E-Malt.com Flash 05b. February 03

China, Shanghai: Shanghai Jinshan District Government announced on February 3 that Suntory Investment Co., Ltd., a Chinese investment company, has recently acquired 74% equity of Shanghai Eastern Sea Beer Co., Ltd....more info

Canada, Montreal: Molson, Inc. announced on February 2 it has received a final order from the Superior Court, District of Montreal, Province of Quebec approving a plan of arrangement under the Canada Business Corporations Act to effect Molson's merger of equals with Adolph Coors Company...more info

USA, St. Louis: Anheuser-Busch Cos. Inc., the largest U.S. brewer, announced on February 2, 2005, it has achieved increased sales and earnings for the fourth quarter and full year 2004. The announcement was made by Patrick Stokes, president and chief executive officer of the company. Consolidated net sales increased 4.7 % in the fourth quarter, while reported earnings per share increased 16.7 %. Net sales and reported earnings per share increased 5.6 % and 11.7 %, respectively, for the full year. All major business segments contributed to the sales and profit growth for the year. Earnings per share for 2004 benefited from certain one-time items --- a $.015 per share gain in the first quarter from the sale of commodity hedges; a $.018 per share gain in the fourth-quarter on sale of the company’s equity investment in Compañía Cervecerías Unidas S.A. (CCU); and a fourth-quarter deferred income tax benefit of $.012 per share related to the company’s Modelo investment due to a reduction in Mexican corporate income tax rates. None of these one-time items impacts sales, gross profit or operating income. Excluding these items, earnings per share for the full year and fourth quarter increased 10.1 percent and 8.3 percent vs. 2003, respectively. As a result of the continuing favorable pricing environment, domestic beer revenue per barrel increased 2.3 % in the fourth quarter and grew 2.5 percent for the full year 2004 vs. the same periods in 2003. Consistent with the company’s practice of implementing moderate annual price increases in two phases, Anheuser-Busch completed the first stage of its pricing plan for 2005 in October 2004. The success of these pricing actions is reflected in the company’s fourth quarter revenue per barrel results. As planned, the second phase of the 2005 pricing initiatives is being implemented this week. As in the past, the revenue enhancement initiatives have been tailored to specific markets, brands and packages. Gross profit margin declined 110 basis points in the fourth quarter 2004, to 34.2 percent, while operating margin decreased 10 basis points to 13.9 percent. For the full year 2004, gross margin was down 40 basis points, to 39.9 percent and operating margin was down 10 basis points vs. 2003, to 22.5 percent. The declines in margins are primarily due to the impact of higher sales and higher costs from the company’s commodity-based can manufacturing and aluminum recycling operations. Domestic beer gross profit margin decreased 30 basis points for the fourth quarter and increased 20 basis points in the full year. The increase in domestic beer sales-to-wholesalers for the year is due primarily to continued growth of the Michelob ULTRA and Bud Light brands. Wholesaler sales-to-retailers were down 3.2 percent in the fourth quarter and declined 0.3 percent for the full year vs. 2003 levels. Both sales-to-retailers and sales-to-wholesalers were adversely impacted during the year by abnormally wet weather in many key markets, especially during the key summer selling season. This was coupled with the general slowdown in consumer spending during the year, particularly among lower income consumers...more info

Croatia: Heineken Adria, a unit of Dutch brewer Heineken, based in Karlova, Croatia, has raised its stake in Croatia's second-largest brewery, Karlovacka Pivovara, to 96.83% by acquiring 2.41% from minor shareholders, local media posted. Heineken Adria launched its buyout offer to minor shareholders in December 2004. Karlovacka Pivovara is Croatia’s second largest brewery, with an 18.7% share of the domestic market, in 2003. The company sold 625,000 hl of beer in 2003. Croatia beer market totaled 3,334,000 hl of beer in 2003. Heineken Adria is active in Croatia, Slovenia, Bosnia and Herzegovina, Kosovo, Serbia and Montenegro. This area is promising and very much on the move. The beer market varies from developed (Croatia) to highly difficult (Kosovo). The company manages and trains five distribution partners and takes care of the marketing investments for the whole Heineken portfolio. Heineken has an excellent image and the Heineken brand is the most intensively distributed beer in the whole region.

