E-Malt.com Flash 04a. January 24

Canada, USA: The multibillion-dollar merger between Montreal-based Molson Inc. and Golden-based Adolph Coors Co. is expected to close February 9, the breweries announced. After that, the historic Adolph Coors Co. name disappears in favor of Molson Coors Brewing Co. The U.S. operating unit will continue to be called Coors Brewing Co. Molson's shareholders, who are to vote in Montreal on Friday, now appear likely to approve the merger. That's following the decision by the two family-controlled companies to increase the special dividend offered to Molson shareholders by two-thirds, from $316 million to $532 million. "Coors feels confident that the merger with Molson will proceed as currently planned, and we're excited about the merged company moving forward," Coors spokeswoman Laura Sankey said. Coors shareholders are to vote at the Golden brewery at 9 a.m. Feb. 1. Final approval of the deal from the Quebec Superior Court will be sought Feb. 2. If approved, Molson shareholders will receive the special dividend Feb. 8. Molson chairman Eric Molson, who controls a majority of the company's voting shares, has agreed to forgo his share of the dividend. The deal requires approval from two-thirds of both classes of Molson shareholders and a simple majority of both classes of Coors shareholders. If ratified, the combined company will be the fifth largest brewer in the world. The $316 million special dividend was first announced in November in a move by the breweries to sway skeptical Molson shareholders. The recent increase came after several Molson institutional shareholders put the heat on Coors chief financial officer Timothy Wolf earlier this month, according to a proxy document filed last week with the U.S. Securities and Exchange Commission. The proxy document details how numerous Molson institutional shareholders called Wolf to discuss their reactions to the terms of the transaction and to suggest approval of the merger might require an increase in the amount of the special dividend. After discussions between Coors chief executive Leo Kiely and Molson chief executive Dan O'Neill, the Coors and Molson boards of directors convened telephonically Jan. 13 and both agreed to approve an increase in the special dividend by 67 percent. That decision persuaded several major Molson institutional shareholders to vote in favor of the deal. The proxy document also includes an updated fairness opinion from Deutsche Bank, Coors' financial adviser. The opinion states that in spite of the increased special dividend, the exchange ratio is still fair for both classes of Coors shareholders.

China, Harbin: Anheuser-Busch, the world's largest brewery by sales value, hopes to have an active role in conforming the Chinese beer industry and plans to continue developing Northeast China's beer market...more info

Russia: During the fourth quarter of 2004 Russian beer production increased 11.5% versus the same period in 2003. According to the estimations, in 2004 beer output in Russia boosted 12.5% ...more info

El Salvador: Brazilian beer-maker, AmBev (Companhia de Bebidas das Americas), is to enter the El Salvador beer market by the end of June the latest. They plan to occupy about 20% of the total domestic beer market...more info

Belgium: InBev Chief Executive Officer John Brock announced on Tuesday, January 25, he was confident the brewer would achieve a 30% profit margin by the end of 2007. Speaking at the opening of the company's new corporate headquarters in Belgium, Brock said the group's new strategy was centred on 'capturing over the next three years far more than our fair share of the incremental global EBITDA, which translates into a 30 pct profit margin'. Brock has often said he wants InBev to cut costs and become as efficient as U.S. rival Anheuser-Busch, which has a margin on earnings before interest, tax, depreciation and amortization (EBITDA) of some 28%. "(We want to capture) over the next three years far more than our fair share of the incremental global EBITDA ... which translates into a 30% profit margin," Brock said. "That is why achieving our mission ... is key to maintaining superior, sustainable and profitable growth," Brock added at the opening of a new headquarters for the world's largest brewer in its home town of Leuven, about 20 miles east of Brussels. The CEO also said he expected the company to meet its 2005 volume sales target of a growth rate of two to three times the industry average. InBev sold less beer than expected in 2004. Underlying volume sales excluding acquisitions rose 3.3 percent, below its target of 4 to 5 percent. The company had to rely on recently acquired AmBev of Brazil to boost its total volume sales higher. InBev plans to launch its flagship Brazilian beer, Brahma, in Europe and North America "in the next few months," Brock added. He dampened speculation that InBev might buy Colombian brewer Bavaria, which has been reported to be the subject of a $9 billion bid, though he confirmed InBev was open to acquisitions in Russia, China and Latin America. "It is my understanding that other people appear to be more interested," he said.

