Peter S. Swinburn - Chief Executive Officer, President and Director Gavin Hattersley - Global Chief Financial Officer Stewart F. Glendinning - Chief Executive Officer Andrew T. Molson - Chairman, Member of Nominating Committee and Member of Class A-M Nominating Subcommittee Mark Hunter - Chief Executive Officer of Molson Coors Europe and President of Molson Coors Europe Krishnan Anand - Chief Executive Officer of Molson Coors International and President of Molson Coors International Tom Long - Chief Executive Officer

Dara W. Mohsenian - Morgan Stanley, Research Division Kaumil S. Gajrawala - UBS Investment Bank, Research Division Judy E. Hong - Goldman Sachs Group Inc., Research Division Ian Shackleton - Nomura Securities Co. Ltd., Research Division Priya Ohri-Gupta - Barclays Capital, Research Division Vivien Azer - Citigroup Inc, Research Division Mark D. Swartzberg - Stifel, Nicolaus & Co., Inc., Research Division Hiroshi Saji - Mizuho Securities Co., Ltd., Research Division Brett Cooper - Consumer Edge Research, LLC Bryan D. Spillane - BofA Merrill Lynch, Research Division Robert E. Ottenstein - ISI Group Inc., Research Division

Welcome to the Molson Coors Brewing Company's First Quarter 2013 Earnings Conference Call. Before we begin, I will paraphrase the company's Safe Harbor language. Some of the discussion today may include forward-looking statements. Actual results could differ materially from what the company projects today, so please refer to its most recent 10-K and 10-Q filings for a more complete description of factors that could affect these projections. The company does not undertake to publicly update forward-looking statements whether as a result of new information, future events or otherwise. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. Regarding any non-U.S. GAAP measures that may be discussed during the call and from time-to-time by the company's executives in discussing the company's performance, please visit the company's website, www.molsoncoors.com, and click on the Financial Reporting tab of the Investor Relations page for a reconciliation of these measures to the nearest U.S. GAAP results. Also, unless otherwise indicated, all financial results that the company discusses are versus the comparable prior year period and in U.S. dollars. Now I would like to turn the call over to Peter Swinburn, President and CEO of Molson Coors.

Thank you, Candice. Hello, and welcome, everybody, to the Molson Coors earnings call. Thank you for joining us today. With me on the call this morning are Gavin Hattersley, Molson Coors's CFO; Tom Long, CEO of MillerCoors; Stewart Glendinning, CEO of Molson Coors Canada; Mark Hunter, CEO of Molson Coors Europe; Kandy Anand, CEO of Molson Coors International; Sam Walker, Molson Coors's Chief Legal and People Officer; Zahir Ibrahim, Molson Coors's Controller; and Dave Dunnewald, Molson Coors's VP of Investor Relations. On the earnings call today, Gavin and I will take you through highlights of our first quarter 2013 results for Molson Coors Brewing Company, along with some perspective of the remainder of 2013. Our first quarter numbers include the effect of the Central Europe acquisition that we completed in the middle of last year. Because of this addition, we recorded volume and sales increases but a posttax income decline. The decline was driven by 3 months in Central Europe debt-servicing costs being allocated against our lowest earnings quarter of the year in that region, along with foreign exchange losses and increased marketing spend across the rest of the business. As reported by others, weather affected volumes in all of our markets. Against this backdrop, we grew share in Europe, saw relatively flat share in the U.S. and lost share in Canada. Our innovation programs got off to a fast start and reflects a pipeline that is both full and exciting. In the U.S., our portfolio transformation strategy delivered growth in domestic net revenue per hectoliter of 4%, the largest quarterly percentage increase in 4 years. Also, Nielsen results indicate that we gained share in each key segment in the first quarter, and we achieved initial success with the national brand launches of Redd's Apple Ale and Third Shift Amber…

