Base Currency: Euro, EUR on 24-November-2004 1 EUR = 1.3081 USD 1 EUR = 0.7007 GBP 1 EUR = 1.5521 CAD 1 EUR = 1.6653 AUD 1 EUR = 135.21 JPY 1 EUR = 3.5894 BRL 1 EUR = 37.2939 RUB 1 EUR = 10.8396 CNY	Base Currency: US Dollar on 24-November-2004 1 USD = 0.7647 EUR 1 USD = 0.5356 GBP 1 USD = 1.1865 CAD 1 USD = 1.2731 AUD 1 USD = 103.4 JPY 1 USD = 2.744 BRL 1 USD = 28.51 RUB 1 USD = 8.2865 CNY
EUR/USD Chart

China: InBev, the world’s largest brewery by volume acquires China's Hubei Dangyang Xuebao Brewery for 7.5 million yuan (US$907,276) with the purpose to strengthen its position in central China, the South China Morning Post reported in a statement on November 23. The brewery said it already had 30 pct of Hubei's market, the paper said. The Hong Kong-based newspaper said InBev, through its subsidiary Interbrew China, intends to invest a further 30 million yuan to upgrade the brewery and increase its annual production capacity to 500,000 hl of beer. Earlier this month, Inbev acquired the remaining 45 % shares in Hunan Debier Brewery based in Hunan province for USD 18.2 million cash. The Belgian brewer, InBev, the new brewing conglomerate born out of the merger between Interbrew SA and Brazil's Ambev, is the third largest brewer in China, with a production capacity of 30 m hectoliters, a market share of over 10% and 18 breweries. It has operations in the Zhejiang, Guangdong, Hubei, Hunan, Jiangsu and Shandong provinces. The company has been active in China since 1984, providing the transfer of technical and brewing know-how to various Chinese brewing companies, including the Zhujiang Brewery in Guangzhou. In 1997, InBev entered the Chinese beer market as an operator with the acquisition of the Nanjing and Jingling Breweries. In 2002, it acquired a 24 per cent share in the Zhujiang Joint Stock Company, China’s fifth largest and most profitable brewer on a per-tonne basis, and a 70 per cent stake in K.K. Group’s brewing business, based in Zhejiang Province. In 2004, InBev acquired the China brewery activities of the Lion Group of Malaysia, providing Interbrew China with leading market positions in the six provinces where it is present. In July 2004, InBev also acquired 70 per cent share in Zhejiang Shiliang Brewery Company Ltd. in Zhejiang province. InBev's longstanding interaction with its Chinese partners has provided the company with strong local relationships and a good understanding of the Chinese beer market. The brewing giant currently has two breweries in the Eastern Chinese province of Hunan (66.6 million inhabitants) - the Hunan Debier Brewery in the city of Changsha and Zhuzhou Debier Brewery Co. Ltd in the city of Zhuzhou.

South Africa, Johannesburg: The South African Breweries Limited confirmed on November 22 2004 that it will invest R5-billion in South Africa over the next five years, commencing in early 2005. Approximately half of this is in new expansion. Managing Director Tony van Kralingen said that the decision had been taken as a direct result of SAB’s confidence in the South African economy and its future prospects. The company has invested some R4-billion in South Africa over the past decade, including the construction of the Ibhayi brewery. “This new expansion project will have two major thrusts: capacity and capability. After about 10 years of relatively static volume, the company has experienced significant growth over the last two years in particular. Our share of the liquor market has increased to just under 60% in 2004, while in the last few years, we have added three new beer brands to the market plus two flavoured alcoholic beverages. During the last financial year, our premium brands achieved a moving annual growth in excess of 40% and our flavoured alcoholic beverages also achieved a moving annual growth in excess of 40% - which increased our market share significantly in the FAD segment.” “Increasing capability is designed to keep pace with the changing needs and demands of our customers – particularly for variety. Capability is all about flexibility, agility, quicker changeovers for our production lines, shorter planning cycles and the introduction of new packs and brands. Improving capability means that other dimensions are being considered, like our bottle and can size, shape and colour. Other ‘extrinsic’ issues also have to be researched, like labelling and tertiary packaging.” “This will result in our being more proactive in meeting consumer needs and particularly, with respect to increased customisation coupled with commercial viability. Increasing capability does, however, imply a need to increase capacity, as flexibility and changeovers are capacity-negative.” “Our breweries are being run very efficiently and this plan is designed to cater for future growth, resulting in a total spend of some R1-billion a year for the next five years on both expansion and maintenance. This investment will create a number of opportunities for employees and suppliers of the company, and as importantly, will boost our company’s impact on the South African economy.”...more info

