E-Malt.com Flash 10b. March 10

Mexico: Mexico’s leading beer maker Modelo plans capital expenditures of up to $350 million and sales volumes increases this year, Credit Suisse First Boston analyst Tufic Salem said in a report released on March 11. Modelo, the manufacture of the popular Corona beer, provided guidance during an analyst meeting in Mexico City this week, Reuters cited Salem. "Volume increases of 3 % and 5 % are expected in domestic and export sales, respectively," he said and noted they were below his estimates but in line with inflation. Inflation in Mexico was 5.19 percent in 2004 and is seen falling to around 4 percent this year. Rival Femsa, maker of the Sol and Tecate beers, said last month it also planned to increase prices for its brews. During the meeting, Modelo also said that its Eastern U.S export deal with Gambrinus is expected to conclude by year end. "However, no comment was made on whether they would maintain distribution with Gambrinus (under a new deal) or seek a different distributor," Salem added. Modelo, half-owned by Anheuser-Busch Cos. Inc., one of the world's largest brewers, is at loggerheads with its East Cost importer Gambrinus. The importer started an arbitration case last year to contest a 2006 termination clause in its contract with Modelo. A change in importer could cost Modelo a hefty termination fee, but could also ramp up cash flow, analysts have said.

Japan: Combined domestic shipments of beer and similar products by Japan's five major brewers fell 5.3 % in February 2005 compared to February 2004 for the second straight monthly drop...more info

Czech Republic: Czech brewery Budejovicky Budvar (BB), controlled by the state, announced on March 3 a gross profit of CZK 312 million in 2004, a decrease by 11 % from the previous year...more info

Colombia: South America's second-largest beer maker, Grupo Empresarial Bavaria, dampened feverish takeover speculation on Friday, March 11, saying it had received no offer to buy shares in the company, according to Reuters’ statement. The denial came three days after a Reuters report that quoted a source from Bavaria's controlling Santo Domingo group as saying Dutch brewer Heineken NV had offered $9 billion for Bavaria. Colombia's financial markets regulator, the Securities Superintendency, on Thursday, March 10, had ordered the company to comment on the accuracy of the Reuters report. "Neither senior management nor the board of directors has received any offer of any deal which would affect Bavaria SA or its shareholding composition," Bavaria said in a letter to the Securities Superintendency. Bavaria shares decreased by 8 % in early trade on the Colombian Stock Exchange on the denial, traders said, hitting 45,520 pesos. Tuesday's report had caused Bavaria shares to jump 9 % in one day. The shares have gained 66 % so far this year on persistent reports from analysts and industry sources that the world's top four brewers -- InBev, Anheuser-Busch Cos. Inc., SABMiller Plc and Heineken -- are all looking at buying Bavaria. The company said the public should beware of news media reports that it said had generated a "wave of speculation." "Bavaria SA calls on the public to consider the implications that such rumors could have on the stock market," it said in a news release. Bavaria, South America's largest remaining independent brewer, said in January that it had met representatives of world beer companies but had not received any offer that would affect its share composition. Earlier this month, analysts and industry sources said London-based SABMiller was leading the field in an auction process for Bavaria that was likely to take months. Heineken refused to comment on Tuesday's report, but a Bavaria spokeswoman said executives from the Dutch brewer were visiting Bavaria's installations in Colombia. Bavaria, which has an enterprise value of about $7 billion, dominates markets in Colombia, Ecuador, Peru and Panama, and would largely complete Latin America's brewing jigsaw for the largest world brewing companies. Latin America's young population and thirst for beer makes it one of the most attractive investment options, along with China, for big brewers facing sluggish demand in their traditional European and U.S. markets.

