will be leading the development of the category across Central and Eastern Europe with an own brand in the second quarter. In Above Premium Beers, we have high expectations for Blue Moon LightSky, which ended 2020 as the number one new beer in the United States per Nielsen. We've expanded its production capacity by approximately 400%. We're putting more marketing muscle behind it, and we believe this is a brand that's going to continue to rise for quite some time. Our regional craft portfolio in the United States grew 17% per Nielsen in 2020, outpacing the craft segment once again.
Next month, we will be taking Hop Valley national in the U.S. and Canada. It's our first national IPA, and we believe it will be another driver of growth for our Above Premium portfolio. Do not forget about Yuengling. This fall, the newly formed joint venture plans to bring Yuengling to one of America's biggest beer-drinking states, Texas. The reception has already been incredible, and there is significant upside potential with Yuengling as the joint venture begins its westward expansion. At the beginning of last year, we changed our name to the Molson Coors Beverage Company, and it wasn't just words. By the end of the year, our non-alc strategy came into focus. We're piloting our own brands with our partner, L.A. Libations. We've taken equity investments in other opportunities, including two with legendary non-alc innovator Lance Collins.
We've signed distribution agreements to enter the fast-growing spaces like RTD Coffee with La Colombe and Energy Drinks with ZOA through our new energy drink partnership with the leadership team led by Dwayne "The Rock" Johnson. ZOA is getting very positive reaction from retailers and distributors. The Rock isn't just putting his name on this. He's personally making calls to retailers. We're bringing that to market this spring. We think ZOA could be a game changer in the energy drink space. Truss Canada, our Canadian cannabis joint venture with HEXO, launched their beverage portfolio in August. By December, they jumped to the number one dollar share position with four of the top five cannabis beverage SKUs in Canada. Truss USA is building on that through their first lineup of hemp-derived CBD beverages in Colorado, which entered the market in December.
We are learning a lot about the exciting category following the launch. This entire lineup is a tremendous growth opportunity for our business. It will be a driving force behind our goal to build our emerging growth division into a $1 billion revenue business by 2023. As a reminder, that ambition does not include our hard seltzers. We recently announced our first entry into the fast-growing RTD cocktail space through an exclusive equity and distribution agreement with Superbird an above premium tequila-based Paloma. Last year, we also made major investments to help our business grow the top line. We invested in our e-commerce capabilities all around the globe with more staff and more robust digital capabilities. It paid off last year with 230% growth in e-commerce in the U.S. alone.
We expanded our seltzer production capacity by approximately 400%. We also expanded our LightSky production capacity by approximately 400%. We completed a sleek can production line capable of manufacturing approximately 750 million sleek cans annually. On the topic of cans, I'm really pleased to say that our packaging material supply has vastly improved, with glass bottles, paperboard, and tall cans with all returning to normal material availability. In fact, our Coors Light can inventory is higher than it was at this point last year. Our industry-standard can supply is improving. We have sourced cans from four continents and worked closely with our suppliers to keep up with the very high rate of consumer demand, and we expect to return to normal material availability by the end of this quarter.
We will continue investing in our capabilities throughout the year as we work to grow our ability to produce high-margin Above Premium products. Last, but certainly not least, is how we are supporting our people and our communities. This one is particularly important to me. When I took over as CEO, I made it clear that I want Molson Coors at a people-first culture, and that approach guided our decision-making throughout the last year. The work in this space is never done, but we are making important progress. Last summer, we set a goal of increasing the representation among people of color in the United States by 25% by the end of 2023. Across the country, among salaried employees and in leadership positions, each where market availability shows we have room for improvement. We have made progress towards that goal, and we expect to continue to do so.
We also increased our support for organizations dedicated to equality, empowerment, racial justice, and community building, and provided nearly 3 million meals to families in our hometown communities struggling with food insecurity. We must do more. Today, I'm proud to announce that not only will we recommit to matching last year's investments in our communities, we have also committed to spend a total of $1 billion with diverse suppliers over the next three years. This is a commitment that benefits all of us. A wider base of talented suppliers with different backgrounds and life experiences will be a benefit to our company. The diverse suppliers who earn our business will be able to, in turn, hire more talented employees into their businesses.
Last summer, we said that Molson Coors' response to addressing racial injustice would not just be a moment in time, passing things set aside and forgotten as other priorities took over. That would be unacceptable. Our commitment to investing in our communities and striving for equal opportunity for all people will not fade. Even with the unforeseeable challenges of last year, we built on the strength of our iconic core. The H2 of 2020, we achieved a record high portion of our U.S. portfolio in above-premium products. We expanded beyond the beer. We invested in our capability. We supported our people and our communities, and we are not about to stop now. When I took over this role, I told you that we would plan and invest to grow our top line. We're going to follow through on this, and we're on the pathway there.
