Base Currency: Euro, EUR on 11-August-2004 1 EUR = 1.2240 USD 1 EUR = 0.6701 GBP 1 EUR = 1.6140 CAD 1 EUR = 1.7171 AUD 1 EUR = 136.27 JPY 1 EUR = 3.7075 BRL 1 EUR = 35.8142 RUB	Base Currency: US Dollar on 11-August-2004 1 USD = 0.8172 EUR 1 USD = 0.5476 GBP 1 USD = 1.3186 CAD 1 USD = 1.4028 AUD 1 USD = 111.33 JPY 1 USD = 3.029 BRL 1 USD = 29.26 RUB
EUR/USD Chart

Russia: Heineken N.V. announced on August 10 that it has signed an agreement to acquire 100% of the Russian group Central European Brewing Company (CEBCO). CEBCO owns 95% of the common voting shares and 78% of the total issued shares of Shikhan Brewery in Sterlitamak and 100% of Volga Brewery in Nizhny Novgorod. The consideration is payable in cash and will be funded from available resources. The transaction has been completed but is subject to the formal registration of the new charter reflecting the transfer of ownership. The registration is expected within one week. The acquisitions are value enhancing on a NPV (Net Present Value) basis. As a result of this transaction, Heineken will become the third largest player in the Russian beer market with volumes of 5.9 million hectolitres and a market share of more than 7%. Russia is the world's fifth largest beer market and Heineken expects the Russian beer market to grow by 7% to over 80 million hectolitres in 2004. Jean Francois van Boxmeer, member of the Executive Board of Heineken N.V. commented: "These acquisitions extend our presence and participation in one of the world's largest and rapidly growing beer markets. The Shikhan and the Volga Breweries offer us a better geographical spread of production facilities in the fastest growing regions in Russia. I firmly believe that by applying our proven capabilities in integration, distribution and brand marketing we will drive significant growth and value from both these businesses and the Russian market in the coming years". The acquisition of the Shikhan and the Volga Breweries fit perfectly in Heineken's growth strategy for Russia. Since Heineken Brewery LLC in St. Petersburg is performing well with growing sales volumes of 15-20% per year, it is expected that the brewery will run out of its capacity in 2005. The Shikhan and the Volga Breweries offer Heineken immediate additional production capacity for producing the national brands Bochkarev and Ohota, currently produced by Heineken Brewery LLC...more info

Brasil: Sao Paulo: Companhia de Bebidas das Americas – AmBev, the world’s fifth largest brewer and Brazil’s leading beverage company, announced on August 11, 2004 its results for the second quarter 2004 (2Q04). The following financial and operating information, unless otherwise indicated, is presented in Reais, in a nominal and consolidated basis, pursuant to Brazilian Corporate Law. AmBev’s Brazilian operations are comprised of the Brazilian beer segment, the Brazilian soft drinks and non-alcoholic, non-carbonated (NANC) segment and the “other products” segment. AmBev’s consolidated operations are comprised of the Company’s Brazilian operations and its International Operations, which include AmBev’s 50.98% average economic stake in Quinsa (Argentina) in the quarter and other international operations (Venezuela, Guatemala, Peru, Ecuador and Dominican Republic). Comparisons, unless otherwise stated, refer to the second quarter 2003 (2Q03). AmBev’s consolidated EBITDA reached R$735.1 million in the quarter, a 33.4% increase compared to the year-ago quarter. The EBITDA of the Brazilian operations totaled R$635.4 million, up 20.8% compared to 2Q03. In AmBev’s Brazilian beer business, efforts focused on recovering market share, without compromising profitability. Market share was 66.3% in June (as compared with 65.0% in March) according to ACNielsen estimates, and the EBITDA margin was 140 basis points higher than 2Q03. International Operations accounted for 13.6% of consolidated EBITDA (versus 4.5% in 2Q03). The positive and continuous evolution of Quinsa’s results, as well as the good performance of Cerveceria Rio in Central America and Embodom in Caribe, guaranteed a greater impact of this segment on our results. Carlos Brito, AmBev’s CEO, commented: “With an increase of 33.4% in consolidated EBITDA, results for the second quarter 2004 once again reaffirm AmBev’s potential for value creation. Through the hard work of each of our employees, we continue to succeed in our efforts on recovering market share in Brazil and expanding AmBev’s presence in Latin America...more info

