Quilmes Industrial (Quinsa) S.A. (NYSE:LQU; "Quinsa" or the "Company") today announced that for the three months ended June 30, 2000, net income was US$ 2.9 million, or US$ 0.027 per share, compared to US$ 7.9 million, or US$ 0.074 per share for the second quarter in 1999. EBITDA for the same period increased 7.0 percent to US$ 45.8 million compared to US$ 42.8 million a year earlier.

For the six months ended June 30, 2000, net income was US$ 26.0 million, or US$ 0.244 per share, compared to US$ 36.8 million, or US$ 0.345 per share. EBITDA for the same period was US$ 122.9 million compared to US$ 121.2 million for the first six months of 1999.

FINANCIAL REVIEW: SECOND QUARTER 2000

Volume sales for beer increased 2.6 percent to 2,019,000 hectoliters in the second quarter 2000, from 1,967,000 hectoliters a year earlier. Significant contributors to this improvement were the Paraguay and Chile operations that continue to post strong volume growth. Volume sales for soft drinks and water were 1,460,000 hectoliters for the quarter, compared to 458,000 hectoliters in 1999. This increase was the result of the acquisition of BAESA which more than offset the divestiture of the mineral water business in Argentina.

Consolidated net sales increased to US$ 183.3 million compared to US$ 138.0 million, mainly due to the acquisition of BAESA. Net sales for soft drinks and water were US$ 66.5 million compared to US$ 19.6 million in 1999 while net sales for beer were US$ 113.6 million compared to US$ 115.3 million a year ago. The decline in net beer revenues was principally the result of lower average prices in every market, as the combination of competitive pressures, a trading down to less expensive brands both in Argentina and Bolivia, and local currency devaluations, affected pricing in dollar terms.

Gross profit increased 21 percent to US$ 90.0 million in the second quarter of 2000, from US$ 74.1 million for the same period in 1999, despite the reclassification of the plants' administrative expenses which are included in cost of sales as of the first quarter 2000. The increase in gross profit was again principally the result of the consolidation of BAESA. Gross margin before the combined effects of BAESA, the reclassification of administrative expenses and the divestiture of the mineral water business in Argentina (i.e. on a fully comparable basis) increased to 56.7 percent compared to 54.0 percent a year earlier. This improvement was principally the result of reductions in the cost of cans, bottles and other raw materials, the lower costs involved in producing the Heineken brand locally in Chile and the local production of cans in Paraguay and Chile.
¶ Quinsa's selling and marketing expenses increased to US$ 51.8

million in the second quarter of 2000 from US$ 35.1 million for the same period in 1999. Administrative and general expenses were US$ 17.6 million compared to US$ 17.1 million last year. Administrative expenses, excluding the effects of BAESA, Eco de los Andes and the expenses reclassification, actually declined from US$ 17.0 million to US$ 15.5 million.

Operating profit was US$ 20.6 million compared to US$ 21.9 million a year earlier. Lower average pricing across all markets caused the decline, which more than offset an increase in volumes sold, reductions in labor expenses and other cost reductions. Net of the BAESA and Eco de los Andes effects, the operating margin remained virtually unchanged at 16 percent.

Interest expense increased to US$ 9.5 million during the second quarter of 2000, from US$ 1.9 million a year earlier as a result of the debt incurred for the acquisition of BAESA. Other expenses declined from US$ 9.2 million to US$ 7.8 million principally as a result of lower severance payments.

Consolidated net income for the second quarter 2000 was US$ 2.9 million, or US$ 0.027 per share, compared to US$ 7.9 million, or US$ 0.074 per share for the second quarter in 1999. This was principally the result of the increase in financing costs.

Total shareholders' equity and minority interest increased to US$ 791.4 million as of June 30, 2000 from US$ 764.4 million as of June 30, 1999. The Company's net debt position, that is total bank debt net of cash, certificates of deposit and government securities, was US$ 227.0 million as of June 30, 2000, compared with a net cash position of US$ 35.3 million a year ago. Long term debt portion of total bank debt increased to US$ 156.4 million from US$ 16.5 million a year ago. The increase in debt is related to the acquisition of BAESA. Inventories decreased to US$ 125.6 million from US$ 132.0 million in 1999 despite the acquisition of BAESA, principally due to lower volumes of barley stocks. Trade receivables were US$ 87.6 million compared to US$ 56.7 million a year earlier, as a consequence of the BAESA acquisition.

Capital expenditures, excluding acquisitions, reached US$ 13.5 million during the 2000 second quarter and US$ 24.1 million for the same period in 1999. For the second quarter of 2000, capital expenditures were principally related to the Ypane brewery expansion in Paraguay.

