Mr. Bob Sartor reports

BIG ROCK BREWERY INC. ANNOUNCES SECOND QUARTER FINANCIAL RESULTS

Big Rock Brewery Inc. has released its financial results for the three and six months ended June 30, 2014.

The corporation reported a net income of $276,000 and a loss of $34,000 for the three and six months ended June 30, 2014, respectively, as compared with net income of $1,369,000 and $1,461,000 for the same periods in 2013. These results are attributed to a reduction in sales volumes. Reported sales volumes decreased 9.1 per cent to 46,597 hectolitres (hl) for the second quarter of 2014 as compared with 51,266 hl for the same quarter of 2014. Sales volumes decreased 13.6 per cent to 80,698 hl for the six months ended June 30, 2014, compared with 93,364 hl for the same six-month period in 2013. Excluding the impact of the discontinuance of certain products and the discontinuance or delayed introduction of certain package configurations, the volume decrease for the three and six months ended June 30, 2014, would be 482 hl (1.0 per cent) and 6,088 hl (7.6 per cent), respectively.

"Our transition back to the innovation and premium quality that was, for many years, the hallmark of our brand is on schedule," said Bob Sartor, chief executive officer. "The discontinuance of beers that do not fit our brand represented over half of our volume loss. While there is no doubt that the intense competition and open market in Alberta has impacted our volume, particularly for our original beers such as Grasshopper Wheat Ale and Traditional Ale, we will be launching several new full-time beers starting early in the fourth quarter of 2014 and into 2015, which will begin to replace the discontinued beer volume with better, higher-margin product."

With respect to the Big Rock expansion into British Columbia, Mr. Sartor commented: "Our brewery construction in Vancouver is ongoing, and we have finalized a completely new and creative line up of full-time and seasonal beers for the B.C. market for the fourth quarter of 2014 and for 2015. Permitting delays have pushed back our planned opening date, and we are now anticipating an opening date in the early part of the fourth quarter. Once the Vancouver brewery is operational, we will look to other markets for expansion. Work is already under way in this regard."

Financial and operating highlights

• Volume growth occurred in premium-priced brands, including Fowl Mouth ESB, Big Rock's best-selling Brewmaster's Edition beer to date, which ended its limited run in April. Big Rock's latest Brewmaster's Edition beer, Rhine Stone Cowboy, has also enjoyed an enthusiastic market response, having outsold its 2013 equivalent, Rosmarinus, over two to one in its first two months.
• New products and initiatives introduced subsequent to the first quarter have provided incremental sales volumes with partial benefit in the second quarter and are expected to provide full benefit in the third quarter.
• The corporation released five limited edition beers and two limited edition ciders in the second quarter (for a total of 11 products in the first six months of 2014) and expects to release 14 additional limited edition products during the remainder of 2014.
• Selling costs for the three months ended June 30, 2014, were higher than the same period in 2013 due to timing differences compared with 2013, particularly relating to sponsored events and new merchandise developed in accordance with Big Rock's recent rebranding.

                    FINANCIAL AND OPERATING HIGHLIGHTS 
             (In thousands, except per share and where noted)

                                       Three months ended   Six months ended
                                                  June 30,           June 30,
                                            2014     2013     2014      2013

Sales volumes (hectolitres or hl)         46,597   51,266   80,698    93,365
Net revenue                               10,414   11,635   17,561    20,639
Operating profit (loss)                      342    1,806      (78)    1,935
Net income (loss)                            276    1,369      (34)    1,461
Earnings (loss) per share (basic and
diluted)                                $   0.04 $   0.22 $  (0.01) $   0.24

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