Japan, Tokyo: Kirin Brewery Co. Ltd. said on August 10 its first-half net profit rose 2.1 % as lower costs and solid earnings by affiliates offset sluggish beer sales at home, and it maintained its full-year profit forecast. Kirin, known for its flagship "Lager" beer, said it expected a full-year net profit of 43 billion yen ($389 million), unchanged from its May forecast. It expects sales to hit 1.68 trillion yen in the year to December 31, up from 1.60 trillion in 2003, although its core market has shrunk due to a shift in consumer tastes, according to Reuters. The latest sales forecast was down slightly from its May estimate of 1.70 trillion yen. "In addition to the hot weather (which boosted sales) in July, we are counting on planned event campaigns such as soccer games in the latter half of the year to lift sales," Kirin Managing Director Kazuhiro Sato told a news conference. "But a shift in consumer tastes and the lure of cheaper products are weighing on us." Newer, cheaper drinks such as those based on shochu -- distilled alcohol made from materials such as sweet potatoes -- have lured customers from traditional brews, resulting in a 6.6 percent drop in Kirin's beer sales in the half year to June 30. Its shipments of cheaper low-malt beer, or happoshu, slumped 9.9 percent as market leader Asahi Breweries Ltd. (2502.T: Quote, Profile, Research) snatched a 5.1 percentage point rise in its share of that market. Kirin still kept the biggest share with 42.6 percent. First-half net profit was 14.23 billion yen, up from 13.9 billion in the same period last year, on sales of 759.45 billion yen. The slowdown in beer sales was offset by robust earnings at soft drinks unit Kirin Beverage Corp., which posted a 158.6 percent rise in half-year net profit from a year earlier on sales of 177.6 billion yen...more info

Russia: The Associated Press The Federation Council on Sunday, August 8, approved a bill that will put some of Europe's toughest restrictions on beer ads. Under the measure, brewers will not be able to advertise their products on TV or radio from 7 a.m. to 10 p.m. At other times, the ads will not be allowed to show humans, animals or animated characters or imply that beer is connected with social or athletic success. Advertisers cannot imply that it quenches thirst, according to The Moscow Times. The Federation Council approved the measure in a 142-9 vote with six abstentions. The State Duma approved it Thursday. Now it goes to President Vladimir Putin for his signature. The Brewers Union has warned that the new prohibitions will undermine beer companies' sponsorship of sports events on television. Sergei Mironov, speaker of the Federation Council, had earlier told Itar-Tass that senators would likely propose some amendments to the measure this fall that would ensure that brewers' financial support to sports is not reduced. He did not specify what those amendments would be.

China: The Chinese beer market has grown at an astounding pace in recent years. Indeed since 1997 total consumption of beer grew by 16.79 per cent up to 2003 to reach 24.87 billion litres. These figures have been spurred on by the massive levels of foreign investment in the market, along with the rise in the average levels of consumer spending in China, thanks to the economic reform policies of the government. Indeed total expenditure on beer has risen by 85.99 per cent in current value terms since 1996, the report highlights, the Beverage Daily posted on August 6. China stands poised to overtake the US to become the largest national beer market in the world, and this is likely to happen before the next century begins, the Access Asia research team say. Thus China is an increasingly important market, with a lot more potential for investment. The report bases this assumption on the fact that retail volumes for beer rose by 23.29 per cent between 1997 and 2003 and that in 2002 the market reached an estimated value of RMB 163.98 billion (ˆ16.1bn). The further potential of the Chinese beer market is highlighted by the fact that, despite volumes being significant, per capita consumption is still relatively low. In 2003 an average of 18.76 litres of beer was consumed by each person on a yearly basis. This compares to 44.5 litres per capita in South Korea, 41.9 in Japan and 29 litres in Hong Kong. Undoubtedly such figures indicate that as the economy continues to develop, so too will the potential for greater levels of beer consumption. Over the course of the last few months the China beer market has witnessed frenzied activity as international brewery companies race to increase their footprint in what is now the world’s second largest market by volume. But with the immense size of the market and development still a long way behind western Europe, the latest report from Access Asia suggests that there is still a great deal of room for further investment and development...more info

Malt News

Malt export licence fixations in 2003/04 had been a record 2.432 million tonnes in the EU-15. The fast pace of licence bookings continued in July, 226,719 tonnes would result in a total of 2.7 million tonnes for the whole of 2004/05, if that pace continued. That, however, seems impossible. Nevertheless, the good beginning of the new export year should reduce the anxieties of the malting industry that it cannot sell its production any more after the increase of capacities in the EU and Eastern Europe.

