Base Currency: Euro, EUR on 15-September-2004 1 EUR = 1.2260 USD 1 EUR = 0.6827 GBP 1 EUR = 1.5858 CAD 1 EUR = 1.7472 AUD 1 EUR = 134.41 JPY 1 EUR = 3.5677 BRL 1 EUR = 35.836 RUB	Base Currency: US Dollar on 15-September-2004 1 USD = 0.8159 EUR 1 USD = 0.5565 GBP 1 USD = 1.2935 CAD 1 USD = 1.4251 AUD 1 USD = 109.63 JPY 1 USD = 2.91 BRL 1 USD = 29.23 RUB
EUR/USD Chart

China: Lion Nathan Limited in deal to sell Chinese beer business for $A219 million. Lion Nathan Ltd said on September 15 it has entered into an unconditional agreement to sell its Chinese beer business, Lion Nathan China, to China Resources Breweries (CRB) for $US154 million ($NZ236m). The sale follows the conclusion of a competitive sales process, ShareChat News posted on September 15, 2004. CRB is a joint venture owned by SABMiller and China Resources Enterprises, and is the second largest brewer in China, operating more than 30 breweries in the Chinese mainland. The sale price represents a premium to the book value of Lion Nathan China of around $A120 million ($NZ129 million). The consideration comprises approximately $US71 million in cash as well as the assumption by CRB of about $US83 million in debt. Completion is expected to occur on September 30. "This is an excellent outcome for Lion Nathan and its shareholders," said Lion Nathan chief executive officer Gordon Cairns. "It can be attributed to a number of factors including the quality of our assets and brands, the strategic importance of our operations in the rapidly consolidating Yangtze River Delta beer market and the outstanding job the Lon Nathan China team has done in building our business in China," he said. Lion Nathan chief financial officer Jamie Tomlinson said the decision to sell the Chinese beer business followed a detailed review of Lion Nathan's competitive position in China. He said the options considered included increasing the scale of the business through acquisitions, participating in the consolidation of the Chinese beer market by way of a merger or joint venture, or selling the business into the current wave of industry consolidation. "Having considered all of these options, Lion Nathan concluded that this sale was the best outcome for Lion Nathan shareholders especially given the capital and profit risk associated with remaining in China," he said. The proceeds of the sale will be applied to debt reduction, Tomlinson said.

Colombia: Colombian brewer Bavaria will take direct control of Compania Boliviana de Bebidas, which it already controls indirectly via its Peruvian subsidiary Cervecerias Peruanas Backus y Johnston, Bavaria said on Tuesday, Sept 14, according to Reuters. “We simply want the head office to have more direct control over the operation in Bolivia. We're going to make a bit more of an effort in marketing and publicity to beef up that operation," a Bavaria official said. Bavaria plans to spend about $4 million on marketing and refrigeration units for Compania Boliviana de Bebidas, which produces non-alcoholic drinks and shares rights to PepsiCo Inc (PEP.N: Quote, Profile, Research) products in Bolivia, the official said. Bavaria, controlled by Colombian businessman Julio Mario Santo Domingo, has recently bought breweries in Panama and Peru and has consolidated its brewing in Ecuador. It also has operations in Costa Rica.

Germany: Despite searing temperatures, the German Beer market declined more sharply in 2003 than in any of the previous three years. According to a brand new report from leading beverage industry analysts Canadean, the effects of the controversial deposit scheme were dramatic. Introduced on the opening day of the year, the scheme charges consumers a deposit on all non-refillable packs and actually resulted in some retailers de-listing products from their shelves altogether. As a result, sales of canned Beer were decimated with consumption plummeting by more than 70%. The repercussions were widespread and even the Beer Mix segment, which has been expanding rapidly, took a significant downturn. The launch of the scheme could not have come at a worse time for the market, which has been in decline for a number of years. Overall, consumption dropped by more than 3% although the losses in canned Beer were partly offset by the strong growth in exports, particularly to other EU countries. Although export levels have traditionally been low when compared with domestic consumption, they are now booming. As turnover increases, German brewers are unsurprisingly showing a greater interest in these foreign markets! The largest segment, Pils, was responsible for over 90% of the total market decline. Much of this volume was lost to the third most important and fastest growing segment, namely Export (Export style beers as opposed to Exports). Second placed Weizen also grew strongly and is now enjoying something of a cult status. The on-premise channel proved especially rewarding for the segment which is moving further away from its regional roots in southern Germany to become a national and international favourite. This said, the very small number of national brands indicates that the potential for further growth may still be considerable. Between 1999 and 2002, consumption of Beer Mix Drinks grew by almost 80%. However, many products launched exclusively in cans were withdrawn from sale completely once the retailers began de-listing. The segment also faced increasing competition from flavoured alcoholic beverages. Germany remains the largest Beer market in Europe and is home to no less than three quarters of the EU's brewers. The number of breweries is expected to decline as the merger and acquisition activity seen in recent years continues apace. Looking forward, Canadean predict that the impact of the deposit scheme will be softened as more brands are marketed in refillable packs and retailers institute systems for the return of packaging. Exports should continue to thrive in 2004 but the familiar challenges presented by the shift towards healthier lifestyles, lower disposable incomes and the substitution of Beer for other beverages are likely to result in total consumption declining further still.