Folks, this is our revitalization plan in action. I know there have been questions about whether or not we can execute all of this, but no one has to wonder any longer. We're doing it right now, today. Now I'll turn it over to Tracey, who can provide you with more detail on our financial performance and our outlook for 2021. Trace?
Thank you, Gavin. Hello, everyone. The coronavirus pandemic had a significant impact on our 2020 financial performance, primarily due to the on-premise restrictions and lockdowns. Our Europe business was the most impacted, particularly in the U.K., where our business skews heavily towards the on-premise and drove revenue and EBITDA declines in both the fourth quarter and for the full year 2020. In fact, Europe, which accounted for only 15% of our revenue in 2020, contributed to 61% of revenue decline and 83% of our EBITDA decline for the year, and 92% of the revenue decline and 56% of our EBITDA decline for the fourth quarter. Despite these incredible challenges in 2020, we are proud of our resilience and financial performance as we have navigated through these unprecedented times.
Let me take you through our full-year performance, and then I'll touch on our quarterly results before moving on to our outlook. Recapping the year, consolidated net sales revenue decreased 8.7% in constant currency, of which North America was down 4.3%, while Europe was down 28.4% on a constant currency basis. We delivered net pricing growth in North America and Europe, as well as positive brand and package mix in the U.S., this was more than offset by volume declines and unfavorable channel mix, principally driven by varying degrees of on-premise restrictions throughout much of the year due to the coronavirus pandemic, which also drove packaging material constraints due to the unprecedented can demand. Brand volumes declined 7.8%, and financial volumes declined 8.9%. North American shipment trends improved in the H2 of the year as certain packaging material constraints eased, and we built distributor inventory.
Net sales per hectoliter on a brand volume basis grew 1.1% in constant currency due to pricing growth in North America and Europe, as well as positive brand and package mix in the U.S. The success of our above-premium innovations, including Vizzy, Blue Moon LightSky, and Coors Seltzer, helped drive U.S. net sales per hectoliter up 2.3% for the year. Underlying COGS per hectoliter increased 2.8% on a constant currency basis, driven by cost inflation, including higher transportation costs, volume deleverage, and mixed impact from premiumization in North America, partially offset by cost savings. Higher can sourcing costs in North America contributed to the higher cost inflation. After the onset of the coronavirus pandemic, we aggressively began sourcing additional aluminum cans from all over the world to support our core brands to address unprecedented off-premise demand.
We saw a tightening of the freight market throughout the year, which has led to higher transportation costs. Underlying SG&A decreased 9.9% on a constant currency basis as we quickly took action, pivoting spend away from areas impacted by the coronavirus pandemic, particularly live entertainment events and sporting events due to shortened or delayed seasons, such as the delayed start of the NHL season into 2021. In the H2 of the year, we began to progressively increase marketing spend, particularly in social and TV media, setting up support behind our new innovations such as Vizzy, Blue Moon LightSky, and Coors Seltzer, in alignment with additional supply coming online, as well as continuing to support our core Coors Light, Miller Lite, and other iconic core brands.
MG&A declines were also driven by targeted cost mitigation actions and significant cost savings in the first year of our Revitalization Cost Savings Program. In aggregate, we delivered approximately $270 million across MG&A and cost of goods sold, placing us on track to meet our $600 million target in total growth savings. These reductions were offset by innovation spend and citing lower incentive compensation and a non-recurring vendor benefit in the prior year, which we referenced last quarter. As a result, underlying EBITDA decreased 10% on a constant currency basis. Underlying free cash flow was $1.3 billion for the year, a decrease of $104 million from the prior year, driven by lower underlying EBITDA and higher cash taxes, partially offset by favorable working capital.
The working capital benefit was driven by the deferral of approximately $150 million in tax payments from various government-sponsored payment deferral programs related to the coronavirus pandemic, of which we currently anticipate the majority to be paid in 2021 as they become due. Capital expenditures incurred were $550 million for the year. With improved liquidity and strong cash management, we were able to accelerate certain investments in expanding our production capacity and capabilities to support new innovations and growth initiatives. In addition to the strong free cash flow performance, we made tremendous strides in improving our financial flexibility, including continuing to pay down debt, favorably amending our U.S. revolving credit facility, and suspending our dividend in May for the remainder of 2020.