EU malt export licence fixations:

(in tonnes)	2000-2001	2001-2002	2002-2003	2003-2004	July 01, 2004 - July 27, 2004
France	523,190	701,134	661,772	774,761	79,850
Germany	305,980	468,314	408,063	422,047	35,116
Belgium	277,584	296,368	287,850	317,292	17,300
U.K.	254,793	350,621	294,995	443,501	28,314
Finland	65,550	91,890	100,758	114,165	10,000
Denmark	52,326	96,812	94,791	90,452	8,500
Sweden	50,847	101,000	76,916	78,369	4,170
Netherlands	54,835	51,310	66,219	80,703	6,540
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	-
Italy	-	-	2	-	-
Total old EU	1,621,098	2,205,799	2,038,157	2,432,075	226,719
New EU members				May-June, 04
Czech Republic				34,340	9,003
Poland				7,604	6,089
Hungary				2,830	7,968
Slovakia				1,000	24,100
Total EU	1,621,098	2,205,799	2,038,157	2,477,849	273,879

	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 – July 27/2004	405
	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 – July 27/2004	2,027

Barley News

In 2003/04 prices of malting barley around the world were driven up by the huge demand for feed grains, malting industry analysts revealed. Crops of 2004 will produce enough maize and feed wheat to cut down the use of feed barley to traditional levels. One must not forget, though, that EU barley costs about US $ 125 FOB at present exchange rates and world markets will have to do without EU barley supplies, as long as prices are below the a.m. level or as long as the EU does not grant export restitutions.

Austria: A large crop of good quality may even produce a small export surplus. Price ideas are as low as EUR 120 bid and EUR 125 ask, delivered ex harvest, fca maltings.

Australia: The impending $850 million merger of two of the grain industry's biggest players, ABB Grain and Ausbulk, is starting to cut a swath through Ausbulk's senior management. A spokeswoman for Ausbulk confirmed on August 9 that at least four of Ausbulk's management team will be leaving the company as part of the redundancies flowing from its absorption into ABB Grain, The West Australian posted. They are its deputy chief executive, Michael Nicolai, its grain marketing executive manager, Phil Pyle, its human resources executive manager, Ruth Gillies, and its corporate relations executive manager, David Thomas. Mr Pyle and Mr Thomas will leave on September 30, the day the merger will come into effect provided it gets expected approval from grower shareholders at meetings scheduled for September 21 and provided the Australian Competition and Consumer Commission raises no major objections in its response expected this week. Mr Nicolai and Ms Gillies are due to leave on March 31.

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.

Malting barley prices. French barley prices.

Nominal prices.

EURO = USD 1.2240 August 11, 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	114.00	139.50
2RS	Prestige	nq	nq	113.00	138.50
2RS	Cellar	nq	nq	113.50	139.00
2RS	Aspen	nq	nq	112.50	138.00
2RS	Optic	nq	nq	112.50	138.00
2RS	Astoria	nq	nq	112.00	137.50
2RS	Cork	nq	nq	112.00	137.50
6RW	Esterel	nq	nq	102.00	125.00

nq - Not quoted

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

Graph of the week

Agenda

August 2004:
Great British Beer Festival;
Worcester Beer and Cider Festival;
BeerTek China Beer and Brewing Technology Exhibition;
Peterborough Beer Festival 2004;
FOODWORLD Food and Beverage Exhibition;
TecnoBebida Latin America International Exhibition of Technologies for the Beverage Industry;

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;
bevex Beverage Trade Fair;
InterBev 2004;
YUGOSLAVIA INTERNATIONAL FAIR OF FOOD & BEVERAGES 2004;
BevExpo 2004;
Great American Beer Festival;

October 2004:
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