UK: InBev is to close the Boddingtons Brewery. Workers at Boddingtons went on a wildcat strike on Tuesday afternoon (September 14) as anger mounted over controversial plans to close Manchester's historic brewery. All daytime production staff at the Strangeways plant, which has been operating since 1778, walked out just before 1pm in protest at threats to axe jobs. Earlier, officials from the T and G union met senior management figures from InBev - formerly Interbrew - the Belgium-based brewing giant that owns Boddies, which has proposed the closure. Staff hoped the meeting would produce a breakthrough and a change of heart by the company. But after two hours of talks, union representatives told the workforce that InBev was still determined to close the brewery, with the loss of 55 jobs. Angry workers then decided to walk out and stay out for 24 hours. Their action was not sanctioned by the T and G, which had not expected such a furious reaction on the shop floor. InBev announced last week that it would be shutting the Boddingtons Brewery in Manchester, home to the “Cream of Manchester” for almost 200 years. Interbrew UK, which owns the Stella Artois and Beck’s brands, said that it was planning to shift production of cask Boddingtons to the rival Hydes Brewery in Manchester under contract. Production of its non-cask ales will be moved to Preston, South Wales and Glasgow. Cask ale Boddingtons, which InBev says accounts for 10 % of business, is set to be produced at Hyde's brewery in Moss Side. The shock announcement came two years after the M.E.N, the union and the workers combined to persuade InBev to drop a similar plan. But the brewing giant says that it has now done all it can to try to keep the site open. The company says that there has been a 14.5 % drop in sales of Boddingtons cask ales in the past two years. But the T and G disputes the figures and is calling on workers in InBev plants around the world to back their campaign to stay open. Workers held an angry meeting a night before when they unanimously backed plans to oppose the closure. They argue that the brewery is performing within budgets, increasing production and is in better shape than two years ago. One of those Boddies staff present said: "This was one of the most angry meetings I have seen in many years at this place. The people here feel like they've been sold down the river and they want to take this fight to InBev at the very highest level." ...more info

Brazil: Brazilian brewer Kaiser has concluded an agreement with Femsa, Mexico’s largest beverage company, to produce Sol beer in Brazil, according to Mexico press. The drink is already being manufactured in Kaiser’s factory in Araraquara city in the state of Sao Paulo, Valor Econômico reported on September 13. Citing José Antonio Fernandez, Femsa’s main executive, in the story, the newspaper said that the partnership is the first step by the Mexican company to increase its beer sales in the Latin American market.

