Base Currency: Euro, EUR on 22-October-2004 1 EUR = 1.2618 USD 1 EUR = 0.6905 GBP 1 EUR = 1.5683 CAD 1 EUR = 1.7105 AUD 1 EUR = 135.58 JPY 1 EUR = 3.6062 BRL 1 EUR = 36.7436 RUB	Base Currency: US Dollar on 22-October-2004 1 USD = 0.7926 EUR 1 USD = 0.5471 GBP 1 USD = 1.2429 CAD 1 USD = 1.3556 AUD 1 USD = 107.46 JPY 1 USD = 2.858 BRL 1 USD = 29.12 RUB
EUR/USD Chart

Latvia: The Danish Brewery Group (Bryggerigruppen) reinforces its number two position in the Baltic States by acquiring controlling interest in leading Latvian brewery, the company announced on October 20. Bryggerigruppen acquired 83.5% of the share capital of Lacplesa Alus A/S registered in Latvia, the leading Latvian brewery with well-known brand and particularly strong in the HoReCa segment. The acquisition price of the shares amounts to DKK 8.9 million (EUR 1.2 million), whereas the interest-bearing debt of the company amounts to DKK 19.0 million (EUR 2.5 million) equal to a total value (enterprise value) of some DKK 28 million (EUR 3.7 million). The acquisition, which is subject to, among other things, approval from the Latvian competition authorities, is expected to be completed in early 2005. Lacplesa Alus A/S is a leading supplier of beer in Latvia with expected revenue of some DKK 45 million (some EUR 6 million) in 2004. The company’s main brand – Lacplesis - is known as a high quality brand placed in the premium segment, and it is particularly strong in the HoReCa area. In addition to its own brands, the company sells and distributes a number of international beer brands in Latvia. In 2003 the total Latvian beer market reached some 1.5 million hectolitres with Lacplesa Alus A/S holding a share of some 11%, which made it the number 3 beer supplier in Latvia. The company has some 200 employees. The V8 Strategic Plan of The Danish Brewery Group identifies the Baltic countries as a key target area. In July 2004, the Group announced its acquisition of the leading Baltic soft drinks producer SIA ”Cido Partikas Grupa” registered in Latvia (cf Announcement BG23/2004 of 29 July 2004). This initiative is now complemented by the acquisition of 83.5% of the share capital of Lacplesa Alus A/S. The Danish Brewery Group now has three breweries and one soft drinks producer in the Baltic countries with expected revenue of DKK 500 million and some 1,000 employees. This clearly makes The Danish Brewery Group one of the leading beverage suppliers in the Baltic countries. In combination with The Danish Brewery Group’s acquisition of SIA ”Cido Partikas Grupa”, which holds a 31% share of the market for fruit juices and soft drinks in Latvia, the acquisition of Lacplesa Alus A/S makes possible the achievement of considerable synergies on sales and distribution. Furthermore, positive results are expected from purchasing and production synergies resulting from cooperation with AB Kalnapilio Tauro grupé in Lithuania. The Danish Brewery Group’s contribution of capital and competence will, based on an overall strong market position, enable further exploitation and enhancement of Lacplesis brand strength...more info

UK: Britain's biggest brewer Scottish & Newcastle announced on October 20 robust performance for the first nine months of the year despite poor summer weather, which dampened beer markets across Western Europe. Since the end of the summer period beer markets have recovered to anticipated levels. This performance is due to improving operational efficiency and good progress from our key brands, the company said. Greater competitiveness across our businesses combined with recovering demand gives us confidence we will meet market expectations for 2004. This robust performance and improving competitiveness positions the group well for further progress in 2005. The UK beer market, as has been widely reported, was relatively weak in the third quarter with poor summer weather compounded by a drop-off in off trade demand following the end of the Euro 2004 football championships. In the context of these testing market conditions, the UK business had a positive third quarter, continuing the strong performance of the first half of the year. The top four beer and cider brands (Foster’s, Kronenbourg 1664, John Smith’s, Strongbow) performed well with volumes for the year to date being +5%; these brands are the key contributors to improving share. This growth has been achieved with no additional discounting, and net sales per hectolitre were slightly ahead for the third quarter. Operationally, the business continues to perform well with high levels of service, good control of costs, and strong cash generation. This improved efficiency is enabling us to invest significantly more in advertising behind our brands; a key driver of improving volumes and margins in the future. As previously indicated, A&P spend will increase by around 1.5% points of net sales for the full year. In France volumes in July and August were, as anticipated, markedly lower than in 2003. As a consequence of the wet summer against extremely tough comparatives we now anticipate the French beer market will decline by around 6% for the full year. However, Brasseries Kronenbourg’s premium brands (Kronenbourg 1664, Grimbergen and Foster’s) continue to gain share (volume –3.5% for the year to date) and total volumes for the third quarter were ahead of those in 2002. Demand has improved since the end of the summer, and for the balance of the year we expect beer market volumes to be at more normal levels...more info

