Base Currency: Euro, EUR on 25-May-2004 1 EUR = 1.2014 USD 1 EUR = 0.6707 GBP 1 EUR = 1.6466 CAD 1 EUR = 1.7197 AUD 1 EUR = 135.46 JPY 1 EUR = 3.8193 BRL 1 EUR = 34.8286 RUB	Base Currency: US Dollar on 25-May-2004 1 USD = 0.8325 EUR 1 USD = 0.5583 GBP 1 USD = 1.3706 CAD 1 USD = 1.4314 AUD 1 USD = 112.77 JPY 1 USD = 3.179 BRL 1 USD = 28.99 RUB
EUR/USD Chart

Interbrew and Fomento Economico Mexicano SA de CV (FEMSA) announced on May 24 the unwinding of their U.S. and Mexican cross-shareholdings as well as the reassignment of the distribution rights held by the parties' US joint venture to the US subsidiary of the Mexican brewer. Labatt Brewing Company Limited, (“Labatt”), a wholly owned subsidiary of Interbrew, will sell to FEMSA its 30% interest in Femsa Cerveza SA de CV (“CCM”), a subsidiary of FEMSA, for US$1.245 billion in cash. Concurrently, Labatt’s US subsidiary, Labatt USA L.L.C. (“LUSA”) will assign the US distribution rights for CCM brands to Wisdom Imports Sales Company L.L.C. (“Wisdom”), a wholly owned subsidiary of CCM, for the redemption of Wisdom’s 30% interest in LUSA. Upon completion of the transactions, Interbrew will own 100% of LUSA and FEMSA will own 100% of CCM. LUSA will continue to distribute the CCM brands in the United States for a transitional period of four months after closing of the transactions under a temporary exclusive distributor agreement with Wisdom. Following closing, it is expected that LUSA and Beck’s North America will be merged into a single organization. In addition, FEMSA and its affiliates have agreed to withdraw their lawsuit filed March 12, 2004 in New York, which sought a preliminary injunction of certain aspects of Interbrew’s planned combination with Companhia de Bebidas das Américas – AmBev (“AmBev”), and have committed not to bring any litigation under the joint venture documents to oppose the combination of Interbrew and AmBev (“InterbrewAmBev”)...more info

Hong Kong: A small Shandong-based beer maker, Jinan Brewery, said on May 24 it is in talks with international beer makers including Anheuser-Busch over a possible partnership, including a stake sale. Jinan Brewery, told reporters it hoped to team up with foreign firms and has held talks with Budweiser-brewer Anheuser-Busch, the world's largest beer maker. "If the talks proceed, we won't rule out selling all our controlling shares," said the vice mayor of Jinan city, Wang Tianyi. Jinan Brewery has annual production of 200,000 tonnes The city government holds a 50 % stake, also called state-owned shares, in Jinan Brewery. Jinan Brewery, which makes Bao Tu Quan beer in eastern Shandong province, posted a profit of roughly 30 million yuan (US$3.6 million) and sales of 500 million yuan in 2003, the firm said. China which is the biggest beer market in the world by volume, is expected to grow at up to 10 % a year in the next few years. Foreign firms are scrambling to expand their market share in the fast-growing market via acquisitions and partner with Chinese beer makers, according to Reuters. Anheuser-Busch holds a nearly 10 percent stake in China's biggest beer maker Tsingtao Brewery and will boost it to 27% over the next few years. (US$=8.28 yuan)

