E-Malt.com Flash 09b. March 03

USA: Molson Coors Brewing Co., the world's fifth-largest brewer, announced on March 2 plans to boost its 2005 revenues through the restructuring of its Brazilian operations, besides investing $70-$90 million at its plants in Canada and the US. Molson Coors, formed last month with the merger of Montreal's Molson Inc. and Colorado-based Adolph Coors Co. and now the world's fifth-largest brewer by volume, said the Brazil market has compelling growth potential. Molson Coors Brewing’s chief executive, Leo Kiely said, "From a financial perspective, the cash drain from the Brazil business is unacceptable and must be addressed quickly. As it's performing today, the Brazil business is clearly not economically viable." "Making the right choice in Brazil is critically important to this company and our shareholders," Kiely said. In the text of its presentation on the company's Web site, Molson Coors said it would grow its Kaiser business in Brazil. Kiely said that in Brazil, the company will focus on growing the Kaiser brand; turning around its core market of Sao Paolo; working on its distribution system; stemming the cash drain; and evaluating long-term profitability and growth potential. Molson bought Brazilian brewer Cervejarias Kaiser Brasil SA in March 2002 for $765 million, Reuters said, but it has so far proved to be a drain on profits and Molson was forced to record an impairment charge last year. "Our challenge centers on the growth rate of the Kaiser brand particularly in our core market, which is Sao Paulo ... From a financial perspective the cash strain from the Brazil business is unacceptable and must be addressed quickly," Molson Coors Chief Executive Leo Kiely told the meeting. "We are committed to turning the situation around in very short order," he added, saying the company planned to rebuild its relationship with Coca-Cola FEMSA, which distributes Kaiser beer. Rolling out its 2005 global objectives, Molson Coors also said it aimed to achieve low double-digit growth of earnings before interest and taxes and for more than $1 billion in earnings before interest, tax, depreciation and amortization, pre-synergies and merger-related costs. In Canada, where the brewer continues to lose market share amid aggressive price-cutting and higher costs, Molson Coors said it planned to "significantly increase investment" in its Molson Premium brands and reduce reliance on price increases. It also said it would "aggressively invest" in Quebec behind its Coors Light brand. "Based on current share of premium light segment -- 58 % -- Coors Light could grow from 8.5 % share of the Canadian market now to 14.5 % in the long run," it said. It said that by heavily marketing Canadian and Coors Light it aimed to stabilize Canadian and drive Coors Light share from other domestic brands, mainly Labatt Blue, which is brewed by Belgium's Interbrew. "They can't raise prices, they have recognized they had better find some other way of getting profits up," Palmer said...more info

China, Wuhan: China Resources Breweries (CRB) is set to invest 100 million yuan (US$12.1 million) in a Yichang brewery base with an annual production capacity of 100,000 tons, according to its recent agreement signed, Asia Pulse communicated on March 2. CRB plans to put the first phase of the project into production in July, which will require an investment of 50 million yuan. It will produce 50,000 tons. The base mainly produces Xingyinge series. CRB has built 38 similar bases in China.

South America: Quilmes Industrial (Quinsa) S.A. announced on March 2 its results for the six months and full year ended December 31, 2004....more info

Belgium: Shares in InBev fell 5.2 % after the world's biggest brewer by volume told analysts it expected lower earnings per share this year after unveiling a surge in profit for last year....more info

