E-Malt.com Flash 06b. February 10

Canada and USA: Molson Inc. and Adolph Coors Company announced on February 9 that they have completed the transaction announced on July 22, 2004 to combine Molson and Coors in a merger of equals. Molson Coors Brewing Company is a new global brewing company with the operating scale and balance sheet strength to be a major player in the continuing consolidation of the brewing industry. Molson and Coors shareholders approved the combination at their special shareholder meetings held on January 28 and February 1, 2005, respectively, and the Quebec Superior Court approved the transaction as required by Canadian law on February 2, 2005. W. Leo Kiely III, chief executive officer of Molson Coors Brewing Company said, "By combining Molson and Coors, we have created a company with the market and financial strength necessary to drive organic growth and compete more effectively in today's increasingly challenging global market, while preserving the rich heritages of two of the world's most prominent brewing companies. We look forward to drawing on this brewing heritage and the combined strengths of a world-class management team to deliver greater value to our customers, partners, employees and shareholders." "This transaction marks a new and important chapter in the history of both companies," said Eric H. Molson, chairman of Molson Coors Brewing Company. "It leverages successful business relationships and builds on the strategic and cultural fit between our two companies. With an impressive track record in brewing excellence, the new Molson Coors Brewing Company will be a dynamic and competitive organization that will create long-term value for our shareholders and the communities in which we operate." The transaction was structured as a Plan of Arrangement under which each share of Molson held by a Canadian resident was exchanged, at the election of the holder, for exchangeable shares in a Canadian subsidiary of Molson Coors and/or Molson Coors stock. Molson shares held by nonresidents of Canada have been exchanged for Molson Coors stock. The transaction was structured to be tax deferred to Canadian resident Molson shareholders who have properly elected to receive exchangeable shares, and taxable to U.S. holders of Molson shares and those Canadian resident Molson shareholders who choose to convert to Molson Coors stock. Under the Plan of Arrangement, each Molson Class B common share has been converted into shares which were exchanged for 0.126 voting share and 0.234 non-voting share of Molson Coors (or exchangeable shares, as applicable) and each Molson Class A non-voting share has been converted into shares which were exchanged for 0.360 non-voting share of Molson Coors (or exchangeable shares, as applicable). A total of 2,437,513 Class A exchangeable shares and 32,161,792 Class B exchangeable shares of Molson Coors Canada and 64,275 shares of Class A common stock and 12,084,689 shares of Class B common stock of Molson Coors Brewing Company have been issued as part of the merger transaction to former Molson shareholders. In addition, Molson shareholders of record at close of business on February 8, 2005, were eligible to receive a CDN $5.44 special dividend as part of the transaction...more info

Japan: Combined domestic shipments of beer and similar products by Japan's five major brewers fell 12.9 % in January this year, compared to January 2005, the first fall in two months, according to industry data released by Kyodo News on February 10. Japan's five major brewers are Kirin Brewery Co., Asahi Breweries Ltd., Sapporo Breweries Ltd., Suntory Ltd. and Orion Breweries Ltd. The sales of beer, "happoshu" low-malt beer and a beer-like sparkling alcoholic beverage, widely dubbed "third-category" beer, totalled 21.53 million cases. One case holds 12.66 liters, or the equivalent of 20 633-milliliter bottles. Industry officials attributed the January data to a reaction to moves in December among many wholesalers to bolster the stock of alcoholic drinks prior to January's planned abolition of the rebates brewers pay in proportion to sales. Although Japan's beer brewers had long paid such rebates to wholesalers, they stopped the incentive in January. The shipments of the third-category beer alone shot up to 1.89 million cases in the month, clinching a record 8.8 percent share of the domestic market for beer and the like.Third-category drinks are becoming increasingly popular due to cheaper prices as they are subject to lower liquor taxes due to the absence of malt and wheat in its ingredients. The government levies a 24.20 yen tax for every 350 ml of third-category drink, compared with 77.70 yen for beer and 46.99 yen for happoshu of the same volume. Meanwhile, beer shipments plunged 17.3 percent to 12.63 million cases in January, the first double-digit percentage fall in eight months since May 2004. Happoshu shipments dropped 21.5 percent to 7.01 million cases, the sixth consecutive month of a year-on-year fall.

Singapore: Asia Pacific Breweries' (APB) announced on February 11 strong growth in attributable profit during the first quarter of 2004/05, which ended on 31 December 2004. Attributable profit (before exceptional items) increased 19%....more info

