E-Malt.com Flash 04b. January 27

Canada, Montreal: Shareholders of Molson Inc., Canada's biggest brewer, voted overwhelmingly in favour of a plan to merge with U.S.-based Adolph Coors Co. at a special meeting held in Montreal on Friday, 28 January 2005. The merger, which won the favour of 80.2% of Molson class A shareholders and 84.3% of its class B shareholders, would create the world's fifth-largest brewer by volume. Molson Chairman Eric Molson said the vote represented overwhelming support from shareholders. "Molson management and the board are very pleased that the shareholders have supported the merger and understood the strategic and economic value of this transaction," he told the meeting. Molson added that the merger would allow the combined company to compete in the rapidly consolidating global beer market. "This transaction marks a new and important chapter in Molson's history," said Eric H. Molson, chairman of Molson. "This merger builds on the strategic and cultural fit between our two companies and creates a global brewer with the operating scale, resources and geographic coverage necessary to compete in today's consolidating brewing industry." "This has been a long process and I am thankful that our shareholders have supported us and have understood the strategic and economic value of this transaction." Molson's Class A shares were up 80 Canadian cents at C$39.15 on the Toronto Stock Exchange shortly after the opening of trade on Friday. Coors shares were up $1.36 or 1.8 percent at $76.25 on the New York Stock Exchange. Molson shareholders will own 55 percent of the combined company, with the Molson and Coors families sharing voting power. Coors Chief Executive Leo Kiely and chief financial officer Tim Wolf will keep those posts at the merged company. The proposed merger requires the approval of Adolph Coors Company stockholders scheduled for February 1, 2005, in Golden Colorado. As previously announced, the approved merger will be submitted to the Québec Superior Court for a final order or approval on February 2nd, 2005 and the closing of the transaction is planned for February 9, 2005. The Molson Coors stock is expected to start trading on the TSX and the NYSE on February 9th, 2005. Registered Molson shareholders at the close of business on the day preceding the closing will be entitled to receive the $5.44 special dividend as part of the approved transaction. Together, Molson Inc. and Adolph Coors Company will form the fifth largest brewer in the world, with combined volume of 60 million hl and proforma net sales of US$6 billion. The brewer will have a market capitalization of US$6 billion and a position of strength to become a future consolidator in the global brewing industry. It will have leading market share in Canada and in the U.K. a growth market in the U.S. and an emerging market in Brazil as well as a portfolio of well established brands such as Molson Canadian, Coors Light and Carling and other brands including Keystone, Aspen Edge, Zima, as well as Molson Ultra, Export, Molson Dry, Rickard's and Kaiser. Founded by pioneering families who are still active in the business and have deep roots in their respective countries, Molson Coors Brewing Company will have over 350 combined years of brewing excellence, 15 breweries and 14,800 employees in 4 countries...more info

Germany: In 2004 overall sales of German beer increased for the first time in 5 years. About 10.6 billion litres (2.8 billion gallons) of German beer were sold in 2004, up 0.2 % from 2003, due to an increase in exports to other European Union member states, the Federal Statistics Office said. German Beer exports climbed 13.1% in 2004 to 13.9 billion litres (3.67 billion gallons). Beer sales within Germany dropped by 1.5 % to 9.19 billion litres (2.43 billion gallons) in the 12 months to 2004. With the exception of 1999 and 2002, beer sales have declined each year since 1995. The lower birth rate and a penchant for more exotic drinks among young Germans has been blamed for the drop in the past, but the office gave no reason for the trend. The slide continues a persistent trend in Germany that worsened in 2003 when the country introduced a complex system of deposits on cans and bottles. Germany ranks as the third highest per capita consumer of beer in world, behind Ireland and the Czech Republic, the office said.