Japan: A dispute over beer prices between alcoholic beverage wholesalers and retailers continues with no end in sight, puzzling consumers with different prices in shops, Kyodo News commented on March 01. The dispute was triggered early this year by the abolition of a rebate by beer brewers. Alcoholic beverage wholesalers have asked retailers to raise beer prices, but major supermarket chain stores are rejecting the demand. Kazuhiro Sato, an executive director of Kirin Brewery Co., said, "I think considerable time will be required" before the problem is resolved. Beer brewers used to ship beer after providing the suggested retail prices to wholesalers and paid them a rebate according to the volume of sales. The rebate was for reduced prices at large retailers, such as major supermarket chain operators and discount stores. But four beer brewing companies have raised shipment prices by abolishing the rebate and suggested retail prices, causing turmoil between wholesalers and retailers. The brewers abolished the rebate for fear of bargain sales of their products. Until the early 1990s when the beer market expanded, a hike in the market share led to increased profit, and the brewers asked wholesalers to expand sales with a rebate. But the collapse of the bubble economy brought sluggish market growth and wholesalers cut prices in anticipation of a bigger rebate, causing panic selling. To normalize sales, the brewers abolished the rebate. Wholesalers have asked retailers to raise prices to offset the rebate cut in negotiations, which wholesalers hoped to end by mid-February. About 70 % of retailers have accepted the wholesalers' request, but major supermarket chain operators, helped by price cuts through the rebate, have rejected the request. "We cannot explain to consumers," said an executive of Aeon Co., a major supermarket chain company. Three different prices for the same brand of beer have appeared. Some retailers have raised prices, and others are leaving them as they were, while there are convenience stores selling beer at list prices. A Tokyo discount store, which raised the price of a beer case (24 cans of 350 milliliter of beer) by 100-300 yen in early February, said sales have dropped about 10 percent. The situation is worse, compared with wholesalers which have been offsetting losses in beer sales with profits from other alcoholic beverages and food. There were 1,800 wholesalers across the country in the early half of the 1990s, but the number is now 800. Meidi-Ya Co., a distinguished major wholesaler kept posting losses until the end of the February 2004 business year, for the ninth consecutive year, and was brought under the wing of Mitsubishi Corp. The brewers have created a monetary system to push wholesalers' investments in place of the rebate but the amount is small. "Unless beer trading is normalized, wholesalers face a crisis of extinction," said an executive at a wholesaler.

Malt News

Uruguay: A new malt plant in the city of Paysandu belonging to the Brazilian company Ambev was inaugurated on March 2 in the presence of Uruguayan president Tabare Vazquez and Brazilian president Luiz Inacio Lula da Silva....more info

Malt business for 2005 is virtually finished, small gap filling was reported from Germany, South Africa, Vietnam, according to analysts. Business for crop 2005 = delivery 2006 has taken place only in some exceptional cases. But now one company, which is often the first to start the new campaign, is asking for prices. Initial target price of maltsters – average price for 2006, CPT breweries, in Benelux, France, Germany, is EUR 250 per tonne.

Barley News

World carryover stocks of barley are forecast by IGC (Feb 28) at 27.4 million tonnes (21.4 million tonnes) at the end of 2004/05, down by 0.3 million tonnes from last month’s figure....more info

World barley consumption in 2004/05 is forecast by IGC (Feb 28) at 144.4 million tonnes (145.8 million tonnes), only slightly higher than in last month’s Market Report. Most of the year-on-year fall in global use reflects lower barley feed needs in the European Union, where large availabilities of competitively-priced wheat, maize and rye have curtailed demand. EU barley consumption is forecast to fall by 2.1 million tonnes from last year, to 51.2 million tonnes, including 38.0 million tonnes for feed (41.0 million tonnes).

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

Malting Barley Price Evolution

Australia Malting Export Barley Prices

Table of the week

Ukraine Beer Market, 2004

	2003	2004
Market size, in million litres	1,526	1,729
Market growth, %	+8.3 %	+13.3%
Per capita consumption, litres	31	36

Company	Market share, %
Company	2002	2003	2004
SUN Interbrew	30 %	34 %	36 %
BBH	20 %	22 %	22 %
Obolon Brewery	21 %	21 %	21 %
Donetsk Brewery	16 %	16 %	13 %
Others	13 %	7 %	8 %

Graph of the week

Agenda

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;
BLACK SEA GRAIN: A NEW ENVIRONMENT IN UKRAINE AND REGIONAL PROSPECTS FOR GROWTH;
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;

May 2005:
HOFEX 2005. 11th Asian International Exhibition of Food & Drink. Hong Kong;
30th Congress of the European Brewery Convention;
Beer International Brewing Technology Exhibition. Sochi, Russia.;
California Festival of Beers;

More events are available on site e-malt.com