Thanks, Peter, and hello, everybody. Molson Coors's first quarter underlying aftertax earnings decreased 36% to $54.6 million or $0.30 per share. This decline was driven by the inclusion of operating losses in 3 months of debt service this year from Central Europe acquisition in the lowest sales and profit quarter of the year. Results a year ago did not include these impacts. This year, negative foreign exchange of $6 million on a pretax basis also contributed to lower results, along with weak economic conditions and challenging weather. Worldwide beer volume for Molson Coors increased more than 20% due to the addition of Central Europe results. As we have in previous quarters, I will provide an overview of our results, with MillerCoors presented as if it were proportionately consolidated. This is a non-GAAP approach, but we believe it provides a useful view of some key performance metrics for our business. On this basis, total company net sales increased 10.4% in the first quarter, driven by the inclusion of the Central Europe business along with growth in the United States. Despite pricing growth across all markets, net sales on a per hectoliter basis decreased 6.8% in the quarter due to the addition of Central Europe sales and a lower net sales per hectoliter rate. Cost of goods sold per hectoliter decreased 4.5% due to the addition of Central Europe, which has a lower cost structure than our other businesses, partially offset by higher cost of goods sold per hectoliter in Canada. Total company gross margin was 36.4%, 150 basis points lower than a year ago, primarily due to higher cost of sales in Canada, including a higher brand investments captured in this line. Marketing, general and administrative expenses increased 10.2% due to the addition of Central Europe results and investments for national…

Thanks, Gavin. In the U.S., our share performance was improved across key segments, and our net revenue per hectoliter growth is the strongest it's been for 4 years. For the third straight year, we're increasing our investment in innovation, and we are focusing that innovation on the biggest, highest-potential opportunities and the most profitable parts of the U.S. beer market. We will see new activity behind Coors Light and Miller Lite. And in Craft, we are planning new line extensions for Leinenkugel's and Blue Moon for summer and the fall. In above-premium, we're building on the initial success of launching Redd's, Third Shift and Batch 19 nationally. In Canada, we look forward to the hockey playoffs in key markets in the weeks ahead, along with full retail activation for the new season this fall. Going forward, we have a strong innovation program following the rollout of Molson Canadian Wheat. This will include the launch of Molson Canadian Cider in select markets this summer and Rickard's Shandy. Along with our innovative Aluminum Pint bottle, we also expect our 2 lead brands in Canada, Coors Light and Molson Canadian, to benefit from further packaging innovation ahead of the summer selling season. In Europe, Romania, Serbia and Hungary are on a firmer foot than just a few months ago, with trade inventories at better levels and the elimination of some low-margin package configurations. Staropramen is growing strongly across our Central Europe markets, and Carling grew volume and share in the U.K. The innovation agenda across Europe is accelerating, with Carling Cider now in market in the U.K. and performing in line with expectations. We are also broadening our Carling Zest portfolio with the launch of a ginger variant, and we are extending our beer mix offerings across Central Europe with the introduction of…

[Operator Instructions] And your first question comes from Dara Mohsenian from Morgan Stanley.

So in Canada, the pricing increase in the quarter was weaker than we've seen in the last couple of years. Can you just give us some detail on what drove that softness and the competitive environment in general in Canada? And also, your expectations as we look out for the balance of the year?

Sure. Dara, it's Stewart Glendinning here. Well, we won't give any forecast, of course, for the balance of the year related to pricing. But if you look back at this past quarter, yes, 1% was not strong pricing. I will say it was positive, which is good news. There were parts of the country that were more aggressive and competitive than others. Certainly, I think, if we looked at the Atlantic region, we saw a lot of promotions there. And particularly in BC, we saw higher levels of promotional volume in that province. Québec saw actually strong pricing, which came on top of the back -- on the back of also increased taxes, and the combination of those things affected volume in the province. Ontario was broadly in line with our average.

Okay. And do you think some of that promotional environment lingers as we look at the balance of the year, or was it more just kind of tactical within Q1, especially given some of the volume weakness in industry?

Well, it's hard to say what will happen in pricing because it is so dynamic and because we don't give any forecast on that. I will say that beer is, against other markets, relatively expensive in Canada, and it is a very competitive market. So we'll see what takes place over the balance of the year.

Okay. And then up in Canada, you've been struggling from a market share standpoint the last couple of years here after really having nice outperformance prior to that. So what do you think has been the main issue from a market share standpoint? And some of this packaging innovation and other focus you mentioned in the balance of the year, does that really help you start to close this market share gap or even start to outperform at some point?