China: SABMiller, the world's second largest brewer, made the second round of bidding for Australian brewer Lion Nathan's Chinese business, The Times reported on Tuesday, September 14. The estimated 85-million-pound ($153 million) bid, reported by The Times without citing specific sources, compares with a range of analysts' expectations of A$100 million ($70 million) to A$150 million for the loss-making China operations. SABMiller, listed in both London and Johannesburg, withdrew from a bidding war for China's Harbin Brewery earlier this year, ceding the field to arch-rival Anheuser Busch. But it did not renounce its ambition to expand in China, the world's largest beer market, which is growing at about 6 percent a year. Global rivals such as Anheuser Busch, Dutch Heineken and Belgium's InBev have also been tipped as possible bidders in Lion Nathan's China auction, as have Asian groups such as China's Chongqing and Japan's Asahi, according to Reuters. Melbourne analysts said Lion Nathan would benefit from a wave of mergers among Chinese brewers as it moved closer to the sale. " "Clearly Lion Nathan is trying to strike while the iron is hot," an analyst said. Lion Nathan entered China in 1995 but its operations there have since tallied up losses of more than A$200 million, including writedowns. China is the world's largest beer market by volume but Lion Nathan has found it tough to turn a profit in the highly competitive market. Its China revenues in the six months to March 31 climbed 15.9 per cent to A$22.8 million and volumes, excluding the acquisition of the Hua Xia Brewing Co in Changzhou, were up 54 per cent to 49.6 million litres. But Lion Nathan warned increased competition and cost pressures would make it challenging to break even in operating earnings terms for the full year. The company's key brands in China are Taihushui, Steinlager, and Rheineck, targeting the Yangtze River Delta region, which includes Shanghai. Its main breweries are in Suzhou and Wuxi and it also has a smaller plant at Changzhou. Its plants had been operating at well below capacity, analysts said.

Malt News

Russia: In January/ June this year Russia still imported 290,000 tonnes of malt (550,000 tonnes July 2003 – June 2004). Imports of barley were 410,000 tonnes in the crop year 2003/04, which included 260,000 tonnes malting barley from the EU, according to the latest figures.

Barley News

Canada: For 2004-05, barley production in Canada is forecast by Agriculture and Agri-Food Canada (AAFC) to increase by 5% due to higher yields, despite lower seeded area, AAFC posted on September 10. Due to higher carry-in stocks and production, supplies are expected to rise by 9%. Feed use is projected to increase significantly, due to higher barley supplies in western Canada and increased shipments to eastern Canada. Malting barley exports are expected to rise, as import demand from China returns to normal. Feed barley exports are forecast to fall, due to increased competition from the Black Sea region, the EU-25, and Australia. Carry-out stocks are forecast to increase significantly. Off-Board feed barley prices are expected to decrease by about $15/t from 2003-04 to $120/t, due to increased domestic barley production and depressed US corn prices. The CWB August PRO for No.1 CW Feed Barley is $116/t I/S VC/SL, versus $167/t for 2003-04. The PRO for Special Select Two Row designated barley is $181/t versus $200/t for 2003-04, mainly due to higher supplies expected in Europe and Australia.

USA: While workers are building the $60 million International Malting Co. plant near Great Falls, farmers are waiting to see if the new plant will reshape the malt barley business in Montana. "We are really looking forward to them opening up and working with them," said Dave Henderson, a Cut Bank-area barley grower. Tribune Business posted that along with expanding the market for Montana barley, producers are hoping the contracts with IMC will yield better prices for high-quality malt barley. Higher prices will not only help farmers but also could put additional money into circulation in many northcentral Montana communities, officials say. An IMC official says the Milwaukee-based company likes what it sees in Montana so far. "Montana is getting a pretty good barley crop," said Alain Caekaert, who heads IMC barley buying in the United States and Canada. "It's a good start to our program." Caekaert said IMC, working with staffers from its buying agent in Montana, Columbia Grain, signed contracts with about 80 Montana growers early this year. He declined to discuss how much barley the company hopes to land from the 2004 crop. The contracting is just a start to what IMC plans to do in coming years, Caekaert said. "It was a small program to get the farmers familiar with us," he said, noting IMC was pleased with the reception it received from barley producers. The contracted barley, coupled with barley IMC will buy on the open market, will be used to fuel the Great Falls plant, which is slated to begin production in June 2005. In the long-term, the company hopes to be able to buy all the barley it needs for the new plant from Montana growers. IMC says it will use about 12 million bushels per year at the plant. Some of that amount could come from customers who supply their own barley as part of "toll malting" deals with IMC. The malt produced in Great Falls will be sold to brewers, distillers and food producers. It is expected to help IMC meet increasing demand for malt in the western United States, as well as overseas. While the brewing industry has been growing only slowly in North America, markets in the China, Southeast Asia, Mexico and other places in Latin America are fueling demand ...more info

Ukraine will export 3 million tonnes of barley in 2004/05-market year, APK-Inform posted on September 13. According to State Statistics Committee, the amount of barley exported from Ukraine in July 2004 made up 129,000 tonnes. The average price of barley exported in July was US$109 per tonne versus US$137 per tonne in the previous month. The main buyers of Ukrainian barley in July were Saudi Arabia (35,000 tonnes or 27 % of the total export), Libya (32,000 tonnes or 25 %) and Israel (27,000 tonnes or 21 %). According to APK-Inform data, during August-September 2004 barley shipments from Ukrainian ports have increased significantly. According to preliminary data 380,000 tonnes of barley were shipped in August. Over 300,000 tonnes of barley were shipped during the period of September 1-13. APK-Inform analysts forecast barley export in 2004/05 MY to reach 3 million tonnes. This figure will be a record for Ukraine. Last season Ukraine exported 1.52 million tonnes of barley.

