Beer consumption in the U.S. recorded its sixth straight annual gain in 2001,
despite the slumping economy, according to the 2002 edition of Adams Beer
Handbook published by Adams Beverage Group.

U.S. Beer consumption rose 0.6% in 2001 to 2.8 billion 2.25-gallon cases-the
slowest growth rate in four years. Imports climbed (+8.8%) while domestics
dipped for the first time in four years (-0.3%).

Premium products - lights and imports in particular - continued to chip away
at sub premium and popular brands and categories.

Last year marked the first decline for domestics in four years. Gains made by
super premium & micro/specialty (+9.6%) and lights (+2.9%) were not enough to
offset losses by premium (-4.1%), popular (-6.3%), malt liquor (-8.7%) and
ice (-4.8%).

"The appeal of premium, luxury products of all types have captured consumers,
and beer is riding the wave. The strength of lights and imports has proven to
be resilient over the course of the past decade," said Robert Keane,
co-publisher/editorial director for Adams Beverage Group.

The buzz in the beer industry over the past 18 months has been malternatives
- flavored malt beverages led by Smirnoff Ice, according to the press
release. "Malternatives, still small compared with other beer categories, are
playing their part in creating excitement and interest within the relatively
stagnant overall beer market." The jury is still out on whether this new
segment is a fad or an enduring trend.

The Adams Beer Handbook 2002 contains beer consumption by category, state and
metro market. Brand data, retail sales, consumer demographics, and industry
statistics are included. The cost of the publication is $495. The Adams
Beverage Group serves all aspects of the beverage alcohol industry through
Cheers, Beverage Dynamics and StateWays magazines, Adams Beverage Handbooks
and Adams Business Research.

For more information contact Cynthia Porter at 630-762-8709 or e-mail
cporter@aip.com or visit http://www.beveragehandbooks.com.

"The US spirits industry is facing the possibility of a regulatory crackdown
on one of its fastest growing categories, RTDs or 'malternatives', the
category which includes brands such as Smirnoff Ice and Bacardi Silver,"
according to the just-drinks.com editorial team.

The article suggests that the U.S. Bureau of Alcohol, Tobacco and Firearms
(BATF) has been studying possible changes to current rules for the malt-based
alcoholic beverages. Some industry insiders have predicted that that could
impact the further development of this lucrative market.

In addition, Groups such a MADD have voiced concern that malternative
products that have become popular with younger adult drinkers are also being
widely consumed by under-age drinkers as well.

"Because of their malt content, 'malternatives' are treated like beers rather
than liquor," the article stated. "This affects where they can be sold and
how they can be advertised. However, the BATF is thought to be considering a
revision to the regulations which would mean that in order to be treated like
a beer, malternatives must contain more malt-based alcohol." The industry was
quoted as saying that flavor tests with more malt have been unsatisfactory.

In addition, the BATF may limit the amount of neutral distilled alcohol the
drinks can contain to 0.5%. Some in the spirits industry have said that these
requirements would destroy the taste of the drinks, making them too "malty".
However, those petitioning for the changes maintain that if the drinks are
obtaining special status only by virtue of their malt content, it seems not
unreasonable for them to taste like malt drinks. It has also been suggested
that the BATF may be looking to change its classifications leading to a tax
hike for RTDs.

Does beer advertising target teenagers? Youths in the 12-20 age bracket see
45% more beer ads in magazines than adults do, claims a recently-released
study from the Center for Alcohol Marketing and Youth at Georgetown
University in Washington, DC. The study, which was funded by the Pew
Charitable Trusts and the Robert Wood Johnson Foundation, used data supplied
by Mediamark Research Inc. It claimed that Heineken and Fosters ads were seen
by 80% more teenagers than adults, and ads for Doc Otis' and Rick's hard
lemonades were viewed by 75% more 12-20 year-olds than legal drinkers. On the
opposite end of the scale, teenagers saw only 8% more Budweiser ads than
adults did.

