E-Malt.com Flash 10a. March 07

Philippines: The Philippines government said on March 9 it would sell its stake in San Miguel Corp., worth $1.5 billion, this year as part of a privatisation program to pay down debt...more info

Vietnam: Vietnamese breweries produced about 13.7 million hl of beer in 2004, according to the Vietnam Beer and Beverage Association. The association estimated Vietnam beer production to rise to 15 million hl in 2005...more info

Colombia: The Netherlands brewing force, Heineken N.V. is in talks with Colombia's biggest brewer, Grupo Empresarial Bavaria, about a possible acquisition as global beer companies race to tie up with South America's largest remaining independent brewer, Reuters cited two sources familiar with the situation on Tuesday, March 8. A source at Bavaria said a group of executives from Heineken had visited the company's head office in Bogota on Tuesday, March 8, though he declined to comment on whether there was a bid. A source with the Santo Domingo Group, which owns 70 % of Bavaria, said Heineken had made a firm offer. He said the figure was around $9 billion, though it was unclear how such a deal would be structured, whether through cash or shares or a combination, or whether it would include debt. The company reported net debt of more than $1.7 billion as of Feb. 28. The Santo Domingo Group source was not available for further comment. The Santo Domingo Group source said Bavaria's majority stockholders were analyzing and discussing Heineken's offer. Bavaria, whose brands include Aguila, Cristal and Pilsener, said last month it was looking for a foreign partner. Previously, sources had tipped London-based SABMiller and Belgium-based InBev as favorites to tie up with Bavaria, which has a market capitalization of around $4.9 billion, Reuters commented. Bavaria's shares have risen nearly 68 percent on Colombia's stock exchange this year since speculation started that Bavaria was considering a merger or alliance with a global brewer. Bavaria is the largest remaining independent brewer in South America after Interbrew's takeover of AmBev last year that formed InBev. It has a virtual monopoly in Colombia, Peru and Ecuador, and it has an 80 % market share in Panama. Industry researcher Canadean ranked Bavaria as the world's 14th-biggest brewer, producing 22 million hectoliters (or 2.2 billion liters) in 2003, far behind world leader InBev with 139.7 million hectoliters. Bavaria posted a loss of 87 billion pesos ($37.6 million) in 2004, compared with a profit of 97.9 billion pesos in 2003. The company said results were hit by the appreciation of the Colombian peso, which caused an accounting loss on its foreign holdings.

Russia: President Vladimir Putin signed off on March 09, 2005, the law retaining Russians' right to drink beer in public. The original bill, which Putin sent back to parliament in January for amendments, had proposed “draconian” measures that would have banned beer consumption in parks, stadiums and public transport, according to Associated Press. The planned restrictions were widely unpopular in a country where public beer drinking is widespread; many Russians consider beer an everyday drink and Muscovites can often be seen with a bottle on their way to work. Brewers feared that the proposals would cut into their sales -- a dearth of affordable restaurants in Russia means that 20 percent of the beer they produce is drunk outside. While the new law retains restrictions on beer sales on public transportation and in cultural and sports buildings, as well as near schools, Vyacheslav Mamontov, head of the Russian brewers' union, welcomed the legislation as taking aim at underage drinkers. "The variant that the president signed most harmoniously takes into consideration both the interests of brewers the authorities and society as a whole," Mamontov said. The Russian beer market is dominated by foreign producers, with Scottish & Newcastle, SUN Interbrew and Efes the leaders.

Chile: Fitch Ratings has affirmed the 'A-' foreign and local currency credit ratings of Compania Cervecerias Unidas S.A. (CCU). The Rating Outlook is Stable. CCU's investment grade ratings are supported by the company's dominant position in the Chilean beer market and its conservative capital structure, Business Wire, Chicago posted on March 4. The product and geographic diversification of the company's cash flow from operations further supports the ratings. CCU ended 2004 with a 90% market share in the Chilean beer industry. Fitch expects the company to continue dominating this industry due to its modern production facilities, extensive direct-distribution system, diversified portfolio of beer products and the broad appeal of its flagship brand, Cristal. The cash flow generated by CCU's Chilean beer division provides stability to the company's credit-protection measures and underpins the ratings. During 2004, 39% of the company's consolidated revenues and 64% of its consolidated cash operating profits (EBITDA) were generated by its Chilean beer division. Through the company's subsidiary Embotelladoras Chilenas Unidas S.A. (ECUSA), CCU also has a solid presence in Chile's soft drink, mineral water and nectar industries. During 2004, ECUSA was the largest bottler and distributor of water in Chile, with a market share of 64%, and the third-largest bottler of soft drinks, with an estimated market share of 22%. Soft drink, mineral water and nectar sales accounted for 29% of CCU's sales and 20% of its EBITDA during 2004. The company's proprietary soft drink products -- Bilz, Pap, Kem and Show-are the most profitable part of this division. CCU also bottles, markets, sells and distributes PepsiCo, Inc.'s (PepsiCo) and Schweppes Holdings' products. The company's cash flows are further diversified by its Argentine brewer, CCU Argentina, and its vintner, Vina San Pedro (VSP). They accounted for 29% of revenues and about 14% of EBITDA in 2004. During 2004, CCU generated US$162 million of EBITDA, an increase from US$125 million in 2003. This improved profitability was driven by strong demand for the company's products in Chile and Argentina, as well as higher average prices for beer in both markets. The company's dollar EBITDA also benefited from a strengthening of the Chilean peso versus the U.S. dollar by 12% during 2004...more info