We reduced our net debt position by $1.1 billion in 2020 and reduced our trailing 12 months net debt to underlying EBITDA ratio to 3.5x as we remain committed to maintaining our investment-grade rating. Now let's discuss the fourth quarter, where, again, Europe, due to the on-premise lockdowns, had a significant and disproportionately negative impact on our results. Consolidated net sales revenue declined 8.3% in constant currency, principally due to financial volume declines as a result of the on-premise restrictions, along with corresponding negative channel mix, partially offset by net pricing growth in North America and Europe, as well as positive brand and package mix in the U.S. North America net sales revenue was down 1% in constant currency. However, in the U.S., despite increased on-premise restrictions and aluminum can supply constraints, we delivered net sales revenue growth of 1.9% in the quarter.
We continued to build distributor inventory in the U.S. with brand volumes down 6.2% compared to domestic shipment declines of 2.3%. Growth in the U.S. business was more than offset by lower volumes and negative mix in Canada and, to a lesser degree, Latin America, as a result of the on-premise restrictions. In Europe, net sales revenue was down 39.4% in constant currency, driven by volume declines and negative mix due to increased on-premise restrictions, with the most meaningful in the U.K., which experienced a return to almost total on-premise lockdown for November and the historically strong month of December. With the subdued nature of many festive celebrations during the fourth quarter, we did not see a big shift of volume into the off-premise.
Net sales per hectolitre on a brand volume basis increased 3.7% in constant currency, reflecting net pricing growth in North America and Europe, more than offsetting the negative mix effects of the various market dynamics and consumer shifts caused by the coronavirus pandemic. In the U.S., net sales per hectolitre on a brand volume basis increased 4.2%, driven by favorable sales mix from new innovations and strong net pricing growth. In Europe, net sales per hectolitre on a brand volume basis decreased 8.2% due to unfavorable mix, particularly driven by the higher margin U.K. business, which more than offset pricing increases. Underlying cost per hectolitre increased 6.4% on a constant currency basis, as we saw a greater impact from freight inflation and U.S. mix premiumization in Q4 compared to the full year.
MG&A in the quarter increased 5.8% on a constant currency basis due to higher planned marketing spend to support our core brands and key innovations, as well as factoring lower incentive compensation and a non-recurring vendor benefit in the fourth quarter of 2019. This was partially offset by cost savings and lower discretionary spend. As a result, underlying EBITDA decreased 33.6% on a constant currency basis, disproportionately driven by Europe. Given the length and severity of the impact of the coronavirus pandemic on our Europe business, as well as the protracted recovery currently expected in certain on-premise markets, we recognized a goodwill impairment charge of $1.5 billion in our Europe segment. We also recognized a $59.6 million of asset impairment charges in our North America segment. These charges are non-cash and are not included in the underlying results. This takes me to our financial outlook.
As you may recall, on March the 27th of last year, we withdrew our guidance due to the uncertainty driven by the coronavirus pandemic. While uncertainty remains, in an effort to help enhance visibility, we have determined to reinstate our practice of providing guidance. We have also determined to adjust the metrics provided, which includes adding guidance for net sales revenue, a metric which aligns with our Revitalization Plan goals for driving top line growth, as well as net debt to underlying EBITDA leverage ratios, given our commitment to remaining investment grade. We are very proud of our performance and agility in navigating the coronavirus pandemic and executing against our Revitalization Plan, Recognize that headwinds remain. The pandemic continues to impact our business due to on-premise losses across all our geographies, Disproportionately so in Europe, as well as Canada.
We expect this domestic shipment trends in the U.S. to continue to be higher than brand volume trends in the first quarter, as we continue to build inventories heading into the peak season. For the year, we maintain our annual goal of shipping to consumption in the U.S. In Europe, we continue to experience significant lockdowns and expect first quarter volumes will be materially impacted versus the prior year period, similar to what was experienced in the fourth quarter of 2020. For 2021, we expect to deliver mid-single-digit net sales revenue growth. 2021 is intended to be a year of investment as we continue to deliver our Revitalization Plan and drive towards long-term growth.
This entails increasing year-over-year marketing spend to build on the strength of our core brands and support our successful 2020 launches, including Blue Moon, Michelob ULTRA, Vizzy, and Coors Seltzer, and new innovations to come, as well as investing in further expanding our capabilities to drive productivity and efficiencies. We expect significant increases in spend beginning in the second quarter versus the prior year comparable quarter. While we continue to expect Revitalization Plan savings, as I discussed, given this increased investment, along with cost headwinds related to higher inflation, including transportation costs and continued premiumization of our portfolio, we anticipate 2021 underlying EBITDA to be approximately flat compared to the prior year. We anticipate underlying depreciation and amortization of $800 million, net interest expense of $270 million ±5%, and an effective tax rate in the range of 20%-23%.
We enter 2021 with greatly improved financial flexibility, better enabling us to not only continue to invest in our business, but to continue to pay down debt and return cash to shareholders in 2021. As I mentioned, we significantly reduced our net debt position by $1.1 billion in 2020 and reduced our leverage ratio to 3.5x as of December 31st, 2020. We are proud of this progress and are establishing a target net debt to underlying EBITDA ratio of approximately 3.25x by the end of 2021 and below 3x by the end of 2022. We currently anticipate that our board of directors will be in a position to reinstate a dividend in the H2 of this year.