Of course, we are focused on driving the best possible answer for our shareholders, and a big part of that is market share. I think if you look back at the history of what's taken place in -- from a market share perspective, it's been most of the -- gains have come at the -- on the back of gains in wines primarily and also in the smaller brewers, those 2 impacts. Specifically, against the smaller brewers, that pressure has come both on the value end and in domestic above-premium. On the value end, you will have seen a push very hard this year with Keystone into a number of markets, also looking to be very competitive on our existing legacy brands. And I'm pleased to say that in value in this quarter, we saw a gain in share. On the above-premium side, we've been very successful there both in terms of Rickard's, Canadian 67, some of our higher-priced products, along with our craft offerings in Creemore and Granville Island. Again, we have seen those brands growing. But if you look at the shape of our portfolio, we are under-indexed in that above-premium segment and we're under- indexed in value. And so as some of those segments have seen growth, we have lost share. Now if you look at the balance of the year, so what should you expect? First of all, as I mentioned, we are pushing hard in both of the segments we're under-indexed in, and we've seen positive results there. As it relates to the mainstream part of our business, a lot of new innovation coming in the remainder of the year. Molson Canadian Wheat has been released; Cider is going to be in the marketplace; on the above-premium side, Shandy. So there's some news now coming into the market, which I think is going to be helpful for us as we look at the back part of the year.

And your next question comes from Kaumil Gajrawala with UBS.

Yes, if I could follow up on Canada a little bit. It's -- there's been some challenges, but we're still talking about growth rates from a volume perspective in the single digit. Can you give some context on the impact of the deleverage, because the down -- the degree to which profit was down was quite high versus what we saw in terms of volume, and especially, the offset that pricing should support?

Sure.

[indiscernible] just for clarity, there wasn't growth in Canada. There was growth on NSR. The market was down about 0.8% and we were down about 1.4% in volume terms. So Stewart, do you want to pick it up from there?

Yes, certainly. So thanks for clarifying that point. Of course, negative volumes do drive deleverage. And I think if you'd just reflect on our COGS, Kaumil, COGS were up just under 6%. About 1/3 of that was related to deleverage in mix, so giving you a sense of the kind of impact that, that can have on the results.

Okay, about 1/3. And if we were to see -- as we get into the larger quarters, does that 1/3 shrink substantially if we're talking about the same volume numbers?

We're not going to break that down for the rest of the year. We have given you some guidance on what COGS looks like for the rest of the year, which is up mid-single digits. And obviously, each quarter, we'll report out on, specifically, what drove the quarter.

Got it. And then on taxes, if -- I know you still have -- you've given us guidance for this year, but as we could think a little bit long term, obviously, your taxes seem to be -- have been structurally quite low to date. Do they stay there? Do they need to -- or will they creep up to a, just closer to a mid-20s as we go forward?

Yes, I'll pass you on to Gavin for that in a second. But obviously, just to sort of build a little bit on Stewart's answer. Directionally, you're obviously right, because as the volumes increase, the fixed costs remain exactly where they are. So we would expect that to be a lower figure going forward.

Yes, on tax, Kaumil, the 16% to 20% for this year is the guidance that we're holding to. I mean, the first quarter, as I said -- as I think we said in our release, we did have a discrete tax item, which drove a benefit in a very low-profit quarter. So we're sticking to the 16% to 20%. And yes, it's going to take us 3 years for us to get to the 20% to 24% level. So we will come off to 16% to 20% in the years ahead.

And your next question comes from Judy Hong with Goldman Sachs.

I guess I wanted to also just follow on Canada. And just kind of stepping back, this is a market where obviously, from a profitability perspective, you've struggled a bit. And I think you're still committed to growing your core markets in a profitable manner. So to the extent that you can talk about some of the things that you can control more on the cost side, what is the sense of urgency to really get some of those cost savings? And can you maybe talk about some of the opportunities, regardless of really what happens on the volume side?

Yes. So thanks for that, Judy. Look, let's start with the urgency. I mean, there's a high sense of urgency in our business generally to ensure that we are as cost-competitive as possible. I think if you looked at our operating margins relative to those of some of our competitive set, you'll conclude that there are some differences. Some of those differences are driven by the structure of our partner brands. But we are pretty clear that when we look at other areas of our cost structure, that they are driven by choices that we're making. And so we are actively looking at what changes can be made there. Sorry, could you just give me the other part of your question?