Jim O'Hara, the center's executive director, was quoted in the Washington
Post as admitting that magazines like Rolling Stone and Sports Illustrated
appeal to varied age groups, and advertisers trying to reach the
twenty-something crowd would inevitably reach teenager readers as well. He
told the Post, however, "But if you want to reduce your underage exposure,
you would probably choose not to advertise in certain magazines, this is a
choice you make because you want to be responsible."

O'Hara called on the alcoholic beverage industry to regulate itself more
strictly, and said his group would be sending its data to the Federal Trade
Commission.

The results of the study may add fuel to the call for a Congressional
investigation. In a September 4, 2002 letter, Rep. Frank Wolf (R-VA) and
Lucille Roybal-Allard (D-CA) petitioned their fellow lawmakers to sign a
letter asking the Committee on Energy and Commerce to hold hearings on
alcohol advertising and its impact on children.

"Despite the fact that the alcohol industry claims that they do not target
minors, alcohol commercials push all the hot buttons for teens," they write.
"These ads use youth-oriented music, party scenes, and messages implying that
drinking makes you more popular with your friends and more appealing to the
opposite sex."

Asserting that in 2000 the alcohol industry spent about $1.4 billion on TV
advertising, the two Congressmen insist that it would be "naive" to think
these ads aren't influencing kids to drink.

By Greg Kitsock

Are Mothers Against Drunk Driving and the distilled spirits manufacturers
making common cause against the beer industry? It sounds like an unlikely
alliance, but that's what the National Beer Wholesalers Association asserted
in an August 30, 2002 letter to MADD president Wendy Hamilton. The missive,
signed by NBWA chairman of the board Chris Caffey, criticizes MADD for
opposing tax relief legislation for brewers while ignoring a bill that would
reduce the federal excise tax for hard liquor.

H.R. 1305, which has been backed by over half the U.S. House of
Representatives, would roll back the tax on beer to its pre-1991 level. MADD,
on its Website, terms defeat of the rollback a legislative priority, arguing
that it would result in 600 more traffic deaths annually and cost the U.S.
Treasury $1.75 billion in tax revenues each year. MADD has publicly denounced
the bill in testimony before the House and in an April 16, 2002 press
conference on Capitol Hill.

MADD's Website, however, doesn't mention H.R. 2023, a bill that would roll
back the tax on hard liquor to its pre-1986 level, decreasing it by 28%. Nor
has the organization taken any public position on the measure, insists the
NBWA.

H.R. 2023 was introduced by Rep. Ron Lewis (KY-R) and currently has 97
co-sponsors, according to Frank Coleman, senior vice president of the
Distilled Spirits Council of the United States. Asked about any opposition to
the bill on MADD's part, he replied, "I haven't heard of any." Regarding his
group's relations with MADD, he added that DISCUS "has worked cooperatively
with MADD in the past on comprehensive legislation against drunk driving."

"We do not advocate any lowering of alcohol taxes," insisted Karen Sprattler,
national director of public policy for MADD. She said she strongly stated
MADD's opposition to H.R. 2023 at the recent Governors Highway Safety
Association Conference in St. Louis, and added that MADD's Website would be
updated during the next month to reflect that position.

In addition, in an eight-point plan to combat drunk driving released in June,
MADD endorsed increasing the federal tax on beer and wine to the same level
as that levied on spirits. If enacted, this measure would slap a whopping
150% tax hike on the brewing industry, notes the NBWA letter. This
"equalization" campaign, the NBWA adds, has long been a top priority of
DISCUS and the U.S. spirits industry.

"We believe that beer does not pay its own way," asserted Sprattler, noting
that equalization would increase the federal excise tax on a 12-oz container
from five cents to twelve cents. Asked whether MADD favors any one segment of
the alcoholic beverage industry as being more responsible than others, she
answered, "I have no comment on that."

The Taiwan Tsingtao Brewery will spend some T$3 billion (US$86 million) to
build a brewery to produce China's number one beer brand Tsingtao in the
Island. Mainland China had long coveted the huge beer market on the island of
Taiwan.

Historically, Taiwan Tsingtao Brewery Co will be the first Taiwan firm to be
licensed by a China brand to produce on the island, according to published
reports. The brewery will be located in the southern county of Pingtung and
is estimated have an annual capacity of up to 200,000 tonnes.

