---

|UNITED STATES

 SECURITIES AND EXCHANGE COMMISSION
         Washington, D.C. 20549
|----------------------------------------------------------------------------------
|                                                                                  

| | REGISTRATION STATEMENT
PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF
1934                                       | 
| | ------------------------------------------------------------------------------------------------------------------------------------ | 
| | ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934For the fiscal year ended: December 31, 2003     | 
| | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from_____ to _____ | 

Commission
    file number: 0-20486


|COMPAÑIA CERVECERIAS UNIDAS S.A.(Exact name of Registrant as specified in its charter)UNITED BREWERIES COMPANY, INC.(Translation of Registrant's name into English)
     Republic of Chile(Jurisdiction of incorporation or organization)Bandera 84, Sixth Floor, Santiago, Chile(Address of principal executive offices)
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                         

---

Securities
      registered or to be registered pursuant to Section 12(b) of the Act.


|Title of each class                                                                                 | Name of each exchange on which registered                
|--------------------------------------------------------------------------------------------------- | ---------------------------------------------------------
|American Depositary Shares
       Representing Common Stock
       Common Shares, without par value | The New York Stock Exchange 
The New York Stock Exchange*

|__________*    Not for trading, but only in connection with the registration of American
    Depositary Shares        
 which are evidenced by American Depositary Receipts                                                                      
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Securities
             registered or to be registered pursuant to Section 12(g) of the
     Act:                                                                                                                                                
|Not
           applicable                                                                                                                                                                                                                        
|Securities
             for which there is a reporting obligation pursuant to Section 15(d)
     of the Act:                                                                                                                                     
|Not
             applicable                                                                                                                                                                                                                      
|Indicate the number of outstanding shares of each of the issuers
             classes of capital or common 
stock as of the close of the period
     covered by the annual report. Common
Stock, with no par value                   318,502,872

|                           | 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         
         No  
|                           | Indicate
      by check mark which financial statement item the registrant has elected
    to follow:                                                                                                                                                                                                                                                  
|Item 17  
         Item 18

---



|Table of Contents                                                                                    |     
|---------------------------------------------------------------------------------------------------- | ----
|                                                                                                     | Page
|Introduction                                                                                         | i   
|                                                                                                     |     
|Forward Looking Statements                                                                           | ii  
|                                                                                                     |     
|PART I                                                                                               | 1   
|Item 1: Identity of Directors, Senior Management and Advisers                                        | 1   
|Item 2: Offer Statistics and Expected Timetable                                                      | 1   
|Item 3: Key Information                                                                              | 1   
|Item 4: Information on the Company                                                                   | 10  
|Item 5: Operating and Financial Review and Prospects                                                 | 50  
|Item 6: Directors, Senior Management and Employees                                                   | 68  
|Item 7: Major Shareholders and Related Party Transactions                                            | 79  
|Item 8: Financial Information                                                                        | 82  
|Item 9: The Offer and Listing                                                                        | 86  
|Item 10: Additional Information                                                                      | 87  
|Item 11: Quantitative and Qualitative Disclosures about
      Market Risk                            | 103 
|Item 12: Description of Securities Other than Equity Securities                                      | 107 
|                                                                                                     |     
|PART II                                                                                              | 107 
|Item 13: Defaults, Dividend Arrearages and Delinquencies                                             | 107 
|Item 14: Material Modifications to the Rights of Security
      Holders and Use of Proceeds          | 107 
|Item 15: Controls and Procedures                                                                     | 107 
|Item 16 A: Audit Committee Financial Expert                                                          | 107 
|Item 16 B: Code of Ethics                                                                            | 107 
|Item 16 C: Principal Accountant Fees and Services                                                    | 107 
|Item 16 D:
                         Exemptions from the Listing Standards for Audit Committees       | 107 
|Item 16 E:
                   Purchases of Equity Securities by the Issuer and Affiliated Purchasers | 107 
|                                                                                                     |     
|PART III                                                                                             | 109 
|Item 17: Financial Statements                                                                        | 109 
|Item 18: Financial Statements                                                                        | 109 
|Item 19: Exhibits                                                                                    | 109 



Table of Contents

Introduction

In this annual
    report on Form 20-F, all references to the we, us or CCU are
  to Compañía Cervecerías Unidas S.A., an open stock corporation
  ( sociedad anónima) organized under the laws of the Republic
  of Chile, and its consolidated subsidiaries. Chile is divided into regions,
  each of which is known by its roman number (e.g. Region XI). Our fiscal year
  ends on December 31st. Unless otherwise specified, all references to U.S.
  dollars, dollars, or US$ are to United States dollars, and references
  to Chilean pesos, pesos or Ch$ are to Chilean pesos. We publish our financial
  statements in Chilean pesos, which are adjusted to reflect changes in purchasing
  power due to inflation and/or changes in exchange rates. Unless otherwise specified,
  financial data regarding us is presented in this annual report in constant
  Chilean pesos of December 31, 2003 purchasing power. See the notes to our consolidated
  financial statements included in pages F-8 through F-65 of this annual report.
  We use the metric system of weights and measures in calculating our operating
  and other data. The United States equivalent units of the most common metric
  units used by us are as shown below:

|                                                    
|----------------------------------------------------
|1 liter = 0.2642 gallons                            
|1 liter = 0.008522 US beer barrels                  
|1 liter = 0.1761 soft drinks unit cases ( 8 oz cans)
|1 liter = 0.1174 beer unit cases ( 12 oz cans).     
|1 hectoliter = 100 liters                           
|1 US beer barrel = 31 gallons                       
|1 hectare = 2.4710 acres                            
|1 mile = 1.6093 kilometers                          
|                                                    

This annual report contains various estimates made by us of market
  share data and related sales volume information. These estimates are based
  on statistics published or made available by A.C. Nielsen Chile S.A., or Nielsen,
  in the case of beer, soft drinks, mineral water and wine sales in Chile; the Asociación
  Nacional de Bebidas Refrescantes (National Association of Soft Drinks,
  or ANBER) in the case of soft drinks and mineral water; the Servicio Agrícola
  Ganadero (Agricultural and Livestock Service, or SAG) in the case of wine
  sales in Chile; and the Asociación de Viñas de Chile, A.G. (the
  Wineries of Chile Association) in the case of Chilean wine exports. We believe
  that, due to the methodologies used, the statistics provided by these sources
  in some cases do not accurately reflect our market share or industry sales
  volumes. For example, the Nielsen sampling base includes only the metropolitan
  areas of Chile and not the rural areas of the country, where we believe our
  beer market share is higher than in the metropolitan areas, due to our distribution
  system. Similarly, data regarding the size of the Chilean soft drink and mineral
  water markets and market shares do not coincide with publicly available information
  of our sales volume and our competitors. As a consequence, we have revised
  the share estimates from the sources identified above for Chilean beer sales,
  soft drink and mineral water sales and wine sales in Chile to reflect what
  we believe is a more accurate measure of market shares, taking into account:

- reports published by the Instituto
        Nacional de Estadísticas (the
    Chilean National Institute of Statistics, or the INE),
- our internal sales data,
- sales information filed publicly by our competitors,
- equity research analyst reports, and
- import and export reports made available by Chilean and Argentine customs authorities.

Most of the above information is also used to estimate Argentine beer market
  share.

i

However, our revised estimates have not been confirmed by independent
  sources. Certain amounts, including percentage amounts, which appear in this
  annual report have been rounded and may not sum exactly to the totals shown.

Table of Contents

Forward Looking Statements

This annual
    report contains forward-looking statements within
  the meaning of Section 27A of the Securities Act of 1933, as amended, which
  we refer to as the Securities Act, and Section 21E of the Securities and Exchange
  Act of 1934, which we refer to as the Exchange Act. These statements relate
  to analyses and other information, which are based on forecasts of future results
  and estimates of amounts not yet determinable. They also relate to our future
  prospects, development and business strategies.

These forward-looking
    statements are identified by the use of terms and phrases such as anticipate, believes, could, expects, intends, may, plans, predicts, projects, will and
  similar terms and phrases. We caution you that actual results could differ
  materially from those expected by us, depending on the outcome of certain factors,
  including, without limitation:

- our success in implementing our investment and capital expenditure   program;
- the nature and extent of future competition in our principal   marketing areas;
- political and economic developments in Chile, Argentina and other   countries where we currently conduct business or may conduct business in the   future, including other Latin American countries; and
- other Factors discussed under Risk factors, Our business and Management's   discussion and analysis of financial condition and results of operations.

You are cautioned not to place undue reliance on these forward-looking statements,
  which speak only as of the date of this annual report. We undertake no obligation
  to release publicly the result of any revisions to these forward-looking statements
  which may be made to reflect events or circumstances after the date of this
  annual report, including, without limitation, changes in our business strategy
  or planned capital expenditures, or to reflect the occurrence of unanticipated
  events.

ii

Table of Contents

PART   I

Table of Contents

ITEM     1: Identity of Directors, Senior Management and Advisers

Not applicable

Table of Contents

ITEM    2: Offer Statistics and Expected Timetable

Not applicable

Table of Contents

ITEM     3: Key Information

Selected  Financial Data

The following table presents
    selected consolidated financial data as of December 31, 2002 and 2003, and
    for each of the years ended December 31, 2001, 2002 and 2003, which has been
    derived from our consolidated financial statements included elsewhere in
    this annual report. Selected consolidated financial data as of December 31,
    1999, 2000 and 2001, and for the two years ended December 31, 1999 and 2000
    has been derived from our consolidated financial statements not included
    in this annual report. The financial data set forth below should be read
    in conjunction with the consolidated financial statements and related notes
    and Item 5: Operating and Financial Review and Prospects included
  elsewhere in this annual report.



The financial information
    as of and for the years ended December 31,
  1999, 2000, 2001, 2002 and 2003 shown below is presented in constant Chilean
  pesos of December 31, 2003:

|                                                                                                  | Year ended December 31,       
|------------------------------------------------------------------------------------------------- | ------------------------------
|                                                                                                  |                               
|                                                                                                  | 1999                          
|                                                                                                  |                               
|                                                                                                  | (millions of constant Ch$) (1)
|Income Statement Data:                                                                            |                               
|Chilean GAAP:                                                                                     |                               
|Total revenues                                                                                    | Ch$337,820                    
|Operating income                                                                                  | 44,990                        
|Interest expense                                                                                  | (6,790)                       
|Other income                                                                                      | 21,196                        
|Income tax                                                                                        | (8,077)                       
|Net income                                                                                        | 46,246                        
|Net earnings per share                                                                            | 145.8                         
|Net earnings per ADS (2)                                                                          | 729.2                         
|Dividends per share (3)                                                                           | 64.65                         
|Dividends per ADS in US$ (2) (3)                                                                  | 0.63                          
|Weighted average shares                                                                           |                               
|Outstanding (000s)                                                                                | 317,099                       
|U.S.  GAAP:                                                                                       |                               
|Total revenues                                                                                    | Ch$266,879                    
|Net income                                                                                        | 49,445                        
|Basic and diluted earnings per share                                                              | 156                           
|Basic and diluted earnings per ADS (2)                                                            | 780                           
|Balance Sheet Data:                                                                               |                               
|Chilean GAAP:                                                                                     |                               
|Total assets                                                                                      | Ch$ 667,249                   
|Long-term liabilities                                                                             | 101,521                       
|Total debt (4)                                                                                    | 101,494                       
|Total stockholders' equity                                                                        | 425,814                       
|Capital stock                                                                                     | 169,976                       
|U.S.  GAAP:                                                                                       |                               
|Total assets                                                                                      | Ch$ 675,347                   
|Long-term liabilities                                                                             | 99,017                        
|Total debt (4)                                                                                    | 101,494                       
|Total stockholders' equity                                                                        | 431,841                       
|Capital stock                                                                                     | 169,976                       
|Other Data:                                                                                       |                               
|Sales volume (in millions of liters):                                                             |                               
|Beer ( Chile )                                                                                    | 344.5                         
|Beer ( Argentina )                                                                                | 157.9                         
|Soft drinks, nectars and mineral water (5)                                                        | 376.1                         
|Wine (6)                                                                                          | 56.7                          
|Change in consumer price index applicable
        for the restatement of financial statements (7) | 2.6%                          

---

|(1) | Except
shares outstanding, net earnings per share and per ADS, sales volume and inflation data.
|--- | -----------------------------------------------------------------------------------------------

|(2) | Per
ADS amounts are determined by multiplying per share amounts by 5, as one ADS is equal to
5 shares of Common Stock
|--- | ---------------------------------------------------------------------------------------------------------------------

|(3) | Dividend
per share are expressed in pesos corresponding to payment dates and dividend per ADS are
expressed in US$ based on the conversion rate on the day of payment.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Includes
short-term and long-term financial debt.
|--- | -------------------------------------------------

|(5) | Includes
sales of soft drinks, nectars and mineral water in Chile and Argentina . During 2002 and
2003, there were no sale of these products in Argentina.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------

|(6) | Includes
sales of wine in Chile and Argentina.
|--- | ----------------------------------------------

|(7) | Based
on the consumer price index of the INE for the twelve-month period ended November 30 of
each         indicated year. Accordingly, figures presented here may vary from other
        published inflation figures for given periods, which are generally calculated
    for the actual calendar period indicated.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

2

Exchange Rates.Prior to 1989, Chilean law permitted
  the purchase and sale of foreign currency only in those
  cases explicitly authorized by the Central Bank of Chile . The Central Bank
  Act, which was enacted in 1989, liberalized the rules that govern the ability
  to buy and sell foreign currency. The Central Bank Act now empowers the Central
  Bank of Chile to determine that certain purchases and sales of foreign currency
  specified by law must be carried out in the formal exchange market. The formal
  exchange market is formed by banks and other entities authorized by the Central
  Bank. All payments and distributions made to our holders of ADSs must be transacted
  in the formal exchange market.

In order to keep fluctuations in the average exchange rate within
  certain limits, the Central Bank of Chile has in the past intervened by buying
  or selling foreign currency on the formal exchange market. In September 1999,
  the Central Bank of Chile decided to suspend its formal commitment to intervene
  in the exchange market to maintain the limits on a certain band, and decided
  to intervene in the market only under extraordinary circumstances, which will
  be informed in advance. The Central Bank of Chile also committed itself to
  provide periodic information about the levels of its international reserves.

The observed exchange rate is the average exchange rate at which
  commercial banks conduct authorized transactions on a given date in Chile ,
  as certified by the Central Bank of Chile . The Central Bank of Chile generally
  carries out its transactions at the spot market rate. Authorized transactions
  by banks are now generally conducted at the spot market rate.

Purchases and sales of foreign exchange effected outside the
  formal exchange market are carried out in the Merced Cambiario Informal (the
  informal exchange market). The informal exchange market reflects the supply
  and demand for foreign currency. There are no limits imposed on the extent
  to which the rate of exchange in the informal exchange market can fluctuate
  above or below the observed exchange rate. On June 17, 2004, the average exchange
  rate in the informal exchange market was Ch$647.25 per U.S. dollar and the
  U.S. dollar observed exchange rate was Ch$648.16 per U.S. dollar.

The following table sets forth the low, high, average and period-end
  observed exchange rates for U.S. dollars for each of the indicated periods
  starting in 1999 as reported by the Central Bank of Chile . The Federal Reserve
  Bank of New York does not report a noon buying rate for Chilean pesos.

|                             | Daily Observed
          Exchange Rate (1)(Ch$ per US$)
|---------------------------- | -------------------------------------------------------
|                             |                                                        
|                             | Low (2)                                                
|                             |                                                        
|1999                         | 468.69                                                 
|2000                         | 501.04                                                 
|2001                         | 557.13                                                 
|2002                         | 641.75                                                 
|2003                         | 593.10                                                 
|December 2003                | 593.10                                                 
|January 2004                 | 559.21                                                 
|February 2004                | 571.35                                                 
|March 2004                   | 593.22                                                 
|April 2004                   | 596.61                                                 
|May 2004                     | 622.25                                                 
|(June 2004, through June 17) | 640.96                                                 

---

Source: Central Bank of Chile


|(1) | Historical
pesos.
|--- | -----------------

|(2) | Rates
shown are the actual low and high, on a day-by-day basis for each period.
|--- | -------------------------------------------------------------------------------

|(3) | The
average of monthly average rates during the period reported.
|--- | ----------------------------------------------------------------

3

Capitalization and
Indebtedness

Not applicable

Reasons for the
Offer and Use of Proceeds

Not applicable

Risk Factors

RISKS RELATING TO CHILE

We are substantially dependent on economic conditions in Chile , which
    may adversely impact our results of operations and financial condition.We
    are predominantly engaged in business in Chile and approximately 89.9% of
    our revenues in 2003 were generated from our Chilean operations. Thus, our
  results of operations and financial condition are to a large extent dependent
  on the overall level of economic activity in Chile . Although the Chilean economy
  experienced an average yearly growth of 7.7% between 1990 and 1997, it experienced
  an average yearly growth of only 2.5% between 1998 and 2003. Historically,
  slower economic growth in Chile has negatively affected demand for our products
  and adversely affected our profitability. We cannot make any assurances that
  economic growth in Chile will return to its prior levels.

Our financial statements are reported and our dividends are declared, based
    on Chilean GAAP, which generally differs from U.S. GAAP.There are important
    differences between Chilean accounting and reporting standards and U.S. standards.
    As a result, Chilean financial statements and reported earnings generally
    differ from those reported based on U.S. accounting and reporting standards.
    See Note 25 to our consolidated financial statements for a description of
    the principal differences between Chilean GAAP and U.S. GAAP as they relate
    to us and reconciliation to U.S. GAAP of our net income and total shareholders'
    equity.

The relative liquidity and volatility of Chilean securities markets may
    increase the volatility of the price of our ADSs and adversely impact a holder's
    ability to sell any shares of our common stock withdrawn from our ADR facility.The
    Chilean securities markets are substantially smaller, less liquid and more
    volatile than major securities markets in the United States . For example,
  the Santiago Stock Exchange, which is Chile's main stock exchange, had a market
  capitalization of approximately US$86 billion as of December 31, 2003 while
  as of December 31, 2003, The New York Stock Exchange had a market capitalization
  of approximately US$17.3 trillion and the NASDAQ National Market had a capitalization
  of approximately US$2.8 trillion. In addition, the Chilean securities markets
  may be materially affected by developments in other emerging markets, particularly
  other countries in Latin America.

The lower liquidity and
    greater volatility of the Chilean markets compared to markets in the United
    States could increase the price volatility of the ADSs and may impair a holder's
    ability to sell shares of our common stock withdrawn from the ADR facility
    in the Chilean market in the amount and at the price and time the holder
  wishes to do so. See Item 9: The Offer and Listing.

Chilean economic policies, currency fluctuations, exchange controls and
    currency devaluations may adversely affect the price of our ADSs.The
    Chilean government's economic policies and any future changes in the value
  of the Chilean peso against the U.S. dollar could adversely affect the dollar
  value of our ADSs and the return on any investment in our ADSs. The Chilean
  peso has been subject to large nominal devaluations in the past and may be
  subject to significant fluctuations in the future. In the period from December
  31, 1999 to

4

December 31, 2002,
      the value of the Chilean peso relative to the U.S. dollar declined 35.6%
      in nominal terms, or an average of 10.7% per year, based on the observed
      exchange rate for U.S. dollars on those dates. See Exchange
    Rates.

Chilean trading in the
    shares of our common stock underlying our ADSs is conducted in Chilean pesos.
    Cash distributions received by the depositary for the shares of our common
    stock underlying our ADSs will be received in Chilean pesos. The depositary
    will convert any Chilean pesos received by it to U.S. dollars at the then-prevailing
    exchange rate for the purpose of making dividend and other distribution payments
    for the ADSs. If the value of the Chilean peso falls relative to the U.S.
    dollar, the value of our ADSs and any distributions to holders of our ADSs
  receive from the depositary could be adversely affected. See Item 8: Financial Information  Dividend Policy and Dividends.

We are subject to different corporate disclosure and accounting standards
    than U.S. companies.Although the securities laws of Chile which govern
    open stock corporations or publicly listed companies such as us have as a
    principal objective promoting disclosure of all material corporate information
    to the public, Chilean disclosure requirements differ from those in the United
    States in certain important respects. In addition, although Chilean law imposes
    restrictions on insider trading and price manipulation, the Chilean securities
    market is not as highly regulated and supervised as the U.S. securities market.
    We have been subject to the periodic reporting requirements of the Exchange
    Act since our initial public offering of ADSs in September 1992.

RISKS RELATING TO ARGENTINA

We have significant operations in Argentina and the recent prolonged
    recession and economic crisis in Argentina has adversely affected our results
    of operations.In addition to our operations
in Chile , we maintain substantial assets in Argentina and derive significant
revenue from our operations in Argentina . In 2003, we derived Ch$39,022 million,
or 10.2%, of our revenues from our Argentina operations, and, as of December
31, 2003, Ch$109,614 million, or 19.0%, of our assets were located in Argentina
.. In recent years, Argentina has suffered a prolonged recession, which culminated
in an economic crisis, with negative growth rates of -3.4% in 1999, -0.8% in
2000, -4.4% in 2001 and -10.9% in 2002. Although the economic situation in Argentina
has improved in the last year, it could continue to materially and adversely
affect our Argentine operations. See Item 5: Operating and Financial Review and Prospects  Trend
    Information.

The Argentine peso devaluation in 2002 resulted in a loss of Ch$2,987 million
  for the year 2002 and our subsidiary, Finca La Celia , reported a loss due
  to the devaluation in 2002 of Ch$995 million. Additionally, according to accounting
  pronouncements regulating the conversion of Argentine financial statements
  to Chilean GAAP, fixed assets and their depreciation are considered in historical
  dollars. As a result, a devaluation of the Argentine peso adversely affects
  our operating results, as our revenues from our Argentine operations are impacted
  by the devaluation of the Argentine peso. In spite of the recent appreciation
  of the Argentine peso against the U.S. dollar, we cannot assure if the Argentine
  economy will continue to recover or if the crisis will continue, and if the
  crisis continues whether it will affect our operations in Argentina.

Argentina 's legal regime and
      economy are susceptible to changes that could adversely affect our Argentinean
      operations.The
    measures applied by the Argentine government in recent years to address the
    Argentine economic crisis, which began in 1998, have severely affected the
    Argentine financial system's stability and have had a materially negative
  impact on its reputation. From December 2001 through December 2003, the consumer
  price index, the wholesale price index and the Coeficiente de Estabilización
  de Referencia, or CER, exhibited annual cumulative increases of 44.6%,
  115.1% and 45.7%, respectively. However, in 2003 the inflationary trend slowed,
  with the consumer price index rising 3.7% from January to December 2003 and
  the wholesale price index rising 2.0% in the same period. In 2003, Argentina
  's gross domestic product increased by an estimated 7.9%. We cannot predict
  how the current Argentine government, which took office on May 25, 2003, will
  be able to maintain a strict monetary policy and control inflation in response
  to the changing economic situation. The unpredictability, timing and scope
  of possible

5

measures enacted
      by the Argentine government, including expropriations, higher taxes and
      exchange control measures, may adversely affect our Argentinean operations
      and our results of operations.

RISKS RELATING TO OUR BUSINESS

Fluctuations in the cost of our raw materials may adversely impact
    our profitability if we are unable to pass those costs along to our customers.We
    purchase malt, rice and hops for beer, sugar for soft drinks and grapes for
    wine from local producers or through purchases in the international market.
  The prices of those commodities have experienced significant fluctuations over
  time and are determined by the global supply and demand for those commodities
  as well as other factors, such as fluctuations in exchange rates, over which
  we have no control.

Although we historically have been able to increase our selling prices in
  response to increases in raw material costs and thus have not sought to hedge
  our exposure to increases in raw material prices, we cannot assure you that
  our ability to recover increases in the cost of raw materials will continue
  in the future. If we are unable to increase our selling prices in response
  to increases in raw material costs, any increase may adversely affect our profitability.

We are controlled by one majority shareholder, whose interests
    may differ from those of holders of our ADSs and this shareholder may take
    actions which adversely affect the value of a holder's ADSs or common stock.As
    of May 31, 2004, Inversiones y Rentas S.A. , or IRSA, a Chilean closed corporation,
    owned 61.62% of our shares of common stock. Accordingly, IRSA has the power
    to control the election of most members of our board of directors and its
    interests may differ from those of the holders of our ADSs. IRSA also has
    a significant influence in determining the outcome of any corporate transaction
  or other matters submitted to our shareholders for approval, including mergers,
  consolidations, the sale of all or substantially all of our assets and going-private
  transactions. In addition, actions by IRSA with respect to the disposition
  of the shares of common stock that it owns, or the perception that such actions
  may occur, may adversely affect the trading prices of our ADSs or common stock.

Competition in the Chilean beer market
    may erode our market share and lower our profitability.In 2003, our market
    share of the Chilean beer market by volume was 89%. Our largest competitor
    in the Chilean beer market by volume is Cervecería
  Chile S.A., or Cervecería Chile , a subsidiary of Quilmes Industrial
  S.A., or Quilmes , the largest Argentine brewer. In May 2002, Quilmes and Companhia
  de Bebidas das Américas, or AmBev, announced an agreement by which AmBev
  will assume control of Quilmes within a seven-year period. As of the date of
  this annual report the merger has not been completed. We estimate that Cervecería
  Chile had a market share by volume in Chile of approximately 10% in 2003. In
  the past, Cervecería Chile has engaged in aggressive price discounting.
  If Cervecería Chile were to engage in aggressive price discounting in
  the future, there can be no assurance, given the current environment, that
  any such discounting or other competitive activities will not have a material
  adverse impact on our profitability.

Additionally, if business conditions in the beer market continue to be relatively
  favorable in Chile , other enterprises may attempt to enter the Chilean beer
  market either by producing beer locally or through imports. We expect that
  additional competitors could erode our market share or lead to price discounting.

Our beer brands in Chile may face increased competition from other alcoholic
    beverages such as wine and spirits, as well as from non-alcoholic beverages
    such as soft drinks.Beer consumption in Chile historically has been
    influenced by changes in domestic wine prices. Increases in domestic wine
    prices have tended to lead to increases in beer consumption, while reductions
    in wine prices have tended to reduce or slow the growth of beer consumption.
    In the last four years, wine prices have decreased and we expect that they
    will remain at a low level, becoming a threat to beer consumption. Similarly,
    over the past few years, the price of soft drinks has decreased relative
    to the price of beer due to lower packaging costs, the introduction of larger
    packaging formats and the launch of low-price brands, which we believe has
    slowed the growth in beer consumption. As a result of our lower

6

market share
      in the Chilean wine and soft drinks markets as compared to the Chilean
      beer market, if beverage consumers were to shift their consumption from
      beer to either wine or soft drinks, we expect that it would adversely affect
      our profitability.

Quilmes dominates the
      beer market in Argentina and we may not be able to maintain our current
      market share.In Argentina , we face competition
    from Quilmes, Cervecería Argentina
  S.A. Isenbeck, a subsidiary of Warsteiner Brauerei Hans Cramer GmbH & Co.,
  or Warsteiner, and Cervecería Estrella de Galicia S.A., or Galicia .
  In 2003, we estimate that Quilmes had a market share of 78%, Warsteiner had
  a market share of 7% and Galicia had a market share of less than 1%. We estimate
  that our year-end market share of the Argentine beer market was 14% in 2003.
  As a result of its dominant position in Argentina , Quilmes ' large size enables
  it to benefit from economies of scale in the production and distribution of
  beer throughout Argentina . Therefore, we can make no assurances that we will
  be able to grow or maintain our current market share of the Argentine beer
  market.

Consolidation in the beer industry.In May 2002, AmBev and Quilmes announced
  an agreement by which AmBev will assume control of Quilmes within a seven-year
  period . Additionally, on March 2004, AmBev and Interbrew announced an agreement
  to merge, creating the world's largest brewer under the name InterbrewAmBev.
  As of the date of this annual report, this deal has not yet been completed.
  In Chile , InterbrewAmBev would sell its beer through Cervecería Chile
  , which had a market share of approximately 10% in 2003, and in Argentina ,
  InterbrewAmBev would sell its beer through Quilmes , which had a market share
  of approximately 78% in 2003. Consolidation in the beer industry has resulted
  in larger and more competitive participants, which could change the current
  market conditions under which we operate.

Restrictions in gas supply from Argentina.In recent months, the Argentine
  government began restricting gas exports to Chile due to supply problems in
  that country. We expect that this situation will increase the costs of operating
  our beer production plants in Chile and Argentina , as well as our soft drinks
  plants in Chile . Additionally, we expect an increase in electrical power costs
  related to these same gas restrictions. We do not need additional investments
  because our boilers can work with gas or with alternative fuels, such as diesel
  oil. Considering the current energy prices, we estimate that the higher costs
  at a consolidated level should not exceed Ch$1,100 million for 2004.

Profitability of the wine business.We have taken measures to improve
  the profitability of Viña San Pedro
  by reducing costs and expenses, rationalizing stock keeping units, or SKUs,
  optimizing prices, and focusing efforts on its most important markets. However,
  if the strengthening of the Chilean peso continues throughout 2004, it could
  neutralize the effects of part of these efforts. In addition, there can be
  no assurance that the measures taken to improve profitability will have the
  expected outcome.

License agreements.Most of our license agreements include certain conditions
  that must be met during their term, as well as provisions for their renewal
  at expiry date. We can make no assurances that such conditions will be fulfilled,
  and therefore that the agreements will be renewed, expire at end of term or
  undergo early termination. Termination of, or failure to renew our existing
  license agreements could have an adverse impact on our operations.

RISKS RELATING TO OUR ADSs

Possible disposition
      of Anheuser-Busch International Holdings, Inc. Chile II of CCU's shares
      of common stockOn March 9, 2004, Anheuser-
    Busch Companies Inc., or A-BC, informed us that it was considering a possible
    disposition, through an underwritten secondary offering in Chile and in the
    international markets, of the shares of common stock held by its affiliate
    Anheuser-Busch International Holdings, Inc. Chile II Ltda., representing
    20% of our outstanding capital stock. Currently, and as requested by A-BC,
    we are

7

negotiating the form
    and conditions under which such possible offering might be effected with
    the support of our management. A-BC expressly stated that the disposition
    of our shares held by its affiliate will not affect the license agreement
    currently in force for Budweiser beer in Argentina . As of the date of this
    annual report, there can be no assurance that A-BC will consummate a secondary
    offering or other disposition of our shares and the potential risks of this
    possible disposition.

The price of our ADSs and the U.S. dollar value of any dividends will be
    affected by fluctuations in exchange conditions.Our ADSs trade in U.S.
    dollars. Fluctuations in the exchange rate between Chilean and Argentine
    currencies, and the U.S. dollar are likely to affect the market price of
    our ADSs. For example, since our financial statements are reported in Chilean
    pesos, a decline in the value of the Chilean peso against the dollar would
    reduce our earnings as reported in U.S. dollars. Any dividend we may pay
    in the future would be denominated in Chilean pesos. A decline in the value
    of the Chilean peso against the U.S. dollar would reduce the U.S. dollar
    equivalent of any such dividend. Additionally, in the event of a dividend
  or other distribution, if exchange rates fluctuate during any period of time
  when the ADS depositary cannot convert a foreign currency into dollars, a holder
  of our ADSs may lose some of the value of the distribution. Also, since dividends
  in Chile are subject to withholding taxes, which we retain until the following
  year when the exact amount to be paid is determined, if part of the retained
  amount is refunded to the shareholders, the amount received by holders of our
  ADSs would be subject to exchange rate fluctuations between the two dates.

Holder of ADSs may be subject to certain risks due to the fact that holders
    of our ADSs do not hold shares of our common stock directly.In order
    to vote at shareholders' meetings, if a holder is not registered on the books
    of the ADS depositary, the holder of our ADSs is required to transfer its
    ADSs for a certain number of days before a shareholders' meeting into a blocked
    account established for that purpose by the ADS depositary. Any ADS transferred
    to this blocked account will not be available for transfer during that time.
    If a holder of our ADSs is registered on the books of the ADS depositary,
  it must give instructions to the ADS depositary not to transfer its ADSs during
  this period before the shareholders' meeting. A holder of our ADSs must therefore
  receive voting materials from the ADS depositary sufficiently in advance in
  order to make these transfers or give these instructions. There can be no guarantee
  that a holder of our ADSs will receive voting materials in time to instruct
  the ADS depositary how to vote. It is possible that a holder of our ADSs will
  not have the opportunity to exercise a right to vote at all. Additionally,
  a holder of our ADSs may not receive copies of all reports from us or the ADS
  depositary. A holder of our ADSs may have to go to the ADS depositary's offices
  to inspect any reports issued.

Controls on foreign investment and repatriation of investments in Chile
    may adversely impact a holder of our ADSs ability to obtain and dispose of
    the shares of our common stock underlying its ADRs.Equity investments
    in Chile by persons who are not Chilean residents are generally subject to
    exchange control regulations that restrict the repatriation of investments
  and earnings from Chile . Our ADSs are subject of an ADR foreign investment
  contract among us, the depositary and the Central Bank of Chile which is intended
  to grant holders of our ADSs and the depositary access to Chile 's formal exchange
  market. See Exchange Rates. Pursuant to current Chilean law, our ADR foreign
  investment contract may not be amended unilaterally by the Central Bank of
  Chile . However, we cannot make any assurances that additional Chilean restrictions
  applicable to holders of our ADSs, the disposition of underlying shares of
  our common stock or the repatriation of the proceeds from the disposition of
  the underlying common stock could not be imposed in the future, nor can we
  assess the duration or impact of the restrictions if imposed. If for any reason,
  including changes to our ADR foreign investment contract or Chilean law, the
  depositary is unable to convert Chilean pesos to U.S. dollars, investors would
  receive dividends or other distributions in Chilean pesos. Transferees of shares
  of our common stock withdrawn from the ADR facility will not be entitled to
  access to the formal exchange market unless the withdrawn shares are redeposited
  with the depositary. See Item 10: Additional Information  Exchange Controls
  in Chile .

8

A holder of our ADSs' right to force us to purchase its underlying shares
    of our common stock pursuant to Chilean corporate law upon the occurrence
    of certain events may be limited.In accordance with Chilean laws and
    regulations, any shareholder that votes against certain corporate actions
    or does not attend the meeting at which certain corporate actions are approved
    and communicates to the corporation its dissent in writing within the term
    established by Law, may exercise a withdrawal right, tender its shares to
    the company and receive cash compensation for its shares, provided that the
    shareholder exercises its rights within the prescribed time periods. See Item
    10: Additional Information  Memorandum and Articles of
  Association  Rights, preferences and restrictions regarding shares. In our
  case, the actions triggering a right of withdrawal include the approval of:

- our transformation into a different type of legal entity,

- our merger with and/or into another company,

- the transfer of 50% or more of our corporate assets, whether
  or not liabilities are also transferred, or the proposal or amendment of any
  business plan that contemplates the transfer of assets exceeding said percentage,

- the granting of real or personal guarantees to secure third party
  obligations exceeding 50% of the corporate assets,

- the creation of preferences for a series of shares or the increase
  or reduction in the already existing ones. In this case, only dissenting shareholders
  of the affected series shall have the right to withdraw,

- curing certain formal defects in our charter which otherwise
  would render it null and void or any modification of our by-laws that grant
  this right, and

- other cases provided for by statute or in our bylaws, if any.

Because of the absence of legal precedent as to whether a shareholder that
  has voted both for and against a proposal, such as the depositary of our ADSs,
  may exercise withdrawal rights with respect to those shares voted against the
  proposal, there is doubt as to whether a holder of ADSs will be able to exercise
  withdrawal rights either directly or through the depositary for the shares
  of our common stock represented by its ADSs. Accordingly, for a holder of our
  ADSs to exercise its appraisal rights, it may be required to surrender its
  ADRs, withdraw the shares of our common stock represented by its ADSs, and
  vote the shares against the proposal.

Preemptive rights to purchase additional shares of our common stock may
    be unavailable to holders of our ADSs in certain circumstances and, as a
    result, their ownership interest in us may be diluted.The Chilean Corporations
    Act requires us, whenever we issue new shares for cash, to grant preemptive
    rights to all holders of shares of our common stock, including shares of
    our common stock represented by ADSs, giving those holders the right to purchase
    a sufficient number of shares to maintain their existing ownership percentage.
    We may not be able to offer shares to holders of our ADSs pursuant to preemptive
    rights granted to our shareholders in connection with any future issuance
    of shares unless a registration statement under the Securities Act is effective
    with respect to those rights and shares, or an exemption from the registration
    requirements of the Securities Act is available.

We intend to evaluate at the time of any future offerings of shares of our
  common stock the costs and potential liabilities associated with any registration
  statement as well as the indirect benefits to us of enabling U.S. owners of
  our ADSs to exercise preemptive rights and any other factors that we consider
  appropriate at the time, and then make a decision as to whether to file such
  a registration statement. We cannot make any assurances that any registration
  statement would be filed.

To the extent a holder
    of our ADSs is unable to exercise its preemptive rights because a registration
    statement has not been filed, the depositary will attempt to sell the holder's
    preemptive rights and distribute the net proceeds of the sale, net of the
    depositary's fees and expenses, to the holder, provided that a secondary
    market for those rights exists and a premium can be recognized over the cost
    of the sale. A secondary market for the sale of preemptive rights can be
    expected to develop if the subscription price of the shares of our common
    stock upon exercise of the rights is below the prevailing market price of
    the shares of our common stock. In addition, Chilean income tax laws provide
  a tax deduction to an

9

individual resident taxpayer
    in an amount equal to a percentage of the individuals' investment in newly
    issued shares. Nonetheless, we cannot make any assurances that a secondary
    market in preemptive rights will develop in connection with any future issuance
    of shares of our common stock or that if a market develops, a premium can
    be recognized on their sale. Amounts received in exchange for the sale or
    assignment of preemptive rights relating to shares of our common stock will
    be taxable in Chile and the United States . See Item
    10: Additional Information  Taxation  Chilean Tax Considerations  Capital
    Gains and  United States Tax Considerations  Capital Gains. If the rights
    cannot be sold, they will expire and a holder of our ADSs will not realize
    any value from the grant of the preemptive rights. In either case, equity interest
    in us will be diluted proportionately.

Table of Contents

ITEM 4: Information on the Company

History and Development
        of the Company

Our current
    legal and commercial name is Compañía
  Cervecerías Unidas S.A. We were incorporated in the Republic of Chile
  in 1902 as an open stock corporation, following the merger of two existing
  breweries, one of which had its origins back in 1850, when Mr. Joaquín
  Plagemann founded one of the first breweries in Chile in the port of Valparaíso
  . By 1916, we owned and operated the largest brewing facilities in Chile .
  Our operations have included the production and marketing of soft drinks since
  1902 and the bottling and selling of mineral water products since 1960.

We are subject to a full range of governmental regulation and
  supervision generally applicable to companies engaged in business in Chile
  and Argentina . These regulations include labor laws, social security laws,
  public health, consumer protection and environmental laws, securities laws,
  and anti-trust laws. In addition, regulations exist to ensure healthy and safe
  conditions in facilities for the production, bottling, and distribution of
  beverages.

Our principal
    executive offices are located at Bandera 84, Sixth Floor, Santiago , Chile
    . Our telephone number in Santiago is (56-2) 427-3000, the fax number is
    (56-2) 427-3215 and the website is www.ccu-sa.com. Our authorized representative
    in the United States is Puglisi & Associates, located at
  850 Library Avenue, Suite 204 , Newark , Delaware 19715 , USA , telephone number
  (302) 738-6680 and fax number (302) 738-7210.

In 1986,
    IRSA, our current main shareholder, acquired its controlling interest in
    us through purchases of common stock at an auction conducted by a receiver
    who had assumed control of us following the economic crisis in Chile in the
    early 80's, which resulted in our inability to meet our obligations to our
    creditors. IRSA, at that time, was a joint venture between Quiñenco
  S.A. and the Schörghuber Group from Germany through its wholly owed subsidiary
  Finance Holding International B.V., or FHI of the Netherlands . To our knowledge,
  none of our common stock is currently owned by governmental entities. Our common
  stock is listed and traded on the principal Chilean stock exchanges. See Item
  7: Major shareholders and Related Party Transactions.

In September 1992, we issued 4,520,582 ADSs, each representing
  five shares of our common stock, in an international American Depositary Receipt,
  or ADR, offering. The underlying ADSs were listed and traded on the National
  Association of Securities Dealers Automated Quotation National Market System,
  or NASDAQ, until March 25,1999. Since that date, the ADSs have been listed
  and traded on the New York Stock Exchange.

In 1994,
    we diversified our operations both in the domestic and international markets.
    In that year, we purchased a 48.4% interest in the Chilean wine producer
    Viña San Pedro S.A., or VSP. As of December 31, 2003,
  that interest amounted to 60.3%. In November 1994, we and Buenos Aires Embotelladora
  S.A. (BAESA) (the PepsiCo bottler in Chile at that time) merged businesses
  to create Embotelladoras Chilenas

10

Unidas S.A.
    , or ECUSA, for the production, bottling, distribution and marketing of soft
    drinks and mineral water products in Chile .

In November 1999, we bought BAESA's interest in ECUSA and thereafter
  have controlled 100% of that company. In addition, in 1994 through Southern
  Breweries Establishments, or SBE, a 50%-investment, we acquired a 26.9% indirect
  equity interest in Karlovacka Pivovara d.d., or Karlovacka, a Croatian brewery.
  Between 1994 and 1998, we increased our indirect equity stake in Karlovacka
  to 34.4%. On March 31, 2003, SBE sold its interest in Karlovacka to Heineken
  Adria d.o.o, a subsidiary of Heineken International B.V., or Heineken International,
  generating a profit of Ch$20,114 million, and on April 10, 2003, we bought
  the remaining 50% interest of SBE. At CCU consolidated level, we have a 99.97%
  interest in SBE due to minority shareholders in Comercial CCU Santiago S.A.,
  indirect owner of a 24.99% equity in Inversiones Ecusa S.A., which owns 50%
  of SBE.

Through Compañía Cervecerías Unidas Argentina
  S.A., or CCU Argentina, we began our expansion into Argentina by acquiring
  an interest in two Argentine breweries: 62.7% of the outstanding shares of
  Compañía Industrial Cervecera S.A, or CICSA, were acquired during
  January and February 1995 and 98.8% of the outstanding shares of Cervecería
  Santa Fe S.A. , or CSF, were acquired in September 1995. In 1997, CCU Argentina
  increased its interest in CICSA to 97.2% and in CSF to 99.9% through the purchase
  of minority interests. In January 1998, we decided to merge these two breweries
  into one company operating under the name of CICSA. Following the merger, CCU
  Argentina's interest in CICSA was 99.2%. In April 1998, CCU Argentina completed
  the purchase of the brands and assets of Cervecería Córdoba for
  US$8 million. After subsequent capital expansions, our interest in CCU Argentina
  reached 89.2%, with Anheuser-Busch Incorporated, or Anheuser-Busch, interest
  at 10.8%.

In addition to our acquisitions in Argentina , we signed a license
  agreement with Anheuser-Busch in 1995 granting us the exclusive right to produce,
  market, sell and distribute the Budweiser beer brand in Argentina .

After a capital increase approved by our shareholders in October
  1996, we raised approximately US$196 million between December 1996 and April
  1999. Part of this capital expansion was accomplished between December 1996
  and January 1997 through our second ADR offering in the international markets.

During 2000, VSP acquired the winery Finca La Celia S.A ., or
  FLC, in Mendoza , Argentina , initiating its international expansion, allowing
  VSP to include fine quality Argentine wines into its export product portfolio.
  VSP began consolidating this operation on its financial statements as of January
  2003. Prior to January 2003, FLC was in the development stage.

To increase
    our presence in the premium beer segment, we acquired in November 2000, a
    50% stake in Cervecería Austral S.A., located in
  the city of Punta Arenas, with an annual production capacity of 50,000 hectoliters.
  Further, in May 2002, we acquired a 50% stake in Compañía Cervecera
  Kunstmann S.A., located in the city of Valdivia , with an annual production
  capacity of 30,000 hectoliters.

In October
    2001, VSP signed a joint venture agreement with the French winery Château Dassault for the production of super premium wines,
  mainly for the export market. As a result of this agreement we have combined
  Château Dassault's vast experience in first-quality wine production with
  VSP's knowledge of both the Chilean and Argentine markets, along with its extensive
  international distribution network.

In February
    2003, we began the sale of a new product for our beverage portfolio, pisco,
    under the brand Ruta Norte. Pisco is a grape spirit very popular in Chile
    that is produced in the northern part of the country and the southern part
    of Peru . Our pisco is produced in the  Elqui Valley  in
  the IV Region of Chile and it is sold throughout the country by our beer division
  sales force.

On April
    17, 2003, the Schörghuber Group, an indirect owner
  of 30.8% of our ownership interest, gave Quiñenco S.A. , also an indirect
  owner of 30.8% of our ownership interest, formal notice of its intent to sell
  100% of its interest in FHI to Heineken Americas B.V., a subsidiary of Heineken
  International B.V. As a result of the sale, Quiñenco and Heineken Americas
  B.V., the latter through FHI, became the only two shareholders of IRSA, the
  owner of 61.6% of our equity, each with a 50% interest in IRSA. Heineken

11

International
    B.V. and FHI subsequently formed Heineken Chile Ltda., to hold the latter's
    50% interest in IRSA. Therefore, Quiñenco and Heineken Chile Ltda. are
    the only two current shareholders of IRSA, with a 50% equity each. On December
    30, 2003, FHI merged into Heineken Americas B.V., which together with Heineken
    International B.V. remain as the only shareholders of Heineken Chile Ltda.

In January
    2004, we entered the confectionery business by means of a joint venture between
    our subsidiary ECUSA and Empresas Lucchetti S.A. (which has been renamed Industria Nacional de Alimentos S.A.), a subsidiary
  of Quiñenco, with a 50% interest each in Calaf S.A., a corporation that
  acquired the trademarks, assets and know-how, among other things, of Calaf
  S.A.I.C. and Francisca Calaf S.A., traditional Chilean candy makers, renowned
  for more than a century. We sell Calaf's products together with our soft drinks,
  with the potential to reach more than 90,000 clients. This new challenge offers
  an interesting growth potential to ECUSA in the ready-to-eat market segment.

CAPITAL EXPENDITURES

The capital expenditures figures shown below reflect amounts on the date they
  are recorded in our accounting records and therefore may not match cash flow
  figures since these reflect payments when made. Our capital expenditures for
  2001, 2002 and 2003 were Ch$31,609 million, Ch$19,097 million and Ch$20,903
  million, respectively, totaling Ch$71,609 million, of which Ch$23,562 million
  were invested in our beer operations in Chile, Ch$9,693 million in our Argentine
  beer operations, Ch$20,457 million in soft drink and mineral water operations
  and Ch$12,858 million in wine operations during the years mentioned above.

In recent years, our capital expenditures have been made primarily for the
  expansion of our production capacity. In Chile , these expenditures included
  the completion of a new brewery in Temuco . In Argentina , capital expenditures
  have been made for the expansion and improvement of the beer production and
  bottling capacity of the facility in Santa Fe , including the construction
  of its new canning line. Capital expenditures have been made in our soft drinks
  division in order to adjust soft drink bottling lines to meet changes in consumer
  demand for new packaging formats. With regard to our wine operations, capital
  expenditures have been made primarily to increase wine bottling and storage
  capacities.

During 2000, we constructed and completed a canning line for the Santa Fe
  plant in Argentina , which has a capacity of 60,000 cans per hour. This investment
  was principally financed by Anheuser-Busch through a capital increase in CCU
  Argentina. This packaging line helped to reinforce CCU Argentina's position
  in this segment. This canning line was constructed to provide CCU Argentina
  with enough capacity to meet the export market's demand for Budweiser beer.