I think it's just related to that. I mean, what are some of the things that you can actually -- you've made choices to control? And maybe you can even quantify what you think are the components of your cost structure that you can control, and what are the buckets of those opportunities?

Yes, I mean, I think -- yes, so thank you for that. I think, look at -- broadly speaking, it's going to break down both into COGS and G&A. And you could run some comparisons between us and others and see those gaps. I can't really get into the specific of -- by line item. But broadly, we're focused on the 2 components of G&A and COGS. On the bright side, I mean, I would look at this most recent quarter. And specific to the COGS line item, we fully offset all of the inflationary impacts that we saw in the quarter with ongoing cost savings. So cost savings are an active part of our agenda. And in fact, if you looked at some of our just broad G&A this quarter, it is lower than last year. And that's because we have fewer people. So I don't want to leave you with the impression that nothing's been done. In fact, a number of things have been done. But looking forward, we expect that there's more ground to cover.

Okay. And then just a clarification on the pricing. So in Canada, you said it was up 1% per hectoliter. How much of that was mix versus price, pricing? And then, as you're kind of launching some of these higher-cost packaging, are you not just getting enough maybe mix improvement to kind of offset some of that, some of the higher costs because of the competitive environment? Or -- I guess I'm just wondering because it seems like the mix is a more negative on the cost side, but not necessarily flowing through on the positive to the pricing side.

You got it. Well, I mean, look, first of all, on -- just to address mix. When you look at the mix impacts, there's a couple of things going on. There's brand mix. Depending on the brand, that will influence cost, if it's partner brand or not a partner brand. I think if you looked at some of the higher-priced new product we're putting in, of course, our starting point is to try to ensure that we capitalize on higher-priced, more attractive and premium products to increase our margin on those. As it relates to other mix impacts in the market, an important dynamic to just understand is that broadly, across the market, there is a shift between bottles and -- from bottles to cans, cans being a more expensive packaging mix. And those prices are going to be somewhat managed by the market. Depending on where competition goes, we'll need to be competitive. So if I look back, I can see some periods where you'd like to get more margin on the can, but actually the competitive benchmark that's been set is putting some pressure on that. So a mix. So in some cases, you're getting more for that expensive product, and in some cases, not.

And then my final question, just on the European segment. I'm wondering if you can give us a little bit more color just in terms of the cost savings you're getting, both on the synergy side as well as the savings that you're getting from the restructuring?

We'll bring everyone up to speed a bit more at the analyst conference, Judy. But safe to say, as we said in the script, we're absolutely comfortable with where we are in terms of the synergies that we're driving out compared to the business case that we explained to you when we bought the Central European business. And equally, we're getting all of the cost savings that we expected to get from the restructuring in the U.K. as well.

And your next question comes from Ian Shackleton with Nomura.

Your performance in Europe looks very good compared with some of the other reporting we've seen. Volume's always minus 1% and then up in April, and a very healthy price mix, 5%. I'd like to have a bit more color, particularly on that price mix, how it's been achieved by market? Is it merely price mix, and how does it vary, as I say, across markets?

Mark, do you want to take that?

Sure. I mean, what I'm not going to do is delve into every market, for obvious reasons. But if you look across Europe, on a pan-European basis, pricing's up just under about 5% on a local currency basis. And that's split pretty equally between mix and between price, net price improvements. So we're seeing the right kind of channel and pack improvements, and we're getting headline pricing coming through as well. I think on the volume front, overall industry was down just under a couple of points, a couple of percentage points. The interesting thing is that on our last call, I explained that Romania was probably blurring some of the industry performance because there's been pretty significant growth in that market, all driven in the very low-margin value segment. If you actually strip Romania out of the industry numbers, industry is down about 3% or so. And I think that really kind of emphasizes the strong performance we've seen across the majority of our markets. The U.K. is growing strongly. We've seen record shares in Bulgaria. We were #1 in Croatia. We were #1 in the Czech Republic, where we've recorded our highest-ever off-premise share. And the good news is, in both Romania and Hungary, which have been a bit more challenged, we're pretty confident that we've got those markets stabilized, and we're focusing our investment on higher-margin parts of the market. So really trying to work across each market on a market-by-market basis to give that aggregate improvement that you've seen, but I can't really go into any more detail within each of the markets, for obvious reasons.