We are doing all of this while continuing our commitment to maintaining, and in time, upgrading our investment grade rating. Given the operating environment, we are pleased with our 2020 financial performance, which underscores our strong progress against our Revitalization Plan and the resilience of our company and our people who have united to successfully navigate and overcome challenges posed by the coronavirus pandemic. While these challenges have created some near-term fluctuations in financial and operating results, we are confident we're on the right path of driving towards long-term revenue and underlying EBITDA growth. We look forward to updating you on our continued progress. With that, we look forward to taking your questions. Operator?
Thank you. We will now begin the question and answer session. To ask a question you may press star then one on your touchtone phone. If you are using a speaker phone please pick up your handset before pressing the key. To withdraw your question please press star then two. Please limit yourself to one question. The first question today comes from Andrea Teixeira with JPMorgan. Please go ahead.
Hey, good morning, guys. It's actually Kojo on for Andrea.
Hi.
Just at a high level, we're just wondering if you could provide a little bit of color on how depletions have trended quarter to date in both North America and Europe.
Look, we don't provide guidance on in-month depletions. Lots of ups and downs. From a European point of view, as Tracey said in her opening remarks, the on-premise remains in lockdown. We expect the first quarter volumes in Europe and particularly in the United Kingdom to be challenged. From a U.S. point of view, the lockdowns remain, although it does vary from state to state, and we do see a loosening of on-premise restrictions both in North America and in Europe as we progress into Q2 and further on into the year. From a supply point of view, just reiterate my comments in the script that our Coors Light can supply is much improved, and our inventory levels are actually higher than they were at the same time last year. We're well-positioned to take advantage of the brand health strength of Coors Light.
Thanks. Great.
The next question comes from Kevin Grundy with Jefferies. Please go ahead.
Great. Thanks. Good morning, everyone. I want to spend some time on Europe, just given the impact in the quarter. Obviously pretty challenging, both from a revenue and profitability perspective. Understanding that the impairment charge is non-cash, it naturally signals a less confident outlook and ability to return to levels of profitability, perhaps you'd previously thought, at least within a reasonable amount of time when you're doing a discounted cash flow model. Gavin, it'd be good to get your updated views on your outlook for this business, strategic fit within the portfolio, and how you're thinking about the cost structure, given this less constructive outlook. Tracey, for you relatedly, not to get too much in the weeds with this, but I'm just trying to understand the margins in the quarter.
The top-line pressure in the second quarter was worse than the fourth, but the margin performance was clearly a lot more pressured. The detrimental margins in the second quarter, about 25%, closer to 60% in the fourth quarter. It just seemed like there was a better ability to sort of flex down M&A in the second quarter than there was in the fourth. I think it'd be useful for folks if you could maybe spend a little bit of time on that. Thank you both, and I'll pass it on.
Thanks, Kevin. I'll talk about Europe and performance, specifically. Look, the on-premise restrictions in Q4 were fairly draconian. There was somewhat of a scattergun approach across Europe, which made it a little harder for us to plan and react to, particularly on the cost line. When you compare Q4 versus Q2, the impact for Q4 was particularly pronounced because December's historically been a very strong month for the on-premise in the U.K., given the holidays. Of course, you can't be outdoors that much comfortably in the fourth quarter as much as you can be in the second quarter. It's also a seasonally lower trading period in Central and Eastern Europe. We saw similar declines in the second and fourth quarters from a volume perspective. The on-premise restrictions in the second quarter were more uniform, so it made it easier for us to plan.
Certainly the lockdowns, as I said earlier, have continued into the first quarter. We did make some conscious decisions in Q4, though, Kevin, to invest behind our core brands, not only in the United States, but also in Europe, and in particular in Central Europe. We've got some strong healthy brands. We wanted to make sure we positioned ourselves for sustainable recovery in 2021. That explains why the M&A in Europe was a little higher than you might have been expecting. We were investing behind our brands. What other question there?
Yeah. Kevin did ask about the strategic outlook.
Oh, okay. Yeah, look, Kevin, our top priority as a company as a whole is to make sure that we emerge strong coming out of the pandemic when the on-premise returns to more normalized levels. This includes Europe, which we continue to view as a strategic asset.
Maybe, Kevin.
Thanks.
Kevin, if I can just jump in on the margin. Yeah, in Europe in Q4, we focused our marketing investment on specific brands and markets where we had capacity, and we needed to ensure that we were competitive in the context of share of voice and brand health metrics. The investments that we made in Q4 in Europe were to support the ongoing performance of our national champion brands and our premiumization. Also just to note, we were stacking comparatively much lighter spend in Q4 of 2019 in Central Europe. That would account for some of the margin differences.
