Base Currency: Euro, EUR on 10-September-2004 1 EUR = 1.2198 USD 1 EUR = 0.6835 GBP 1 EUR = 1.5712 CAD 1 EUR = 1.7739 AUD 1 EUR = 133.92 JPY 1 EUR = 3.5374 BRL 1 EUR = 35.6426 RUB	Base Currency: US Dollar on 10-September-2004 1 USD = 0.8201 EUR 1 USD = 0.5603 GBP 1 USD = 1.2881 CAD 1 USD = 1.4542 AUD 1 USD = 109.83 JPY 1 USD = 2.90 BRL 1 USD = 29.22 RUB
EUR/USD Chart

InBev, the world's largest brewer by volume with 13% of the global beer market, announced on September 9 that it has achieved strong organic profit growth in the first half of 2004. InBev said strong growth in its premium Beck's and Stella Artois brands helped deliver first-half net profits of EUR 205 million, up 20 % from EUR 171 million in the same period last year. The company has registered global volume growth of Beck’s ® by +14.6% and of Stella Artois ® by +6.2%. Commenting on the results, John Brock, InBev’s Chief Executive Officer said: “ InBev’s strong organic volume and profit growth, and its significant increase in EPS for the first half of 2004, are the direct result of solid brand-marketing programs, coupled with superior sales execution in the marketplace. Especially encouraging is the development of our global flagship brands, Stella Artois ® and Beck’s ® .” InBev chief executive John Brock told a conference call that the relatively cool summer across much of northern Europe would impact the third quarter, although the slow start would not impact overall results. "We did end up having a softer June and July than we would have liked, especially in Europe," Brock told a conference call following the release of the results. "August came back in a meaningful manner." "As we look to the third quarter, our business continues to grow as expected." InBev was created from a merger between Belgium's Interbrew SA and Brazil's AmBev, completed just last month. But Thursday's results and forecasts relate only to Interbrew; AmBev results will be incorporated into InBev in the second half of the year. InBev said overall volume was up 5.5 percent, with an 11.6 percent rise in North American sales offsetting weaker performance in Western Europe. In Western Europe, volume decreased by 1.8 % due to the termination of a large distribution contract in Britain. Otherwise, volume growth in Western Europe would have been up 0.2 %. InBev realized EBITDA growth of +2.2%, due to the disposal of assets in the U.K. and the Netherlands, while EBIT declined by 0.7%...more info

Canada: The proposed merger between Molson Inc. and Adolph Coors Co. is likely the best option for Canada's oldest brewer to broaden its brand appeal, analysts said on Wednesday, September 8, despite speculation that major shareholders may reject the deal. "I think the street is still in denial of Molson. It didn't realize how much trouble Molson is in," said Michael Palmer, an analyst and the president of Veritas Investment Research. "Once it dawns on them that Molson is experiencing significant volume declines and profit declines in Canada, which will be reflected in the next couple of quarters, then I think they'll begin to say this is not such a bad deal." Eric Molson, the company's chairman and controlling shareholder, backs the merger plan, but chief executive Dan O'Neill is reported to be unsure whether Molson's class A nonvoting shareholders will approve it, Reuters revealed. "At this point in time, he's not sure that all class A shareholders are on side," said Molson spokeswoman Sylvia Morin. O'Neill was traveling and not available for comment. The merger must have the approval of two-thirds of both Molson's class A nonvoting and class B voting shareholders. Eric Molson controls more than 50 percent of the class B voting shares, which means his main task is to persuade the institutional and retail investors who hold the A shares that the merger has merit. There has been speculation that Ian Molson, Eric Molson's cousin and former deputy chairman of the company, will step in with a higher offer that would include a takeover premium. Reached in London, Ian Molson declined to say whether he was close to putting together a bid for the 218-year-old brewer. "I'm not in a position to comment," he told Reuters. Molson and Coors are both struggling to gain market share in a mature industry. In 2002, Molson bought Brazil's Kaiser brewery to expand its reach into South America, but the venture quickly became a drain on profit. The Molson-Coors merger, announced July 22, would create the world's fifth-largest brewer by volume. The two companies said it would allow them to compete against larger rivals, including Anheuser-Busch Cos Inc. and SABMiller Plc, while keeping the Molson and Coors families in control. "The merger won't solve all their problems but it will certainly help in some ways and it will provide some synergies that will allow them to reinvest in their brands," said Michael Van Aelst, an analyst with CIBC World Markets. Under the terms of the deal, the shares of both companies would be exchanged for shares in the new, combined company ...more info