Malt News

Maltings closures, done and announced till February 28, are: U.K. 110,000 tonnes, Ireland 36,000 tonnes, Slovakia 30,000 tonnes. All these shutdowns are smaller old units of large malting companies, who streamline their production for the difficult years to come. Sad stories emanate from Germany: a 40,000 tonnes plant, idle since a year, has resumed production. Two small malthouses of an insolvent company will probably be taken over and continue to produce malt, experts said.

Ukrainef: In January 2005 Ukraine exported 400 tonnes of malt, of which 300 tonnes was sold to Russia...more info

Barley News

European Union: During 2004-2005, EU-25 will use about 11 million tonnes of malting barley, against the 10.9 million tonnes of the previous year. The usage of malting barley will decrease by 150,000 tonnes in the UK and 80,000 tonnes in the Netherlands. However, it will increase by 20,000 tonnes in Germany, 65,000 tonnes in Belgium, up to 80,000 tonnes in France, 40,000 tonnes in Finland, 90,000 tonnes in Sweden and 45,000 tonnes in Lithuania. That would take EU demand to about 11 million tonnes compared with forecast total production of 13.6 million, according to the statement of Andree Defois of Paris-based Strategie Grains in a Home-Grown Cereals Authority (HGCA) on-line conference. UK malting barley production this year is expected to be about 2.1 million tonnes and demand about 1.8 million tonnes. She said: "The European malting scene is being restructured. New maltings devoted to exports have been built in ports, or very close to them, while over-capacity has closed other plants, mostly in the UK and Germany." The most recent to close in Scotland was the 45,000 tonne Kirkcaldy maltings, owned by Muntons plc. Josh Dadd of the HGCA said that malting barley growers could not look at the market for their crop in isolation, pointing out that good harvests throughout much of the world last year raised global wheat and maize stocks by more than 30 million tonnes to about 260 million: "But that is still the lowest global stock since 1983/84 and suggests that prices will continue to be sensitive to world weather charts." US maize effectively sets comparative prices on the international market, he said. It cannot be ignored because most malting barley contracts are based on a feed value base plus a premium and the US had a record maize crop last year at just under 300 million tonnes. Stocks in store at 51 million tonnes are the second highest since 1992-3.

Canada: Domestic feed barley markets absorb most of the feed availabilities, market analysts commented on February 28...more info

USA: Total barley use in the United States is forecast by IGC at a four-year high of 6.1 million tonnes (5.0 million tonnes)...more info

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

Malt Price Evolution

Malt Market Price Evolution, Crop 2005

Source: E-malt.com

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

Table of the week

EU Malt Export Licence Fixations:

(in tonnes)	2000-2001	2001-2002	2002-2003	2003-2004	July 01, 2004 - February 22, 2005
France	523,190	701,134	661,772	774,761	477,800
Germany	305,980	468,314	408,063	422,047	179,576
Belgium	277,584	296,368	287,850	317,292	251,544
U.K.	254,793	350,621	294,995	443,501	181,843
Finland	65,550	91,890	100,758	114,165	30,166
Denmark	52,326	96,812	94,791	90,452	38,953
Sweden	50,847	101,000	76,916	78,369	63,840
Netherlands	54,835	51,310	66,219	80,703	28,908
Ireland	26,003	35,145	31,140	38,900	56,924
Austria	4,850	8,840	8,620	60,211	6,130
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	1,316,324
New EU members				May-June, 04
Czech Republic				34,340	53,892
Poland				7,604	22,965
Hungary				2,830	44,915
Slovakia				1,000	41,230
Total EU 25	1,621,098	2,205,799	2,038,157	2,477,849	1,479,326

	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 – February 22/2005	4,236

	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 – February 22/2005	18,895

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