Australian brewer Lion Nathan Ltd expects its operations in China to be swallowed by one or more of its multinational competitors by early next year. Company’s CEO Gordon Cairns said he thought the big six international brewers in China would consolidate down to two. He conceded Lion Nathan, which told shareholders last week it would struggle to break even in China in 2003-04 on an earnings before interest and tax basis, could not survive there alone, according to Nationwide News. "We are competing against the two biggest brewers in the world," Mr Cairns told Channel 7's Sunday Sunrise program. "We are competing against two Japanese companies, who have different shareholder requirements, we're competing against one of the largest Chinese brewers and there's us. Together those six brewers have got only half the market, so there is going to be a tremendous dogfight. We just don't have the fire power to be able to compete." Mr Cairns said South African Breweries, Anheuser-Busch from the US, Interbrew and Heineken were all possible partners for Lion Nathan. "Everyone is talking to everyone else because they realise the six players have got to consolidate down to about two. So you are going to see aggregation," he said. Lion Nathan's often-criticised Chinese experiment began seven years ago and the company has built new breweries capable of producing international brands such as Becks. China has cost the company roughly $100 million. Asked whether Lion Nathan, as the smallest and arguably weakest of the group of six, would be negotiating from a point of weakness, Mr Cairns said...more info

SABMiller, the world's No.2 brewer, announced on May 24 it has made a formal offer to buy all remaining Harbin Brewery Group Ltd shares it does not already own for $HK3.04 billion ($556.8million) and hired ABN Amro Holding as an adviser. SABMiller, which owns 29.4 % of Harbin Brewery, offered $HK4.30 a share for the remainder of China's oldest brewer, according to Bloomberg. The offer, made in a letter to shareholders, is open until June 21. Harbin Brewery shares, little changed at $HK4.975 in Hong Kong, have traded at more than the offer price since the plan was announced on May 5, on optimism that Anheuser-Busch would make a counter bid. Anheuser-Busch, the world's largest beer maker, last week completed a purchase of a 29 % stake, setting up a possible battle over China's fourth-biggest brewer. Lilian Leung, an analyst at ING Groep, who has a sell recommendation on the stock, said: "SABMiller's offer price is quite close to our previous fair value for the stock. The share price is at a quite high level already." SABMiller said the offer price was 38 times Harbin Brewery's earnings last year and more than four times the brewer's net asset value. Anheuser-Busch and SABMiller may jostle for control to strengthen their foothold in a market Harbin Brewery estimates will grow by 6 per cent a year this decade. China overtook the US two years ago as the world's top brewing nation...more info

German brewery Bitburger has bought out Holsten's holdings in Licher Privatbrauerei and Konig-Brauerei, leaving rival Holsten to focus on its business in northern Germany. Holsten has sold its stakes in two German breweries. The sale is subject to agreement at Holsten's general meeting. Earlier this month Holsten sold its water and soft drinks business when it sold its 65.1% stake in Hansa-Brunnen AG of Rellingen to Lange-HANSA-Holding GmbH of Wohltorf. Holsten was founded on 24 May 1879 and built its brewery on its present site in the town of Altona, which then still belonged to Prussia. Holsten grew rapidly by steadily increasing sales of its beer and also by acquiring other breweries in and around Hamburg.

Malt News

Domestic EU malt business has continued, although slowly. The large brewing groups have not entered the market yet. Prices for 2005 were reported between EUR 258 and EUR 270, delivered breweries in France, Benelux and Germany. Analysts’ estimates are that German brewers covered 40 % of their 2005 demand, U.K. brewers 20 %.

Australia: AUSBULK Limited is looking to build a malthouse in Victoria with a capacity to produce 80,000 tonnes or more of malt. Ballarat appears to be the frontrunner for the plant, although the company says other towns between Horsham and Melbourne are also possibilities, according to Nationwide News. AusBulk already owns three plants at Ballarat through its malting subsidiary, AusMalt. AusMalt chief executive officer Bill Gill said the company had land in an industrial estate in Ballarat to build a new plant if it chose to do so. "But I couldn't say categorically that we will build there," Mr Gill said. "A malt factory has got the life of 50 years. "We need to ensure we have power, water and gas. "And we have to take into consideration environmental issues, such as building near residences." He said what was environmentally acceptable now might be unacceptable in 20 years. AusMalt has embarked on plans to boost capacity at malting plants around Australia since entering the market two years ago with the takeover of Adelaide Malting. The company is capitalising on growth in the export malt market to Asia. It has recently increased capacity at its Cavan site in Adelaide to supply the export and domestic markets. Victoria has been identified by AusMalt for expansion of its operations...more info