And just following up -- I mean, overall -- because I thought you gained share in the region. And I'm just thinking about the markets where that's happened, it sounds like Romania, probably, you didn't, because the growth was large-pack PET. Is that the one that you didn't gain share in or...

Yes, and to be fair, the major markets we did grow share in. So the U.K., Bulgaria, Croatia and then the Czech Republic. In Serbia, Romania and Hungary, we've been working actively to actually get our stock in market, held by the distributors back to what I call more normal levels. That process is pretty much complete now, and we're feeling much more confident about the relationship between our supply and the demand in the marketplace. But we certainly gave up some share in Hungary and Romania, albeit both of those markets are very challenged from a unit margin perspective.

And your next question comes from Priya Ohri-Gupta with Barclays.

I was wondering if you could just provide a little bit more clarity on how we should expect your debt paydown to proceed this year and whether you have an objective for where your leverage should be at year end?

From a debt leverage point of view, let me start with that. I mean, over the next 3 years, we've -- our stated objective is to get our leverage levels back to where they were pre-acquisition of StarBev. So depending on which rating agency you ask, we were either in the mid- to the high-tier levels. So that would be our medium-term or 3-year goal to get to that level by 2015. We have 2 debt coming up -- or 2 items of debt coming up in 2013. One is the euro convertible, which was done at the time of the deal. And that can be put on us by CBC anytime between 14 March, which obviously has passed, and the middle of December, but that will settle this year. And then the other one is the $575 million convertible, which is due in July. We have recently, as you would have seen from our financial filings, put in place a commercial paper program, which we were using to fund those 2 debt payoffs, including the cash resources we've got.

Your next question comes from Vivien Azer with Citi.

My first question has to do with Europe. I'm trying to reconcile 2 comments that you made. I heard you say, I think, that you wanted to invest ahead of growth in that region, but at the same time, target a reduction in your investment spend per hectoliter. Can you help me reconcile those 2 comments, please?

Well I think the comment that Peter made in the script -- this is Kandy. That was on the International business. I think what they're doing on International business is investing in high-growth markets and -- but at the same time because our growth in terms of volume is higher than the growth in our investment, we are decreasing our investment per hectoliter. And that's been consistent over the years, and we intend to continue to do that until we can start contributing to profitability in the medium term.

Yes, just to build on that. I guess, the 2 comments -- I mean, at the macro level, we are investing ahead of the curve. So we're investing in long-term growth, but at the moment, that's costing us money. So we are investing ahead of the curve as far as the businesses concerned. That investment, as it pays off, means that we grow the business. And as the volume grows, then our costs -- our costs reduce because increased margin is spread across the whole system, if that make sense.

No, it definitely does. That's great. In terms of the Canadian market, not to belabor the point, but as I think about some of the industry dynamics and the updated number that you've offered for April, I'm curious if you can kind of tease out what the kind of onetime shock was from a price increase versus a weak consumer versus maybe just volume shifting to other categories as you kind of unpack the components of the overhang on volumes for the industry?

There's a couple of things, I think. I mean, first of all, don't forget that for all of our numbers, with possibly the exception of Romania, which has a different calendar, Easter fell in the first quarter this year as opposed to the second quarter. So our second quarter numbers are affected by the comparison against Easter, that's point 1. I wouldn't personally get wrapped around the axle too much on small details of what happens in the first quarter in a relatively small volume and profit period. I think Stewart outlined the structural issues in Canada which we have to deal. And they are that structurally, the growth areas are above-premium and value. And what we're doing about that is that we've done a lot of work on value. We've had a best-value performance for quite a long time and actually grew market share in value, but we under-indexed. We also under-indexed in above-premium. Again, although we've had a good period in above-premium, we under-indexed. Within that, we're trying to keep our core brands moving forward. Canadian had a relatively good period. We've got a lot of innovation coming through. So what really is what we're doing about it, I think Stewart was pushing into, and what we're doing about it is we're going to continue to put pressure on that value segment so that we get closer to our fair share, but also, in above-premium, develop on the brands that we've already got in terms of Creemore, Granville Islands. But also, if you look at the innovation programs that Stewart talked about with Cider and with Rickard's Shandy coming through Canadian we just launched, we believe we're pushing all the right buttons to make sure that, that structural issue with which we're dealing is being addressed. Very similar to what we're trying to do in the U.S., if you look at it.