Canada: Canadian brewing giant Labatt is echoing the concerns of Moosehead Brewery about a deal to give millions to their competitor Molson, and wants to meet with the province to discuss the situation, nb.cbc.ca posted on November 23. New Brunswick has offered Molson millions to set up a brewery in Moncton by 2007. The deal has been heavily criticized by Moosehead Brewery and Labatt has now waded into the fray. Labatt is the largest beer retailer in New Brunswick. It accounts for half the beer sold in the province. Labatt's Jean Lepine is worried the deal with Molson will create unfair competition. "We welcome Molson to the Maritimes, that is not an issue for us. What is an issue for us is that the marketplace be fair and equitable." Two weeks ago, New Brunswick Premier Bernard Lord announced the province was putting up $6 million to help Molson build a brewery in Moncton, creating 40 jobs. Moosehead Brewery Chairman Derek Oland immediately condemned the premier's deal as being bad for his Saint John company, and now Labatt is raising its own questions. Part of New Brunswick's deal with Molson is the immediate elimination of tariffs on Molson beer being sold by the New Brunswick Liquor Corporation, even though its New Brunswick Brewery won't be built for two years. Labatt will still have to pay some of those tariffs on beer it sells, and says that's not fair. For example, all Labatt beer made in Quebec is subject to a $2.40 per case charge when it comes into New Brunswick, while Molson beer made in Quebec is now free of that charge. "Essentially they're providing Molson an advantage prior to them bottling their first beer or brewing their first beer," says Lepine. "In our estimation that is an issue, so we'll be looking at all the options available to us and hope for an early opportunity to discuss this with provincial officials in New Brunswick." Labatt pays about $300,000 in the same New Brunswick beer tariffs that Molson is now free of. Lepine says it hopes a meeting with the province can fix that imbalance, with a deal that could make the cost of New Brunswick's Molson brewery even steeper for taxpayers.

Russia: In autumn the brewers fixed the biggest fall in sales over the last years: in October the sales of beer dropped by an average of 18% as compared to September, whereas the usual seasonal drop never exceeded 10%, according to Vedomosti. The market participants suppose this is caused by the beer advertising restrictions. According to the estimates of the Russian Union of Brewers, the volume of the Russian beer market totals about US$6 billion or 75 million hectoliters. In October the sales of beer fell by 18% as compared to September, reported the Head of the Russian Union of Brewers, Vyacheslav Mamontov. Autumn is traditionally viewed as a period of reduced consumer activity, but the last year the difference between October and September was within 7%. “In October the seasonal fall in sales is typical of all brewers, this month is considered the worst of the entire year”, said Mamontov. “But this year the fall in sales is caused by a “psychological impact” on customers rather than by weather. Adoption of legal restrictions in relation to the beer advertising and the anti-beer campaign of the government aimed at putting a ban on drinking of beer in public places affected the consumer attitude towards the product”, — declared the head of the trade union.

Bulgaria: Beer consumption in Bulgaria decreased for the second month. About 288,310 hl of beer were sold during October 2004, according to the figures of the Bulgarian Union of Brewers. A total of 367,700 hl of beer were sold in September 2004 whereas more than 550,000 hl were sold in August 2004. However, if compared to October 2003 there has been registered an increase of 22.7% in the beer sales during October 2004. The decrease was attributed by experts to the cold weather. Over the first ten months of the year some 3,707 million hl of beer have been sold which marks and increase of 11.7% as compared to the same period in 2003. Thirteen Bulgarian breweries produce over 50 different kinds of beer in the country. The chairman of Bulgarian Union of Brewers Vladimir Ivanov forecasted that in 2004 beer sales in Bulgaria would register an 8% increase versus 2003.

