Redhook Ale has insisted that talks on a potential merger with fellow US craft brewer Widmer Brothers Brewing Co. remain at a "preliminary" stage.

The brewer made the admission as it reported its financial results for 2006. Redhook posted annual operating income of US$604,000, up from a loss of US$837,000 a year earlier.

Revenues leapt almost 16% to just over US$40m, Redhook said yesterday (26 March).

Redhook and Widmer began discussions on a possible merger in January as they looked to join forces to better compete with larger brewers in the US.

A union would deepen the relationship between Redhook and Widmer, who together run Craft Brands Alliance, a sales and marketing venture in the western US. Redhook also brews the Widmer brand under licence for the eastern US.

Redhook was coy about how the talks are progressing but said: "These negotiations are continuing, and are still in the preliminary stage."

The relationship between the two brewers has faltered somewhat in recent months. In November, Redhook pointed the finger at the Craft Brands venture for its falling sales in western US states and claimed the business had done a better job selling beers from the Widmer stable.

Brewing giant Anheuser-Busch owns a 34% stake in Redhook and 39.5% in Widmer. In January, A-B said it expected Redhook to be "the surviving company" after a deal between the craft brewers.