And your next question comes from Mark Swartzberg with Stifel, Nicolaus. Mark D. Swartzberg - Stifel, Nicolaus & Co., Inc., Research Division: I guess, Mark, a couple of questions on Central and Eastern Europe. First, on the level of brand spending. Generally, can you speak to where we are in that evolution? Shortly after you purchased StarBev, you spoke about what we've seen, this pickup in spend levels. And it seems to be working out in terms of the share performance. Where are we in that evolution, in your opinion? And can you give us some sense, as you've picked up the rate of spend, how much has been on the trade side of things, and how much has been more on the pull/consumer side of things?

Sure. I don't think we ever said that there was a specific start point and end point in terms of the evolution of spending. We are committed to growing our brand portfolio with a focus on core, core plus, above-premium and innovation. And that's where we are investing. Investment, this year, is up on last year. I don't think we've given specific details on that, and we're clearly phasing that as we work our way through the year. So we're committed to invest more to build the strength of the portfolio. And as you say, that's demonstrating, I think, its value, particularly on major markets where we are seeing our share growth come through. The spend increase is balanced pretty equally between what I describe as direct-to-consumer and consumer-via-customer. And at the moment, the direct-to-consumer spend does take the biggest proportion, and both are growing roughly equally. If anything, there's an emphasis towards direct-to-consumer spend. And that's particularly to support the innovation agenda. As I think Peter and Gavin mentioned earlier, we've got Carling Cider, Carling Zest, Molson Canadian, Carling Lager going to Croatia, [indiscernible] Super Dry, 3 new beer mix flavors, the Franciscan Well acquisition in the Republic of Ireland. So the innovation focus and the above-premium and core plus focus with Staropramen, et cetera is, I think, paying dividends. So we will invest wisely and ensure that, that investment is phased and paced at a level which demonstrates a return. And I think that's what we've managed, certainly, to do as we've got off to a relatively strong start to this year. Mark D. Swartzberg - Stifel, Nicolaus & Co., Inc., Research Division: That's helpful. And I didn't hear any Scotland innovations there, Mark. When's that going to come?

All of the above are relevant for Scotland. Mark D. Swartzberg - Stifel, Nicolaus & Co., Inc., Research Division: Fair enough. And then if I could, you also called out several other countries there in Central Europe as having a better macro picture than you've seen in the past. Can you speak generally to what you're seeing in terms of consumer behavior and how it's unfolding versus what we've seen in the last few years?

Yes, I mean, I think it's fair to say, across the majority of the European markets, GDP estimates, which -- actual GDP numbers through 2012 were anything from flat to minus 2, 2.5 points. They've improved slightly on a 2013 outlook basis, but they're still running kind of flat to negative, albeit a slight improvement. So I'm going to say, I'm certainly bullish from an overall economic perspective and from a consumer demand perspective. And the fact that we've seen industry volume across the markets in aggregate down a couple of points, and as I mentioned earlier, slightly higher than excluding Romania, would suggest that we're going to have to keep a real focus on not only the top line, through pricing and innovation, but continuing to manage our cost base very effectively. And again, as Peter mentioned, the cost-reduction plan in the U.K. is running bang in line with schedule, and we are being very tight with costs across the rest of our business.

And finally, on the U.K., Carling you mentioned is picking up share. You're still getting reasonable price mix growth in that market. Can you speak to what's going on with Carling in the U.K. And give us any sense of any divergence between channels across your portfolio in the U.K., on and off trade share trends?

Yes, I mean, I think -- to cut to the chase on this, our on-premise performance with Carling has been very solid for the last few years. The major volatility we've seen has principally been around the off-premise channel, and I think we were pretty transparent last year when we said we were out of play with one of the majors from a promotional calendar perspective. The good news is that we've started this year, and Carling us in play across all of the major multiple grocers. And we're feeling, I think, as positive as we can about the opportunity for Carling this year to really kind of get back into a growth spurt, particularly on the core Carling brand where we've got new Carling creative platform, which is going to be released relatively soon and on the back of the innovation agenda, Zest was very successful last year. It's continuing to grow, and Carling Cider is now in market, and there'll be a further Carling addition in July of this year with one of our major customers. So probably feeling as optimistic about Carling as we have done for the last couple of years.

Your next question comes from Brett Cooper with Consumer Edge Research.