During 2000, we purchased
    50% of the shares of Cervecería Austral S.A.,
  located in Punta Arenas, Chile's southernmost city, for Ch$4,747 million. The
  purpose of this acquisition was the development of the Austral brand and to
  increase its volume and presence, not only in Chile but also in the southern
  regions of Argentina . Austral beer has potential to be sold abroad.

During 2001, our main capital expenditures included the acquisition of bottles,
  crates and marketing assets for all of our business segments as well as improvements
  in quality and productivity.

During 2002, our main capital expenditures included also the acquisition of
  bottles and crates as well as the upgrades and improvements of packaging lines
  for all of our business segments.

In Chile , during 2003, capital expenditures in our beer division were focused
  principally on increasing the amount of returnable bottles purchased from third
  parties. In Argentina , our capital expenditures were primarily for the implementation
  of machinery and equipment used in the production and sale of Heineken. Capital
  expenditures were incurred in our soft drink division for bottles and coolers.
  Additionally, with regards to our wine operations, we increased the number
  of wine cellars in San Pedro, Santa Helena, and Finca La Celia. We also purchased
  equipment to improve the capacity of Pisconor and to buy new software.

12

Our principal capital expenditures for the period 2001-2003 are displayed
  in the following table. The information is presented in constant million Chilean
  pesos of December 31, 2003.

|                                            |                                     |            | 2001         
|------------------------------------------- | ----------------------------------- | ---------- | -------------
|                                            |                                     |            |              
|                                            |                                     |            | (Million Ch$)
|Beer Chile                                  |                                     |            |              
|                                            | Bottling line improvements          |            | 3,549        
|                                            | Bottles and crates                  |            | 3,454        
|                                            | Coolers                             | 1,472     
|                                            | Others                              |            | 2,436        
|                                            |                                     |            |              
|                                            |                                     | Total      | 10,910       
|                                            |                                     |            |              
|Beer Argentina                              |                                     |           
|                                            | Marketing assets                    |            | 1,757        
|                                            | Santa Fe Plant capacity improvement | 380       
|                                            | Salta Plant capacity improvement    |            | 29           
|                                            | Others                              |            | 1,983        
|                                            |                                     |            |              
|                                            |                                     | Total      | 4,150        
|                                            |                                     |            |              
|Soft
            Drinks & Mineral
    Water |                                     |           
|                                            | Bottles and crates                  | 4,114     
|                                            | Coolers                             | 2,282     
|                                            | Others                              |            | 3,211        
|                                            |                                     |            |              
|                                            |                                     | Total      | 9,607        
|                                            |                                     |            |              
|Wine                                        |                                     |            |              
|                                            | Barrels                             |            | 674          
|                                            | New wine cellars                    | 333       
|                                            | Thanks capacity increase            |            | 240          
|                                            | Bins and racks                      |            | 199          
|                                            | Others                              |            | 3,632        
|                                            |                                     |            |              
|                                            |                                     | Total      | 5,078        
|                                            |                                     |            |              
|Others                                      |                                     |            |              
|                                            | Injection molds                     | 1,222     
|                                            | Trailers                            | 42        
|                                            | Pallets acquisition                 | 32        
|                                            | Others                              |            | 567          
|                                            |                                     |            |              
|                                            |                                     | Total      | 1,864        
|                                            |                                     |           
|                                            |                                     | TOTAL 2001 | 31,609       
|                                            |                                     |            |              
|                                            |                                     |            |              
|                                            |                                     |            | 2002         
|                                            |                                     |            |              
|                                            |                                     |            | (Million Ch$)
|Beer Chile                                  |                                     |            |              
|                                            | Bottles                             | 2,754     
|                                            | Coolers                             | 1,104     
|                                            | Packaging line improvements         | 1,022     
|                                            | Others                              |            | 2,047        
|                                            |                                     |            |              
|                                            |                                     | Total      | 6,927        
|                                            |                                     |            |              
|Beer Argentina                              |                                     |           
|                                            | Marketing assets                    | 308       
|                                            | Bottles and pallets                 | 290       
|                                            | Others                              | 184       
|                                            |                                     |            |              
|                                            |                                     | Total      | 781          
|                                            |                                     |            |              
|Soft
            Drinks & Mineral
    Water |                                     |           

13

|                                            | Packaging line improvements | 625       
|------------------------------------------- | --------------------------- | ----------
|                                            | Bottles, crates and pallets |           
|                                            | Coolers                     |           
|                                            | Others                      |           
|                                            |                             |           
|                                            |                             | Total     
|                                            |                             |           
|Wine                                        |                             |           
|                                            | New bottling line           |           
|                                            | Storage tanks               |           
|                                            | Plant improvements          |           
|                                            | Barrels                     |           
|                                            | Others                      |           
|                                            |                             |           
|                                            |                             | Total     
|                                            |                             |           
|Others                                      |                             |           
|                                            | Software and hardware       |           
|                                            | Injection molds             |           
|                                            | Others                      |           
|                                            |                             |           
|                                            |                             | Total     
|                                            |                             |           
|                                            |                             | TOTAL 2002
|                                            |                             |           
|                                            |                             |           
|                                            |                             |           
|                                            |                             |           
|Beer Chile                                  |                             |           
|                                            | Bottles                     |           
|                                            | Coolers                     |           
|                                            | Marketing assets            |           
|                                            | Packaging                   |           
|                                            | Machinery and equipment     |           
|                                            | Others                      |           
|                                            |                             |           
|                                            | Total                       | 5,725     
|                                            |                             |           
|Beer Argentina                              |                             |           
|                                            | Machinery and equipment     |           
|                                            | Marketing assets            |           
|                                            | Bottles and pallets         |           
|                                            | Others                      |           
|                                            |                             |           
|                                            |                             | Total     
|                                            |                             |           
|Soft
            Drinks & Mineral
    Water |                             |           
|                                            | Bottles, boxes and pallets  |           
|                                            | Coolers                     |           
|                                            | Marketing assets            |           
|                                            | Packaging                   |           
|                                            | Others                      |           
|                                            |                             |           
|                                            |                             | Total     
|                                            |                             |           
|Wine                                        |                             |           
|                                            | Barrels                     |           
|                                            | Machinery and Equipment     |           
|                                            | Others                      |           
|                                            |                             |           
|                                            |                             | Total     
|                                            |                             |           
|Others                                      |                             |           
|                                            | Software and hardware       |           
|                                            | Injection molds             |           
|                                            | Others                      |           
|                                            |                             |           
|                                            |                             | Total     
|                                            |                             |           
|                                            |                             | TOTAL 2003

14

Business
    Overview

Summary

We are a diversified beverage company operating principally in
  Chile and Argentina . We are the largest brewery in Chile , the second largest
  brewery in Argentina , the third largest soft drinks producer in Chile , the
  largest mineral water and bottled nectar producer in Chile , the second largest
  wine producer in Chile and the third largest pisco producer in Chile . Our
  beer and soft drink products include a wide range of proprietary, licensed
and imported brands.

In 2003, we had consolidated net sales of Ch$384,064 million,
  of which 39.0% was accounted for by our beer sales in Chile, 8.2% by our beer
  sales in Argentina, 30.0% by our soft drinks, nectar and mineral water sales
in Chile, 21.5% by wine sales and the remainder by sales of other products.

Beer. We estimate that our share of the Chilean beer
  market by volume was approximately 88% for 2001, 88% for 2002 and 89% for 2003.
  Our line of beers in Chile includes a full range of super-premium, premium,
  medium-priced and popular-priced brands, which are primarily marketed under
  seven different proprietary brands and one brand extension. Our flagship brand,
  Cristal, is Chile 's best selling beer, accounting for an estimated 59% of
  all 2003 beer sales by volume in Chile . We are the only brewery in Chile with
  a nationwide production and distribution network. In addition, we are the exclusive
  producer and distributor in Chile of Heineken brand beer, the exclusive distributor
  in Chile of imported Budweiser brand beer and the exclusive local producer
  and importer of Paulaner brand beers. We also produce, under license, Austral
beer and distribute Kunstmann beer brands.

We entered
    the Argentine beer market in 1995 by acquiring two breweries and their brands,
    CICSA and CSF. Additionally, in 1998, we bought the brands and assets of
    Cervecería Córdoba.
    Under a joint venture agreement entered into with Anheuser-Busch in 1995,
    we began importing, selling and distributing Budweiser beer in Argentina
    in March 1996. We began production and distribution of locally produced Budweiser
    beer in Argentina in December 1996 as part of our strategy to develop Budweiser
    as the flagship brand of our Argentine operations. In addition, we are the
    exclusive producer and distributor in Argentina of Heineken brand beer and
    the exclusive distributor in Argentina of imported Corona and Guinness beer
    brands. Currently, we and Anheuser-Busch have 89.2% and 10.8% respective
    interests in our Argentine subsidiary, CCU Argentina. We estimate that our
    market share by volume of the Argentine beer market was approximately 12%
in 2001, 13% in 2002 and 14% in 2003.

Soft Drinks and Mineral Water. We produce and sell soft
  drink and mineral water products in Chile , including our proprietary brands
  and brands produced under license from PepsiCo, Schweppes Holdings Ltd. and
  Watt's Alimentos S.A. , or Watt's. We estimate that our Chilean soft drinks
  market share by volume, not including nectars, was approximately 21% in 2001,
  20% in 2002 and 20% in 2003 and that our mineral water market share by volume
was 57% in 2001, 57% in 2002 and 56% in 2003.

Wine. We entered the Chilean wine industry in 1994 with
  the acquisition of a 48.4% interest in VSP, Chile 's third largest winery and
  second largest wine exporter. After making subsequent investments, we currently
  have a 60.3% interest in VSP. VSP produces and markets a full range of wine
  products for both the domestic and export markets. We believe that in 2003,
  VSP's sales by volume amounted to approximately 18% of total measured domestic
  industry sales by volume and 13% of Chile 's total wine export sales by volume.
  VSP's main vineyard is located in Molina, 200 kilometers south of Santiago
  . VSP's domestic wine products are distributed through our nationwide distribution
  system with dedicated sales forces in the major cities and its export products
are sold in 70 different countries through distribution agents.

Pisco.In
    February 2003, we began the sale of a new product for our beverage portfolio,
    pisco, under the brand Ruta Norte. Pisco is a grape spirit very popular in
Chile that is produced in the northern part of the

15

country and
    the southern part of Peru . Our pisco is produced in the  Elqui Valley  in the IV Region
      of Chile and it is sold throughout the country by the beer division sales
  force.

Distribution Network.In Chile , we have an extensive
  and integrated distribution network for the sale and distribution of beer,
  soft drinks, mineral water, nectars, wine and pisco including a total of 16
  owned or leased warehouses, a network of independent transportation companies
  and a direct sales force of approximately 800 people who sell our products
to approximately 93,000 customers throughout Chile .

In Argentina, our sales and distribution network for our beer
  products consists of five owned or leased warehouses, a direct sales force
  reaching approximately 15,800 customers plus 15 supermarket chains, and 448
distributors.

Our
Beer Business

Our historical core business,
    our Chilean beer operation, was first established in 1850. Since that date,
    our management believes we have played a leadership role in the industry,
    with a business that in 1902, after the merger of different breweries, gave
    rise to our formation. In 1995, we began building our presence in Argentina
    through the acquisition of a majority interest in two Argentine brewing companies,
  CICSA and CSF.

Our Beer Business in Chile

The Chilean Beer Market.We estimate that annual beer
  consumption in Chile was 419 million liters in 2003, or approximately 27 liters
  per capita. The following chart shows our estimates for total and per capita
consumption levels for beer in Chile for the years 1999 - 2003:

|Year | Total Sales Volume (1) | Per Capita (2)
|---- | ---------------------- | --------------
|     | (millions of liters)   | (liters)      
|     |                        |               
|1999 | 384                    | 26            
|2000 | 397                    | 27            
|2001 | 397                    | 27            
|2002 | 398                    | 26            
|2003 | 419                    | 27            

---

|(1) | Based on our sales data, competitors' publicly available
      information, equity research analyst reports, imports and export data from
    customs authorities.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Population estimated in accordance
        with the national census of April 2002.                                                                                

We estimate that the total beer market increased approximately
  5.0% in terms of volume sold during 2003 as compared to 2002. We believe that
  this positive growth in the beer market is the result of the actions taken
  by us since 2001 to increase beer consumption in Chile with new products, new
  packaging and creating new occasions of consumption, the improvement in Chilean
economic conditions and a milder Chilean winter in 2003.

Virtually
    all of the beer consumed in Chile is produced by four Chilean manufacturers:
    us, Cervecería Chile, Cervecería Austral
  S.A., or Cervecería Austral, and Compañía Cervecera Kunstmann
  S.A., or Kunstmann, whose principal brands of beer in Chile are Cristal, Becker,
  Austral and Kunstmann, respectively. According to our estimates, during 2003,
  we and Cervecería Chile accounted for approximately 89% and 10% of total
  beer sales in Chile , respectively. In November 2000, we acquired a 50% stake
  in Cervecería Austral, located in the city of Punta Arenas . This brewery
has an annual production capacity of 50,000 hectoliters

16

and had less
    than 1% market share during 2003. In October 2001, Cervecería Austral entered
    into a license agreement with our subsidiary, Cervecera CCU Chile Limitada,
    to produce and sell our brand Cristal, and also any other brand, owned by or
    licensed to Cervecera CCU Chile Limitada in the southern part of Chile . During
    2003, Cervecería Austral began the production and sale of our brands
    Cristal, Escudo and Dorada 6.0. In May 2002, we acquired a 50% stake in Compañía
    Cervecera Kunstmann S.A., located in the city of Valdivia . This brewery has
    an annual production capacity of 30,000 hectoliters and had less than 1% market
    share during 2003. Due to the high costs of shipping beer to Chile and Chile
    's returnable glass bottle system, sales of imported beer are not significant,
  representing an estimated 1% of total beer industry volume in 2003.

Wholesale and retail beer prices are not regulated in Chile .
  Wholesale prices are subject to negotiation between the producer and the purchaser.
  Retailers determine retail prices to the final consumer. We believe that the
  key factors determining retailers' prices include: national and/or local price
  promotions offered by the manufacturer, the nature of product consumption (on-premise
  or take-out), the type of packaging (returnable or non-returnable), the applicable
  tax structure, the desired profit margins and the geographical location of
the retailer.

Beer Production and Marketing in Chile .The production
  of beer in Chile is our principal activity, generating net sales of Ch$135,234
  million, Ch$135,820 million and Ch$149,672 million or 36.2%, 38.9% and 39.0%
  of our total net sales in 2001, 2002 and 2003, respectively. Our sales of beer
  by volume in Chile increased 6.0% in 2003. As a percentage of our total net
  sales, net sales of beer in Chile have increased slightly mainly due to volume
and price increases in this segment.

The following table shows our proprietary brands, brands produced under license
  and brands imported under license for the Chilean market:

|Super-Premium | Premium     | Special      | Medium-priced | Popular-priced
|------------- | ----------- | ------------ | ------------- | --------------
|beer brands   | beer brands | beer brands  | beer brands   | beer brands   
|              |             |              |               |               
|Royal Guard   | Cristal     | Lemon Stones | Morenita      | Dorada 6.0    
|Royal Light   | Escudo      |              |               | Aysén         
|Heineken (1)  |             |              |               |               
|Budweiser (2) |             |              |               |               
|Paulaner (1)  |             |              |               |               
|Austral (1)   |             |              |               |               
|Kunstmann (3) |             |              |               |               

---

|(1) | Produced under license   
|--- | -------------------------
|(2) | Imported                 
|(3) | Distributed under license

Cristal is
    our principal and best selling beer brand in Chile . Escudo , Chile 's second
    most popular beer, is targeted to young-adult consumers. Royal Guard is our
    single, proprietary, super-premium brand. Royal Light is a light beer extension
    of the Royal Guard line and contains a lower alcohol content. Morenita is
    a dark beer and Dorada 6.0 is a discount brand with the highest alcohol content
    in Chile . Lemon Stones is a lemon flavored sweetened beer, with a 2.5% alcohol
    content. Aysén
    is a discount brand to compete with cans of low-priced imported beers in
  the northern part of the country.

In 2003, we exported a limited amount of beer. Export sales of
  beer accounted for less than 1% of our net sales in 2003. Although we continually
  explore export opportunities, we do not expect beer exports to be a significant
  source of sales in the future since our primary focus is on the Chilean domestic
market.

On April
    28, 2003, we, through our subsidiaries Cervecera CCU Chile Limitada and Compañía Cervecerías
    Unidas Argentina S.A., and Heineken Brouwerijen B.V. signed license and technical
    assistance agreements which provide us with the exclusive rights to produce,
    sell and distribute Heineken beer in Chile and Argentina commencing June
    18, 2003. These agreements have an initial term of 10 years beginning in

17

June 2003,
    renewable for subsequent periods of five years. Heineken beer is the leading
    brand in the premium segment, the beer segment with the highest growth in
    Chile in the last years.

Additionally,
    we both import and produce, bottle and distribute Paulaner beer under license
    from Paulaner Brauerei AG, which is controlled by the Schörghuber Group. The current Import and License agreement, executed
  in 1995, which supersedes all prior agreements, provides us with the exclusive
  right to produce in Chile super-premium beer under the Paulaner label and distribute
  in Chile a variety of additional imported Paulaner products. Its term is five
  years, beginning in May 1995, renewable for successive five-year periods beginning
  in the year 2000. Paulaner is a subsidiary of the Schörghuber Group, until
  April 2003 one of the two beneficial shareholders of IRSA, our major shareholder.
See Item 7: Major Shareholders and Related Party Transactions.

In October
    1996, we and Anheuser-Busch entered into an agreement granting us the exclusive
    right to distribute Budweiser beer in Chile . Since then, distribution has
    been carried out continuously. Currently, we and Anheuser-Busch are reviewing
    the terms and conditions of such distribution in order to execute a new agreement.
See Item 3: Risk Factors.

In October
    2001, we signed a license agreement with Cervecería
  Austral S.A. for the production of the Austral brand by our beer division.
  This agreement has a fourteen-year term, automatically renewable for a seven-year
  term if certain conditions are fulfilled. This agreement can be extended for
an additional seven-year period if both parties express this intention in writing.

In May 2002,
    we acquired a 50% ownership interest in Compañía
  Cervecera Kunstmann S.A., a microbrewery located in the southern city of Valdivia
  , with an annual production capacity of 3 million liters. In July 2002, VSP
  began selling Kunstmann beer brands in the city of Viña del Mar , and
  later on expanded into the cities of Santiago , Concepción, Chillán
  and Los Angeles . Since June 2003, our beer division began selling Kunstmann
nationwide.

Our investment
    in Cervecería Austral S.A., the production
  of Austral brand by our beer division, the investment in Compañía
  Cervecera Kunstmann S.A., plus the production of Heineken beer since June 2003,
  are part of our strategy to increase our presence in the premium segment of
the Chilean beer market.

Our beer products sold in Chile are bottled or packaged in returnable
  and non-returnable bottles, aluminum cans or stainless steel kegs at our production
  facilities in the Chilean cities of Santiago , Temuco and Antofagasta . During
  2001, 2002 and 2003, we sold our beer products in Chile in the following packaging
formats:

|Percentage of
    Total Beer Products Sold
|------------------------------------------
|Container                                 
|                                          
|Returnable (1)                            
|Non-Returnable (2)                        
|Returnable Kegs (3)                       
|Total                                     
|                                          

---

|(1) | Returnable beer containers include glass bottles of various
    sizes.                               
|--- | -----------------------------------------------------------------------------------------------------
|(2) | Non-Returnable beer containers include bottles and aluminum
    cans, both of assorted sizes.        
|(3) | Returnable kegs are stainless steel containers, which
          have a capacity of 30 and 50 liters .

We obtain all of our glass
bottles and cans from third party suppliers. See  Raw Materials.

18

We directly distribute our beer products throughout Chile to:

- off-premise retail: small and medium sized retail
outlets, which in turn sell beer to consumers for take-out consumption;

- on-premise retail: retail establishments such as
  restaurants, hotels and bars for on-premise consumption;

- wholesalers; and

- supermarket chains.

In 2001,
    2002 and 2003, the percentage mix of the above distribution channels for
    our beer products in Chile was as follows:

|Percentage of
    Total Beer Products Sold
|------------------------------------------
|                                          
|Distribution Channels                     
|                                          
|Off-premise retail                        
|On-premise retail                         
|Wholesalers                               
|Supermarkets                              
|                                          
|Total                                     
|                                          

As of December 31, 2003, we had more than 36,500 customers in
  Chile for our beer products, none of which accounted for more than 2% of our
  total beer sales by volume, with the exception of one large supermarket chain
  that represented 6%. During 2004, the Chilean supermarket industry continued
  to consolidate, increasing the importance and purchasing power of a few supermarket
  chains. We do not maintain any long-term contractual arrangements for the sale
  of beer with any of our customers in Chile .

The following table sets forth our beer sales volume in Chile
, by category, during each of the last five years:

|Category       | 1999                    | 2000  | 2001  | 2002  | 2003 (*)
|-------------- | ----------------------- | ----- | ----- | ----- | --------
|               |                         |       |       |       |         
|               | (in millions of liters)
|Super-Premium  | 12.8                    | 11.9  | 12.0  | 14.2  | 21.8    
|Premium        | 246.5                   | 244.7 | 233.7 | 233.5 | 302.1   
|Special        | -                       | -     | 8.2   | 13.0  | 8.9     
|Medium-Priced  | 50.5                    | 52.9  | 44.2  | 67.7  | 14.7    
|Popular-Priced | 33.9                    | 41.7  | 47.2  | 20.9  | 23.5    
|Other Brands   | 0.3                     | 0.5   | 2.2   | 0.6   | 0.0     
|               |                         |       |       |       |         
|Total          | 344.0                   | 351.6 | 347.5 | 350.0 | 371.0   
|               |                         |       |       |       |         

---

|(*) Escudo beer brand has been classified
        as a premium beer effective January 2003; previous years were not reclassified.
|---------------------------------------------------------------------------------------------------------------------------------

The above figures do not include:

- export sales to third parties, which amounted to
  0.5, 0.6, 0.8, 0.2 and 0.1 million liters in 1999, 2000, 2001, 2002 and 2003,
respectively, or

- export sales to affiliates, which amounted to 0.2
  and 0.3 million liters in 1999 and 2000. During 2001, 2002 and 2003, we did
  not export to affiliates.

The average price, based on December 2003 Chilean pesos, per
  liter to our customers for beer products in Chile increased from an average
  of Ch$384 in 1999 to Ch$396 in 2003. The four-year compounded annual growth
rate was 0.8%.

Our beer
    production in 2003 was centralized in the Santiago and Temuco plants in addition
    to the bottling facility in Antofagasta . The Temuco plant commenced in November
1999, replacing the closed plants of

19

Concepción
    and Osorno. For a more detailed discussion of our capital expenditure program,
  see   History and Development of the Company  Capital Expenditures.

Raw Materials.The principal raw materials used in our
  production of beer are malt, rice, water and hops. We obtain our supply of
  malt from local producers and in the international market. During 2003, we
  renewed and signed long-term contracts with local producers for 50% of our
  requirements. The balance for 2004 is expected to continue to be imported,
  mainly from Canada , France , Argentina and Uruguay . During 2003, we received
  22,000 tons of malt from Argentina , France and Uruguay , representing 100%
  of our imports. Rice is obtained from local and international suppliers in
  spot transactions and/or annual contract agreements. We pre-treat rice in order
  to ensure that it meets our standards of quality. We import hops mainly pursuant
  to contracts with international suppliers, primarily in the United States and
Europe , which permits us to secure supplies for periods of up to four years.

Water is essential in the production of beer. We obtain all of
  our water from wells located at our plants and/or from public utilities. The
  water is treated at facilities located at our plants to remove impurities and
  to adjust the characteristics of the water before it is used in the production
process.

We maintain testing facilities at each of our plants and factories
  where raw materials are tested. Additionally, samples of beer are analyzed
at various stages of production to ensure product quality.

We generally
    purchase all of the glass bottles used in packaging our beer from the major
    national glass supplier in Chile or Cristalerías
  Chile S.A. under one-year agreements. In addition, other sources, principally
  in Argentina , can be used when price and delivery terms are favorable. During
  2003, all of our requirements for aluminum cans were purchased from a local
  supplier, Rexam Chile S.A., formerly Latasa Chile S.A., but if price and delivery
  conditions are favorable, cans can be imported. Our kegs used for draft beer,
  are purchased from various suppliers outside Chile . We obtain the labels for
  our beer products principally from local suppliers. Crowns and plastic caps
are principally purchased from two suppliers in Chile .

Prices of principal raw materials used in beer production in
  Chile are tied to the U.S. dollar and have not been volatile. However, from
  time to time, prices of agricultural products vary depending on demand and
supply factors.

We believe that all of the contracts or other agreements between
  us and third party suppliers, with respect to the supply of raw materials for
  beer products, contain standard and customary commercial terms and conditions.
  We do not believe we are dependent on any one supplier for a significant portion
  of our important raw materials. During the past ten years, we have not experienced
  any material difficulties in obtaining adequate supplies of necessary raw materials
at satisfactory prices, nor do we expect to in the future.

Sales, Transportation and Distribution.We distribute
  all of our beer products in Chile directly to retail, supermarket and wholesale
  customers. This system enables us to maintain a high frequency of contact with
  our customers, obtain more timely and accurate marketing-related information,
and maintain good working relationships with our retail customers.

During 2003, after production, bottling and packaging, our beer
  was either stored at one of the three production facilities or transported
  to a network of 16 warehouses which are located throughout Chile and are either
  owned or leased by us. Beer products are generally shipped from the region
  of production to the closest warehouse, allowing us to minimize our transportation
  and delivery costs. In July 2002, Comercial Patagona Ltda. began selling all
  of our beer products in the country's Twelfth Region. Comercial Patagona Ltda.
  is a subsidiary of Cervecera Austral S.A. that is responsible for the sales
  and distribution of our products and those of Cervecera Austral in Chile 's
extreme south.

During 2003,
    we had approximately 340 salesmen, responsible for our sales of beer and
    other products in Chile . This sales force is divided into three categories:
    one exclusively responsible for sales of beer and pisco, another for sales
    of beer, pisco and wine, and the other responsible for sales of beer, pisco,
wine and

20

soft drink
    products, all of them through a pre-sell system. As of April 2004, the sales
    operation of soft drinks in the cities of Iquique , Antofagasta , Calama
    and Copiapó was transferred from our
    beer division sales force to ECUSA's sales force. Therefore, currently our
    beer division sells soft drink products only in the rural areas of the country,
    representing approximately 7% of the total soft drink and mineral water sales
  by volume in Chile .

In 2003, beer represented 84% of the volume sold by our beer
  division in Chile . The remaining 16% of sales volume was accounted for by
  soft drinks, mineral water, pisco and wine sales. Our customers make payment
  for our products either in cash at the time of delivery or in accordance with
  one of various credit arrangements. Payment on credit sales for beer is generally
  due 30 days from the date of delivery. Credit sales accounted for 24.1%, 25.4%
  and 27.1% of our beer sales in Chile in 2001, 2002 and 2003, respectively.
Losses on credit sales of beer in Chile have not been significant.

During the last eight years, with the goal of improving customer
  service and optimizing distribution efficiency in the larger cities, we implemented
  a distribution software package that enables delivery personnel to automatically
  generate client dispatch routes. During 2000, we implemented software to optimize
  truck loading. To decrease distribution costs, we continued the process of
  consolidating our distribution centers, resulting in fewer and larger warehouses
  strategically located throughout the country for a more efficient distribution.
  Moreover, since October 2001, all of the warehouses and transportation companies
  are managed on a consolidated basis for all our products by our subsidiary
Transportes CCU Ltda.

Seasonality.As a result of the seasonality of the beer
  industry, our sales and production volumes are normally at their lowest in
  the second and third calendar quarters and at their highest in the first and
  fourth calendar quarters (i.e., those months corresponding to the holidays
as well as the summer vacation season in Chile ).

The following table shows our annual sales volume of beer in
Chile , including exports, by quarter in 2001, 2002 and 2003:

|Year | Quarter      | Sales Volume         | % of Annual 
|---- | ------------ | -------------------- | ------------
|     |              | (millions of liters) | Sales Volume
|     |              |                      |             
|2001 | 1 st quarter | 105.4                | 30.3        
|     | 2 nd quarter | 63.2                 | 18.1        
|     | 3 rd quarter | 67.8                 | 19.5        
|     | 4 th quarter | 111.9                | 32.1        
|     |              |                      |             
|     | Total        | 348.2                | 100.0       
|     |              |                      |             
|     |              |                      |             
|2002 | 1 st quarter | 108.7                | 31.0        
|     | 2 nd quarter | 60.7                 | 17.3        
|     | 3 rd quarter | 67.6                 | 19.3        
|     | 4 th quarter | 113.2                | 32.3        
|     |              |                      |             
|     | Total        | 350.2                | 100.0       
|     |              |                      |             
|     |              |                      |             
|     |              |                      |             
|2003 | 1 st quarter | 112.8                | 30.4        
|     | 2 nd quarter | 63.1                 | 17.0        
|     | 3 rd quarter | 73.8                 | 19.9        
|     | 4 th quarter | 121.3                | 32.7        
|     |              |                      |             
|     | Total        | 371.0                | 100.0       
|     |              |                      |             

Geographical
        Markets.Our main
        beer production facility is located in Santiago . Santiago and the surrounding
        areas (referred to as the Metropolitan Region) account for approximately
        40% of the population of Chile and accounted for approximately 38% of
        our beer sales by volume in 2003. We also have one additional beer production
        facility (Temuco) and one additional bottling facility ( Antofagasta
        ) located outside

21

the
      Santiago metropolitan area. Virtually all of our brands are distributed
      to customers located within the geographic areas of the corresponding production
      facilities.

Competition.Our
    principal competitor in the beer business is Cervecería Chile (a subsidiary
    of Quilmes of Argentina), which commenced operations in Chile during the
    second half of 1991, resulting in a loss of market share for us. Nevertheless,
    since our market share low of 86% in 1994 and 1995, we have regained market
presence. In 2003, we had an 89% market share.

Our estimated share of the Chilean beer market over the last
five years is as follows:

|     | Our Chilean Market Share for
        Beer
|---- | -----------------------------------------
|     |                                          
|Year | Estimated Market Share                   
|     |                                          
|1999 | 90%                                      
|2000 | 89%                                      
|2001 | 88%                                      
|2002 | 88%                                      
|2003 | 89%                                      

Our competitor, Cervecería Chile has one production facility
  located in Santiago and distributes its products throughout the country. Cervecería
  Chile uses third party distributors in Regions I and II in the north, and in
  Region X in the south. We estimate that the sales of Cervecería Chile
  's brands of beer by volume accounted for approximately 11% of total beer sales
  in 2002 and 10% in 2003. In 2003, we estimate that Cervecería Chile
  had an annual production capacity of approximately 78 million liters which
  represents approximately 12% of our annual nominal production capacity in Chile
..

Due to the high cost of shipping beer to Chile and the competitive
  advantage inherent to domestic producers as a result of Chile 's returnable
  glass bottle system, imported beer is not a significant component of the Chilean
  beer market. We estimate that imports accounted for approximately 1% of total
beer sales by volume during 2003.

Although there are currently no significant legal or regulatory
  barriers to entering the Chilean beer market, substantial investment would
  be required to establish or acquire production and distribution facilities
  and bottles for use in Chile 's proprietary returnable bottling system, and
  to establish a critical mass in sales volumes. Nevertheless, if long-term economic
  conditions in Chile continue to be favorable, other enterprises may be expected
  to attempt to enter the Chilean beer market. In addition, our beer brands in
  Chile may face increased competition from other alcoholic beverages such as
wine and spirits, as well as from non-alcoholic beverages such as soft drinks.

Our Beer Business in Argentina

Overview.In December 1994, we established CCU Argentina
  in order to develop a presence in the Argentine beer market. During January
  and February 1995, we, through CCU Argentina, acquired a 62.7% interest in
  CICSA, a brewery located in the city of Salta , 1,600 kilometers northwest
  of Buenos Aires . In September 1995, CCU Argentina expanded its operations
  by purchasing 98.8% of CSF, a brewery located 450 kilometers northwest of Buenos
Aires in the city of Santa Fe .

In December
    1995, we entered into a joint venture agreement pursuant to which Anheuser-Busch
    acquired a 4.4% interest in CCU Argentina. The agreement involved two kinds
    of contracts: an investment and a licensing contract. Under the investment
    contract, Anheuser-Busch maintains an option, which expires in 2005, to increase
    its interest in CCU Argentina to 20%. The licensing contract has a duration
    of 20 years and grants CCU Argentina the exclusive right to produce, package,
    market, sell and distribute Budweiser beer in Argentina . In November 1999,
    after the last capital expansion, Anheuser-Busch increased its interest in
CCU Argentina to 10.8% and we reduced our participation to 89.2%. See Item 3: Risk Factors.

22

Between 1996 and 1999,
we and Anheuser-Busch invested approximately US$189 million and US$23 million
in CCU Argentina, respectively. Among other things, this capital was used to
prepay debt incurred to acquire the initial stake in CICSA and CSF, increase
CCU Argentina's stake in these subsidiaries, increase plant capacity, purchase
land in Zárate (a region close to Buenos Aires),
purchase the brands and assets of Cervecería Córdoba, reduce short
term debt and buy a canning line for the Santa Fe plant.

In January 1998, we merged our two subsidiaries, CICSA and CSF.
Currently both plants operate under the CICSA name. After the merger of CICSA
and CSF, CCU Argentina holds a 99.2% interest in CICSA.

In April
1998, CCU Argentina paid approximately US$8 million to acquire the brands and
assets of Cervecería Córdoba. After the
solution of certain labor issues, we began the production of the Córdoba
brand at our Santa Fe plant during mid 1998.

The Argentine Beer Market.The Argentine beer market is estimated by us
to be more than three times the size of Chile's. Traditionally, beer and wine
have been the principal alcoholic beverages consumed in the country. We estimate
that annual beer consumption in Argentina was 1,292 million liters, or approximately
36 liters per capita in 2003.

The table below sets forth our estimates of beer consumption in Argentina during
each of the last five years:

|Year | Volume                  | Per Capita (*)
|---- | ----------------------- | --------------
|     |                         |               
|     | (in millions of liters) | (liters)      
|1999 | 1,265                   | 36            
|2000 | 1,231                   | 34            
|2001 | 1,233                   | 34            
|2002 | 1,221                   | 34            
|2003 | 1,292                   | 36            
|     |                         |               

We estimate that total beer consumption in Argentina increased
at a four-year compounded annual growth rate of 0.5% between 1999 and 2003. During
2003, the Argentine beer market increased 5.8%, explained by a recovery in consumption,
an increase in the consumer confidence and a delay in the recovery of beer prices
relative to other products categories, after the Argentine peso devaluation.

Wholesale and retail prices of beer are not regulated in Argentina.Wholesale
prices are subject to negotiation between the producer and the purchaser and
retailers establish prices to charge the final consumer. We believe that the
key factors determining retailer prices include national and/or local price promotions
offered by the producer, the nature of product consumption (on-premise or take-out),
the type of product packaging (returnable or non-returnable), the applicable
tax structure, the desired profit margins and the geographical location of the
retailer.

Beer Production
and Marketing in Argentina.Our production
of beer in Argentina generated net sales of Ch$55,271 million, Ch$25,130 million
and Ch$31,576 million representing 14.8 %, 7.2% and 8.2% of our total net sales
in 2001, 2002 and 2003, respectively. The decline in 2002 was the result of the
devaluation of the Argentine peso when converted to Chilean pesos. The increase
in 2003 was the result of higher prices and volumes, as a consequence of a better
economic environment in Argentina.

We produce and market super-premium, premium, medium-priced and popular-priced
beer brands in Argentina. The following table shows our principal brands produced
and imported under license in Argentina:

23

|Super-Premium | Premium       | Medium-priced         | Popular-priced
|------------- | ------------- | --------------------- | --------------
|beer brands   | beer brands   | beer brands           | beer brands   
|              |               |                       |               
|Heineken (1)  | Budweiser (1) | Schneider             | Río Segundo   
|Corona (2)    | Salta         | Schneider Fuerte
6.0° | Rosario       
|Guinness (2)  | Santa Fe      | Córdoba               |               
|              |               |                       |               

Schneider
is our principal proprietary brand in Argentina, accounting for 42% of our Argentine
sales volume in 2003. We began local production of Budweiser brand beer in December
1996. Budweiser beer represented 22% of our Argentine sales volume in 2003. Since
February 2002, our Budweiser one-liter returnable bottle, the main format in
the market, has been priced at the same level as the leading brand in the market.
In June 2003, we began selling locally produced Heineken beer. Our Schneider
brand is sold in three varieties, regular lager, dark and Schneider Fuerte 6.0°, a brand extension with 6.0% of alcohol; the
Salta and Santa Fe brands are sold in those two varieties and an additional special
lager variety. The Córdoba brand is sold only as a regular lager. During
1997, we began to import Guinness beer from Ireland, making Argentina one of
the two countries in South America where Guinness draught is sold. During 2001,
we began to import Corona beer from Mexico. During 2003, we exported 5.1 million
liters of beer from Argentina, representing 2.7% of CCU Argentina's beer sales
volume.

Our beer products are bottled or packaged in returnable and non-returnable glass
bottles, aluminum cans, or stainless steel kegs at our production facilities.
During 2001, 2002 and 2003, we sold our beer products in Argentina in the following
packaging formats:

|Percentage of Total Beer Products Sold
|--------------------------------------
|                                      
|Container                             
|                                      
|Returnable (1)                        
|Non-Returnable (2)                    
|Returnable Kegs (3)                   
|                                      
|Total                                 
|                                      

We obtain all of our glass bottles from third-party suppliers
located in Argentina, and stainless steel kegs from third-party suppliers in
Germany.

In Argentina, though most beer is sold to wholesalers, we also sell our products
to retailers and supermarket chains. In 2001, 2002 and 2003, the percentage mix
of the above distribution channels for our beer products in Argentina was as
follows:

|Percentage of Total Beer Products Sold
|--------------------------------------
|                                      
|Distribution Channels                 
|                                      
|Wholesalers                           
|Retailers                             
|Supermarkets                          
|                                      
|Total                                 
|                                      

24

In 2003, we sold to approximately 16,300 customers in Argentina,
none of which individually accounted for more than 3% of our total beer sales
by volume.

The following table sets forth our beer sales volume in Argentina
by category during each of the last five years:

|Category                | 1999  | 2000  | 2001  | 2002(*) | 2003 
|----------------------- | ----- | ----- | ----- | ------- | -----
|                        |       |       |       |         |      
|(in millions of liters)
|                       
|Super-premium           | 38.2  | 36.1  | 32.7  | 0.4     | 9.4  
|Premium                 | 42.2  | 36.7  | 34.2  | 69.2    | 77.7 
|Medium-priced           | 73.0  | 71.0  | 70.2  | 78.1    | 91.7 
|Popular-priced          | 4.4   | 10.6  | 9.9   | 9.3     | 6.5  
|                        |       |       |       |         |      
|Total                   | 157.9 | 154.4 | 147.1 | 156.9   | 185.4
|                        |       |       |       |         |      

The average price, based on December 2003 Chilean pesos, to our
customers for our beer products in Argentina has decreased at a four-year compounded
annual rate of 16.3%, from Ch$323 per liter in 1999 to Ch$158 per liter in 2003,
due to the effect of the Argentine peso's devaluation.

The license
agreement between CCU Argentina and Anheuser-Busch, which provides CCU Argentina
with the exclusive right to produce, package, market, sell and distribute Budweiser
beer in Argentina, has an initial term of 20 years commencing in December 1995.
Among other things, the license agreement includes provisions for both technical
and marketing assistance from Anheuser-Busch. Under the license agreement, CCU
Argentina is obligated to purchase certain raw materials from Anheuser-Busch
or from suppliers approved by Anheuser-Busch. CCU Argentina cannot produce, package,
sell or distribute within Argentina any North American beer, other than Budweiser
beer, without the prior written consent of Anheuser-Busch. We began distribution
of our locally produced Budweiser in December 1996. See  Sales,
Transportation and Distribution. In addition, the license agreement is subject
to certain specified market share targets and marketing expenditures. During
the third quarter 2000, we and Anheuser-Busch signed an export agreement to supply
Budweiser from Argentina to Paraguay, Chile and Brazil. In August 2003, the license
agreement was modified, with regard to certain targets, to adjust it to the current
economic situation of the Argentine market. See Item 3: Risk Factors.

On April 28, 2003, CCU Argentina and Heineken Brouwerijen B.V.,
a subsidiary of Heineken International B.V., signed license and technical assistance
agreements which provide us with the exclusive rights to produce, sell and distribute
Heineken beer in Argentina commencing June 18, 2003. These agreements have an
initial term of 10 years beginning in June 2003, renewable for subsequent periods
of five years. Heineken beer is the leading brand in the premium segment in Argentina.

Raw Materials.The principal raw materials used in the production of our
beer products in Argentina are malt, corn syrup, rice and hops. During 2003,
we continued obtaining malt and rice from regional suppliers, benefiting from
lower costs as compared to imported materials. We obtain rice from suppliers
in Uruguay and malt from suppliers in Argentina.

Other raw materials are obtained from local and international
suppliers in spot transactions and/or annual contracts. All purchased raw materials
are tested in order to ensure that they meet certain standards of quality.

Water is
essential in the production of beer. Our operation in Salta obtains all of its
water from wells located at its plant, and the Santa Fe operation obtains all
of its water from the Paraná river. The water
is treated at facilities located at our plants to remove impurities and adjust
the characteristics of the water before it is used in the production process.

25

We maintain testing facilities at each of our plants and factories
in which raw materials are analyzed according to our standards. Additionally,
samples of beer are analyzed at various stages of production to ensure product
quality. Samples of Heineken and Budweiser are periodically sent to Holland and
to Anheuser-Busch facilities in the United States, respectively, to verify the
consistency and quality of the products.

We locally purchase all of our glass bottles from various suppliers.
Other sources, principally in Brazil, can be used when price and delivery terms
are favorable. In October 2000, we finished the installation of a canning line
in our Santa Fe plant. With this line, imports of pre-packaged canned beers were
terminated and all varieties of CCU Argentina's beers are locally produced. Kegs
used for draft beer are purchased from various suppliers in Germany. Plastic
storage and carrying crates, as well as the labels for beer products and crowns,
are obtained from local suppliers.

Prices of principal raw materials used in beer production in
Argentina, have not been volatile in dollar terms. However, from time to time,
prices of agricultural products vary depending on demand and supply factors.

We believe that all contracts or other agreements between us
and third party suppliers, with respect to the supply of raw materials for beer
products, contain standard and customary commercial terms and conditions. We
do not believe we are dependent on any one supplier for a substantial portion
of our raw materials in Argentina. We have not experienced any significant difficulties
in obtaining adequate supplies of necessary raw materials at satisfactory prices
and do not expect to in the future.

Sales, Transportation and Distribution.After production,
bottling and packaging, our beer is either stored at the production facilities
or transported to a network of five warehouses leased by us. Beer products are
generally shipped to those warehouses, which are located within the region in
which the beer products are sold.

Most of our
beer in Argentina is sold and distributed through third party sales and distribution
chains in the regions surrounding the cities of Santa Fe, Salta, Córdoba and Buenos Aires. As of December 31, 2003,
we had a direct sales force which sold our beer products to approximately 15,800
customers within the Salta, Santa Fe, Córdoba, Rosario, the Federal Capital
and its outlying metropolitan area, in addition to 15 supermarket chains throughout
the country.

Our Argentine beer customers either make payments for our products
in cash at the time of delivery or through one of our various credit arrangements.
Payment on credit sales is currently due 7 days from the date of delivery to
wholesalers, and an average of 50 days of delivery to supermarkets. Credit sales
accounted for 89%, 80% and 74% of our beer sales in Argentina in 2001, 2002 and
2003, respectively. Losses on credit sales of beer in Argentina have not been
significant.

Seasonality.As a result of the seasonality of the beer
industry, our sales and production volumes are normally at their lowest in the
second and third calendar quarters and at their highest in the first and fourth
quarters (i.e., those months corresponding to the summer and holiday seasons
in Argentina).

The following table shows the annual sales volume of beer in Argentina, including
exports, during each quarter in 2001, 2002 and 2003:

26

|Soft Drinks & Mineral Water
|---------------------------
|                           
|Year                       
|                           
|                           
|2001                       
|                           
|                           
|                           
|                           
|                           
|                           
|                           
|2002                       
|                           
|                           
|                           
|                           
|                           
|                           
|                           
|2003                       
|                           
|                           
|                           
|                           
|                           
|                           

Geographical Markets.Our
beer production facilities in Argentina are located in Santa Fe and Salta. Santa
Fe and its surrounding areas account for approximately 8.3% of the population
of Argentina and for approximately 23.3% of total beer sales of CCU Argentina
by volume in 2003. The region surrounding and including the cities of Salta and
Jujuy account for approximately 4.7% of the population of Argentina and for approximately
10.0% of total beer sales of CCU Argentina by volume in 2003. The region surrounding
and including the city of Córdoba accounts for approximately 8.5% of the
Argentine population and represents approximately 14.4% of CCU Argentina's sales
by volume. Lastly, the province of Buenos Aires accounts for approximately 45.8%
of the population of Argentina and for approximately 25.1% of total beer sales
of CCU Argentina by volume in 2003.

Competition.Since 2003, after the agreement between Quilmes
and AmBev, the Argentine beer market consisted of four brewing groups: AmBev-Quilmes,
us, Warsteiner and Galicia. The principal brands of these companies are Quilmes,
Schneider, Isenbeck and San Carlos, respectively. According to the information
made public by our competitors and our estimates for Isenbeck, the different
brewing groups had the following market shares in 2003: AmBev-Quilmes, 78%; us,
14%; Warsteiner, 7%; and Galicia, less than 1%.

The following table shows our market share in the Argentine market over the past
five years:

|Our Argentine Market Share for Beer
|-----------------------------------
|                                   
|Year                               
|                                   
|1999                               
|2000                               
|2001                               
|2002                               
|2003                               

Quilmes, the beer market leader in Argentina and our principal
competitor, also has beer operations in Chile, Paraguay, Uruguay and Bolivia.
In February 1997, Quilmes purchased Bieckert in Argentina, and, as a result of
that acquisition, increased its production capacity by approximately 170 million
liters, increasing its market share by an estimated 4.9%. As of December 31,
2003, Quilmes had five breweries in Argentina with an estimated total annual
production capacity of 1.9 billion liters. Quilmes' large size enables it to
benefit from economies of scale in the production and distribution of beer throughout
Argentina.

27

We estimated
that Quilmes' average market share in 2003 decreased to 78% (including Bieckert
and Brahma) from 82% market share in late 1994. At that time, Companhia Cervejaria
Brahma, one of the two largest beer producers in Brazil, commenced production
at its new brewery in Luján, near Buenos
Aires. In addition, Warsteiner, a large German brewer, commenced production at
its new brewery in Zárate, also near Buenos Aires. The annual production
capacity for these breweries is estimated to be approximately 264 million liters
and 138 million liters, respectively. Prior to commencing production in Argentina,
Companhia Cervejaria Brahma and Warsteiner competed in the Argentine market with
imported beer. The other competitor, Galicia, has one plant with a total annual
capacity of approximately 17 million liters. In July 1999, the merger of Companhia
Cervejaria Brahma and Companhia Antarctica Paulista was announced, creating AmBev.
This merger was finally approved in March 2000, creating one of the largest beverage
producer in the world.