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 2004: 270.50 EUR/tonne - in December 2003
	Minimum average price for 2RS Malt, crop 2004: 238.50 EUR/tonne - in August-September 2004
	Maximum average price for 6RW Malt, crop 2004: 252.50 EUR/tonne - in December 2003
	Minimum average price for 6RW Malt, crop 2004: 226.50 EUR/tonne - in August-September 2004

Source: E-malt.com

Malting barley prices. French barley prices.

Nominal prices.

EURO = USD 1.2260 September 15, 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	137.50
2RS	Prestige	nq	nq	111.00	136.50
2RS	Cellar	nq	nq	111.50	137.00
2RS	Aspen	nq	nq	110.50	135.50
2RS	Optic	nq	nq	110.50	135.50
2RS	Astoria	nq	nq	110.00	135.00
2RS	Cork	nq	nq	110.00	135.00
6RW	Esterel	nq	nq	101.00	124.00

nq - Not quoted

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

Table of the week

Estimate of EU Barley Crops (in thousand metric tonnes)   in '000 tonnes  WINTER  SPRING  TOTAL  Acreage Crop Acreage Crop Acreage Crop 2003  2004  2003  2004  2003  2004  2003  2004  2003  2004  2003  2004   EU Members  Austria  73  80  341  480  139  111  541  612  212  191  882  1,092   Belgium  30  34  205  245  11  6  66  37  41  40  271  282   Denmark   130  130  776  845  580  550  3,000  3,025  710  680  3,776  3,870   Deutschland   1,323  1,360  6,979  9,548  751  613  3,617  3,373  2,074  1,973  10,596  12,921   Spain  744  790  2,022  2,373  2,345  2,367  6,676  7,449  3,089  3,157  8,698  9,822   France   1,053  1,051  5,878  7,277  697  581  3,990  3,566  1,750  1,632  9,868  10,843   Greece  105  112  242  298  -  -  -  -  105  112  242  298   Ireland  17  13  131  95  169  161  1,022  1,058  186  174  1,153  1,153   Italy   310  310  1,009  1,130  -  -  -  -  310  310  1,009  1,130   Luxembourg 5  5  28  38  5  4  27  25  10  9  55  63   Netherlands 3  3  20  21  53  53  352  329  56  56  372  350   Portugal  10  11  12  18  -  -  -  -  10  11  12  18   Finland   -  -  -  -  530  564  1,697  1,813  530  564  1,697  1,813   Sweden   7  6  40  30  356  393  1,502  1,772  363  399  1,542  1,802   United Kingdom  456  422  2,851  2,659  622  612  3,518  3,550  1,078  1,034  6,369  6,209   Total old EU members 4,266  4,327  20,534  25,057  6,258  6,015  26,008  26,609  10,525  10,342  46,542  51,666   New EU Members  Estonia          132  135  263  256  132  135  263  256   Latvia          139  140  247  273  139  140  247  273   Lithuania          309  292  900  875  309  292  900  875   Poland  106  142  228  728  910  926  2,603  2,680  1,016  1,068  2,831  3,408   Cyprus 50  50  100  127          50  50  100  127   Czech Republic 86  116  440  594  464  353  1,628  1,862  550  469  2,068  2,456   Slovakia  20  19  150  86  220  205  682  834  240  224  832  920   Slovenia  14  16  39  68          14  16  39  68   Hungary  181  189  445  873  168  147  380  600  349  336  825  1,473   Total new EU members 457  532  1,402  2,476  2,342  2,198  6,703  7,380  2,799  2,730  8,105  9,856    TOTAL EU 4,723  4,859  21,936  27,533  8,600  8,213  32,711  33,989  13,323  13,072  54,647  61,522  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