USA: Anheuser-Busch announced on September 8, 2004 that it is enjoying another year of strong growth in earnings per share, cash flow and return on capital. This represents the sixth straight year of solid growth, company executives told investors at the Prudential Consumer Conference today. Despite the general slowdown in spending for consumer products this summer, Anheuser-Busch's earnings per share for the full year are expected to grow approximately 11 percent. 1/ This includes dilution from the company's acquisition of Harbin and excludes the benefit of the commodity hedge gain in the first quarter. August A. Busch IV, president of Anheuser-Busch, Inc., also announced a series of new initiatives aimed at increasing beer sales volume and market share growth. In October, Anheuser-Busch will add another flavor to the Bacardi Silver family with the introduction of its newest offering, low-carb Bacardi Silver Green Apple. In addition, the company is developing a variety of other new products it intends to test in the coming months, featuring unique flavors and varying degrees of carbohydrates, calories and alcohol content, in order to capture incremental volume opportunities. The company will also continue to step up innovation with new packaging. Anheuser-Busch has been rolling out new Bud Light applied plastic label bottles, which will be available nationwide over the next six to nine months. “Our new Bud Light applied plastic label bottle enhances the sophistication and image of the nation's number one beer brand,” Busch said. Next week, Anheuser-Busch will introduce a new 16-ounce aluminum bottle for Michelob, Michelob Light and Anheuser World Select, Busch said. This unique, high-end aluminum bottle will be offered in bars, clubs and convenience stores. Busch also indicated that the Budweiser family is leveraging its freshness advantage by expanding communication of the fact that “Fresh Beer Tastes Better” through a new campaign that combines advertising, on-premise promotions and public relations initiatives. Three million on-premise consumers are expected to sample the freshest Budweiser and Bud Light available as a part of this program. He also told investors that the domestic beer pricing environment remains very favorable. “Beer is an image-driven product and consumers are continuing to trade up,” he said. Consistent with the company's practice of implementing moderate annual price increases in two phases, Anheuser-Busch will be initiating selective pricing actions in the fourth quarter of this year and first quarter of 2005 ...more info

Japan: Combined domestic shipments of beer and "happoshu" low-malt beer of Japan's five major brewers dropped 5.9% in August from a year earlier to 557,677,000 litres, the Brewers Association of Japan and its sister low-malt liquor association said on September 10. The association attributed the decline, among other things, to an exceptionally hot summer giving way to typhoons in late August. Beer and happoshu shipments by Kirin Brewery Co., Asahi Breweries Ltd., Sapporo Breweries Ltd., Suntory Ltd., and Orion Breweries Ltd. totaled 44.05 million cases. In the January-August period, shipments of beer and low-malt brewed alcohol fell 4.1 pct year-on-year to 4.08 mln kiloliters, they said. The volume of beer shipped in August fell 4.8 pct year-on-year to 361,608 kiloliters, following 10.4 pct rise in July. The July rise, attributed to the hot summer, was the first double-digit increase since January 1998. In the January-August period, beer shipments fell 1.4 pct year-on-year to about 2.53 mln kiloliters Shipments of low-malt liquor in August fell 7.7 pct year-on-year to 196,069 kiloliters. In the January-August period, shipments of low-malt liquor fell 8.0 pct year-on-year to 1.55 mln kiloliters. Japanese breweries began selling a low-malt beverage known as "happoshu" in 1994, in an effort to halt a slide in beer sales. Happoshu used to cost substantially less than beer because it was taxed at a lower rate, and sales rose steadily until last year, when the government raised the tax on low-malt brews. In February, Sapporo Breweries, which belongs to Sapporo Holdings Ltd, released a beer-like drink, but which is neither beer nor happoshu, in response to the higher taxation. The shipments of this product are not counted in the data above. The top five breweries in are Kirin Brewery Co Ltd, Asahi Breweries Ltd, Sapporo Breweries Ltd, Suntory Ltd and Orion Beer Co Ltd.

China: Transtasman brewer Lion Nathan is expected to quit its loss-making China operations within months, with at least four large international brewing groups having undertaken due diligence on its assets. A report in the Australian Financial Review said at least four big brewers - Heineken, Interbrew, SAB Miller and Anheuser-Busch - had undertaken due diligence on Lion Nathan's three plants in the Yangtze River Delta. The company has been in China for nine years but is still losing money. It said earlier it was looking at a joint venture or sale. Lion Nathan's China business has accumulated losses of more than A$ 200 mln in the past nine years as the brewer joined dozens of rivals in entering the fiercely competitive market. Investor relations manager Warwick Bryan said Lion Nathan had "always said organic growth is not going to get us there and that left the option of joint venture or sales. Those have both been on the table." He would not confirm whether due diligence was taking place but said it could be expected given the company's position. The three breweries have a book value of A$100 million ($106 million). Their sales in the six months to March 31 rose 54 per cent to 49.6 million litres and revenue was up 60 per cent to 139.6 million yuan ($27.6 million). But the company's losses were 42.9 million yuan ($7.94 million) in the half year, from 34.3 million yuan a year earlier. Lion Nathan and five other brewers - Anheuser-Busch, Interbrew, China's Chongqing, and Japan's Asahi Breweries and Suntory - control about half the Yangtze Delta market. In May, outgoing Lion Nathan chief executive Gordon Cairns said he expected those six to consolidate down to one or two groups to become profitable. Analysts spoken to by the Business Herald expected Lion Nathan to get between A$100 million and A$120 million for its Chinese operations. But other analysts say the company may receive more, given the heat in the Chinese market. Rob Mercer, head of research at Forsyth Barr, predicted that Lion Nathan would be out of China in three to six months. "A sell-down is much more imminent that not, and a joint venture unlikely," he said. Lion entered China in 1995, hoping that rising incomes would increase consumption of premium beer. But it has struggled to compete with cheap local brands.