Japan: Japanese brewery, Kirin Brewery Co., Ltd. (President: Koichiro Aramaki), announced on November 24, 2004 that it concluded a contract with Dalian Daxue Brewery (Pulandian, Dalian City, Liaoning Province: President: Wang Mingrui) for the capital-affiliation ties on October 21, 2004. Under the contract, Kirin Brewery will purchase new shares to be issued by the Chinese brewer for 300 million yuan (about USD 37.6 million). As a result, Kirin Brewery will acquire 25% of all outstanding shares in Dalian Daxue Brewery. Dalian Daxue Brewery is located in the city of Dalian, an area where a large number of foreign businesses are actively operating. The Chinese brewer's beer sales are estimated to surge by 30% over the previous year in 2004 to about 185,000 kl, making it the second largest beer producer in Liaoning Province. The company has sold beer under the brand of “Daxue.” It also has another new brand, called “Daxue Draft” at premium price since 2003. With the partnership with Dalian Daxue Brewery, Kirin Brewery will introduceits internationally renowned beer-brewing and quality-control technologies in order for Dalian Daxue to strengthen its competitiveness in product quality. Moreover, Kirin will cooperate with Dalian Daxue in enhancing their brand marketing for Daxue, Daxue Draft and Kirin brands to build their sustainable competitive advantage in the competitive market. Kirin Brewery sees the Pearl River Delta, the Yangtze River Delta and the three northeastern provinces as strategically important markets. In the Pearl River Delta, Kirin's business operations have been led by Zhuhai Kirin President Brewery Co., Ltd. (Jiu Zhou Road Jida, Zhuhai City, Guangdong Province), a joint venture with Uni-President Enterprises Corp. In the Yangtze River Delta, Kirin Brewery is considering the launch of new business operations. China is the largest beer market with an estimated sales volume of 25.1 million kl in 20032 . With its latest contract with Dalian Daxue, the Kirin group will continue to enhance its market position considerably by maximizing the effects of group synergy. Kirin Brewery is building global business network by forming strategic partnership with other major brewers. At a time when the world beer industry has been undergoing rapid realignment, Kirin Brewery places an emphasis on the Asia and Oceania region as priority market areas. Kirin is thus prepared to consider forming further business ties with strategic partners in the areas to strengthen its business platform for sustainable growth of Kirin brands.

Malt News

Sweden: Viking Malt, with its operative centre in Lahti, Finland, announced today it has officially opened its new malt house in Halmstad, Sweden on 24 November 2004. The value of the investment is around EUR 33 million. The investment doubles the nominal annual malting capacity of Viking Malt Halmstad to 170 000 tonnes/year. In addition to the new malting tower, the investment includes: additional silo capacity for barley; new process control for the silo plant; new laboratory and office. The maltings and silo equipment was delivered by Schmidt-Seeger AG and Brice-Baker Silos Ltd. With this new production unit, together with the newly opened malt house in Panevezys, Lithuania, Viking Malt has a total nominal annual malting capacity of 340.000 tonnes. At the opening ceremony Mr Harald Relander, Chairman of the Board of Polttimo Companies stated: "With these modern malting houses, increased capacity and streamlined organisation Viking Malt will be well equipped to supply its customers cost-effectively also in the future”. "This investment in Halmstad is a further step to increase our possibilities of delivering large quantities of homogenous quality and to guarantee gentle handling at loadings of bulk shipments to export markets”, says Mr Bengt Ohlsson, Managing Director of Viking Malt. The festivities were honoured by participation of the County Governor of Halland, Karin Starrin, together with current and future customers, raw material suppliers and representatives of authorities. All in all around 100 guests were present at the ceremony. The ownership of Viking Malt Oy is divided between Polttimo Companies in Finland (62.5 %) and Svenska Lantmännen (Swedish Farmers) in Sweden (37.5 %). Malt is important raw material for the brewing industry. Viking Malt production units in Sweden use 260 000 tonnes malting barley annually for malt production. In Sweden the malting barley is mainly acquired from local farmers. Malt production in the world amounts to approximately 18 million tonnes. Viking Malt with its total malting capacity of 340 000 tonnes/a is the 12th largest malting company in the world...more info

United Kingdom: The UK malting business has been rationalised in recent years due to a world over supply of malt. In the UK considerable restructuring has taken place with the number of malting companies and sites reduced. In 1990 there were 28 companies operating 62 sites, in 1994 22 companies operating 55 sites and by 2001 just 17 companies operating 40 sites. Of these there are six plants with capacity in excess of 80,000 tonnes per year and 12 plants with a capacity of less than 10,000 tonnes per year. There has been a movement away from integration by ownership, with the five major ‘sales maltsters’ integrating though contractual and other business relationships with grain merchants and co-operatives, and with the major brewers. In the UK brewing industry, the four large companies had about 75% of market share in 2003, according to the results from a Cereal Industry Review published by the HGCA Board in November 2004.