Okay. Thank you very much. A bunch of questions, but I'll pass it on. Thank you.
The next question comes from Kaumil Gajrawala with Credit Suisse. Please go ahead.
Hi, good afternoon, everybody. Can you talk a bit about your expectations for the on-premise for 2021 as it relates to what you've incorporated into your guidance and specifically to the U.S., at what rate do you expect it to recover? How much does that contribute to your numbers? If you could also maybe help us with mechanically what that means for your business. I believe your shares are higher off-premise. We kind of know that over the course of 2020, large pack sizes took a larger degree of share from the rest of what was being sold at grocery retail. That obviously will look very different when we get to a more normalized on-premise environment. Are you a net share beneficiary as the on-premise turns back on? Does it work the opposite direction?
If you could help us with some details there, that'd be helpful. Thank you.
Thanks, Kaumil. Yeah, a lot in there. Let me try and give you some context. Obviously, the reality is the situation remains fluid and it varies market by market. In the third quarter of last year, we did see some on-premise reopenings pretty much across the board in the countries in which we operated. During the fourth quarter, we saw a return to much more severe on-premise restrictions as most countries went back into strict lockdowns, and there was no benefit of outdoor dining given the climate. In terms of our major markets in the U.K., the government operated a tiered system of restrictions in October. They followed that up with a national lockdown in November. They returned to a tiered system in December, but pretty much, the U.K. is locked down as we speak.
In North America, Canada was particularly impacted more than the U.S. from a lockdown point of view. It was a stricter lockdown. We really did see varied pictures across the United States, depending on which state. From an on-premise performance point of view in the United States, it's been fairly stable for a while now. There's no big spike up or down. In terms of market share, we think that the consumer moving to big and trusted brands will benefit us in all the markets in which we operate. Where we have seen reopenings, we've seen that play through from a market share point of view. I think we will be net beneficiaries when that takes place.
Obviously, in our Above Premium portfolio, we were very pleased with our performance in Above Premium in the fourth quarter, and that's in the face of Blue Moon and Peroni, which are strong on-premise brands being obviously challenged because of the lack of on-premise. We expect that when the on-premise comes back more fully, that those two brands will be big beneficiaries of it. If you look at the U.K., which is the market which has the largest on-premise exposure, we've demonstrated a sustained track record of growing our share in the on-premise in the U.K. For at least five years pre-pandemic, we've grown our share in the on-premise as we've driven to be first choice for our customers. In fact, just learned this week that we were number one again with our customers in the net promoter score survey across the trade in 2020.
We've got contracts to supply many of our competitors in both the retail and wholesale models. Our customers value the service that we bring through our own brands and also our wholesale brands. We believe we're well-positioned to gain share in the U.K. market when it reopens. I think I've got all your questions there, Kaumil.
Yeah, you did, and it was probably unfair. It was a lot of questions in one. If I can, so I'm asking just a follow-up on the portfolio. Maybe your best guess, you've announced a series of deals over the last number of months. If you were to maybe give us a best guess of what your portfolio breakdown is likely to look like by the end of the year? Is it still likely to be about two-thirds premium lights, followed by high-end? I don't know how much non-alcohol will be as part of it, but maybe just give some idea of, if we put all of these deals together, how your portfolio may look different as we move forward with the roll-outs of these products in the next 12 months.
Let me try and give you some color there, Kaumil. Obviously, we've been very clear about the objective in our revitalization plan of driving our Above Premium portfolio and our Beyond Beer portfolio. Almost all of the deals we've done come at the Above Premium margin. That was two of the five focus areas in our revitalization plan that we announced in October of 2019. We're going to continue building on that. You could see the results of that in both the third quarter and the fourth quarter with our positive mix, which we generated. We generated another quarter above 200 basis points of positive mix, which is continuing to reflect our growth and performance in Above Premium. Per Nielsen, we actually grew share of Above Premium despite the on-premise challenges, which brands like Blue Moon and Peroni have experienced.
We obviously put out the ambition of getting to $1 billion revenue for our emerging growth division, which is going to require that many of our partnerships that we've just announced, like our ZOA partnership, like Arlo and so on, are successful. They're coming off a standing start of zero because we didn't have them before. I'd also point you to the fact that we actually grew the top line in the very market where concerns have been expressed about our ability to execute. We grew the top line in the fourth quarter despite all these deals that we've done and the challenges that we faced, and we're going to build on that in 2021. There is a lot of excitement from retail and from our distributors with the deals that we've done.