Canada: Sleeman Breweries Ltd., Canada's No. 3 beer producer, announced on March 10 it sold a lot more beer in the last three months of 2004 but profits stayed flat at C$3.9 million due to price cuts in the Ontario market. Sleeman said its fourth quarter diluted earnings per share were C$0.23 compared to C$0.24 in the prior year’s fourth quarter. Net revenue for the fourth quarter of 2004 increased 14% to C$55.6 million compared with C$48.7 million for the same period last year. This increase was the result of core volume growth of 1% and a favourable change in product mix. Premium brand volume increased by 18% with Unibroue volume contributing half of this growth in the quarter. "We sold the most beer in our history in the face of severe price discounting in the Ontario market in the last three months of the year," said company CEO John Sleeman in a statement. Sleeman’s net income for 12 months 2004 rose 18% to C$14.4 million, or C$0.87 per share on a diluted basis, compared with C$12.3 million, or C$0.76 per share on a diluted basis in 2003. EBITDA was C$35.9 million compared with C$33.4 million in 2003, representing an 8% increase. Net revenue of C$213.4 million for the year was up 15% over net revenue of C$185.0 million in fiscal 2003. The increase resulted from 5% core volume growth, a 35% increase in Sapporo hectolitre sales and a mix shift to higher priced premium product sales in the period. “We are pleased with our progress in achieving our strategic and financial goals this year. Our premium brands continue to generate increased sales and margins and we delivered strong growth in revenue, net income and core volume,” said John Sleeman, Chairman & CEO. “The Unibroue integration was completed in the quarter as planned. The integration has provided a positive impact on our operations and our relationships with our customers. We are confident that the integration of that business into our premium portfolio will generate increased revenue and positive returns.” Mr. Sleeman continued, “Operating conditions tested our mettle in the last half of 2004, but we proved our ability to meet new challenges, growing core volume by 1% and delivering record revenue in the fourth quarter. We sold the most beer in our history in the face of severe price discounting in the Ontario market in the last three months of the year.” Sleeman’s management expects that the Canadian beer market will remain very competitive in 2005. Sleeman will continue to succeed by introducing innovative new products and executing distinctive sales and marketing programs. In addition, Sleeman will continue to lower its cost of production and distribution operations in 2005 as the Company realizes the benefits from recent capital expenditures and the successful integration of the Sleeman and Unibroue operations. By focusing on its costs, the Company is prepared for continued value price discounting by competitors for an extended period of time in 2005 in Ontario...more info

Malt News

Australia Malt: In Australia one malthouse construction and one expansion will add 150,000 tonnes of capacity...more info

Russia: Total malt production capacity of Russia will reach about 1.5 million tonnes by next year, according to analysts. Earlier this year Russia announced two more projects of malthouse constructions. The Russian embargo on malt (and grain) from Denmark, Estonia, Germany, Netherlands continues. There is also the Russian threat to expand the embargo to the whole EU, unless a compromise – a common EU Phytosanitary Certificate – is reached by April 1.

Barley News

USA, North Dakota: A new Institute of Barley and Malt Sciences is being developed at North Dakota State University, to try to help researchers and barley growers expand their market, Associated Press posted on March 10. "Compared to other institutions around the U.S., we have a very complete program in barley," said Paul Schwarz, an NDSU professor of plant sciences. "We're able to address problems in a multidisciplinary manner." North Dakota leads the nation in barley production, harvesting 80 million bushels per year. Roughly 80 percent of the state's barley is specific malting varieties, Schwarz said. The majority of that is brewed into beer and malt beverages, while the rest goes into such foods as bread, bagels and cereals, he said. Jim Broten, chairman of the North Dakota Barley Council, said the new institute should benefit malting and brewing companies, including Cargill Malt, which operates a large malting plant near Spiritwood, and Busch Agricultural Resources, which has four elevators in the state and operates a malting plant in neighboring Moorhead, Minn. "Anything to help create a better market for malt, to help them create a better barley for their business - that's why we're getting good industry support," he said. Broten, a barley farmer near Dazey, said he hopes the institute will serve as a world-class research center to boost barley yields and curb disease, and also as a teaching center to expand the worldwide barley market. While Europe is well known for training maltsters in the art of dark beers, consumers in the United States, Latin America and Southeast Asia tend to prefer a lighter beer, which requires different malting and brewing properties, Broten said. "Nobody's teaching that technology," he said. "If we can bring these people in, we can help development a larger market for our barley and our malt by teaching them." The institute also will focus on feed barley to support the livestock industry, he said. The institute has about $550,000 in grants from the Barley Council, NDSU and other sources. It will be part of NDSU's College of Agriculture, Food Systems and Natural Resources. A board of directors made up of representatives from the Barley Council, the American Barley Malting Association, North Dakota and Montana agricultural experiment stations and the barley malting industry will review the institute's work.