Chile, Santiago: Compañía Cervecerías Unidas S.A. (CCU) announced on February 2 its consolidated financial results, stated in Chilean GAAP for the fourth quarter and full year ended December 31, 2004. “The year 2004 was a very positive one for CCU. The Company reached record levels in its main financial indicators: volume sales of 11.3 million hectoliters, revenues of US$755 million, operating income of US$105 million and EBITDA of US$177 million. We improved the profitability of all our business segments,” company’s CEO said. For Q4 2004 total revenues increased 4.6% to Ch$126,499 million (US$226.9 million), as a result of higher consolidated volumes, partially offset by lower average prices. Consolidated volumes growth is explained by an increase of 4.2% in beer Chile, 5.8% in beer Argentina, 0.9% in the soft drink segment, 3.1% and 10.9% in the Chilean domestic and Argentinean wine businesses, respectively. The decrease in average prices is explained by 2.6% lower prices in the soft drink segment and 1.6% lower prices in beer Chile. Gross profit in Q4’04 Increased 0.4% to Ch$67,835 million (US$121.7 million) as a result of 4.6% higher revenues, partially offset by a 9.9% higher cost of goods sold, which amounted to Ch$58,664 million (US$105.2 million). The increase in cost of goods sold is explained by beer Chile, beer Argentina and the soft drink segments as well as a higher level of pisco sales. In Q4’04, the gross profit margin, as a percentage of sales, decreased from 55.9% to 53.6%. For full year 2004 accumulated revenues increased 6.9% and amounted to Ch$420,638 million (US$754.6 million). Gross profit in 2004 Increased 9.2%, amounting to Ch$218,016 million (US$391.1 million). The consolidated gross margin increased 1.1 percentage points to 51.8%. The Chilean beer business increased its operating result by 13.1% during 2004. The brand mix favored premium brands, especially Heineken, Kunstmann, Budweiser and Royal. The month of December was an all-time high, with volumes of almost 580,000 hectoliters. 2004 was the second consecutive year that the total revenues of the Chilean beer industry increased more than GDP, reflecting the success of our ACC Plan initiated in 2001. The Argentine beer segment improved it operating performance by US$6.1 million during the year. Prices increased 8% in December, finishing the year at US$37 per HL, compared to US$30 per HL in December 2003. Additionally, we reached a market share of 15.9% in Q4’04, compared to 15.1% in Q4’03. “Finally, during the quarter we refinanced our long-term debt, taking advantage of low interest rates, with a new syndicated loan of US$100 million and a new bond issue of UF2 million. Additionally, the syndicated loan was transformed into a fixed-rate UF loan through a cross-currency swap. The debt refinancing will allow CCU to decrease its overall financial expenses.”

Brazil: Rio de Janeiro's Carnival is the marketing opportunity of the year for Brazilian breweries. The two major players in the Rio Carnival beer wars are AmBev, which owns Brahma, and the family-owned Schincariol...more info

Malt News

World Malt Trade: IGC left its forecast of world malt trade for the grain year 2004/05 unchanged at 4.2 million tonnes, of which 2.5 million tonnes from the EU; 550,000 tonnes from Australia, 480,000 tonnes from Canada, 440,000 tonnes from Argentina/Uruguay.