Particularly brands like ZOA and Topo Chico, a lot of excitement, and that will continue to improve our Above Premium mix. Hope that's helpful.
Okay, great. Thank you.
The next question comes from Sean King with UBS. Please go ahead.
Good afternoon. I guess my question is, with hard seltzer becoming a larger portion of the mix and I guess the growth story going forward, can you just discuss, I guess, the gross margin profile of that business for you and how that could change over time?
The hard seltzer has been a very strong growth category. We believe that's going to continue in 2021, and we're excited about our opportunity for hard seltzers. We think we've got one of the strongest portfolios of hard seltzers, with each brand having a very unique perspective on the category. By the time that we have all four of our hard seltzers in markets this year, we think it's differentiated, provides a differentiated offering for our consumers, and I think we're well-placed. Seltzers do operate at the upper end of the above-premium price point, and therefore, operate at the upper end of our margin structure. We don't give it out publicly, specifically, but you can be assured that it's high.
Great. Thank you very much.
The next question comes from Chris Carey with Wells Fargo. Please go ahead.
Hi, good morning. I guess just conceptually, trying to understand how you think about the off-premise channel in 2020. Certainly, there was more strength there as there was a channel shift, I guess I'm also hearing that it sounds like you think there's some sustainability to the growth that you've seen there, and certainly you're going to be investing behind that. I guess underlying the question is, I'm trying to understand what you think might be sustainable coming out of this year and certainly in 2021 if the recovery of the on-premise is a bit slower than what might happen. Just trying to understand sensitivities around what's needed to acquire in the off-premise in order to get you to this top-line growth algorithm. Thanks.
Well, we certainly believe that there will be some sustainability to the off-premise demand. I think consumers have learned new behaviors and new occasions have been created. I think there will be some sustainability of it. We don't believe that it's going to continue to grow at the same level, but there certainly will be sustainability to the underlying trend. There is a very large pent-up demand for on-premise from consumers. I think when the on-premise is more readily open, I think we'll see a strong pent-up demand from consumers. The other behavioral change which we've obviously experienced in 2020 is the growth of e-commerce sales. There are many consumers of alcoholic beverages that didn't realize you could buy beer online, and they do now.
We've seen 230% increase in our online sales, and I think that that trend will stay and that's why we're making investments in our e-commerce capabilities. Thanks, Chris.
The next question comes from Bonnie Herzog with Goldman Sachs. Please go ahead.
Thank you. Hi, everyone. I guess I'd like to hear a little bit more color on how you're thinking about balancing your investment needs between your recent innovations and some of the launches with marketing supports behind your core brands. I guess what I'm still maybe struggling with is how you plan to stabilize or maybe even improve your core business if a lot of your stepped-up investment spend and attention is going to be focused behind all these new initiatives. Then Gavin, maybe you could help frame for us some of your targets or missions for your core business, similar to how you're framing the opportunities and some of the goals you've put out there for all these new and exciting brands and partnerships. I think that would be helpful. Thank you.
Thanks, Bonnie. Look, our revitalization plan, which we announced in October 2019, required us to do both. That's our plan, and it remains our plan. Investing behind our iconic core brands and investing behind above premiums and investing behind our Beyond Beer portfolio is the plan. Tracey mentioned in the guidance, approximately flat EBITDA. That's really the revitalization planning coming to life with our big investments behind both Miller Lite and Coors Light, which we'll see more spend this year. We'll put more spend behind our above-premium portfolio with Blue Moon LightSky and Blue Moon. We'll put more money behind seltzers. We will have four seltzers in market this year. We only had two. One was launched in April, the other one was launched in September. This year, we're going to have four as we strive to get to the 10% market share.
We're going to be investing behind our new ventures like ZOA and La Colombe and also our Yuengling joint venture. In terms of actual performance, Bonnie, Coors Light and Miller Lite have performed really well in spite of the headwinds which they've got. We've made numerous pivots from a marketing point of view to meet the changed circumstances. Where necessary, we put marketing money behind it, in the fourth quarter, for example. From a media perspective, we shifted our media to places like social, gaming, podcasts, online video, and so on. From a creative point of view, we've created new creative, which has resonated with consumers. We've actually created 40 pieces of new creative since March. A lot of that has been behind Miller Lite and Coors Light.
Just some examples of that would be our Farewell Work Holiday party for Miller Lite, and then our campaign to get Tom Flores into the Pro Football Hall of Fame with Coors Light. You can see the benefits of that with both of those brands. I mean, Coors Light drove significant share growth in the first half of the year. It did slow down in the third quarter because of the inventory supply constraints which we had, which we're now through because our inventory is higher than it was at the same time last year for Coors Light. In December, we saw the best industry share trend we've seen in years outside of the pantry loading for March for Coors Light. It's the Made to Chill campaign platform is working, and we're excited about it. Miller Lite's share trends have been strong.
