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Goodwill and Intangible Assets
 12 Months Ended
Dec. 31, 2021
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Intangible Assets Goodwill and Intangible Assets
 
Americas(1)
EMEA&APAC(1)(2)
Consolidated
Changes in Goodwill(In millions)
Balance as of December 31, 2019$6,146.6 $1,484.8 $7,631.4 
Impairments— (1,484.3)(1,484.3)
Foreign currency translation4.4 (0.5)3.9 
Balance as of December 31, 2020$6,151.0 $— $6,151.0 
Foreign currency translation1.6 — 1.6 
Balance as of December 31, 2021$6,152.6 $— $6,152.6 
(1)    On January 1, 2020, we changed our management structure from four segments and a corporate center to two reportable segments. Under this new structure we have two reporting units, Americas and EMEA&APAC.
(2)     During 2020, we recognized a goodwill impairment charge of $1,484.3 million to the EMEA&APAC reporting unit recorded in special items, net, in the consolidated statements of operations as a result of continued challenges and declines within the European beer industry brought on by the extended impacts of the continued duration of the global coronavirus pandemic and related outlook of recovery. As of the year ended December 31, 2020, the EMEA&APAC reporting unit was fully impaired.
The gross amount of goodwill totaled approximately $8.4 billion as of December 31, 2021. Accumulated impairment losses as of December 31, 2021 totaled $2,217.5 million, and are comprised of impairments taken on both the EMEA&APAC and the Americas reporting units as well as our historic India reporting unit which is classified as held for sale in the consolidated balance sheets as of December 31, 2021.
The following table presents details of our intangible assets, other than goodwill, as of December 31, 2021:
Useful lifeGrossAccumulated
amortization		Net
 (Years)(In millions)
Intangible assets subject to amortization:    
Brands
10 - 50
$5,081.8 $(1,267.1)$3,814.7 
License agreements and distribution rights
15 - 20
206.8 (107.2)99.6 
Other
3 - 40
98.5 (32.0)66.5 
Intangible assets not subject to amortization:    
BrandsIndefinite8,197.9 — 8,197.9 
Distribution networksIndefinite800.5 — 800.5 
OtherIndefinite307.6 — 307.6 
Total $14,693.1 $(1,406.3)$13,286.8 
The following table presents details of our intangible assets, other than goodwill, as of December 31, 2020:
Useful lifeGrossAccumulated
amortization		Net
 (Years)(In millions)
Intangible assets subject to amortization:    
Brands
10 - 50
$5,128.4 $(1,070.6)$4,057.8 
License agreements and distribution rights
15 - 20
206.8 (99.5)107.3 
Other
3 - 40
109.1 (36.4)72.7 
Intangible assets not subject to amortization:    
BrandsIndefinite8,215.7 — 8,215.7 
Distribution networksIndefinite795.0 — 795.0 
OtherIndefinite307.6 — 307.6 
Total $14,762.6 $(1,206.5)$13,556.1 
The changes in the gross carrying amounts of intangible assets from December 31, 2020 to December 31, 2021 are primarily due to the impact of foreign exchange rates, as a significant amount of intangible assets are denominated in foreign currencies.
Based on foreign exchange rates as of December 31, 2021, the estimated future amortization expense of intangible assets is as follows:
YearAmount
 (In millions)
2022$211.1 
2023$210.1 
2024$208.8 
2025$208.7 
2026$190.2 
Amortization expense of intangible assets was $218.0 million, $220.0 million, and $221.2 million for the years ended December 31, 2021, December 31, 2020 and December 31, 2019, respectively. This expense is primarily presented within marketing, general and administrative expenses in our consolidated statements of operations.
Annual 2021 Impairment Assessment
We completed our required annual goodwill and indefinite-lived intangible asset impairment testing as of October 1, 2021, the first day of our fourth quarter, and concluded that the fair value of the Americas reporting unit was determined to be in excess of its carrying amount and no goodwill impairment charge was required. While the Americas reporting unit did not have an impairment of goodwill, it is considered to be at risk for future impairments as further discussed below.
We also evaluated the indefinite-lived and definite-lived intangible assets within our Americas and EMEA&APAC reporting unit, and concluded no impairments were required for our indefinite-lived and no material impairments were required for our definite-lived intangible assets.