More recently,
in May 2002, AmBev and Quilmes announced that pursuant to an agreement between
both parties, AmBev would transfer all of its beer assets in Argentina, Bolivia,
Paraguay and Uruguay to Quilmes in exchange for 26.4 million new B shares of
Quilmes. Additionally, according to the announcement AmBev would purchase from
the controlling shareholders of Quilmes 230.92 million class A shares for US$346.4
million. Also the agreement stipulates that AmBev can purchase at the end of
a seven-year period the remaining Quilmes shares owned by the current controlling
group, the Bemberg family, with AmBev shares. The Bemberg family has the option
to sell to AmBev their remaining class A shares during a period beginning with
the end of the first year and ending with the seventh year after the agreement
was announced. This transaction was approved by the Argentine antitrust authorities
on January 13, 2003, subject to the condition that AmBev and Quilmes divest themselves
of certain brands and the AmBev plant in Luján, near Buenos Aires, to
a company currently not present in the Argentine beer market. On February 14,
2003, through our subsidiary CICSA, we filed a complaint before the Argentine
federal courts in order to be eligible to participate in the acquisition of these
assets. As of the date of this annual report, this case was in the Argentinean
Supreme Court of Justice and its ruling was still pending. On March 3, 2004,
AmBev and Interbrew announced an agreement to merge the two companies, creating
the world's largest brewer under the name InterbrewAmBev. As of the date of this
annual report, this merge had not yet been consummated. Consolidation in the
beer industry has resulted in larger and more competitive participants, which
could change the current market conditions under which we operate.

Due to the high cost of shipping beer to Argentina and the competitive
advantage inherent to domestic producers as a result of Argentina's returnable
glass bottle system, we estimate that imported beer sales accounted for less
than 1% of the total sales volume in 2003.

Our beer brands in Argentina also face competition from other
alcoholic beverages such as wine and spirits, as well as from non-alcoholic beverages
such as soft drinks.

Excise taxes for the beverage industry in Argentina have been subject to variations
in the past. The last modification was in 1999 and has been applicable since
January 2000. The following table shows current Argentine excise beverage taxes:

|Product Type                                   | 1999 Excise Taxes | Current Excise Taxes
|---------------------------------------------- | ----------------- | --------------------
|                                               |                   |                     
|Non-Alcoholic Beverages                        |                   |                     
|                                               |                   |                     
|Cola soft drinks                               | 4%                | 8%                  
|Flavored soft drinks, mineral water and juices | 0%                | 4%                  
|                                               |                   |                     
|Alcoholic Beverages                            |                   |                     
|                                               |                   |                     
|Beer                                           | 4%                | 8%                  
|Whisky                                         | 12%               | 20%                 
|10-29% alcohol content                         | 6%                | 12%                 
|30% or more alcohol content                    | 8%                | 15%                 
|Wine                                           | 0%                | 0%                  

28

Future changes in excise taxes in Argentina could adversely affect
our sales volume, market share and operating margins.

Our
Soft Drinks and Mineral Water Business

Overview.
We have produced and sold soft drinks in Chile since 1916. Prior to November
1994, we independently produced, bottled and distributed carbonated and non-carbonated
soft drinks in Chile. Our line of soft drink products included our own proprietary
brands, in addition to brands produced under license from Cadbury Schweppes plc.
(Crush, Crush Light, Canada Dry Agua Tónica,
Canada Dry Agua Tónica Light, Canada Dry Ginger Ale and Canada Dry Limón
Soda). Under a similar licensing arrangement with Watt's, a local fruit related
product company, we have bottled and distributed Watt's nectar products in Chile
since 1987. In addition, under our two proprietary brand names, Cachantun and
Porvenir, we bottled and nationally distributed mineral water from our own two
natural sources located within the central region of Chile.

In November
1994, we merged our soft drink and mineral water businesses with the one owned
by BAESA in Chile (PepsiCo's bottler at that time) creating ECUSA for the production,
bottling, distribution and marketing of soft drink and mineral water products
in Chile. Therefore, we began producing PepsiCo brands under license (currently
Pepsi, Pepsi Light, Pepsi Twist, Pepsi Twist Light, Seven Up, Seven Up Light
and Mirinda). On November 29, 1999, we purchased 45% of ECUSA's shares owned
by BAESA for approximately Ch$42,678 million. Since that date, we have owned
100% of ECUSA's shares. However, we have had control of ECUSA since January 1998
after the shareholders agreement was amended. In January 2001, ECUSA and Schweppes
Holdings Ltd. signed an agreement to continue bottling Crush and Canada Dry brands.
See  Our Soft Drinks, Mineral Water and
Nectar Production and Marketing in Chile.

The Chilean Soft Drinks and Mineral Water Market.Commercial
soft drink production was first established in Chile by us in 1902, and mineral
water production began in 1960. In 2003, we estimate that annual carbonated soft
drinks consumption in Chile was 1,606 million liters or approximately 105 liters
per capita. We estimate that consumption of fruit nectars and 100% natural fruit
juices was 122 million liters or approximately 8 liters per capita, in 2003.
In 2003, we also estimate that consumption of mineral water, including both carbonated
and non-carbonated, was 135 million liters or approximately 9 liters per capita.

The table below sets forth our estimates of total and per capita carbonated soft
drinks, fruit nectars and mineral water sales in Chile during each of the last
five years:

|Carbonated Soft Drink and Mineral Water Sales
|---------------------------------------------
|                                             
|Volume (1)                                   
|                                             
|(millions of liters)                         
|                                             
|Year                                         
|                                             
|1999                                         
|2000                                         
|2001                                         
|2002                                         
|2003                                         
|                                             

The soft
drink market in Chile consists of both carbonated and non-carbonated beverages.
The principal types of carbonated beverages are colas and non-colas. The principal
non-carbonated beverages are fruit

29

nectars and
    fruit juices, which are estimated to have accounted for approximately 13%
    of our total soft drink sales by revenues in 2003.

The following table sets forth our estimates as to the percentage of total carbonated
soft drinks production in Chile, represented by each of the two principal categories
of carbonated soft drinks during the last three years:

|Type      | 2001 | 2002 | 2003
|--------- | ---- | ---- | ----
|          |      |      |     
|Colas     | 58%  | 58%  | 58% 
|Non-colas | 42%  | 42%  | 42% 
|          |      |      |     
|Total     | 100% | 100% | 100%
|          |      |      |     

Since the
creation of the ECUSA joint venture in November 1994, the two main soft drinks
producer groups in Chile have been (i) the licensees of The Coca-Cola Company
(consisting of three companies with 14 bottling plants) and (ii) us. Since
August 1998, private labels have had an increasing participation in the industry,
representing 5% of the total soft drink sales in Chile in 2003. Distribution
of these brands is concentrated in the supermarket channel where they constituted
a 16% market share in 2003. Additionally, discount brand producers have entered
the market and represented 7% of the soft drinks market in 2003. Due to the strong
presence of local producers, the high cost of transportation and the existing
returnable bottle system that accounts for a large portion of soft drink sales
volume, we believe that there is no significant market for imported soft drinks
in Chile, which were estimated to represent less than 1% of all soft drinks sales
by volume in 2003.

The mineral water market in Chile is comprised of both carbonated
and non-carbonated water. As with the soft drink market, approximately 91% of
all mineral water in Chile is processed and marketed by two entities, us and
Vital S.A., a subsidiary of Embotelladora Andina S.A., one of The Coca-Cola Company
licensees in Chile. Our mineral water products have been produced by ECUSA since
November 1994.

Wholesale and retail prices of both soft drinks and mineral water
products are not regulated in Chile. We believe that the key factors determining
retailers' prices include any national and/or local price promotions offered
by the manufacturer, the nature of product consumption (on-premise or take-out),
the type of product packaging (returnable or non-returnable), the applicable
tax structure, the desired profit margins and the geographical location of the
retailer.

Our Soft Drinks, Mineral Water and Nectar Production and Marketing
in Chile.Our soft drinks, nectar and mineral water production and marketing
in Chile generated net sales of Ch$112,862 million, Ch$111,875 million and Ch$115,282
million, or 30.2%, 32.0% and 30.0% of our total net sales, in 2001, 2002 and
2003, respectively.

The following table shows the soft drink and mineral water brands produced and/or
sold by us through ECUSA:

|Brand                        | Product    | Category             | Affiliation            
|---------------------------- | ---------- | -------------------- | -----------------------
|                             |            |                      |                        
|Bilz                         | Soft Drink | Non-Cola Proprietary | CCU Proprietary        
|Pap                          | Soft Drink | Non-Cola Proprietary | CCU Proprietary        
|Bilz Light                   | Soft Drink | Non-Cola Proprietary | CCU Proprietary        
|Pap Light                    | Soft Drink | Non-Cola Proprietary | CCU Proprietary        
|Kem Piña                     | Soft Drink | Non-Cola Proprietary | CCU Proprietary        
|Kem Xtreme                   | Soft Drink | Functional           | CCU Proprietary        
|Show                         | Soft Drink | Non-Cola Proprietary | CCU Proprietary        
|Canada Dry Ginger Ale        | Soft Drink | Non-Cola Licensed    | Schweppes Holdings Ltd.
|Canada Dry Agua Tónica       | Soft Drink | Non-Cola Licensed    | Schweppes Holdings Ltd.
|Canada Dry Agua Tónica
Light | Soft Drink | Non-Cola Licensed    | Schweppes Holdings Ltd.
|Canada Dry Limón Soda        | Soft Drink | Non-Cola Licensed    | Schweppes Holdings Ltd.
|Crush                        | Soft Drink | Non-Cola Licensed    | Schweppes Holdings Ltd.
|Crush Light                  | Soft Drink | Non-Cola Licensed    | Schweppes Holdings Ltd.

30

|Pepsi             | Soft Drink     | Cola Licensed     | PepsiCo        
|----------------- | -------------- | ----------------- | ---------------
|Pepsi Light       | Soft Drink     | Cola Licensed     | PepsiCo        
|Pepsi Twist       | Soft Drink     | Cola Licensed     | PepsiCo        
|Pepsi Twist Light | Soft Drink     | Cola Licensed     | PepsiCo        
|Seven-Up          | Soft Drink     | Non-Cola Licensed | PepsiCo        
|Seven-Up Light    | Soft Drink     | Non-Cola Licensed | PepsiCo        
|Mirinda           | Soft Drink     | Non-Cola Licensed | PepsiCo        
|Gatorade          | Isotonic       | Functional        | PepsiCo        
|Watt's            | Nectars        | Licensed          | Watt's         
|Watt's Light      | Nectars        | Licensed          | Watt's         
|Cachantun         | Mineral Water  | Proprietary       | CCU Proprietary
|Cachantun O 2     | Mineral Water  | Functional        | CCU Proprietary
|Porvenir          | Mineral Water  | Proprietary       | CCU Proprietary
|Glacier           | Purified Water | Proprietary       | CCU Proprietary

In 1994, ECUSA and Cadbury
Schweppes plc, or Cadbury Schweppes, the latter through its subsidiaries CS Beverages
Ltd. and Canada Dry Corporation Ltd., entered into license agreements for all
Cadbury Schweppes products (Crush, Crush Light, Canada Dry Limón Soda, Canada Dry Ginger Ale and Canada Dry Agua Tónica).

On December 11, 1998, The Coca-Cola Company, or TCCC, announced an agreement
with Cadbury Schweppes to acquire certain of the latter's international beverage
brands, including those licensed to ECUSA, and in August 1999 the agreement was
reported to have been consummated.

In September 2000, after more than a year's litigation, both in Chile (suits
at civil courts and antitrust authorities) and England (arbitration under ICC
rules), ECUSA and TCCC reached an agreement superseding ECUSA's previous license
contracts with CS Beverages Ltd. and Canada Dry Corporation Ltd.

The new agreement, referred
to as the  Bottler Contract  , was executed
between ECUSA and Schweppes Holdings Ltd., concerning the Crush and Canada Dry
brands, and was approved by the Chilean antitrust commission, thus putting an
end to the proceeding regarding the Cadbury Schweppes brands issue and dismissing
all complaints filed in consideration of the agreement.

The Bottler Contract is
valid as from January 2, 2001, with an initial ten-year term, renewable for consecutive
five-year periods provided that certain conditions are fulfilled.

In January 1998, ECUSA signed new exclusive bottling appointments
with PepsiCo, Inc. and its subsidiary Seven-Up International, respectively, authorizing
ECUSA to produce, sell and distribute Pepsi products (currently Pepsi, Pepsi
Light, Pepsi Twist, Pepsi Twist Light, Seven Up, Seven Up Light and Mirinda)
in Chile. On November 15, 1999, the term of the contracts were extended to December
31, 2009. After that date it is automatically renewed for successive five-year
periods, unless otherwise stated by any party to the contract.

In June 2002, an exclusive bottling appointment was executed
between ECUSA and Stokely Van-Camp, Inc., a subsidiary of PepsiCo, Inc., authorizing
ECUSA to bottle, sell and distribute Gatorade products in Chile, for an initial
term ending on December 31, 2009. After that date, it is automatically renewed
for successive five-year periods, unless otherwise stated by any party to the
contract. As of August 2002, we began the import, sale and distribution of Gatorade,
the world's number one isotonic drink.

In addition, ECUSA has been granted the exclusive license to
produce and distribute our proprietary brands Bilz, Pap and Kem. This license
agreement remains in effect through November 2004, is renewable by mutual consent
for six additional five-year periods and is subject to termination upon the expiration
of ECUSA's licensing agreement with PepsiCo.

The license agreement for nectar products with Watt's, which
grants us exclusive production rights, was first signed in June 1987 and originally
had a 33-year term. A new license agreement between us and Watt's was signed
in February 1999. This new contract provides us with a ten-year license renewable

31

automatically
    for three consecutive periods of five years if the conditions set forth in
    the contract are fulfilled at the date of renewal. Additionally, the new
    contract allows us to produce new flavors and bottle Watt's nectars in non-returnable
  packaging (wide mouth glass and plastic bottles), which currently represents
  77% of our nectar sales in bottles.

In October 1994, ECUSA, at that time a 55%-owned subsidiary of
us, entered into two license agreements with Aguas Minerales Cachantun S.A. and
Agua Mineral Porvenir S.A.I., respectively, for the use of the natural sources
of mineral water and the Cachantun and Porvenir brand names. These agreements
were amended in November 1994 and have a ten-year term, renewable for a five-year
period with prior mutual consent. However, the term of both agreements is limited
to the life of ECUSA's licensing agreement with PepsiCo. Currently, ECUSA is
a wholly-owned subsidiary of us; therefore, these agreements will be renewed
in 2004.

On June 14, 2001, ECUSA and Life O 2 Beverages LLP entered into
an exclusive technology and trademark license agreement for the production, sale
and distribution of water products with high concentrations of oxygen. The agreement
has an initial term of five years as from June 2001, renewable for one-year periods,
unless otherwise stated by any party in writing.

In June 2003, we entered into the purified water business with
our proprietary brand Glacier, increasing our water selection and reaching a
larger amount of population with a more affordable product.

Under each license agreement, we have the exclusive right to
produce, sell and distribute the respective licensed products in Chile. Generally,
under our license agreements, we are required to maintain certain standards of
quality with respect to the production of licensed products, to achieve certain
levels of marketing and, in certain cases, to fulfill minimum sales requirements.
We believe that we are in compliance with the material requirements of all our
license agreements.

During 2001, 2002 and 2003, we sold our soft drink and mineral water products
in the following packaging formats:

|                   | Soft Drinks and Nectars | Mineral Water
|------------------ | ----------------------- | -------------
|                   |                         |              
|Container          | 2001                    | 2002         
|                   |                         |              
|Returnable (1)     | 59%                     | 56%          
|Non-Returnable (2) | 38%                     | 42%          
|Post-Mix (3)     | 2%                      | 2%           
|                   |                         |              
|Total              | 100%                    | 100%         
|                   |                         |              
|                   |                         |              

We manufacture
most of our returnable and non-returnable plastic bottles and obtain all of our
glass bottles and cans from third party suppliers. See  Raw Materials and  Our Other Businesses.

We directly distribute our soft drinks and mineral water products
throughout Chile to:

- off-premise
retail: small and medium sized retail outlets, which in turn sell beer to consumers
for take-out consumption;
- on-premise
retail: retail establishments such as restaurants, hotels and bars for on-premise
consumption;
- wholesalers;
and
- supermarket
chains.

32

In 2001, 2002 and 2003, the percentage mix of the above distribution channels
for our beer products in Chile was as follows:

|                      | Percentage of Total Soft Drinks and Mineral Water Products Sold
|--------------------- | ---------------------------------------------------------------
|                      |                                                                
|Distribution Channels | 2001                                                           
|                      |                                                                
|Off-premise retail    | 54%                                                            
|On-premise retail     | 9%                                                             
|Wholesalers           | 10%                                                            
|Supermarkets          | 27%                                                            
|                      |                                                                
|Total                 | 100%                                                           
|                      |                                                                

During 2003, we had no single customer that accounted for more
than 2% of our sales by volume, with the exception of three large supermarket
chains that represented a combined total of 15%. During 2004, the Chilean supermarket
industry continued to consolidate, increasing the importance and purchasing power
of a few supermarket chains. We do not maintain any long-term contractual arrangements
for the sale of soft drinks and/or mineral water with any of our customers.

The following table shows the sales volume of our soft drinks and mineral water
by category during each of the last three years:

|Category          | 2001  | 2002           
(millions of liters) | 2003 
|----------------- | ----- | ------------------------------------ | -----
|                  |       |                                      |      
|Licensed          | 57.9  | 53.0                                 | 53.3 
|Non-colas         |       |                                      |      
|Proprietary       | 171.0 | 163.5                                | 158.7
|Licensed          | 89.0  | 94.7                                 | 106.4
|Nectars           | 22.5  | 28.2                                 | 34.0 
|                  |       |                                      |      
|Soft Drinks Total | 340.4 | 339.4                                | 352.3
|                  |       |                                      |      
|Mineral Waters    |       |                                      |      
|Cachantun         | 70.2  | 71.2                                 | 71.4 
|Porvenir          | 2.1   | 3.0                                  | 4.2  
|Purified Water    | 0.0   | 0.0                                  | 0.5  
|                  |       |                                      |      
|Total Waters      | 72.3  | 74.2                                 | 76.1 
|                  |       |                                      |      
|Total             | 412.7 | 413.6                                | 428.4
|                  |       |                                      |      

The following table shows the sales volume of our soft drinks by affiliation during each of the last three years:

|Affiliation | 2001  | 2002           
(millions of liters) | 2003 
|----------- | ----- | ------------------------------------ | -----
|            |       |                                      |      
|Proprietary | 171.0 | 163.5                                | 158.7
|Schweppes   | 77.6  | 84.1                                 | 96.2 
|PepsiCo     | 69.3  | 63.6                                 | 63.4 
|Watt's      | 22.5  | 28.2                                 | 34.0 
|            |       |                                      |      
|Total       | 340.4 | 339.4                                | 352.3
|            |       |                                      |      

The average price, based on December 2003 Chilean pesos, per
liter to our customers for soft drink products increased from an average of Ch$238
in 1999 to Ch$263 in 2003. The four-year compounded annual growth rate increased
0.8%. For mineral water products, the average price, based on December

33

2003 Chilean
  pesos, per liter decreased from an average of Ch$228 in 1999 to Ch$219 in 2003
  and experienced a four-year compounded annual growth rate of 1.0%.

Raw Materials.
The principal raw materials used in the production of soft drinks are water,
sugar, flavoring concentrate and in the case of carbonated products, carbon dioxide
gas. We generally purchase all of our sugar requirements from Empresas Iansa
S.A., the sole producer of sugar in Chile. However, we are not dependent on this
supplier, because we may purchase sugar in the international market at prices
similar to those in Chile, due to special customs duties. We purchase flavoring
concentrates for our licensed soft drinks brands from the respective licensing
companies. See  Our Soft
Drinks and Mineral Water Production and Marketing in Chile. Flavoring concentrates
for our proprietary brands are purchased from third party suppliers in Chile
and Germany, which manufacture the concentrates under contract with us. We obtain
carbon dioxide gas from local suppliers in Chile.

We also require
    fruit pulp, juices, citric acid, other artificial and natural flavors, and
    chemical substances.Although
    water does not represent a major raw material cost, it is nonetheless essential
    in the production of soft drinks. We obtain all of our water from wells located
    at our plants and/or from public utilities. The water is treated at facilities
    located at our plants to remove impurities and adjust the characteristics
    of the water before it is added in the production process.

We own two mineral water sources in Chile from which the Cachantun
and Porvenir brand mineral water products are obtained. These water sources are
located in two areas near Santiago: Coinco and Casablanca, respectively. All
of our mineral water products are bottled at their respective sources and distributed
throughout the country.

We maintain testing facilities at each of our plants in order
to analyze raw materials. Additionally, samples of soft drinks and mineral water
are inspected at various stages of production to ensure product quality.

We generally
purchase all of the glass bottles used in packaging soft drinks and mineral water
from the major supplier in Chile, Cristalerías
Chile. Other sources, principally in Argentina, Peru and Colombia, can be used
when price and delivery terms are favorable; however, no significant purchases
were made in either of these countries during 2003. While aluminum cans used
in packaging our soft drinks are generally purchased from a local supplier, we
produce most of our own plastic returnable and non-returnable bottles. See  Our
Other Businesses. We obtain the labels for our soft drinks and water products
principally from local suppliers. Crowns and plastic caps are principally purchased
from two suppliers in Chile.

Prices of principal raw materials used in soft drink production
in Chile are tied to the U.S. dollar and have not been volatile, except for the
polyethylene terephthalate, or PET, resins that depend on oil prices as well
as market factors.

We believe
that all of the contracts or other agreements between us and third party suppliers
with respect to the supply of raw materials for soft drinks and water products
contain standard and customary commercial terms and conditions. Without considering
the soft drinks concentrates purchased from Schweppes Holdings Ltd. and PepsiCo
under the license agreements described under  Our
Soft Drinks and Mineral Water Production and Marketing in Chile, we believe
we are not dependent on any one supplier for a significant portion of our raw
materials. Historically, we have experienced no significant difficulties in obtaining
adequate supplies of necessary raw materials at satisfactory prices and expect
that we will be able to continue to in the future.

Sales, Transportation and Distribution in Chile.
In some regions of Chile, including the areas of Santiago, Viña del Mar, Rancagua,
Melipilla, Arica, Concepción and other major cities in the south, ECUSA
manages its own sales force that is directly responsible for the exclusive servicing
of soft drinks and water clients. In October 1999, ECUSA began delivering its
products in Concepción through our logistic division (currently, Transportes
CCU Ltda.) while keeping its sales force separated. Due to its success, this
system was implemented in Valparaíso and Viña del Mar since July
2000 and in Santiago since October 2001, through Transportes CCU Ltda., the entity
in charge of delivering all of our products throughout Chile. The ECUSA sales
force directly sells to approximately 67,000 customers, accounting for 86.4%
of our total soft drink and

34

mineral water
    sales by volume in Chile in 2003. The area served by ECUSA accounts for approximately
    77% of the Chilean population. In the outlying northern and southern regions
    of Chile, ECUSA has contracted the sales services of our beer division, which
    sells soft drinks and mineral water products both exclusively and in connection
    with the sales of our beer and wine products. Such sales accounted for the
    remaining 13.6% of our total soft drinks and mineral water sales by volume
    in Chile in 2003. Since April 2004, the beer division sells soft drink products
    only in the rural areas, representing approximately 7% of the total soft
    drink and mineral water sales by volume in Chile.

Our Chilean soft drinks and mineral water customers make payments
for our products either in cash at the time of delivery or in accordance with
one of our various credit arrangements. Payment on credit sales is generally
due 30 days from the date of delivery. Credit sales accounted for 30.3% and 35.8%
of ECUSA's soft drink and mineral water sales to third parties in Chile in 2002
and 2003, respectively. Losses on credit sales of soft drinks and mineral water
in Chile have not been significant.

Seasonality in Chile.Due to the seasonality of sales
for both soft drinks and mineral water products, our sales and production volumes
are normally at their lowest in the second and third calendar quarters and at
their highest in the first and fourth calendar quarters (i.e., those months corresponding
to holidays and summer vacation season in Chile).

The following table shows our annual sales volume of soft drinks and mineral
water by quarter for the last three years:

|Soft Drinks & Mineral Water
|---------------------------
|                           
|Year                       
|                           
|2001                       
|                           
|                           
|                           
|                           
|                           
|                           
|                           
|2002                       
|                           
|                           
|                           
|                           
|                           
|                           
|                           
|2003                       
|                           
|                           
|                           
|                           
|                           
|                           

Competition in Chile.Our principal competitors in the
soft drink business are companies, which produce, bottle and distribute soft
drinks in Chile under licenses from The Coca-Cola Company and its affiliates.
The Coca-Cola Company's products are produced, bottled and distributed in Chile
through three separate licensees which market soft drinks under the Coca-Cola,
Coca-Cola Light, Fanta, Fanta Light, Sprite, Sprite Light, Quatro Balance, Nordic
Mist, Andina nectars and juices, and Kapo juice brand names. According to store
audits conducted by Nielsen, Coca-Cola and related brands accounted for approximately
65% of total carbonated soft drink net sales in 2003. However, calculations made
by us are higher than the Nielsen estimates. During 1998, a few supermarket chains
began selling soft drinks products under private labels. Additionally, discount
brand producers entered the market and represented, along with private labels,
approximately 12% of the soft drink market in 2003 according to Nielsen. However,
calculations made by us

35

are lower
    than the Nielsen estimates. Even though these brands are not a significant
    portion of the industry, they are expected to increase their presence in
    the future.

Since the formation of ECUSA, our market share has decreased
as a consequence of increasing marketing activity on the part of our competitors
and the entrance of private labels and discount brand producers to the market.
During 2003, our market share was approximately 20%, similar to the percentage
in 2002.

Our market share for our soft drink products over the last five years is presented
in the following table based on store audits conducted by Nielsen and our own
estimates . These Nielsen results are, for each year, higher than our own estimates.

|Our Chilean Soft Drink Market Share
|-----------------------------------
|                                   
|Year                               
|                                   
|1999                               
|2000                               
|2001                               
|2002                               
|2003                               
|                                   

Our domestic
competitors in the soft drinks business have benefited from both internationally
recognized brand labels (especially with regard to the Coca-Cola product line)
and a large number of local bottling companies distributing their products throughout
Chile. As a result of the formation of ECUSA, we also similarly benefited from
the internationally recognized Pepsi brand as well as our previous competitive
strengths, which include a portfolio of nationally well known brands and a nationwide
distribution system. Additionally, during 2002, we launched Bilz Light, Pap Light,
Agua Tónica
Light, Show Cherry and Gatorade, the world's number one isotonic drink. Gatorade
is classified as a functional product, since in addition to refreshing, it hydrates
the body and replenishes mineral salts lost during sports or other physical activities.
During January 2003, we launched Pepsi Twist and Pepsi Twist Light. In April
2003, we introduced to the market Kem Xtreme, a soft drink with a high level
of caffeine, that also is considered a functional product because it gives more
energy.

Given the high percentage of soft drink sales volume in returnable
containers coupled with the high cost of transportation to Chile, the market
for imported soft drinks in Chile is not significant and accounted for less than
1% of total sales by volume in 2003. While there are no legal barriers to entry,
we believe that the existing returnable bottle system and high transportation
costs may continue to deter potential competitors from exporting soft drinks
to Chile.

Fruit nectars
under the trade name Watt's, a segment of our
soft drink business, face competition from other liquid and powdered juices,
which are provided by a variety of local companies. After just four years from
the re-launch of Watt's nectar, we have attained our third year as market leader
in the bottled category of nectars and 100% fruit juices, with a market share
of 52% during 2003, according to Nielsen.

Our main competitor in the mineral water business is Vital S.A.
(a subsidiary of Embotelladora Andina S.A., one of The Coca-Cola Company licensees
in Chile). We estimate that our sales of Cachantun and Porvenir brand mineral
waters accounted for approximately 56%, while those of Vital S.A. products accounted
for approximately 35% of total mineral water sales by volume in 2003. Small domestic
bottlers, private labels, as well as imported mineral water products, comprise
the remaining 9% sales volume.

The following chart shows estimates of our mineral water market share for the
last five years based on store audits conducted by Nielsen and our own estimates.
These Nielsen results are, for each year, higher than our own estimates.

36

|     | Our Chilean Mineral Water Market Share
|---- | --------------------------------------
|     |                                       
|Year | Nielsen                               
|     |                                       
|1999 | 63%                                   
|2000 | 64%                                   
|2001 | 62%                                   
|2002 | 63%                                   
|2003 | 62%                                   

___________________


|(*) | Based
on our sales data, publicly available information from competitors, equity research
analyst reports, information from Nielsen and ANBER.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------

Our Wine Business



Overview. We entered the
Chilean wine market in October 1994 with the purchase of 48.4% of VSPs equity for
approximately Ch$13,777 million, thereby acquiring an interest in the third largest
winery in Chile. During the first half of 1995, VSPs capital was increased by
approximately Ch$11,512 million, of which we contributed approximately Ch$6,272 million.
During August-October 1997, VSPs capital was increased again by approximately Ch$9,363
million, of which we contributed approximately Ch$5,218 million, plus approximately
Ch$150 million in additional shares bought during October 1997 in the local stock market.
Furthermore, in October 1998 and during 1999, we purchased additional shares in VSP
through the local stock exchanges for an amount of approximately Ch$4,358 million.
During March-June 1999, VSPs capital was increased by approximately Ch$13,773 million,
of which we contributed approximately Ch$8,515 million. Between November 2000 and March
2001, VSPs capital was increased by approximately Ch$17,568 million, of which we
contributed approximately Ch$10,569 million. As a result of these activities, as of
December 31, 2003, our total ownership interest in VSP was 60.3%.

We believe that expansion
into the Chilean wine business provides us with the opportunity to further exploit our
nationwide distribution system through the expansion of our beverage portfolio.  We also
believe that further development of our domestic wine business may help reduce the
seasonality of our sales, as wine sales in Chile tend to be stronger during the winter
months when beer and soft drinks consumption decline.

The proceeds from VSPs
capital increase during 1995 were used to reduce debt, expand capacity and add new
hectares of vineyards in the Maipo Valley for producing premium red wines.  Part of VSPs
capital increases during 1997 was used to add new hectares of vineyards in Requinoa, Chépica
and Molina during 1997, and in Pencahue during 1998.  These purchases of land more than
doubled the number of hectares of our vineyards.  The winery also increased its total
vinification and wine storage capacity in both tanks and barrels from to 52.1 million
liters as of December 31, 1998, to 70.1 million liters as of December 31, 2003, as well
as its peak bottling and packaging capacity from 35,100 liters per hour in 1998 to 58,150
liters per hour as of December 31, 2003.  The capital increase in 1999, was used to pay
debts related to the winerys expansion process.  The proceeds from VSPs capital
increase during November 2000 and March 2001 were used to finance the winerys
acquisition of FLC, in Mendoza, Argentina, to plant the hectares of this new winery and
improve its production facilities, as well as to refinance debt.

In October 2001, VSP
signed a joint venture agreement with the French winery Château Dassault for the
production of super premium wines, mainly for the export market.  As a result of this
agreement we combined Château Dassaults vast experience in first-quality wine production
with VSPs knowledge of both the Chilean and Argentine markets, along with its extensive
international distribution network.

In December 2001, Viña
Santa Helena, or VSH, created its own commercial and productive winemaking operation,
distinct from its parent, VSP, under the Viña Santa Helena label in the Colchagua Valley.

37

In Argentina, we sell a
small amount of wine, which generated net sales of Ch$1,637 million, Ch$260 million and
Ch$1,356 million in 2001, 2002 and 2003, respectively.  These sales represented less than
0.5% of our total net sales each year.  The increase in wine sales in 2003 was due to the
consolidation of FLC on VSPs financial statements since January 2003.

VSP is a publicly traded
company that, at December 31, 2003, had a market capitalization of Ch$117,918 million.
 VSP shares trade on the Santiago Stock Exchange, the Valparaíso Stock Exchange and the
Chile Electronic Stock Exchange.

The Chilean Wine Market.
We estimate that wine consumption in Chile amounted to approximately 19 liters per
capita in 2003. Given that the Chilean wine industry is fragmented, no single wine
producer accounts for the majority of production and/or sales. The leading wineries
include Viña Concha y Toro S.A., or Concha y Toro, Viña Santa Rita S.A., or Santa Rita,
VSP and Bodegas y Viñedos Santa Carolina S.A., or Santa Carolina. In addition, there are
numerous medium-sized wineries, including Viña Undurraga S.A., or Undurraga, Cousiño
Macul S.A., or Cousiño Macul, Viña Cánepa y Cía., or Cánepa and Viña Tarapacá S.A., or
Tarapacá. All wineries, which sell wine products that comply with industry and tax
regulations, make up Chiles formal wine market. VSP is a member of the formal wine
market, as are most other principal wineries in Chile. The SAG is the entity in charge
of wine industry regulation and principally oversees inventory records and product
quality. Small wine producers that do not comply with industry and tax regulations (a
19% value added excise tax and an additional 15% alcohol excise tax) comprise Chiles informal
market. We estimate that the informal market wineries produced and sold approximately
10 million liters of wine during 2003 as compared to 287 million liters by the producers
in the formal wine market.

The following chart shows
our estimates for the formal wine market and per capita consumption levels for wine in
Chile for the years 1999 through 2003:

|Year | Total Volume (1)     | Per Capita (2)
|---- | -------------------- | --------------
|     |                      |               
|     | (millions of liters) | (liters)      
|1999 | 235                  | 16            
|2000 | 240                  | 16            
|2001 | 257                  | 17            
|2002 | 263                  | 17            
|2003 | 287                  | 19            

___________________


Sources: SAG, Central
Bank and the Wineries of Chile Association


|(1) | Includes
wine sales from pisco producers in the III and IV Regions of Chile.
|--- | ----------------------------------------------------------------------------

|(2) | Population
estimated in accordance with the national census of April 2002.
|--- | --------------------------------------------------------------------------

Wines in Chile can be
segmented by product type.  Chilean wineries produce and sell premium, varietals and
popular-priced wines within the domestic market.  Premium wines and many of the varietal
wines are produced from high quality grapes, aged and packaged in glass bottles.
 Popular-priced wines are usually produced using non-varietal grapes and are not aged.
 These products are generally sold in either cartons or jug packaging.

VSPs Production and
Marketing.  VSP was founded in 1865.  Its principal vineyards are located in Molina,
approximately 200 kilometers south of Santiago.  The VSP estate in Molina is one of the
largest single-site vineyards in Chile with an area of 1,160 hectares.  As of December
31, 2003, VSPs vineyards covered an aggregate of 2,500 hectares in Chile, distributed
among 8 different plantations, including additional property acquired in Requinoa, Chépica,
Molina and Pencahue.  The winery also has 600 hectares under long-term lease.  In
Argentina, FLCs vineyards are located in San Carlos, Mendoza, with an area of 400
hectares.

38

VSP is one of Chiles
largest producers and distributors of wine in terms of sales volume and net sales.  In
2001, 2002 and 2003 our wine segment sales amounted to Ch$70,288 million, Ch$75,909
million and Ch$82,568 million representing 18.8%, 21.7% and 21.5% of our total net sales,
respectively.  The above net sales figures for wine include exports of bulk wine which
amounted to Ch$1,912 million, Ch$2,212 million and Ch$5,798 million in 2001, 2002 and
2003, respectively.

The following chart
indicates the breakdown of VSPs volume in the domestic and export markets:

|Year     | Domestic Volume  | Export Volume    | Total Volume    
|-------- | ---------------- | ---------------- | ----------------
|         |                  |                  |                 
|         | (million liters) | (million liters) | (million liters)
|1999     | 28.7             | 27.7             | 56.4            
|2000     | 32.1             | 33.8             | 65.9            
|2001     | 42.8             | 40.9             | 83.7            
|2002     | 51.2             | 45.0             | 96.1            
|2003 (*) | 52.9             | 67.7             | 120.5           

___________________


|(*) | Includes
sales of FLC.
|--- | ----------------------



We estimate that VSPs
share by volume of Chiles formal wine market was approximately 17% in 2001, 19% in 2002
and 18% in 2003.  According to the Wineries of Chile Association, VSPs share of Chiles
total wine export sales by volume was 13% in 2001, 2002 and 2003.  Specifically, in 1998,
VSP became the second largest exporter of Chilean wines measured by both volume and
revenues.

VSP, VSH and FLC produce
and market premium, varietal and popular-priced wines as set forth below:

|Brand                    | Premium | Varietal | Popular-priced
|------------------------ | ------- | -------- | --------------
|                         |         |          |               
|                         |         |          |               
|Viña San Pedro           |         |          |               
|Cabo de Hornos           | X       |          |               
|1865                     | X       |          |               
|Late Harvest             | X       |          |               
|Castillo de Molina       | X       | X        |               
|35 South                 |         | X        |               
|Las Encinas              | X       |          |               
|Urmeneta                 |         | X        |               
|Gato                     |         | X        | X             
|Etiqueta Dorada          |         |          | X             
|Viña Santa Helena        |         |          |               
|Selección del Directorio | X       |          |               
|Siglo de Oro             |         | X        |               
|Gran Vino                |         | X        | X             
|Tradición de Familia     |         |          | X             
|Finca La Celia           |         |          |               
|La Celia                 | X       |          |               
|La Consulta              |         | X        |               
|Angaro                   |         | X        |               
|Magallanes               |         | X        |               
|Don Eugenio              | X       |          |               
|Amancay                  |         | X        |               
|Altivo                   |         | X        |               
|Furia                    |         |          | X             

The following table
presents our breakdown of total sales volume in thousands of liters by category of VSPs
Chilean wines during 2003:

39

|Category       | Domestic              | Export | Total  
|-------------- | --------------------- | ------ | -------
|               |                       |        |        
|               | (thousands of liters)
|Premium        | 371                   | 2,842  | 3,213  
|Varietal       | 326                   | 6,372  | 6,698  
|Popular-Priced | 49,596                | 31,970 | 81,566 
|Bulk           | -                     | 9,676  | 9,676  
|               |                       |        |        
|Total          | 50,293                | 50,860 | 101,153
|               |                       |        |        

The following table
presents our breakdown of total sales volume in thousands of liters by category of VSPs
Argentine wines during 2003:

|Category       | Domestic              | Export | Total 
|-------------- | --------------------- | ------ | ------
|               |                       |        |       
|               | (thousands of liters)
|Premium        | 16                    | 162    | 178   
|Varietal       | 65                    | 225    | 290   
|Popular-Priced | 1,729                 | 1,614  | 3,343 
|Bulk           | 749                   | 14,823 | 15,572
|               |                       |        |       
|Total          | 2,559                 | 16,824 | 19,383
|               |                       |        |       

As of December 31, 2003,
VSPs storage capacity totaled 70.1 million liters and its peak bottling and packaging
capacity totaled 58,150 liters per hour.

Domestic Market.
 Our Chilean domestic wine is packaged in bottles, jugs, cartons, and bag-in-box
containers at VSPs production facilities in Lontué and Molina.  The following chart
shows our packaging mix for domestic wine sales in 2001, 2002 and 2003:

|              | Percentage of Total Domestic
|------------- | ----------------------------
|              | Wine Sold in Chile          
|              |                             
|Container     | 2001                        
|              |                             
|              |                             
|Carton        | 83%                         
|Jug           | 6%                          
|Glass Bottles | 11%                         
|Bag-in-Box    | 1%                          
|              |                             
|Total         | 100%                        
|              |                             

In 2002 and 2003, VSP
obtained all of its glass bottles, carton package containers and jugs from third party
suppliers.  See  Raw Materials.

Beer is the principal
substitute product for wine in Chile.  In addition, our wine products may also compete
with other alcoholic beverages, such as spirits (mainly pisco), and with non-alcoholic
beverages, such as soft drinks and juices.

The average price, based
on December 2003 Chilean pesos, for our domestic wine customers was Ch$664 and Ch$466 per
liter in 1999 and 2003, respectively, experiencing a negative four-year compounded annual
growth rate of 8.5%.  This price decrease is mainly explained by larger grape harvests,
which increased the wine supply.

Export Market.
 According to industry sources, exports of Chilean wine (excluding champagne) increased
from approximately 43 million liters in 1990 to 394 million liters in 2003, at a
compounded annual growth rate of 18.6%.  During 2002 and 2003, Chilean wine exports
reached 347 million liters and 394 million liters,

40

respectively.
    We believe that Chilean wine exports have grown steadily due to their comparatively
    low prices and positive international image, as well as due to external factors,
    such as low wine production in the Northern Hemisphere in certain years.
    During 2003, total Chilean wine exports increased 13.5% by volume.

VSP exported 40.9 million
liters, 45.0 million liters and 67.7 million liters of wine in 2001, 2002 and 2003,
respectively.  During 2003, VSP exported wine to 70 countries worldwide.  These exports
accounted for net sales of Ch$46,367 million, Ch$51,235 million and Ch$57,333 million in
2001, 2002 and 2003, respectively.  In 2003, VSPs primary export markets included the
United Kingdom, Sweden, the United States, Denmark and Japan.

Most exported wine is
sold in glass bottles, except for a certain quantity of unbranded wine that is
occasionally sold in bulk and the amount that is sold in carton containers.  The
following chart shows our packaging mix for export Chilean wine volume in 2001, 2002 and
2003:

|                  | Percentage of Total Export
|----------------- | --------------------------
|                  | Wine Volume from Chile    
|                  |                           
|Container         | 2001                      
|                  |                           
|Glass Bottles (1) | 70%                       
|Bulk              | 14%                       
|Carton (2)        | 15%                       
|                  |                           
|Total             | 100%                      
|                  |                           

___________________


|(1) | Includes
jugs
|--- | -------------

|(2) | Includes
Bag-in-Box
|--- | -------------------

We experienced a negative
four-year compounded annual growth rate of 4.9% from Ch$1,234 in 1999 to Ch$1,011 per
liter in 2003 in the average price, based on December 2003 Chilean pesos, to our Chilean
export wine customers.

Raw Materials.
 The principal raw materials that VSP uses in its production process are purchased and
harvested grapes, purchased wine, bottles, carton containers, corks and cardboard boxes.
 VSP obtained approximately 42% of the grapes used for export wines from its own
vineyards during 2003.  The majority of the wine sold in the domestic market is purchased
from third parties, tested to assure compliance with our quality standards, and blended
at the winery before packaging.  In 2003, approximately 67% of wine for domestic sale was
purchased from seven local producers:  Corretajes Torres y Cía. Ltda., Empresas Lourdes
S.A., Sociedad Comercial y Vitivinícola Los Maitenes y Cía Ltda., Cooperativa Agrícola y
Vitivinícola Loncomilla Ltda., Sociedad Agrícola Hacienda Mal Paso y Cía. Ltda.,
Cooperativa Agrícola Pisquera Elqui Ltda. and Agrícola El Milagro Ltda.  VSP has various
alternative sources of supply, which can be used when they are attractive.  VSPs bottles
are principally purchased from Cristalerías Chile; however, when prices have been
favorable, VSP has purchased bottles from other suppliers.  Carton containers are
purchased either from Tetra Pak de Chile Comercial Ltda. or from SIG Combibloc Inc. and
are assembled in VSPs own automated packing lines.

Prices of principal raw
materials used in wine production in Chile have not been volatile.  However, from time to
time, prices of grapes and wine vary depending on demand and supply factors.

Domestic Sales,
Transportation and Distribution.  After production, bottling, and packaging, wine is
either stored at the production facilities or transported to one of the 16 warehouses.
 The warehouses are part of our warehouse network and are located throughout Chile.  VSP
wines used to be distributed and sold in Chile through our sales and distribution
network, under the same system and payment terms as our beer products.  In May 2000, VSP
organized a new sales force to directly offer its products in the city of Concepción.
 However, it continued delivering the products through our beer distribution network.
 After the success of this new system, it was implemented in the cities of Viña del Mar
and Valparaíso in November 2000, and in Santiago in May 2001.  This system was further
implemented in the cities of Temuco, Chillán,

41

Los Angeles and
    Valdivia. See  Our Beer
  Business  Our Beer Business in Chile  Sales, Transportation and Distribution.

We directly distribute
our wine products throughout Chile to:

- off-premise
retail: small and medium sized retail outlets, which in turn sell beer to consumers for
take-out consumption;
- on-premise
retail: retail establishments such as restaurants, hotels and bars for on-premise
consumption;
- wholesalers;
and
- supermarket
chains.

In 2001, 2002 and 2003,
the percentage mix of the above distribution channels for our wine products in Chile was
as follows:

|                      | Percentage of Total Wine Products Sold
|--------------------- | --------------------------------------
|                      |                                       
|Distribution Channels | 2001                                  
|                      |                                       
|Off-premise retail    | 33%                                   
|On-premise retail     | 8%                                    
|Wholesalers           | 20%                                   
|Supermarkets          | 39%                                   
|                      |                                       
|Total                 | 100%                                  
|                      |                                       

We had approximately
17,700 customers for our wine products at December 31, 2003, none of which accounted for
more than 3% of our total wine sales by volume, with the exception of two supermarket
chains that represented 17%.  During 2004, the Chilean supermarket industry continued to
consolidate, increasing the importance and purchasing power of a few supermarket chains.
 We do not maintain any long-term contractual arrangements for the sale of wine with any
of our customers.

Export Sales,
Transportation and Distribution.  Internationally, VSP has arrangements with 214
agents who facilitate the export of its wine to 70 countries.  We have signed
distribution agreements with Schenk, one of the largest distributors in Europe, Asian
Breweries, one of the largest beverage companies in Asia, and Shaw Ross International, a
subsidiary of Southern Wine and Spirits, the main liquor wholesale distributor for the
United States, as well as other distributors.  In 2002, we signed a distribution
agreement with the Swedish company Vin & Sprit AB, the owner of Absolut Vodka, to
distribute VSPs wines in Sweden, Finland, Norway and Estonia, improving our position in
those markets and taking advantage of synergies between both companies.

Geographical Markets.
 In Chile, Santiago and surrounding areas (referred to as the Metropolitan Region), which
account for approximately 41% of the Chilean population, represented approximately 45% of
total domestic sales of VSP products by volume in 2003.

The following table
provides the distribution of VSPs exports from Chile during 2003 by geographical markets:

|              |                       | Percentage      
|------------- | --------------------- | ----------------
|Market        | Volume                | of Total Exports
|              |                       |                 
|              | (thousands of liters)
|Europe        | 32,806                | 64.5%           
|South America | 6,537                 | 12.9%           
|North America | 5,741                 | 11.3%           
|Asia          | 5,485                 | 10.8%           
|Others        | 291                   | 0.6%            
|              |                       |                 
|Total         | 50,860                | 100.0%          
|              |                       |                 

42

Competition.  The
wine industry is highly competitive in both the domestic and the export markets.  VSPs
domestic market share was approximately 18% in 2003.  In Chile, VSP competes directly
against all other Chilean wineries.  We believe that VSPs primary domestic competitors,
Concha y Toro and Santa Rita, derive their relative competitive strengths from their wide
portfolio of products, well recognized brand names and established distribution networks.
 In 2003, Concha y Toro and Santa Rita had market shares of approximately 22% and 23%,
respectively.  VSP also competes with Santa Carolina and numerous medium-sized wineries,
including Undurraga, Cousiño Macul and Tarapacá, and many small wine producers that make
up Chiles informal market.