By Tom McCormick

Pete Slosberg has migrated from wicked to cocoa. As in Cocoa Pete's. Pete
has just founded a new company, Cocoa Pete's Chocolate Adventures, a "premium
craft chocolate company." And it has some similarities to the craft beer
business - malt, fermentation, self-distribution, and turning consumers on to
quality not quantity.

Inspired by trips to Belgium during his beer days, Pete has embarked on a
quest to make premium chocolate more accessible to both the connoisseur and
mainstream consumer. Replicating decades old Belgium recipes that he was
exposed to while recently attending the Culinary Institute of America's
chocolate and confections program, Cocoa Pete's has created a three
dimensional chocolate product with unique designs and creative flavors. "We
found that the consumer perceives a molded piece in a box to be fresher and
of higher quality than the standard rectangular, flat bar" said Pete in a
recent phone interview. "The bar market is boring. Our products will be
three dimensional and interesting both in shape and in the combinations of
flavors."

Four products will be released initially, but perhaps the most interesting is
the Maltimus Maximus, a malt ball creation inspired by the late Roger Briess
and his malt balls, still regularly sent out to customers by Briess Malting
Company. Maltimus Maximus is made with two malt varieties from Briess
Malting. Other styles include Nuts So Serious - milk chocolate with roasted
hazelnuts. Berry, Berry Dangerous - dark chocolate with dried strawberries.
And Hallowed Grounds - with real Italian roasted coffee, "inspired by a
street vendor I met while selling beer on the streets of Seattle" explained
Pete.

Pete spoke of many parallels between his new business and that of the craft
beer business, in which he was an integral part of since 1986 when he founded
Pete's Brewing Company. "The intent is to make great chocolate generally
available. We want to break into the chains, corner stores and
non-traditional outlets," said Pete. The "craft chocolate" business looks to
be part of the growing better foods movement that seems destined to keep
growing. The premium chocolate category is growing at double digit rates,
seven times faster than the $12.5 billion mainstream chocolate market. Anoth
er similarity to Pete's past life is in the making of chocolate - premium
chocolate is fermented like beer. According to Pete, "the pods contain pulp
and inside the pulp are seeds. Sweet pulp ferments with wild yeast causing
chemical changes to occur." The seeds are roasted and then ground which
liquefies the cocoa.

Cocoa Pete's will self-distribute until they figure out the complex
distribution channels required for this type of product. Cocoa Pete also
plans to develop his own sales force to drive the educational and sales side
of the business - something certainly gleaned from his beer days. Currently,
the four products are available only in Northern California but with
expansion planned soon.

Pete will be in Denver this week during the GABF paring his chocolates at a
media and industry vertical beer tasting. And probably tasting some beers
too.

The 21st annual Great American Beer Festival kicks off once again this week
in Downtown Denver Thursday through Saturday. General sessions open to the
public are Thursday, Friday and Saturday 5:30 - 10:00 PM. A Connoisseur
Tasting Session, also open to public, is Saturday 12:30 - 4:30 PM at which
time the GABF medal winners are announced.

There are a number of industry events and gatherings surrounding the GABF
public sessions including:

Wednesday 6:30 - 9:00 PM
Brewers Celebration Gathering
Hosted by Wynkoop Brewing Co. and sponsored by Briess Malting Co, this is the
usual kick-off gathering of industry attendees. This is a ticketed event.

Thursday 11:00 - 3:00 PM
Siebel Institute's Sensory Analysis Seminar at the Convention Center. Email
the institute for information at info@siebelinstitute.com.

Thursday 12:00 - 2:00 PM
8th annual Great Divide Media Luncheon at Great Divide Brewing Company.
Email amry@greatdivide.com for more information.

Thursday 9:30 - 11:00 PM
ProBrewer.com and BEERWeek's 8th annual Stogies and Stout party at Falling
Rock Tap House, 1919 Blake Street, Downtown Denver. Casks of Fuller's London
Pride flown in that day and other exotic craft beers on draft. Email
tom.mccormick@probrewer.com for more info.