The fair value of the Americas reporting unit was estimated at approximately 6% in excess of carrying amount, as of the October 1, 2021 testing date, and therefore the reporting unit is considered to be at risk of future impairment. The fair value of the Americas reporting unit in the current year is still largely impacted by the continued perceived risk of realizing management's revitalization efforts and the ongoing impacts from the coronavirus pandemic. The fair value as of the 2021 test was further impacted by assumptions related to increased cost inflation pressures in the medium term. Additionally, an increase to the discount rate as a result of the recent interest rate environment adversely affected the results of our impairment testing. Specifically, the discount rate used in developing our annual fair value estimates for the Americas reporting unit in the current year was 8.25% based on market-specific factors, as compared to 8.00% used as of the October 1, 2020 annual testing date. In the Americas segment, we continue to build on the strength of our iconic core brands, grow our above premium portfolio, and expand beyond the beer aisle. While the preliminary results of executing on these strategies are promising, including the increasing proportion of our above premium portfolio in the current year, the growth targets included in management’s forecasted future cash flows are inherently at risk given that the strategies are still in progress. Further, the uncertainty around the ongoing impacts of the coronavirus pandemic including governmental or societal impositions on bars and restaurants and restrictions on public gatherings that limit many on-premise locations to operate at full capacity if at all have negatively impacted the forecasted future cash flows of the reporting unit. Lastly, cost inflation for certain inputs could put pressure on achieving key margin and cash flow projections into the future.
As of the October 1, 2021 testing date, the fair value of our Americas reporting unit was determined to be in excess of its carrying value, although considered to be at risk of future impairment. The fair value determinations are sensitive to further unfavorable changes in forecasted cash flows, macroeconomic conditions, market multiples or discount rates that could negatively impact future analyses, including the ongoing impacts of the coronavirus pandemic and cost inflation on our reporting units. The key assumptions used to derive the estimated fair values of our reporting units represent Level 3 measurements.
Indefinite-Lived Intangible Assets
The fair value of the indefinite-lived Miller brands in the U.S., Coors brands in the Americas and Carling brand in the U.K. are all sufficiently in excess of their respective carrying values as of the annual testing date.
The fair value of the Staropramen brand increased versus the prior year and is sufficiently in excess of its carrying value as of the annual testing date. The increase in the fair value of the Staropramen brand was a result of the progressive reopening throughout Europe, but more impactfully Western Europe, during the year and the related improvement to expected future cash flows based on our long-range plan for this brand.
We utilized Level 3 fair value measurements in our impairment analysis of certain indefinite-lived intangible brand assets, including the Coors and Miller brands in the Americas and the Staropramen and Carling brands in EMEA&APAC. An excess earnings approach is used to determine the fair values of these assets as of the testing date. The future cash flows used in the analysis are based on internal cash flow projections based on our long range plans and include significant assumptions by management as noted below. Separately, we performed a qualitative assessment of our water rights indefinite-lived intangible assets in the U.S. to determine whether it was more likely than not that the fair values of these assets were greater than their respective carrying amounts. Based on this qualitative assessment, we determined that a full quantitative analysis was not necessary.
Key Assumptions
As of the date of our annual impairment test, performed as of October 1, 2021, the Americas reporting unit goodwill balance is at risk of future impairment in the event of significant unfavorable changes in the forecasted cash flows (including company-specific risks like the performance of our above-premium and beyond the beer aisle transformation efforts and overall market performance of new innovations like hard seltzers, along with macro-economic risks like the continued prolonged weakening of economic conditions related to the coronavirus pandemic as well as cost inflation, or significant unfavorable changes in tax rates, environmental or other regulations, including interpretations thereof), terminal growth rates, market multiples and/or weighted-average cost of capital utilized in the discounted cash flow analysis. For testing purposes of our reporting units, management's best estimates of the expected future results are the primary driver in determining the fair value. Current projections used for our Americas reporting unit testing reflect growth assumptions associated with our revitalization plan to build on the strength of our iconic core brands, aggressively grow our above premium portfolio, expand beyond the beer aisle, invest in our capabilities and support our people and our communities all of which are intended to benefit the projected cash flows of the business. These cash flow assumptions are tempered somewhat by the impacts the coronavirus pandemic has had on our overall business and specifically our more profitable on-premise business.
Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions and factors. As a result, there can be no assurance that the estimates and assumptions made for purposes of the goodwill and indefinite-lived intangible impairment tests will prove to be an accurate prediction of the future. Examples of events or circumstances that could reasonably be expected to negatively affect the underlying key assumptions and ultimately impact the estimated fair value of our reporting units and indefinite-lived intangible assets may include such items as: (i) a decrease in expected future cash flows, specifically, an inability to execute on our strategic initiatives or increase in costs that could significantly impact our immediate and long-range results, a prolonged weakness in consumer demand or other competitive pressures adversely affecting our long-term volume trends, a continuation of the trend away from core brands in certain of our markets, especially in markets where our core brands represent a significant portion of the market, unfavorable working capital changes and an inability to successfully achieve our cost savings targets, (ii) adverse changes in macroeconomic conditions or an economic recovery that significantly differs from our assumptions in timing and/or degree (such as a global pandemic or recession), (iii) significant unfavorable changes in tax rates such as increased corporate income tax rates (iv) volatility in the equity and debt markets or other country specific factors which could result in a higher weighted-average cost of capital, (v) sensitivity to market multiples; and (vi) regulation limiting or banning the manufacturing, distribution or sale of alcoholic beverages.
