Exhibit Index at
                                                               Page 19


                       SECURITIES AND EXCHANGE COMMISSION
                                WASHINGTON, D.C.

                                    FORM 10-Q


[x]  QUARTERLY   REPORT  PURSUANT  TO  SECTION  13  OR  15(d)  OF  THE
     SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended  October 31, 1998

                                       OR

[ ]  TRANSITION  REPORT  PURSUANT  TO  SECTION  13  OR  15(d)  OF  THE
     SECURITIES EXCHANGE ACT OF 1934
For the transition period from      to

                         Commission File Number 0 - 1653

                               GENESEE CORPORATION
          (Exact name of registrant as specified in its charter)

 STATE OF NEW YORK                                       16-0445920
 (State or other jurisdiction of                        (I.R.S. Employer
  incorporation or organization)                        Identification No.)

 445 St. Paul Street, Rochester, New York                 14605
 (Address of principal executive offices)                (Zip Code)

Registrant's telephone number, including area code   (716)546-1030

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed  by  Section  13 or 15 (d) of the  Securities  Exchange  Act of 1934
during the preceding 12 months (or for such shorter  period that the  registrant
was  required  to file such  reports),  and (2) has been  subject to such filing
requirements for the past 90 days. Yes X   No


As of the date of this report, the Registrant had the following shares of common
stock outstanding:

                                       Number of Shares
                Class                  Outstanding


      Class A Common Stock (voting),            209,885
        par value $.50 per share


      Class B Common Stock (non-voting),      1,409,024
        par value $.50 per share

<PAGE>
                                       2



                      GENESEE CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                         October 31, 1998 and May 2, 1998
<TABLE>
<S>                                                                                  <C>                      <C>    
                                                                                      UNAUDITED                AUDITED
(Dollars in Thousands)                                                              October 31, 1998          May 2, 1998

ASSETS
     Current assets:
         Cash and cash equivalents                                                     $  2,876                2,692
         Marketable securities available for sale                                         8,136               17,808
         Trade accounts receivable, less allowance for doubtful receivables
            of $515 at October 31, 1998; $433 at May 2, 1998                             11,026               10,163
         Inventories, at lower of cost (first-in, first-out) or market                   16,654               14,258
         Deferred income tax assets                                                       1,433                1,315
         Other current assets                                                             1,127                  683
                                                                                       
            Total current assets                                                         41,252               46,919

     Net property, plant and equipment                                                   36,580               33,311
     Investment in and notes receivable from unconsolidated real estate partnerships      5,459                5,534
     Investments in direct financing and leveraged leases                                34,037               34,638
     Goodwill and other intangibles                                                      28,574               10,737 
     Other assets                                                                         5,179                4,450
                                                                                      
            Total assets                                                                151,081              135,589
                                                                                     

LIABILITIES AND SHAREHOLDERS' EQUITY
     Current liabilities:
         Accounts payable                                                                 7,650                8,358
         Income taxes payable                                                               504                  692
         Federal and state beer taxes payable                                             1,174                1,756
         Line of credit and current portion of mortgage payable                          10,079                   -
         Accrued expenses and other                                                      10,894                7,255
                                                                                       
            Total current liabilities                                                    30,301               18,061

     Deferred income tax liabilities                                                      9,294                9,295
     Accrued postretirement benefits                                                     15,415               15,415
     Mortgage payable                                                                     4,744                   -       
     Other liabilities                                                                      491                  471
                                                                                      
            Total liabilities                                                            60,245               43,242

     Minority interests in consolidated subsidiaries                                      2,313                2,227
     Shareholders' equity:
         Common stock Class A                                                               105                  105
         Common stock Class B                                                               753                  753
         Additional paid-in capital                                                       5,856                5,842
         Retained earnings                                                               84,988               86,143
         Unrealized gain on marketable securities, net of income taxes                      264                  752
         Less treasury stock, at cost                                                     3,443                3,475
                                                                                      
                                                                                     
            Total shareholders' equity                                                   88,523               90,120
                                                                                      

            Total liabilities and shareholders' equity                               $  151,081              135,589
                                                                                      
         See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
                                       3


                GENESEE CORPORATION AND CONSOLIDATED SUBSIDIARIES
                             CONSOLIDATED STATEMENTS
                         OF LOSSES AND RETAINED EARNINGS
           Thirteen Weeks Ended October 31, 1998 and November 1, 1997
<TABLE>

(Dollars in Thousands,
Except Per Share Data)
<S>                                                                       <C>                        <C>  
                                                                                      UNAUDITED
                                                                          1998                        1997

Revenues                                                               $ 45,972                      47,827

         Federal and state beer taxes                                     6,784                       7,913
                                                                    
Net revenues                                                             39,188                      39,914

          Cost of sales                                                  29,980                      31,007
                                                                     
Gross profit                                                              9,208                       8,907

           Selling, general and administrative expenses                   9,769                      10,291
                                                                     
Operating loss                                                             (561)                     (1,384)

          Investment income                                                 266                         556
          Other income / (expense), net                                    (109)                       (129)
          Interest of minority partners in earnings of
              consolidated subsidiaries                                    (297)                       (194)
                                                                     

Loss before income taxes                                                   (701)                     (1,151)

         Income tax benefit                                                (115)                       (382)
                                                                     
Net loss                                                                   (586)                       (769)
Basic loss per share                                                      (0.36)                      (0.48)
Diluted loss per share                                                    (0.36)                      (0.47)

Retained earnings at beginning of period                                 86,709                      88,571

          Less:  dividends - $.70 per share in 
                 1998 and $.70 per share in 1997                          1,135                       1,133

Retained earnings at end of period                                     $ 84,988                      86,669
</TABLE>
                                                                    

See accompanying notes to consolidated financial statements.