Poland, Warsaw: The Heineken group's Zywiec, which has long led the Polish beer market, and long-time runner up SABMiller's Kompania Piwowarska (KP) clashed over third-quarter sales, both claiming to be Poland's largest brewer, Interfax-Europe posted on October 22. "For a long time, we have been closing the gap between us and the Zywiec group, and this quarter we have finally reached the No. 1 place on the Polish market," KP General Director Karl Lippert told reporters on Thursday. "Our market share exceeds 35%, depending on the methodology, and we sold some 320 mln liters" of beer in the third quarter. Heineken's Zywiec replied that it is the market leader, as it currently holds a 37% market share, but it declined to come up with specific sales figures. "We have maintained the 37% market share, but we disclose the volume production data only for the full- and half-year periods," Zywiec President Nico Nusmeier told reporters, claiming the company will strive to take 40% of the market. Kompania Piwowarska boosted third-quarter sales 16.2% to over 320 mln, which gives it a 37.4% share in the country's beer sale total of 855.6 mln liters, as reported by Polish brewers association Browary Polskie. The company aims to sell over 1 bln liters in 2004. The company had a PLN 440 mln net profit in the fiscal year ended in March 2004. Zywiec lifted its net profit by two and half times to PLN 206.2 mln on sales up 8.4% to PLN 3.20 bln in 2003. In volume terms, Zywiec sold some 9.1 mln hectoliters (910 mln liters) in 2003, marking an 8% improvement from the year before.

Russia: Baltika, the top Russian brewer, plans to add Iraq and Cuba to its export map next year as it continues to attract new overseas fans. "There are quite a lot of people who like to taste new brands," Baltika Director for Exports Dmitry Kistev said in a telephone interview late on Thursday, October 21, according to Reuters. "They are attracted by the unusual link of 'beer and Russia'," Kistev said of Baltika's typical customer. The St Petersburg-based company, jointly owned by Carslberg and Scottish & Newcastle, plans to raise its export volumes to 180 million litres next year from just 41 million litres in 2001 when it began shipping abroad. "Initially, exports were just the acknowledgment of the quality of our beer," Kistev said. "But when Russian market growth started to slow in 2001, we had to look for new markets." In 2001, export volumes accounted for 1 percent of Baltika's overall sales, but the company hopes to raise that to 6.5 percent this year and 9 percent in 2005. The ultimate goal is to export 15-18 % of production, Kistev said. Russia's biggest beer exporter, which has recently started deliveries to New Zealand, sells the amber liquid in 35 countries. It plans to enter markets in Brazil, Cuba, India and Iraq next year. "We think that military operations will continue next year," he said of Iraq, adding that Baltika hoped mainly to supply coalition forces with its beer. "It will be Baltika No. 9, our strongest beer with 8 percent alcohol content. We already have orders, maybe deliveries will start even this year." Baltika will also sell Baltika No.0, its alcohol-free beer, for the local Iraqi population. The United States -- Baltika's biggest market -- should consume 1.5 million litres this year and double that next year. "China should show a similar result next year," Kistev said. Brazil will drink 360,000 litres of Baltika beer in 2005. The only market where Baltika faces major problems is ex-Soviet Georgia, whose authorities jailed the head of Baltika's local distributor for 3 months on accusations that the company had not paid excise charges. Baltika denies this. "We have been forced to stop sales to Georgia," Kistev said. Baltika used to deliver beer to Armenia via Georgia, but will now have to consider transportation through Iran, where Baltika also sells alcohol-free beer. Baltika also plans to launch production outside Russia, primarily in the CIS countries. "There are such plans and we are holding talks," he said without elaborating.