FINANCIAL REVIEW: FIRST HALF 2000

Despite the unfavorable economic environment that affected most of the Southern Cone during the first six months of 2000, Quinsa's beer volumes increased 0.1 percent to 5,412,000 hectoliters due to larger volume sales in Paraguay, Chile and Uruguay. Volume sales of soft drinks and water increased to 3,562,000 hectoliters during the same period, from 1,139,000 hectoliters a year earlier, as volumes sold by the recently acquired BAESA more than compensated for both the divestiture of Eco de los Andes and the decline in soft drinks volumes in Paraguay.

Net sales were US$ 480.3 million compared to US$ 377.2 million for the same period in 1999. The increase in sales was principally due to BAESA's contribution, which more than offset the effect of lower average prices across all markets.

Gross profit for the first half of 2000 was US$ 243.2 million, compared to the US$ 214.2 million reached in the same period of 1999. This increase was the result of the consolidation of BAESA. Net of BAESA, Eco de los Andes, and the administrative expenses reclassification introduced this year, Quinsa's gross margin increased from 57.3 percent in the first half of 1999 to 58.2 percent in the first half of 2000.

Operating profit was US$ 73.4 million compared to US$ 79.4 million last year. This decline was caused principally by lower average selling prices which were not fully offset by reductions in the cost of labor, raw materials and freight. On a fully comparable basis, the operating margin actually increased slightly during the first six months of 2000 to 21.6 percent from 21.4 percent last year.

Consolidated net income declined to US$ 26.0 million, or US$ 0.244 per share, from US$ 36.8 million, or US$ 0.345 per share, for the first halves of 2000 and 1999, respectively. This was the result of increased financial costs associated with the acquisition of BAESA.

MARKETS

ARGENTINA:

Beer: The Argentine economy has not yet shown clear indicators pointing to a recovery from its long-drawn recession, despite which market volumes have not declined. Quinsa's domestic volumes during the second quarter 2000 were stable compared to last year, at 1,474,000 hectoliters. Market share has stabilized at slightly above 69 percent since the implementation of price reductions for cans a year ago. Quinsa's share of value increased throughout the quarter, reaching 72.6 percent in June 2000.

Revenues were US$ 82.5 million for the second quarter 2000, compared to US$ 91.5 million for the second quarter 1999. The absence of mineral water sales during the quarter accounted for US$ 4.7 million of the difference. A decline in average pricing, reflecting price reductions for cans and a continued trend towards lower-priced brands, accounted for the balance. The competitive environment has continued to be marked by aggressive price discounting. Quinsa has made use of its brand portfolio to effectively face this challenge, in order to avoid affecting Quilmes' brand equity.

Operating profit was US$ 14.5 million compared to US$ 19.9 million a year earlier. This decline was the result of lower revenues and higher selling expenses, partially compensated through reductions in the cost of labor, freight and raw materials. Selling expenses increased to US$ 21.9 million principally due to a US$ 1.7 million reclassification of promotional material purchases which, as of this year, are expensed when actually purchased. Despite this reclassification, selling expenses for the six months to June 2000 were US$ 55.7 million, compared to US$ 56.5 million a year earlier.

Administrative expenses, on the other hand, declined 10 percent (net of reclassifications) when comparing the second quarters of 2000 and 1999, principally due to lower personnel expenses. The Company has thus continued to enhance administrative efficiencies, particularly through the use of SAP's administrative modules. This has resulted, for example, in administrative headcount reductions of 9 and 18 percent for the last six and eighteen months, respectively. The success of these efforts has prompted the Company to extend the use of SAP to include its industrial, cost accounting and financial consolidation modules.

Soft drinks: BAESA's volume sales for the second quarter 2000 were 993,000 hectoliters of soft drinks (933,000 in Argentina and 60,000 in Uruguay) and 162,000 hectoliters of water (126,000 in Argentina and 36,000 in Uruguay). Market share in the Greater Buenos Aires region stands at about 27 percent.

Net sales for the second quarter were US$ 53.4 million. The pricing environment continued to be very competitive, particularly due to the action of B-brands. Furthermore, as was the case with beer, the weak economic climate led consumers to trade down to lower-priced brands. BAESA's Mirinda brand, for example, represented 22 percent of total volume sales for the first six months of 2000, up from 15 percent a year earlier.