<PAGE>
                                       4

                                      

               GENESEE CORPORATION AND CONSOLIDATED SUBSIDIARIES
                             CONSOLIDATED STATEMENTS
                        OF EARNINGS AND RETAINED EARNINGS
          Twenty six Weeks Ended October 31, 1998 and November 1, 1997


(Dollars in Thousands,
Except Per Share Data)
<TABLE>

<S>                                                                       <C>                        <C>  
                                                                                      UNAUDITED
                                                                          1998                        1997

Revenues                                                               $ 94,560                     100,880

         Federal and state beer taxes                                    15,987                      18,020
                                                                    
Net revenues                                                             78,573                      82,860

          Cost of sales                                                  59,690                      63,089
                                                                     
Gross profit                                                             18,883                      19,771

           Selling, general and administrative expenses                  18,849                      19,510
                                                                     
Operating income                                                             34                         261

          Investment income                                               1,465                       1,390
          Other income / (expense), net                                      57                        (160)
          Interest of minority partners in earnings of
              consolidated subsidiaries                                    (494)                       (383)
                                                                     

Earnings before income taxes                                              1,062                       1,108 

         Income taxes                                                       516                         461
                                                                     
Net earnings                                                                546                         647
Basic and diluted earnings per share                                       0.34                        0.40

Retained earnings at beginning of period                                 86,143                      87,720

          Less:  dividends - $1.05 per share in 
                 1998 and $1.05 per share in 1997                         1,701                       1,698

Retained earnings at end of period                                     $ 84,988                      86,669
                                                                    

See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
                                       5


                                       

                GENESEE CORPORATION AND CONSOLIDATED SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
          Twenty six Weeks Ended October 31, 1998 and November 1, 1997


(Dollars in Thousands)
<TABLE>

                                                                                UNAUDITED
<S>                                                                        <C>              <C> 
                                                                           1998             1997

Cash flows from operating activities:
     Net earnings                                                      $    546          $    647
     Adjustments to reconcile net income to net cash
      (used in) provided by operating activities:
               Depreciation and amorization                               3,313             2,539
               Other                                                        577               456
     Changes in non-cash assets and liabilities:
               Trade accounts receivable                                     53            (1,260)
               Inventories                                                 (518)             (993) 
               Other assets                                                (511)             (226)
               Account payable                                           (3,010)           (1,271) 
               Accrued expenses and other                                 2,526                96    
               Income taxes payable                                        (188)             (171)
               Federal and state beer taxes                                (582)             (772) 
               Other liabilities                                         (1,353)              (70)    

                    Net cash provided by (used in) operating activities     853            (1,025) 
                                                                       
Cash flows from investing activities:
     Acquisitions, net of cash acquired                                 (18,754)          (11,060)
     Capital expenditures                                                (4,217)           (3,529)
     Sales of marketable securities                                       9,800            25,131
     Purchase of marketable securities and other investments               (912)          (10,845) 
     Investments in and advances to unconsolidated real
       estate investments, net of distributors                               75                27 
     Net investment in direct financing and leveraged leases                602              (992) 
     Withdrawals by minority interest                                      (409)              (35)
                   
                     Net cash used in investing activities              (13,815)            (1,303) 

Cash flows from financing activities:
     Line of credit                                                      10,000                 -
     Mortgage payable                                                     4,800                (9)
     Payment of dividends                                                (1,701)           (1,698)
     Net proceeds from treasury stock transactions                           47                38

                    Net cash provided by (used in) financing activities  13,146            (1,669)

Net increase (decrease) in cash and cash equivalents                        184            (3,997)

Cash and cash equivalents at beginning of the year                        2,692             4,521 

Cash and cash equivalents at end of period                            $   2,876         $     524

         
See accompanying notes to consolidated financial statements.

</TABLE>                                                            
<PAGE>
                                       6


                                       

                               GENESEE CORPORATION


Notes to Consolidated Financial Statements


     NOTE (A)  The  Corporation's  consolidated  financial  statements  enclosed
          herein are unaudited  with the exception of the  Consolidated  Balance
          Sheet at May 2,  1998  and,  because  of the  seasonal  nature  of the
          business and the varying schedule of its special sales efforts,  these
          results are not  necessarily  indicative of the results to be expected
          for the  entire  year.  In the  opinion  of  management,  the  interim
          financial  statements  reflect  all  adjustments,  consisting  of only
          normal recurring items, which are necessary for a fair presentation of
          the results  for the periods  presented.  The  accompanying  financial
          statements  have  been  prepared  in  accordance  with  GAAP  and  SEC
          guidelines   applicable  to  interim  financial   information.   These
          statements should be reviewed in conjunction with the annual report to
          shareholders for the year ended May 2, 1998.