Japan, Tokyo: Japan's Sapporo Breweries Ltd., a unit of Sapporo Holdings Ltd., has increased its product output through a Canadian firm to strengthen its beer operations in the US. The company aims to sell 2.1 million cases of beer in the US. by 2009, up 50% from 2004. The company aims to improve the profitability of overseas beer operations by strengthening US efforts. Sapporo sold 2 million cases of its beer abroad in last year, with 70 per cent sold in the US. Japan's Sapporo Breweries plans to strengthen its US operations to lift overseas profitability, according to Asia in Focus.

Barley News

USA, Idaho: Last week local barley prices were steady to 5 % lower in southern and northern Idaho. Due to the Martin Luther King, Jr. Holiday and presidential inauguration events, USDA’s export sales report will not be released until next Monday. According to Idaho Grain Market Report, the EU Grains Management Committee approved 219.5 TMT of free-market barley for export with a subsidy of 17.97 euros per metric ton. Previous week they approved subsidies on 290 TMT of free-market barley for export. Ag Canada is projecting Canada’s barley seeded area in 2005 will total 11.151 million acres, versus 11.558 million planted last year, a decline of 3.5%.

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

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

Ukraine Barley Supply & Demand 1998 - 2004

in '000 tonnes	July-June 1998/99	1999/00	2000/01	2001/02	2002/03	2003/04
Opening stocks	423	152	139	134	458	248
Acreage seeded	4,319	3,740	4,003	4,108	4,577	5,795
Acreage harvested, ''000 ha	3,562	3,341	3,520	3,799	4,287	4,719
Yield t/ha	1.70	1.90	1.80	2.30	2.30	1.60
Crop	6,000	6,250	6,165	8,794	9,828	7,450
Imports	1	12	30	15	20	20
SUPPLY	6,424	6,414	6,334	8,943	10,306	7,718
Food industry	490	400	500	500	800	350
Feed usage	3,900	3,930	3,520	3,800	4,675	4,700
Seeds	713	750	810	880	1,200	900
Exports	800	775	1,020	2,805	2,883	1,450
Losses	370	420	350	550	500	200
DEMAND	6,273	6,275	6,200	8,485	10,058	7,600
Ending stocks	151	139	134	458	248	118
Stocks / Use in %	2.40	2.20	2.20	5.40	2.50	1.50

Graph of the week

Globally Beer Leading Companies By Sales Volumes

Agenda

January 2005:
AGRIFLANDERS Flemish Agriculture Exhibition;
Big Beers, Belgians & Barleywines Festival. Vail CO;
35th Barley Improvement Conference. The American Malting Barley Association;
VIETFOOD (HANOI) 2005;
Great Alaskan Beer and Barley Wine Festival;
Technologisches Seminar 2005. Organiser: TUM, Lehrstuhl für Technologie der Brauerei I;
Getränke-Kongress. Organiser: Die Akademie Fresenius, Dortmund;
Boston Winter Jubilee;
Extreme Beer Fest;
Atlanta Cask Ale Tasting;
Spirit of Belgium;
National Winter Ales Festival (CAMRA);

February 2005:
Pianeta Birra - Beverage & Co. International Show of Beers, Beverages etc., Italy;
Liqma International Beverage Industry Exhibition, Spain;
Canadian Food and Beverage Show;

March 2005:
Night of Great thirst, Belgium;
Zythos Beer Festival, Belgium;
Institute and Guild of Brewing Africa Section 10th Convention, South Africa;
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;
FOODEX JAPAN 2005 / INTERNATIONAL FOOD & BEVERAGE EXH;
China Drinktec China International Exhibition on Beverage, Brewery and Wine Technology;

More events are available on site e-malt.com