Operating loss for the quarter was US$ 0.2 million, while EBITDA was US$ 5.2 million. This performance partially reflects some of the improvements that are being introduced to BAESA. Cost savings amounting to US$ 12.2 million per year have already been identified, of which about US$ 6.5 million should already have an effect on BAESA's fiscal year 2000 performance. Savings have already been achieved in the cost of purchases such as media, coolers, cans and labels. Further savings in third parties services such as insurance, audit and legal fees are also included in the annual savings mentioned above. Furthermore, since Quinsa took control in December 1999, total headcount has been reduced from 2,581 to 2182 as of June 30, 2000. We expect further savings in labor, freight and systems to be introduced during the course of next year.

In addition to the cost savings described, investments have been approved for approximately US$ 5.7 million in items such as the replacement of can ends, the removal of cardboard from PET packs and the improvement of the industrial lay-out at BAESA's largest plant. Annual savings resulting from these investments should be approximately US$ 3.5 million.

Plans to implement commercial synergies through the combination of the beer and soft drinks businesses continue to advance on schedule. Selective trials for joint third-party distribution in certain regions of Greater Buenos Aires are providing satisfactory results, as are the trials for joint direct distribution in Mar del Plata. The restructuring and combination of both businesses' indirect distribution is expected to be completed by about the middle of the year 2001, while we also expect to extend the Mar del Plata trials to other Argentine cities during next year. Effective synergies between our beer and soft drinks operations in Uruguay are being analyzed as well and should be implemented in the course of the next twelve months.

Plans for consolidating BAESA's industrial structure are also advancing. Negotiations with the major remaining Pepsi bottler in Argentina are well advanced and we expect closing before year-end. Full consolidation of the industrial system, including the other two Argentine PepsiCo franchises, should be completed by the year 2002.

Quinsa's public tender offer for BAESA shares ended on June 28, 2000. The Company now owns 86.8 percent of BAESA's capital stock, and is currently in negotiations to increase its ownership above 90 percent.

Mineral water (not consolidated): Eco de los Andes' domestic volume sales increased 4.6 percent to 132,000 hectoliters despite the recessionary environment, taking the business' market share to 13 percent according to Nielsen. Quinsa's consolidated market share for the water industry (i.e. including BAESA's Glaciar brand) is already 22 percent.

Eco de los Andes has recently launched a new, lighter, plastic bottle which has allowed for further cost savings. Furthermore, it is ready to launch the new Nestle Pure Life brand that will be in the market before the peak season this year.

BOLIVIA: Domestic volume sales for the second quarter 2000 reached 91,000 hectoliters compared to 118,000 hectoliters for the same period in 1999. This decline reflects a severe contraction in consumer spending and the increase in excise taxes, which now represent more than 50 percent of the factory selling price. Sales for the quarter were US$ 4.7 million, compared to US$ 7.0 million a year earlier, as a consequence of both lower volumes sold and a 12 percent decrease in average prices. The latter was the result of actual price reductions, particularly in the Santa Cruz region, and of a 6.5 percent depreciation of the local currency against the dollar over the past twelve months. At the operating level, the business lost US$ 0.6 million compared to a US$ 0.6 million profit for the same quarter in 1999. EBITDA for the second quarter was US$ 1.1 million.

Quinsa has continued to acquire minority stakes in its Bolivian competitor, Cerveceria Boliviana Nacional ("CBN"), of which it already owns approximately 30 percent. Negotiations continue to acquire further participations in the capital stock of CBN, with a view to acquiring control of the company in the short term.

CHILE: Domestic beer volume sales have continued to grow despite a sluggish beer market, reaching 68,000 hectoliters during the second quarter 2000, which is 19 percent higher than the 57,000 hectoliters sold a year earlier. Volume sales growth was particularly strong in the interior of the country, although the Company also posted solid growth in the capital. Market share for the second quarter increased to 10 percent, nearly 1.5 percentage points higher than a year earlier. Supporting this improvement were solid performances by all of Quinsa's local brands. Thus, Baltica continued to grow particularly in the returnable segment while Becker consolidated its position in the one-way segment of the market. The Heineken brand, produced locally, also delivered excellent growth very profitably, due to its premium positioning. The success of the Heineken brand has led the Company to approve the expansion of its production capacity, and investments are already underway.

Sales increased 11 percent to US$ 5.1 million, as the volume increases more than compensated for a decline in average prices. Operating results improved to a loss of US$ 0.9 million compared to a loss of US$ 1.9 million a year earlier. This performance was the result of higher sales and reductions in the cost of raw materials (such as cans). Further cost improvements were achieved due to the local production of Heineken. EBITDA for the second quarter 2000 was a positive US$ 0.2 million, compared to a negative US$ 0.7 million for the second quarter 1999.