     NOTE (B) Inventories are summarized as follows:
<TABLE>
<S>        <C>                                                    <C>                    <C>   

                                                                    Dollars  in  thousands
                                                              October 31, 1998       May 2, 1998

           Finished goods                                         $   5,629           5,250
           Goods in process                                           1,558           2,301
           Raw materials, containers and packaging supplies           9,467           6,406
                Total inventories                                  $ 16,654          13,957
</TABLE>

     NOTE (C) The Corporation has a mortgage  payable in the principle amount of
          $4.8  million,  collateralized  by  certain  land and  buildings.  The
          mortgage payable bears interest at a fixed rate of 6.49% per annum and
          requires   payments  of  principal  and  interest  through  2008.  The
          maturities  of the  mortgage  payable for each fiscal year through the
          year ending May 1, 2004 are, respectively,  $82,000, $87,000, $93,000,
          $99,000 and $106,000.

          In addition, the Corporation has a $15 million line of credit which 
          bears interest at LIBOR plus .70 for an effective rate of 5.97% as of
          December 1, 1998. This line of credit expires in July 1999. At October
          31, 1998, $5 million was available for use under this instrument.

     NOTE (D) In fiscal 1999,  the  Corporation  adopted  Statement of Financial
          Accounting Standards (SFAS) No. 130, "Reporting Comprehensive Income."
          Comprehensive  income is defined as the change in equity of a business
          during a period from  transactions and other events and  circumstances
          from  non-owner  sources.  Under  SFAS  130,  the term  "comprehensive
          income"  is used to  describe  the total of net  earnings  plus  other
          comprehensive income which, for the company, includes unrealized gains
          and losses on marketable securities classified as available-for-sale.


<PAGE>
                                       7


                               GENESEE CORPORATION


Notes to Consolidated Financial Statements (continued)


           SFAS 130 does not impact the  calculation of net earnings or earnings
           per share nor does it impact  reported  assets,  liabilities or total
           shareholders'   equity.  It  does  impact  the  presentation  of  the
           components of shareholders'  equity within the balance sheet and will
           result in the presentation of the components of comprehensive  income
           within an annual  financial  statement,  which must be displayed with
           the same prominence as other financial statements.

           The components of the corporation's total comprehensive income were:
<TABLE>
<S>        <C>                                                   <C>                  <C> 
                                                                Dollars in Thousands
                                                      Thirteen Weeks Ended    Twenty six Weeks Ended
                                                      10/31/98    11/01/97    10/31/98      11/01/97

           Net earnings/(loss)                        $ (586)       (769)        546           647
           Unrealized holding gain/loss,
              net of taxes                                73        (333)       (488)          244

           Total comprehensive (loss)/income          $ (513)     (1,102)         58           891

</TABLE>

<PAGE>
                                       8




                               GENESEE CORPORATION


Item 2.      Management's   Discussion   and   Analysis  of  Financial
             Condition and Results of Operations

Comparison of 13 weeks ended October 31, 1998 to 13 weeks ended November 1, 1997

      Consolidated  net revenues for the thirteen  weeks ended  October 31, 1998
were $39.2  million,  a decrease  of $726,000  over  consolidated  net  revenues
reported  for the same period last year.  The lower  revenues  were due to lower
sales volume at the Genesee  Brewing  Company,  which were  partially  offset by
increased sales by the Corporation's Foods Division.

      On a consolidated  basis,  the  Corporation  reported an operating loss of
$561,000,  which was an  $822,000  improvement  compared to the same period last
year.  The  improvement  in operating  performance  was primarily due to reduced
selling, general and administrative expenses at the Genesee Brewing Company.

      On a consolidated basis, the Corporation  reported a net loss of $586,000,
or $.36 basic and  diluted  loss per share,  in the  second  quarter  this year,
compared  to a net loss of  $769,000,  or $.48 basic and $.47  diluted  loss per
share,  for the same  period  last  year.  The  improvement  in net loss for the
current  year  was   attributable   to  a  reduction  in  pre-tax  loss  in  the
Corporation's brewing operations.

Genesee Brewing Company

      Genesee  Brewing  Company's  net sales in the  second  quarter  were $25.0
million, a decrease of $3.9 million from last year's second quarter net sales of
$28.9  million.  Barrel  sales for the second  quarter this year were down 15.5%
over last year due to a 12.5% decrease in Genesee Brewing Company's core brands,
a 14.1%  decrease in the HighFalls  brands and a 25.3%  decrease in volume under
the contract with Boston Beer Company.

      Within the Genesee core brands,  higher-margin  returnable glass packages,
draft packages and 24-can  packages  showed the largest volume  declines.  These
declines  were   partially   offset  by  higher  unit  sales  of  lower  margin,
value-priced 30 and 36 can "Multipaks".

      The decline in HighFalls volume, which represents 24% of total volume, was
primarily the result of decreased Honey Brown Lager draft (on premise) sales. It
is management's  belief that, Honey Brown has maintained a higher  percentage of
draft business than competing craft brands. The slowdown in the craft segment of
the industry is affecting  draft sales to a greater extent and  HighFalls,  with
its higher  concentration,  is affected to a greater  degree.  It is anticipated
that Honey Brown Lager draft sales will continue to be adversely affected.

      The  decline  in  contract  brewing  volume for the  quarter  was due to a
reallocation by Boston Beer Company of a portion of its production  requirements
in  anticipation  of the start of production of a new package  configuration  by
Genesee Brewing Company.  Production of the new package configuration  continues
to be delayed by the  inability  of a Boston  Beer  Company  supplier to deliver
packaging  materials.  Production  of  the  new  package  configuration  is  now
scheduled to commence in December. The decline in volume was also due to a shift
in production of a seasonal product to November versus October in the prior year
and  Boston  Beer  Company  moving  production  of a short  run  brand and 22oz.
packages to its Cincinnati, Ohio plant.