Barley News

Main barley exporters

(in '000 tonnes)	1999-2000	2000-2001	2001-2002	2002-2003	2003-2004 (forecast)
European Union	10,100	7,600	3,600	4,800	2,500
feed barley	8,300	6,300	2,500	3,300	1,400
malting barley	1,800	1,300	1,100	1,500	1,100
Ukraine	700	1,200	2,800	2,900	1,400
Russia	100	700	2,700	3,100	2,900
Australia	3,300	3,600	4,400	2,800	4,000
feed barley	1,800	1,900	2,600	1,100	2,500
malting barley	1,400	1,700	1,800	1,700	1,500
Canada	1,700	1,900	1,100	400	1,900
feed barley	500	600	200	0	600
malting barley	1,200	1,300	900	400	1,300
USA	600	1,300	600	600	600
feed barley	400	1,100	400	400	400
malting barley	200	200	200	200	200

Source: C.I.C.

Ukraine: In March 2004 Ukraine exported about 104 thousand tonnes of barley that is 62% more than in February 2004. Meanwhile the average contract price increased from 139.9 US$/t in February to 145.6 US$/t in March, according to Ukrainian Gosscomstat. In March Ukraine delivered 42.3 thousand tonnes of barley to Turkey - 41%; 38.2 thousand tonnes to Cyprus – 37%; 5.1 thousand tonnes to Saudi Arabia – 5%. In March Ukraine also continued shipping barley to Belarus – 3.9 thousand tonnes for an average price of 148 US$/t and to Russia – 0.99 thousand tonnes for 208.2 US$/t average price. For the first nine months of the market year Ukraine exported about 1.23 million tonnes of barley that is 2.1 times less than in the same period last year. About 61% of these shipments (476 thousand tonnes) were delivered to Saudi Arabia. In April Ukraine exported 45 thousand tonnes of barley; in May already 25 thousand tonnes. Hence the total volume of Ukrainian barley export reached 1.3 million tonnes and the forecast for the entire market year is estimated at 1.37 million tonnes.

Theoretical malt prices.

* - 70/30 = 70% Average two Rows Spring and 30% Six Rows Winter
** - 50/50 = 50% Average two Rows Spring and 50% Six Rows Winter

Theoretical malt prices for crop 2004 are available online www.e-malt.com/MarketPrices

Malting barley prices. French barley prices.

Graph of the week
Agenda

May 2004:
EBC SYMPOSIUM 'FOOD SAFETY & TRACEABILITY';
CANADEAN'S 4th INTERNATIONAL BEER CONFERENCE;
CITBUSMED 2004;
PIVO, GASTRO, BAKERY / Bulgaria;
ALCO + SOFT 2004 / Ukraine;
FOOD & DRINKS/FOOD TECHNOLOGY 2004 / Moldova;
Beer International Brewing Technology Exhibition / Russia;
NEWARK'S 9TH BEER FESTIVAL

June 2004:
ALIMENTARIA MEXICO International Food and Beverages Exhibition;
Hotelympia
10th international symposium on pre-harvest sprouting in cereals;
BevTek / BrewTek;
IGC GRAINS CONFERENCE 2004;
26th Annual National Homebrewers Conference;
Scottish Traditional Beer Festival;
Coceral Congress 2004;
The 9th International Barley Genetics Symposium;
Little Oktoberfest;

July 2004:
VI Moscow Beer Festival;
Lucky Baldwin's IPA Festival;
BevTek / BrewTek China;
Vermont Brewers Festival;
World Brewing Congress 2004;
Hop, malt and beer of Russia Exhibition;

More events are available on site e-malt.com