Hong Kong: China's Kingway Brewery Holdings Ltd. announced on Friday, January 28 its parent, GDH Ltd., would not give up control of Kingway to Heineken, but talks continued on the Dutch giant's plans to take a bigger stake, Reuters posted. "The board has been informed by GDH that it has no intention to relinquish control over the company," Kingway said in a statement. Heineken's Singapore-based joint venture said talks toward raising the firm's 21.44 % stake in Kingway, which the two sides both confirmed a week ago, were continuing. "We are in preliminary talks," said Sarah Koh, a spokeswoman for Heineken Asia Pacific Breweries. Heineken is battling with global rivals to expand its share of the fast-consolidating China beer market, the world's largest by volume. Reuters reported this week that Heineken was in talks to increase its stake in Kingway to 50 percent, a step toward a possible takeover of the firm, which is controlled, through GDH, by the government of the southern province of Guangdong, one of China's wealthiest regions. Kingway said on Friday that negotiations to sell Heineken a bigger stake were still at a very preliminary stage, and that there had been no progress since Jan. 20. "There is no agreement regarding terms (including price and the number of shares which may be acquired)," the company said. GDH holds 52.63 percent of the company. A source familiar with the situation told Reuters on Monday that the two companies were discussing a deal priced between HK$3.50 and HK$4.00 per Kingway share. Kingway shares closed at HK$2.825 on Friday, down eight percent from Thursday's close. In recent years, global beer makers have flooded into China as incomes and spending power surge. Heineken is on an acquisition spree to bolster its position in rapidly growing markets such as China and Russia. Kingway does not rank among China's 10 largest brewers, but is seen as an attractive takeover candidate because of its strong position in the southern boomtown of Shenzhen, adjacent to Hong Kong. It has a market capitalization of US$550 million according to Reuters data. Kingway shares have surged by 40 percent since late last week on expectations that Heineken, the world's fourth-largest beer maker by sales, would boost its holding in the firm. Last year, global giants Anheuser-Busch and SABMiller mounted an unprecedented bidding war for China's Harbin Brewery Group that resulted in Anheuser-Busch paying $692 million for the company.

USA: Six months after acquiring Portland Brewing Co., Seattle's Pyramid Breweries Inc. said on January 27 that it is moving a majority of its beer and soft drink production south to Portland Brewing beginning February 1...more info

Benelux: Czech brewing company Budejovicky Budvar announced on January 27 that it gained the right to sell its beer under its original brand names in the Benelux region, winning the latest round of its global legal battle against U.S. beer force, Anheuser-Busch Ltd....more info

Russia: According to the last agreement between SUN Interbrew Ltd and Alfa-Eco, the control of Yekaterinburg Brewery OAO “Patra” is completely transferred to Alfa-Eco. That means Patra might be resold, Russian analysts commented...more info

Malt News

Ukraine: The biggest Ukrainian malt manufacturer, Slavuta Malting plant, has recently announced a 12% increase in its malt output in 2004 (versus 2003). The company regards last year as a profitable one. In 2004/2005 MY the plant intends to increase the barley processing by 12.4% versus previous MY. In March 2004 French Soufflet Group has acquired 90% of Slavuta malting plant form Baltic Beverages Holding (BBH) Company. Slavuta Company can process about 120 thousand tonnes of barley per annum and has a production capacity of 80 thousand tonnes of malt per annum. In 2003 Slavuta Maltings increased its malt production by 16.95% in comparison with 2002. Soufflet Group, the world's largest maltster, owns 22 malting pants with a production capacity of 686 thousand tonnes in France and 600 thousand tonnes in Eastern Europe: Poland, the Czech Republic, Hungary, Romania, Russia, Kazakhstan, and Ukraine. With the acquisition of Slavuta Maltings, the Soufflet Group malting capacity has reached 1,355,000 tonnes.

Ireland: Minch Malt, part of Greencore, announced on January 28 it plans to close Banagher Maltings in Co Offaly next September with the loss of 10 full-time jobs. Over 300 malting barley growers in Offaly, North Tipperary...more info

Barley News

EU: On January 20 the European Commission adopted a resolution, which will permit from January 28, 2005 the accordance of export subsides for 219,500 tonnes...more info

World Barley Markets: Barley markets were supported by steady demand and firm Black Sea prices in the past two months, with Australia’s smaller than expected harvest lifting local malting prices, The International Grain Council (IGC) revealed in its last Grain Market Report on January 27. A smaller than anticipated harvest in Australia has contributed to a cut in the global crop figure, but world barley production will nevertheless show a rise of 10 million tonnes, to 150 million tonnes. Consumption, however, will decline in 2004/05, mainly because of a reduction in the EU. Somewhat increased feed barley imports by countries in N.E Asia and North Africa and an upturn in malting buying in China should lift world trade in barley grain by 0.7 million tonnes, to 15.8 million tonnes. No significant change is expected in global trade in barley malt in 2004/05 (not included in the global trade total), with a rise in Brazil, to be matched by a further cut in Russia’s needs. World stocks are expected to climb with those in the EU set to nearly double, to 8.3 million tonnes. According to IGC on January 7 Tunisia bought 0.1 million tonnes of feed barley. On January 7 EU: Licenses 154,637 tonnes feed barley imports in first week of 2005 TRQ. (source: IGC)

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