E-Malt.com Flash 13b. March 31

China: Dutch brewing force Heineken N.V. announced on March 31 that it has reached an agreement, through its associated company, Heineken-APB (China) Pte Ltd (HAPBC), with Nantong Alcohol Industry Co., Ltd to acquire a 40% stake in Jiangsu DaFuHao Breweries Co, Ltd (DaFuHao). The total acquisition is valued at USD 28.6 million (EUR 22.1 million) of which Heineken's share is 46.1% (or EUR 10.2 million). The transaction will be funded from existing cash resources. The investment is expected to be earnings accretive in 2005. The deal is subject to necessary consents as well as approvals of the relevant local authorities. As a result of this transaction, HAPBC's market position is significantly strengthened in the adjacent provinces of Jiangsu and Shanghai. Thony Ruys, Chairman of the Executive Board of Heineken N.V. said, "Jiangsu DaFuHao Breweries' profitability in a competitive market such as Jiangsu, is a testament to its strength. With a strong position in one of the key beer markets in China, the acquisition of DaFuHao is a further step in our long-term growth path in China. It is consistent with Heineken's strategy of focusing on acquiring interest in breweries with quality earnings stream. Furthermore, it’s an excellent opportunity for the Heineken brand to benefit from DaFuHao’s distribution network in the Nantong region for further growth." DaFuHao, incorporated in 1996, is based in the city of Nantong, located in the Jiangsu Province, on China's southeast coast. Being one of the most profitable breweries and ranked amongst the top five brewers in Jiangsu, DaFuHao owns four breweries with a total production capacity of 3.5 million hectolitres in Nantong, Tongzhou, Qidong and Yancheng. It brews, markets and distributes major beer brands including "BBOSS", Tongzhou and Changjiang, which are popular in Nantong. The flagship brand "BBOSS" is also marketed and sold in other parts of the Jiangsu Province. The brewery has a 12% market share in the Jiangsu province and 60% market share in the 1.6 million hectolitre Nantong region. In 2003 DaFuHao sold a volume of 1.4 million hectolitres and the turnover was EUR 22 million. The brewery employs approximately 1,200 staff. The DaFuHao stake is HAPBC's second recent investment in China. In January 2004 it acquired a 21% interest in Kingway Brewery, which brews the Kingway beer in Guangdong province and is one of the most profitable listed brewers in China. HAPBC also owns Shanghai Asia Pacific Brewery, where Heineken beer is brewed for the Chinese market and Hainan Asia Pacific Brewery. HAPBC, in which Heineken has an indirect stake of 46.1% and Fraser & Neave 43.9%, combines all activities of Heineken and Asia Pacific Breweries in China. HAPBC is a 50/50 joint venture between Asia Pacific Investment Pte Ltd (APIPL) and Asia Pacific Breweries Limited (APBL). APBL is controlled by its parent company APIPL, a joint venture, with equal shareholders' and boards' voting rights, between Heineken and Fraser & Neave Limited...more info

Canada: InBev, the world’s largest brewer by volume, announced on March 31 that Labatt’s Toronto brewery will cease major brewing operations on November 4, 2005, with the brewery site formally closing by the end of the year. About 265 employees will be affected by the closure and will be provided fair and equitable severance packages as well as support services. “We have provided our employees with as much advance notice as possible to allow them to plan for their futures,” said Carlos Brito, President of Labatt Breweries of Canada. After an extensive review of Labatt’s operations, which took over a year, the Canadian Labatt management team has decided to close the Toronto brewery by the end of the year. Labatt’s decision to close the Toronto brewery is based on excess capacity, particularly in Central Canada, and the competitive disadvantage, which this creates. “This decision was a difficult one to take and follows considerable debate and analysis,” said Carlos Brito, President of Labatt Breweries of Canada. “After an extensive review of our brewery network, the Canadian management team has decided to cease major brewing operations in Toronto on November 4, 2005 with the brewery site formally closing by the end of the year.” As a result of the Toronto brewery closure, new investments will be made and jobs will be created at Labatt’s London, Ontario brewery. The company said it would have to spend some $25 million to expand the London brewery. “We will be taking steps to ensure that Toronto brewery production is transitioned to the rest of our brewery network before the closure takes place,” said Charles Oliver, Labatt's Vice President, Supply Chain. “And we plan to work consultatively with Toronto City Council to ensure the de-commissioning and re-development of the brewery lands is done in the best interests of the community.” The closure will leave Labatt with one Ontario plant in London, 185 kilometres west of Toronto, and breweries in Edmonton, Creston, B.C., Montreal, Toronto, London and St. John's, Nfld. The two Ontario plants produce more than 40 % of the company's beer in Canada. Founded in London , Ontario in 1847 and the proud brewer of more than 60 quality beer brands, Labatt is Canada 's largest brewing company. Labatt, has its beer distributed in 40 countries. The closure announcement comes after Labatt's conducted a review of its Canadian operations, which came after the merger of Belgian brewer Interbrew S.A. with Brazil's Ambev, to form the world's largest brewer by volume. Under the 2004 merger, control of Labatt's was transferred from Interbrew to Ambev. The Toronto closure follows an announcement in September that Labatt will close its brewery in the Vancouver suburb of New Westminster on April 21, cutting 180 jobs...more info

Germany: Danish beer giant, Carlsberg A/S, announced on March 30 that its wholly owned subsidiary, Carlsberg Deutschland GmbH, has acquired 100% of the beverage wholesale company, Göttsche Getränke Group...more info

