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• Smith Barney, the research arm of Citigroup bank, raised on November 26 its target price for SABMiller. Analysts increased the price from 600p to 640 pence ...more info



• Russia’s third largest beer maker, Ochakovo announced its intentions to triple its advertising budget. Next year Ochakovo will spend about US$ 20 million to advertise its production ...more info



• British brewer, Young & Co, may close its Ram brewery in London, one of the oldest in the UK ...more info



• Japanese brewing force, Kirin, is planning to produce draught beer in China from next year, Japanese media reported. The brewer aim is to increase sales in the Chinese market ...more info



• Washington D.C.: Diageo and other leading beer, wines and spirits companies could face a massive class action lawsuit, claiming they deliberately used advertising aimed at drinkers under the legal age ...more info



• The chairman of China's biggest beer hops company moved his family abroad, drained his bank accounts and dropped from sight, official reports say ...more info

2. Brewery News

Chinese beer maker, Guangdong Brewery Holdings Ltd., announced on November 26 it was in talks to sell a stake to one of the world's five largest brewing groups, accelerating consolidation in the world's biggest beer market by volume. However Guangdong didn’t identify the buyer. The potential sale of a 21 % stake highlights the appetite of foreign beer giants to buy a toehold in the fragmented but fast-growing Chinese market, Reuters said. Guangdong Brewery Holdings has a market capitalisation of US$314 million and does not rank among the top 10 Chinese beermakers, although it boasts a 16 % market share in its home province of Guangdong, one of China's wealthiest, where its flagship Kingway brand is popular. "The M&A game is the trend in China's beer sector, but the competition is getting fierce," said Nomura International analyst Phoebe Wong. "There are fewer breweries to pick from now. Most of the top five have foreign partners already," she said. Shares in Guangdong Brewery, which could not be reached for additional comment, surged 7.69 % to close the morning session at HK$1.96. The stock has quadrupled this year amid a broad rally by Chinese domestic consumption related stocks. Guangdong Brewery said in a statement that it and its parent firm GDH had agreed with a company from "one of the world's top five international brewery groups by sales" to talk about various strategic investments. It did not identify the international brewer. Market sources said potential buyers include Dutch brewer Heineken NV, Denmark's Carlsburg A/S and U.S.-based Anheuser-Busch Cos Inc, the world's largest. China's largest beermaker is Tsingtao Brewery, which has grown its market share to about 14 % through an acquisition spree...more info

The global beer market is due to reach 1.5 billion hectolitres by 2005, according to leading beverage industry analysts Canadean in their latest annual Global Beer Report. Total world of beer grew by 2.3% in 2002 to reach 1.4 billion hectolitres, driven mainly by strong growth rates in Asia, East Europe and Africa. Consumption in Central & South America fell marginally after years of growth, volumes being hit by the deteriorating economic situation in a number of the region’s largest beer markets. Consumption in the developed markets of West Europe and Australasia fell slightly, although North America posted modest growth, fuelled by the strength of the imported beer sector in the USA. Last year, China overtook the USA to become the world’s leading beer market, having grown by over 50 million hectolitres between 1997 and 2002. Russia is another market which has grown dramatically, consumption rising by over 40 million hectolitres over the same period. The US market, meanwhile, continues on an upward path, buoyed by the increasing demand for imported beers. Total beer imports into the USA last year stood at just under 27 million hectolitres, making it the largest beer importer in the world. To put this in context, this makes the imported beer market in the USA bigger than the entire Polish beer market, and would rank as the world’s 9th largest market in its own right. Other key importing countries are the UK, France, Italy, Spain and, Germany. Looking at exports, Mexico overtook the Netherlands in 2002 to become the world’s leading exporter of beer. Both countries shipped around 13 million hectolitres of beer in 2002, whilst the world’s third largest exporter, Germany, shipped a further 11 million hectolitres...more info

Swedish conglomerate, Baltic Beverages Holding (BBH), has finished the necessary procedures regarding the acquisition of 100% of Kazakhstan’s brewery Ak-Nar based in Alma-Ata city, Russian press reported on November 26. BBH is to invest about US$ 40 million. As a result Scandinavian company BBH is becoming the owner of three Kazakhstan’s beer brands: Derbes, Irbis and Alma-Ata. That was the announcement made by Edward Babayan, the president of Ak-Nar in Alma-Ata. Now BBH owns 90% of Ak-Nar, 6% is owned by the company Tsesna and 4% is owned by TOO Kanon. According to a spokesman of Ak-Nar, the company controls 11% of the Kazakhstan beer market. Its production capacity comes to 40 million litres per year.