Philippines: Southeast Asia's largest food and beverage conglomerate San Miguel Corp. announced on February 10 it registered a record net profit of PHP8.08 billion ($147.4 million) in 2004, up 9.6% from PHP7.37 billion in 2003, mainly on strong beer sales. However the results still fell short of analysts' forecasts. "Philippine beer business posted record results for the third straight year, driving 2004 revenues to P36.9 billion, 21% higher than 2003 as it capitalized on an expanded beer drinker base and a more far-reaching distribution system," San Miguel said. Analysts expect 2005 to be a tougher year for the Philippine firm as it faces higher local taxes on alcohol products and huge financing costs for a regional expansion that includes a $1.4 billion bid for Australia's National Foods Ltd. Thomson One Analytics projected San Miguel's net profit in 2005 at an average PHP9.18 billion. Reuters Estimates had a consensus profit forecast for 2005 of 9.3 billion pesos. The company's consolidated sales in 2004 rose 18% on year to PHP174.7 billion as local beer volume rose to a record 174 million cases, while international beer operations rebounded last year from the effects in 2003 of SARS on tourism and consumer spending in Asia. San Miguel's domestic beer sales climbed 21% on year to PHP36.9 billion. Sales of beer in its overseas markets, which include China, Australia, Indonesia and Vietnam, rose 12% on year to $263 million. Astro del Castillo, managing director at First Grade Holdings, said although San Miguel barely met the lower end of market expectations for net profit last year, investors will likely focus on its plan to offer shares at a discount for a week starting March 10. San Miguel will give shareholders on record as of Feb. 28 the right to buy one new share for every 10 shares they hold at a discount of 5% to the stock's average trading price between Jan. 31 to Feb. 25. Proceeds from the sale of 284.6 million shares will be used by the company to finance acquisitions and expansion projects, both in the Philippines and abroad. BDO Capital & Investment Corp. is the offer's financial adviser. "The stock rights offer will likely be the main focus of trading activity on San Miguel," del Castillo said. "San Miguel remains fundamentally sound." Chelsea Dipasupil, research head at RCBC Securities, said that San Miguel's earnings may get a boost this year from its past acquisitions, particularly from abroad. "They might start reaping this year the benefits from their acquisitions in the past two or three years," she said ...more info

Ukraine and Russia: SUN Interbrew Ltd, a leading brewer in Russia and Ukraine, announced recently its plan to invest EUR 190 million in 2005 to expand production capacity and start new commercial projects....more info

Uzbekistan: The European Bank for Reconstruction and Development (EBRD) lent 2.8 million to privately owned brewer Mekhnat Pivo to help it improve quality and double its beer production capacity, the bank said on 11 February....more info

Malt News

Brazil, the world’s largest malt importer, is forecast by International Grains Council (IGC) to register 850 thousand tonnes of malt (grain equivalent) import during 2004-2005....more info

Russia: Russian beer industry requires about 1.2 million tonnes of malt per year, according to the estimations of Russian malting plant, “Russky Solod”, a subsidiary of Avangard Bank. So far 60% of the needs were covered by imported malt. However in 2004 the share of imported malt decreased to 25%. Kiril Minovalov, the president of Avangard Bank, said on February 2, that malt import is to drop to zero by 2005-2006. Russky Solod is to control 25% of the Russian malt market. In April this year Russky Solod is launching its third malting plant. In about a year the company is to launch its fourth malting plant, after which it will control about 50% of Russian malt market. According to analysts, in 2005 Ochakovo and Cargill are to launch their malting plants in Russia as well, with a production capacity of about 100 tonnes each. Nevsky Bereg is also constructing its malting plant with a production capacity of 100 tonnes per year in St. Petersburg.

Barley News

China: China imported 1.7 million tonnes of malting barley in 2004, compared to 1.4 million tonnes in 2003, 1.9 million tonnes in 2002 and 2.4 in 2001....more info

Uruguay: The Brazilian brewer Ambev inaugurates on March 2 in the presence of Brazilian president Luis Inacio Lula da Silva a factory renovated to process the barley of Paysandu (North-Western region of Uruguay) ...more info

Canada: For 2004-2005, Canada’s barley exports are forecast by Agriculture and Agri-Food Canada (AAFC) to decrease by 24% from 2003-2004 to 1.85 million tonnes due mainly to lower selection rates for malting barley, AAFC published on February 7. Carry-out stocks are forecast to rise to the burdensome level of 3.7 million tonnes. In 2003-2004 Canada exported 2.45 million tonnes of barley. Carry-out stocks of barley were 2.11 million tonnes in 2003-2004

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.

nq - Not quoted
Prices for Danish and UK malting barley are available on site www.e-malt.com/MarketPrices

French Malting Barley Price Evolution

Table of the week

EU malt export licence fixations:

(in tonnes)	2000-2001	2001-2002	2002-2003	2003-2004	July 01, 2004 - January 25, 2005
France	523,190	701,134	661,772	774,761	434,800
Germany	305,980	468,314	408,063	422,047	170,922
Belgium	277,584	296,368	287,850	317,292	225,068
U.K.	254,793	350,621	294,995	443,501	156,458
Finland	65,550	91,890	100,758	114,165	27,166
Denmark	52,326	96,812	94,791	90,452	36,243
Sweden	50,847	101,000	76,916	78,369	56,190
Netherlands	54,835	51,310	66,219	80,703	22,620
Ireland	26,003	35,145	31,140	38,900	42,924
Austria	4,850	8,840	8,620	60,211	4,234
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	1,177,265
New EU members				May-June, 04
Czech Republic				34,340	48,134
Poland				7,604	22,965
Hungary				2,830	37,457
Slovakia				1,000	38,220
Total EU 25	1,621,098	2,205,799	2,038,157	2,477,849	1,324,041

	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 – January 25/2005	4,001

	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 – January 25/2005	17,931

Graph of the week

Globally Beer Leading Companies By Sales Volumes

Agenda

February 2005:
Pianeta Birra - Beverage & Co. International Show of Beers, Beverages etc., Italy;
Seminaire Orges brassicoles 2005 à Paris-Bagnolet;
Liqma International Beverage Industry Exhibition, Spain;
Canadian Food and Beverage Show;
GrainWorld 2005. Canada. CWB.;
Beer Business Daily's Second Annual Beer Industry Summit.;

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;
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;

More events are available on site e-malt.com