USA: CBR Brewing Company, Inc. Reports First Quarter 2000 Operating Results
During the three months ended March 31, 2000 and 1999, the Company sold 58,394 metric tons and 52,563 metric tons of beer, respectively, an increase of 11.1%. Beer sales increased in 2000 as compared to 1999 as a result of a weakening in consumer demand for foreign branded premium beer in China, which contributed to an increase in the volume of domestic brand beer sold in China. Net income decreased in 2000 as compared to 1999 primarily as a result of a substantial increase in selling, advertising and promotional expenses.
CBR Brewing Company, Inc., through its subsidiaries and affiliates, is engaged in the production, distribution and marketing of Pabst Blue Ribbon beer in the People's Republic of China. As of March 31, 2000, the Company owned effective interests of 60%, 24%, 33% and 9% in four brewing facilities currently producing Pabst Blue Ribbon beer in the People's Republic of China, all of which are managed by the Company. The Company produces Pabst Blue Ribbon beer under a sublicense agreement with Guangdong Blue Ribbon Group Co. Ltd. ("Guangdong Blue Ribbon"), a related company, which expires on November 6, 2003.
Noble China Inc., a public company listed on the Toronto Stock Exchange, issued a press release on May 27, 1999 to announce that it had acquired from Pabst Brewing Company the exclusive rights to brew and distribute Pabst Blue Ribbon beer throughout China for a period of 30 years from 2003 to 2033. Noble China Inc. has issued subsequent press releases reiterating this information. Although the Company to date has been unable to verify whether such a license has in fact been granted to Noble China Inc., the terms of any such license, and whether it is subject to any conditions, the Company believes that some form of a license was granted to Noble China Inc. by Pabst Brewing Company. Management has consulted with legal counsel regarding the legitimacy of the purported license and the Company's potential responses. In addition, management has consulted with Guangdong Blue Ribbon, the owner of the Pabst Blue Ribbon trademark in China, regarding potential responses, and has met with representatives of Noble China Inc. in an attempt to explore a potential settlement.
Management of the Company has requested that Guangdong Blue Ribbon take appropriate action to protect its rights and its sub-licensee's rights to utilize the Pabst Blue Ribbon trademark in China. The Company has been advised that Guangdong Blue Ribbon is still evaluating the situation and has not yet determined how it will respond to this matter. Once Guangdong Blue Ribbon has responded, the Company expects to be in a position to evaluate and revise its future business plan and strategy accordingly. The Company is currently unable to predict the effect that this development may have on future operations. However, if Noble China Inc. has obtained the exclusive right to brew and distribute Pabst Blue Ribbon beer in China beginning in 2003, the inability of the Company to obtain a sub-license from Noble China Inc. on acceptable terms and conditions to allow the Company to continue to produce and distribute Pabst Blue Ribbon beer in China would have a material adverse effect on the Company's future results of operations, financial position and cash flows.
For further information, contact investor relations at (818) 789-0488.
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