PARAGUAY: Domestic beer volume sales increased a remarkable 26 percent to 320,000 hectoliters. This performance was the result of strong growth for the beer market and also of Quinsa's continued success at increasing market share. Market share for the second quarter 2000 reached 82 percent, compared to 76 percent a year earlier. The Quilmes brand, produced locally, has been particularly successful and has already reached a market share of about 20 percent, making it the second largest brand in the country behind Pilsen. The Company has also been successful in penetrating the one-way segment, especially since cans are now produced locally at its Ypane plant. Sales for beer increased 24 percent to US$ 18.2 million for the second quarter compared to US$ 14.7 million a year ago. Operating profit for the beer business more than doubled to US$ 6.4 million for the second quarter of 2000, from US$ 3.1 million a year earlier. This increase was principally the result of higher volume sales and a reduction in the cost of raw materials, including cans which are now produced locally. EBITDA for the second quarter 2000 was US$ 8.6 million.

Investments to double capacity at the Ypane plant are largely concluded, and in fact the new brewhouse went into production in April 2000. The older brewery located in Asuncion has already been closed. The replacement of old capacity by new one will further reduce costs in the future.

Volume sales for soft drinks and water reached 295,000 hectoliters for the 2000 second quarter, compared to 321,000 hectoliters for the 1999 second quarter, with market share reaching 79 percent for the period. Net sales for soft drinks and water were US$ 13.8 million compared to US$ 14.8 million a year ago. Operating profit was US$ 1.1 million compared to US$ 0.1 million for the second quarters of 2000 and 1999, respectively. EBITDA was US$ 3.0 million.

Negotiations regarding the sale of the soft drinks business to Coca-Cola continue and the transaction is expected to close in the short term.

URUGUAY: Quinsa's domestic beer volumes for the second quarter 2000 remained virtually stable compared to the same quarter in 1999, reaching 55,000 hectoliters. Market share was 56 percent compared to 55 percent a year earlier. Sales were US$ 6.7 million in the 2000 second quarter compared to US$ 8.6 million in the 1999 second quarter. The decline in revenues was the result of the sale of the Company's malt operation. Operating profit was unchanged for the second quarters of 2000 and 1999, at US$ 0.7 million. EBITDA during the second quarter 2000 was US$ 1.3 million.

FORWARD LOOKING STATEMENTS

This release contains forward-looking statements. Such statements are not statements of historical fact, and reflect the beliefs and expectations of the Company's management. The words "should", "expects", "believes" and similar words are intended to identify these statements, which necessarily involve known and unknown risks and uncertainties. These include the macroeconomic environment in the countries within which Quinsa operates, the impact of competitive products and pricing, regulatory approval and other risks described in the Company's registration statement and other Securities and Exchange Commission filings.

ABOUT QUINSA

Quinsa is a Luxembourg-based holding company, which controls 85 percent of Quilmes International (Bermuda) Ltd., ("QIB"). The remaining 15 percent share is owned, since 1984, by Heineken International Beheer B.V. ("Heineken"). Heineken Technical Services B.V. renders technical assistance to the operating companies. Quinsa, through QIB, controls beverage and malting businesses in five Latin American countries. Its beer brands are market leaders in Argentina, Paraguay and Uruguay and have a strong presence in Bolivia and Chile. In Paraguay, Quinsa's soft drink business is the market leader. Quinsa has announced it is negotiating the sale of its Paraguayan soft drinks business to The Coca-Cola Export Corporation. The Company also owns a controlling interest in the largest PepsiCo bottler in Argentina. Quinsa's common and preferred shares are listed on the Luxembourg Stock Exchange (Reuters codes: QUIN.LU and QUINp.LU). Quinsa's American Depository Shares, representing the Company's preferred shares, are listed on the New York Stock Exchange (NYSE:LQU).


Quilmes Industrial (Quinsa) S.A.
UNAUDITED CONSOLIDATED PROFIT AND LOSS STATEMENT
(U. S. Dollars in millions, except per share amounts)

Three months ended Six months ended
June 30th, June 30th,
2000 1999 2000 1999


Net sales 183.3 138.0 480.3 377.2
Cost of goods sold (93.3) (63.9) (237.1) (163.0)

Gross profit 90.0 74.1 243.2 214.2

Selling and
marketing expenses (51.8) (35.1) (128.9) (95.9)
Administrative and
general expenses (17.6) (17.1) (40.9) (38.9)

Operating profit
before interest,
other income,
expenses and taxes 20.6 21.9 73.4 79.4

Interest income 3.5 2.3 6.4 4.6
Gain (loss) on sales
of fixed assets (0.1) 0.3 0.1 1.1
Other income 0.8 1.0 3.2 1.8
Interest expenses (9.5) (1.9) (18.1) (4.1)
Other expenses (7.8) (9.2) (13.4) (13.6)

