Redhook Ale Brewery, Inc

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International Guild of Hospitality & Restaurant Managers

Redhook Ale Brewery, Inc

NASD : HOOK

Redhook Ale Brewery, Inc., incorporated on May 4, 1981, brews, markets and sells craft beers. Its operations consist of its corporate headquarters and a pub in the Fremont area of Seattle, Washington; a brewery in the Seattle suburb of Woodinville, Washington; and, a brewery in Portsmouth, New Hampshire. The Company currently produces eight styles of beer, marketed under distinct brand names. The Company's flagship brand is Redhook E.S.B., and its other principal products include Redhook India Pale Ale, Redhook Hefe-Weizen, Blackhook Porter, Double Black Stout, and its seasonal offerings Redhook Blonde Ale, Winterhook, and Redhook Nut Brown Ale. In addition to its principal products, it periodically develops and markets new products to test and measure consumer response to varying styles and flavors.

The Company produces a variety of styles of full-flavored craft beers using traditional European brewing methods. The Company brews its beers using only high-quality hops, malted barley, wheat, rye and other natural ingredients, and does not use any rice, corn, sugar, syrups or other adjuncts. The Company's beers are marketed on the basis of freshness and distinctive flavor profiles. To help maintain full flavor, its products are not pasteurized. As a result, it is appropriate that they be kept cool so that oxidation and heat-induced aging will not adversely affect the original taste, and that they be distributed and served as soon as possible, generally within approximately three months after packaging to maximize freshness and flavor. The Company distributes its products only in glass bottles and kegs, and its products are freshness dated for the benefit of consumers.

The Company's flagship brand, Redhook E.S.B., which accounted for approximately 66% of its sales in 1999, is a full, rich, well-rounded, amber-colored ale with a sweet toasted malt flavor balanced by a pleasant floral/herbal liveliness derived from Tettnang hops. A premium English pub-style bitter ale, Redhook India Pale Ale, is pale and aggressively hopped, has a brassy color imparted by caramelized malt, an herbal aroma characteristic of Northwest Cascade hops, and a crisp, dry finish. Redhook Hefe-Weizen is wheat beer is unfiltered and named hefe-weizen, which means "wheat beer with yeast." Leaving the yeast in, instead of filtering it out, accentuates the wheat flavor and adds visual appeal. A London-style Porter, Blackhook Porter has an ebony tone, a pleasant "burnt" character produced by highly roasted black barley, and a dark malt flavor suggesting coffee and chocolate, balanced by lively hopping. Double Black Stout is a rich, imperial stout enhanced by the addition of an extract of Starbucks coffee.

Redhook Blonde Ale's combination of lightly roasted barley, subtle hops, and a touch of wheat, create a balanced and distinctively drinkable ale. Redhook Blonde Ale is available during the spring and summer months. The Company's Winterhook is a rich seasonal holiday ale formulated specially each year for cold-weather enjoyment, Winterhook typically is deep in color and rich in flavor, with complex flavors and a warm finish. Winterhook is available during the fall and winter months. Redhook Nut Brown Ale is a malty ale with a hint of sweetness in the finish. The combination of six barley malts and two hop varieties result in a smooth, well-balanced dark beer. Redhook Nut Brown Ale is available during the late winter and early spring.

The Company uses only technologically advanced and highly automated small-batch brewing equipment. The Woodinville Brewery employs a 100-barrel mash tun; lauter tun; wort receiver; wort kettle; whirlpool kettle; five 70,000-pound, one 35,000-pound and two 25,000-pound grain silos; two 100-barrel, fifty-four 200-barrel, and ten 600-barrel fermenters; and, two 300-barrel and four 400-barrel bright tanks. The Portsmouth Brewery employs a 100-barrel mash tun; lauter tun; wort receiver; wort kettle; whirlpool kettle; three 70,000-pound and two 35,000-pound grain silos; three 100-barrel and sixteen 400-barrel fermenters; two 200-barrel and two 400-barrel bright tanks; and an anaerobic waste-water treatment facility which completes the process cycle. Both breweries use advanced microfiltration technology, including a diatomaceous earth pad filter to eliminate unwanted yeast and to extend shelf life.

The Company distributed its products through a network of third-party wholesale distributors and a long-term distribution alliance with Anheuser-Busch, Incorporated (A-B) in 48 states as of December 31, 1999. A-B distributes its products throughout the United States through a network of about 700 wholesale distributors. The Company's most significant non-Alliance wholesaler, K&L Distributors, Inc., an independent A-B distributor responsible for distribution in most of King County, Washington, which includes Seattle, accounted for approximately 17% of total sales in each of 1999, 1998 and 1997. As of December 31, 1999, the Company had 27 non-Alliance distributors. The Company also offers its products directly to consumers at its three on-premise retail establishments, the Trolleyman pub in Fremont, the Forecasters Public House in Woodinville, and the Cataqua Public House in Portsmouth, New Hampshire.

As the Company expanded its distribution network outside the Pacific Northwest region, and as other craft brewers expanded their distribution to the Pacific Northwest, the Company has encountered increasing competition from microbreweries, other regional specialty brewers such as Sierra Nevada Brewing Company and Anchor Brewing Company, as well as from contract brewers such as Pete's Brewing Company and Boston Beer Company. The Company also competes against producers of imported beers, such as Heineken, Molson, Modelo (Corona), Becks and Labatts.

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The data included within the Financial section is solely for information and does not construe a recommendation and/or endorsement by IGHRM or its members to invest funds with any of the companies listed. You are strongly advised to obtain professional advice with qualified individuals or corporations for any investments of funds.

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