Just want to circle back on the U.S. The question centers around shelf space. So first of all, can you think about where you guys are able to place Redd's and Third Shift, where that's taking shelf space from? And then just a little bit more broadly, what you're seeing from shelf space in terms of -- is some of the pressure on the mainstream and sub-premiums coming from reductions in shelf space to benefit the high end?

Tom, can I pass it over to you for the detail?

Sure. Redd's is positioned beside Mike's Hard Lemonade. It's price-pointed there. Every now and again, it's put near ciders. We prefer it to be in the FMB section, and it's done quite well there. So that's net new space for us, and that's one of the reasons for the placement, as I mentioned. The premium light space is generally not challenged too much. It's actually the economy space that's been challenged in shelf sets by all the above-premiums.

And your next question comes from Bryan Spillane with Bank of America Merrill Lynch.

Just 2 questions. One, because I may have missed this, just had you updated at all your outlook for capital spending and free cash flows here?

Yes, we did. Gavin can give you that now.

Bryan, we just reaffirmed what we said in the first quarter call where 2013 free cash flow will be -- underlying basis will be $700 million, plus or minus 10%. And our capital line will be $330 million, which is higher than last year, obviously, because of the addition of our Central Europe business. But both of those are unchanged.

And then I guess just more broadly, Peter, if you could give us a little bit of perspective on -- it was about 1 year ago where you articulated really the driver, the need to begin to drive more innovation and basically start to drive more consistent sales growth. And I think in this quarter, you certainly -- it looks like you gained share in Europe. And the mix is -- you've seen some evidence of the mix improvement in the U.S. So I think there's a bit of attention in the market right now about whether going forward, the market wants to see Molson Coors sort of generate a lot more cost savings and maybe there's less of a focus on the sales growth, but on the other hand, you've got a strategy where you really -- I think you've articulated, you really need to start driving the sales growth in order to drive the bottom line. So can you give a little perspective on kind of where you feel today about some of that investment, is it beginning to -- you're beginning to feel comfortable that it's beginning to show up in the results, first? And then second, is it possible to have a model where you're focused on cost, but also driving the top line of the same time?

Let me take the second part, first, Bryan. The answer to that is absolutely yes, it has to be. And we continue to do that. And I think Stewart outlined earlier with confidence, and we'll talk more in the investor meeting, but we are confident that -- on the cost saving line. So put that to one side, let's start off with the facts, okay, and let's just look at what we talked about this quarter. If you try and segment it, without going into any more detail, Europe, I think, anyone would accept as a very strong performance. In the U.S., I would argue the underlying fundamentals are very strong. We've got NSR growth of 4%. Our share performance is the best that we've seen probably for about 4 years. And we started off with a very strong innovation program with the outline of the strong innovation program to come. International, we've laid out over the years. We've told you exactly where we're going to get to, and we're bang in line on that program. We're not happy with Canada at the moment. There's some structural reasons for that position, but they're just excuses. We told you where the -- where we believe the weaknesses are and what we're doing to address them. We feel good about the movement we're making on value. We've got more work to do on above-premium, but we've got a strong innovation program coming out and our core brands are performing relatively well. So when you look forward, the real question, I think, is what is going to happen at the macro level with industry demand? And the short answer to that is we don't know the absolute difference between how much of our volume's been affected by weather and how much has been affected by consumer indifference. We believe -- we don't know, we believe a significant amount is down to the weather. And as that improves, then we think we're extremely well positioned to go forward in most of our markets on the basis of that which I've outlined. And Canada is still a work in progress, but we're very confident that we know where we need to look. So really, the best as I can, that would be my summary, Bryan.

And just fair to say, over the last years, you've -- again, going back to the point at your Investor Day, I guess, last year in March where you articulated sort of the strategy in terms of spending -- invest more in the top line. Despite the weather being bad, despite a strike in Canada and the things you really can't control, it hasn't really affected your rate of investment, right? You've invested, and if the macro gets better, you're there in a position to kind of pick that up as the macro gets better. You haven't -- it hasn't really affected your approach to that investment?