Internationally,
VSP competes against Chilean producers as well as with wine producers from other parts of
the world.  According to information compiled by the Wineries of Chile Association, VSP
is the second largest exporter of Chilean wines with a market share of approximately 13%
in 2003.  Our other principal Chilean competitors, namely Concha y Toro, Santa Rita and
Santa Carolina had market shares of 17%, 4% and 2%, respectively.

Our Other Businesses

Plastic Bottles

Through our subsidiary Fábrica
de Envases Plásticos S.A., or PLASCO, we own and operate a plastic bottle factory which
supplies most of the returnable and non-returnable plastic bottles used by us in the
packaging of, mainly, our soft drinks and mineral water products.

The manufacturing of both
returnable and non-returnable plastic bottles involves a two-step process.  The first
step consists of an injection molding process, which manufactures pre-forms from PET
resin.  The second step involves blowing plastic bottles from the molded pre-forms.  We
purchase resin and complete the two-step process in order to fulfill the majority of our
bottling requirements.  In some cases, we purchase pre-forms manufactured by third party
suppliers and complete only the bottle-blowing step at our own facilities.

Prices of principle raw
materials required by our PLASCO subsidiary have not been volatile except for the PET
resins that depend on oil prices as well as market factors.  However, from time to time,
prices of various materials vary depending on demand and supply factors.

In 2003, all returnable
and non-returnable plastic bottle requirements of ECUSA were supplied directly by PLASCO
with the exception of five-liter bottles, which are bought by ECUSA in small quantities
from third party suppliers.  During 2003, PLASCO sold 284.5 million bottles and pre-forms
of which, approximately 99.8% were plastic bottles and the remaining 0.2% were pre-forms.
 Of all bottles supplied by PLASCO, approximately 95.3% were manufactured by PLASCO into
pre-forms and then blown into bottles and approximately 3.4% were semi-manufactured by
PLASCO while a third party made the injection or the blowing processes.  The remaining
1.3% were bought by PLASCO and transferred to ECUSA.  PLASCO has, to date, not made any
bottle sales to third parties.

Plastic bottle and
pre-form sales decreased from 290.3 million in 2002 to 284.5 million in 2003.  Plastic
crate sales decreased by 37.3% from 0.3 million units in 2002 to 0.2 million units in
2003.  PLASCOs net sales of Ch$15,302 million and net income of Ch$1,449 million in 2003
represented a decrease of 0.5% and 7.9%, respectively, over 2002, due to a change in the
transfer price policy, which currently considers a return equal to its cost of capital.

Pisco

In February 2003, we
began selling a new product for our beverage portfolio, pisco, under the brand Ruta
Norte.  Pisco is a grape spirit very popular in Chile that is produced in the northern
part of the country and

43

the southern
    part of Peru. Our pisco is produced in the Elqui Valley in the IV Region
    of Chile and it is sold throughout the country by the beer division sales
    force. During 2003, we sold 3.2 million liters of pisco, obtaining an 8%
    market share according to the last Nielsen measurement done in 2003. During
    2003, we participated in the 35° of alcohol category, the larger of the pisco markets.  In January
  2004, we introduced Ruta Sour, a pisco sour ready to drink, a typical Chilean drink that
  combines pisco, lemon and sugar.

The principal raw
material used in the production of pisco is alcohol made from grapes.  Prices of alcohol
vary according to grape and wine prices, which depend on demand and supply factors.

Government
Regulation

Government
Regulation in Chile

We are subject to the
full range of governmental regulation and supervision generally applicable to companies
engaged in business in Chile.  These regulations include labor laws, social security
laws, public health, consumer protection and environmental laws, securities laws, and
anti-trust laws.  In addition, regulations exist to ensure healthy and safe conditions in
facilities for the production, bottling, and distribution of beverages.  As for
environmental laws, see  Environmental Matters.

Additional regulations
specifically concerning the production and distribution of alcoholic beverages are
contained in Chilean Law N° 18.455 and its Ordinance, which set the standards for human
consumption of such beverages, by minutely describing the different types of alcohol; the
minimum requirements that must be met by each class of beverage; raw materials and
additives that may be used in their manufacture; their packaging and the information that
must be provided by their labels; the procedure for their importation, among others.

The large-scale
production of alcoholic beverages does not need any licenses or permits other than those
required for the general run of commercial and industrial enterprises engaged in the
manufacture of consumer commodities.

On January 19, 2004 Law N° 19.925
was published, which amended and restated the Act on Sale and Consumption of Alcoholic
Beverages (former Law N° 17.105).

All establishments
dealing in alcoholic beverages, whether wholesale or retail, require a special municipal
license, the cost of which is fixed by the law and varies according to the nature of the
outlet or point of sale (i.e. liquor store, tavern, restaurant, hotel, warehouse, etc.).
 We are in possession of all licenses necessary for our wholesale operations.

Law N° 19.925 set new
opening and closing hours; limited geographical areas for the sale of alcohol; reduced
the maximum number of licenses to be granted by zones and population; increased criminal
liability for selling alcohol to persons under eighteen years of age; and tightened the
restrictions, imposing prison sentences and higher fines, for violations formerly deemed
lighter.  One of its most important innovations is to forbid the sale of alcohol to
minors at all outlets, and not just for on-premise drinking (the only exception retained
is the case of children who are served meals when accompanied by their parents).

The regulatory agency for
alcoholic beverages is the SAG (the Servicio Agrícola Ganadero, or Agricultural and
Livestock Service).

The production, bottling
and marketing of non-alcoholic beverages is subject to applicable sanitary legislation
and regulations, particularly the Sanitary Code and the Food Ordinance (the Reglamento
Sanitario de los Alimentos). These laws provided for supervision by the Servicios de
Salud(Health Services), which inspect plants on a regular basis and take samples for
analysis. On February 2004 Law N° 19.937 was published, setting up the new structure and
powers for the Sanitary Authority, which will become effective on January 1, 2005 and
will be fully operative no later than February 2006.

44

The production and
distribution of mineral water is also subject to special regulation.  Mineral water may
only be bottled directly from sources, which have been designated for such purpose by a
Supreme Decree signed by the President of Chile.  The competent Health Service provides a
certification of the data necessary to achieve such a designation.  All of our facilities
have received the required designation.

Independently of the
products manufactured or services provided in each plant or facility, the premises are
also regularly inspected by the health authorities, regarding sanitary and environmental
conditions, labor safety, and related matters.

There are currently no
material legal or administrative proceedings pending against us in Chile with respect to
any regulatory matter.  We believe that we are in compliance in all material respects
with all applicable statutory and administrative regulations with respect to our
businesses in Chile.

Government
Regulation in Argentina

We are subject to the
full range of governmental regulation and supervision generally applicable to companies
engaged in business in Argentina, including social security laws, public health, consumer
protection and environmental laws, securities laws, and anti-trust laws.

National Law 18,284 (the
Argentine Food Code, or the Code) regulates the manufacturing and packaging of food and
beverages.  The Code provides specific standards with which manufacturing plants must
comply and regulates the production of food and beverages mentioned in the Code.  The
Code also specifies the different methods in which beer may be bottled as well as the
information to be provided on labels.  The health authorities of each province undertake
the enforcement of the Code, and also establish the minimum age requirements for the
purchase of alcoholic beverages.  In general, no sale of alcoholic beverages is permitted
to persons under 18 years of age.  In the Federal Capital and many provinces of
Argentina, local law restricts the sale of alcoholic beverages, particularly between the
hours of 11 p.m. and 8 a.m., and establishes harsh penalties for infringement.  The
Argentine Congress continues to consider proposed legislation to improve enforcement of
drinking laws by establishing a minimum drinking age of 18 by federal law and limiting
the hours permitted for the advertisement of alcohol products on radio and television as
well as any content in such advertisement associating alcohol consumption with healthy
activities.

There are currently no
material legal or administrative proceedings pending against us in Argentina with respect
to any regulatory matter.  We believe that we are in compliance in all material respects
with all applicable statutory and administrative regulations with respect to our business
in Argentina.

45

Organizational
Structure

We are controlled by
IRSA, which owns 61.62% of the shares of our common stock.  IRSA, since 1986, was a joint
venture between Quiñenco and the Schörghuber Group through its wholly owed subsidiary FHI
of the Netherlands.  In 2003, FHI and Heineken International B.V. formed Heineken Chile
Ltda., through which 50% of IRSA shares are held.  On December 30, 2003, FHI merged into
Heineken Americas B.V.

In February 2001,
Bayerische BrauHolding A.G., a division of the Schörghuber Group, announced that it had
sold approximately 49% of its interest in IRSA to Heineken International B.V., the Dutch
brewer.  Due to the above, Quiñenco initiated legal actions alleging that the sale
represented a violation of the existing shareholders agreement with Bayerische
BrauHolding A.G. and FHI Finance Holding International B.V.  On January 14, 2003, Quiñenco
announced that it had reached an agreement ending its disputes with the Schörghuber
Group, its joint venture partner in IRSA, which included amending the IRSA shareholders agreement.
 As reported by Quiñenco, on April 17, 2003, in accordance with the new terms and
conditions of the amended shareholders agreement, the Schörghuber Group gave Quiñenco
formal notice of the sale of 100% of its interest in FHI to Heineken Americas B.V., a
subsidiary of Heineken International B.V.  Currently, Quiñenco and Heineken Chile
Limitada, a Chilean limited corporation controlled by Heineken Americas B.V., are the
only shareholders of IRSA, each with a 50% equity interest.  The terms of the agreement
also specified that IRSA would propose to our board of directors that we submit for
consideration to our shareholders a dividend distribution equivalent to 100% of our 2002
earnings plus an extraordinary dividend distribution against our retained earnings
amounting to Ch$168,700 million (historic value), to be paid within 180 days of the board
agreement in single or multiple distributions.

Additionally, as part of
the agreement reached, Southern Breweries Establishment, a 50% subsidiary of ours at that
time, agreed to sell its interest in the Croatian brewery, Karlovacka Pivovara d.d., to a
wholly-owned subsidiary of Heineken International at a sale price equivalent to ten times
its annual earnings from operations.

46

Pursuant to an
extraordinary shareholders meeting held on February 26, 2003, we approved the payment,
out of retained earnings, of an extraordinary dividend amounting to Ch$168,700 million
(historic value), to be fully paid in multiple distributions.  See Item 8: Financial
Information  Dividend Policy and Dividends.  Further, on March 31, 2003, SBE sold its
interest in Karlovacka to Heineken Adria d.o.o, a subsidiary of Heineken International,
generating a profit of Ch$20,114 million, subject to certain post-closing contingent
payments.  On April 10, 2003, Compañía Cervecerías Unidas S.A., Cayman Islands Branch,
bought the remaining 50% interest of SBE from Lanzville Investments Establishment, which
became a wholly-owned subsidiary of ours.

Quiñenco S.A. is a
Chilean holding company engaged in a wide range of business activities in Chile and
countries of the Southern Cone and Mercosur regions, including Brazil, Argentina and
Peru.  Quiñencos principal holdings include, among others, Madeco S.A. (a leading
manufacturer of copper and aluminum-based products in Chile, Brazil, Argentina and Peru),
Compañía Nacional de Teléfonos - Telefónica del Sur S.A. (a leading provider of local
telephone service in southern Chile), Banco de Chile (one of the largest and most
respected banks in Chile, consolidating in this entity all of Quiñencos investments in
the financial sector), and Habitaria S.A. (a developer of residential real estate in
Chile).

Heineken, the Dutch
brewer, is one of the largest brewers in the world with operations in more than 170
countries and 61,271 employees worldwide.  Heineken sold 109 million hectoliters of beer
during 2003, the main brands being Heineken and Amstel.  In 2003, Heineken had more than
115 breweries in over 65 countries.  Approximately 60% of its sales are made in Western
Europe.

The following table
provides our significant subsidiaries as of May 31, 2004:

|Subsidiaries    | Country   | Owner Interest
|--------------- | --------- | --------------
|                |           |               
|CCU Chile       | Chile     | 99.99         
|CCU Argentina   | Argentina | 89.22         
|ECUSA           | Chile     | 99.94         
|VSP             | Chile     | 60.33         
|PLASCO          | Chile     | 99.99         
|Transportes CCU | Chile     | 99.99         
|Pisconor        | Chile     | 99.99         

Property, Plant
and Equipment

Set forth below is
information concerning our production facilities as of December 31, 2003, all of which
are owned and operated by us or our subsidiaries:

|                                 | Nominal Installed Monthly Production Capacity (in million liters) | Utilized Capacity During Peak Month (1) | Average Utilized Capacity During 2003 (2)
|-------------------------------- | ----------------------------------------------------------------- | --------------------------------------- | -----------------------------------------
|                                 |                                                                   |                                         |                                          
|Beer Production Facilities       |                                                                   |                                         |                                          
|Santiago                         | 43.3                                                              | 77.6%                                   | 57.8%                                    
|Antofagasta (3)                  | 4.1                                                               | 72.4%                                   | 58.0%                                    
|Temuco                           | 12.0                                                              | 75.4%                                   | 56.6%                                    
|                                 |                                                                  
|Chile Total                      | 59.4                                                              | 76.8%                                   | 57.5%                                    
|                                 |                                                                  
|                                 |                                                                   |                                         |                                          
|Santa Fe                         | 23.0                                                              | 88.6%                                   | 66.0%                                    
|Salta                            | 3.5                                                               | 85.9%                                   | 63.3%                                    
|                                 |                                                                  
|Argentina Total                  | 26.4                                                              | 88.3%                                   | 65.6%                                    
|                                 |                                                                  
|                                 |                                                                   |                                         |                                          
|Soft Drink Production Facilities |                                                                   |                                         |                                          
|Santiago                         | 66.5                                                              | 51.1%                                   | 41.3%                                    

47

|Talcahuano                          | 17.5 | 34.7% | 24.2%
|----------------------------------- | ---- | ----- | -----
|Antofagasta                         | 9.8  | 13.5% | 10.4%
|                                    |     
|Total                               | 93.8 | 44.1% | 34.9%
|                                    |     
|                                    |      |       |      
|Mineral Water Production Facilities |      |       |      
|Coinco                              | 21.0 | 45.0% | 30.3%
|Casablanca                          | 2.0  | 24.2% | 19.9%
|                                    |     
|Total                               | 23.0 | 44.1% | 29.4%
|                                    |     

___________________


|(1) | Based
on the year ended December 31, 2003.  Utilized Capacity During Peak Month is equal to
production output as a percentage of Nominal Installed Production Capacity during our
peak month for each respective plant.  The implicit        slack (spare) capacity does
not necessarily measure real slack capacity.  We believe that real production capacity is
less than the nominal installed production capacity as adjustments are required for real
machinery performance,        packaging mix, availability of raw materials and bottles,
seasonality within the months and other factors.  As a result, we believe that the peak
monthly capacity utilization rates shown above understate real capacity utilization
       and that slack capacity is overstated.  We estimate that during the peak month in
2003, the real slack capacity amounted to approximately 11.9 million liters in Chilean
beer, 1.8 million liters in Argentine beer, 19.6 million        liters in soft drinks and
6.8 million liters in Chilean mineral water.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Average
Utilized Capacity during 2003 equals the plants total production output as a percentage
of nominal installed annual production capacity in 2003.  Nominal installed annual
production capacity is calculated by multiplying the        Nominal Installed Monthly
Production Capacity by 11 months (on average, a one month period is required each year
for maintenance and repairs).  Given the seasonal nature of our beer production and
sales, these figures        underestimate capacity utilization during peak months.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Information
represents bottling capacity
|--- | ----------------------------------------

Our installed
vinification and storage capacity is shown in the table below:

|                           | Installed Vinification | Storage Capacity in Tanks
|-------------------------- | ---------------------- | -------------------------
|                           | Capacity               | and Barrels              
|                           | (millions liters)      | (millions liters)        
|                           |                        |                          
|Wine Production Facilities |                        |                          
|Lontué                     | 0.0                    | 14.0                     
|Molina                     | 23.0                   | 38.9                     
|Santa Helena               | 8.0                    | 10.8                     
|                           |                        |                          
|Chile Total                | 31.0                   | 63.7                     
|                           |                        |                          
|                           |                        |                          
|Finca La Celia             | 4.8                    | 6.4                      
|                           |                        |                          
|Argentina Total            | 4.8                    | 6.4                      
|                           |                        |                          

As of December 31, 2003,
VSP had a nominal filling capacity of 34,500 liters per hour at its Lontué plant, a
bottling capacity of 18,900 liters per hour at its Molina plant and , a bottling capacity
of 2,250 liters per hour at its Viña Santa Helena plant.  At Finca La Celia in Argentina,
VSP had a nominal filling capacity of 2,500 liters per hour.

Our only outstanding
encumbrance is a mortgage in favor of Banco del Estado de Chile, which includes the
prohibition to encumbrance, lease, transfer, sell or dispose of Viña San Pedros tenant Hacienda
La Patagua and Fundo La Aguada , both located in the Talca province, and their
respective water rights, as evidenced in a public deed dated September 25, 2000, executed
before the notary public of Santiago, Chile, Mr. Gonzalo de la Cuadra.  The guarantee
expires upon final payment in 2007 of the loan secured thereby.

48

Environmental
Matters

Chile

Our operations are
subject to both national and local regulations in Chile relating to the protection of the
environment.  Regarding the human health, the fundamental law in Chile is the Health
Code, which establishes minimum health standards and regulates air and water quality, as
well as sanitary landfills.  The local Health Services are the governmental agencies
entitled to the enforcement of these rules and have the authority to impose fines.

The environmental
framework is given by Law N°19,300, enacted in 1994, as amended, which includes not only
environmental protection rules but also ones concerning the preservation of natural
resources.  Among other matters, it creates the environmental impact assessment system
which requires any future project or major amendment of an existing activity that may
affect the environment to evaluate the possible impacts, in order to fulfill related
regulations and to implement mitigation, compensation and restoration measures.  Our
latest projects have been successfully submitted to this system, where the environmental
national public entity, the National Environmental Commission, have given the respective
authorizations.

The Law N° 19,300 also
creates a mechanism of point sources emission limits and environmental quality standards
that are developed and detailed by specific regulations.  In this sense, there is a
special regulation for wastewater discharges into sewage system, and another regulation
for wastewater discharges into superficial water bodies, in both cases pursuant to a
schedule of deadlines.  In all material respects, we are in compliance with the Act and
the regulations, having fulfilled at each relevant stage all requirements prescribed by
them.

Due to the high levels of
air pollution in the Santiago metropolitan area, the  Administration has implemented a
decontamination plan, which includes different levels of air quality, and certain
measures that can be imposed to industries.  In case of emergency situations, those
companies comprising the industries classified as producing the highest emissions of
particle and gas emissions must suspend their activities.  In all material respects, we
comply with current regulations applicable to both our beer and soft drink facilities in
the Santiago metropolitan area.

There are currently no
material legal or administrative proceedings pending against us in Chile with respect to
any environmental matter.  We believe that we are in compliance in all material respects
with all applicable environmental regulations.

Argentina

New laws and regulations
are being enacted in Argentina as a result of heightened community concerns for
environmental issues.  As a consequence, there are several statutes imposing obligations
on companies regarding environmental matters at the federal, provincial, and municipal
levels.  On many occasions, private entities operating public utilities such as water
supply and sewage, are in charge of controlling and enforcing those regulations.  Many of
these regulations have been recently enacted and little precedent exists as to their
scope.

The most important
environmental statute in Argentina is the Hazardous Waste Act (Law 24,051) which,
although a federal law, has been strictly adhered to in no more than three provinces.
 When certain federal tests indicate the need, the provisions of the Hazardous Waste Act
are enforced.  The application of the provisions of the Hazardous Waste Act are applied
depending upon the magnitude of the public health risk and whether those conditions exist
in more than one province.  Hazardous waste is defined so as to cover any residue that
may cause harm, directly or indirectly, to human beings that may pollute the soil, water,
atmosphere or the environment in general.  Generally, claims involving hazardous waste
give rise to strict liability in the event of damage to third parties.  In addition, each
province in which we operate facilities has

49

enacted environmental
    legislation with broad and generic goals, as well as water codes and related
    agencies to regulate the use of water and the disposal of effluents in the
    water.

In November 1999, the
province of Santa Fe approved the Environmental and Sustainable Development Act (Law
11,717).  This Act regulates all the environmental issues in this province.  In November
2002, the Federal Congress approved the General Environmental Act (Law 25,675),
enforceable throughout the country.  This law prevails over all provincial and municipal
laws and regulations.  CCU Argentina complies with all the environmental Argentine laws,
rules and regulations.

In the year 2000, CCU
Argentina invested US$1.2 million to install a wastewater treatment plant.  The plant is
designed to treat 140 cubic meters per hour of liquid residuals and generates 260 cubic
meters of biogas, which is used as boiler fuel.  The main features of this plant are its
minimum space requirements and its low electric power consumption, which make it
perfectly suitable for the urban context where it is located.

In the year 2002, CCU
Argentina implemented a complete program for the treatment of its solid waste, which
involves the separation, collection, and reuse of such waste.  This program is part of
our constant effort to improve environment-related conditions.

The regulation of matters
related to the protection of the environment is not as well developed in Argentina as in
the United States and certain other countries.  Accordingly, we anticipate that
additional laws and regulations will be enacted over time with respect to environmental
matters.  While we believe that we will continue to be in compliance with all applicable
environmental regulation, there can be no assurance that future legislative or regulatory
developments will not impose restrictions on us, which could result in material adverse
effects.

Table of Contents

ITEM 5: Operating
and Financial Review and Prospects

Overview

We are a diversified
beverage company operating principally in Chile and Argentina.  We are the largest
brewery in Chile, the second largest brewery in Argentina, the third largest soft drinks
producer in Chile, the largest mineral water and bottled nectar producer in Chile, the
second largest wine producer in Chile and the third largest pisco producer in Chile.  Our
beer and soft drink products include a wide range of proprietary, licensed and imported
brands.

We face certain key
challenges and risks associated with our business.  These risks include competition
within the market place, managing operating costs and the integration and expansion of
new products.  We currently have approximately 89% of the Chilean beer market; however,
competitors are investing in this market and we must concentrate on competitive pricing
and marketing strategies to maintain our market share.  Operating costs are subject to
variations depending on plant efficiency, product mix and production cycles.  Our main
costs include cost of raw materials, distribution and marketing costs.  We continue to
sell and deliver new products to our customers, including existing products through new
licensing agreements and new products through internal development.

In 2003 we reached
historical records in sales volumes and net sales revenues, obtaining a net income of
Ch$54,088 million.  We had consolidated net sales of Ch$384,064 million, of which 39.0%
was accounted for by our beer sales in Chile, 8.2% by our beer sales in Argentina, 30.0%
by our soft drinks, nectar and mineral water sales in Chile, 21.5% by wine sales and the
remainder by sales of other products.  Our sales increased 10.2% over the prior year as
we increased sales of existing products, incorporated new lines of beer into our
portfolio and introduced new products into the market including pisco for the first time
in 2003.  Operating income and margins increased as we managed costs, while net income
increased significantly

50

due primarily
    to a one time gain associated with the sale of our indirect interest in the
    Croatian brewery Karlovacka Pivovara d.d.

Outlook. We had a very
successful 2003. We believe that our entrance in 2003 into the pisco business, our
exploration of the readytoeat industry with ECUSAs entrance to the confectionery
business, the incorporation of Heineken beer into our portfolios in Chile and Argentina,
and the improvement in the economic situation of Chile and Argentina, position us well
for future growth.

Operating Results

The following discussion
should be read in conjunction with our consolidated financial statements and the notes
thereto included in this annual report.  As discussed below, our consolidated financial
statements have been restated to recognize certain effects of inflation.  In the
following discussion, Chilean peso amounts have been rounded to the nearest million
pesos, unless otherwise indicated.  Certain amounts (including percentage amounts) which
appear herein have been rounded and may not sum exactly to the totals shown.

We prepare our financial
statements in accordance with Chilean GAAP, which differs in certain important respects
from U.S. GAAP.  Note 25 to the consolidated financial statements provides a description
of the principal differences between Chilean GAAP and U.S. GAAP as they relate to us and
a reconciliation to U.S. GAAP of net income and total shareholders equity for the years
ended December 31, 2001, 2002 and 2003.  Although Chilean inflation was moderate during
the periods covered by the consolidated financial statements, as discussed below, Chile
has experienced high levels of inflation in the past.  Chilean GAAP requires that our
consolidated financial statements recognize certain effects of inflation.  Accordingly,
except where otherwise indicated, financial data have been restated in constant pesos of
December 31, 2003 purchasing power.

The following table
presents the net sales and operating income, and related percentage as a component of net
sales, for each of our product segments, expressed in millions of Chilean pesos as of
December 31, 2003:

|                           | Year Ended December 31,              
|-------------------------- | -------------------------------------
|                           | 2001                                 
|Net Sales                  | (millions of Ch$, except percentages)
|Beer Chile Segment (1)     | Ch$ 135,234                          
|Beer Argentina Segment (1) | 55,271                               
|Soft Drinks and Mineral    |                                      
|Water Segment (2)          | 112,862                              
|Wine Segment (3)           | 70,288                               
|Other (4)                  | 433                                  
|                           |                                      
|Total                      | Ch$374,088                           
|                           |                                      
|Operating Income           |                                      
|Beer Chile Segment (1)     | Ch$30,054                            
|Beer Argentina Segment (1) | (7,059)                              
|Soft Drinks and Mineral    |                                      
|Water Segment (2)          | 8,878                                
|Wine Segment (3)           | 9,676                                
|Other (4)                  | 3,862                                
|                           |                                      
|Total                      | Ch$45,411                            
|                           |                                      

___________________


|(1) | Includes
sales of beer, beer by-products and other products such as malt, spent grain and yeast.
|--- | ------------------------------------------------------------------------------------------------

|(2) | Includes
sales of carbonated and non-carbonated soft drinks, nectar, mineral water and related
           merchandise.
|--- | ----------------------------------------------------------------------------------------------------------------------

|(3) | Includes
sales of wine, by-products and other products such as labels and corks.
|--- | --------------------------------------------------------------------------------

|(4) | Includes
sales of crates and other packaging for all years presented, and pisco beginning in 2003.
|--- | --------------------------------------------------------------------------------------------------

51

The following table
presents operating results in millions of pesos and as a percentage of net sales:

|                                                      | Year Ended December 31,                                    
|----------------------------------------------------- | -----------------------------------------------------------
|                                                      | 2001                                                       
|                                                      | (millions of Ch$, except percentages and sales volume data)
|Net Sales                                             | Ch$374,088                                                 
|Cost of Sales                                         | (176,934)                                                  
|                                                      |                                                            
|Gross Profit                                          | Ch$197,154                                                 
|Selling and Administrative Expenses                   | (151,743)                                                  
|                                                      |                                                            
|Operating Income                                      | Ch$45,411                                                  
|Non-Operating Income                                  | 24,224                                                     
|Non-Operating Expenses                                | (17,870)                                                   
|Price-Level Restatement and Exchange 
    Differences | (2,496)                                                    
|Income Taxes                                          | (7,434)                                                    
|Minority Interest                                     | (1,912)                                                    
|                                                      |                                                            
|Net Income                                            | Ch$39,924                                                  
|                                                      |                                                            
|                                                      |                                                            
|Sales volume (1):                                     |                                                            
|Beer ( Chile )                                        | 348.3                                                      
|Beer ( Argentina )                                    | 151.2                                                      
|Soft drinks and mineral water (2)                     | 414.2                                                      
|Wine (3)                                              | 84.6                                                       
|Pisco (4)                                             | -                                                          

___________________


|(1) | In
millions of liters.
|--- | ----------------------

|(2) | Includes
sales of soft drinks and mineral water in Argentina, which equaled 1.5 million liters in
2001.     During 2002 and 2003, there were no sales of soft drinks and mineral water in
Argentina.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Includes
sales of wine in Argentina for the domestic market, which equaled 0.9 million liters in
2001, 0.5 million liters in 2002 and 2.7 million liters in 2003.  Additionally, since
2003 the balance includes wine                   exports from Argentina, totaling 16.8
million liters.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | We
entered the pisco business in February 2003.
|--- | -----------------------------------------------

FISCAL YEAR ENDED
DECEMBER 31, 2003 COMPARED TO FISCAL YEAR ENDED DECEMBER 31, 2002

Net Sales

Our net sales were
Ch$384,064 million in 2003 compared to Ch$349,350 million in 2002, representing a 9.9%
increase which is mainly explained by higher sales volumes in all our categories.  The
net sales performance of each of our business segments during 2003 is described below:

Beer Chile: Our
net sales of beer in Chile increased 10.2% to Ch$149,672 million in 2003, from Ch$135,820
million in 2002. This increase resulted from a 6.0% increase in volume and 4.1% increase
in unit price. Higher volumes were a result of our ACC Plan (Aumento de Consumo de
Cerveza, or increase in beer consumption) which was implemented in 2001 and comprises a
range of strategic measures, including product and packaging innovations, the development
of new distribution channels and improvements in marketing and point-of-sale execution.
Additional increases resulted from the incorporation of Heineken beer into our
portfolio; a milder winter, which normally results in increased consumption and a better
economic environment in Chile, which positively impacts beer sales. Higher prices were
explained by price increases in April and October of approximately 8% in nominal terms,
fewer discounts and higher premium product mix.

Beer Argentina:
 Our net sales of beer in Argentina increased 25.6% to Ch$31,576 million in 2003, from
Ch$25,130 million in 2002.  This increase resulted from 18.7% higher beer sales volume
and a 6.3% increase in unit price.  Higher volumes were explained by the improvement in
the economic situation in Argentina and the incorporation of Heineken beer into our
portfolio.  Higher prices were explained by price increases in local currency in March
and September, the appreciation of the Argentine peso and higher premium product mix.

52

Soft Drinks and Mineral Water:
Our net sales of soft drinks and mineral water increased 3.0% to Ch$115,282 million in
2003, from Ch$111,875 million in 2002. This increase in sales resulted from a 3.6%
increase in sales volume, due to increases of 2.3%; 20.7% and 2.5% in soft drinks, nectars
and mineral water volumes, respectively; as well as a 1.1% higher nectar per unit price.
Higher volumes resulted primary from increased sales of Watts nectars, which has
experienced greater acceptance by consumers. This increase was partially offset by a 2.2%
and 2.4% decrease in soft drinks and mineral water per unit prices, respectively. Lower
prices were due to competition from lower price brands in these segments.

Wine: Our net sales of wine
increased 8.8% to Ch$82,568 million in 2003, from Ch$75,909 million in 2002. This increase
in sales resulted from the incorporation of Finca La Celia (FLC), which began
consolidating its results within VSP in January 2003. Prior to 2003, FLC was in the
development stage, and therefore its results from operations were not included
in VSPs consolidated results but were recorded directly to equity for Chilean GAAP
purposes.

Cost of Goods SoldOur cost of good sold consists
principally of the costs of packaging and other raw materials, labor costs for production
personnel, depreciation of assets related to production, depreciation of returnable
bottles, licensing fees, bottle breakage and costs of operating and maintaining plants and
equipment. Our cost of goods sold in 2003 amounted to Ch$189,204 million compared to
Ch$172,157 million in 2002. As a percentage of net sales, cost of goods sold was 49.3% in
both 2003 and 2002. Our cost of goods sold for each business segment during 2003 is
described below:

Beer Chile: Our cost of goods
sold for our Chilean beer segment increased by 2.7% to Ch$59,183 million in 2003, from
Ch$57,614 million in 2002. This increase was a direct result of increased sales. Cost of
goods sold as a percentage of sales decreased from 42.4% in 2002 to 39.5% in 2003 mainly
due to lower depreciation charges resulting from certain assets reaching full depreciation
at the end of 2002, and the dilution of fixed costs as a result of higher sales.

Beer Argentina: Our cost of
goods sold for our Argentine beer segment decreased 1.3% to Ch$19,126 million in 2003,
from Ch$19,368 million in 2002. Cost of goods sold as a percentage of net sales decreased
from 77.1% in 2002 to 60.6% in 2003, mainly due to lower depreciation charges and the
dilution of fixed costs as a result of higher sales.

Soft Drinks and Mineral Water:
Our cost of goods sold for our soft drinks and mineral water segment increased by 6.9% to
Ch$55,167 million in 2003, from Ch$51,623 million in 2002. Cost of goods sold as a
percentage of sales increased from 46.1% in 2002 to 47.9% in 2003. This increase was
primarily due to adjustments related to bottle deposits based on our estimates of total
bottles in circulation and inventory.

Wine: Our cost of good sold
for our wine segment increased by 17.7% to Ch$55,578 million in 2003, from Ch$47,225
million in 2002. Cost of goods sold as a percentage of sales increased from 62.2% in 2002
to 67.3% in 2003, mainly due to the consolidation of FLC beginning January 2003 and an
increase in the direct cost associated with the export of wine from Chile.

Gross Profit Our gross profit increased 10.0% to
Ch$194,860 million in 2003, from Ch$177,193 million in 2002. This increase was directly
related to our increase in sales. As a percentage of net sales, gross profit was 50.7% in
both 2003 and 2002.

Selling, General and
Administrative Expenses Our selling, general and
administrative expenses, or SG&A, include primarily advertising and promotional
expenses, salaries of administrative personnel, maintenance, general expenses,
transportation costs and services provided by third parties. Our SG&A increased 7.2%
in 2003, to Ch$148,998 million, from Ch$139,051 million in 2002. This increase is
principally attributed to the wine segment, due to the consolidation of FLC, and to the
commencement of our new pisco business. As a percentage of net sales,

53

our SG&A
  decreased from 39.8% in 2002 to 38.8% in 2003. The SG&A performance of each business
  segment during 2003 is described below:

Beer Chile: Our SG&A of
our Chilean beer segment increased 5.5% to Ch$53,737 million in 2003, from Ch$50,934
million in 2002. As a percentage of net sales, our SG&A decreased from 37.5% in 2002
to 35.9% in 2003. The increase in SG&A resulted from an increase in salaries and
distribution costs, directly related to our increase in sales. This was partially offset
by lower marketing expenses for our main brand, Cristal, as the prior year included a
significant advertisement campaign. This was partially offset by the launch of Heineken
and the formation of a new trade marketing division.

Beer Argentina: Our SG&A
of our Argentine beer segment decreased 4.9% to Ch$16,115 million in 2003, from Ch$16,937
million in 2002. This decrease resulted mainly from lower depreciation and a decrease in
write-offs of accounts receivable, partially offset by higher transportation and marketing
expenses. As a percentage of net sales, our SG&A decreased from 67.4% in 2002 to 51.0%
in 2003, largely due to the significant increase in net sales of 25.6% and relatively
fixed SG&A expenses.

Soft Drinks and Mineral Water:
Our SG&A of our soft drinks and mineral water segment increased 1.7% to Ch$51,459
million in 2003, from Ch$50,602 million in 2002. This increase resulted from higher
depreciation and marketing expenses, partially offset by a decrease in salaries due to the
transfer of certain employees to our transportation division. As a percentage of net
sales, SG&A in this segment decreased slightly from 45.2% in 2002 to 44.6% in 2003.

Wine: Our SG&A of our wine
segment increased 18.8% to Ch$23,189 million in 2003, from Ch$19,520 million in 2002. This
increase is mainly due to the consolidation of FLC results beginning in January 2003 and
higher transportation expenses as a consequence of more exports from Chile. As a
percentage of net sales, SG&A for this segment increased from 25.7% in 2002 to 28.1%
in 2003.

Operating Income Our operating income increased 20.2%
in 2003 to Ch$45,863 million as compared to Ch$38,142 million in 2002. As a percentage of
net sales, operating income, or operating margin, increased from 10.9% in 2002 to 11.9% in
2003. The operating income performance of each of our business segments during 2003 is
described below:

Beer Chile: Our operating
income from our Chilean beer segment increased by 34.8% to Ch$36,753 million in 2003, from
Ch$27,272 million in 2002. Our operating margin for this segment increased from 20.1% in
2002 to 24.6% in 2003.

Beer Argentina: Our operating
income from our Argentine beer segment improved from a loss of Ch$11,175 million in 2002
to a loss of Ch$3,665 million in 2003. Our operating margin improved from negative 44.5%
in 2002 to negative 11.6% in 2003.

Soft Drinks and Mineral Water:
Our operating income from our soft drinks and mineral water segment decreased by 10.3% to
Ch$8,656 million in 2003, from Ch$9,649 million in 2002. Our operating margin for this
segment decreased from 8.6% in 2002 to 7.5% in 2003.

Wine: Our operating income
from our wine segment decreased by 58.5% to Ch$3,801 million in 2003, from Ch$9,163
million in 2002. Our operating margin for this segment decreased from 12.1% in 2002 to
4.6% in 2003.

Non-Operating IncomeOur non-operating income increased
285.6% in 2003 to Ch$24,490 million compared to Ch$6,351 million in 2002. This increase is
primarily due to the gain associated with the sale of our indirect interest in the
Croatian brewery Karlovacka Pivovara. In March 2003, our then 50% owned equity investee
Southern Breweries Establishment sold its portion of Karlovacka, which represented
SBEs only material asset, resulting in a one-time gain of Ch$40,541 million. Our
portion of the gain was Ch$20,114 million. We subsequently purchased the remaining
ownership interest in SBE in order to maintain the entity for future

54

potential
  acquisitions or developments. Additionally, we recorded higher interest income
    in 2003 due to temporary higher cash balances resulting from the sale of
    Karlovacka and the proceeds from a syndicated loan entered into in May 2003.
    The non-operating results for 2002 reflected income of Ch$1,754 million resulting
    from the impact of a change in inventory accounting, which was a one-time
    gain and not recorded for 2003.

Non-Operating Expenses Our non-operating expenses increased
24.6% in 2003 to Ch$12,110 million as compared to Ch$9,721 million in 2002. This increase
is due to higher interest expenses related to the syndicated loan and increases in
write-offs of fixed assets and other assets.

Price-Level Restatement
and Exchange Gains The price-level restatement of our
non-monetary assets, liabilities and equity due to Chilean inflation and foreign exchange
fluctuations resulted in a net gain of Ch$1,262 million in 2003, as compared to a net loss
of Ch$3,711 million in 2002. These positive results are largely due to (1) reduced foreign
exchange losses arising from the translation of assets and liabilities denominated in
Argentine pesos; (2) a reduced charge related to price-level restatement for equity in
2003 as a consequence of the decrease in equity due to the extraordinary dividend paid in
2003 and (3) the inflation factor for 2003 was 1% versus 3% for 2002. A gain in
price-level restatement results from holding monetary liabilities in excess of monetary
assets during inflationary periods, or from holding foreign currency denominated assets in
excess of foreign currency denominated liabilities during periods of devaluation of the
Chilean peso.

In accordance with Chilean generally
accepted accounting principles, we apply Technical Bulletin 64 (TB 64) issued
by the Chilean Institute of Accountants to translate and value investments in foreign
subsidiaries (see Note 1 to our consolidated financial statements). Under TB 64, our
foreign investments in Compañía Industrial Cervecera S.A., or CICSA, and FLC
are not subject to price-level restatements based on inflation in those countries.
Instead, the U.S. dollar is considered to be the functional currency. As a result, the
effect of a devaluation of the peso against the U.S. dollar on our financial statements is
determined, in part, by the impact of such devaluation on the value of our investments in
CICSA and FLC, as well as on foreign currency denominated obligations that qualify as a
hedge against those investments. These effects are recorded in the account
Cumulative translation adjustment in shareholders equity. As of December
31, 2003, our investment in CICSA and FLC amounted to Ch$72,253 million, foreign currency
denominated obligations that were designated as a hedge against these investments amounted
to Ch$13,887 million and the negative cumulative translation adjustment account amounted
to Ch$67 million.

Income TaxesOur income taxes for 2003 amounted to
Ch$4,977 million, translating into an effective consolidated tax rate of 8.4%. Income
taxes in 2002 amounted to Ch$7,511 million translating into an effective consolidated tax
rate of 24.2%. Our effective consolidated tax rate in 2003 was lower than the Chilean
statutory rate of 16.5% mainly due to the gain resulting from our foreign subsidiary
SBEs sale of Karlovacka, which was not taxed as SEB is incorporated in a tax-free
country. In 2002, the effective consolidated tax rate was higher than the statutory rate
of 16.0% due to losses in the Argentine subsidiaries, for which no tax benefits were
recorded; however, the losses were included in the consolidated net income portion of the
effective tax calculation. Additionally, Chilean companies and each of their domestic
subsidiaries calculate and pay taxes on a separate basis rather than on a consolidated
basis.

In accordance
                with Chilean law, a Chilean company and each of its domestic subsidiaries calculates
                and pays taxes in Chile on a separate basis rather than on a consolidated basis.
                As of December 31, 2003, our consolidated subsidiaries had available tax loss
                carryforwards of Ch$18,213 million in Chile and Ch$24,579 million in Argentina.
                Our Chilean subsidiaries with the most significant tax loss carryforwards available
                include Transportes CCU Ltda. with Ch$6,456 million, Inversiones ECUSA S.A.
                with Ch$5,208 million, Viña Urmeneta S.A. with
Ch$4,827 million and Pisconor S.A. with Ch$1,469 million. In Argentina, our subsidiaries
with the most significant tax loss carryforwards available are CCU Argentina
                S.A. with Ch$15,327 million and Finca La Celia with Ch$9,252 million. In Chile,
                there is no legal expiration date prescribed by law with respect to tax loss
                carryforwards; however, in Argentina tax loss carryforwards are subject to
                a five-year expiration date. The extent to which we can utilize such tax loss
                carryforwards in the

55

future will depend
                upon the amount of income earned by each subsidiary and the specific tax loss
                carryforwards available to that particular entity. Dividends paid to us by
                CCU Argentina will be included in our taxable income in Chile, but will be
                governed by the applicable regulations of the Chilean tax authorities. We will
                receive a full credit against income tax in Chile with respect to such dividends
                for income taxes paid by the Argentine subsidiaries. On December 30, 1998,
                a 1% tax on assets was implemented in Argentina. This tax can be used as a
                credit to income tax and is subject to a four-year expiration date.

Minority InterestMinority interest in 2003 decreased
65.2% to negative Ch$439 million as compared to negative Ch$1,264 million in 2002. This
decrease resulted mainly from VSPs lower net income, partially offset by lower
losses from CCU Argentina.

Net Income Our net income in 2003 was Ch$54,088
million, Ch$31,803 million higher than 2002s net income of Ch$22,286 million. The
increase in net income is primarily explained by the Ch$20,114 million gain from the sale
of the Croatian brewery Karlovacka Pivovara and higher operating income from our beer
operations in Chile and Argentina. This was partially offset by the lower results of our
wine division.

FISCAL YEAR ENDED
DECEMBER 31, 2002 COMPARED TO FISCAL YEAR ENDED DECEMBER 31, 2001

Net SalesOur net sales were Ch$349,350 million
in 2002 compared to Ch$374,088 million in 2001, representing a 6.6% decrease for 2002.
This was a result of a decrease in our Argentine beer segment, partially offset by an
increase in our wine segment, while soft drinks and Chilean beer remained relatively
stable. The net sales performance of each business segment during 2002 is described below:

Beer Chile: Our net sales of
beer in Chile increased by 0.4% to Ch$135,820 million in 2002, from Ch$135,234 million in
2001. This increase in sales resulted from a 0.6% increase in beer sales volume, partially
offset by a 0.4% decrease in per unit prices.

Beer Argentina: Our net sales
of beer in Argentina decreased by 54.5% to Ch$25,130 million in 2002, from Ch$55,271
million in 2001. This decrease in sales resulted from a 57.6% decrease in per unit prices,
as a consequence of the devaluation of the Argentine currency, partially offset by 6.1%
increase in beer sales volume.

Soft Drinks and Mineral Water:
Our net sales of soft drinks and mineral water decreased by 0.9% to Ch$111,875 million in
2002, from Ch$112,862 million in 2001. This decrease in sales resulted from a 1.4%
decrease in overall prices, due to a 1.1% decrease in soft drink unit prices, a 1.3%
decrease in nectar prices and a 6.0% decrease in mineral water unit prices. This decrease
in net sales was partially offset by a 0.2% increase of overall sales volume, including a
25.1% increase in nectar and 2.6% increase in mineral water volumes, partially offset by a
2.1% decrease in soft drink volumes. The price decreases were due to the absence of
nominal price adjustments during 2002 and more aggressive competition in the mineral water
segment. Higher nectar volumes were explained by the positive reception of Watts
nectars by consumers.

Wine: Our net sales of wine
increased 8.0% to Ch$75,909 million in 2002, from Ch$70,288 million in 2001. This increase
in sales resulted from a 14.3% increase in overall sales volume, consisting of a 19.5%
increase in domestic volumes and an 8.9% increase in export volumes. This increase in
sales was partially offset by a 5.5% decrease in overall prices, consisting of an 8.7%
decrease in domestic per unit prices and a 1.4% decrease in export per unit prices. Higher
volumes in the domestic market were due to lower prices. Lower prices were a result of a
more competitive environment and lower costs of raw materials which we were able to pass
on to our consumers. The export volume increased mainly due to larger demand for bulk
wine.

56

Cost of Goods SoldCost of goods sold in 2002 amounted
to Ch$172,157 million as compared to cost of goods sold in 2001 that reached Ch$176,934
million. As a percentage of net sales, cost of goods sold was 49.3% in 2002 compared to
47.3% in 2001. The increase in cost of goods sold as a percentage of net sales in 2002 is
principally attributable to fixed costs relative to a significant decline in sales in our
Argentine beer segment and higher direct costs in our Chilean beer operations. Our cost of
goods sold for each business segment during 2002 is described below:

Beer Chile: Our cost of goods
sold for our Chilean beer segment increased by 4.9% to Ch$57,614 million in 2002, from
Ch$54,899 million in 2001. Cost of goods sold as a percentage of sales increased from
40.6% in 2001 to 42.4% in 2002 due to the effect of exchange rate fluctuations in dollar
denominated raw materials and increases in the volume of non-returnable packaging which
have a higher cost to produce.

Beer Argentina: Our cost of
goods sold for our Argentine beer segment decreased by 33.3% to Ch$19,368 million in 2002,
from Ch$29,037 million in 2001 mainly, as a consequence of the devaluation of the
Argentine currency. Cost of sales as a percentage of net sales increased from 52.5% in
2001 to 77.1% in 2002, mainly because direct production costs are indexed to the U.S.
dollar and depreciation is accounted for in historical dollars.

Soft Drinks and Mineral Water:
Our cost of goods sold for our soft drinks and mineral water segment decreased by 5.2% to
Ch$51,623 million in 2002, from Ch$54,448 million in 2001. Cost of goods sold as a
percentage of sales decreased from 48.2% in 2001 to 46.1% in 2002 mainly due to lower
direct costs for mineral water as a consequence of lower cost of packaging, and lower
depreciation charges.

Wine: Our cost of good sold
for our wine segment increased by 7.5% to Ch$47,225 million in 2002, from Ch$43,922
million in 2001, mainly due to higher sales. Cost of goods sold as a percentage of net
sales remained relatively stable at 62.2% in 2002 compared with 62.5% in 2001.

Gross ProfitOur gross profit decreased 10.1% to
Ch$177,193 million in 2002, from Ch$197,154 million in 2001. As a percentage of net sales,
gross profit decreased from 52.7% in 2001 to 50.7% in 2002. The decrease in gross profit
was primarily due to the lower sales of Argentine beer measured in Chilean pesos as a
consequence of the devaluation of the Argentine currency.