China: In January 2005 China imported 120,000 tonnes of malting barley, half each from Australia and Canada...more info

Scandinavian Malting Barley Market: Like last year at this time the slightest reduction in feed barley prices are followed by immediate drop in malting barley prices...more info

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 2005 are available on site www.e-malt.com/MarketPrices

Malt Price Evolution

Malt Market Price Evolution, Crop 2005

Source: E-malt.com

Malting barley prices. French barley prices.

Nominal prices.

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 - February 22, 2005
France	523,190	701,134	661,772	774,761	477,800
Germany	305,980	468,314	408,063	422,047	179,576
Belgium	277,584	296,368	287,850	317,292	251,544
U.K.	254,793	350,621	294,995	443,501	181,843
Finland	65,550	91,890	100,758	114,165	30,166
Denmark	52,326	96,812	94,791	90,452	38,953
Sweden	50,847	101,000	76,916	78,369	63,840
Netherlands	54,835	51,310	66,219	80,703	28,908
Ireland	26,003	35,145	31,140	38,900	56,924
Austria	4,850	8,840	8,620	60,211	6,130
Spain	3,000	2,400	5,640	10,000	-
Greece	1,800	1,744	1,306	979	130
Portugal	340	221	85	695	510
Italy	-	-	2	-	-
Total EU 15	1,621,098	2,205,799	2,038,157	2,432,075	1,316,324
New EU members				May-June, 04
Czech Republic				34,340	53,892
Poland				7,604	22,965
Hungary				2,830	44,915
Slovakia				1,000	41,230
Total EU 25	1,621,098	2,205,799	2,038,157	2,477,849	1,479,326

	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 – February 22/2005	4,236

	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 – February 22/2005	18,895

Graph of the week

Agenda

March 2005:
Night of Great thirst, Belgium;
Zythos Beer Festival, Belgium;
Institute and Guild of Brewing Africa Section 10th Convention, South Africa;
China Drinktec China International Exhibition on Beverage, Brewery and Wine Technology;
FOODEX JAPAN 2005 / INTERNATIONAL FOOD & BEVERAGE EXH;
International Food and Drink (IFE), UK;
BLACK SEA GRAIN: A NEW ENVIRONMENT IN UKRAINE AND REGIONAL PROSPECTS FOR GROWTH;
Deltabierfestival, The Netherlands;
Spring Beer Festival "Hops on Equinox", Seattle;
Brew and Beverage Industry - Beer Auction International Trade Fair, Russia;
Siebel Institute Brewing Profitability Workshop;

April 2005:
Helsinki Beer Festival;
Concise Course in Brewing Technology;
World Barley, Malt & Beer Conference 2005;
JOINT LEGISLATIVE CONFERENCE. Washington, D.C., USA;
BEER. Exhibition Pavilion Minsk.;
Craft Brewers Conference & BrewExpo America;
Classic City Brewfest, Athens, GA;
WINES, BEERS AND DRINKS Exhibition for the Beverage Industry. Krasnoyarsk, Russia;
Excursion to West-Flanders;

May 2005:
HOFEX 2005. 11th Asian International Exhibition of Food & Drink. Hong Kong;
30th Congress of the European Brewery Convention;
Beer International Brewing Technology Exhibition. Sochi, Russia.;
California Festival of Beers;

More events are available on site e-malt.com