<PAGE>
                                       9


                               GENESEE CORPORATION


Item 2.      Management's Discussion and Analysis of Financial
             Condition and Results of Operations (continued)

      Genesee  Brewing  Company's  gross profit  decreased  $1.1 million to $5.0
million,  or 20.1% of net sales, in the second quarter of fiscal 1999,  compared
to $6.2 million or 21.4% of net sales, in the second quarter of fiscal 1998. The
negative  volume trends for both the Genesee core brands and the HighFalls craft
brands,  together with the unfavorable shift in product mix towards Multipak can
packages,  contributed to the decline in gross profit in the second quarter this
year. In addition, intense competition has resulted in price stagnation over the
past several years,  further  depressing  Genesee Brewing Company's gross profit
margins.

      Selling, general and administrative expenses were down $1.7 million in the
second  quarter of fiscal  1999  compared  to the same  period  last year.  This
decrease is primarily the result of cost reduction efforts implemented in fiscal
1998.

      Genesee Brewing  Company's  second quarter  operating loss of $2.7 million
was $576,000 less than the $3.3 million  operating loss in the second quarter of
the prior year. This improvement was primarily due to lower selling, general and
administrative  spending in the second quarter of fiscal 1999 as compared to the
same period last year.

      As previously  reported,  the beer industry in the United States continues
to be highly  competitive.  The industry is dominated by Anheuser  Busch,  Inc.,
Miller Brewing Company and Coors Brewing Company which together account for more
than 80% of domestic  production.  In  comparison,  the volume of malt beverages
produced by Genesee Brewing Company  represents only about 1% of annual domestic
production.  In recent years,  per capita  consumption  of malt beverages in the
United States has declined and total consumption has grown by an average of less
than 1% a year. However, consumption of domestically produced malt beverages has
remained  basically  flat  during  this  period,  with the  increase  in overall
consumption  coming  largely from the  increasing  popularity  of imported  malt
beverages.

      During the past ten years, demand for many established domestic brands has
declined  as  consumers  have  turned to new  domestic  brands,  imports and the
diverse  range of beer  styles  offered by the craft beer  segment.  However,  a
slowdown  in the craft  beer  segment  of the  industry  that  began in 1997 has
continued through 1998.

      As a result of these  trends and the excess  capacity  that  exists in the
industry,  brewers are attempting to gain market share through reduced  pricing,
intensive  marketing and promotional  programs,  new product  introductions  and
innovative  packaging.  In addition,  the industry has seen increased  levels of
price  discounting  and price  promotions  and a growth in  popularity  of value
priced 30 and 36 can Multipaks.  Although  Anheuser Busch,  the largest domestic
brewer,  recently  implemented price increases on certain brands and packages in
certain  markets,  there can be no assurance that these increases will remain in
place or that they will  provide  any  meaningful  relief in the  markets  where
Genesee Brewing Company products are sold.

<PAGE>
                                       10



                               GENESEE CORPORATION


Item 2.      Management's Discussion and Analysis of Financial
             Condition and Results of Operations (continued)

      The  competitive  position of smaller brewers like Genesee Brewing Company
has also been adversely  affected by the consolidation  that is occurring within
the distribution tier of the brewing industry. The effects of this consolidation
have been aggravated by the aggressive  efforts of the large national brewers to
obtain an increasing share of the  distributor's  time and attention  devoted to
their brands.  During the past several years,  the large  national  brewers have
utilized a variety of  inducements,  incentives and  contractual  terms to cause
their distributors to make a greater commitment to their brands,  largely at the
expense of the brands of smaller  brewers,  like Genesee,  that are also sold by
these distributors.  These developments have made it increasingly  difficult for
Genesee Brewing  Company to effectively  promote and sell its brands in its core
markets and to expand sales of its products in new or lower share markets.

      The competitive  conditions in the brewing industry that are impacting the
performance of Genesee Brewing  Company are not expected to materially  abate in
the near term.

Foods Division

      On August 3, 1998, the Corporation  acquired TKI Foods,  Inc. and Spectrum
Foods,  Inc. for $18.8 million,  net of post closing  adjustments.  The purchase
price was funded in part by a $10  million  credit  facility  from a  commercial
bank,  with the balance of the purchase price paid from the  Corporation's  cash
reserves.  TKI Foods, is a food company located in  Springfield,  Illinois,  and
Spectrum Foods, an affiliated company was located in Decatur, Illinois.

      Net sales for the Foods  Division were $13.2 million in the second quarter
of fiscal 1999,  compared to $10.3 million for the second quarter last year. The
increase  in net sales was  primarily  attributable  to $4.4  million  in second
quarter sales of artificial  sweeteners and other private label food products of
TKI Foods and Spectrum Foods. The increase in net sales  attributable to the TKI
Foods and Spectrum  Foods product line was partially  offset by the loss of $1.4
million in net sales recorded in the second quarter of the prior year from a one
time  government soup contract and a contract to package infant cereal that were
completed  in fiscal 1998.  The Foods  Division is not  aggressively  seeking to
replace this contract manufacturing business,  instead devoting resources to its
core retail private label  business and the  relocation  and  integration of TKI
Foods and Spectrum Foods business into the Foods Division.

      Gross profit for the Foods Division increased $1.2 million to $3.2 million
in the second  quarter of fiscal  1999,  compared to $2.0 million for the second
quarter  last  year.  The  increase  in gross  profit  was  attributable  to the
acquisition of TKI Foods and Spectrum Foods.

