Mr. Robert Sartor reports

BIG ROCK BREWERY INC. ANNOUNCES SECOND QUARTER FINANCIAL RESULTS

Big Rock Brewery Inc. is releasing its financial results for the three and six months ended June 30, 2016.

The corporation reported an increase in sales volumes of 14 per cent to 57,084 hectolitres for the second quarter of 2016, as compared with 50,051 hectolitres for the same period in 2015, the fifth consecutive quarter of volume growth. Wholesale revenue increased by $1.2-million to $11.7-million for the same period. The reported operating profit was $656,000 for the three months ended June 30, 2016, compared with an operating loss of $304,000 for the same period in 2015, while net income was $382,000 for the second quarter of 2016, as compared with a net loss of $473,000 for the second quarter in 2015.

Big Rock's chief executive officer, Robert Sartor, commented: "We continue to see strong volume growth, which has translated into bottom-line growth for the second quarter of well over $900,000, compared to the same period last year. However, while we are pleased with the return to profitability, we know we can do more."

Big Rock grew volumes and gross profit in Alberta, the company's largest market and the province with the greatest competition in Canada, while at the same time keeping selling expenses below the same periods in 2015. Several new products were successfully launched or relaunched in the quarter, including Mosaic Lager and Purple Gas. These join the successful new products launched earlier in the year, including Citradelic single-hop IPA and a new Rock Creek Peach Cider. Additionally, new and rebranded private label beers, launched late last year, and AGD, Big Rock's most approachable lager, continued to see strong consumer demand.

The enthusiastic response to the rebranding and relaunching of these lower-priced products has compressed average margins, which also remain under sustained pressure as a result of two changes to markup rates in 2015, which combined represented a 20.5-per-cent increase in Alberta Gaming and Liquor Commission (AGLC) markup rates, as compared with the previous year. Subsequent changes announced on July 12, 2016, and July 28, 2016, will replace Alberta's graduated markup rate with a flat rate of $1.25 per litre plus a new grant program for Alberta breweries that will be administered by Alberta Agriculture and Forestry. These changes are due to take effect on Aug. 5, 2016. Although the combined impact of the flat markup rate and the grant program is expected to result in an effective net rate that is slightly higher on average than the graduated rate which has applied to Big Rock's business in Alberta, the longer-term implications are being assessed.

In British Columbia, Big Rock's Vancouver brewery increased volumes for the three months ended June 30, 2016, by 77 per cent. Big Rock's Ontario expansion continues to progress, with construction activity under way at the Etobicoke brewery site, which is expected to open during the third quarter of 2016. The Liberty Village brew pub has now entered the construction stage is expected to open in the fourth quarter of 2016.

Mr. Sartor noted: "Our brew pub in Vancouver has proven itself to be an engine of innovation, providing us with two exciting new national brands, Citradelic IPA and Mosaic Lager, barely a year after opening our doors. Now we have to focus on bringing the brew pub out of its start-up phase and into full profitability."

                                 SUMMARY OF RESULTS
     (in thousands of dollars, except hectolitres and per-hectolitre amounts)

                                 Three months ended June 30,      Six months ended June 30,
                                       2016            2015            2016           2015 

Sales volumes (hectolitre)           57,084          50,051          99,228         84,032 
Net revenue                       $  12,291       $  11,105       $  21,335      $  18,242 
Operating profit (loss)                 656            (304)           (462)        (1,135)
Net income (loss)                       382            (473)           (400)        (1,097)
Per-hectolitre net wholesale 
revenue                           $  205.77       $  210.43       $  204.52      $  209.40 
Per-hectolitre wholesale 
cost of sales                     $  109.96       $  114.70       $  113.23      $  112.39 

Financial and operating highlights:

• Volume, revenue and gross profit growth occurred in Big Rock's largest market, Alberta, with the launch, or relaunch, of Purple Gas and the Vancouver-developed Mosaic Lager, together with continued growth of Citradelic and Rock Creek Peach Cider launched in the first quarter.
• In addition to the new products launched in the second quarter, Big Rock expects to release limited-edition products from Calgary, Vancouver and Etobicoke during the remainder of 2016.

Additional information

The financial statements, and management's discussion and analysis, dated Aug. 4, 2016, can be viewed on Big Rock's website and on SEDAR under Big Rock Brewery.

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