Washington USA: The Yakima Brewing and Malting Co. announced November 26 it would offer 500,000 shares of preferred stock in hopes of raising money to boost production for a popular new beer. Yakima Brewing, which was bought by parent company Black Bear Brewing Co. of Atlanta, Fla., in January 2002, comprises Grant's Brew Pub in Yakima and a separate 35,000-square-foot brewery, according to Associated Press. Sales of Grant's Mandarin Hefeweizen beer are on track to beat company records. The company has been unable to keep up with consumer demand but hopes raising capital will enable it to increase production. Mandarin is available in Washington, Oregon, Idaho, California, Arizona and Florida in bottles and on draft. Yakima Brewing also wants to expand the line to more of the 20 to 25 states where its beers are now sold. "We felt like it was really important to us to not just get the product out into a few states, but to release it nationally so no one (scooped) us," said Paul Brown, an officer and director of the company. As a preferred stock, shares will sell for $1 each and pay a 7.75 % semiannual dividend, Brown said. Investors in Yakima Brewing would have the option to convert their preferred shares to common stock shares in that company or its parent company. Yakima Brewing hopes to raise $500,000, which will go toward production of Mandarin Hefeweizen. Brown said the company anticipates producing 1,000 barrels of the fruity beer each month next year. That compares to total average monthly production of about 350 barrels for all of its other beers combined in 2002...more info

3. Malt News

Lithuania will supply with malt almost all Baltic States, local press reported on November 28. The country’s largest malting producer Litmalt has recently received a loan of US$ 16.5 million from the leading Lithuanian bank Vilniaus Bankas. The loan will be invested in completing the construction of a new malting plant in Paniavejis town. The whole project is worth US$ 33 million. It is expected the new plant to be launched in June 2004. Litmalt plans its production capacity to increase four times after the new plant launching and reach 60 thousand tones of malt per year. Another Lithuanian malting company Maltosa is also building new production facilities and is to reach a production capacity of 20-22 thousand tones per year. All Lithuanian brewers need about 50 thousand tones of malt per year. According to Litmalt’s president G. Aukshtinaitis, these two companies will be able to supply about 80-90% of all Baltic malt market. Meanwhile Latvia is also planning to build a new malting plant in Liepae town with a production capacity of 30 thousand tones of malt. This Baltic malt situation makes Lithuanian producers look for the market not only in Baltic States but also in Belarus and Ukraine.

4. Barley News

Total barley production in Scotland is put at 2.04M tonnes for 2003 year, up 340,000 tonnes on 2002acording to HGCA report form November 24. Record yields boosted the spring crop, which rose 322,000 tonnes to 1.61M tonnes. Winter barley production rose 20,000 tonnes to 0.43M tonnes. Malting barley quality in Scotland this year was exceptionally favourable in most respects as far as the needs of the distilling market are concerned. Demand for low nitrogen barley (below <1.65%N) for Scottish distilling and domestic brewing is expected to be between 500,000 and 550,000 tonnes. Based on data from the HGCA Cereal Quality Survey, 83% of Scottish Optic samples from the 2003 harvest recorded a nitrogen level below 1.6%N (graph 2). This is 20% over the average recorded in the previous 3 years. Based on Optic’s 41.2% share of Scottish seed barley certifications at 2002 harvest, estimated production of Optic at 2003 harvest would have been around 660,000 tonnes. This would leave low nitrogen Optic production at around 550,000 tonnes though not all this barley would meet malting specification due to other quality issues such as screenings. However, when one considers the significant tonnage of other suitable spring varieties available this market has clearly been oversupplied this season. Current low premiums reflect the oversupply of malting barley both in Scotland and abroad and the shortage of feedgrains within the EU, which has boosted feed barley prices significantly in recent months. For this season so far HGCA Corn Returns data put the average Scottish malting barley price at £80.54 and feed barley at £70.42 to leave premiums at around £10 per tonne...more info

Australia's worst drought in 100 years has taken its toll on the country's top grains companies, halving AWB Ltd's 2002-03 profit and pushing storage group GrainCorp Ltd into the red. But both results were slightly ahead of expectations and the two companies forecast a big pick-up in the current year after the drought broke in many areas, Reuters posted on November 26. "The drought had a dramatic impact," said Tom Keene, the managing director of GrainCorp, which stores and handles grains across Australia's eastern states. GrainCorp reported an annual loss of A$18.2 million, compared with a profit of A$48.6 million in the previous year. AWB Managing Director Andrew Lindberg said the group, Australia's monopoly wheat exporter, posted a good result, given that drought cut 2002-03 wheat production by 61 percent to just 9.7 million tonnes. AWB's net profit for the year to September 30 fell 59 percent to Aust. $43.9 million ($31.6 million). For the current year, AWB upped its profit forecast to A$110-A$120 million, from A$100-A$110 million previously, while GrainCorp forecast a return to profit but give no figures...more info