Selling, General and
Administrative ExpensesOur SG&A decreased 8.4% in 2002,
to Ch$139,051 million, from Ch$151,743 million in 2001. This decrease is principally
attributed to lower SG&A in our Argentinean beer business, which was partially offset
by higher SG&A in our wine, Chilean beer and soft drink operations. As a percentage of
net sales, our SG&A decreased from 40.6% in 2001 to 39.8% in 2002. The SG&A
performance of each business segment during 2002 is described below:

Beer Chile: Our SG&A of
our Chilean beer segment increased by 1.3% to Ch$50,934 million in 2002, from Ch$50,281
million in 2001. This increase resulted from higher marketing expenses related to
activities aimed at strengthening the Cristal brand name, partially offset by lower
salaries. As a percentage of net sales, our SG&A remained relatively stable.

Beer Argentina: Our SG&A
of our Argentine beer segment decreased by 49.1% to Ch$16,937 million in 2002, from
Ch$33,292 million in 2001. This decrease resulted mainly from the devaluation of the
Argentine peso. As a percentage of net sales, our SG&A increased from 60.2% in 2001 to
67.4% in 2002.

Soft Drinks and Mineral Water:
Our SG&A of our soft drinks and mineral water segment increased by 2.2% to Ch$50,602
million in 2002, from Ch$49,536 million in 2001. This increase resulted mainly from higher
marketing expenses and depreciation charges related to marketing assets, partially offset
by lower salaries. As a percentage of net sales, SG&A in this segment increased from
43.9% in 2001 to 45.2% in 2002.

57

Wine: Our SG&A of our wine
segment increased by 17.0% to Ch$19,520 million in 2002, from Ch$16,691 million in 2001.
This increase is mainly due to higher marketing, salaries and travel expenses to support
the sales growth. As a percentage of net sales, SG&A for this segment increased from
23.7% in 2001 to 25.7% in 2002.

Operating IncomeOur operating income decreased 16.0%
in 2002 to Ch$38,142 million as compared to Ch$45,411 million in 2001. Operating margin
decreased from 12.1% in 2001 to 10.9% in 2002. The operating income performance of each of
our business segments during 2002 is described below:

Beer Chile: Our operating
income from our Chilean beer segment decreased by 9.3% to Ch$27,272 million in 2002, from
Ch$30,054 million in 2001. Our operating margin for this segment decreased from 22.2% in
2001 to 20.1% in 2002.

Beer Argentina: Our operating
income from our Argentine beer segment decreased from a loss of Ch$7,059 million in 2001
to a loss of Ch$11,175 million in 2002. Our operating margin decreased from negative 12.8%
in 2001 to negative 44.5% in 2002.

Soft Drinks and Mineral Water:
Our operating income from our soft drinks and mineral water segment increased by 8.7% to
Ch$9,649 million in 2002, from Ch$8,878 million in 2001. Our operating margin for this
segment increased from 7.9% in 2001 to 8.6% in 2002.

Wine: Our operating income
from our wine segment decreased by 5.3% to Ch$9,163 million in 2002, from Ch$9,676 million
in 2001. Our operating margin for this segment decreased from 13.8% in 2001 to 12.1% in
2002.

Non-Operating IncomeOur non-operating income decreased by
73.8% in 2002 to Ch$6,351 million as compared to Ch$24,224 million in 2001. This decrease
is primarily explained by the absence of the non-recurring gain of Ch$17,371 million in
the sale of Backus & Johnston shares realized in 2001, and lower financial income,
Ch$1,652 million in 2002 as compared to Ch$3,566 million in 2001, reflecting lower
interest rates.

Non-Operating ExpensesOur non-operating expenses decreased
45.6% in 2002 to Ch$9,721 million as compared to Ch$17,870 million in 2001. This decrease
is mainly explained by lower restructuring costs in 2002, lower interest expense -Ch$3,871
million in 2002 as compared to Ch$6,457 million in 2001- the absence of expenses related
to an extraordinary dividend paid in 2001 and lower losses in the sale of property, plant
and equipment.

Price-Level Restatement
and Exchange DifferencesOur price-level restatement of our
non-monetary assets, liabilities and equity due to Chilean inflation and foreign exchange
fluctuations resulted in a net loss of Ch$3,711 million in 2002, as compared to a net loss
of Ch$2,496 million in 2001. These negative results are mainly a consequence of the price
level restatement of inventories done in 2002 due to a change in the accounting treatment
of inventories.

As of December 31, 2002, our
investment in SBE and CCU Argentina amounted to Ch$96,282 million, foreign currency
denominated obligations that were designated as a hedge against these investments amounted
to Ch$16,330 million and the positive cumulative translation adjustment account amounted
to Ch$17,987 million.

Income Taxes
Our income taxes for 2002 amounted to
Ch$7,511 million translating into an effective consolidated tax rate for us of
                24.2%. Income taxes in 2001 amounted to Ch$7,434 million translating into an
                effective consolidated tax rate of 15.1%. In 2002, the effective consolidated
                tax rate was higher than the statutory rate of 16.0% due to losses in the Argentine
                subsidiaries, for which no tax benefits were recorded; however, the losses
                were included in the consolidated net income portion of the effective tax calculation.
                Additionally,

58

Chilean companies
                and each of their domestic subsidiaries calculate and pay taxes on a separate
                basis rather than on a consolidated basis. In 2001, the effective consolidated
                tax rate was close to the Chilean statutory rate of 15.0% as a result of the
                use of all the tax loss carryforwards available to the wine subsidiary, a lower
                loss in Argentina than in 2002 and the effect on deferred income taxes from
                the change in the enacted Chilean statutory rate that increased to 16.0% in
                2002.

In accordance with Chilean law, a
Chilean company and each of its domestic subsidiaries calculate and pay taxes in Chile on
a separate basis rather than on a consolidated basis. As of December 31, 2002, our
consolidated subsidiaries had available tax loss carryforwards of Ch$9,207 million in
Chile and Ch$17,418 million in Argentina. Our Chilean subsidiaries with the most
significant tax loss carryforwards available include Transportes CCU Ltda. with Ch$4,805
million and Inversiones ECUSA S.A. with Ch$3,796 million. In Argentina, the subsidiary
with the most significant tax loss carryforwards available is CICSA with Ch$17,094
million.

Minority InterestOur minority interest in 2002
decreased 33.9% to Ch$1,264 million as compared to Ch$1,912 million in 2001. This decrease
resulted from the higher losses of CCU Argentina and the lower net income in VSP.

Net IncomeOur net income in 2002 was Ch$22,286
million, Ch$17,638 million lower than 2001s net income of Ch$39,924 million. The
decrease in net income is primarily explained by a Ch$10,939 million decrease in our
non-operating results mainly due to the absence of the non-recurring gain from the sale of
Backus & Johnston shares which occurred in 2001 and the weaker performance of our beer
operations, both in Chile and Argentina.

Impact of InflationIn general, inflation has an adverse
effect of diminishing the purchasing power of a companys monetary assets that are
not price-level indexed, and has a positive effect of reducing the real value of a
companys monetary liabilities that are not price-level indexed. In addition, to the
extent that increases in a companys costs of production are not passed on in the
form of higher prices for a companys goods, inflation will adversely affect
earnings.

Most of our monetary assets,
principally accounts receivable, and liabilities, principally accounts payable, that are
not price-level indexed are short-term and thus are not significantly affected by
inflation. However, our liability for deposits on bottles and containers (Ch$11,871
million at December 31, 2002 and Ch$11,097 million at December 31, 2003) is a long-term,
non-indexed monetary liability that is affected over time by inflation. The net impact of
inflation on our capital expenditures has generally been neutral as all substantial assets
constructed or acquired are fixed non-monetary assets and all substantial liabilities
incurred in the process of financing capital expenditures are price-level indexed or
foreign-currency denominated. Nonetheless, high rates of inflation in the future could
have a variety of unpredictable effects on us and could adversely impact our operations.

U.S. GAAP Reconciliation Our net income under U.S. GAAP for
2001, 2002 and 2003 was Ch$35,901 million, Ch$19,533 million and Ch$55,209 million,
respectively, as compared to that reported under Chilean GAAP of Ch$39,924 million,
Ch$22,286 million and Ch$54,088 million, respectively. These differences are principally
the result of US GAAP adjustments for the:

- reversal of
amortization of goodwill
- differences
associated with the amortization of intangible trademarks
- accounting
treatment of developmental stage enterprises
- impact of
including labor and overhead costs in inventories in 2001
- revaluation of
fixed assets
- adjustments of
employee severance indemnities
- capitalization
of interest on assets under construction, and
                59

- recording of
deferred income taxes.

Our total shareholders equity
under U.S. GAAP as of December 31, 2001, 2002 and 2003 was Ch$426,690 million, Ch$456,313
million and Ch$275,188 million, respectively, as compared to that reported under Chilean
GAAP for the same period of Ch$428,161 million, Ch$437,820 million and Ch$278,772 million,
respectively. The differences between shareholders equity under U.S. GAAP and
Chilean GAAP are principally the result of US GAAP adjustments for the:

- amortization of
goodwill and trademarks
- reversal of the
revaluation of fixed assets and related depreciation
- minimum dividends
required under Chilean GAAP
- capitalization of
interest on assets under construction
- reversal of gain
on investment in Vina Dassault San Pedro S.A.
- adjustments of
employee severance indemnities, and
- recording of
deferred income taxes (FAS No. 109).

Liquidity and Capital
Resources

Our main source of liquidity has been
cash generated by our operating activities, which amounted to Ch$70,522 million, Ch$65,409
million and Ch$63,334 million during 2001, 2002 and 2003, respectively.

Our cash flow from operations and
working capital are our primary sources to meet both our short-term and long-term
obligations. In the opinion of our management, they are sufficient to this end.

In 2003, our cash flows provided by
operating activities totaled Ch$63,334 million. The main component of cash flows generated
by operating activities in 2003 was net income of Ch$54,088 million compared to Ch$22,286
million in 2002. In 2003, we recorded a non-cash equity gain of Ch$19,739 million compared
to a non-cash equity gain of only Ch$870 million in 2002. Cash flows from the changes in
operating assets and liabilities resulted in the net use of Ch$12,863 million compared to
the net use of Ch$10,482 million in 2002. Cash used in 2003 resulted primarily from an
increase in our accounts receivable balance, inventories and other assets.

In 2003, our cash flows used in
financing activities totaled Ch$97,761 million compared to Ch$26,169 million in 2002. The
main components of cash flows used in financing activities consisted of dividends paid of
Ch$188,292 million and repayment of bank borrowings of Ch$43,626 million, partially offset
by proceeds from bank borrowings of Ch$132,740 million. In 2002, payments of cash
dividends were Ch$23,330 million and repayment of bank borrowings was Ch$28,823 million.

In 2003, our cash flows provided by
investment activities totaled Ch$9,126 million compared to cash used in investing
activities of Ch$12,728 million in 2002. The main components of cash flows provided by
investment activities in 2003 consisted of net proceeds from the sale of investments in
unconsolidated affiliates of Ch$31,176 million partially offset by capital expenditures of
Ch$24,773 million.

There are no material restrictions,
either legal or economic, that would limit our ability to transfer funds (i.e.,
dividends, loans, or advances) from our subsidiaries to us.

As of December 31, 2003, we had
Ch$52,467 million in cash, time deposits and marketable securities, which does not include
Ch$14,128 million corresponding to readjustable promissory notes issued by the Central
Bank and purchased under resale agreements. Indebtedness, including accrued interest,
amounted to Ch$140,005 million as of December 31, 2003. Short-term indebtedness included:

- Ch$35,812 million
of short-term obligations to banks and financial institutions under certain lines of
credit described below,
- Ch$1,664 million
representing the current portion of long-term public bonds, and
- Ch$1,340 million
representing the current portion of long-term debt to banks.
                60

As of December 31, 2003, long-term
indebtedness, excluding the current portion, comprised:

- Ch$82,718 million
of long-term obligations to banks, and
- Ch$18,471 million
of long-term obligations to the public represented by bonds.

On May 9, 2003, the Cayman Islands Branch
of Compañías Cervecerías Unidas S.A., entered into a US$135 million,
five-year unsecured, syndicated loan agreement. This credit agreement has a variable
interest rate of the London Interbank Offered Rate, or LIBOR, plus 0.75% in U.S. dollars,
with five equal semi-annual amortization installments of principal beginning on the third
anniversary of the closing. Interest payments are on a quarterly basis. The credit
agreement was syndicated by 11 banks. We will repay this debt with the cash generated by
our operating activities.

To avoid the exchange and interest
risks of this credit, we entered into cross currency interest rate swap agreements for an
aggregate of US$96.1 million, 86.4% of which is in variable Chilean pesos rate and 13.6%
of which is in fixed Chilean pesos rate. Therefore, we replaced the risk of LIBOR
fluctuations for this credit agreement, with the risk of variations in the nominal Tasa
Activa Bancaria, or TAB rate, expressed in Chilean pesos for an amount of Ch$49,285
million (US$83 million). Nevertheless, we expect that if the TAB rate rises, such rise
would be due to a recovery on consumer demand, which would result, in turn, in an
improvement in our operating results, causing a natural hedge for the nominal variable
rate Chilean peso debt.

As of December 31, 2003, we were
required, under our debt covenants then in effect, to maintain certain financial ratios.
The most significant covenants required us to maintain a consolidated interest coverage
ratio (the ratio of operating income plus depreciation and operating amortization to
interest expenses) equal to or higher than 3.00 to 1.00, to maintain a consolidated
leverage ratio (the ratio of financial debt to operating income plus depreciation and
operating amortization) equal or lower than 3.00 to 1.00, and a minimum consolidated
equity of 15 million Unidades de Fomento (as of December 31, 2003, approximately US$427
million). Furthermore, we were required to maintain a current ratio (the ratio of current
assets to current liabilities) of more than 1.0 to 1.0 on both a consolidated and
unconsolidated basis, as well as an indebtedness ratio (the ratio of liabilities to
shareholders equity) lower than 2.0 on both a consolidated and unconsolidated basis.

At December 31, 2003, we met all our
financial debt covenants and had a consolidated interest coverage ratio of 15.26 to 1, a
consolidated leverage ratio of 1.63 to 1, a current ratio of 2.82 to 1 on an
unconsolidated basis and 1.65 to 1 on a consolidated basis. Our consolidated equity as of
December 31, 2003 was Ch$278,772 million (UF16.5 million, or US$469.5 million). Our
indebtedness ratio was 1.21 and 1.07 on an unconsolidated and consolidated basis,
respectively.

The following table summarizes debt
obligations held by us as of December 31, 2003. The table presents principal payment
obligations in millions of Chilean pesos by interest rate structure, financial instrument
and currency, with their respective maturity dates and related weighted-average interest
rates:

61

Interest-Bearing Debt
as of December 31, 2003 (millions of
Ch$, except percentages)

|Expected Maturity Date
|----------------------
|                      
|Fixed rate            
|                      
|Ch$ (UF) (1)          
|                      
|TOTAL                 
|                      

|Variable rate | Average Int. Rate | 2004 | 2005      | 2006 | 2007   | 2008   | Thereafter | TOTAL
|------------- | ----------------- | ---- | --------- | ---- | ------ | ------ | ---------- | -----
|              |                   |      |           |      |        |        |            |      
|Ch$ (UF) (1)  | Banks             | 2.5% | Ch$904    | 852  | 852    | 852    | -          | -    
|US$ (2)       | Banks             | 2.1% | 35,820    | -    | 32,065 | 32,065 | 16,033     | -    
|Argentine $   | Banks             | 4.8% | 202       | -    | -      | -      | -          | -    
|Euro          | Banks             | 3.4% | 226       | -    | -      | -      | -          | -    
|              |                   |      |           |      |        |        |            |      
|TOTAL         |                   |      | Ch$37,152 | 852  | 32,917 | 32,917 | 16,033     | -    
|              |                   |      |           |      |        |        |            |      

---

|(1) | A
UF (Unidad de Fomento) is a daily  indexed,  peso-denominated  monetary  unit.  The UF is
set daily in advance  based on the               previous month's inflation rate.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Includes
the US$135 million  syndicated  loan, of which US$96.1  million are hedged through cross
currency  interest rate swap               agreements.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------

To hedge our market
risks,  we hold debt  obligations in various  currencies and we enter into some
 derivatives  contracts.  See "Item 11: Quantitative Information About Market Risk."

Our treasury policy is to invest in
highly liquid financial instruments issued by first class financial institutions.
Investments are made primarily in Chilean pesos and U.S. dollars. As of December 31, 2003,
we had invested Ch$45,819 million in Chilean peso related instruments and Ch$9,910 million
in U.S. dollar related instruments.

The following table summarizes
financial instruments, including time deposits, marketable securities and securities
purchased pursuant to repurchase agreements, held by us as of December 31, 2003:

Short-Term Financial
Instruments(millions of Ch$)

|UF (*)      | 652   
|----------- | ------
|Ch$         | 45,167
|US$         | 9,910 
|Argentine $ | 1     
|            |       
|TOTAL       | 55,730
|            |       

Capital Expenditures We continue to make substantial
capital expenditures to meet estimated growth in demand for our products. Our plans for
capital expenditures through 2007 period are displayed in the following table. The
information is presented in constant Chilean pesos of December 31, 2003

|Business Unit |                                       | 2004   | 2005   | 2006  | 2007 
|------------- | ------------------------------------- | ------ | ------ | ----- | -----
|              |                                       |        |        |       |      
|              | (millions of Ch$ as of December 2003)
|             
|Beer Chile   
|              | Machinery and equipment               | 5,290  | 3,045  | 1,238 | 2,306
|              | Packaging                             | 2,032  | 1,980  | 2,027 | 2,186
|              | Marketing assets                      | 2,490  | 3,097  | 2,412 | 3,367
|              | Software and hardware                 | 127    | 63     | 85    | 37   
|              | Other                                 | 453    | 2,542  | 2,274 | 248  
|              |                                       |        |        |       |      
|              | Total                                 | 10,391 | 10,727 | 8,038 | 8,145

62

|                           
|---------------------------
|Beer Argentina             
|                           
|                           
|                           
|                           
|                           
|                           
|                           
|                           
|Soft Drinks & Mineral Water
|                           
|                           
|                           
|                           
|                           
|                           
|                           
|                           
|Wine                       
|                           
|                           
|                           
|                           
|                           
|                           
|                           
|                           
|Others                     
|                           
|                           
|Total                      
|                           

During the years 2004 through 2007,
we plan to make capital expenditures mainly to adapt, update and increase production
capacity, install new bottling lines, enhance environmental protection, optimize our
distribution system and warehouse facilities, invest in additional returnable bottles and
crates to replace obsolete inventories, adapt to new packaging formats and support
industry volume growth. Capital expenditures are also focused on improving management
information systems and making additional investments in marketing assets.

Regarding our beer businesses,
capital expenditures in machinery and equipment may result in Chile from moving Heineken
production from our Temuco plant to our Santiago facility, and in Argentina due to the
projected increase in production capacity for our Salta plant and the expansion of the
bottling line in Santa Fe. During this period, our soft drinks, mineral water, nectars and
wine businesses contemplate capital expenditures in bottling lines and tanks. Other
important categories of capital expenditures in Chile include packaging and marketing
assets, mainly for our beer and soft drinks, mineral water and nectar businesses. If
consumption of our products continues to grow at high rates, we may need additional
capital expenditures to increase our production capacities.

We review our
                capital investment program periodically and changes to the program are made
                as appropriate. Accordingly, there can be no assurance that we will make any
                of these proposed capital expenditures at the anticipated level or at all.
                In addition, we are studying the possibility of making acquisitions in the
                same or related beverage businesses, either in Chile or in other countries
                of South Americas southern cone. Our capital investment program is subject
to revision from time to time due to

63

changes in market
                conditions for our products, general economic conditions in Chile, Argentina
                and elsewhere, interest, inflation and foreign exchange rates, competitive
                conditions and other factors.

We expect to fund our capital
expenditures through a combination of internally generated funds and long term
indebtedness.

Contractual Obligations The following table summarizes our
known contractual obligations as of December 31, 2003:

|                                        | Payments due by period(unaudited, in million of Chilean pesos)
|--------------------------------------- | --------------------------------------------------------------
|                                        |                                                               
|Contractual Obligations                 | Total                                                         
|                                       
|Long-Term Debt Obligations (1)          | 104,193                                                       
|Capital (finance) Lease Obligations (2) | 142                                                           
|Operating Lease Obligations (3)         | 18,637                                                        
|Purchase Obligations (4)                | 28,557                                                        
|Other Long-Term Liabilities (5)         | 11,097                                                        
|                                       
|Total                                   | 162,625                                                       

---

|(1) | Includes
long-term bank loans and bonds payable
|--- | -----------------------------------------------

|(2) | Includes
one leasing operation
|--- | ------------------------------

|(3) | Includes
real property, vineyards and warehouse leases, as well as marketing contracts
|--- | --------------------------------------------------------------------------------------

|(4) | Includes
raw material purchase contracts
|--- | ----------------------------------------

|(5) | Includes
deposits on bottles and containers
|--- | -------------------------------------------

Off Balance Sheet
Arrangements We do not have any off-balance sheet
arrangements involving any transactions, agreements or other contractual arrangements
involving an unconsolidated entity under which we have:

- made guarantees;

- a retained or a
contingent interest in transferred assets;

- an obligation
under derivative instruments classified as equity; or

- any obligation
arising out of a material variable interest in an unconsolidated entity that provides
financing, liquidity, market risk or credit risk support to us, or that engages in
leasing, hedging or research and development arrangements with us.

We record payments made under
operating leases as expenses, and none of our operating lease obligations are reflected on
our balance sheet. We have no other off-balance sheet arrangements. See Notes 1 and 21 to
our audited consolidated financial statements for a more detailed discussion of
contingencies, including guarantees.

Research and Development

Our research
                and development efforts do not involve material expenditures, as we rely primarily
                on technical assistance and technology transfer agreements with domestic and
                foreign companies and institutes. In 2003, we entered into two technical agreements
                with Heineken International for assistance with all technical issues related
                to the production and bottling of Heineken beer, one for Chile and the other
                one for Argentina. The initial term of these agreements is ten years beginning
                in June 2003, renewable for subsequent periods of five years. See Item
                6: Directors, Senior Management and Employees and Item 7: Major
Shareholders

64

and Related Party
                Transactions. The license agreement between
                        CCU Argentina and Anheuser-Busch, signed in 1995, as amended, also provides
                        us with both technical and marketing assistance for the production and marketing
                        of Budweiser beer brand in Argentina. See Item 4: Information on the
                        Company  Our Business 
        Business Overview  Our Beer Business  Our Beer Business in Argentina 
        Beer Production and Marketing in Argentina.

Critical Accounting
Policies and Practices

A summary of our significant
accounting policies is included in Note 1 to our audited consolidated financial
statements, which are included in this annual report. The preparation of financial
statements requires our management to make estimates and assumptions that affect the
amounts reported in the consolidated financial statements and accompanying footnotes. Our
estimates and assumptions are based on historical experiences, changes in the business
environment and information collected from qualified external sources. However, actual
results may differ from estimates under different conditions, sometimes materially.
Critical accounting policies and estimates are defined as those that are both most
important to the portrayal of our financial condition and results and/or require
managements most subjective judgments. Our most critical accounting polices and
estimates are described below.

a)
          Property, plant, equipment and bottles:The key judgments we must
          make under the property and equipment policy include the estimation of the
          useful lives of our various asset types, expected residual values, the election
          to utilize primarily the straight-line method for recording depreciation,
          managements judgment regarding appropriate capitalization or expensing of
          costs related to fixed assets, and our determination that no impairment exists.

Property and equipment are stated at
cost and are depreciated by the straight-line method based on the estimated useful lives
of the assets. In estimating the useful lives (no expected residual values are considered)
we have primarily relied upon actual experience with the same or similar types of
equipment and recommendations from the manufacturers. Useful lives are based on the
estimated amount of years an asset will be productive. Subsequent revisions to these
estimates could be caused by new technologies, changes to maintenance procedures, changes
in utilization of the equipment, and changing market prices of new and used equipment of
the same or similar types.

Property and equipment assets are
evaluated for possible impairment, as applicable. Factors that would indicate potential
impairment may include, but are not limited to, significant decreases in the market value
of the long-lived asset(s), a significant change in the long-lived assets physical
condition and operating or cash flow losses associated with the use of the long-lived
asset. This process requires our estimate of future cash flows generated by each asset or
group of assets. For any instance where this evaluation process indicates impairment, the
appropriate assets carrying values are written down to net realizable value and the
amount of the write-down is charged against the results of continuing operations.

Expenditures that substantially
improve and/or increase the useful life of facilities and equipment are capitalized. Minor
and other unscheduled maintenance costs are charged to income as incurred.

b)
          Allowance for doubtful accounts:At the end of each period, we record
          provisions to cover the doubtful collection of accounts receivable, which is
          mainly determined by the age of overdue balances, which is based on criteria
          established by us. The percentages provisioned range from 20% for accounts
          overdue between 61 and 90 days, to 100% in the case of accounts that are more
          than 180 days overdue. In case of rejected documents (bad checks), the
          percentage is 100% if they are overdue by more than 30 days. In the case of
          supermarkets, the provisions are determined on a case by case basis by our
          credit committee, which applies certain estimates and judgments including return
          rates and financial worthiness of customers. Our management considers that the
          provision determined under the parameters described above are reasonable and
          sufficient to cover losses inherent in these accounts.

c)
                                 Inventories:Our inventories of finished and in-process goods,
                                 raw materials and supplies are stated at replacement cost and include
                                 the cost of raw materials and labor and overhead costs added to the
                                 products.

65

The resulting
                value of inventories does not exceed their estimated net realizable values.
                For the year ended December 31, 2001, our inventories included solely
                the cost of raw materials. We record obsolescence provisions for finished
                products, products in process, raw material and other materials based
                on technical reports, which take into consideration certain estimations
                and assumptions, including market conditions and consumer consumption
                estimates.

d)
          Goodwill, negative goodwill and other intangible assets:Management exercises judgment in assessing goodwill, negative
          goodwill and other intangibles including trademarks for impairment. Goodwill
          arises from the excess of the purchase price of companies acquired over their
          net book value. We amortize costs in excess of book value of net assets (and the
          excess of book value over cost) of our businesses using the straight-line method
          over a period not to exceed 20 years. This period is based on managements
          assumption regarding the estimated period of recovery regarding these
          investments. This assumption takes into consideration various factors, including
          but not limited to, significant decreases in the market value of the investment,
          significant changes in legal or regulatory provisions and how these may impact
          the value of an investment and rates of returns used in calculating operating or
          cash flows associated with the use of our assets. We annually review the
          recorded value of our goodwill, or sooner if changes in circumstances indicate
          that the carrying amount may exceed fair value. Recoverability of the carrying
          value of the asset is determined by comparing net book value, including
          goodwill, to fair value based on the estimated future net cash flows of the
          relevant assets.

e)
          Deposits on bottles and containers:Glass and plastic returnable bottles
          and crates are presented within fixed assets at their historic cost plus
          price-level restatement and net of obsolescence provisions. Glass bottles are
          depreciated over a period of up to eight years, plastic bottles over up to four
          years and plastic crates in ten years. In Chile, returnable bottles are
          proprietary and are only given to customers in exchange for a deposit equivalent
          to a significant portion of the replacement cost of such bottles. The amount
          collected is recorded in the deposits on bottles and containers liability
          account that is not price-level adjusted. The deposit is returned to the
          customer when the bottles and the commodity agreement are returned. The expected
          return of bottles and containers put into circulation in the market and the
          estimated value of valid deposits, especially those from glass bottles, are
          adjusted annually. The adjustment is based on an estimate that is carried out by
          counting the bottles held by customers and adding an estimate of the number of
          bottles in hands of the final consumers. This latter estimate is based on
          independent studies and historical information regarding the return of these
          bottles. In Argentina, all companies use the same returnable bottles. Therefore,
          unlike in Chile where returnable bottles are proprietary and require a deposit,
          bottles are loaned to customers at no cost.

f)
          Deferred Taxes:Effective January 1, 2000, the effects of
          deferred income taxes arising from temporary differences between the basis of
          assets and liabilities for tax and financial statement purposes are recorded in
          accordance with Technical Bulletin No. 60 of the Chilean Institute of
          Accountants. The effects of deferred income taxes at January 1, 2000, which were
          not previously recorded, are recognized in income beginning in 2000 as the
          temporary differences reverse. Under Technical Bulletin No. 60, deferred tax
          assets are reduced by a valuation allowance if it is more likely than not that
          some portion or all of the deferred tax asset will not be realized. In making
          this determination, we consider both positive and negative evidence and make
          certain assumptions, including projections of taxable income. Changes in these
          assumptions should not have a material impact on results.

g)
          Severance Indemnities:The Company and most of its subsidiaries
          have agreed with their personnel to the payment of long-term severance
          indemnities. The accrued liability covering this obligation is reported under
          Long-term liabilities. It has been calculated for years 2002 and 2003 based on
          the present value of the obligation, assuming a 7% discount rate and an average
          employee tenure based on the legal retirement age (65 for men and 60 for women).

h)
                                 Investments:The investments in Argentinean subsidiaries,
                                 CICSA and Finca La Celia, are recorded in accordance with Technical
                                 Bulletin No. 64 of the Chilean Institute of Accountants. Under this
                                 pronouncement, the financial statements of foreign subsidiaries, which
                                 operate in countries that are exposed to significant risks, restrictions
                                 or inflation/exchange fluctuations must be remeasured into U.S. dollars
                                 and translated into Chilean pesos at the year-end exchange rate. As
                                 a result, no effect is given to

66

price-level
                restatements based on inflation in those countries and the U.S. dollar
                is considered to be the functional currency of these operations. Accordingly,
                the financial statements of the Argentinean subsidiaries are prepared
                in accordance with Chilean GAAP except for the application of monetary
                correction and then remeasured into U.S. dollars as follows:

|1) | Monetary
assets and liabilities at the closing exchange rate for the period;
|-- | ----------------------------------------------------------------------------

|2) | All
other assets and liabilities and shareholders' equity are expressed in historical U.S.
dollars;
|-- | ---------------------------------------------------------------------------------------------------

|3) | Income
and expenses accounts at average rate during the period;
|-- | ---------------------------------------------------------------

|4) | The
resulting exchange adjustments are included in the results of operations.
|-- | -----------------------------------------------------------------------------

The resulting U.S. dollar amounts are
then translated to Chilean pesos at the Observed Exchange Rate of the U.S. dollar in
relation to the Chilean pesos at the balance sheet date. The net equity in the foreign
subsidiaries in Chilean pesos is compared to the investment valued by the equity method at
the beginning of the year, as adjusted for price-level changes in Chile during the year.
Any difference between the Companys participation in the equity of the subsidiaries
and the investment therein as adjusted for Chilean inflation, arises from exchange
adjustments, which are included in the Cumulative Translation Adjustment account in the
equity section of the balance sheet under Chilean GAAP.

Argentine investments are subject to
risk and certain restrictions due to potential inflationary and exchange risk. Impairment
tests are performed on these and all investments when facts and circumstances indicate
that there may be impairment. This process requires managements assessment of
current conditions and managements estimate of future cash flows and future economic
conditions. Any impairment loss is measured on the basis of the difference between the
carrying value and fair value of these investments.

Trend Information

As described under Item 4:
Information on the Company  Business Overview and  Operating
Results, the most significant trend affecting our results of operations currently
and during the past five fiscal years has been the prolonged recession in Argentina which
culminated in an economic crisis in late 2001, and the stagnated consumption due to the
weak economic recovery after its 1999 recession in Chile.

After four years of recession in
Argentina, during 2003 the economy stabilized, evidenced by significant increases in
consumption and prices in the beer industry. However, current prices in U.S. dollar terms
are still significantly lower than those prevailing in December 2001, before the Argentine
peso devaluation. This positive tendency has continued throughout the first five months of
2004. Nevertheless, further recovery in Argentina will depend on deep structural reforms
in many areas, including the relationship between the federal government and the
provinces, regulations in many markets, the resumption of external debt service, as well
as the solution of the energy crisis.

Revenues from CCU Argentina in
Chilean pesos are also subject to the volatility of exchange rates of the Chilean peso,
U.S. dollar and Argentine peso in any given period, which may also affect the level of
income reported from our foreign operations under Chilean GAAP.

The Chilean economy experienced
moderate growth of 3.3% in 2003. It is beginning to feel the rebound of the global economy
and growth estimates for 2004 are between 4.5% and 5.5%. On the domestic side of the
economy, consumer demand has increased over the last year, growing by 3.7% in 2003, and
interest rates are at historically low levels. In spite of the favorable economic climate,
there can be no assurance that our products consumption will grow in the
same proportion. Our margins in the domestic businesses should benefit from the
current lower average exchange rate as compared with 2003, if the exchange rate
follows the same tendency throughout the year. We expect that our wine business
should improve its

67

profitability
                level, both in domestic and export markets, due to the measures we are implementing
                to rationalize costs and expenses, reduce SKUs, optimize prices and focus on
                the main export markets.

In addition, our beer brands in Chile
may face increased competition from other brewers as well as from alcoholic beverages such
as wine and spirits, and non-alcoholic beverages such as soft drinks. Beer consumption in
Chile historically has been influenced by changes in domestic wine prices. Increases in
domestic wine prices have tended to lead to increases in beer consumption, while
reductions in wine prices have tended to reduce or slow the growth of beer consumption.
However, this correlation has not been observed clearly in the past five years due to the
low level of wine consumption and factors like higher wine quality and awareness of the
positive effects of moderate wine consumption on health. Similarly, the price of soft
drinks has decreased relative to the price of beer over the past few years, due to lower
packaging costs and the introduction of larger packaging formats, which may also affect
further growth in beer consumption.

In recent months, the Argentine
government began restricting gas exports to Chile due to supply problems in that country.
This situation will have a cost effect on our beer production plants in Chile and
Argentina, as well as our soft drinks plants in Chile. Additionally, we expect an increase
in electrical power costs, related to these same gas restrictions. We do not need
additional investments because our boilers can work with gas or with alternative fuels,
such as diesel oil. Considering the current energy prices, we estimate that the higher
costs at a consolidated level should not exceed Ch$1,100 million for 2004.

68

Table of Contents

# ITEM 6: Directors,
Senior Management and Employees

# Directors and Senior
Management

The following table sets forth
certain information with respect to our executive officers and members of our board of
directors, as of May 31, 2004:

|Directors             | Position                   | Position Held Since       | At CCU Since    
|--------------------- | -------------------------- | ------------------------- | ----------------
|                      |                            |                           |                 
|                     
|Guillermo Luksic (1)  | Chairman of the Board and  | September 1990 (Chairman) | November 1986   
|                      | Director                   | November 1986 (Director)  | November 1986   
|Giorgio Maschietto    | Vice Chairman of the Board | May 2001 (Vice Chairman)  | April 2001      
|                      | and Director               | April 2001 (Director)    
|Jorge Carey           | Director                   | April 2001                | April 2001      
|Andronico Luksic (1)  | Director                   | November 1986             | November 1986   
|Manuel Jose Noguera   | Director                   | May 1987                  | May 1987        
|Carlos Olivos         | Director                   | October 2003              | October 2003    
|Philippe Pasquet      | Director                   | June 2003                 | June 2003       
|Francisco Perez       | Director                   | July 1998                 | February 1991   
|Alejandro Strauch     | Director                   | July 2003                 | July 2003       
|                     
|Senior Management     | Position                   | Position Held Since       | At Company Since
|                      |                            |                           |                 
|                     
|Patricio Jottar       | Chief Executive Officer    | July 1998                 | July 1998       
|Dirk Leisewitz        | General Comptroller        | Mayo 1988                 | December 1987   
|Jorge Aninat          | Engineering Manager        | March 1996                | April 1977      
|Ricardo Bartel        | Chief Financial Officer    | May 2004                  | May 1990        
|Marisol Bravo         | Corporate Affairs and      | June 1994                 | July 1991       
|                      | Public Relations Manager  
|Pablo De Vescovi      | Human Resources Manager    | September 1998            | November 1994   
|Francisco Diharasarri | ECUSA Manager              | October 2003              | June 1985       
|Johan Doyer           | CCU Chile Manager          | November 2003             | November 2003   
|Alvaro Fernandez      | Pisconor Manager           | September 2002            | September 1998  
|Hugo Ovando           | Development Manager        | September 2002            | September 1997  
|Ricardo Reyes         | Vina San Pedro Manager     | May 2004                  | July 1996       
|Margarita Sanchez     | Chief of Legal Division    | November 1986             | April 1972      
|Fernando Sanchis      | CCU Argentina Manager      | May 1995                  | May 1995        

---

|(1) | Guillermo
Luksic and Andronico Luksic are brothers.
|--- | ---------------------------------------------------

Guillermo Luksic (48), has
served as our Chairman of the Board and Director since September 1990 and November 1986,
respectively. He is currently Chairman of the Board of Directors of Quiñenco S.A.,
Telefónica del Sur S.A. and Madeco S.A., as well as a member of the board of
directors of several other companies, including, Banco de Chile and IRSA.

Giorgio Maschietto (64), has
served as our Vice Chairman of the Board and Director since April 2001. He is also
currently a member of the board of directors of Viña San Pedro S.A., ECUSA,
IRSA, Cecinas San Jorge S.A. and Multitiendas Corona S.A. Until his retirement
in 1998, he held several positions at

69

Unilever in Italy,
                United Kingdom and Chile. He received a degree in Chemical Engineering from
                the Catholic University of Chile.

Jorge Carey (61), has served
as our Director since April 2001. He is currently senior partner at the law firm Carey y
Cía. Ltda., as well as member of the board of directors of several corporations,
including Cemento Melón S.A., ING Chile, Enaex, Masisa, Terranova, Aur Mining
Corporation and Chile Moneda Fund. He received his law degree from the Catholic University
of Chile and his Masters degree in Comparative Jurisprudence from the New York
University Law School.

Andrónico Luksic (50),
has served as our Director since November 1986. He is currently Vice Chairman of the Board
of Banco de Chile and Quiñenco S.A., as well as a member of the board of directors
of several other companies, including Madeco S.A.

Manuel José Noguera
(54), has served as our Director since May 1987. He is currently Chief Legal Counsel of
Quiñenco S.A. and senior partner at the law firm Morales, Noguera, Valdivieso y
Besa Ltda. He has been working with the Luksic group for over 29 years. He is member of
the board of several companies, including IRSA, Calaf S.A. and LQ Inversiones Financieras
S.A. He received his law degree from the Catholic University of Chile.

Carlos Olivos (62), has served
as our Director since October 2003. He is currently senior partner at the law firm
Guerrero, Olivos, Novoa y Errázuriz Ltda., as well as member of the board of
directors of IRSA, Banco Santander Santiago S.A. He received his law degree from the
University of Chile and his Masters degree in Comparative Jurisprudence from the New
York University Law School.

Phillipe Pasquet (65), has
served as our Director since June 2003. He is currently Heinekens Director for Latin
America and has been working for Heineken since 1976. He is member of the board of
directors of CCU Argentina S.A., Viña San Pedro S.A., ECUSA and IRSA, as well as
other Heineken companies in France. He received degrees from the Ecole Superieure de
Commerce at Dijon, France, the Institut International de Commerce at Paris, and
the Centre Europeen dEducation Permanente at Fontainebleau, France.

Francisco Pérez (46),
has served as our Director since July 1998. He is Chief Executive Officer of
Quiñenco S.A. since 1998. Prior to joining Quiñenco, he was our CEO between
1991 and 1998. He is member of the board of several companies, including CCU Argentina
S.A., ECUSA, Viña San Pedro S.A., IRSA, Banco de Chile, LQ Inversiones Financieras
S.A. and Calaf S.A. He received a degree in Business Administration from the Catholic
University of Chile and a Masters degree in Business Administration from the
University of Chicago.

Alejandro Strauch (38), has
served as our Director since July 2003. He is currently Anheuser-Busch International Inc.
Regional Vice President Central and South America and has been working with Anheuser-Busch
since 1992. He is also a member of the board of directors of CCU Argentina S.A. and Grupo
Modelo in Mexico. He received a degree in architecture from the Republic University in
Uruguay and a Masters degree in Business Administration from the University of
Chicago.

Patricio Jottar (41), has
served as our Chief Executive Officer since 1998. He is also currently a Director of CCU
Argentina, ECUSA, Calaf S.A., Cervecería Austral S.A. and Compañía
Cervecera Kunstmann S.A. and is Chairman of the Board of Viña San Pedro. Prior to
joining us, he was Chief Executive Officer of Santander Chile Holding. He received a
degree in Business Administration from the Catholic University of Chile and a
Masters degree in Economics and Business Administration from the Instituto de
Estudios Superiores de la Empresa(IESE), in Barcelona, Spain.

Dirk Leisewitz (58),
                is our General Comptroller and has been with us since 1987. He is currently
                Chairman of the Board of Viña Santa Helena S.A., as well as Director
                of Cervecería Austral S.A.,
Compañía Cervecera Kunstmann S.A. and Clínica Alemana S.A.,
a major hospital in Chile. Additionally, he is member of the board of the Chilean-German
Chamber of Commerce and Industry. Prior to joining us, he was Division Manager
of the Morgan Guaranty Group in Chile. He received a degree in Civil Engineering
from

70

the University
                of Chile, and a Masters in Administration and Management from the Catholic
                University of Louvain in Belgium.

Jorge Aninat(55), is our
Engineering and Project Manager and has been with us since 1977. Prior to his current
position he was Development Manager and Central Soft Drinks Division Manager. He received
a degree in Civil Engineering from the State Technical University of Chile.

Ricardo Bartel (39), is our
Chief Financial Officer and he has been with us since 1990. Prior to his current position,
he was General Manager of Transportes CCU. Among other assignments in different areas, he
was Sales and Brand Manager at CCU Chile. He received a degree in Civil Engineering from
the Catholic University of Chile and an Executive Masters degree in business
administration from the same university.

Marisol Bravo (44), is our
Corporate Affairs and Public Relations Manager and has been with us since 1991. Prior to
her current position she was Head of Special Projects. Before joining us, she was
Assistant Manager of Marketing at Citicorp Mutual Funds. She received a degree in Business
Administration from the University of Chile.

Pablo De Vescovi (51), is our
Human Resources Manager and has been with us since 1994. Prior to serving in this capacity
he was Human Resources Manager of ECUSA. Before joining ECUSA he was the Human Resources
Manager of Embotelladora Chile S.A. (Embochile), a former PepsiCo bottler, and
Human Resources Vice President of The Chase Manhattan Bank in Chile. He received a degree
in Business Administration from the Catholic University of Chile.

Francisco Diharasarri (43), is
the General Manager of ECUSA and has been with us since 1985. Prior to his current
position, he was General Manager of CCU Chile, General Manager of ECUSA and General
Manager of PLASCO. He is also currently Chairman of the Board of Calaf S.A. He received a
degree in Civil Engineering from the University of Chile.

Johan Doyer (51), is the
General Manager of CCU Chile and has been with us since 2003. He has been working with
Heineken since 1978, in different countries around the world, in marketing and sales
positions, as well as General Management. Prior to joining us he was General Manager at a
Heineken brewery in the Democratic Republic of Congo, and also in Burundi, Reunion Islands
and Vietnam. He received a degree in Industrial Engineering from TH Eindhoven of the
Netherlands and a Masters degree in Business Administration from INSEAD in France.

Alvaro Fernández (37),
is the General Manager of Pisconor and has been with us since 1998. Prior to his current
position, he was our Development Manager. He is also Director of Cervecería Austral
S.A. and Compañía Cervecera Kunstmann S.A. Prior to joining us he was
Commercial Manager of Santander Life Insurance Company and Vice President of Citicorp. He
received a degree in Business Administration from the Catholic University of Chile.

Hugo Ovando (33), is our
Development Manager and has been with us since 1997. Prior to his current position, he was
Corporate Projects Manager. He received a degree in Business Administration from the
Catholic University of Chile and a Masters degree in Business Administration from
Babson College.

Ricardo Reyes(49), is the
General Manager of VSP and he has been with us since 1996. Prior to his current position,
he was our Chief Financial Officer for almost 8 years. Prior to joining us, he worked 18
years at Esso Chile Petrolera, an Exxon affiliate, holding the positions of Operations
Manager, Financial and Planning Manager, and Information System Manager. He received a
degree in Civil Engineering from the Catholic University of Chile.

Margarita Sánchez (60),
is our Chief of Legal Division and has been with us since 1972. Prior to her current
position, she was our Counsel and Chief Counsel. She received her law degree from the
University of Chile.

71

Fernando Sanchis (43), is the
General Manager of CCU Argentina and has been with us since 1995. Prior to joining us, he
was Chief Financial Officer of Embochile, a former PepsiCo bottler and held the same
position at Uruguays PepsiCos bottler. He received an accounting degree from
the Buenos Aires University of Argentina.

Our senior management is full time
employees, therefore, they do not perform business activities outside us. The principal
business activities of our directors are summarized in the following table:

|Directors           | Business Activities                                       
|------------------- | ----------------------------------------------------------
|                    |                                                           
|                   
|Guillermo Luksic    | Chairman of Quinenco                                      
|Giorgio Maschietto  | Director of Companies                                     
|Jorge Carey         | Attorney-at-Law                                           
|Andronico Luksic    | Vice Chairman of Banco de Chile                           
|Manuel Jose Noguera | Legal Counsel of Quinenco                                 
|Carlos Olivos       | Attorney-at-Law                                           
|Philippe Pasquet    | Heineken's Director for Latin America                     
|Francisco Perez     | Quinenco's CEO                                            
|Alejandro Strauch   | Anheuser-Busch International, Inc. Regional Vice President
|                    | Central and South America                                 

On January 13, 2003, the existing
shareholders agreement was amended in order to allow the Schörghuber Group to
sell its interest in IRSA to Heineken Americas B.V., a subsidiary of Heineken
International B.V. On April 17, 2003, the Schörghuber Group gave Quiñenco
formal notice of the sale of its interest in IRSA to Heineken International B.V.
Currently, Heineken Chile Ltda., a Chilean limited corporation controlled by Heineken
Americas B.V., owns 50% of IRSAs shares. As of December 31, 2003, IRSAs
primary shareholders agreement gives Quiñenco the right to propose to our
board of directors the candidates for Chief Executive Officer, and to Heineken Chile Ltda.
our General Comptroller and CCU Chiles General Manager. On the other hand, under the
agreement, neither Quiñenco nor Heineken Chile Ltda. can separately, directly or
indirectly, buy or sell our shares.

# Compensation

For the year ended December 31,
2003, the aggregate amount of compensation paid and the expenses reimbursed by us to all
our directors was Ch$1,275 million.