      Selling, general and administrative expenses increased $1.2 million in the
second  quarter of fiscal  1999  compared  to the same  period  last year.  This
increase is primarily the result of additional costs incurred in connection with
to the acquisition of TKI Foods and Spectrum Foods.

      The Foods  Division had an operating  profit of $1.3 million in the second
quarter  of fiscal  1999,  which was  $15,000  less  than the  operating  profit
reported in the first quarter last year.

<PAGE>
                                       11



                               GENESEE CORPORATION


Item 2.      Management's Discussion and Analysis of Financial
             Condition and Results of Operations (continued)

      On October 29,  1998 the Foods  Division  purchased a 340,000  square foot
production  facility in Medina,  New York for $2.4 million.  The Foods  Division
expects to spend  approximately  $4.6  million on  capital  improvements  to the
Medina facility.  The Foods Division borrowed $4.8 million under a mortgage loan
from a  commercial  bank to fund the  acquisition  of the Medina  facility and a
portion of the improvement  costs. The balance of the improvement  costs will be
paid from the proceeds of a $1.7 million term loan from the same commercial bank
which  will  be  drawn  down as the  costs  are  incurred,  with  any  remaining
improvement costs paid from the Corporation's cash reserves.  The Foods Division
expects to relocate and consolidate its operations  currently  located in leased
facilities in Albion, New York and Springfield,  Illinois to the Medina facility
beginning  in calendar  1999.  The Foods  Division  is expected to benefit  from
synergistic  cost savings after all of its operations have been  consolidated at
the Medina plant, which is scheduled to be completed during fiscal 2000.

Genesee Ventures

      Genesee  Ventures,  Inc.,  the  Corporation's  equipment  leasing and real
estate  investment  subsidiary,  reported  operating  income of $955,000 for the
second  quarter of fiscal 1999,  compared to $728,000 for the second  quarter of
fiscal 1998.  The higher  operating  income was  primarily due to an increase in
equipment lease revenue.

Comparison of 26 weeks ended October 31, 1998 to 26 weeks ended November 1, 1997

      Consolidated  year-to-date net revenues were $78.6 million,  a decrease of
$4.3 million from the  consolidated  net revenues of $82.9 million  reported for
the same period last year.  The lower revenues were due to lower sales volume at
the Genesee Brewing  Company,  which were partially offset by increased sales by
the Corporation's Foods Division.

      On  a  consolidated  basis,  the  Corporation  reported  year-to-date  net
earnings of $546,000,  or $.34 basic and diluted earnings per share, compared to
net earnings of $647,000,  or $.40 basic and diluted earnings per share, for the
same period last year.  The  decrease in net  earnings  for the current year was
attributable to reduced  contract  manufacturing  revenues in the  Corporation's
Foods Division.

Genesee Brewing Company

      Genesee  Brewing  Company's  net sales in the first two quarters of fiscal
1999 were $57.4 million,  a decrease of $6.6 million,  or 10.3%,  from the prior
year's net sales of $64.0 million.  Barrel sales for the first two quarters were
down 12.9% over last year due to a 10.9% decrease in Genesee  Brewing  Company's
core brands, a 7.4% decrease in Genesee Brewing Company's HighFalls brands and a
27.9% decrease in volume under the contract with Boston Beer Company.

      Within the Genesee core brands,  higher-margin  returnable glass packages,
draft packages and 24-can  packages  showed the largest volume  declines.  These
declines  were   partially   offset  by  higher  unit  sales  of  lower  margin,
value-priced 30 and 36 can "Multipaks".

<PAGE>
                                       12


                               GENESEE CORPORATION


Item 2.      Management's Discussion and Analysis of Financial
             Condition and Results of Operations (continued)

      The decline in HighFalls volume, which represents 24% of total volume, was
primarily the result of decreased Honey Brown Lager draft (on premise) sales. It
is management's  belief that, Honey Brown has maintained a higher  percentage of
draft business than competing  brands in the craft segment of the industry.  The
decrease in Honey Brown draft sales  year-to-date has been partially offset by a
1.2% increase in Honey Brown case sales.

      The  year-to-date  decline  in  contract  brewing  volume  was  due to the
reallocation by Boston Beer Company of a portion of its production  requirements
in  anticipation  of the start of production of a new package  configuration  by
Genesee Brewing Company.  Production of the new package configuration  continues
to be delayed by the  inability  of a Boston  Beer  Company  supplier to deliver
packaging  materials.  Production  of  the  new  package  configuration  is  now
scheduled to commence in December. The decline in volume was also due to a shift
in production and sale of a seasonal  product to November  versus October in the
prior year and Boston Beer Company  moving  production  of a short run brand and
22oz.  packages to their  Cincinnati,  Ohio plant. The contract volume lost as a
result of the delay in producing the new package  configuration  is not expected
to be made up during the balance of fiscal 1999.  Future  changes in volume will
depend on consumer demand for Boston Beer Company products and on decisions made
by Boston Beer Company  regarding  allocation  of  production  among its several
sources of supply.

      Genesee  Brewing  Company's  gross profit  decreased $1.9 million to $13.4
million, or 23.4% of net sales,  year-to-date for fiscal 1999, compared to $15.3
million,  or 24.0% of net sales,  in the prior year. The negative  volume trends
for both the Genesee core brands and the HighFalls  craft brands,  together with
the unfavorable  shift in product mix towards Multipak can packages  contributed
to the decline in gross profit for fiscal 1999. In addition, intense competition
has resulted in price stagnation over the past several years, further depressing
Genesee Brewing Company's gross profit margins.