Belarus: The construction of a new Belarus-Czech brewery is planned to be started in Grodno this year. This event will increase several times the Belarus demand for brewing barley. The joint Belarus-Czech enterprise OOO “Kuntzevsky pivovar, 1877” has already been registered. The owners of the new company are Belarus company Conversion-Invest, which owns 60%; Czech company Aragast with 31% and Grodno Brewery with 9%. The project, which includes construction of the plant and modernization, requires EUR 11.5 million. The production capacity of the new brewery will come to 20 million litres of beer per annum. According to analysts 40% of the production is planned to be sold on internal market the rest is to be shipped abroad. The enterprise is to start brewing on January 1, 2006.

Malt News

Ukraine: The European Bank for Reconstruction and Development (EBRD) signed on October 21 an agreement with Soufflet Group about purchasing 24% shares of the largest Ukrainian malt producer OAO Slavutsky Malting Plant based in Khmelnitski Oblast. More over EBRD is offering a five-year credit of USD 11.8 million for financing the expanding of company’s production capacity up to 150 thousand tonnes of malt per year. The financing will also be invested in implementation of international quality certification, application of energy-saving technologies and management improvement. The loan was offered in the network of earlier concluded contract with Soufflet Group for EUR 65 million to support the company’s activity in Central and Eastern Europe. The share holding was acquired from the French company Soufflet, which was controlling 90% of the Slavutsky’s shares before the deal. On 8 March 2004 Baltic Beverage Holding (BBH) sold 90% of company‘s shares to Soufflet Group. Representatives of Souffle Group pointed out that the granted credit funds would help to create stable source of revenue for farmers. Having great experience in malt production Souffle Group will provide assistance in establishing new technologies of barley growing and culturing. Slavutsky Malting plant output in the last three months about 6 thousand tonnes of malt. In September the plant produced 1.6 thousand tonnes of malt that is a 75% drop versus August. Its production facilities are calculated upon yearly 120,000 tonnes barley processing and 70,000 tonnes malt output. Reportedly, the Soufflet group, the world's leading maltster, has invested in Central Europe, which began at the end of 1998. Malteries Soufflet produces in nine countries, France, Poland, the Czech Republic, Hungary, Romania, Russia, Kazakhstan, Ukraine and Serbia-Montenegro. It owns 22 malting plants with 686 thousand tonnes production capacity per year in France and 600 thousand tonnes in Eastern Europe countries. With Slavutsky plant the total production capacity of the plant comes to 1.3 million tonnes. According to analysts Ukraine’s demand in malt is 120 thousand tonnes per year.

EU: The EU malting industry was expected to be in deep trouble because of extremely low sales prices for 2005 and the added malt capacities in the EU, Russia and Ukraine, industry analysts posted in a statement. In the first half of 2004 exports went well, and most maltsters report small malt stocks to-date. Barley markets dropped to levels, which reduced or even abolished foreseen financial losses. As beer sales look very good in Southeast Asia and South America, the situation of the EU malting industry looks more optimistic. “But is the major crisis only postponed?”

Barley News

World barley markets were a little firmer in September, mainly because of some tightening of Black Sea supplies, according to International Grains Council Report posted by the end of September. Larger crops in Europe and the CIS are expected to lift world barley production in 2004 by about 9 million tonnes, to 149 million tonnes. The EU estimate is raised by 1 million tonnes from last month due to higher than expected yields in France and Germany, but forecasts for Australia and Canada have been cut, leaving the global estimate virtually unchanged. In contrast to maize, the Council’s forecast of world consumption of barley has been trimmed by 1m. tons, to 143m., a figure lower than last year because of reduced feed use in the EU, which had been unusually large in 2003/04 due to reduced wheat and maize supplies. In Ukraine, where barley is the biggest single feed grain, consumption has been affected by the slow recovery in the livestock sector, especially cattle and pigs, after last year’s sharp fall in feed supplies, and forecast use of this grain has been lowered accordingly. Trade prospects for barley have not changed significantly since last month, with only a modest upturn expected, mainly in the malting sector, as shipments to China recover. Because of uncompetitive prices compared with Black Sea and other offers, EU feed barley exports are forecast to be very small in 2004/05. Following a significant increase in the forecast for the EU, world barley stocks are placed 1m. tons higher than before and are expected to rebound to a six-year high of over 28 million tonnes. According to International Grains Council (IGC) on August 26 Tunisia bought 0.1 million tonnes of Black Sea feed barley. On September 22 Jordan bought 0.1 million tonnes of feed barley.