Earnings before taxes
and minority interest 7.5 14.4 51.6 69.2

Income taxes (4.1) (4.5) (22.2) (22.9)
Minority interest (0.5) (2.0) (3.4) (9.5)

Net income 2.9 7.9 26.0 36.8

Net income per share: 0.027 0.074 0.244 0.345

Depreciation
& Amortization 27.6 22.4 53.6 43.3
Cash Flow (before
minority interest) 31.0 32.3 83.0 89.6

Quilmes Industrial (Quinsa) S.A.
UNAUDITED GEOGRAPHIC INFORMATION - SUMMARY
(U. S. Dollars in millions)

Three months ended Six months ended
June 30th, June 30th,
2000 1999 2000 1999
NET SALES

Argentina 82.5 (1) 91.5 231.7 (1) 256.6
BAESA (2) 53.4 n.a. 132.1 n.a.
Bolivia 4.7 7.0 10.6 15.2
Chile 5.1 4.6 13.0 12.2
Paraguay 32.5 29.7 76.9 79.9
Uruguay 6.7 8.6 20.0 21.2
Interarea sales (1.6) (3.4) (4.0) (7.9)

Total 183.3 138.0 480.3 377.2


(1) Mineral water sales for the second quarter and first half of
1999 were US$ 4.7 million and US$ 12.0 million, respectively. Mineral
water sales for the second quarter and first half of 2000 are not
reflected due to the divestiture of this business, except for BAESA's
mineral water sales, which are included in the BAESA line.
(2) Represents consolidated soft drinks and water sales in
Argentina and Uruguay.

Three months ended Six months ended
June 30th, June 30th,
2000 1999 2000 1999

OPERATING
PROFIT (LOSS)

Argentina (3) 14.5 19.9 (3) 61.1 68.5
BAESA (Argentina
and Uruguay) (0.2) n.a. (1.8) n.a.
Bolivia (0.6) 0.6 (1.1) 1.2
Chile (0.9) (1.9) (1.5) (3.5)
Paraguay 7.7 3.2 17.4 14.9
Uruguay 0.7 0.7 1.9 1.7
Corporate
headquarters
& consolidation
adjustments (0.6) (0.6) (2.6) (3.4)
----- ----- ----- -----

Total 20.6 21.9 73.4 79.4

(3) Includes charges for US$ 1.7 million and US$ 2.7 million in
the second quarter and first half of 2000, respectively, owing to a
change in accounting criteria regarding the purchase of promotional
materials. These are now expensed when purchased.

Quilmes Industrial (Quinsa) S.A.
TOTAL VOLUME SALES
including exports
(in thousands of hectoliters)

Three months ended Six months ended
June 30th, June 30th,
2000 1999 2000 1999

Argentina
-- Beer 1,485 1,496 4,114 4,199
-- Water (Eco de los Andes) 0 131 0 340
-- Soft drinks (BAESA) 933 n.a. 2,279 n.a.
-- Water (BAESA) 126 n.a. 305 n.a.

Bolivia
-- Beer 92 120 203 257

Chile
-- Beer 75 65 194 171
-- Water 3 3 7 4

Paraguay
-- Beer 320 253 786 699
-- Soft drinks and water 295 321 696 783

Uruguay
-- Beer 58 57 180 159
-- Water 7 8 18 22
-- Soft drinks (BAESA) 60 n.a. 154 n.a.
-- Water (BAESA) 36 n.a. 103 n.a.

Interarea sales (11) (29) (65) (91)

Total 3,479 2,425 8,974 6,543

Quilmes Industrial (Quinsa) S.A.
UNAUDITED CONSOLIDATED BALANCE SHEET - SUMMARY
(U. S. Dollars in millions)

As of June 30th,
2000 1999
ASSETS

Cash, Cash Equivalents and Government Securities 129.6 141.6
Inventories 125.6 132.0
Accounts receivable 87.6 56.7
Other Current Assets 29.0 16.0

Total Current Assets 371.8 346.3
Property, Plant and Equipment, Net 740.8 637.1
Other Assets 255.7 78.5

Total Assets 1,368.3 1,061.9

LIABILITIES AND SHAREHOLDERS' EQUITY
Short-Term Bank Debt 200.2 89.8
Long-Term Bank Debt 156.4 16.5
Other Liabilities 220.3 191.2

Total Liabilities 576.9 297.5
Minority Interest 176.2 188.6
Shareholders' Equity 615.2 575.8

Total Liabilities and Shareholders' Equity 1,368.3 1,061.9