      Selling, general and administrative expenses were down $2.5 million in the
first two  quarters of fiscal 1999  compared to the same period last year.  This
decrease  is the result of timing of  spending  this year  versus  last and cost
reduction efforts implemented in fiscal 1998.

      Genesee Brewing  Company's  fiscal 1999 operating loss of $2.2 million was
$518,000  less than the $2.7  million  operating  loss in the prior  year.  This
improvement   was  primarily  due  to  the  decline  in  selling,   general  and
administrative  spending in the first two quarters of fiscal 1999 as compared to
the same period last year.

Foods Division

      Net sales for the  Foods  Division  were  $19.4  million  in the first two
quarters of fiscal 1999, compared to $17.4 million for the same time period last
year.  The increase in net sales was primarily  attributable  to $4.4 million in
second  quarter  sales of  artificial  sweeteners  and other  private label food
products of TKI Foods, Inc., and Spectrum Foods, Inc. This increase in net sales
was  partially  offset by the loss of $2.1 million in net sales  recorded in the
first half of the prior year from a government  soup  contract and a contract to
package infant cereal that were completed in fiscal 1998.


<PAGE>
                                       13


                               GENESEE CORPORATION


Item 2.      Management's Discussion and Analysis of Financial
             Condition and Results of Operations (continued)

      Gross profit for the Foods Division  increased $724,000 to $3.7 million in
the first half of fiscal 1999, compared to $3.0 million for the same period last
year. The increase in gross profit was  attributable  to the  acquisition of TKI
Foods and Spectrum Foods.

      Selling, general and administrative expenses increased $1.3 million in the
first half of fiscal 1999  compared to the same period last year.  This increase
is  primarily  the  result of  additional  costs  incurred  attributable  to the
acquisition of TKI Foods and Spectrum Foods.

      The Foods  Division had an  operating  profit of $1.0 million in the first
half of fiscal 1999,  which was $533,000 less than the operating profit reported
last  year.  The  decrease  in  operating  profit  is the  result of the loss of
contract  revenue from the prior year, and the additional  costs associated with
operating  two  facilities.  The Foods  Division  is  expected  to benefit  from
synergistic  cost savings after all of its operations have been relocated to the
newly acquired production facility in Medina, New York, which is scheduled to be
completed during fiscal 2000.

Genesee Ventures

      Genesee  Ventures,  Inc.,  the  Corporation's  equipment  leasing and real
estate investment  subsidiary,  reported  year-to-date  operating income of $1.7
million for fiscal 1999, compared to $1.4 million for the prior year. The higher
operating income was primarily due to an increase in equipment lease revenue.


LIQUIDITY AND CAPITAL RESOURCES

      Cash, cash equivalents, and marketable securities totaled $11.0 million at
October 31,  1998 and $20.5  million at May 2, 1998.  The decline in cash,  cash
equivalents,  and marketable securities was the result of the sale of marketable
securities  to fund a portion  of the cost to  acquire  TKI  Foods and  Spectrum
Foods.

      Accounts receivable balances were $863,000 higher at October 31, 1998 than
May 2, 1998.  Inventories  at October 31, 1998 were $2.4 million higher than the
balances  reported at May 2, 1998.  Net property,  plant and equipment  balances
were $3.3  million  higher at October  31, 1998 than May 2, 1998.  Goodwill  and
other  intangibles  balances were $17.8 million  higher at October 31, 1998 than
May 2, 1998. Goodwill and other intangibles,  net property, plant and equipment,
accounts  receivable  and  inventories  increased due to the  acquisition of TKI
Foods and Spectrum Foods.

      Current liabilities were $12.2 million higher at October 31, 1998 compared
to May 2, 1998 due to the $10 million  credit  facility  that was used to fund a
portion of the purchase price of TKI Foods and Spectrum Foods,  with the balance
attributable to accrued liabilities acquired with TKI Foods and Spectrum Foods.

<PAGE>
                                       14



                               GENESEE CORPORATION


Item 2.      Management's Discussion and Analysis of Financial
             Condition and Results of Operations (continued)

      The $4.8 million mortgage payable was established on October 29, 1998 with
a commercial  bank in connection  with financing the  acquisition of and capital
improvements the to Foods Division's new facility in Medina, New York.

      The  Corporation  has a strategy to search for and  develop  opportunities
which will  contribute to the future  growth of its  non-brewing  business.  The
Corporation  plans to use its  capital  resources  to  further  expand its Foods
Division to broaden its profit base and  contribute to the  continued  long-term
success of the Corporation.

      The Corporation  expects that it will fund its future capital needs with a
combination of debt and internally  generated funds. With respect to real estate
investments and equipment  leasing,  it is expected that the debt component will
generally be obtained on a non-recourse basis. The Corporation also continues to
seek acquisition  opportunities in the foods industry.  Any such acquisition may
involve new debt or the assumption of existing debt.

     On  December  4, 1998,  the  engineering  firm  engaged by Genesee  Brewing
Company to inspect its system for storing and handling  chemicals  used to clean
and sanitize  brewing  equipment,  kegs and  refillable  bottles (the  "System")
delivered a  preliminary  cost  estimate of up to $1.9 million to modify  and/or
replace  components of the System to achieve  compliance  with New York  State's
chemical bulk storage  regulations (the  "Regulations").  A detailed  inspection
report and cost estimate is expected from the  engineering  firm by December 31,
1998.  The  engineering  firm has  indicated  that its  preliminary  estimate is
conservative.  In  addition,  management  believes  that  it  will  be  able  to
substantially  reduce  the  actual  cost by making  changes to the System and by
seeking variances from certain  requirements of the Regulations as they apply to
the System.