Bulgaria's beer market recorded a growth of 7 to 8% for the first eight months in 2004 over the same period last year. A total of 258 million liters of beer were sold over the first seven months this year, up by 33 million over the volume sold during the whole 2003, according to the Bulgaria’s Union of Beer Brewers. Beer in plastic bottles, typical of Eastern European markets, enjoy the highest increase in sales because of its lower price and the advantages that the bottles offer over their glass counterparts, Novinte said in a statement.

Malt News

Analysts have posted the latest malt production figures. France registered about 1.4 million tonnes of malt in 2003/04, about unchanged from a year before. In July 03/May 04 Germany output about 1.854 million tonnes of malt versus 1.851 million tonnes last year. UK barley usage July/ June 2003/04 1.939 million tonnes (1.962). Malting margins of the EU malt industry remain at unrewarding, counter-margin levels. An improvement can only come from more factory closures and a commercially firmer stance of the industry.

Ukraine: In July 2004 Ukraine imported about 6.6 thousand tonnes of brewing malt at a value of US$1.21 million. That is 3.2 thousand tonnes less than in June 2004. In June 2004 Ukraine imported the highest volumes of malt from the beginning of the year, 9.8 thousand tonnes at a value of US$ 1.36 million, Proagro posted in a statement. Analysts attributed the decline to the increasing of national malt production capacity.

Barley News

Australia: The Australian Bureau of Agricultural and Resource Economics (ABARE) announced on September 7 that it expects Australian barley production to be 7.3 million tonnes in 2004-05, down by around 1.3 million tonnes from 2003-04. In New South Wales the area planted to barley is estimated to have increased by 5 % to 640,000 hectares in 2004-05. Barley production in the state is forecast to increase by 13 % to 1.29 million tonnes in 2004-05. Again, favorable conditions in the north are expected to contribute significantly to the harvest. In the state of Victoria barley production is forecast to fall by 11 % to around 1.6 million tonnes in 2004-05. The majority of Queensland’s barley crop was planted in the western Downs/Maranoa region. Average barley yields are forecast under the assumption that followup rainfall will eventuate in coming months. Barley production is forecast to fall by 28 per cent to 155 000 tonnes in 2004-05. The area planted to barley in Western Australia is estimated to have declined by 19 % to 1 million hectares in 2004-05. As a result, barley production is forecast to decline by 0.9 million tonnes to around 2.1 million tonnes in 2004-05. In South Australia barley production is forecast to be 2.2 million tonnes in 2004-05, a decline of 13 % from the previous season.

Barley crops are larger in the EU, the Balkans, Ukraine and Canada, according to the latest figures. IGC estimates the world trade at 15.3 million tonnes for the current campaign. The EU will not be competitive without restitutions, in Canada feed barley is mainly consumed in domestic markets, therefore Australia and the Black Sea (Russia, Ukraine, Bulgaria, Romania) are the almost exclusive suppliers to world markets. Prices on world markets have recovered to levels around US$ 100-105 FOB seaports. C+F prices improved as follows: Libya on July 5 US$ 101 on August 26 US$ 132. Tunesia US$ 109 - 111 on July 14, 129.50 – 134.70 on August 26. It is expected that Middle East countries will import much larger quantities this year than in 2003/04.

USA: USDA corrected the expected crop figures for barley crop once more in August. According to USDA the forecast for barley crop in USA is 5.94 million tonnes versus 6.01 million tonnes in 2003. Harvesting has advanced further than in Canada, nevertheless weather damage has also been substantial in North Dakota. Also the unharvested one third of the Western two-row crops may be down-graded to feed barley. U.S. brewer-maltsters and trade maltsters are not concerned, because they carry much larger stocks of old crop barley of very good quality into the new campaign.

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 2003 are not quoted.