Each year, our board of directors
makes a proposal to the shareholders regarding their compensation, which is generally
approved during the annual general shareholders meeting. In accordance with the
decisions made at a shareholders meeting, the compensation of our board of directors
consists of a fixed monthly fee of UF 100 per board member, and twice as much for the
Chairman, along with profit-sharing equivalent to 5% of distributed dividends. By a board
decision, this last percentage was not applied to the extraordinary dividend of Ch$168,700
million paid during 2003. Additionally, the board members that participate in the Audit
Committee and in the Business Committee, receive a compensation of UF25 and UF17,
respectively, by each session they assist. In 2003, total compensation paid by us and our
subsidiaries to each of our directors for services rendered was as follows:

|Director           | Attendance
     meetings fee (1) | Dividendparticipation | Subtotal   | Expensereimbursement | Total     
|------------------ | -------------------------------- | --------------------- | ---------- | -------------------- | ----------
|                   |                                  |                       |            |                      |           
|                   | (thousands of Ch$)              
|                  
|Guillermo Luksic   | Ch$43,700                        | Ch$114,395            | Ch$158,095 | Ch$-                 | Ch$158,095
|Giorgio Maschietto | 24,294                           | 114,395               | 138,689    | -                    | 138,689   
|Johannes Bauer (2) | 10,409                           | 114,395               | 124,804    | 13,082               | 137,886   
|Jorge Carey        | 23,532                           | 114,395               | 137,927    | -                    | 137,927   
|Peter Hellich (3)  | 15,192                           | 114,395               | 129,587    | 6,731                | 136,318   
|John Koykka (4)    | 12,673                           | 114,395               | 127,068    | -                    | 127,068   

72

|Director              | Attendancemeetings | Dividendparticipation | Subtotal | Expensereimbursement | Total  
|--------------------- | ------------------ | --------------------- | -------- | -------------------- | -------
|                      |                    |                       |          |                      |        
|                      | (thousands of Ch$)
|                     
|Andrónico Luksic      | 20,269             | 114,395               | 134,664  | -                    | 134,664
|Manuel José Noguera   | 20,269             | 114,395               | 134,664  | -                    | 134,664
|Carlos Olivos (3)     | 5,077              | -                     | 5,077    | -                    | 5,077  
|Philippe Pasquet (2)  | 11,010             | -                     | 11,010   | -                    | 11,010 
|Francisco Pérez       | 29,112             | 114,395               | 143,507  | 429                  | 143,936
|Alejandro Strauch (4) | 10,148             | -                     | 10,148   | -                    | 10,148 

---

|(1) | Include
remuneration for members of the Directors and Business Committees.
|--- | --------------------------------------------------------------------------

|(2) | Mr.
Philippe Pasquet was designated as a permanent Board member in June 2003, after the
     resignation of Mr. Johannes Bauer.
|--- | -------------------------------------------------------------------------------------------------------------------------------

|(3) | Mr.
Carlos Olivos was designated as a permanent Board member in October 2003, after the
     resignation of Mr. Peter Hellich.
|--- | ------------------------------------------------------------------------------------------------------------------------------

|(4) | Mr.
Alejandro Strauch was designated as a permanent Board member in July 2003, after the
resignation of Mr. John Koykka.
|--- | ------------------------------------------------------------------------------------------------------------------------

For the year ended December 31, 2003,
the aggregate amount of compensation paid to our senior managers, to the area managers of
our operating subsidiaries and to the managers of the service units that report to our
CEO, was Ch$4,260 million (Ch$3,663 million in 2002). We do not and are not required under
Chilean law to disclose to our shareholders or otherwise make public information as to the
compensation of our individual senior managers.

We do not maintain any stock option,
pension or retirement programs for our directors or senior managers.

Board Practices

We are managed by our board of
directors which, in accordance with our bylaws (Estatutos), must consist of nine
directors who are elected at the annual shareholders meeting. The entire board of
directors is elected for three years and the last election of directors took place in
April 2004. The board of directors may appoint replacements to fill any vacancies that
occur during periods between annual shareholders meetings. If such a vacancy occurs,
the entire board of directors must be renewed at the next following annual
shareholders meeting. Our senior managers are appointed by the board of directors
and hold office at the discretion of the board of directors. There are regularly scheduled
meetings of the board of directors once a month; extraordinary meetings are specially
summoned by the Chairman at the request of any of the board of directors members. The
board of directors does not have an executive committee. The directors service
contracts do not contain any provisions for benefits upon termination of employment.

Audit Committee. The Chilean
Corporations Act was amended, effective December 20, 2000. The following is a summary
of the main provisions of the amendment. Under the amendment, the boards of directors of
corporations whose market capitalization reaches or exceeds 1.5 million Unidades
de Fomento (as of May 31, 2004 approximately US$39.9 million) shall designate an audit
committee, (the audit committee), referred to in the Chilean Corporations Act
as the comité de directores or directors committee). If the
market capitalization falls below this threshold, the obligation to designate an audit
committee disappears. However, corporations, which do not reach the threshold, may
voluntarily assume the obligations concerning the audit committee, in which case they
shall strictly follow the provisions of the amendment.

The audit committee, as defined and
mandated under the Chilean Corporations Act, does not satisfy the audit committee
requirements of Rule 10A-3 under the Exchange Act and certain additional requirements
under NYSE Rule 303A, with which we will be required to comply by July 31, 2005.

The audit committee has the following
powers and duties:

73

- to examine the
independent accountants' reports, the balance sheets, and other financial statements
submitted by the               corporation's managers or liquidators to the shareholders,
and issue an opinion about them prior to their submission for               shareholder
approval;

- to propose to the
board of directors the independent accountants and the risk rating agencies, which the
board must then               propose to the shareholders.  Should the board of directors
disagree with the audit committee's proposal, the board               shall be entitled
to make its own proposal, submitting both to the shareholders for their consideration;

- to examine the
documentation concerning (i) contracts or agreements in which directors have an interest
and (ii) transactions               between related or affiliated companies, and to
produce a written report on such documentation.  A copy of the report               shall
be delivered to the Chairman of the board, who shall read it at the board meeting in
which the relevant               transaction is presented for approval or rejection;

- to examine the
managers' and chief executives' remuneration policies and compensation plans; and

- all other matters
contemplated in our bylaws or entrusted to the audit committee by a shareholders' meeting
or the board of               directors.

For purposes of the related party
transactions mentioned in the third bullet point above, the following persons are
considered by the Securities Market Law and the Chilean Corporations Act to be related to
a company:

- any entities
within the financial conglomerate to which the company belongs;

- corporate
entities that have, with respect to us, the character of parent company, affiliated
company, subsidiary or related               company.  Parent companies are those that
control directly or indirectly more than 50% of the subsidiary's voting stock
              (or participation, in the case of business organizations other than stock
companies), or that may otherwise elect or               appoint, or cause the election
or appointment, of the majority of the directors or officers.  Limited partnerships
              (sociedades en comandita) may likewise be affiliates of a corporation,
whenever the latter has the power to direct or               guide the administration of
the general partner (gestor) thereof.  Related companies are those that, without actually
              controlling the affiliate, own directly or indirectly 10% or more of the
affiliate's voting stock (or participation, in               the case of business
organizations other than stock companies), or that may otherwise elect or appoint, or
cause the               election or appointment of at least one board member or manager;

- persons who are
directors, managers, administrators or liquidators of us, and their spouses or their
close relatives (i.e.,               parents, father/mother in law, sisters, brothers,
sisters/brothers in law); and

- any person who,
whether acting alone or in agreement with others, may appoint at least one member of our
management or               controls 10% or more of our voting capital.

In addition, the Superintendency of
Securities and Insurance may create a presumption that any individual or corporate entity
is related to a company if, because of relationships of equity, administration, kinship,
responsibility or subordination, the person:

- whether acting
alone or in agreement with others, has sufficient voting power to influence our
management;

- creates conflicts
of interest in doing business with us;

74

- in the case of a
corporate entity, is influenced in its management by the company; or

- holds an
employment or position which affords the person access to non-public information about us
and our business, which               renders the person capable of influencing the value
of the company's securities.

However, a person shall not be
considered to be related to a company by the mere fact of owning up to 5% of the company,
or if the person is only an employee of the company without managerial responsibilities.

The audit committees
discussions, agreements, and organization are regulated, in every applicable matter, by
the Chilean Corporations Act provisions relating to board of directors meetings. The
audit committee shall inform the board of directors about the manner in which it will
request information and about its resolutions.

In addition to the general
liabilities imputable to any director, the directors that compose the audit committee
shall, in the exercise of their duties, be jointly and severally liable for any damage
caused to the corporation or the shareholders.

The audit committee shall be composed
of three members, the majority of which shall be independent. Independent directors are
those that would have been elected even if the votes cast in the directors favor by
the controlling shareholder and its related persons had not been counted. However, a
majority of directors related to the controlling shareholder is permissible if there is an
insufficient number of independent directors. Should there be more than three directors
entitled to participate in the audit committee, the board of directors shall elect the
members of the audit committee by unanimous vote. Should the board of directors fail to
reach an agreement, the matter shall be decided by drawing. Our audit committee is
composed of Messrs. Jorge Carey, Alejandro Strauch and Francisco Pérez, of whom the
first two are independent directors and the third one appointed with the controlling
shareholders votes.

The members of the audit committee
shall be remunerated. The amount of such remuneration shall be established annually by the
shareholders, taking in consideration the duties that the audit committee members shall
perform. The remuneration of our audit committee members is 25 Unidades de Fomento
(as of May 31, 2004, approximately US$666) per audit committee meeting.

The shareholders shall determine the
budget of the audit committee and those of its advisors, and the audit committee shall be
allowed to request the recruitment of professionals to fulfill its duties, within the
limits imposed by the budget. The activities of the audit committee and its expenses,
including its advisors expenses, shall be included in the annual report and conveyed
to the shareholders. The budget of our audit committee and its advisors is 1,000
Unidades de Fomento(as of May 31, 2004, approximately US$26,628).

# General summary of
significant differences with regard to corporate government standards

The following paragraphs provide a
brief, general summary of significant differences between corporate government practices
followed by us pursuant to our home-country rules and those applicable to U.S. domestic
issuers under New York Stock Exchange (NYSE) listing standards.

Composition of the board of
directors; independence. The NYSE listing standards provide that listed companies must
have a majority of independent directors and that certain board committees must consist
solely of independent directors. Under NYSE rule 303A.02, a director qualifies as
independent only if the board affirmatively determines that such director has no material
relationship with the company, either directly or indirectly. In addition, the NYSE
listing standards enumerate a number of relationships that preclude independence.

Under Chilean
                law there is no legal obligation to have independent directors. However, Chilean
                law establishes a number of principles of general applicability designed to
                avoid conflicts of interests and to establish standards for related party transactions.
Specifically, directors elected by a group or class of

75

shareholders
                have the same duties to the company and to the other shareholders as the rest
                of the directors, and all transactions with the company in which a director
                has an interest, either personally (which includes the directors spouse
        and certain relatives) or as a representative of a third party, require prior approval by
        the board of directors and must be entered into on market terms and conditions.
        Furthermore, such transactions must be reviewed by the audit committee (as defined below)
        and disclosed at the next meeting of shareholders. Pursuant to NYSE rule 303A.00, we may
        follow Chilean practices and are not required to have a majority of independent directors.

Committees. The NYSE listing standards require that listed companies have a
          Nominating/Corporate Governance Committee, a Compensation Committee and an Audit
          Committee. Each of these committees must consist solely of independent directors
          and must have a written charter that addresses certain matters specified by the
          listing standards.

Under Chilean law, the only board
committee that is required is the audit committee (comité de directores),
composed of three members, such committee having a direct responsibility to (a) review the
companys financial statements and the independent auditors report and issue an
opinion on such financial statements and report prior to their submission for
shareholders approval, (b) make recommendations to the board of directors with
respect to the appointment of independent auditors and risk rating agencies, (c) review
transactions in which directors have an interest and transactions between affiliated
companies, and issue a report on such transactions, (d) review the Chief Executive
Officers (CEO) and principal executive officers compensation
policies and plans and (e) perform other duties as defined by the companys charter,
by the general shareholders meeting or by the board. A director who is a member of
the audit committee is independent if, subtracting the votes of the
controlling shareholder and its affiliates from the total number of votes given in favor
of such director, he or she would have been nevertheless elected. Directors elected with
the votes of the controlling shareholder and its affiliates may constitute the majority of
the audit committee if there are not enough independent directors on the board.

However, pursuant to NYSE Rule
303A.06, we must have an audit committee that satisfies the requirements of Rule 10A-3
under the Exchange Act and the additional requirements under NYSE Rule 303A by July 31,
2005. Therefore, we must establish an independent audit committee and a written audit
committee charter addressing the audit committees purpose and responsibilities by
July 31, 2005.

Shareholder approval of
equity-compensation plans. Under NYSE listing standards, shareholders must be given
the opportunity to vote on all equity-compensation plans and material revisions thereto,
with limited exemptions. An equity-compensation plan is a plan or other
arrangement that provides for the delivery of equity securities of the listed company to
any employee, director or other service provider as compensation for services.

Under Chilean law, if previously
approved by shareholders at an extraordinary shareholders meeting, up to ten percent
of a capital increase in a publicly traded company may be set aside to fund
equity-compensation plans for the companys employees and/or for the employees of the
companys subsidiaries. Pursuant to NYSE rule 303A.00, as a foreign issuer, we may
follow Chilean practices and are not required to comply with the NYSE listing standards
with respect to shareholder approval of equity-compensation plans.

Corporate Governance Guidelines.The NYSE listing standards provide that listed companies must adopt and disclose
corporate governance guidelines with regard to (a) director qualifications standards; (b)
director responsibilities; (c) director access to management and independent advisors; (d)
director compensation; (e) director orientation and continuing education; (f) management
succession; and (g) annual performance evaluation of the board.

Chilean law does
                not require that such corporate governance guidelines be adopted. Director
                responsibilities and access to management and independent advisors are directly
                provided for by applicable law. Director compensation is approved by the annual
                meeting of shareholders pursuant to

76

applicable law.
                As a foreign issuer, we may follow Chilean practices and are not required to
                adopt and disclose corporate governance guidelines.

Code of Business Conduct and
Ethics.The NYSE listing standards require that listed companies adopt and disclose a
code of business conduct and ethics for directors, officers and employees, and promptly
disclose any waivers of the code for directors or executive officers.

We have adopted a code of business
conduct and ethics that applies generally to all of our executive officers and employees.
A copy of the code of ethics is available in our website at www.ccu-sa.com.

Executive Sessions. To empower
non-management directors to serve as a more effective check on management, NYSE listing
standards provide that non-management directors of each company must meet at regularly
scheduled executive sessions without management.

Under Chilean law, the office of
director is not legally compatible with that of a company officer in publicly traded
companies. The board of directors exercises its functions as a collective body and may
partially delegate its powers to executive officers, attorneys, a director or a board
commission of the company, and for specific purposes to other persons. As a foreign
issuer, we may follow Chilean practices and are not required to comply with the NYSE
listing standard for executive sessions.

Certification Requirements.
Under NYSE listing standards, Section 303A.12(a) provides that each listed company CEO
must certify to the NYSE each year that he or she is not aware of any violation by the
company of NYSE corporate governance listing standards and Section 303A.12(b) provides
that each listed company CEO must promptly notify the NYSE in writing after any executive
officer of the listed company becomes aware of any material non-compliance with any
applicable provisions of Section 303A.

As a foreign private issuer, we must
comply with Section 303A.12(b) of the NYSE listing standards, but we are not required to
comply with 303A.12(a).

# Employees

# Chile

As of December 31, 2001, 2002
and 2003, we had a total of 3,411, 3,462 and 3,349 permanent employees in Chile,
respectively. As of December 2003, 2,139 were represented by 37 labor unions. As of
December 31, 2003, the average tenure of our full-time employees was approximately
nine and a half years.

Unionized employees represent
approximately 65% of our total permanent workforce. Our management believes it generally
has a good relationship with the labor unions representing our employees.

During 2003, 1,438 employees renewed
their collective contracts, all of them for a period of two years. The contract renewals
are expected to increase the unionized workforce costs between 1% and 2%.

All employees who are terminated for
reasons other than misconduct are entitled by law to receive a severance payment. In the
years 2001, 2002 and 2003, we made severance payments in the amounts of Ch$2,477 million,
Ch$1,069 million and Ch$1,262 million, respectively. Permanent employees are entitled to
the basic payment, as required by law, of one months salary for each year, or
six-month portion thereof, worked. This condition is subject to a limitation of a total
payment of no more than 11 months pay for employees hired after August 14, 1981.
Severance payments to employees hired before August 14, 1981 are not subject to any
limitation. Our employees who are subject to collective bargaining agreements have a
contractual benefit to receive a payment in case of resignation, consisting of a payment
of one monthly base salary for each full year worked, not subject to a limitation on the
total amount payable but subject to a limitation on the total number of employees who can
claim the severance benefit during any one year. In 2003, we laid off 322 employees.

77

We do not maintain any pension fund
or retirement program for our employees. Workers in Chile are subject to a national
pension fund law which establishes a system of independent pension plans, administered by
Administradoras de Fondos de Pensiones (AFPs). We have no liability for
the performance of the pension plans or any pension payments to be made to the employees.

In addition to our permanent work
force, as of December 31, 2003, we had 430 temporary employees, who were hired for
specific time periods to satisfy short-term needs.

# Argentina

a) Beer BusinessAs of December 31, 2001, 2002
and 2003, we had a total of 481, 474 and 458 permanent employees respectively. As of
December 31, 2003, 193 employees were represented by three labor unions. Two of the
labor unions are members of one federation, Federación Argentina de Trabajadores
Cerveceros y Afines (the Argentine Beer Workers Federation, or FATCA). As of
December 31, 2003, the average tenure of our employees in Argentina was ten years.

Collective bargaining in Argentina is
done on an industry-wide basis, rather than, as in Chile, on a company-by-company basis.
According to the provisions of an agreement signed in 1975, salary levels of unionized
workers are reviewed periodically. At the end of December 1998, an agreement was
signed regulating working conditions and worker salaries for the period between January 1,
1999 and June 30, 2001. As of December 31, 2003, a new agreement was executed regulating
working conditions and worker remuneration, in similar terms than the 1998 agreement.

In Argentina, as in Chile, all
employees who are terminated for reasons other than misconduct are entitled by law to
receive a severance payment. We made severance payments in connection with our Argentine
beer operations in the amounts of Ch$678 million, Ch$419 million and Ch$47 million, in
2001, 2002 and 2003 respectively. According to the Argentine Labor Law, employees who
joined us before October 1998 are entitled to the basic payment as required by law of one
months salary for each year or fraction thereof worked. This monthly amount cannot
exceed three times the average monthly salary established under the applicable collective
bargaining agreement and cannot be less than the equivalent of two monthly salaries of the
employee. For those employees hired after October 1998, the severance payment is the
equivalent of 8.33% of a monthly salary for each month of tenure. As of January 8, 2002 a
new temporary rule came into force. According to the current labor laws, the severance
payment due to a dismissed employee is to be doubled. This rule, which is included in Law
25561, has been successively extended.

In addition to our permanent work
force, as of December 31, 2003, we had 138 temporary employees, who were hired for
specific time periods to satisfy short-term needs.

b) Wine BusinessAs of December 31, 2003, the first
year that Finca La Celia, the Argentine subsidiary of Viña San Pedro, consolidates
its results, had a total of 94 permanent employees. As of December 31, 2003, 45 were
represented by one labor union. As of December 31, 2003, the average tenure of our
employees in FLC was two years. In addition to our permanent work force in FLC, we had 81
temporary employees, who were hired for specific time periods to satisfy short-term needs.

# Share Ownership

Except as disclosed in Item 7:
Major Shareholders and Related Party Transactions  Major Shareholders, as of
December 31, 2003, our senior management and our board members in the aggregate owned less
than one percent of the our shares.

78

We do not maintain stock option or
other programs involving our employees in the capital of the Company.

Table of Contents

# ITEM 7: Major
Shareholders and Related Party Transactions

# Major Shareholders

Our only outstanding voting
securities are our shares of our common stock. The following table sets forth information
concerning the ownership of our common stock as of May 31, 2004, for each shareholder
known to us to own more than 5% of the outstanding shares of our common stock and for all
of our directors and executive officers as a group:

|Shareholder                   | Number of shares owned | % Ownership
|----------------------------- | ---------------------- | -----------
|                              |                        |            
|Inversiones y Rentas S.A.     | 196,269,358            | 61.62%     
|Anheuser-Busch International 
|Holdings, Inc. Chile II Ltda. | 63,695,333             | 20.00%     
|Our directors and executive  
|officers as a group (1)       | 52,453                 | 0.02%      

---

|(1) | Does
not include the 196,269,358 shares of our common stock owned by Inversiones y Rentas,
which      is 50% beneficially owned by the Luksic family, as discussed below.  Guillermo
Luksic and      Andronico Luksic, our directors, are members of the Luksic family.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In addition, as of May 31, 2004,
JPMorgan Chase Bank, the Depositary for our ADR facility, was the record owner of
9,874,978 shares of our common stock (2.89% of the outstanding common stock) deposited in
our ADR facility.

As of May 31, 2004, we had
approximately 5,570 shareholders of records. All shareholders have equivalent voting
rights.

IRSA is a Chilean privately held
corporation formed for the sole purpose of owning a controlling interest in us. IRSA is
owned 50% by Quiñenco S.A., which is a holding company of the Luksic Group, and 50%
by Heineken Chile Ltda., a subsidiary of Heineken International.

On January 4 and 5, 2001,
Anheuser-Busch International Holdings, Inc. acquired 23,887,716 shares of our common stock
from Compañía de Petróleos de Chile S.A., 24,805,929 shares from
local pension funds in an open market purchase in the Santiago Stock Exchange and
3,045,500 shares in an open market transaction in the New York Stock Exchange. As a result
of these transactions, Anheuser-Busch International Holdings, Inc. became the owner of a
16.2% stake in us. During the year 2001, Anheuser-Busch International Holdings, Inc.
continued buying our shares in the market, becoming the owner of a 20% of our capital
stock, as of December 2001. Anheuser-Busch International Holdings, Inc. transferred its
shares to a Chilean corporation named Anheuser-Busch International Holdings, Inc. Chile II
Ltda., which, as of May 31, 2004, owns 20% of our equity.

On March 9, 2004, Anheuser- Busch
Companies Inc., or A-BC, informed us that it was considering a possible disposition,
through an underwritten secondary offering in Chile and in the international markets, of
the shares of common stock held by its affiliate Anheuser-Busch International Holdings,
Inc. Chile II Ltda. Currently, and as requested by A-BC, we are negotiating the form and
conditions under which such possible offering might be effected with the support of our
management. As of the date of this annual report, there can be no assurance that A-BC will
consummate a secondary offering or other disposition of our shares.

79

# Related Party
Transactions

Article 89 of the Chilean
Corporations Act, Law N° 18.046, requires that transactions with related parties be on
terms similar to those of an arms length transaction. Directors and executive
officers of companies that violate Article 89 are liable for losses resulting from such
violations. In addition, Articles 44 and 50 of the Chilean Corporations Act provide that
any related party transaction, including any transaction in which a director has a
personal interest or is acting on behalf of a third party, may be executed only when such
transaction is disclosed to the audit committee and previously approved by the board of
directors, and the terms of such transaction are similar to those of an arms length
transaction. If the conflicting interest transaction involves a material
amount, the board of directors is required to produce a statement declaring in
advance that the conflicting interest transaction is similar in its terms to an arms
length transaction. A conflicting interest transaction is deemed to involve a
material amount if the amount involved is both greater than UF2,000 (as of May
31, 2004, approximately US$53,256) and exceeds 1% of the assets of the corporation, or if
the amount exceeds UF20,000 (as of May 31, 2004, approximately US$532,562) regardless of
the size of the corporation.

If the board of directors believes
that it is not possible to ascertain whether the conflicting interest transaction is
similar to an arms length transaction, it may approve or reject the conflicting
interest transaction, or appoint independent advisors to make such a determination. In
each case, interested directors are excluded from the decision of the board related to the
conflicting interest transaction. If the board appoints independent advisors, the report
prepared by the advisors will be made available to the shareholders and the board of
directors for 20 business days from the date the last report was received from the
independent advisors. The shareholders will be notified in writing of the receipt of the
report. After this period the board may approve or reject the conflicting interest
transaction, but the board is not required to follow the independent advisors
conclusion. The board may treat the conflicting interest transaction and the report as
confidential information. In each circumstance, the interested director would be excluded
from the decision-making process at the board level.

Within a twenty-day period,
shareholders representing at least 5% of the voting shares of the Company may request that
the board call a shareholders meeting in order to approve or reject the conflicting
interest transaction by a two-thirds majority of the outstanding voting shares. All
decisions adopted by the board in respect of the conflicting interest transaction must be
reported at the next shareholders meeting.

The controller of the corporation or
the related party which intends to enter into the conflicting interest transaction shall
make available to the board of directors, at the time the transaction is being considered
by the board, all information relating to the transaction filed with any non-Chilean
regulatory entities or stock exchanges. A violation of Article 44 may result in
administrative or criminal sanctions against the interested director. The Company, the
shareholders or interested third parties who suffer losses as a result of such violation
have the right to receive compensation from such director in certain situations.

In the ordinary course of our
business, we engage in a variety of transactions with certain of our affiliates and
related parties. Financial information concerning these transactions is set forth in Note
16 to our consolidated financial statements.

We engage in a variety of
transactions with affiliates of the Luksic Group and the Schörghuber Group, the
beneficial owners of IRSA until April 17, 2003, as well as with other shareholders of
ours. On that date, the Schörghuber Group gave Quiñenco formal notice of the
sale of its interest in FHI, and therefore in IRSA, to a subsidiary of Heineken
International. Currently, Quiñenco and Heineken Chile Limitada, a Chilean limited
corporation controlled by Heineken Americas B.V. are the only shareholders of IRSA, each
with a 50% equity interest See Item 4: Information on the Company 
Organizational Structure.

On April 28, 2003, we and Heineken
International signed license and technical assistance agreements which provide us with the
exclusive rights to produce, sell and distribute Heineken beer in Chile and Argentina
commencing June 18, 2003. These agreements have an initial term of 10 years beginning in
June 2003, renewable for subsequent periods of five years. See Item 4: Information
on the Company 

80

Business Overview  Our Beer Business in Chile  Beer
        Production and Marketing in Chile and Item 4: Information on the Company
 Business Overview  Our Beer Business in Argentina  Beer Production and
        Marketing in Argentina.

We produce, bottle and distribute
Budweiser beer in Argentina under the licensing agreement executed with Anheuser-Busch in
December 1995, as amended. We and Anheuser-Busch also signed an investment agreement that
gives Anheuser-Busch an option, until 2005, to increase its current participation in CCU
Argentina from 10.8% up to 20.0%. We also sell imported Budweiser beer in Chile. See
Item 4: Information on the Company  Business Overview  Our Beer Business
in Argentina and Item 4: Information on the Company  Business Overview
 Our Beer Business in Chile. As of May 31, 2004, Anheuser-Busch owned 20.0% of
our shares of common stock.

Additionally, we both import and
produce, bottle and distribute Paulaner beer under license from Paulaner Brauerei AG,
which is controlled by the Schörghuber Group. The current import and license
agreement, executed in 1995, which supersedes all prior agreements, provides us with the
exclusive right to produce in Chile super-premium beer under the Paulaner label and
distribute in Chile a variety of additional imported Paulaner products. Its term is five
years, beginning in May 1995, renewable for successive five-year periods beginning in the
year 2000. See Item 4: Information on the Company  Business Overview 
The Companys Beer Business in Chile  Beer Production and Marketing in
Chile. As of the date of this annual report, the import and license agreement
no longer a related party transaction remains in force.

The technical service agreement with
Paulaner-Salvator-Thomasbräu AG (now Paulaner Brauerei AG), executed in 1989,
pursuant to which Paulaner Brauerei AG provided us with know-how for the
production of beer and assistance in the selection and development of raw materials and
the modernization of plant installations, was in force until September 2003.

Finally, we entered into a Framework
Agreement with Banco de Chile, a Quiñenco subsidiary, effective as from May 1,
2003, for the rendering of banking services to us and certain of our subsidiaries and
affiliates, including, among others, payment to suppliers and shareholders, cashier
service, transportation of valuables and payment of salaries. This agreement replaces
prior agreements for the same purpose executed with Banco de A. Edwards, which merged into
Banco de Chile as from January 1, 2002.

Since our audit committee was
established in 2001, all related party contracts have been reviewed by it, and then
approved by the board of directors, which approval also was a standard practice prior to
the creation of the audit committee. Our principal related party contracts include rental
of properties, the rendering of services and product sales.

Our principal transactions with
related parties for the twelve-month period ended December 31, 2003, are detailed
below:

|Company                       | Relationship | Transaction                 | Amounts          
|----------------------------- | ------------ | --------------------------- | -----------------
|                              |              |                             |                  
|                              |              |                             | (thousand of Ch$)
|Banco de Chile                | Affiliate    | Purchase of time deposits   | 477,019,999      
|                              |              | Interest on time deposits   | 401,320          
|                              |              | Services received           | 76,371           
|                              |              | Interest paid               | 199,678          
|                              |              | Collection services         | 171,895          
|                              |              | Forward contract            | 40,152,960       
|                              |              | Loans obtained              | 508,015          
|                              |              | Valuables transport         | 1,742,290        
|                              |              | Sale of products            | 5,876            
|Editorial Trineo S.A.         | Affiliate    | Purchase of products        | 375,118          
|                              |              | Services received (expense) | 50,451           
|Hoteles Carrera S.A.          | Affiliate    | Services received (expense) | 28,674           
|                              |              | Sale of products            | 16,757           
|Inmobiliaria Norte Verde S.A. | Affiliate    | Services received (expense) | 22,504           
|Paulaner Brauerei A.G.        | Affiliate    | Licenses and technical     
|                              |              | assistance received         | 99,998           

81

|Anheuser Busch Inc.                      | Affiliate       | Licenses and technical assistance | 577,698    
|---------------------------------------- | --------------- | --------------------------------- | -----------
|                                         |                 | Purchase of products              | 2,857,826  
|                                         |                 | Sale of products                  | 1,133,210  
|Cotelsa S.A.                             | Affiliate       | Purchase of products              | 68,502     
|                                         |                 | Purchase of pallets               | 111,982    
|Lanzville Investments Establishment      | Affiliate       | Adjustment paid                   | 1,913      
|Alufoil S.A.                             | Affiliate       | Purchase of products              | 755,423    
|Empresa Nacional de Telecomunicaciones   | Affiliate       | Services received (expense)       | 353,774    
|Entel PCS Telecomunicaciones S.A.        | Affiliate       | Services received (expense)       | 488,596    
|Banchile Corredores de Bolsa             | Affiliate       | Purchase of investments           | 174,528,725
|                                         |                 | Interest on investments           | 197,046    
|Anheuser Busch Lat. Corporation          | Affiliate       | Technical assistance (expense)    | 16,641     
|Cerveceria Austral S.A.                  | Equity Investee | Purchase of products              | 4,935      
|                                         |                 | Royalties                         | 463,881    
|                                         |                 | Services rendered (income)        | 10,189     
|                                         |                 | Sale of raw materials             | 49,390     
|                                         |                 | Distribution services             | 17,623     
|                                         |                 | Affiliate payments                | 18,616     
|                                         |                 | Services rendered                 | 59,263     
|                                         |                 | Advertising                       | 20,000     
|Comercial Patagona Ltda.                 | Affiliate       | Purchase of products              | 32,547     
|                                         |                 | Services rendered (income)        | 13,824     
|                                         |                 | Transport                         | 23,890     
|                                         |                 | Sale of products                  | 679,716    
|Compania Cervecera Kunstmann S.A.        | Equity Investee | Purchase of products              | 187,470    
|                                         |                 | Technical assistance recovery     | 27,119     
|                                         |                 | Affiliate payments                | 63,014     
|                                         |                 | Expenses recovery                 | 29,694     
|Soc. Agricola y Ganadera Rio Negro Ltda. | Affiliate       | Purchase of products              | 337,797    
|                                         |                 | Sale of products                  | 9,747      
|Telefonica del Sur Carrier S.A.          | Affiliate       | Services received (expense)       | 8,611      
|Telefonica del Sur S.A.                  | Affiliate       | Services received (expense)       | 2,829      
|Vina Dassault San Pedro S.A.             | Equity Investee | Sale of products                  | 151,323    
|                                         |                 | Reimbursement of expenses         | 17,913     
|Heineken Brouwerijen B.V.                | Indirect        | Services billed                   | 17,965     
|                                         |                 | Licenses and technical assistance | 238,865    
|Vina Tabali S.A.                         | Associated      | Payments on behalf of Tabali      | 395        
|                                         | company        

See Note 16 to our consolidated
financial statements for information about the years 2001 and 2002.

# Interests of Experts and
Counsel

Not applicable

Table of Contents

# ITEM 8: Financial
Information

# Consolidated Statements and
Other Financial Information

See Item 18: Financial
Statements and Exhibits for the Companys Financial Statements and notes,
audited by PricewaterhouseCoopers.

82



# Wine Exports

We, through our
subsidiary VSP, export wine to 70 countries.  VSP is the second largest wine exporter in
Chile.  See "Item 4: Information on the Company - Business Overview - Our Wine Business".

The following table presents our
Chilean wine exports by volume, in Chilean pesos and as percentage of total sales for the
last three years:

|                              | 2001   | 2002   | 2003  
|----------------------------- | ------ | ------ | ------
|                              |        |        |       
|Exports (thousands of liters) | 40,858 | 44,979 | 50,860
|% of total sales              | 3.5%   | 4.4%   | 4.6%  
|                             
|Exports (Ch$ million)         | 46,367 | 51,235 | 51,404
|% of total sales              | 12.4%  | 14.7%  | 13.4% 

# Legal Proceedings

As of May 31, 2004, the Company has
no material legal proceedings.

# Dividend Policy and
Dividends

Our dividend policy is reviewed and
established from time to time by our board of directors and reported to our annual
shareholders meeting, which is generally held in April of each year. Each year our
board of directors must submit its proposal for a final dividend for the preceding year
for shareholder approval at the annual shareholders meeting. As required by the
Chilean Corporations Act, unless otherwise decided by unanimous vote of the issued shares
of our common stock, we must distribute a cash dividend in an amount equal to at least 30%
of our net income for that year, unless and except to the extent we have losses
accumulated from previous years. Our board of directors has the authority to pay interim
dividends during any one fiscal year, to be charged to the earnings for that year.

Our board of directors announced at
our annual shareholders meeting held on April 22, 2004, its decision to maintain the
current dividend policy for future periods, which authorizes distribution of cash
dividends in an amount equal to 50% of our net income under Chilean GAAP for the previous
year. Our dividend policy is subject to change in the future due to changes in Chilean
law, capital requirements, economic results and/or other factors. During our last annual
shareholders meeting, a dividend of Ch$51.5867 per share of common stock was
approved, in addition to the interim dividend of Ch$33.00 per share of common stock
distributed in January 9, 2004. Together, these dividend payments amounted to Ch$26,941
million, representing 50% of 2003 net income available to be distributed as dividend,
after the deduction of the loss of subsidiaries in development period.

Pursuant to a extraordinary
shareholders meeting held on February 26, 2003, we approved the payment, out of
retained earnings, of an extraordinary dividend amounting to Ch$168,700 million (historic
value), which were fully paid in multiple distributions in 2003. In this occasion, our
board members waived their right to a variable compensation of 5% of the distributed
dividend.

Dividends are paid to shareholders of
record as of the fifth business day, including Saturdays, preceding the date set for
payment of the dividend. The holders of ADRs on the applicable record dates are entitled
to dividends declared for each corresponding period.

The following table sets forth the
amounts of interim and final dividends and the aggregate of such dividends per share of
common stock and per ADS in respect of each of the years indicated:

83

|Year ended December 31, | Interim | Ch$ Per share (1)Final (3) | Total  | Interim | US$ Per ADS (2)Final (3) | Total
|----------------------- | ------- | -------------------------- | ------ | ------- | ------------------------ | -----
|                        |         |                            |        |         |                          |      
|                        |         |                            |        |         |                          |      
|1999                    | 26.00   | 38.65                      | 64.65  | 0.25    | 0.38                     | 0.63 
|2000                    | 33.00   | 99.00 (4)                  | 132.00 | 0.29    | 0.82                     | 1.11 
|2001                    | 33.00   | 33.00                      | 66.00  | 0.24    | 0.25                     | 0.49 
|2002                    | 22.00   | 42.60                      | 64.60  | 0.15    | 0.31                     | 0.46 
|2003                    | 33.00   | 51.59                      | 84.59  | 0.29    | 0.41                     | 0.70 

---

|(1) | Interim
and final dividend amounts are expressed in historical pesos.
|--- | ---------------------------------------------------------------------

|(2) | U.S.
dollars per ADR dividend information serves reference purposes only as we pay all
dividends in Chilean pesos.  The          Chilean peso amounts as shown here have been
converted into U.S. dollars at the respective observed exchange rate in effect
         at each payment date.  Note: The Federal Reserve Bank of New York does not
report a noon buying rate for Chilean pesos.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | The
final dividend with respect to each year is declared and paid within the first five
months of the subsequent year.
|--- | ----------------------------------------------------------------------------------------------------------------------

|(4) | The
payment, made on May 9, 2001 considers the final dividend of Ch$7.388 per share common
stock (US$0.06 per ADS) plus an          extraordinary dividend of Ch$91.612 per share of
common stock (US$0.76 per ADS), the latter paid out of retained earnings.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The following table sets forth the
amounts of the extraordinary dividend per share of Common Stock and per ADS paid out of
retained earnings approved at a special shareholders meeting held on February 26,
2003, separated by payment dates:

|Payment dates    | Ch$ Per share (1) | US$ Per ADS (2)
|---------------- | ----------------- | ---------------
|                 |                   |                
|                
|March 14,2003    | 177.00            | 1.18           
|August 29, 2003  | 235.00            | 1.68           
|October 10, 2003 | 117.67            | 0.91           
|                 |                   |                
|Total            | 529.67            | 3.77           
|                 |                   |                

---

|(1) | Dividend
amounts are expressed in historical pesos.
|--- | ---------------------------------------------------

|(2) | U.S.
dollars per ADR dividend information serves for reference purposes only as        the
Company pays all dividends in Chilean pesos. The Chilean peso amounts as shown
       here have been converted into U.S. dollars at the Observed Exchange Rate in effect
       at the date of the first payment. Note: The Federal Reserve Bank of New York does
       not report a noon buying rate for Chilean pesos.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Pursuant to former Chapter XXVI of
the Central Bank Foreign Exchange Regulations, replaced by Chapter XIV, a shareholder who
was not a resident of Chile had to register as a foreign investor in order to have access
to the Formal Exchange Market for remitting abroad any dividends, sales proceeds or other
amounts accruing from shares in a Chilean company (see Item 10: Additional
Information  Exchange Controls  General Legislation and Regulations).
Under our foreign investment contract, the depository, on behalf of ADR holders, will be
granted access to the formal exchange market to convert cash dividends from pesos to
dollars and to pay such dollars to ADR holders outside of Chile. Dividends received in
respect of shares of Common Stock by holders, including holders of ADRs who are not
Chilean residents, are subject to Chilean withholding tax. See Item 10: Additional
Information  Taxation.

# Significant Changes

In January 2004, we entered the
confectionery business by means of a joint venture between our subsidiary, ECUSA and
Empresas Lucchetti S.A. (which has been renamed Industria Nacional de Alimentos
S.A.), a subsidiary of Quiñenco, with a 50% interest each in Calaf S.A., a
corporation that acquired the trademarks, assets and know-how, among other things, of
Calaf S.A.I.C. and Francisca Calaf S.A., traditional Chilean candy makers, renowned for
more than a century. We sell Calafs products together with our soft drinks, with the
potential to reach more than 90,000 clients. This new challenge offers an interesting
growth potential to ECUSA in the ready-to-eat market segment.

84

On March 9, 2004, Anheuser- Busch
Companies Inc., or A-BC, informed us that it was considering a possible disposition,
through an underwritten secondary offering in Chile and in the international markets, of
the shares of common stock held by its affiliate Anheuser-Busch International Holdings,
Inc. Chile II Ltda., representing 20% of our equity. Currently, and as requested by A-BC,
we are negotiating the form and conditions under which such possible offering might be
effected with the support of our management. As of the date of this annual report, there
can be no assurance that A-BC will consummate a secondary offering or other disposition of
our shares. A-BC expressly stated
that the disposition of our shares held by its affiliate will not affect the license
agreement currently in force for Budweiser beer in Argentina

Table of Contents

# ITEM 9: The Offer and
Listing

# Offer and Listing Details

For the periods indicated, the table
below sets forth the reported high and low closing sales prices for the Common Stock on
the Santiago Stock Exchange as well as the high and low sales prices of the ADSs as
reported by NASDAQ or by the NYSE, the latter since March 26, 1999:

|                      | Santiago Stock Exchange
(per share of common stock)(*) | NASDAQ/NYSE (since 3/26/99)
(per ADS)
|--------------------- | ------------------------------------------------------ | -------------------------------------
|                      |                                                        |                                      
|                      | High                                                   | Low                                  
|                      |                                                        |                                      
|                      | (Ch$)                                                  | (Ch$)                                
|Years                
|1999                  | 3,375                                                  | 1,350                                
|2000                  | 3,471                                                  | 2,100                                
|2001                  | 3,085                                                  | 2,250                                
|2002                  | 2,399                                                  | 1,800                                
|2003                  | 2,780                                                  | 2,125                                
|2004 (through May 31) | 3,075                                                  | 2,350                                
|2002                  |                                                       
|1st quarter           | 2,399                                                  | 2,000                                
|2nd quarter           | 2,210                                                  | 1,910                                
|3rd quarter           | 2,180                                                  | 1,800                                
|4th quarter           | 2,175                                                  | 1,800                                
|2003                  |                                                       
|1st quarter           | 2,626                                                  | 2,125                                
|2nd quarter           | 2,450                                                  | 2,200                                
|3rd quarter           | 2,740                                                  | 2,195                                
|4th quarter           | 2,780                                                  | 2,379                                
|2004                  |                                                       
|1st quarter           | 3,075                                                  | 2,500                                
|Last six months      
|December 2003         | 2,680                                                  | 2,540                                
|January 2004          | 2,710                                                  | 2,500                                
|February              | 2,900                                                  | 2,500                                
|March                 | 3,075                                                  | 2,560                                
|April                 | 2,930                                                  | 2,600                                
|May                   | 2,640                                                  | 2,350                                

---

|(*) | Pesos
per share of Common Stock reflect nominal price at trade date.
|--- | --------------------------------------------------------------------

Significant trading suspensions of
the Companys stock have not occurred in the last three years.

85

86

# Plan of distribution

Not applicable

# Markets

Our common stock is currently traded
on the Santiago Stock Exchange, the Chile Electronic Stock Exchange and the
Valparaíso Stock Exchange under the symbol CU. The Santiago Stock
Exchange accounted for approximately 64% of the trading volume of our common stock in
Chile in 2002 and 61% of such volume in 2003. The remaining 36% in 2002 and 39% in 2003
was traded mainly on the Chile Electronic Stock Exchange. Shares of our common stock were
traded in the United States on the NASDAQ stock exchange between September 24, 1992 and
March 25, 1999 and on the NYSE since March 26, 1999, in the form of ADSs, each
representing five shares of our common stock, with ADSs in turn evidenced by ADRs. The
ADSs are issued under the terms of a deposit agreement dated September 1, 1992, as amended
among us, JPMorgan Chase Bank, as depositary and the holders from time to time of the
ADSs.

# Selling Shareholders

Not applicable

# Dilution

Not applicable

# Expenses of the Issue

Not applicable

Table of Contents

# ITEM 10: Additional
Information

# Share Capital

Not applicable

# Memorandum and Articles
of Association

Provided below is a summary of
certain material information found in our bylaws and provisions of Chilean law. This
summary is not exhaustive. For more information relating to the items discussed in this
summary, the reader is encouraged to read our bylaws which have been filed as an exhibit
to our Registration Statement on form F-1, as amended, filed with the Commission on
September 23, 1992 (File No. 033-48592).

Registration and corporate
purposes We are a public corporation (sociedad anónima
abierta) organized by means of a public deed dated January 8, 1902, executed before
the notary public of Valparaíso, Mr. Pedro Flores, and our existence was approved
by Supreme Decree N° 889 of the Treasury Department, dated March 19, 1902, both of
which were recorded on the reverse of folio 49, N°

87

45 of Valparaísos
Registry of Commerce for 1902, and published in Chiles Official Gazette on March 24,
1902. We are recorded on March 8, 1982, at Chiles Securities Registry of the SVS
under N° 0007.

The last amendment to our articles of
association, which moved the domicile of the corporation from Valparaíso to
Santiago City, and the complete, revised and updated text of the corporations bylaws
were set forth in a public deed dated 4 June 2001, executed before the notary public of
Valparaíso, María Ester Astorga, an extract of which was recorded on the
reverse of folio 474 N° 363 of the Valparaíso Registry of Commerce for 2001,
published in the Official Gazette on June 13, 2001, and recorded at the Registry of
Commerce of Santiago on folio 18.149, N° 14.600 for the year 2001.

Under Article 4 of our bylaws, the
corporations principal purpose is to produce, manufacture and market alcoholic and
non-alcoholic beverages, to manufacture containers and packaging, and to provide
transportation services, among other businesses.

DirectorsUnder the
Chilean law regarding corporations (the Chilean Corporations Act), a
corporation may not enter into a contract or agreement in which a director has a direct or
indirect interest (i.e., a conflicting interest transaction) without prior approval by the
board of directors, and then only if the terms of the conflicting interest transaction are
similar to those of an arms length transaction.

If the conflicting interest
transaction involves a material amount, the board of directors is required to
produce a statement declaring in advance that the conflicting interest transaction is
similar in its terms to an arms length transaction. A conflicting interest
transaction is deemed to involve a material amount if the amount involved is
both greater than 2,000 Unidades de Fomento (as of May 31, 2004, approximately US$53,256
and exceeds 1% of the assets of the corporation, or if the amount exceeds 20,000 Unidades
de Fomento (as of May 31, 2004, approximately US$532,562 regardless of the size of the
corporation.

If the board of directors believes
that it is not possible to ascertain whether the conflicting interest transaction is
similar to an arms length transaction, it may approve or reject the conflicting
interest transaction, or appoint independent advisors to make such a determination. If the
board appoints independent advisors, the report prepared by the advisors will be made
available to the shareholders and the board of directors for 20 business days from the
date the last report was received from the independent advisors. The shareholders will be
notified in writing of the receipt of the reports. After this period, the board may
approve or reject the conflicting interest transaction, but the board is not required to
follow the independent advisors conclusion. The board may treat the conflicting
interest transaction and the report as confidential information. Shareholders representing
at least 5% of our voting shares may request the board to call a shareholders
meeting in order to approve or reject the conflicting interest transaction by a two-thirds
majority of the outstanding voting shares. Interested directors are excluded from all
decisions of the board related to the conflicting interest transaction.

All decisions adopted by the board in
respect of the conflicting interest transaction must be reported to the next following
shareholders meeting. The controller of the corporation or the related party which
intends to enter into the conflicting interest transaction shall make available to the
board of directors, at the time the transaction is being considered by the board, all
information relating to the transaction filed with any non-Chilean regulatory entities or
stock exchanges.

If a suit for damages arises from
such a transaction, the defendant (i.e., one or more directors, the controller, a related
party, or all of them) bears the burden of proof that the transaction was made under
marketplace conditions or that its terms proved benefit to the corporation, unless the
conflicting interest transaction was previously approved by the shareholders.

The amount of any directors
remuneration is established each year at the annual shareholders meeting.


Directors are forbidden, unless
previously and duly authorized thereto by the board of directors, to borrow or otherwise
make use of corporate money or assets for their own benefit or that of (a) their spouses
or certain relatives, including certain in-laws; (b) companies in which they, or their
spouses or the relatives above referred to, either are directors, or own, beneficially or
of record, at least a 10% interest;


88

or (c) third parties for whom the directors act as
representatives. However, the shareholders authorization is not required. These
rules can only be modified by law.

It is not necessary to hold our
shares to be elected a director, and there is no age limit established for the retirement
of directors.

Rights, preferences and
restrictions regarding shares At least thirty percent of our net profits
for each fiscal year is required to be distributed in cash to our shareholders, unless our
shareholders unanimously decide otherwise. Any remaining profits may be used to establish
a reserve fund (that may be capitalized at any time, amending the corporate bylaws by the
vote of a majority of the voting stock issued), or to pay future dividends.