     Genesee  Brewing  Company will work to develop a program of  modifications,
upgrades  and  replacements  to  the  System  to  achieve  compliance  with  the
Regulations  (the  "Compliance  Program").  The deadline for compliance with the
Regulations is December 22, 1999 and Genesee  Brewing Company may not be able to
complete the entire Compliance  Program by that date in which case it intends to
seek extensions to complete those portions of its Compliance Program that cannot
be completed by the deadline.

      It is anticipated  that the cost of the Compliance  Program will be funded
internally and depreciated  over the useful life of the System  modifications or
replacements.

YEAR 2000

General

      The Corporation is currently  assessing and  undertaking  steps to address
potential  problems  that could affect the  business  operations  and  financial
condition of the Corporation  and its  subsidiaries as a result of the year 2000
issue.  The year 2000  issue is the result of  computer  hardware  and  software
systems and other  equipment with embedded chips or processors that use only two
digits to represent the year. As


<PAGE>
                                       15


                               GENESEE CORPORATION


Item 2.      Management's Discussion and Analysis of Financial
             Condition and Results of Operations (continued)

the year 2000  approaches,  time-sensitive  software may  recognize a date using
"00" as the year 1900 rather than 2000.  These systems may fail to operate or be
unable to process data  accurately as a result of this flaw. The year 2000 issue
could  arise  at  any  point  in  the  supply  chain,   manufacturing   process,
distribution   channels  or  information   systems  of  the   Corporation,   its
subsidiaries and third parties with which they do business.  The Corporation has
formed a task force made up of senior  managers to address year 2000  compliance
issues.  These  issues  include  identification  of  critical  and  non-critical
systems,  determining appropriate remediation measures, assigning responsibility
and scheduling of planned  remediation,  documentation and certification of task
completion,  assessing third party relationships for compliance, cost estimation
and  monitoring,  and  contingency  planning for the Corporation and each of its
subsidiaries.

State of Readiness

      The Corporation's  year 2000 project is proceeding on schedule so far. The
task  force has  identified  critical  and  non-critical  information  and other
technology  systems at its  Genesee  Brewing  Company  subsidiary  and is in the
process of  identifying  these  systems in its Foods  Division and its equipment
leasing and real estate investment businesses. In November 1998, Genesee Brewing
Company  implemented  a  major  hardware  and  software  upgrade  to  bring  its
manufacturing,  information and financial  consolidation software into year 2000
compliance.  The new  system  has been  tested and  Genesee  Brewing  Company is
currently in the process of programming to resolve minor issues  relating to the
operation  of this new system.  This  programming  is  expected to be  completed
during the third quarter of fiscal 1999.

       The task force is currently in the process of identifying  critical third
party relationships and is developing a program to assess year 2000 readiness of
vendors,  customers and other material third party relationships for each of its
businesses.  The  Corporation's  timetable for completion of the  identification
process  and  communication  program  is the end of the third  quarter of fiscal
1999.

Year 2000 Costs

      The Corporation is committed to making the investments  required to ensure
year 2000 readiness of the information and other  technology  systems of each of
its business units. These investments include hardware and software upgrades and
replacement.   The  cost  to  achieve  year  2000  readiness  for  the  internal
information and other technology systems of the Corporation and its subsidiaries
is currently estimated to be approximately $1.7 million, with $1.3 million spent
to date.

Year 2000 Risks

      Failure by the  Corporation or any third party with which the  Corporation
has a material  business  relationship  to achieve a year 2000  readiness  could
result in the  disruption of normal  business  activities.  Such failures  could
materially  affect  the  Corporation's  results  of  operations,  liquidity  and
financial condition.  The Corporation is currently unable to estimate the impact
on its results of operations, liquidity and financial condition from the failure
to achieve year 2000  readiness  of the  Corporation's  internal  systems or the
failure of venders,  customers or third parties to achieve year 2000  readiness.
Risks  inherent  with  the  year  2000  problem  could  occur  if  there  is  an
interruption of needed supplies and services,

<PAGE>
                                       16


                               GENESEE CORPORATION


Item 2.      Management's Discussion and Analysis of Financial
             Condition and Results of Operations (continued)

including energy,  telecommunications  and information exchange suppliers.  In a
worse  case  scenario,   this  could  interrupt  or  prevent  the  Corporation's
businesses  from producing and selling their products or receiving  payment from
customers.  Management believes that it can achieve year 2000 readiness with its
internal  systems on a timely  basis,  but at this time is unable to assure year
2000 readiness by third parties in the same time frame.

Year 2000 Contingency Plans

      The task force  established  by the  Corporation  will  evaluate  business
disruption  scenarios  that could  result  from a failure  to achieve  year 2000
readiness,  identify  and  implement  preemptive  strategies,  and  develop  and
coordinate  contingency  plans.  Contingency plans to address  reasonably likely
worse case  scenarios will be in place by the end of the first quarter of fiscal
2000.