No, it hasn't. And again, I think you've seen the numbers we've talked about. I mean, we had a high level of investment in the U.S. just before Christmas. We followed that on with a high-level investment in our innovation program. We talked about increased marketing spend in Canada and in Europe. We've talked about investments in our innovation program going forward. So I think the facts are there for you to see that. And again, I'd come back to the point that, if you look at where we were structurally when we talked to you back in March and you look at the business structurally now, I would -- I believe we're in a stronger position. It has -- the first quarter was affected by consumer demand. You and I can have a view on how much of that is weather and how much is fundamental consumer demand, but we believe that the fundamentals of the business are strong, as I've outlined.

[Operator Instructions] Your next question comes from Robert Ottenstein with ISI.

I was wondering, now that you've had StarBev for a little while, I'm wondering if you can just kind of reflect on where there's been positive surprises and negative surprises as you look at things? And second, the Staropramen just is a wonderful brand, it's a great beer. Any thoughts in terms of bringing that to the U.S.? You talked about being under-indexed at the high end. That could be a really nice superpremium import.

Robert, I'll take the high-level answer to that, and I'll let Mark fill in on some of the others. And then Kandy can talk about Staropramen in the U.S. So the high level, really, in terms of the business case and the due diligence that we did on Central Europe, we've had no nasty surprises. And if anything, they've been positive. The only issue that's affected the overall performance of the business versus the business case is what Mark referred to earlier. We had various projections in terms of GDP for the various countries. And by and large, those projections, we're seeing, in hindsight, they did seem to be optimistic. But over and above that, the absolute structure in terms of what we thought we were getting, where we thought we might have issues, specifically Romania and Hungary, the opportunities in terms of Staropramen, innovation, putting -- premiumizing the business, they've all really come to fruition. So we're very pleased and satisfied that what we expected to happen has really happened. Mark, any builds on that?

Yes, probably just 2 or 3 things to touch on. You asked a question about positives and negatives. I have to say, the list of negatives would be very short. Probably the Romanian and Hungarian market are more challenging than we anticipated, but we've been dealing with that. We've made some changes to our leadership teams there, and we've got a very clear plan of action, which we're now executing. If you leave that to one side, I think on the positives, we're very pleased with the talent accretion that we've seen on our business. Some very, very capable leaders who are adding a lot of value. And there's a real focus within the business from what I would describe as an operational excellence perspective, both in supply chain, and we're now taking the best of the StarBev systems, integrating that with the Molson Coors legacy systems to create something, which is even more powerful. And that's already starting to be rolled across the supply chain network to really drive further efficiency and effectiveness. And in the area of commercial, the commercial excellence program that exists is being, to use our internal language, lifted and shifted back into other parts of the Molson Coors organization, particularly the U.K. and in Canada. So a real focus on trying to drive further executional effectiveness right at the front end of our business. The one area where I think we are adding value within the StarBev business, in particular, is really just trying to give the business more of a medium to long-term focus to really balance that short-term operational excellence orientation. So we're, I think, in a great place actually in terms of blending the kind of longer-term perspective, the brand and innovation focus that we have more broadly across Molson Coors with the real kind of operational excellence focus that exists within the StarBev business. And I have to say, having been in the business now for 10 months, I feel very good about what we've acquired and what we're creating here. With regard to your question on the Staropramen, that's a slightly complicated because of the existing MillerCoors relationship and an existing distributor relationship that's been in place for Staropramen in the U.S. But we are -- we agree with your sentiment on the brand, and we're working our way through how we could activate that. And Peter, I don't know whether you want to comment on that further?

Yes, thanks, Mark. Kandy?

Robert, first, we are really pleased that you like Staropramen. We think it's a fabulous beer, too. Certainly, my favorite these days. As Mark mentioned, the reason we have not moved Staropramen on to our MillerCoors system is because of an existence of a longer-term importer contract that we have with an importer here in the U.S. So we've agreed with MillerCoors to continue to build this brand, at least, during the remaining term of this longer-term contract. And we've just started working now with this importer to really build the brand step-by-step and make it available in the right way, in the right markets, in the right bars. It's going to be -- it's like a slow-burn craft brand, but we will build it with this importer as part of our overall export growth business for Staropramen.

And we have no further questions at this time.

Okay. Well, thank you, Candice. And thank you, everybody, for joining us today and for the questions. And we look forward to speaking to you at our analyst conference in New York in June. Thank you. Goodbye now.

And this concludes today's conference call. You may now disconnect.