Based on known facts and circumstances, we evaluate and consider recent events and uncertain items, as well as related potential implications, as part of our annual assessment and incorporate into the analyses as appropriate. These facts and circumstances are subject to change and may impact future analyses. For example, we continue to monitor the challenges within the beer industry for further weakening or additional systemic structural declines, as well as for adverse changes in macroeconomic conditions such as the coronavirus pandemic and cost inflation that could significantly impact our immediate and long-range results and could lead to a material impairment. Additionally, we are monitoring the impacts that the coronavirus pandemic and cost inflation have on the market inputs used in calculating our discount rates, including risk-free rates, equity premiums and our cost of debt, which could result in a meaningful change to our weighted-average cost of capital calculation, as well as the market multiples used in our impairment assessment. Furthermore, increased volatility in the equity and debt markets or other country specific factors, including, but not limited to, extended or future government intervention in response to the pandemic, could also result in a meaningful change to our weighted-average cost of capital calculation and other inputs used in our impairment assessment. Separately, the Ontario government in Canada adopted a bill that, if enacted, could adversely impact the existing terms of the beer distribution and retail systems in the province, as further described in Note 18, "Commitments and Contingencies".
While historical performance and current expectations have resulted in fair values of our Americas reporting unit and indefinite-lived intangible assets equal to or in excess of carrying values, if our assumptions are not realized, it is possible that an impairment charge may need to be recorded in the future.
Annual 2020 Impairment Assessment
We completed our required annual goodwill and indefinite-lived intangible asset impairment analysis as of October 1, 2020, and concluded there were no impairments of goodwill within our Americas reporting unit but it was considered to be at risk for future impairments. Further, we recognized a goodwill impairment charge of $1,484.3 million to the EMEA&APAC reporting unit, recorded in special items, net, in the consolidated statement of operations. The impairment charge was primarily due to continued challenges and declines within the European beer industry, the largest market of our EMEA&APAC reporting unit, brought on by the extended impacts of the continued duration of the global coronavirus pandemic and related outlook of recovery as well as an increase in the discount rate used for fair value estimation of the reporting unit. As of the year ended December 31, 2020, the EMEA&APAC reporting unit was fully impaired.
In addition, we also evaluated the indefinite-lived and definite-lived intangible assets within our EMEA&APAC reporting unit, prior to recording the goodwill impairment, and concluded that an insignificant impairment was required for a definite-lived intangible asset but no impairments were required for the indefinite-lived intangible assets; however, the Staropramen indefinite-lived intangible asset was considered to be at risk of future impairment as of the year ended December 31, 2020.
Reporting Unit Changes and Interim 2020 Impairment Testing
During 2020, we changed our management structure from a corporate center and four segments to two segments - Americas and EMEA&APAC. As a result of the changes, we re-evaluated our historical reporting unit conclusions and consolidated our previously separate U.S. and Canada reporting units into a single Americas reporting unit effective January 1, 2020. Further, during 2020, we completed an interim impairment assessment for our former U.S. and Canada reporting units as of January 1, 2020 immediately prior to the reporting unit change, as well as an impairment assessment of the combined Americas reporting unit immediately after the change, and determined that no impairments existed. Additionally, as the changes resulted in the combination of our U.S. and Canada reporting units into a single Americas reporting unit, no further reallocation of goodwill was required.
Additionally, as a result of the structural changes discussed above, including the centralization of the brand management and strategy for our Coors brands across the Americas segment, we have aggregated our Coors brand indefinite-lived intangible asset in the U.S. and Coors Light distribution agreement indefinite-lived intangible asset in Canada into a single unit of accounting for the purpose of testing for impairment, effective January 1, 2020. During 2020, we completed an interim impairment assessment for each individual indefinite-lived intangible asset immediately prior to aggregation, and determined that no impairments existed.
Definite-Lived Intangible Assets
Regarding definite-lived intangible assets, we continuously monitor the performance of the underlying assets for potential triggering events suggesting an impairment review should be performed. In 2021, we considered whether any triggering events have occurred related to definite lived intangibles during the current year. It was noted that in the second quarter of 2021, consistent with our revitalization plan, management made the decision to discontinue select economy SKUs and brands. It was determined that although these specific brand family line extensions had been discontinued, the brand family itself was still being used and produced. Additional evaluation was performed on these specific definite-lived brand intangible assets with no triggering events noted at the asset group level and no changes in useful life of the brand intangible assets deemed necessary. In 2020, we recognized impairment losses on some of our definite-lived intangible assets related to certain regional craft breweries in the Americas and EMEA&APAC. Impairment losses on the Grolsch brand and distribution agreement definite-lived intangible assets and the brand intangible asset related to our historical India business were recognized in 2019. See Note 7, "Special Items" for further details on these impairment losses.