Ms. Barbara Feit reports

BIG ROCK BREWERY INC. ANNOUNCES Q2 2017 FINANCIAL RESULTS

Big Rock Brewery Inc. has released its financial results for the three and six months ended June 30, 2017.

"Big Rock continued to grow production volumes and gross profit during the second quarter of 2017," said interim chief executive officer Barbara Feit. "Sales of Big Rock's bottled and canned products increased in the quarter, particularly in Alberta. These increases were led by AGD, private label brands and the limited-edition Canada 150 Variety Pack, but also included increases in Big Rock's flagship Grasshopper and Traditional brands and newer brands such as Pilsner and Rhinestone Cowboy. Ontario also contributed to growth as the addition of the Etobicoke brewery in the fall of 2016, and Liberty Commons at Big Rock Brewery restaurant in early 2017 continued to gain a foothold in Canada's most populous province."

Financial highlights

For the quarter ended June 30, 2017, compared with the second quarter of 2016, the corporation's:

• Sales volumes increased by 9 per cent, from 56,524 hectolitres (hl) to 61,703 hl.
• Net revenue increased by 11 per cent, from $12,117,000 to $13,496,000.
• Operating profit decreased from $656,000 to $246,000.
• Net income decreased to $207,000 from $383,000.
• Cash from operating activities increased to $633,000 from $136,000.

For the six months ended June 30, 2017, compared with the first half of 2016, Big Rock's:

• Sales volumes increased by 7 per cent, from 98,224 hl to 105,180 hl.
• Net revenue increased by 10 per cent, from $21,018,000 to $23,085,000.
• Operating loss increased from $529,000 to $911,000.
• Net loss increased to $700,000 from $400,000.
• Cash used in operating activities was $595,000 compared with cash provided by operating activities of $570,000.

Operating highlights

Big Rock's operating results continued to be hampered in the second quarter of 2017 by increased costs imposed by the Alberta government's revision in August, 2016, to the markup and grant structure. Under this new structure, the maximum grant rate available to producers is based on an optimal annual sales level of 150,000 hl in Alberta. Big Rock's Alberta sales volumes exceed this threshold, which has resulted in higher net costs per hectolitre as compared with the costs per hl imposed by the markup program that was in place during the first half of 2016.

The corporation has initiated discussions with the Alberta government and taken actions to mitigate the impact of the higher net cost by reducing the number of limited-time offer price promotions. To improve Big Rock's grant rate in the future, the corporation has taken steps to optimize its Alberta sales volumes by discontinuing two lower-margin products, which is expected to bring Big Rock's Alberta sales volumes closer to the new 150,000-hectolitre threshold. Big Rock anticipates these actions will reduce the net markup rate (markup less grant) in September, 2017, and future periods. Big Rock will continue discussions with the Alberta government with the objective of improving the environment for growth.

Big Rock's beer sales in British Columbia declined in the quarter, partly due to a conscious effort to improve margins by de-emphasizing value-priced products, as well as reduced keg sales in the competitive on-premise market. The decline was partially offset by a healthy increase in B.C. cider sales and growing revenue from the Vancouver Big Rock Urban Restaurant.

Big Rock beer products are becoming increasingly available in all three key retail channels in Ontario: the Liquor Control Board of Ontario retail stores, Beer Store outlets and licensed grocery chains. The three months ended June 30, 2017, is the first full quarter of results from both the Etobicoke brewery and the Liberty Village restaurant, and this has facilitated an increase in beer sales in both packaged and keg formats in Ontario.

                       SUMMARY OF RESULTS
           ($000, except hl, per hl and per-share amounts)

                                   Three months ended        Six months ended 
                                         June 30                  June 30  
                                     2017        2016        2017        2016

Sales volumes (hl)                 61,703      56,524     105,180      98,224
Net revenue                       $13,496     $12,117     $23,085     $21,018
Operating profit (loss)               246         656        (911)       (462)
Net income (loss)                     207         383        (700)       (400)
Net income (loss) per share          0.03        0.06       (0.10)      (0.06)
$ per hl
Net revenue                        218.73      214.37      219.48      213.98
Cost of sales                      124.42      116.09      129.70      120.99
                                   ------      ------      ------      ------

Appointment of new president and chief executive officer

As previously announced on July 11, 2017, Wayne Arsenault has been appointed as president and CEO of Big Rock Brewery, effective Sept. 7, 2017.

Mr. Arsenault previously served as chief executive officer of Corey Nutrition Company Inc. from 2015 to the present. Prior to joining Corey Nutrition, Mr. Arsenault held several vice-president roles with Moosehead Breweries Ltd. from 2009 to 2015, including operations, human resources and communications. Mr. Arsenault previously held management roles at Molson Coors Brewing Company, the Coca-Cola Company and McCain Foods Ltd.

Chairman of the board John Hartley commented: "On behalf of the board, I am very pleased to welcome Wayne to Big Rock. Wayne is a proven CEO with 20 years experience in the beer and branded beverage industry and a track record of delivering growth and operational excellence. We are excited to have an executive with his vision and experience joining our team."

Additional information

The unaudited consolidated financial statements and management's discussion and analysis for the three and six months ended June 30, 2017, dated Aug. 3, 2017, can be viewed on Big Rock's website and on SEDAR under Big Rock Brewery.

About Big Rock Brewery Inc.

Big Rock Brewery produces premium, all-natural craft beers and ciders. Big Rock has a broad family of permanent ales and lagers, the Rock Creek Cider series of craft ciders, and a continuing selection of seasonal and cutting-edge small-batch brews. Big Rock brews in Calgary, Alta., Vancouver, B.C., and Toronto, Ont.

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