Thursday 10:00 PM
Rocktobfest at Rock Bottom Restaurant, 1001 16th St. Downtown Denver. Hosted
by Cargill Malt and White Labs. Email Joanne@whitelabs.com for more info.

Thursday 8:00 - Midnight
8th annual KROC World Brewers Forum at the Mattie Silks Room, Denver Marriott
City Center, 1701 California St. Downtown Denver. Contact
BrewsTraveler@adamsco-inc.com for more info.

Friday 2:30 - 4:00 PM
Gathering the Guilds to discuss American Beer Month in the Gold Room at the
Denver Marriott City Center, 1701 California St. Downtown Denver. All are
welcome. Please RSVP to Kate Porter at kate@aob.org.

Friday 3:00 - 5:00 PM
Redstone Meadery Reception in the Mattie Silks Room at the Denver Marriott
City Center, 1701 California St. Downtown Denver. Email
julia@redstonemeadery.com for more info.

Saturday 1:30 PM
GABF Awards Ceremony during the Connoisseur Tasting Session at the Convention
Center.

OTHER NOTES

There is a new shuttle company at Denver International Airport (DIA) called
Blue Sky Shuttle. Rates are $15.00 one way; $26.00 round trip to downtown.
Vans pick up at "ground transportation" outside door 510 on the fifth level
(United Baggage Claim area). Go to island 3. Drivers sell tickets and
accept cash and major credit cards. They run about every 15 min. Thanks to
Nancy Johnson at IBS for this info.

GABFCast
Weather forecast for the Denver area Wednesday is mostly cloudy with a slight
chance of showers. Lows in the 30's and highs in the 50's. Thursday and
Friday look to be dry and warmer with highs in the 60's but chilly at night
with low's in the 30's. This is a long-term forecast and subject to change.
For the most recent forecast for the Denver area go to www.crh.noaa.gov/den/

BEERWeek and ProBrewer.com invite you to the 8th annual "Stogies and Stout"
party next Thursday, October 3rd at Falling Rock Tap House in Denver during
the Great American Beer Festival. Starting at 9:30 pm, this years event will
include casks of Fuller's London Pride being delivered by airplane that day
plus a variety of unique and unusual domestic craft beers on tap.

Included in this year's festivities will be the presentation of the trophies
for the American Beer Month Challenge winners. Come join us under the stars
for an evening of unique beers and industry revelry. Falling Rock is located
at 1919 Blake Street in Downtown Denver. We hope to see you there!

The National Beer Wholesalers' Association (NBWA) is holding its 65th annual
convention in Boston this week. NBWA board and committee meetings started on
Friday, September 27th, registration on September 28th, and educational
seminars and the official Welcome Reception on September 29th.

The NBWA Annual Convention continues today and Tuesday, October 1. Seminars
and educational sessions reflect the current state of the beer wholesaling
and distribution business, including current trends in retailing, the
contributions of imported beers and "malternative" alcopops to the bottom
line, the increasing use of technology in the trade - including creating web
site, using software for route accounting, and automating case selection -
and perhaps one of the most significant issues in the industry today,
consolidation.

Sessions will wrap up at around 5PM on October 1st, in preparation for the
final of three evenings of "supplier hospitalities," where brewers and
importers take the opportunity to show off (and sample) their wares to the
all-important middlemen, who handle the majority of the nation's
multi-billion dollar beer wholesaling trade.

Heartland Brewery in NYC plans to build a microbrewery in Brooklyn with a
30-bbl brewhouse, to open this fall, for the purpose of providing beer for
its expanding group of brewpubs/restaurants in NYC. This plan calls for
brewing onsite at the brewpubs to end at some point, although only they can
say exactly when that full transition will occur.

The different licensing option, as a result, will open the door for them to
open more Heartland Brewery restaurants in the near future.

St. Louis Brewery (the second largest brewery in St. Louis!) is opening its
new brewery, bringing all packaging (bottles) in house (they formerly used
the facilities of August Schell) in early 2003, with brewing commencing in
Feb. and the brewery and tour facility open to the public next April. For
info contact Dan Kopman at the brewery.

Closed:

Quincy Ships Brewery
Quincy, MA