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Rehook Shipments Down 2% in First Quarter

May 12, 2005 - Redhook Ale Brewery, Incorporated announced a net loss of $732,000, or $0.09

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loss per share, for the 2005 first quarter, compared to a net loss of $921,000, or $0.15 loss per share for the 2004 first quarter. Shipments were down 2.0% in the same period.

The Company benefited in the 2005 first quarter from its investment in

Craft Brands Alliance, the joint venture between Redhook and Widmer Brothers Brewing Company that advertises, markets, sells and distributes both Redhook and Widmer

products in the western United States. The 2005 first quarter net loss includes a $260,000 share in the net profit of Craft Brands.

The Company reported sales of $7,325,000 and shipments of 49,200

barrels in the first quarter of this year as compared to sales of $9,390,000

and shipments of 50,200 barrels in the 2004 first quarter. The sale of

Redhook products to Craft Brands in the 2005 first quarter

significantly impacts the comparability of 2004 to 2005 first quarter

sales. Redhook sells its products to Craft Brands at a price

substantially below historical wholesale pricing levels.

Redhook shares in the profits of Craft Brands with Widmer. Also impacting

comparability of the current quarter's sales was an increase in fees

that the Company paid to Anheuser-Busch on sales in the Midwest and eastern

United States pursuant to the July 1, 2004 distribution agreement with

A-B. Redhook continues to sell its product at wholesale pricing levels

in the Midwest and eastern United States through sales to A-B.

Redhook said in a press release that it will continues to execute a pricing strategy involving a reduction in discounting and price promotion, both in terms of

frequency and depth of discount.


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