Sweden: The new estimate for Swedish 2004 crop is 280,000 tonnes of screened malting barley, Viking Malt posted in its last report. This early estimate has now been reduced due to low yields and lower calibration. The small deficit can easily be covered from neighbouring areas. Sweden’s two main barley areas, mid and south of Sweden, are this year somewhat reversed. The outcome is the opposite of normal regarding quality and quantity with high yields and low proteins in the mid of Sweden and the opposite in the south. The estimated time for harvest of malting barley in Sweden is 100-120 days after sowing. For 2004 the malting barley harvest was completed around two weeks late, in the beginning of September. The breakdown between varieties is still on the same levels as before. Major varieties are Barke, Pasadena, Astoria and Prestige.

Australia, Sydney: Australia's Hamelin malting barley variety has been officially classified as General Malting after two years of commercial malting and brewing trials conducted by the Western Malting Barley Council, AgReport revealed on October 22. Hamelin was developed by Western Australia's Department of Agriculture and the GRDC with support from the Western Malting Barley Council. It has been malted by Joe White Maltings and brewed by the Kirin Brewery in Japan and Carlton and United Breweries' pilot brewery, performing well at all stages of the malting and brewing process. Western Malting Barley Council Chairman Steve Tilbrook said it was pleasing to see Hamelin perform so well and the upgrade was timely for growers planning next year's cropping program. "The classification of Hamelin as malting grade is a significant step forward in the development, growth and marketing of high quality barley varieties from WA," Tilbrook said.

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

Malting barley prices. French barley prices.

Nominal prices.

EURO = USD 1.2618 October 22, 2004
Crop year		2004		2005
Parity		FOB Creil		FOB Creil
Position		July 2004		July 2005
Type	Variety	EURO	USD	EURO	USD
2RS	Scarlett	112.00	141.50	123.00	155.50
2RS	Prestige	111.00	140.50	122.00	154.00
2RS	Cellar	111.50	141.00	122.50	154.50
2RS	Aspen	110.50	139.50	121.50	153.50
2RS	Optic	110.50	139.50	121.50	153.50
2RS	Astoria	110.00	139.00	121.00	153.00
2RS	Cork	110.00	139.00	121.00	153.00
6RW	Esterel	100.00	126.50	106.00	134.00

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 - September 28, 2004   France   523,190  701,134  661,772  774,761  165,340   Germany   305,980  468,314  408,063  422,047  85,415   Belgium   277,584  296,368  287,850  317,292  56,804   U.K.    254,793  350,621  294,995  443,501  117,948   Finland   65,550  91,890  100,758  114,165  18,520   Denmark    52,326  96,812  94,791  90,452  22,120   Sweden   50,847  101,000  76,916  78,369  27,190   Netherlands   54,835  51,310  66,219  80,703  12,079   Ireland   26,003  35,145  31,140  38,900  37,404   Austria   4,850  8,840  8,620  60,211  2,541   Spain   3,000  2,400  5,640  10,000  -   Greece   1,800  1,744  1,306  979  130   Portugal   340  221  85  695  170   Italy   -  -  2  -  -   Total old EU   1,621,098  2,205,799  2,038,157  2,432,075  545,661   New EU members  May-June, 04     Czech Republic         34,340  24,124   Poland         7,604  6,913   Hungary         2,830  20,523   Slovakia         1,000  31,770   Total EU    1,621,098  2,205,799  2,038,157  2,477,849  628,991    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 – September 28/2004    1,399        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 – September 28/2004    8,501

Graph of the week

Agenda

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;

November 2004:
INTERNATIONAL EXH FOR FOOD & DRINK INDUSTRY / WORLD FOOD UKRAINE 2004;
INT'L EXH OF WINES, ALCOHOLIC & NON ALCOHOLIC DRINKS & PROTECTION EQUIPMENT / EXPO DRINK 2004. Romania;
TALLINN FOODFEST 2004;
Belgian Beer Fest, Boston MA;
Teach a Friend to Brew Day;
FOOD PROCESSING MACHINERY EXPO 2004;
FISPAL RECIFE 2004 / INTERNATIONAL FOOD FAIR. Brazil.;
BRAU Beviale 2004. Nürnberg, Germany.;
Brewers' Association of America Conference;
Accrington Beer Festival. UK;
FOODAPEST 2004. 7th International Food, Drink and Food Processing Trade Fair;
INTERNATIONAL EXH FOR FOOD INGREDIENTS, ADDITIVES & FLAVOURINGS / INGREDIENTS RUSSIA 2004;

More events are available on site e-malt.com