Compulsory minimum dividends, i.e.,
at least thirty percent of our net profits for each fiscal year, become due thirty days
after the date on which the annual shareholders meeting has approved the
distribution of profits in the fiscal year. Any additional dividends approved by our
shareholders become due on the date set by our shareholders or our board of directors.

Accrued dividends that corporations
fail to pay or make available to their shareholders within certain periods are to be
adjusted from the date on which those dividends became due and that of actual payment.
Overdue dividends will accrue yearly interest established for adjustable operations over
the same period.

Dividends and other cash benefits
unclaimed by shareholders after five years from the date on which they became due will
become the property of the Chilean Fire Department.

We have only one class of shares and
there are therefore no preferences or limitations on the voting rights of shareholders.
Each of our shareholders is entitled to one vote per share. In annual shareholders
meetings, resolutions are made by a simple majority of those present, provided there is a
quorum. A special or extraordinary meeting generally requires an absolute majority, in
other words, 50% plus one of the shares entitled to vote; however, the Chilean
Corporations Act provides that in order to carry certain motions, a two thirds majority of
the outstanding voting stock is necessary.

Our directors are elected every three
years and their terms are not staggered. Our shareholders may accumulate their votes in
favor of just one person or distribute their votes to more than one person. In addition,
by unanimous agreement of our shareholders present and entitled to vote, the vote may be
omitted and the election made by acclamation.

In the event of liquidation, the
Chilean Corporations Act provides that corporations may carry out distributions to
shareholders on account of a reimbursement of capital only after the payment of corporate
indebtedness.

There are no redemption or sinking
fund provisions applicable to us, nor are there any liabilities to our shareholders
relating to future capital calls by us.

Under Chilean law, certain provisions
affect any existing or prospective holder of securities as a result of the shareholder
owning a substantial number of shares. The Securities Market Law establishes that (a) any
person who, directly or indirectly, (i) owns 10% or more of the subscribed capital of a
corporation (the majority shareholders) whose shares are registered in the
Securities Registry of the SVS (the SRSVS), or (ii) owns any such percentage
because of the purchase of shares; and (b) all directors, the chief executive officer,
liquidators and other principal officers of any corporation whose shares are registered
with the SRSVS, regardless of the number of shares they own, must report any direct or
indirect purchase or sale of shares made by such persons or entities within two business
days of such transactions to the SVS and to each of the stock exchanges in Chile where
such corporation has securities listed. In addition, majority shareholders must inform the
SVS and the stock exchanges with respect to whether the purchase is aimed at acquiring
control of the corporation or just as a financial investment.

89

The Securities Market Law also
provides that when one or more persons intend to take over a corporation subject to
oversight by the SVS, they must give prior public notice. This notice must include the
price to be offered per share and the conditions of the proposed transaction, including
the expected manner of acquiring the shares.

Finally, Chapter XXV of the
Securities Market Law was enacted on December 20, 2000, to ensure that controlling
shareholders share with minority shareholders the benefits of a change of control, by
requiring that certain share acquisitions be made pursuant to a tender offer. However, up
to December 31, 2003, this tender offer requirement was not wholly applicable to our
controlling shareholder, pursuant to the exemption contemplated in transitory article 10
of Law N° 19.705, the benefits of which were granted to the controllers by the
shareholders meeting held on June 4, 2001.

The Chilean Corporations Act provides
shareholders with preemptive rights. The Act requires that options to purchase stock
representing capital increases in corporations and debentures duly convertible into stock
of the issuing corporation, or any other securities extending future rights over such
stock, must be offered preferably, at least once, to existing shareholders, in proportion
to the number of shares owned by them. A corporation must distribute any bonus stock in
the same manner.

The Chilean Corporations Act also
provides shareholders with the right to withdraw from a corporation in certain situations.
Unless there is an ongoing bankruptcy proceeding, if a shareholders meeting approves
any of the following matters, dissenting shareholders will be automatically entitled to
withdraw from the corporation upon payment by the corporation of the market value of their
shares:

- our transformation
into a different type of legal entity,
- our merger with
and/or into another company,
- the disposition of
50% or more of the corporate assets, whether or not liabilities are also transferred, or
the proposal or     amendment of any business plan that contemplates the transfer of
assets exceeding said percentage,
- the granting of real
or personal guarantees to secure third party obligations exceeding 50% of the corporate
assets,
- the creation of
preferences for a series of shares or the increase or reduction in the already existing
ones. In this case,      only dissenting shareholders of the affected series shall have
the right to withdraw,
- curing certain
formal defects in the corporate charter which otherwise would render it null and void or
 any modification of      its bylaws that should grant this right, and
- other cases provided
for by statute or in our bylaws, if any.

In addition, shareholders may
withdraw if a person becomes the owner of two-thirds of the outstanding shares of the
corporation as a consequence of a share acquisition and such person does not make a tender
offer for the remaining shares within 30 days.

Our bylaws do not provide for
additional circumstances under which shareholders may withdraw.

Action necessary to change the
rights of holders of stock Rights of stockholders are established by law
and pursuant to the bylaws of a corporation. For certain modifications of
shareholders rights, the law requires a special majority, such as the creation,
increase, reduction or suppression of preferred stock, which may be adopted only with the
consent of at least two-thirds of the affected series. Consequently any other impairment
of rights not specifically regulated needs only an absolute majority ( more than 50%) of
the stock entitled to vote. However, the waiver of the shareholders right to receive
no less than 30% of the net profits accrued in any fiscal year (the minimum
dividend) requires the unanimous vote of all stockholders. The above
notwithstanding, no decision of the shareholders meeting can deprive a shareholder
of any part of the stock that he owns.

Our bylaws do not contemplate
additional conditions in connection with matters described in this subsection.

90

Shareholders
meetings Our annual shareholders meetings are to be held during the
first quarter of each year. During the meetings, determinations are made relating to
particular matters, which matters may or may not be specifically indicated in the notice
for such meeting.

The quorum for a shareholders
meeting is established by the presence, in person or by proxy, of shareholders
representing at least an absolute majority of our issued voting stock; if a quorum is not
present at the first meeting, the meeting can be reconvened and upon the meeting being
reconvened, shareholders present at the reconvened meeting are deemed to constitute a
quorum regardless of the percentage of the voting stock represented. In that case,
decisions will be made by the absolute majority of stock with voting rights present or
otherwise represented. The following matters are specifically reserved for annual
meetings:

- review of our state
of affairs and of the reports of internal and independent auditors, and the approval or
rejection of the      annual report, balance sheet, financial statements and records
submitted by our officers or liquidators;
- distribution of
profits of the respective fiscal year, including the distribution of dividends;
- election or
revocation of regular and alternate board members, liquidators and management
supervisors; and
- determination of the
remuneration of the board members, designation of the newspaper were notices for meetings
shall be      published and, in general, any other matter to be dealt with by the annual
meeting being of corporate interest and not      specifically reserved to extraordinary
shareholders' meetings.

Extraordinary shareholders
meetings may be held at any time, when required by corporate necessity. During
extraordinary meetings, determinations are made relating to any matter which the law or
the Companys bylaws reserve for consideration by such extraordinary meetings, which
matters shall be expressly set forth in the relevant notice. Whenever in an extraordinary
shareholders meeting determinations must be made relating to matters specifically
reserved to annual meetings, the operation and decisions of such extraordinary meeting
will follow the requirements applicable to annual meetings. The following matters are
specifically reserved for extraordinary meetings:

- dissolution of the
corporation;
- transformation,
merger or spin-off of the corporation and amendments to its bylaws;
- issuance of bonds or
debentures convertible into stock;
- transfer of  50% or
more of the corporate fixed assets, whether or not including the disposition of its
liabilities, or the      transfer of 50% or more of its liabilities; and
- guarantees of third
parties' obligations, except when these third parties are subsidiary companies (in which
case approval of      the board of directors will suffice).

In addition to the above, annual and
extraordinary shareholders meetings must be called by the board of directors in the
following circumstances:

- when requested by
shareholders representing at least 10% of issued stock; and
- when required by the
SVS.

Only holders of stock recorded in the
Register of Shareholders at least five days before the date of the pertinent meeting may
participate with the right to be heard and vote in shareholders meetings. Directors
and officers other than shareholders may participate in shareholders meetings with
the right to be heard.

91

Shareholders may be represented at
meetings by other individuals, regardless of whether or not those persons are shareholders
themselves. A proxy must be conferred in writing, and for the total number of shares held
by the shareholder and entitled to vote in accordance with the previous paragraph.

Limitations on the right to own
securities The right to own any kind of property is guaranteed by the
Chilean Constitution, and the Chilean Corporations Act does not contain any general
limitation regarding the right to own securities. There are, however, certain limitations
on the right of foreigners to own securities of Chilean corporations, but only for certain
special types of companies. We are not affected by these limitations, and our bylaws do
not contain limitations or restrictions in this regard.

Article 14 of the Chilean
Corporations Act forbids public corporations from including in their bylaws any provisions
restricting the free transferability of stock. However, two or more shareholders may enter
into a private agreement on this matter, but, in order for these agreements to be
effective, they must be recorded by the corporation and thus made available to any
interested third parties. See Item 6: Directors, Senior Management and Employees
Directors and Senior Management.

Takeover
defenses Our bylaws do not contain any provisions that would have the
effect of delaying, deferring or preventing a change in control of us and that would
operate only with respect to a merger, acquisition or corporate restructuring involving us
(or any of our subsidiaries).

Ownership
threshold Our bylaws do not contain any ownership threshold above which
shareholder ownership must be disclosed. For a description of the ownership thresholds
mandated by Chilean law, see  Rights, preferences and restrictions regarding
shares.

Our bylaws do not impose any
conditions that are more stringent than those required by law for effecting changes in our
capital.

# Material Contracts

Not applicable

# Exchange Controls

General Legislation and
Regulations. The Central Bank of Chile is responsible for, among other things,
monetary policies and exchange controls in Chile. See Item 3. Key Information 
Selected Financial Data  Exchange Rate. Foreign investments can be registered
with the Foreign Investment Committee under Decree Law No. 600 registration which
grants the investor access to the Formal Exchange Market or with the Central Bank of
Chile under Chapter XIV of the Central Bank Foreign Exchange Regulations.

Effective April 19, 2001, the Central
Bank of Chile abrogated the then existing Chapter XXVI of the Central Bank Foreign
Exchange Regulations (Chapter XXVI), which addressed issuance of ADSs by a
Chilean company, and issued an entirely new set of Foreign Exchange Regulations (the April
19th Regulations), virtually eliminating all the restrictions and
limitations that had been in force up to that date. The April 19th Regulations
were based upon the general principle that foreign exchange transactions can be made
freely in Chile by any person, notwithstanding the power conferred by law to the Central
Bank of Chile of imposing certain restrictions and limitations to such transactions.

With the issuance
    of the above Regulations, the approval by the Central Bank of Chile required
    for access to the Formal Exchange Market was replaced with the requirement
    of disclosure of the relevant transactions to the Central Bank of Chile.
    However, some foreign exchange transactions, notably foreign loans, capital
    investment or deposits, continued to be subject to the requirement of being
    effected through the Formal

92

Exchange Market.
    The April 19th Regulations
      reduced the time needed to effect foreign exchange transactions by foreign
      investors in Chile.

The April 19th
Regulations, among others, eliminated the following restrictions:

- prior authorization
by the Central Bank of Chile for the entry of capital in connection with foreign loans,
investment,          capital contribution, bonds and ADRs;
- prior authorization
by the Central Bank of Chile for the remittance of capital in connection with
repatriation of capital,          dividends and other benefits related to capital
contributions and investment, and prepayment of foreign loans;
- minimum risk
classification restrictions and terms for the issuance of bonds;
- restrictions on the
issuance of ADRs. Therefore, the rules established under Chapter XXVI of the previous
Foreign Exchange          Regulations are no longer applicable; and
- Mandatory Reserve
deposits for foreign capitals.

According to these Regulations,
foreign exchange transactions performed before April 19, 2001, remain subject to the
regulations in effect at the time of the transactions (i.e. Chapter XXVI), unless the
interested parties elected the applicability of the April 19thRegulations,
thereby expressly waiving the applicability of the regulations in force at the time of the
execution of the respective transaction.

On January 23, 2002, the Central Bank
of Chile issued an entirely new set of Foreign Exchange Regulations, effective as from
March 1, 2002, replacing April 19th Regulations (The New Rules).
The New Rules preserve the general principle established in the April 19thRegulations of freedom in foreign exchange transactions, simplified procedures to
reduce the time needed to effect foreign exchange transactions by foreign investors in
Chile, and introduced several new provisions.

Pursuant to the New Rules, Chilean
entities are now allowed, under Chapter XIV, which governs credits, deposits, investments
and capital contribution from abroad, to:(i) dispose of such foreign currency allocated
abroad, executing any of the transactions contemplated in Chapter XIV, without the need of
delivering it into Chile, subject to the obligation of reporting said transaction to the
Central Bank of Chile; and (ii) capitalize any liability expressed in foreign currency and
acquired abroad.

According to the New Rules, foreign
exchange transactions made pursuant to Chapter XIV, executed before April 19, 2001, shall
continue to be subject to the regulations in effect at the time of the transactions,
unless the interested parties elect the applicability of the New Rules, expressly waiving
the applicability of the provisions which would otherwise govern them.

Notwithstanding the above, foreign
exchange transactions contemplated in Chapter XIV, executed before March 1, 2002 according
to the regulations of the Central Bank of Chile in force at the time of their execution,
may be reported to the Central Bank pursuant to the provisions contained in the New Rules.

Therefore, notwithstanding the April
19th Regulations and the New Rules, Chapter XXVI remains in force with respect
to our ADR facility, as referred to below.

Our ADRs.
    A Foreign Investment Contract was entered into among the Central Bank of
    Chile, us and the Depositary pursuant to Article 47 of the Central Bank Act
    and Chapter XXVI (see General Legislation and
Regulations, above). According to Chilean law, a contract is ruled by the
law in force at the time of its execution. Therefore, our Foreign Investment
Contract is ruled by the foreign exchange regulations in force before April 19,
2001, among which is Chapter XXVI. Absent the Foreign Investment Contract, under
Chilean exchange controls in force until April 19, 2001, investors would not
have been granted access to the Formal Exchange Market for the purpose of converting
Chilean pesos to U.S. dollars

93

and repatriating
    from Chile amounts received in respect of deposited Shares or Shares withdrawn
    from deposit on surrender of ADRs (including amounts received as cash dividends
    and proceeds from the sale in Chile of the underlying Shares and any rights
    with respect thereto). In December 1999, amendments were introduced to Chapter
    XXVI whereby, among other things, the Central Bank of Chile was authorized
    to reject applications under such regulations without expression of cause.
    In reviewing such applications, the Central Bank of Chile was required to
    take into account the situation of the balance of payments and the stability
    of the capital account. However, the Central Bank of Chile was authorized
    to impose certain conditions on the applicants prior to resolving the applications.
    In April 2000, Chapter XXVI was again amended in order to incorporate, in
    addition to shares issued by Chilean corporations, quotes of investment funds
  as eligible to be converted into ADSs. Chapter XXVI did not require delivery
  of a new application in case of the entry of U.S. dollars intended for the
    acquisition of shares not subscribed by the shareholders or by the transferees
    of the options to subscribe the shares.

Under Chapter XXVI and our Foreign
Investment Contract, the Central Bank of Chile agreed to grant to the Depositary, on
behalf of ADR holders, and to any non-Chilean resident investor who withdrew Shares of our
common stock upon surrender of ADRs (such Shares being referred to herein as
Withdrawn Shares) access to the Formal Exchange Market to convert Chilean
pesos to U.S. dollars (and to remit such dollars outside of Chile) in respect of Shares of
our common stock represented by ADSs or Withdrawn Shares, including amounts received as
(a) cash dividends, (b) proceeds from the sale in Chile of Withdrawn Shares (subject to
receipt by the Central Bank of Chile of a certificate from the holder of the Withdrawn
Shares (or from an institution authorized by the Central Bank of Chile) that such
holders residence and domicile were outside Chile and a certificate from a Chilean
stock exchange (or from a brokerage or securities firm established in Chile) that such
Withdrawn Shares had been sold on a Chilean exchange), (c) proceeds from the sale in Chile
of pre-emptive rights to subscribe for and purchase additional Shares of our common stock,
(d) proceeds from the liquidation, merger or consolidation of the Company and (e) other
distributions, including, without limitation, those resulting from any recapitalization,
as a result of holding Shares represented by ADSs or Withdrawn Shares. Access to the
Formal Exchange Market in the case of (a), (b), (c) and (d) above would be available for
only five working days following the sale of the shares on the stock exchange. Transferees
of Withdrawn Shares would not be entitled to any of the foregoing rights under Chapter
XXVI unless the Withdrawn Shares were redeposited with the Custodian. Investors receiving
Withdrawn Shares in exchange for ADRs would have the right to redeposit such Shares in
exchange for ADRs, provided that certain conditions to redeposit were satisfied. For a
description of the Formal Exchange Market, see Item 3: Key Information 
Selected Financial Data  Exchange Rates. Alternatively, according to the
amendments introduced to Chapter XXVI in December 1999, in case of Withdrawn Shares and
their subsequent sale on a stock exchange, the Chilean peso proceeds obtained thereby
could be converted into U.S. dollars in a market different from the Formal Exchange Market
within five business days from the date of the sale.

Chapter XXVI provided that access to
the Formal Exchange Market in connection with the sale of Withdrawn Shares or
distributions thereon would be conditioned upon receipt by the Central Bank of Chile of a
certification by the Depositary or the Custodian, as the case might have been, that such
Shares had been withdrawn in exchange for delivery of the pertinent ADRs and receipt of a
waiver of the benefits of our Foreign Investment Contract with respect thereto (except in
connection with the proposed sale of the Shares) until such Withdrawn Shares were
redeposited. Chapter XXVI also provided that access to the Formal Exchange Market in
connection with dividend payments was conditioned on certification by us to the Central
Bank of Chile that a dividend payment had been made. The provision contained in Chapter
XXVI that established that access to the Formal Exchange Market in connection with
dividend payments was conditioned on certification by us to the Central Bank of Chile that
any applicable tax had been withheld was eliminated on November 23, 2000.

Chapter XXVI
    and our Foreign Investment Contract provided that a person who brought foreign
    currency into Chile, including U.S. dollars, to purchase Shares entitled
    to the benefit of our Foreign Investment Contract was required to convert
    such foreign currency into Chilean pesos on the same date and had five banking
    business days within which to invest in Shares in order to receive the benefit
    of our Foreign Investment Contract. If such person decided within such period
    not to acquire Shares, such person could access the Formal Exchange Market
to reacquire foreign currency, provided that the applicable request

94

was presented
      to the Central Bank of Chile within seven banking days of the initial conversion
      into pesos. Shares acquired as described above could be deposited in exchange
      for ADRs and receive the benefit of our Foreign Investment Contract, subject
      to receipt by the Central Bank of Chile of a certificate from the Depositary
      that such deposit had been effected and that the related ADRs had been
    issued and receipt by the Custodian of a declaration from the person making
    such deposit waiving the benefit of our Foreign Investment Contract with
    respect to the deposited Shares.

Chapter XXVI required foreign
investors acquiring shares or securities in Chile to maintain a mandatory reserve (the
Mandatory Reserve) for one year in the form of a non-interest bearing U.S.
dollar deposit with the Central Bank, or to pay to the Central Bank a non-refundable fee
(the Fee). Such reserve requirement was imposed with respect to investments
made by foreign investors to acquire shares or securities in the secondary market, but did
not apply to capital contributions made for purposes of paying-in capital for a newly
created company or increasing the capital of an existing company. As of June 1, 1999, the
Mandatory Reserve was not applied to foreign investments made for purposes of acquiring
shares of a stock corporation, provided that the investor was entitled to the benefit of
Chapter XXVI, and that such acquisition was consummated in accordance with the provisions
of Chapter XXVI. On September 17, 1998, the Central Bank of Chile reduced the Mandatory
Reserve to 0%.

Access to the Formal Exchange Market
under any of the circumstances described above was not automatic. Pursuant to Chapter
XXVI, such access required approval of the Central Bank of Chile based on a request
therefor presented through a banking institution established in Chile within five business
days from the occurrence of any of the events described in letters (a), (b), (c) and (d)
above. Pursuant to our Foreign Investment Contract, if the Central Bank of Chile had not
acted on such request within seven banking days, the request would be deemed approved.

Under current Chilean law, our
Foreign Investment Contract cannot be amended unilaterally by the Central Bank of Chile.
No assurance can be given, however, that new restrictions applicable to the holders of
ADRs, the disposition of underlying Shares or the repatriation of the proceeds from such
disposition will not be reinstated in the future by the Central Bank of Chile, nor can
there be any assessment of the possible duration or impact of such restrictions.

# Taxation

# Chilean Tax
Considerations

The following discussion is based on
certain Chilean income tax laws presently in force, including Rulings N°324 of January
29, 1990 and N°3708 of October 1, 1999 of the Chilean Internal Revenue Service and
other applicable regulations and rulings. The discussion summarizes the principal Chilean
income tax consequences of an investment in the ADSs or shares of common stock by an
individual who is not domiciled in or a resident of Chile or a legal entity that is not
organized under the laws of Chile and does not have a permanent establishment located in
Chile which we refer to as a foreign holder. For purposes of Chilean law, an individual
holder is a resident of Chile if he or she has resided in Chile for more than six
consecutive months in one calendar year or for a total of more than six months, whether
consecutive or not, in two consecutive tax years. An individual holder is domiciled in
Chile if he or she resides in Chile with the purpose of staying in Chile (such purpose to
be evidenced by circumstances such as the acceptance of employment within Chile or the
relocation of his or her family to Chile). This discussion is not intended as tax advice
to any particular investor, which can be rendered only in light of that investors
particular tax situation.

Under Chilean law, provisions
contained in statutes such as tax rates applicable to foreign holders, the computation of
taxable income for Chilean purposes and the manner in which Chilean taxes are imposed and
collected may be amended only by another statute. In addition, the Chilean tax authorities
issue rulings and regulations of either general or specific application interpreting the
provisions of Chilean tax law.

95

Chilean taxes may not be assessed retroactively against taxpayers
 who act in good faith relying on such rulings and regulations, but Chilean tax
 authorities may change said rulings and regulations prospectively. There is
 no general income tax treaty in force between Chile and the United States.

Cash
   dividends and Other Distributions Cash dividends paid by
 us with respect to the ADSs or shares of common stock held by a foreign holder
 will be subject to a 35.0% Chilean withholding tax, which is withheld and paid
 over by us, which we refer to as the Chilean withholding tax. A credit against
 the Chilean withholding tax is available based on the level of corporate income
 tax, or first category tax, actually paid by us on the taxable income to which
 the dividend is imputed; however, this credit does not reduce the Chilean withholding
 tax on a one-for-one basis because it also increases the base on which the Chilean
 withholding tax is imposed. In addition, distribution of book income in excess
 of retained taxable income is subject to the Chilean withholding tax, but such
 distribution is not eligible for the credit. Under Chilean income tax law, for
 purposes of determining the level of the first category tax that has been paid
 by us, dividends generally are assumed to have been paid out of our oldest retained
 taxable profits. Presently, the first category tax rate is 17.0%. Whether the
 first category tax is imposed or not, the effective overall combined rate of
 Chilean taxes imposed with respect to our distributed profits would be 35.0%.
 Nevertheless, in the case that the retained taxable profits or exempted profits
 as of December 31 of the year preceding a dividend are not sufficient to attribute
 to such dividend, we will make a withholding of 35% of the amount that exceeds
 those retained taxable or exempted profits. In case such withholding is determined
 to be excessive before the end of the year, there will be rights to file for
the reimbursement of the excess withholding.

The foregoing tax consequences apply to cash dividends paid by
 us. Dividend distributions made in property (other than shares of common stock)
 will be subject to the same Chilean tax rules as cash dividends. Share dividends
 are not subject to Chilean taxation until such shares are sold.

Capital GainGain realized on the sale, exchange
 or other disposition by a foreign holder of ADSs (or ADRs evidencing ADSs) will
 not be subject to Chilean taxation, provided that such disposition occurs outside
 Chile or that it is performed under the rules of Title XXIV of the Chilean Securities
 Market Law, as amended by Law No. 19,601, dated January 18, 1999. The deposit
 and withdrawal of shares of common stock in exchange for ADRs will not be subject
to any Chilean taxes.

Gain recognized on a sale or exchange of shares of common stock
 (as distinguished from sales or exchanges of ADSs representing such shares of
 common stock) by a foreign holder will be subject to both the first category
 tax and the Chilean withholding tax (the former being creditable against the
 latter) if (1) the foreign holder has held such shares of common stock for less
 than one year since exchanging ADSs for the shares of common stock, (2) the
 foreign holder acquired and disposed of the shares of common stock in the ordinary
 course of its business or as a regular trader of stock or (3) the sale is made
 to a company in which the foreign holder holds an interest (10.0% or more of
 the shares in the case of open stock corporations). In all other cases, gain
 on the disposition of shares of common stock will be subject only to the first
 category tax levied as a sole tax. However, if it is impossible to determine
 the taxable capital gain, a 5.0% withholding will be imposed on the total amount
 to be remitted abroad without any deductions as a provisional payment of the
 total tax due.

The tax
  basis of shares of common stock received in exchange for ADSs will be the acquisition
  value of such shares. The valuation procedure set forth in the deposit agreement,
  which has been approved by the Chilean Internal Revenue Service pursuant Ruling
  No 324 of 1990, values
  shares of common stock that are being exchanged at the highest price
  at which they trade on the Santiago Stock Exchange on the date of the exchange,
  generally will determine the acquisition value for this purpose. Consequently,
  the conversion of ADSs into shares of common stock and sale of such shares
  of common stock for the value established under the deposit agreement will
 not generate a capital gain subject to taxation in Chile .

In the case where the sale of the shares is made on a day that
 is different than the date in which the exchange is recorded, capital gains
 subject to taxation in Chile may be generated. However, following Ruling No.
 3708 of the Chilean Internal Revenue Service, we will include in the deposit
 agreements a provision whereby the capital gain that may be generated if the
 exchange date is different than the date in

96

which the shares received
    in exchange for ADSs are sold, will not be subject to taxation. Such provision
    states that in the event that the exchanged shares are sold by the ADS holders
    in a Chilean stock exchange on the same day in which the exchange is recorded
    in the shareholders' registry of the issuer or within two business days prior
    to the date on which the sale is recorded in the shareholders' registry,
    the acquisition price of such exchanged shares shall be the price registered
    in the invoice issued by the stock broker that participated in the sale transaction.

The distribution and exercise of preemptive rights relating to
 the shares of common stock will not be subject to Chilean taxation. Amounts
 received for the assignment of preemptive rights relating to the shares will
 be subject to both the first category tax and the Chilean withholding tax (the
 former being creditable against the latter to the extent described above).

The Chilean
  Internal Revenue Service has not enacted any rule nor issued any ruling about
  the applicability of the norms explained below (referred to as Laws No 19,738 and No 19,768)
 to the foreign holders of ADRs.

To the extent
  that our shares are actively traded on a Chilean stock exchange, foreign institutional
  investors who acquire our shares may benefit from a tax exemption included
  in an amendment to the Chilean Income Tax Law, Law No 19,738 published
  on June 19, 2001. The amendment established an exemption for the payment of
  income tax by foreign institutional investors, such as mutual funds, pension
  funds and others, that obtain capital gains in the sales through a Chilean
  stock exchange, a tender offer or any other system authorized by the Superintendency
  of Securities and Insurance, of shares of publicly traded corporations that
 are significantly traded in stock exchanges.

A foreign
  institutional investor is an entity that is either:

- a fund that makes public offers of its shares in
      a country which public debt has been rated investment grade by an international
      risk classification agency qualified by the Superintendency of Securities
      and Insurance;
- a fund that is registered with a regulatory entity
      of a country which public debt has been rated investment grade by an international
      risk classification agency qualified by the Superintendency of Securities
      and Insurance, provided that the investments in Chile, including securities
      issued abroad that represent Chilean securities, held by the fund represent
      less than 30.0% of its share value;
- a fund that holds investments in Chile that represent
      less than 30.0% of its share value, provided that it proves that no more
      that 10.0% of its share value is directly or indirectly owned by Chilean residents;
- a pension fund that is exclusively formed by individuals
      that receive their pension on account of capital accumulated in the fund;
- a
      fund regulated by Law No 18,657, or the
       Foreign Capital Investment Funds Law, in which case
      all holders of its shares must reside abroad or be qualified as local institutional
      investors; or
- another kind of institutional foreign investor that complies with the characteristics
      defined by a regulation with the prior report of the Superintendency of Securities
      and Insurance and the Chilean Internal Revenue Service.

In order to be entitled to the exemption, foreign institutional
investors, during the time in which they operate in Chile must:

- be organized abroad and not be domiciled in Chile
    ;
  97
- not participate, directly or indirectly, in the
    control of the issuers of the securities in which it invests and not hold,
    directly or indirectly, 10.0% or more of such companies' capital or profits;
- execute an agreement in writing with a Chilean bank
    or securities broker in which the intermediary is responsible for the execution
    of purchase and sale orders and for the verification, at the time of the
    respective remittance, that such remittances relate to capital gains that are
    exempt from income tax in Chile or, if they are subject to income tax, that
    the applicable withholdings have been made; and
- register in a special registry with the Chilean Internal Revenue Service.

Pursuant
  to the enacted amendment to the Chilean Income Tax Law published on November
  7, 2001 (Law No. 19,768) as amended by Law No 19,801
 published on April 25, 2002, the sale and disposition of shares of Chilean
  public corporations which are actively traded on a Chilean stock exchange
  is not levied by any Chilean tax on capital gains if the sale or disposition
was made:

- on a local stock exchange or any other stock exchange
    authorized by the Superintendency of Securities and Insurance or in a tender
    offer process according to Title XXV of the Chilean Securities Market Law,
    so long as the shares (a) were purchased on a public stock exchange or in a
    tender offer process pursuant to Title XXV of the Chilean Securities Market
    Law, (b) are newly issued shares issued in a capital increase of the corporation,
    or (c) were the result of the exchange of convertible bonds (in which case the
    option price is considered to be the price of the shares). In this case,
    gains exempted from Chilean taxes shall be calculated using the criteria set
    forth in the Chilean Income Tax Law; or
- within 90 days after the shares would have ceased to be significantly traded
    on stock exchange. In such case, the gains exempted from Chilean taxes on capital
    gains will be up to the average price per share of the last 90 days. Any gains
    above the average price will be subject to the first category tax.

Other Chilean TaxesNo Chilean inheritance, gift
 or succession taxes apply to the transfer or disposition of the ADSs by a foreign
 holder but such taxes generally will apply to the transfer at death or by a
 gift of shares of common stock by a foreign holder. No Chilean stamp, issue,
 registration or similar taxes or duties apply to foreign holders of ADSs or
 shares of common stock.

Withholding Tax CertificatesUpon request, we will provide to
 foreign holders appropriate documentation evidencing the payment of the Chilean
 withholding tax. We will also inform when the withholding was excessive in order
 to allow the filing for the reimbursement of taxes.

United States Tax Considerations

The following is a summary of certain United States federal
  income tax consequences of the ownership of shares of Common Stock or ADSs
  by an investor that is a U.S. Holder (as defined below) that holds the shares
  of Common Stock or ADSs as capital assets. This summary does not purport to
  address all material tax consequences of the ownership of Common Stock or ADSs,
  and does not take into account the specific circumstances of any particular
  investors (such as tax-exempt entities, certain insurance companies, broker-dealers,
  traders in securities that elect to mark to market, investors liable for alternative
  minimum tax, investors that actually or constructively own 10% or more of the
  voting stock of the Company, investors that hold Common Stock or ADSs as part
  of a straddle or a hedging or conversion transaction or U.S. Holders (as defined
  below) whose functional currency is not the U.S. dollar), some of which may
  be subject to special rules. This summary is based on the tax laws of the United
  States (including the Internal Revenue Code of 1986, as amended, its legislative
history, existing and proposed regulations thereunder, published

98

rulings and
    court decisions) as in effect on the date hereof, all of which are subject
  to change (or changes in interpretation), possibly with retroactive effect.

For purposes
  of this discussion, a U.S. Holder is
  any beneficial owner of shares of Common Stock or ADSs that is (i) a
  citizen or resident of the United States, (ii) a corporation or partnership
  organized under the laws of the United States or any State, (iii) an estate
  whose income is subject to United States federal income tax regardless of its
  source or (iv) a trust if a United States court can exercise primary supervision
  over the trust's administration and one or more United States persons are authorized
  to control all substantial decisions of the trust. The discussion does
  not address any aspects of United States taxation other than federal income
  taxation. Investors are urged to consult their tax advisors regarding the United
  States federal, state and local and other tax consequences of owning and disposing
 of Common Stock and ADSs.

In general, assuming that the representations of the Depositary are true and
 that each obligation in the Deposit Agreement and any related agreement will
 be performed in accordance with its terms, for United States federal income tax
 purposes, holders of ADRs evidencing ADSs will be treated as the owners of the
 shares of Common Stock represented by those ADSs, and exchanges of shares of
 Common Stock for ADSs, and ADSs for shares of Common Stock will not be subject
 to United States federal income tax.

Cash Dividends and Other DistributionsUnder
  the United States federal income tax laws, and subject to the passive
   foreign investment company (PFIC) rules discussed below, U.S. Holders will include in gross income the
 gross amount of any dividend paid before reduction for any net withholding (i.e.,
 after taking into account any Chilean First-Category Tax creditable against
 Chilean Withholding Tax) by the Company out of its current or accumulated earnings
 and profits (as determined for United States federal income tax purposes) as
 ordinary income when the dividend is actually or constructively received by
 the U.S. Holder, in the case of shares of Common Stock, or by the Depositary,
 in the case of ADSs. The dividend will not be eligible for the dividends-received
 deduction. Subject to a holder's satisfaction of certain holding period requirements,
 dividends included in income by a noncorporate U.S. holder during the period
 ending on December 31, 2008 are subject to tax at a maximum rate of 15% if the
 dividends are paid by a domestic corporation or qualified foreign corporation. A
 qualified foreign corporation generally includes a foreign corporation if
 (i) its shares (or ADSs) are readily tradable on an established securities
 market in the U.S. or (ii) it is eligible for benefits under a comprehensive
 U.S. income tax treaty, provided that the corporation is not a passive foreign
 investment company, foreign personal holding company or foreign investment company.
 We believe that we should be treated as a qualified foreign corporation with
 respect to dividend payments to our ADS holders and, therefore, dividends
 paid to an individual U.S. holder of ADSs should be taxed at a maximum rate
 of 15%. However, you should be aware that the requirements to be treated as
 a qualified foreign corporation are not entirely clear and further guidance
 from the Internal Revenue Service may be forthcoming that could affect this
 conclusion. U.S. holders of Ordinary Shares directly, rather than through ADSs,
 should consult their own tax advisor about whether the 15% maximum rate applies
 to dividends they receive. The amount of the dividend distribution includible
 in income of a U.S. Holder will be the U.S. dollar value of the Chilean peso
 payments made, determined at the spot Chilean peso/U.S. dollar rate on the date
 such dividend distribution is includible in the income of the U.S. Holder, regardless
 of whether the payment is in fact converted into U.S. dollars. Generally, any
 gain or loss resulting from currency exchange fluctuations during the period
 from the date the dividend payment is includible in income to the date such
 payment is converted into U.S. dollars will be treated as ordinary foreign exchange
 gain or loss. Such gain or loss will generally be from sources within the United
 States for foreign tax credit limitation purposes. Subject to certain generally
 applicable limitations, the net amount of any Chilean Withholding Tax (after
 reduction for the credit for Chilean First-Category Tax) paid over to Chile
 will be creditable against the U.S. Holder 's United States federal income tax
 liability. For foreign tax credit limitation purposes, the dividend will be
 income from sources outside the United States . In the case of U.S. individuals,
 if the reduced rate of tax on dividends applies to such holder, such limitations
 and restrictions will appropriately take into account the rate differential
 under rules similar to section 904(b)(2)(B) of the Internal Revenue Code. The
 rules governing foreign tax credits are complex and U.S. Holders should consult
 their tax advisors regarding their application to the particular circumstances
of such holder.

99

Pro rata distributions of shares of Common Stock or preemptive
 rights generally are not subject to United States federal income tax. The basis
 of the new shares of Common Stock or preemptive rights (if such rights are exercised
 or sold) generally will be determined by allocating the U.S. Holder's adjusted
 basis in the old shares between the old shares and the new shares or preemptive
 rights received, based on their relative fair market values on the date of distribution
 (except that the basis of the preemptive rights will be zero if the fair market
 value of the rights is less than 15% of the fair market value of the old shares
 at the time of distribution, unless the U.S. Holder irrevocably elects to allocate
 basis between the old shares and the preemptive rights). The holding period
 of a U.S. Holder for the new shares or preemptive rights will include the U.S.
 Holder's holding period for the old shares with respect to which the new shares
 or preemptive rights were issued. In other circumstances, distributions of Common
Stock or preemptive rights may be treated as taxable dividends.

Capital GainsU.S.
  Holders will not recognize gain or loss on deposits or withdrawals of shares
  of Common Stock in exchange for ADSs or on the exercise of preemptive rights.
  U.S. Holders will recognize capital gain or loss on the sale or other disposition
  of ADSs or shares of Common Stock (or preemptive rights with respect to such
  shares) held by the U.S. Holder or by the Depositary equal to the difference
  between the amount realized and the U.S. Holder's tax basis in the ADSs or
  shares. Any gain recognized by a U.S. Holder generally will be treated as United
  States source income. Consequently, in the case of a disposition of shares
  of Common Stock or preemptive rights (which, unlike a disposition of ADSs,
  will be taxable in Chile), the U.S. Holder may not be able to claim the foreign
  tax credit for Chilean tax imposed on the gain unless it appropriately can
  apply the credit against tax due on other income from foreign sources. Loss
 generally would be treated as United States source loss. With respect to
  sales occurring on or after May 6, 2003, but before January 1, 2009, the long-term
 capital gain tax rate for an individual U.S. Holder is 15%. For sales occurring
 before May 6, 2003, or after December 31, 2008, under current law the long-term
 capital gain rate for an individual U.S. Holder is 20%.

PFIC RulesCCU
  believes that it should not be treated as a passive foreign investment
   company (a PFIC) for United States federal income tax purposes,
 although this conclusion is subject to some uncertainty because definitive
  asset values for non publicly-traded or illiquid assets may be unavailable.
  This conclusion is also a factual determination made annually and thus
may be subject to change.

In general, the Company
  will be a PFIC with respect to a U.S. Holder if for any taxable year in which
  the U.S. Holder held the Company's ADSs or shares of Common Stock, either (i)
  at least 75% of the gross income of the Company for the taxable year is passive
  income or (ii) at least 50% of the value (determined on the basis of a quarterly
  average) of the Company 's assets is attributable to assets that produce or
  are held for the production of passive income. For this purpose, passive income
  generally includes dividends, interest, royalties, rents (other than certain
  rents and royalties derived in the active conduct of a trade or business),
  annuities and gains from assets that produce passive income. If a foreign corporation
  owns at least 25% by value of the stock of another corporation, the foreign
  corporation is treated for purposes of the PFIC tests as owning its proportionate
  share of the assets of the other corporation, and as receiving directly
  its proportionate share of the other corporation's income. If the Company is
  treated as a PFIC, a U.S. Holder would be subject to special rules with respect
  to (a) any gain realized on the sale or other disposition of shares of Common
  Stock or ADSs and (b) any excess distribution by
 the Company to the U.S. Holder (generally, any distributions to the U.S.
 Holder in respect of the shares of Common Stock or ADSs during a single taxable
 year that are greater than 125% of the average annual distributions received
 by the U.S. Holder in respect of the shares of Common Stock or ADSs during
  the three preceding taxable years or, if shorter, the U.S. Holder 's
  holding period for the shares or ADSs). Under these rules, (i) the gain or
  excess distribution would be allocated ratably over the U.S. Holder 's holding
  period for the shares of Common Stock or ADSs, (ii) the amount allocated to
  the taxable year in which the gain or excess distribution was realized would
  be taxable as ordinary income, (iii) the amount allocated to each prior year,
  with certain exceptions, would be subject to tax at the highest tax rate in
  effect for that year and (iv) the interest charge generally applicable to underpayments
of tax would be imposed in respect of the tax attributable to each such year.

Special rules apply with respect to the calculation of the amount
 of the foreign tax credit with respect to excess distributions by a PFIC.

100

If the Company is treated as a PFIC, a U.S. Holder may be able
 to make a mark-to-market election if the Company's stock is treated as regularly
 traded on a registered national securities exchange or other exchange to the
 extent permitted by the IRS. If the election is made, the PFIC rules described
 above will not apply. Instead, in general, the electing U.S. Holder will be
 required to include as ordinary income each year the excess, if any, of the
 fair market value of the shares of Common Stock or ADSs at the end of the taxable
 year over the U.S. Holder's adjusted tax basis in the shares or ADSs. The electing
 U.S. Holder will also be allowed to take an ordinary loss in respect of the
 excess, if any, of the adjusted tax basis in the shares of Common Stock or ADSs
 over their fair market value at the end of the taxable year (but only to the
 extent of the net amount of income previously included as a result of the mark-to-market
 election). An electing U.S. Holder's tax basis in the shares of Common Stock
 or ADSs will be adjusted to reflect any such income or loss amounts.

Alternatively,
  a U.S. Holder of shares or ADSs in a PFIC can sometimes avoid the rules described
  above by electing to treat the company as a qualified electing fund under section 1295
  of the Internal Revenue Code. This option will not be available to U.S.
  Holders because the Company does not intend to comply with the requirements
  necessary to permit a U.S. Holder to make this election. U.S. Holders should
  consult their own tax advisors concerning the U.S. federal income tax consequences
  of holding shares or ADSs if the Company is considered a passive foreign
 investment company in any taxable year.

Information Reporting and Backup Withholding Dividends in respect
 of the Shares or ADSs and proceeds from the sale, exchange, or redemption of
 the Shares or ADSs may be subject to information reporting to the United States
 Internal Revenue Service and a backup withholding tax (currently, at a 28% rate)
 may apply unless the U.S. Holder furnishes a correct taxpayer identification
 number or certificate of foreign status or is otherwise exempt from backup withholding.
 Generally, a U.S. Holder will provide such certification on Form W-9 and a non-U.S.
Holder will provide such certification on Form W-8BEN.

Dividends and Paying Agents

Not applicable

Statement by Experts

Not applicable

Documents on Display

The documents concerning us, which are referred to in this annual report,
 may be inspected at our main offices at Bandera 84, Sixth Floor, Santiago ,
Chile .

Subsidiary Information

Not applicable

101

Table of Contents

ITEM 11: Quantitative and Qualitative Disclosures About Market Risk

The following
  discussion about our risk management activities includes forward-looking statements that
  involve risk and uncertainties. Actual results could differ materially from
those projected in the forward-looking statements.

We face primary market risk exposures in three categories: commodity
 price fluctuations, exchange rate fluctuations and interest rate fluctuations.
 We periodically review our exposure to the three main sources of risk described
 above and determine at our senior management level how to minimize the impact
 on our operations of commodity price, foreign exchange and interest rate changes.
 As part of this review process, we periodically evaluate opportunities to enter
into hedging mechanisms to mitigate such risks.

The market risk sensitive instruments referred to below are entered into only
for purposes of hedging our risks and are not used for trading purposes.

Quantitative Information About Market Risk

Commodity
                        Price SensitivityThe
                        major commodity price sensitivity faced by us is the variation of malt prices.

The following table summarizes information about our malt inventories and futures
contracts that are sensitive to changes in commodity prices, specifically malt
prices. For inventories, the table presents the carrying amount and fair value
of the inventories and contracts as of December 31, 2003. For these contracts
the table presents the notional amounts in tons, the weighted average contract
prices, and the total dollar contract amount by expected maturity dates.

Commodity
Price Sensitivity as of December 31, 2003

|                                             | Carrying Amount   |        |        | Fair Value
|-------------------------------------------- | ----------------- | ------ | ------ | ----------
|On Balance Sheet Position                    |                   |        |        |           
|                                             |                   |        |        |           
|Malt inventory (millions
       of Ch$)      | Ch$3,717          |        |        |           
|Bulk wine inventory (raw material)           | 14,199            |        |        |           
|                                             | Expected Maturity |        |        | Fair Value
|                                             | 2004              | 2005   | 2006   | 2007      
|Purchase Contracts                           |                   |        |        |           
|                                             |                   |        |        |           
|Malt:                                        |                   |        |        |           
|Fixed Purchase Volume (tons)                 | 40,000            | 20,000 | 20,000 | 6,000     
|Weighted Average Price (US$ per ton) (1)     | 300               | 330    | 330    | 330       
|Contract Amount (thousands of US$)           | ThUS$12,000       | 6,600  | 6,600  | 1,980     
|Grapes:                                      |                   |        |        |           
|Fixed Purchase Volume (tons)                 | 14,598            | 9,330  | 7,786  | 5,353     
|Weighted
    Average Price (Ch$ per kg.) (2) | 206               | 221    | 178    | 177       
|Contract Amount (millions of Ch$)            | 3,007             | 2,064  | 1,388  | 945       
|Wine:                                        |                   |        |        |           

102

|Fixed Purchase Volume (million liters)     | 10.8  | 5.3 | 1.8 |  |  |  | 
|------------------------------------------ | ----- | --- | --- |  |  |  | 
|Weighted Average Price (Ch$ per liter) (2) | 179   | 174 | 174 |  |  |  | 
|Contract Amount (millions of Ch$)          | 1,938 | 925 | 308 |  |  |  | 

---

|(1) | Price to be reviewed and adjusted to reflect market prices according to variations in international barley
prices.  Accordingly, the commodity risk is mitigated, as each years deliveries will approximate market.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Price to be reviewed and adjusted to reflect market prices according to variations in domestic raw material prices.  Accordingly, the
commodity risk is mitigated, as each years deliveries will approximate market.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

As of December 31, 2002 we had purchase contracts for ThUS$6,279, which increased
mainly due to the purchase of higher malt volumes.

Exchange Rate SensitivityThe
                major exchange rate risk faced by us is the variation of the Chilean peso against
                the U.S. dollar.

On May 9,
  2003, the Cayman Islands Branch of Compañía
 Cervecerías Unidas S.A. entered into a US$135 million, five-year unsecured,
 syndicated loan agreement. This credit agreement has a variable interest
 rate of LIBOR + 0.75% in U.S. dollars, with five equal semi-annual amortization
 installments of principal beginning on the third anniversary of the closing.
 Interest payments are on a quarterly basis. The credit agreement was syndicated
 by 11 banks. To avoid the exchange and interest risks of this credit, we
 entered into cross currency interest rate swap agreements for an aggregate
 of US$96.1 million, 86.4% of which is in variable Chilean pesos rate and
 13.6% is in fixed Chilean pesos rate. As a consequence, we replaced the risk
 of LIBOR fluctuations for this credit agreement, by the risk of variations in
 the nominal TAB rate, expressed in Chilean pesos in an amount of Ch$49,285 million
 (US$83 million). Nevertheless, we expect that if the TAB rate rises, such
 rise would be due to improvement in consumer demand, which we expect would result,
 in turn, in an increase in our operating results, causing a natural hedge
for the nominal variable rate Chilean peso debt.