Denmark, Copenhagen: The Danish Brewery Group A/S (Bryggerigruppen) announced on March 31 it has entered into an agreement to sell the former brewery site in Randers...more info

Colombia, Bogota: Colombian brewer Grupo Empresarial Bavaria, which is seeking a big foreign partner, announced on March 29 it foresaw higher earnings in 2005 and would reduce debt over the next two years, according to Reuters. South America's second-largest brewer should report earnings before interest, taxes, depreciation and amortization of more than $800 million in 2005, up from about $797 million in 2004, company President Ricardo Obregon told a shareholders' assembly. It plans to reduce its debt to $1.7 billion by the end of this year and $1.5 billion by the end of 2006 from $1.9 billion in December, Obregon said. The company, which dominates beer markets in Colombia, Ecuador, Peru and Panama, plans to invest $192 million this year. Bavaria shares have jumped about 44 percent 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 -- were all looking at buying the company. But Bavaria says it has received no offers and that its controlling shareholders from Colombia's Santo Domingo family do not want a straight sale and are instead looking at a share swap that would give them a stake in a world-class partner. Taking a share in Bavaria would be the only way for a rival to challenge InBev, the world's largest brewer, in the promising South American market, analysts say.

Romania: The beer market of Romania is to maintain its growing trend despite the increase of excise duty applied from April 1, which is higher than expected by Romanian breweries...more info

Barley News

World Barley: A small decrease in world barley output is expected in 2005, IGC posted in its Grain Market Report on March 31. Areas are likely to remain the same in the EU but to increase in Russia...more info

Australia: The Department of Agriculture, Western Australia has reaffirmed that farmer to farmer trading of its new malting barley varieties Baudin and Hamelin is permitted in Western Australia, SeedQuest News posted on April 1. Barley industry development officer Alaina Garthwaite said recent reports on Plant Breeders Rights (PBR) had created some confusion about the trading regulations for seed of the new varieties. Ms Garthwaite said Baudin and Hamelin barley were protected by PBR, meaning that the licensee sets the terms and conditions for the use of these varieties. “In Western Australia, the Grains Research and Development Corporation and the Department of Agriculture are the seed licencees and Baudin seed is free to trade from farmer to farmer in Western Australia. However, in the Eastern States where the seed licence for Baudin is held by AWB Seeds, farmer to farmer trading is not permitted,” she said. “Hamelin seed is free to trade in Western Australia and has not been commercially released in other states.” Ms Garthwaite said Hamelin and Baudin were subject to crop improvement royalties (CIR), otherwise known as end point royalties, for every tonne of grain produced and sold by growers. In WA, Baudin and Hamelin are subject to a A$3/ tonne CIR for grain delivered for malting and A$1/ tonne for grain delivered as feed. In the eastern states, an additional collection fee of 50 cents is also applicable.

USA: Growers in the United States intend to plant 3.97 million acres of barley this year, down 12% from last year, according to this year's seeding intentions report from the USDA...more info

Theoretical malt prices.

* - 70/30 = 70% Average Two Row Spring and 30% Six Row Winter
** - 50/50 = 50% Average Two Row Spring and 50% Six Row 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

Number of German Breweries classified by production capacity

Production capacity, hl of beer	1997	1998	1999	2000	2001	2002	2003	2004
up to 5,000 hl	686	718	725	746	781	789	774	796
up to 10,000 hl	116	105	107	97	88	93	82	85
up to 50,000 hl	241	237	233	222	231	212	219	195
up to 100,000 hl	85	85	77	85	77	71	72	72
up to 200,000 hl	51	54	52	43	41	45	46	44
up to 500,000 hl	43	35	36	35	28	25	29	32
up to 1 Million hl	18	21	21	21	23	21	26	21
over 1 Million hl	33	30	30	30	29	31	27	29
Total German Breweries	1,273	1,285	1,281	1,279	1,298	1,287	1,275	1,274

Source: Deutscher Brauer-Bund

Graph of the week

Agenda

April 2005:
Helsinki Beer Festival;
Tour de Geuze 2005. Payottenland, Belgium;
FAB 2005 - BC Food & Beverage Conference. Vancouver, BC;
Grains Week 2005. Queensland, Australia;
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;
SOUTH-UKRAINIAN DAYS OF FOOD AND DRINKS;
SIBFOODEXPO, Siberian Beer. Novosibirsk;
SAMARA DRINKS. SAMARA, RUSSIA;
WINES, BEERS AND DRINKS Exhibition for the Beverage Industry. Krasnoyarsk, Russia;
Malting Course BRi Nutfield United Kingdom;
INTERPAK 2005 Duessledorf, Germany;
Excursion to West-Flanders;

May 2005:
TwinTrack Brewing Microbiology Program. The Siebel Institute;
HOFEX 2005. 11th Asian International Exhibition of Food & Drink. Hong Kong;
30th Congress of the European Brewery Convention;
Pivo-2005. Beer International Brewing Technology Exhibition. Sochi, Russia.;
Export Credit Guarantee Programs Seminar. USDA;
California Festival of Beers;

June 2005:
World Barley, Malt & Beer Conference 2005, Germany;
ASBC Annual Convention. American Society of Brewing Chemists Meeting.;
IGC GRAINS CONFERENCE 2005;
BRASIL BRAU International Fair of Beverage Technology;
FOOD TAIPEI 2005. The largest food and beverage show in Taiwan;
BevTek / BrewTek International Exhibition of Beverage and Brewery Processing and Packaging Technology. Bangkok, Thailand ;

More events are available on site e-malt.com