Obviously, as I said in my opening remarks, we're not satisfied with the performance until, and we intend to put more money behind it. That's a very long-winded way of saying, it's both. It's not either/or. We're not sacrificing one for the other. We believe that we can do more than one thing at one time, and we believe that we've demonstrated it because the market where we've had the most concern about our execution capability is the U.S., and we've grown our top line. We grew our margin. Strong pricing, strong brand mix. This is the Revitalization Plan in action. It's not a series of one-offs. It's all part of a single strategy, and that's the Revitalization Plan, which is specifically aimed to drive top-line growth. We believe we will do that in 2021.
Okay. Thank you so much for all that. It was helpful. I appreciate it.
Bonnie?
The next question comes from Rob Ottenstein with Evercore ISI. Please go ahead.
Great. Thank you very much, Gavin. Obviously a lot of tremendous initiatives that you have for 2021. Clearly, you're very optimistic in terms of the firm's trajectory. Obviously, there's a bit of a disconnect in terms of how the public markets are viewing your outlook and prospects. Just wondering what your thoughts are in terms of share buybacks at some point. I know you talk about very significant de-leveraging, bringing the dividend back. How does the potential for share buybacks play into this if this disconnect continues? Also maybe, Tracey, remind us about your cash tax rate, which I believe remains very advantaged, kind of roughly what that level is and how long it stays at that depressed or lower level. Thank you very much.
Thanks, Rob. Good morning. Look, as I said earlier on, we announced our revitalization plan in 2019, and we're executing that revitalization plan. I'm very pleased with the platform that we laid in 2020, and I think it gives us a really good springboard for 2021, which is why we felt confident with the guidance that we've put out there. I understand there's skepticism around our ability to execute. We wouldn't be putting guidance out if we didn't believe that we would achieve it. Tracey was very clear about our leverage goals. I'll let you comment on our capital allocation, Trace.
Yeah.
Question that Rob had.
Hi, Rob. We are having ongoing conversations around our capital allocation with our board. Our focus has been on improving our leverage ratio because of our commitment to maintain our investment grade rating, as well as investing in our business to deliver the revitalization plan, which is around top line growth. As always we'd look at our capital allocation baskets, have a look at what gives us the highest or what gives our shareholders the highest rates of return. We ran everything through our pack model to make those decisions. Our intention is to continue to pay down our debt to improve our leverage ratio. As I said in the prepared remarks, it is important for us, and we said this on the Q3 call as well, as soon as appropriate to reinstate the dividend.
As I said in the guidance, that's something that we do anticipate our board will be in a position to reinstate in the back half of this year. Just in terms of the tax cash question. Yes, we do still get a benefit from the step-up as we did with the MillerCoors acquisition. That does still run for another few years, Rob.
Can you remind us what exactly that rate, what you expect, what that rate was in 2020 and what you expect it to be in 2021?
Yeah. We don't actually give that guidance, and we didn't other than giving the guidance that we've given you now on the consolidated effective tax rate for 2021 being between 20% and 23%.
Isn't the cash tax rate half that?
Yeah.
Yeah.
That's work in progress, but it does reduce the tax rates pretty significantly, Rob.
From a cash point of view. Okay. All right. Thank you very much.
The next question comes from Bryan Spillane with BOA. Please go ahead.
Hey, good morning, everyone. Just maybe a follow-up question on cash flow. I don't think I saw it, but Tracey, could you help us a little bit with what you're expecting for capital spending for this year, and also, maybe tied to that, how we should think about free cash flow conversion in 2021? Are there any sort of big moving parts that we should consider in terms of free cash flow? Again, some help with CapEx would be helpful as well.
Bryan, we looked at our guidance metrics for this year to really align with our strategy around our revitalization plan goals, also looked at metrics which aligns with our commitment to maintain, and over time, improve our investment grade rating. We haven't given CapEx, and we haven't given free cash flow, because we do believe that the target leverage ratio metric is more meaningful and more aligned to our strategy.
We're going to have to put a CapEx estimate into our cash flow statement. I mean, is 2020 a reasonable sort of guide to use? Just any kind of help at all, just to get some sense of what we should be flowing in there.
I would say, the guidance that we gave back in 2020, which we subsequently withdrew, would be the sort of range of CapEx that you'd expect. There is nothing significant that we've got planned at this stage.
Okay, great. Thank you.
The next question comes from Laurent Grandet with Guggenheim. Please go ahead.