Safe Harbor for Forward-Looking Statements

      This report contains forward-looking  statements within the meaning of the
federal securities laws. These forward-looking statements may include statements
about the  operations  and  prospects  for the  Corporation  and its  subsidiary
businesses and statements  about industry  trends and conditions that may affect
the  performance or financial  condition of the  Corporation  and its subsidiary
businesses.  These  forward-looking  statements  involve  significant  risks and
uncertainties  that could cause actual results to differ  materially  from those
expressed in or implied by the statements. The most important factors that could
cause  actual  results  to  differ  from  the   expectations   stated  in  these
forward-looking  statements  include,  among  others,  the  inability of Genesee
Brewing Company and its distributors to develop and execute effective  marketing
and sales  strategies  for Genesee  Brewing  Company's  products;  the potential
erosion of sales revenues and profit margins through continued price stagnation,
increased discounting or a higher proportion of sales in lower margin Multipaks;
a continuation  of the slowdown in the craft beer category or a potential  shift
in consumer  preferences  away from the craft  category,  including  Honey Brown
Lager;  the  intensely  competitive,  slow-growth  nature of the beer  industry;
demographic  trends  and  social  attitudes  that can  reduce  beer  sales;  the
continued  growth in the popularity of import and nationally  advertised  beers;
increases in the cost of aluminum,  paper packaging and other raw materials; the
Corporation's  inability  to  reduce  manufacturing  and  overhead  costs of its
brewing and foods businesses to more competitive levels;  changes in significant
laws and government  regulations  affecting sales,  advertising and marketing of
malt beverage products; significant increases in federal, state or local beer or
other excise taxes; the potential impact of beer industry  consolidation at both
the brewer and distributor  levels;  a shift in consumer  preferences  away from
store-brand, private label food products increased competition from branded food
product  producers that might adversely  affect sales of private label products;
the possibility that the Corporation's Foods Division might experience delays or
difficulties in integrating TKI Foods and Spectrum Foods;  the possibility  that
the Foods Division might experience  delays or difficulties in the relocation of
its  operations to Medina,  New York;  the  possibility  that the Foods Division
might  not  achieve  all of the  expected  synergies  from the  integration  and
relocation of all operations into a single facility;  interest rate fluctuations
that  could  reduce  demand  for or the rate of  return on new  equipment  lease
business; increased competition in the equipment leasing business resulting from
lower  interest rate  environment;  increases in the estimated  costs to achieve
year 2000

<PAGE>
                                       17


                               GENESEE CORPORATION


Item 2.      Management's Discussion and Analysis of Financial
             Condition and Results of Operations (continued)

readiness;  and  the  risk  that  computer  systems  of  the  Corporation,   its
subsidiaries and their  significant  suppliers or customers may not be year 2000
compliant.

PART II.  OTHER INFORMATION

     The  Corporation's  annual  meeting  of  Class A  shareholders  was held on
October  22,  1998.  At the  annual  meeting,  shareholders  elected  William A.
Buckingham,  Samuel T. Hubbard,  Jr. and Robert N. Latella to serve as directors
until the annual meeting of shareholders in 2001. The terms of office of Stephen
B. Ashley, Thomas E. Clement Gary C. Geminn,  Richard P. Miller, Jr., Charles S.
Wehle and John L. Wehle, Jr. continued after the annual meeting of shareholders.


Item 6. Exhibits and Reports on Form 8-K

         (a) Exhibits. The following exhibits are attached to this report:

             Exhibit 10 - Amendment No. 1 to Genesee Corporation 1986
             Incentive Bonus Plan.

         (b) Reports on Form 8-K.  The  Corporation  did not file any reports on
             Form 8-K during the quarter for which this report is filed.



<PAGE>
                                       18




                               GENESEE CORPORATION

                                   SIGNATURES


Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.


                               GENESEE CORPORATION



Date:   12/11/98                  /s /Robert N. Latella
                               Robert N. Latella
                               Executive Vice President 
                               and Chief Operating Officer



Date:   12/11/98                  /s / Michael C. Atseff
                               Michael C. Atseff
                               Vice President and Controller

<PAGE>
                                       19


                               GENESEE CORPORATION



                                  EXHIBIT INDEX



Exhibit Number                 Exhibit                                     Page

      10           Amendment No. 1 to Genesee Corporation                   20
                   1986 Incentive Bonus Plan                           

<PAGE>
                                       20



                  AMENDMENT NO. 1 OF GENESEE CORPORATION
                            INCENTIVE 1986 BONUS PLAN


     On September 15, 1998, the following  amendment of the Genesee  Corporation
1986 Incentive Bonus Plan (the "Plan") was unanimously adopted by the Management
Continuity  Committee  of the Board of  Directors  of Genesee  Corporation  (the
"Corporation").

     1.   A new Section 3(D) shall be added to the Plan to read as follows:  

          Not withstanding any other provision  of the  Plan, the  amount of all
          Awards payable  pursuant to the  Plan to  Category A  participants (as
          hereinafter designated) in fiscal 1999 shall be determined in the sole
          discretion of the Committee, with or without regard to the achievement
          of goals established for the Performance  Measure and/or the amount(s)
          of award(s) paid to any other Participant(s).

     2.   All  capitalized  terms  shall have the  definitions  set forth in the
          Plan.

     3.   Except as set forth  above,  the Plan  shall  remain in full force and
          effect in accordance with the terms thereof.


      IN WITNESS  WHEREOF,  the  Corporation  has caused  this  Amendment  to be
executed by its duly authorized officer as of September 15, 1998.


GENESEE CORPORATION


By:         /s/R. N. Latella
         Robert N. Latella, Executive Vice President
         and Chief Operating Officer