Australia: Marketing, malting and logistics concern GrainCorp Ltd. Wednesday, 24 November 2004, again revised down its forecast of grain intake from winter crops now being harvested. GrainCorp, which dominates grain logistics in eastern Australia, now forecasts its intake at 10.5 million metric tonnes, according to Dow Jones. This is down from an estimate of 11.5 million tons a month ago and also from a September forecast of 13.0 million tons. Crop yields in western New South Wales and Victoria states, where the harvest is now beginning, "are below expectations following hotter- and drier-than-average conditions in October," the company said in a statement. GrainCorp's long-term average for receivals from winter crops is 12.0 million tons. The main winter crop is wheat, but substantial quantities of barley and canola are also produced. GrainCorp said the harvest of winter grains in Queensland is complete, with the company receiving 1.1 million tons of grain, in line with expectations. Crop prospects in northern New South Wales also have met expectations, with good yields in many areas, it said. Recent rain in these areas will boost plantings of summer crops, with sorghum plantings now mostly complete across all these areas, except in central Queensland, it said. Harvest continues throughout New South Wales and Victoria over the next six weeks, the company reported. About 4.3 million tons of grain has already been received. GrainCorp's intake forecast can't be taken as a proxy for production in the area. Other logistics providers store grain, while some grain is sent direct to end users and some is stored on farms.

Barley News

USDA barley exports forecast: U.S. barley export forecasts for 2004/2005 made by UDSA are lowered in November. Unlike last year, the United States is not expected to capture any of Saudi Arabia’s barley market due to intensified competition from Ukraine and the EU-25. United States barley export forecast for 2004/2005 is down 100,000 tonnes to 450,000 tonnes. Australia barley exports forecast of USDA for 2004/2005 drops by 500,000 tonnes to 3.5 million tonnes as a deteriorating crop reduces exportable supplies. 2004/2005 EU-25 barley forecast of USDA is up 500,000 tonnes to 2.8 million tonnes because of reduced competition from Australia and the resumption of export subsidies.

USA: US agri-giant Cargill introduced a new barley ingredient, with high levels of beta-glucan soluble fibre, at Health Ingredients Europe last week, as part of its platform designed to target heart health, Nutra Ingredients USA posted on November 22. Lee Knudsen, product manager at the group's health and food technologies unit, said the ingredient's high purity stood out against other available beta-glucans that usually only have around 50 per cent beta-glucans. The ingredient has also been designed to improve on the formulation challenges previously seen with high viscosity beta-glucans. Cargill, which is aiming to build a strong portfolio of heart health products around its core plant sterols and soy protien ingredients, is currently waiting for the results of pre-clinical and clinical studies on the barley fibre to be completed this month and published next year. It is also in the process of scaling up a new plant to produce the ingredient in the US, where it is already the largest malt maker. Foods designed to tackle heart health are set to grow by 7.6 per cent to reach sales of £145 million in the UK alone by 2007, according to Datamonitor.

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 1.3081 November 24, 2004
Crop year		2004		2005
Parity		FOB Creil		FOB Creil
Position		July 2004		July 2005
Type	Variety	EURO	USD	EURO	USD
2RS	Scarlett	111.00	145.50	121.00	158.50
2RS	Prestige	109.00	142.50	120.00	157.00
2RS	Cellar	109.50	143.50	120.50	158.00
2RS	Aspen	108.50	142.00	119.50	156.50
2RS	Optic	108.50	142.00	119.50	156.50
2RS	Astoria	108.00	141.50	119.00	156.00
2RS	Cork	108.00	141.50	119.00	156.00
6RW	Esterel	100.00	131.00	105.00	137.50

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

Table of the week

Malt production 2003/04 in major EU countries (in thousand tonnes)  in '000 tonnes 2002/03  2003/04   Germany   Barley malt  2,012.7  2,028.4   Wheat malt  77.9  78.5   France   Barley malt, domestic sales  178  151   Barley malt, export sales  1,102  1,146   U.K.   Barley malt  1,554  1,548

Graph of the week

Agenda

November 2004:
World Brewing Academy Applied Brewing Techniques. Munich, Germany;
World Brewing Academy Concise Course in Brewing Technology. Chicago, Illinois, United States;
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;
Fall Fest-Of-Ale. Janesville, Wisconsin, United States;
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;
BELPRODUKT International Exhibition for Food and Beverages. Minsk, Belarus ;

December 2004:
FOODEX Food, Beverages and Food Technologies Fair. Ankara, Turkey;
Eten & Genieten Food, Beverages and Kitchen Supplies Exhibition. Amsterdam, Netherlands;
Americas Food & beverage Show and Conference;
Holiday Ale Festival;
Sint Niklaas Visits Brewery Ommegang;
IWEX 2004;
WORLD OF FOOD INDIA 2004;
KerstBierFestival 10th edition! Belgium;
VIETFOOD & DRINK 2004 / 3RD INTERNATIONAL EXH ON FOOD AND DRINK;

January 2005:
Big Beers, Belgians & Barleywines Festival. Vail CO;
35th Barley Improvement Conference. The American Malting Barley Association;
VIETFOOD (HANOI) 2005;
Atlanta Cask Ale Tasting;

More events are available on site e-malt.com