Good morning, everyone, and thanks for squeezing me in. Got a question regarding the Beyond Beer. Many on that front. There is almost not a week without a new product showing up. Key question from investors is about your ability to prioritize and not to disrupt your core business. Could you please give us maybe some element of comfort on that front in term of execution? Secondly, you mentioned you should reach about $1 billion in your sales by 2023, and that doesn't include hard seltzers. Could you please help us frame how you get there? Because it's kind of three years to get to $1 billion from almost zero. That would be super helpful. Thank you very much.
Thanks, Laurent. Look, couple of things in there. I've been pretty consistent about one thing, right? Is our revitalization plan requires us to do more than one thing at a time. It does both. I think our fourth quarter is a fine example of that. We grew our top line in the U.S., we grew our net sales revenue per hectoliter meaningfully. We had positive brand mix, and we demonstrated that we could deal with complexity. I mean, the structure that we've put in place in our company was designed to deal with complexity. We've got a team that focuses on the core brands and very pleased with what they've done with Coors Light and Miller Lite and our other legacy iconic brands. We've got a team that focuses on Beyond Beer that's executing against that.
It's exactly as we laid out the revitalization plan, and we're demonstrating that we can do that in our largest market. In terms of the billion-dollar revenue ambition for emerging growth, it does encompass a number of areas in the emerging growth. We're not coming from a standing start. We do have all our craft companies in that area. We have our non-alc division, we have our cannabis, THC-infused beverages, RTDs, and our CBD business. It also includes all of our Latin America exports and license markets. In order to get to $1 billion, we're gonna have to grow our top line for the emerging growth division by 50%, to give you some idea of the base that we're coming off. Hopefully that's helpful, Laurent.
Yeah, thank you very much. Good luck, guys. Thank you.
The next question comes from Steve Powers with Deutsche Bank. Please go ahead.
Hey, thanks, and good morning. Yeah, just one more question for me on the Beyond Beer topic, Gavin. I mean, you've highlighted a lot in this call, but I guess I'm hoping you could talk a little bit more about the economics of that Beyond Beer push, whether in terms of penny profit or margins, especially when it comes to the distribution deals that you've been tacking on. You mentioned ZOA a couple of times with enthusiasm, for example. I'm just curious if you can clarify how those relationships are structured from the perspective of the Molson Coors shareholder. I mean, if ZOA truly is a game changer in the energy market, that would be great. I guess how are those profits to be split between you, your distribution partners, and the brand owner itself? Thanks.
Thanks, Steve. Look, I mean, each deal that we've done has been done differently and structured differently. I think it's safe to say that they all operate in the above premium space. From a revenue point of view, some of these deals we've taken equity stakes in, some bigger than others. We wouldn't be going into this if we weren't intending to make money on these deals. We've got such a route to market advantage from our perspective. The biggest channel for energy drinks, to pick on ZOA, is C- store. Nobody serves the C- store channel better than beer distributors. We think we've got some real structural advantages there. We're not going to break down each and every deal that we've done.
Rest assured that our intention is that these are above-premium products and that we will make money on them, and that we will have equity in most of the deals that we've done.
Okay. Thank you very much.
The next question comes from Lauren Lieberman with Barclays. Please go ahead.
Hi, thanks. Good morning. I think to some degree you've kind of covered this. My question was really just thinking about the EBITDA outlook for 2021. If I just think about it in terms of rate of growth, flat versus 2020, it's actually better than I thought would be the case. Obviously, in dollar terms, the base is lower because of the fourth quarter. Just thinking about that in the context of the timing with which you'll be kind of pulsing marketing spending back in. I'm not asking for quarterly guidance, it's more of a conceptual conversation I'd like to have. Is it kind of investing ahead of recovery? Is it investing concurrent with? Just how you're thinking about marketing versus revenue growth and supporting some of the newer initiatives could be some helpful and interesting perspective.
Thanks, Lauren. Let me try and give you some color, without giving you our quarterly budgets. I think you can expect that the second quarter would be a meaningful increase in marketing and sales spend because there was such a dislocation in the second quarter, last year, where so much just didn't happen, and we were pivoting and still trying to figure out what this pandemic meant. I think it's safe to say that our marketing spend in Q2 will be quite a lot higher than it was in Q2 of last year. Beyond that, we'll be investing behind our innovations, and again, behind Miller Lite and Coors Light at the appropriate times of the year. I think the biggest piece of guidance I can give you is Q2 will be a meaningful increase. Thanks, Lauren.
This concludes our question and answer session. I would now like to turn the conference back over to Greg Tierney for any closing remarks.
Thank you, operator. Appreciate everybody joining us today, and I know there may be additional questions we weren't able to answer. Please follow with me and our IR team with any of those questions, and we look forward to talking with many of you as the year unfolds. With that, thanks, everybody, and for participating in this call, and talk to you all soon. Thank you.
This conference is now concluded. Thank you for attending today's presentation.