Russia: OAO Russky Solod, a subsidiary of Avangard Bank, is to launch its new malting plant in Orlovsk Region, Russia, by the end of the first quarter this year, the president of Avangard Bank, Kirill Minovalov announced on February 2...more info

Barley News

Australia: In 2005-2006 Australia’s barley production is expected to increase to 8 million tonnes from 6.2 million tonnes estimated by the Australian Bureau of Agricultural and Resource Economics for the drought-affected 2004-2005...more info

Mercosur: The crop of malting barley is large and of excellent quality, albeit with fairly low protein contents...more info

Europe: In 2005-2006 barley production in the EU-25 is expected to decrease by 9% to 56 million tonnes due to a return of yields from 2004-2005’s record high to a more normal level and decreased area seeded to barley, Agriculture and Agri-Food Canada reported on January 14. Barley production in the FSU (Former Soviet Union) and Eastern Europe is forecast to drop slightly, from 37.2 million tonnes in 2004-2005 to 35.5 million tonnes. Lower production in Europe is expected to more than offset higher carry-in stocks of 13.2 million tonnes for 2005-2006 versus 8.3 million tonnes for 2004-2005. As a result, barley supplies in Europe are forecast to decrease. Demand in Europe is expected to remain at levels close to 2004-2005. In world feed barley market, the EU-25 and, to a lesser degree, the Black Sea countries are expected to face intensive competition in the Middle East and North African markets and exports from the EU are forecast to decrease. In the malting barley market, the EU’s export share is expected to drop significantly, as the size and quality of the malting barley crop in Australia and Canada return to more normal levels. EU export subsidies for barley are expected to play a more important role for EU to compete with other exporters, especially Ukraine and Russia. EU barley prices are expected to rise to US$135/t in 2005-2006 from US$130/t estimated for 2004-2005, as decreased production in both the EU-25 and the Black Sea countries puts less pressure on prices in Europe.

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

Table of the week

European barley crop estimate. Production forecast in thousand tonnes.

Barley production in '000 tonnes		Spring barley		Total barley
Barley production in '000 tonnes		2003	2004	2003	2004
EU-15	Austria	538	540	869	982
	Denmark	3,010	2,887	3,777	3,634
	Finland	1,671	1,748	1,671	1,748
	France	3,973	3,691	9,818	10,944
	Germany	3,606	3,372	10,601	12,963
	Ireland	1,000	1,104	1,096	1,274
	Belgium/Lux.	31	35	335	355
	Netherlands	351	262	372	281
	Spain	6,607	7,940	8,699	10,582
	Sweden	1,517	1,638	1,547	1,699
	UK	3,517	2,916	6,370	5,938
	Italy			1,032	1,148
	Greece			310	310
	Portugal			10	16
TOTAL EU-15		25,821	26,133	46,507	51,874
EU-10	Czech Republic	1,763	1,814	2,068	2,401
	Hungary	380	600	825	1,472
	Poland	2,603	2,852	2,833	3,500
	Slovakia	682	778	832	984
	Cyprus			79	92
	Estonia	263	265	269	282
	Latvia		224	221	269
	Lithuania		863	756	863
	Slovenia			28	29
	Malta			3	3
TOTAL EU-10		5,691	7,396	7,914	9,895
TOTAL EU-25		31,512	33,529	54,421	61,769
Europe Non-EU	Romania	340	350	540	839
	Bulgaria	180	82	580	876
	Serbia			230	279
	Croatia			85	149
	Bosnia			60	53
	Macedonia			120	149
	Albania			30	30
TOTAL Europe Non-EU		520	432	1,645	2,375
TOTAL EUROPE 31		32,032	33,961	56,066	64,144

Source: Coceral, Brussels December 2004

Graph of the week

Globally Beer Leading Companies By Sales Volumes

Agenda

February 2005:
Pianeta Birra - Beverage & Co. International Show of Beers, Beverages etc., Italy;
Seminaire orge de brasserie à Paris-Bagnolet;
Liqma International Beverage Industry Exhibition, Spain;
Canadian Food and Beverage Show;
GrainWorld 2005. Canada. CWB.;

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;

April 2005:
Helsinki Beer Festival;
Concise Course in Brewing Technology;
World Barley, Malt & Beer Conference 2005;
BEER. Exhibition Pavilion Minsk.;
Craft Brewers Conference & BrewExpo America;
Classic City Brewfest, Athens, GA;
Excursion to West-Flanders;

More events are available on site e-malt.com