Malt Price Evolution

	Maximum average price for 2RS Malt, crop 2003: 308.50 EUR/tonne - in November 2002
	Minimum average price for 2RS Malt, crop 2003: 245.0 EUR/tonne - in July 2004
	Maximum average price for 6RW Malt, crop 2003: 280.50 EUR/tonne - in November 2002
	Minimum average price for 6RW Malt, crop 2003: 237.50 EUR/tonne - in July 2004

Source: E-malt.com

Malting barley prices. French barley prices.

Nominal prices.

EURO = USD 1.2198 September 10, 2004
Crop year		2003		2004
Parity		FOB Creil		FOB Creil
Position		July 2003		July 2004
Type	Variety	EURO	USD	EURO	USD
2RS	Scarlett	nq	nq	112.00	137.00
2RS	Prestige	nq	nq	111.00	135.50
2RS	Cellar	nq	nq	111.50	136.50
2RS	Aspen	nq	nq	110.50	135.00
2RS	Optic	nq	nq	110.50	135.00
2RS	Astoria	nq	nq	110.00	134.50
2RS	Cork	nq	nq	110.00	134.50
6RW	Esterel	nq	nq	101.00	123.50

nq - Not quoted

Prices for Danish and UK malting barley are available on site www.e-malt.com/MarketPrices

Table of the week

EU malt export licence fixations: (in tonnes)   2000-2001  2001-2002   2002-2003   2003-2004  July 01, 2004 - August 24, 2004    France   523,190  701,134  661,772  774,761  115,490   Germany   305,980  468,314  408,063  422,047  50,193   Belgium   277,584  296,368  287,850  317,292  20,225   U.K.    254,793  350,621  294,995  443,501  92,179   Finland   65,550  91,890  100,758  114,165  13,000   Denmark    52,326  96,812  94,791  90,452  18,640   Sweden   50,847  101,000  76,916  78,369  4,190   Netherlands   54,835  51,310  66,219  80,703  8,540   Ireland   26,003  35,145  31,140  38,900  34,404   Austria   4,850  8,840  8,620  60,211  2,525   Spain   3,000  2,400  5,640  10,000  -   Greece   1,800  1,744  1,306  979  -   Portugal   340  221  85  695  85   Italy   -  -  2  -  -   Total old EU   1,621,098  2,205,799  2,038,157  2,432,075  359,471   New EU members  May-June, 04     Czech Republic         34,340  9,007   Poland         7,604  6,089   Hungary         2,830  19,323   Slovakia         1,000  28,070   Total EU    1,621,098  2,205,799  2,038,157  2,477,849  421,960    Total Wheat malt, tonnes   Total 2000-2001    4,686  Total 2001-2002    12,805  Total 2002-2003    30,908  Total 2003-2004    15,768  July 01/2004 – August 24/2004    1,264        Total Roasted malt, tonnes   Total 2000-2001    23,967  Total 2001-2002    23,480  Total 2002-2003    23,603  Total 2003-2004    24,438  July 01/2004 – August 24/2004    5,168  Graph of the week Agenda September 2004: 6th BELGIAN BEER WEEKEND; China Brew 2004 / China Beverage 2004; International Brewery and Soft Drinks Industry Exhibition; FOOD & BEVERAGE PROCESSING & PACKAGING INDONESIA 2004; Pivoindustria International Beer Industry Exhibition; National Beer Wholesalers Show 2004; PAN ASIAN FOOD & BEVERAGE TRADE SHOW 2004; Barley Malt Quality Evaluation Short Course; EUROMALT BARLEY SEMINAR 2004; OCTOBERFEST Famous German Beer Festival; Agro + Food + Drink + Tech Expo Georgia Food, Beverages and Processing Equipment Trade Fair; bevex Beverage Trade Fair; InterBev 2004; YUGOSLAVIA INTERNATIONAL FAIR OF FOOD & BEVERAGES 2004; BevExpo 2004; Great American Beer Festival; October 2004: OCTOBERFEST Famous German Beer Festival; Great American Beer Festival; bevex Beverage Trade Fair. Germany; Great Welsh Beer & Cider Festival; ST. PETERSBURG FOOD SALON 2004; Beer Fair. Spain; Expo Bebidas Beverage Exhibition. Mexico; EXPOALIMENTOS Y BEBIDAS 2004. Panama; Fall Eastern PA Breweriana; Knoxville Brewer's Jam - A Memorial to Tom Rutledge; INTERPRODTECH Food and Beverages Processing Exhibition. Russia; Alko and Drinks Show Alcoholic Beverages and Non-alcoholic Drinks Exhibition. Russia; WORLD FOOD KAZAKHSTAN 2004; PAN ASIAN FOOD & BEVERAGE TRADE SHOW 2004. Canada; More events are available on site e-malt.com