The following table summarizes our debt obligations, cash and cash equivalents,
accounts receivable and derivative contracts in foreign currencies as of December
31, 2003, in million Chilean pesos, according to their maturity date, weighted-average
interest rates and fair values:

Exchange Rate Sensitivity as of December 31, 2003(millions
 of Ch$, except percentages and exchange rate)

|Expected Maturity
  Date  |             |     
|------------------------- | ----------- | ----
|                          | 2004        | 2005
|                          |             |     
|Debt Obligations          |             |     
|                          |             |     
|Variable rate             |             |     
|US$ (*)                   | 35,820      | -   
|Average int. rate         | 2.1%        | -   
|Euro                      | 226         | -   
|Average int. rate         | 3.4%        | -   
|Argentine $               | 202         |     
|Average int. rate         | 4.8%        |     
|                          |             |     
|Cash and Cash Equivalents | 14,566      |     
|                          |             |     
|Accounts Receivables      | 11,001      |     
|                          |             |     
|Derivative Contracts      |             |     
|                          |             |     
|Receive Ch$/pay US$       | ThUS$1,400  |     
|Receive US$/pay Ch$       | ThUS$24,500 |     

---

|(*) | Includes
    the US$135 million syndicated loan, of which US$96.1 million is hedged through
    cross currency interest rate swap agreements.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------

103

In accordance
    with Chilean generally accepted accounting principles, we apply TB 64 issued
    by the Chilean Institute of Accountants to translate and value investments
    in foreign subsidiaries (see Note 1 to our consolidated financial statements).
    Under TB 64, our foreign investments in CICSA and FLC are not subject to
    price-level restatements based on inflation in those countries. Instead,
    the U.S. dollar is considered to be the functional currency. As a result,
    the effect of a devaluation of the peso against the U.S. dollar on our financial
    statements is determined, in part, by the impact of such devaluation on the
    value of our investments in CICSA and FLC, as well as on foreign currency
    denominated obligations that qualify as a hedge against those investments.
    These effects are recorded in the account Cumulative translation adjustment in shareholder's
   equity. As of December 31, 2003, our investment in CICSA and FLC amounted
   to Ch$72,253 million, foreign currency denominated obligations that were
   designated as a hedge against these investments amounted to Ch$13,887 million
   and the negative cumulative translation adjustment account amounted to Ch$67
million.

As of December
  31, 2002 we had a smaller amount of debt exposed to the U.S. dollar because
  during 2003, our subsidiary the Cayman Islands Branch of Compañía Cervecerías
  Unidas S.A. entered into a US$135 million syndicated loan, of which US$96.1
million is currently hedged.

Interest
                        Rate SensitivityThe
                        major interest rate risk which we face is a rise in the TAB rate. As of December
                        31, 2003, our interest-bearing debt amounted to Ch$140,005 million (see Notes
                        9, 10 and 11 to the consolidated financial statements), 80.1% of which was
                        variable-rate debt and 19.9% was fixed-rate debt. The majority of our floating-rate
                        debt, Ch$52,737 million, was Chilean peso denominated and tied to the TAB
                        rate due to the cross currency interest rate swap agreements entered into
                        in respect of a large part of our US$135 million syndicated loan.

The following table summarizes debt obligations with interest
 rates by maturity date, the related weighted-average interest rates and fair
 values:

Interest-Bearing Debt as of December 31, 2003(millions
 of Ch$, except percentages)

|                  | 2004      | 2005  | 2006   | 2007   | 2008 | Thereafter | TOTAL   | Fair Value
|----------------- | --------- | ----- | ------ | ------ | ---- | ---------- | ------- | ----------
|                  |           |       |        |        |      |            |         |           
|Fixed rate        |           |       |        |        |      |            |         |           
|                  |           |       |        |        |      |            |         |           
|Ch$ (UF) (1) (2)  | Ch$ 1,664 | 1,368 | 1,368  | 381    | 381  | 14,974     | 20,135  | 21,264    
|Interest rate     | 6.0%      | 6.0%  | 6.0%   | 6.0%   | 6.0% | 6.0%       | 6.0%    |           
|Variable rate     |           |       |        |        |      |            |         |           
|Ch$ (UF) (1)      | 904       | 852   | 852    | 852    | -    | -          | 3,459   | 3,372     
|Average int. rate | 2.5%      | 2.5%  | 2.5%   | 2.5%   | -    | -          | 2.5%    |           
|US$ (3)           | 35,820    | -     | 32,065 | 48,098 | -    | -          | 115,983 | 117,466   
|Average int. rate | 2.1%      | -     | -      | -      | -    | -          | -       |           
|Euro              | 226       | -     | -      | -      | -    | -          | 226     | 226       
|Average int. rate | 3.4%      | -     | -      | -      | -    | -          | 3.4%    |           
|Argentine $       | 202       |       |        |        |      |            | 202     | 201       
|Average int. rate | 4.8%      | -     | -      | -      | -    | -          | 4.8%    |           

---

|(1) | A UF ( Unidad
     de Fomento) is a daily indexed, peso-denominated monetary
 unit. The UF is set daily in advance based on the previous month's inflation
 rate.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Bonds.                                                                                                                                                           
|(3) | Includes the US$135
    million syndicated loan, of which US$96.1 million is hedged through
    cross currency interest rate swap agreements.                    

As of December 31, 2002, our major interest risk was related to LIBOR, whereas
 currently, our major interest risk is related to TAB. This is mainly due to
 the cross currency interest rate swap agreements entered into in connection
with the US$135 million syndicated loan.

104

Qualitative Information About Market Risk

The principal
  commodity used in the production of soft drinks is sugar. We generally purchase
  almost all of our sugar requirements from Empresas Iansa S.A., the sole producer
  of sugar in Chile , but we occasionally purchase sugar in the international
  market when prices are favorable. See Item 4: Information
 on the Company  Business Overview  Our Soft Drinks and Mineral Water Business  Our
 Soft Drinks and Mineral Water Business in Chile  Raw Materials. We do not
 hedge these transactions. Rather, we negotiate yearly price conditions with
Empresas Iansa S.A.

The principal
  raw materials used in the production of wine are harvested grapes and purchased
  wine. VSP obtains approximately 42% of the grapes used for export wines from
  its own vineyards, thereby reducing grape price volatility. The majority of
  the wine sold in the domestic market is purchased from third parties. During
  2003, we purchased the majority of our grape and wine needs based on yearly
  contracts at fixed prices from third parties. Spot transactions for wine are
  executed from time to time depending on additional wine needs. During the years
  2001, 2002 and 2003, our wine subsidiary, VSP, bought grapes and wine in Chile
  in the amount of Ch$13,456 million, Ch$15,093 million and Ch$19,404 million,
  respectively. See Item 4: Information on the Company  Business
Overview  Our Wine Business  Raw Materials.

Exchange
  Rate SensitivityThe
  major exchange rate risk faced by us is the variation of the Chilean peso against
  the U.S. dollar. As of December 31,
  2003, our foreign currency denominated liabilities amounted to Ch$131,517
  million, most of which was U.S. dollar denominated. Foreign currency
  denominated interest-bearing debt (Ch$116,411 million) represented 83.1% of
  our total interest-bearing debt, of which 99.6% were U.S. dollar denominated.
  The remaining 16.9% was indexed to Chilean inflation. The Ch$116,411 million
  foreign currency denominated debt includes the US$135 million syndicated loan,
  of which US$96.1 million are hedged through cross currency interest rate swap
  agreements. Additionally, we had Ch$831 million (ThUS$1,400) in notional amounts of derivative
  contracts to sell U.S. dollars and Ch$14,548 million (ThUS$24,500) in notional amounts of
  derivative contracts to buy U.S. dollars, as of December 31, 2003. To reduce
  the impact of any devaluation of the peso against the U.S. dollar, as of December
  31, 2003, we held Ch$9,910 million in dollar-indexed instruments. In addition,
  we held other assets denominated in U.S. dollars equal to Ch$10,426, most of
  which were accounts receivable. Including the assets denominated in U.S. dollars,
  the net liability exposure to variations in foreign exchange rates was Ch$17,784
  million.

According
  to Chilean generally accepted accounting principles, we applied TB 64 to translate
  and value investments in foreign subsidiaries (see Note 1 of our consolidated
  financial statements) as of December 31,
 2003. Under TB 64, our foreign investments in CICSA and FLC are not subject
 to price-level restatements based on inflation in those countries. Instead,
 the U.S. dollar is considered the functional currency for CICSA and FLC. As
 a result, the effect of a devaluation of the peso against the U.S. dollar on
 our financial statements is determined, in part, by the impact of such devaluation
 on the value of our investments in CICSA and FLC, as well as on foreign currency
 denominated obligations that qualify as a hedge against those investments. These
 effects are recorded in the account Cumulative translation adjustment in shareholders'
 equity. As of December 31, 2003, our investment in CICSA and FLC amounted
 to Ch$72,253 million, and foreign currency denominated obligations that were
 designed to hedge against these investments amounted to Ch$13,887 million.
 Therefore, such amounts should not be included in determining the net exposure
in Chile to foreign exchange that would have an impact on net

105

income. As
   a result, the net accounting exposure with effect on the results of operations
  was a net liability of Ch$3,897 million.

CICSA, as of December 31, 2003, had a net liability exposure
 of Ch$9,044 million due to financial debt denominated in U.S. dollars. At the
 same date, FLC had a net asset exposure of Ch$399 million due to short term
 assets. Additionally, according to TB 64 the Argentine peso net monetary liability
 position, as of December 31, 2003, amounted to Argentine Th$13,189 for CICSA
and a net asset position of Argentine Th$6,339 for FLC.

Interest Rate SensitivityThe major interest rate risk which we
 face is a rise in the TAB rate. As of December 31, 2003, we had Ch$115,983 million
 of LIBOR-based interest-bearing debt outstanding, of which Ch$57,070 million
 was hedged through cross currency interest rate swap agreements, 86.4% is in
 variable Chilean pesos rate and 13.6% is in fixed pesos rate. Additionally,
 our subsidiary VSP has a long-term credit agreement with a variable interest
 based on TAB, that as of December 31, 2003, amounted to Ch$3,429 million.

Table of Contents

ITEM 12: Description of Securities Other than Equity Securities

Not applicable

Table of Contents

PART
II

Table of Contents

ITEM
13: Defaults, Dividend Arrearages and Delinquencies

Not applicable

Table of Contents

ITEM
 14: Material Modifications to the Rights of Security Holders and Use of Proceeds

Not applicable

Table of Contents

ITEM
    15: Controls and Procedures

Our chief
  executive officer, or CEO, and chief financial officer, or CFO, have
  evaluated the effectiveness of our disclosure controls and procedures (as
 defined in Exchange Act rules 13a-14(c) and 15d-14(c)) as of December 31,
  2003. These controls and procedures were designed to ensure that material
  information relating to us and our subsidiaries are communicated to our
  CEO and the CFO. Based on such evaluation, our CEO and CFO concluded that our
  disclosure controls and procedures are effective in timely alerting them to
  material information required to be included in our periodic SEC reports. There
  have been no significant changes in our internal controls and procedures or
  in other factors that could significantly affect these controls and procedures
subsequent to the date of this evaluation.

106

Table of Contents

ITEM 16A: Audit Committee
Financial Expert

We are not required to have, and we do not have, an audit committee financial
 expert ( within the meaning of the regulations adopted under the Sarbanes-Oxley
 Act of 2002) serving on our audit committee. However, pursuant to NYSE Rule
 303A.06, we must have an audit committee that satisfies the requirements of
 Rule 10A-3 under the Exchange Act and the additional requirements under NYSE
Rule 303A, by July 31, 2005.

Table of Contents

ITEM 16B: Code of Ethics

We have adopted a code of ethics that applies to all of our executive officers
 and employees. Our code of ethics is available on our website at www.ccu-sa.com.
 Our code of ethics has not been amended and no waivers, either explicit or implicit,
 of provisions of the code of ethics have been granted to the Chief Executive
Officer, Chief Financial Officer or Chief Accounting Officer.

Table of Contents

ITEM 16C: Principal Accountant Fees and Services

The following table sets forth the fees billed to us by our independent auditors,
PricewaterhouseCoopers, during the fiscal years ended December 31, 2002 and 2003:

|                   | 2002                                   | 2003
|------------------ | -------------------------------------- | ----
|                   |                                        |     
|                   | (million of Ch$ as of December
  2003)
|Audit Fees         | 228                                    | 171 
|Audit-Related Fees | 2                                      | 7   
|Tax Fees           | -                                      | -   
|All Other Fees     | -                                      | -   
|                   |                                        |     
|Total Fees         | 230                                    | 178 



Audit fees in the above table are the aggregate fees billed by PricewaterhouseCoopers
 in connection with the review and audit of our semi-annual and annual consolidated
 financial statements, as well as the review of other fillings.

Audit Committee Pre-Approval Policies and Procedures

Since May 2003, foreign
  private issuers have been subject to pre-approval requirements
 under which all audit and non-audit services provided by the independent
 auditor must be pre-approved by an audit committee. In our case, our audit
  committee approves all audit, audit-related services, tax services and
  other services provided by PricewaterhouseCoopers. Any services to be provided
  by independent auditors that are not specifically included within the scope
 of the audit must be pre-approved by the audit committee prior to any engagement.

Table of Contents

ITEM 16D: Exemptions from the Listing Standards for Audit Committees

Not applicable.

107

Table of Contents

ITEM 16E: Purchases of Equity Securities by the Issuer and Affiliated Purchasers

Not applicable.

Table of Contents

PART
III

Table of Contents

ITEM 17: Financial Statements

The Company has responded to Item 18 in lieu of responding to this item.

Table of Contents

ITEM 18: Financial Statements

See Annex
for the Financial Statements

Table of Contents

ITEM 19: Exhibits



Index to Exhibits

|1.1  | Company
      by-laws (incorporated by reference from Compañía
     Cervecerías Unidas S.A. Annual Report on Form 20-F for the year ended
    December 31, 2001, filed on June 28, 2002).
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.1  | CCU Cayman Islands Branch US$135 million syndicated dated May 9, 2003.                                                                                                                   
|8.1  | Compañía Cervecerías
      Unidas S.A. significant subsidiaries as of December 31,
     2003.                                                                                            
|12.1 | Certification
      of Chief Executive Officer of Compañía Cervecerías
    Unidas S.A. pursuant to Section 302 of the Sarbanes-Oxley Act
      of 2002.                                  
|12.2 | Certification
     of Chief Financial Officer of Compañía Cervecerías
   Unidas S.A. pursuant to Section 302 of the Sarbanes-Oxley Act of
     2002.                                     
|13.1 | Certification
     of Chief Executive Officer of Compañía Cervecerías
   Unidas S.A. pursuant to Section 906 of the Sarbanes-Oxley Act of
     2002.                                     
|13.2 | Certification
     of Chief Financial Officer of Compañía Cervecerías
   Unidas S.A. pursuant to Section 906 of the Sarbanes-Oxley Act of
  2002.                                        

108

Index to Financial Statements and Schedules

Page


|Report of independent auditors                                                                           | F-1
|-------------------------------------------------------------------------------------------------------- | ---
|Consolidated Balance Sheet at December 31, 2003 and 2002                                                 | F-4
|Consolidated Statement of Income for each of the three years in the
  period ended December 31, 2003     | F-5
|Consolidated Statement of Cash Flows for each of the three years in
  the period ended December 31, 2003 | F-6
|Notes to the consolidated financial statements                                                           | F-8

109

Signatures

The registrant hereby certifies that it meets all of the requirements for filing
on Form 20-F and that it has duly caused and authorized the undersigned to sign
this annual report on its behalf.

Compañía Cervecerías
  Unidas S.A.
 (United Breweries Company,
 Inc.)







|Date : June 24, 2004    | /s/ Patricio Jottar
|----------------------- | -------------------
|                       
|Chief Executive Officer





COMPAÑIA CERVECERIAS
  UNIDAS S.A.
    AND SUBSIDIARIES

December 31, 2003

Consolidated Financial
  Statements



CONTENTS

Report of independent
  auditorsAudited
  financial statements:Consolidated
  Balance Sheet at December 31, 2003 and 2002Consolidated
  Statement of Income for the years ended December 31, 2003, 2002 and 2001Consolidated
  Statement of Cash Flows for the years ended December 31, 2003, 2002 and
2001Notes
to the consolidated financial statements



|Ch$ -   | Chilean pesos                                                                                                                                
|------- | ---------------------------------------------------------------------------------------------------------------------------------------------
|ThCh$ - | Thousands of Chilean pesos                                                                                                                   
|US$ -   | United States dollars                                                                                                                        
|A$ -    | Argentine pesos                                                                                                                              
| -     | Euros                                                                                                                                        
|UF -    | A UF is a daily indexed, peso-denominated monetary unit. The UF rate is
   set daily in advance based on the previous month's inflation rate.



Table of Contents

REPORT OF INDEPENDENT AUDITORS

Santiago , January 29, 2004

To the Board of Directors and Shareholders 
 Compañía Cervecerías
 Unidas S.A.

|1 | We
     have audited the accompanying consolidated balance sheets of Compañía
     Cervecerías Unidas  S.A. and its subsidiaries as of December
     31, 2003 and 2002, and the related consolidated statements
     of income and of cash flows for each of the three years in the period ended
     December 31, 2003, expressed in constant Chilean pesos. These financial
     statements are the responsibility of the Company's management. Our responsibility
     is to express an opinion on these financial statements based on our audits.                                                                                                                                                                                                                                                           
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2 | We conducted
     our audits of these statements in accordance with generally accepted auditing
     standards in both Chile and the standards of the Public Company Accounting
     Oversight Board ( United States ). Those standards require that we plan and
     perform the audit to obtain reasonable assurance about whether the financial
     statements are free of material misstatement. An audit includes examining,
     on a test basis, evidence supporting the amounts and disclosures in the financial
     statements. An audit also includes assessing the accounting principles used
     and significant estimates made by management, as well as evaluating the overall
     financial statement presentation. We believe that our audits provide a reasonable
   basis for our opinion.
|3 | As described
     in Note 1, the accompanying consolidated financial statements have been restated
     to reflect the effects of changes in the purchasing power of the Chilean
     peso on the Company's financial position and results of operations. Furthermore,
     the financial statements as of December 31, 2001 and 2002 and for the years
     then ended have been restated in terms of constant Chilean pesos of December
   31, 2003 purchasing power.                                                                                                                                                                                                                                                                                                                                         
|4 | In
     our opinion, the consolidated financial statements referred to above present
     fairly, in all material respects, the financial position
     of Compañía
     Cervecerías Unidas S.A. and its subsidiaries at December 31,
     2003 and 2002, and the results of their operations and their
     cash flows for each of the three years in the period ended December 31,
     2003, in conformity with accounting principles generally accepted in Chile.                                                                                                                                                                                                                                                                                                                                           
|5 | As discussed
     in Note 2 to the consolidated financial statements, the Company changed its
   method of valuing inventory as of January 1, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

F-2



|  | Santiago,
     January 29, 2004
    Compañía Cervecerías Unidas S.A.
 2                                                                                                                                                                                                                                               
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|6 | Accounting principles generally accepted in Chile vary in
    certain important respects from accounting principles generally accepted
    in the United States of America . Information relating to the nature and effect
    of such differences is presented in Note 24 to the consolidated financial
  statements.

/s/ PricewaterhouseCoopers

Santiago , ChileJanuary
  29, 2004

F-3



Table of Contents

COMPAÑIA CERVECERIAS
  UNIDAS S.A. AND SUBSIDIARIES
 CONSOLIDATED BALANCE
 SHEETS

Adjusted
  for general price-level changes and expressed
 in thousands
of constant Chilean pesos of December 31, 2003

|                                                                                    | As of December 31,
|----------------------------------------------------------------------------------- | ------------------
|ASSETS                                                                              | 2003              
|                                                                                    |                   
|                                                                                    | ThCh$             
|CURRENT ASSETS                                                                     
|Cash                                                                                | 10,865,692        
|Time deposits and marketable securities (Note 3)                                    | 41,601,380        
|Accounts receivable - trade and other, net (Note 4)                                 | 70,790,575        
|Accounts receivable from related companies (Note 15)                                | 676,390           
|Inventories (Note 5)                                                                | 55,043,589        
|Prepaid expenses                                                                    | 3,263,586         
|Prepaid taxes (Note 13)                                                             | 2,165,654         
|Other current assets (Note 6)                                                       | 15,134,250        
|                                                                                    |                   
|Total current assets                                                                | 199,541,116       
|                                                                                    |                   
|PROPERTY, PLANT AND EQUIPMENT, net (Note 7)                                         | 313,804,536       
|OTHER ASSETS (Note 8)                                                               | 63,252,595        
|                                                                                    |                   
|Total assets                                                                        | 576,598,247       
|                                                                                    |                   
|                                                                                   
|LIABILITIES AND SHAREHOLDERS' EQUITY                                               
|                                                                                   
|CURRENT LIABILITIES                                                                
|Short-term borrowings (Note 9)                                                      | 35,812,212        
|Current portion of bank borrowings and bonds payable (Notes 10 and 11)              | 3,003,915         
|Dividends payable                                                                   | 11,280,528        
|Accounts payable                                                                    | 38,228,633        
|Notes payable                                                                       | 159,387           
|Other payables                                                                      | 4,573,303         
|Accounts payable to related companies (Note 15)                                     | 1,132,501         
|Accrued expenses (Note 12)                                                          | 14,664,425        
|Withholding taxes payable                                                           | 9,958,054         
|Income tax                                                                          | 1,507,271         
|Other current liabilities                                                           | 282,732           
|                                                                                    |                   
|Total current liabilities                                                           | 120,602,961       
|                                                                                    |                   
|                                                                                   
|LONG-TERM LIABILITIES                                                              
|Bank borrowings (Note 10)                                                           | 82,717,705        
|Bonds payable (Note 11)                                                             | 18,470,999        
|Accrued expenses and other liabilities (Note 12)                                    | 11,975,064        
|Deferred income taxes                                                               | 14,687,189        
|Deposits on bottles and containers                                                  | 11,096,892        
|                                                                                    |                   
|Total long-term liabilities                                                         | 138,947,849       
|                                                                                    |                   
|                                                                                   
|Total liabilities                                                                   | 259,550,810       
|                                                                                    |                   
|MINORITY INTEREST                                                                   | 38,275,838        
|COMMITMENTS AND CONTINGENCIES (Note 17)                                             |                   
|SHAREHOLDERS' EQUITY (Note 14)                                                     
|Common
     Stock (318,502,872 shares with no par value authorized and outstanding) | 169,975,841       
|Share premium                                                                       | 13,293,340        
|Other reserves                                                                      | 3,228,205         
|Retained earnings                                                                   | 92,274,213        
|                                                                                    |                   
|Total shareholders' equity                                                          | 278,771,599       
|                                                                                    |                   
|                                                                                   
|Total liabilities and shareholders' equity                                          | 576,598,247       
|                                                                                    |                   

The accompanying notes 1 to 24 form an integral part of these
consolidated financial statements.

F-4



Table of Contents

COMPAÑIA
   CERVECERIAS UNIDAS S.A. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF INCOME

Adjusted
  for general price-level changes and expressed
 in thousands of constant Chilean pesos of December 31, 2003

|                                                           | For
     the years ended
     December 31,
|---------------------------------------------------------- | ------------------------------------------
|                                                           |                                           
|                                                           | 2003                                      
|                                                           |                                           
|                                                           | ThCh$                                     
|OPERATING RESULTS                                         
|Net sales                                                  | 384,064,231                               
|Cost of sales                                              | (189,203,934)                             
|                                                           |                                           
|Gross margin                                               | 194,860,297                               
|Selling and administrative expenses                        | (148,997,512)                             
|                                                           |                                           
|Operating income                                           | 45,862,785                                
|                                                           |                                           
|NON-OPERATING RESULTS                                     
|Non-operating income (Note 19)                             | 24,489,961                                
|Non-operating expenses (Note 20)                           | (12,109,737)                              
|Price-level restatement and exchange differences (Note 21) | 1,261,636                                 
|                                                           |                                           
|Income before income taxes and minority interest           | 59,504,645                                
|Income taxes (Note 13)                                     | (4,977,027)                               
|                                                           |                                           
|Minority interest                                          | (439,494)                                 
|                                                           |                                           
|NET INCOME                                                 | 54,088,124                                
|                                                           |                                           

The accompanying
  notes 1 to 24 form an integral part of these consolidated financial statements.

F-5



Table of Contents

COMPAÑIA
   CERVECERIAS UNIDAS S.A. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS

Adjusted
  for general price-level changes and expressed
 in thousands of constant Chilean pesos of December 31, 2003

|                                                                                                                                                        | For
     the years ended
     December 31,
|------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------
|                                                                                                                                                        |                                           
|                                                                                                                                                        | 2003                                      
|                                                                                                                                                        |                                           
|                                                                                                                                                        | ThCh$                                     
|CASH FLOWS FROM OPERATING ACTIVITIES                                                                                                                   
|NET INCOME                                                                                                                                              | 54,088,124                                
|CHARGES (CREDITS) TO INCOME NOT REPRESENTING                                                                                                           
|CASH FLOWS:                                                                                                                                            
|Depreciation                                                                                                                                            | 40,161,075                                
|Amortization of goodwill                                                                                                                                | 2,217,480                                 
|Amortization of negative goodwill                                                                                                                       | (41,094)                                  
|Amortization of other intangibles                                                                                                                       | 391,482                                   
|Provision
       for impairment of property, plant and equipment and write-offs of
       glass bottles, write-offs of spare parts and other provisions | 3,922,842                                 
|Equity in net income of unconsolidated affiliates (net)                                                                                                 | (19,739,625)                              
|Price-level restatement                                                                                                                                 | (1,261,636)                               
|Gain on sale of land and properties held for sale                                                                                                       | (1,364,639)                               
|Gain on sale of investments and other assets                                                                                                            | -                                         
|Deferred income taxes                                                                                                                                   | 2,256,496                                 
|Minority interest                                                                                                                                       | 439,494                                   
|Other                                                                                                                                                   | (4,872,614)                               
|CHANGES IN ASSETS AND LIABILITIES AFFECTING                                                                                                            
|CASH FLOWS:                                                                                                                                            
|Accounts and notes receivable                                                                                                                           | (6,817,919)                               
|Inventories                                                                                                                                             | (4,827,135)                               
|Other assets                                                                                                                                            | (7,457,339)                               
|Accounts payable affecting operating results                                                                                                            | 998,673                                   
|Interest payable                                                                                                                                        | 2,261,816                                 
|Income tax payable                                                                                                                                      | 2,214,994                                 
|Accounts payable affecting non-operating results                                                                                                        | (2,071,640)                               
|Value added tax                                                                                                                                         | 2,835,656                                 
|                                                                                                                                                        |                                           
|Net cash provided by operating activities                                                                                                               | 63,334,491                                
|                                                                                                                                                        |                                           

F-6



CONSOLIDATED
      STATEMENTS OF CASH FLOWS

Adjusted
  for general price-level changes and expressed
 in thousands of constant Chilean pesos of December 31, 2003

|                                                               | For
     the years ended
     December 31,
|-------------------------------------------------------------- | ------------------------------------------
|                                                               |                                           
|                                                               | 2003                                      
|                                                               |                                           
|                                                               | ThCh$                                     
|CASH FLOWS FROM FINANCING ACTIVITIES                          
|Proceeds from bank borrowings                                  | 132,740,288                               
|Repayments of bank borrowings                                  | (43,625,647)                              
|Repayments of bonds payable                                    | (1,364,576)                               
|Dividends paid                                                 | (188,292,116)                             
|Proceeds from issuance of common shares                        | -                                         
|Payment
     of expenses relating to issuanceof common shares  | -                                         
|Other                                                          | 2,781,152                                 
|                                                               |                                           
|Net cash used in financing activities                          | (97,760,899)                              
|                                                               |                                           
|CASH FLOWS FROM INVESTMENT ACTIVITIES                         
|Capital expenditures                                           | (24,772,968)                              
|Proceeds from sale of property, plant and equipment            | 2,502,084                                 
|Proceeds from sale of investments in unconsolidated affiliates | 65,338,039                                
|Proceeds from sale of other investments                        | 37,516                                    
|Investments in unconsolidated affiliates                       | (34,161,992)                              
|Investments in financial instruments                           | (25,221)                                  
|Accounts receivable from related companies                     | -                                         
|Other                                                          | 208,111                                   
|                                                               |                                           
|Net cash provided by (used in) investment activities           | 9,125,569                                 
|                                                               |                                           
|PRICE-LEVEL
     RESTATEMENT OF CASH AND CASH EQUIVALENTS      | (1,442,456)                               
|                                                               |                                           
|NET (DECREASE)
     INCREASE IN CASH AND CASH EQUIVALENTS      | (26,743,295)                              
|CASH AND
     CASH EQUIVALENTS AT BEGINNING OF YEAR            | 93,099,117                                
|                                                               |                                           
|CASH AND CASH EQUIVALENTS AT END OF YEAR                       | 66,355,822                                
|                                                               |                                           

The accompanying
  notes 1 to 24 form an integral part of these consolidated financial statements.

F-7



COMPAÑIA CERVECERIAS UNIDAS S.A. AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 AT DECEMBER 31, 2003

Adjusted for general price-level changes and expressed in thousands
 of constant Chilean pesos of December 31, 2003, except as indicated

Table of Contents

NOTE 1 - NATURE
OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Compañía Cervecerías Unidas S.A. (CCU or the Company)
 is the largest producer, bottler and distributor of beer in Chile . CCU's
  line of beers includes a full range of super-premium, premium, medium-priced
  and popular-priced brands, which are primarily marketed under seven different
  brand names and one brand extension. The Company has three beer production
  facilities located throughout Chile , and has a nationwide production
  and distribution network. The Company also imports and distributes Budweiser,
Paulaner and Guinness beers in Chile .

The Company is one of
  the largest producers in the Argentine beer market. It has two beer production
  facilities in Argentina , in Salta and Santa Fe . Under a joint venture
  agreement with Anheuser-Busch Incorporated (Anheuser-Busch),
 the Company produces and distributes locally-produced Budweiser beer in Argentina

On April 28, 2003, the Company signed license and technical assistance agreements
  with Heineken Brouwerijen B.V. whereby the Company has the exclusive
 rights to produce, sell and distribute Heineken Lager beer in Chile and Argentina
  .

The Company also produces
  Chilean wine through a controlling interest in Viña
 San Pedro S.A. (VSP), Chile 's second largest wine exporter and third largest
 winery in the domestic market. VSP produces and markets premium, varietal and
 popular-priced wines under the brand families Viña San Pedro and Santa
Helena.

The Company is the exclusive producer, bottler, and distributor in Chile of
 CCU's proprietary brands and those brands produced under license from PepsiCo,
 Schweppes Holding Limited and Watt's Alimentos S.A. The Company's soft drink
 and nectar products are produced in three facilities located throughout Chile
 , and its mineral water is produced in two bottling plants in the central region
of Chile .

A summary of significant accounting policies is set forth below:

a) Presentation

These accompanying financial
  statements have been prepared in accordance with accounting principles
  generally accepted in Chile and the regulations of the Chilean Superintendency
  of Securities and Insurance (hereinafter referred to as SVS). In the event
  of discrepancy, the SVS regulations would prevail. There were no material discrepancies
  in the principles or regulations that have effected the accompanying financial
statements.

F-8



The Company has issued its audited statutory consolidated financial statements
 in Spanish and in conformity with accounting principles generally accepted in
 Chile , which include certain notes and additional information required by the
 SVS for statutory purposes. Management believes that these additional notes
 and information are not essential for the complete understanding of the consolidated
 financial statements and accordingly, these notes and additional information
have been excluded from the accompanying consolidated financial statements.

Certain minor reclassifications have been made in the 2001 and 2002 amounts
to conform with the 2003 presentation.

b) Consolidation

The consolidated financial
  statements include the accounts of Compañía
 Cervecerías Unidas S.A. (the Parent Company) and subsidiaries (companies
 in which the Parent Company holds a direct or indirect ownership of more than
 50%). The parent Company and its subsidiaries are herein referred to collectively
 as the Company or CCU. All significant inter-company accounts and transactions
 have been eliminated upon consolidation. The participation of minority shareholders
 is presented in the consolidated financial statements under the caption Minority
interest.

The consolidated financial statements for the years 2003, 2002 and 2001 include
the following significant subsidiaries:

|                                                        | At
     December 31,
|------------------------------------------------------- | --------------------
|                                                        |                     
|                                                        | 2003                
|                                                        |                     
|                                                        | %                   
|Percentage of direct and indirect ownership:           
|Aguas Minerales Cachantun S.A                           | 99.93               
|Comercial CCU Santiago S.A                              | 99.76               
|Fábrica de Envases Plásticos S.A                        | 99.99               
|Transportes CCU Limitada                                | 99.99               
|Cervecera CCU Chile Limitada                            | 99.99               
|CCU Cayman Limited                                      | 99.94               
|Compañía Cervecerías Unidas Argentina S.A               | 89.22               
|Andina de Desarrollo S.A                                | 52.40               
|Compañía Industrial Cervecera S.A. (CICSA)            | 88.51               
|Viña San Pedro S.A                                      | 60.33               
|Viña Santa Helena S.A                                   | 60.27               
|Saint Joseph Investment Limited                         | 99.94               
|South Investment Limited                                | 99.94               
|Embotelladoras Chilenas Unidas S.A. (ECUSA)           | 99.94               
|Pisconor S.A. (formerly, Inversiones Trovador S.A.) (7) | 99.99               
|Vending y Servicios CCU Limitada (8)                    | 99.94               
|Inversiones Ecusa S.A. (4)                              | 99.94               
|Viña Urmeneta S.A. (5)                                  | 60.33               
|Finca La Celia S.A. (1)                                 | 60.33               
|Finca Eugenio Bustos S.A. (6)                           | 60.33               
|Southern Breweries Establishment (3)                    | 99.97               
|Comercial e Industrial Calafquen S.A. (2)               | 99.97               

|(1) | On January 1, 2003 Finca La Celia S.A. concluded its developmental
    stage as defined by the SVS and was consolidated as of January 1, 2003 (Note
  8).
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Comercial
     e Industrial Calafquén S.A., was incorporated
  on December 10, 2003.                                                                     

F-9



|(3) | On
     April 10, 2003, the Company purchased an additional 50% interest in Southern
     Breweries Establishment (Southern) resulting in
     a total ownership interest of 99.97%. Prior to April 2003,
     the Company owned 49.97% of Southern and accounted for this investment under
     the equity method. Upon the acquisition of the additional interest, the
  Company began consolidating the operations of Southern.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(4) | Inversiones Ecusa S.A. was formed on September 27, 2002 in order to operate
  foreign subsidiaries.                                                                                                                                                                                                                                                                                                                                 
|(5) | Viña
     Urmeneta S.A. was incorporated on September 12, 2002 in order to further
  expand the Company's wine business.                                                                                                                                                                                                                                                                                                            
|(6) | Finca Eugenio Bustos S.A. was incorporated on June 4, 2002 in order to
    market fine wines in the world market. On January 1, 2003 this subsidiary
    concluded its development stage as defined by the SVS and was consolidated
  as of January 1, 2003 (Note 8).                                                                                                                                                               
|(7) | Inversiones Trovador S.A. was purchased by the Company on May 10, 2002,
    and on December 6, 2002 changed its name to Pisconor S.A. The purpose of this
  entity is to develop and expand the Company's pisco business.                                                                                                                                                                                                           
|(8) | Vending y Servicios CCU Limitada was established on March 15, 2002 with
  the purpose of selling non-alcoholic beverages using vending machines.                                                                                                                                                                                                                                                                                    

In accordance
  with Circular 981 of the SVS, disbursements made during the organization and
  start-up stage of subsidiaries which are not assignable to tangible or intangible
  assets are included in Shareholder's equity as pre-operating stage deficits.
  Investments in controlled subsidiaries in the development stage are not consolidated;
  rather, they are accounted for under the equity method and included in Other
  Assets in the Consolidated Balance Sheets. At December 31, 2003, the Company ́s investments in Viña Dassault San Pedro
 S.A. (formerly, Viña Totihue S.A.) and Viña Tabalí S.A.
 were considered to be in the development stage. At December 31, 2002, the Company ́s
 investment in Finca La Celia S.A., Finca Eugenio Bustos S.A. and Viña
 Dassault San Pedro S.A. (formerly Viña Totihue S.A.) were considered
to be in the development stage.

c) Use of estimates in the preparation of financial statements

The preparation of financial statements in conformity with generally accepted
 accounting principles requires management to make estimates and assumptions
 that affect the reported amounts of assets and liabilities, revenues and expenses
 and disclosures of contingent liabilities. Management makes its best estimate
 of the ultimate outcome for these items based on historical trends and other
 information available when the financial statements are prepared. Changes in
 estimates are recognized in accordance with the accounting rules for the estimate,
 which is typically in the period when new information becomes available to management.
 Areas where the nature of the estimate makes it reasonably possible that actual
 results could differ from amounts estimated include: the carrying value of property,
 plant and equipment, the adequacy of the allowance for doubtful accounts, the
 carrying value of goodwill and investments in unconsolidated affiliated and
the determination of the liability for deposits for bottles and containers.

F-10



d) Price-level restatements

The financial statements, which are expressed in Chilean pesos, have been
 restated to reflect the effects of variations in the purchasing power of the
 local currency during each year. For this purpose and in conformity with current
 Chilean regulations, non-monetary assets and liabilities and equity accounts
 have been restated by charges or credits to income. Furthermore, the income
 and expense accounts have been restated in terms of year-end constant pesos.
 In accordance with Chilean tax regulations and accounting practices, the restatements
 were calculated based on the official Consumer Price Index of the National Institute
 of Statistics, applied one month in arrears, which was 3.1%, 3.0% and 1.0% for
 the years ended November 30, 2001, 2002 and 2003, respectively. This index is
 considered by the business community, the accounting profession and the Chilean
 government to be the index which most closely complies with the technical requirement
 to reflect the variation in the general level of prices in the country and,
 consequently, is widely used for financial reporting purposes in Chile . For
 comparative purposes, the consolidated financial statements as of December 31,
 2001 and 2002 and the amounts disclosed in the related footnotes have been restated
 in terms of Chilean pesos of December 31, 2003 purchasing power. The above-mentioned
 price-level restatements do not purport to present appraisal or replacement
 values and are only intended to restate all non-monetary financial statement
 components in terms of local currency of a single purchasing power and to include
 in the net result for each year the gain or loss in purchasing power arising
from the holding of assets and liabilities exposed to the effects of inflation.

e) Foreign currency

Balances
  in foreign currency included in the Consolidated Balance Sheets and summarized
  in Note 21 have been translated into Chilean pesos at the market (observed)
exchange rates determined by the Central Bank of Chile in effect at each year
end as follows:

|                       | 2003      | 2002      | 2001     
|---------------------- | --------- | --------- | ---------
|                       |           |           |          
|U.S. Dollar            | 593.50    | 718.61    | 654.79   
|Euro                   | 744.95    | 752.55    | 578.18   
|Unidad de fomento (UF) | 16,920.00 | 16,744.12 | 16,262.66

f) Time deposits and marketable securities

Time deposits are reported at cost plus accrued interest and price level restatements
at each year-end.

Marketable securities
  include money market funds, promissory notes and common equity shares which
  are reported at the lower of their historical cost plus price-level restatements
  (restated cost) or market value. Money
market funds are stated at market value based on year-end quoted values.

g) Allowance for doubtful accounts receivable

The Company records an allowance for doubtful accounts receivable based on
 an analysis of the aging of the outstanding balance as well as other relevant
 information. This allowance is netted against Accounts receivable - trade and
other.

h) Inventories

In process goods, raw materials and supplies are valued at acquisition cost
 plus price-level restatements. The Company estimates that inventories have an
average turnover period of one year or less.

F-11



Effective January 1, 2002, the Company changed the method used to value its
 finished goods from direct cost, which includes only raw materials, to a method
 that includes raw materials, labor and overhead costs (Note 2). For the year
 ended December 31, 2001, the inventory portion of Costs of sales in the Consolidated
Statements of Income was stated at replacement cost excluding labor and overhead.

i) Prepaid expenses

Prepaid expenses are shown at cost plus price-level restatements and include
 prepayments for advertising, insurance premiums, computer maintenance services
 and others, and are amortized over the period of the benefit. Long-term portions
 of prepaid expenses are included in Other assets in the Consolidated Balance
Sheets.

j) Other current assets

Other current assets primarily includes securities acquired pursuant to repurchase
agreements which are stated at cost plus accrued interest and price-level restatements.

k) Property, plant and equipment

Property, plant and equipment are stated at cost plus price-level restatements.
Depreciation for each year has been calculated under the straight-line method,
based on the estimated useful lives assigned to the assets. Estimated useful
lives of assets are as follows:

|                        | Years   
|----------------------- | --------
|                        |         
|Buildings               | 25 - 100
|Vineyards               | 20 - 30 
|Machinery and equipment | 5 - 20  
|Bottles and containers  | 3 - 10  
|Other fixed assets      | 10      

Bottles and containers are reported at cost plus price-level restatements,
 net of write-offs due to breakage and allowances. Depreciation of glass bottles,
 pallets, and plastic boxes is calculated under the straight-line method based
 on the estimated useful lives assigned to the respective assets.

Purchased software is being amortized over periods between four and seven
years.

Property, plant and equipment includes the revaluation increment arising from
 the technical appraisal carried out during 1979 in conformity with instructions
issued by the SVS.

Repairs and maintenance costs are charged against income while improvements are
capitalized as additions to the related assets. Retirements, sales and disposals
of assets are recorded by reversing the cost and accumulated depreciation accounts,
with any related gain or loss reflected in Non-operating income or Non-operating
expense in the Consolidated Statements of Income.

l) Other assets

Other assets include land
  and buildings held for sale which have been adjusted to their estimated realizable
  values; trademarks which have been valued at cost plus price-level restatements
  and are amortized over a period of twenty years; and bond discounts arising
from bonds issued by the Company during 1994.

F-12



Other assets also include the following:

| | Investments
       in unconsolidated affiliates
   Includes
     investments in unconsolidated affiliates are accounted for using the equity
     method when Company has the ability to exercise significant influence over
     the operating and financial policies of the investee. Under Chilean GAAP,
     this is generally presumed to occur when the investor owns between 10% and
     50% of the outstanding voting shares. Accordingly, the Company's proportional
     share in the net income (or loss) of each investee is recognized on an accrual
     basis, after eliminating any unrealized profits or losses from transactions
     with the investees in Non-operating income or expense in the Consolidated
     Statements of Income.
   Goodwill
       and negative goodwill
   Under
     Chilean GAAP, goodwill arises from the excess of the purchase price of companies
     acquired over their net book value; negative goodwill arises when net book
     value exceeds the purchase price of companies acquired. Goodwill and negative
     goodwill also arise from the purchase of investments accounted for by the
     equity method. Goodwill and negative goodwill are normally amortized on
     a straight-line basis over the expected period of return of the investments,
     up to a maximum period of 20 years. Chilean GAAP also provides that the
     amortization of goodwill and negative goodwill may be accelerated if the
     proportional net income or loss of the investee exceeds the respective straight-line
     amortization amount. The Company evaluates the recoverability of goodwill
     on a periodic basis.
   Investments
       in other companies
   Investments
     in other companies includes investments in quoted common shares with an
     average trading value below UF 400 during the last quarter of each year
     and investments in unlisted shares and partnership interests in other companies
     where the Company does not have the ability to exercise significant influence
     over the operating and financial policies of the investee.
   Investments
     in unlisted shares and partnership interests in other companies are reported
     at each year end at cost plus price-level restatements and income from these
     investments is recognized on a cash basis. Where provisions for impairment
  were considered necessary, such provisions were recorded.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

m) Translation of foreign currency financial statements

The investments in the
  Argentine subsidiaries and in Karlovacka Pivovara dd (prior to its sale on
  March 30, 2003), are recorded in accordance
  with Technical Bulletin No. 64 of the Chilean Institute of Accountants.
  Under this pronouncement, the financial statements of foreign subsidiaries,
  which operate in countries that are exposed to significant risks, restrictions
  or inflation/currency fluctuations must first be remeasured into US dollars
  or Euros and then translated into Chilean pesos at the year-end exchange rate.
  As a result, no effect is given to price-level restatements based on
  inflation in those countries, the US dollar in the case of the Argentine subsidiaries
  and Euro in the case of Karlovacka Pivovara d.d., are considered to be
  the functional currency of these operations. Accordingly, the financial statements
  of these subsidiaries are prepared in accordance with Chilean GAAP, excluding
  the application of monetary correction, and then remeasured into US dollars
and Euros as follows:

- monetary assets and liabilities are translated
   at the closing exchange rate for the period;
- all other assets and liabilities and shareholders' equity are
    translated at historical rates of exchange;
- income and expense accounts are translated at average rates during
    the period; and
- the resulting exchange adjustments are included in the results of operations
   for the period.

F-13



The resulting foreign
  currency amounts are then translated to Chilean pesos at the closing exchange
  rate at the balance sheet date. The difference between the investments' equity
  value arising from the financial statements remeasured as explained above and
  the net equity value at the beginning of the year restated by Chilean inflation,
  plus the proportional share of the investments' income (or loss) for the year,
  is recorded as a Cumulative Translation Adjustment in
Shareholders' equity in the Consolidated Balance Sheets.

n)
   Bonds payable

Bonds are recorded at face value plus accrued interest. The discount on, and
 expenses incurred, in the issuance of the bonds are included in Other current
 assets and Other assets in the Consolidated Balance Sheets and are amortized
using the interest method of amortization over the term of the bonds.

o) Severance indemnities

The Company and most of its subsidiaries have agreed with their personnel
 to the payment of long-term severance indemnities. Severance indemnities are
 included in Accrued expenses and other liabilities in the Consolidated Balance
 Sheets and have been calculated based on the legal retirement age and the present
 value of the obligation, after applying a discount rate of 7%, except for those
 cases in which the union contracts limit the benefit to a maximum amount per
year, such cases being shown under current liabilities.

p) Income taxes and deferred income taxes

Effective January 1, 2000,
  the effects of deferred income taxes arising from temporary differences between
  the basis of assets and liabilities for tax and financial statement purposes
  are recorded in accordance with Technical Bulletins Nos. 60, 68 and 69 of the
  Chilean Institute of Accountants and Circular No. 1,466 of the SVS. The effects
  of deferred income taxes at January 1, 2000 that were not previously recorded,
  were recognized, in accordance with the transitional period provided by Technical
  Bulletin No. 60, against a contra asset or liability account (complementary accounts)
  and were recorded to offset the effects of the deferred tax assets and liabilities
  not recorded prior to January 1, 2000. Complementary accounts are amortized
  to income over the estimated average reversal periods corresponding to underlying
  temporary differences to which the deferred tax asset or liability related.
  Deferred income taxes at January 1, 2000 are recognized in income beginning
in 2001 as the temporary differences are reversed.

Deferred income tax assets are reduced by a valuation allowance if, based
 on the weight of available evidence, it is more likely than not that some portion
 or all of the deferred income tax assets will not be realized. The valuation
 allowance should be sufficient to reduce the deferred income tax asset to an
amount that is more likely than not to be realized.

The Argentine subsidiaries, with the exception of Finca La Celia S.A., have
 not recorded a current tax provision due to the existence of tax loss carryforwards
 (Note 13). However, CICSA recorded a minimum imputed income tax (Note 8) which
 has been included under Other assets in the Consolidated Balance Sheets as a
 tax recoverable as the taxes paid can be used to offset income taxes in future
periods.

q) Employee vacations

Vacations
  are accrued as a liability when earned by employees and are included in Accrued
  expenses in the Consolidated Balance Sheets.

F-14



r)   Deposits on bottles and
containers

Deposits  received on bottles
and containers in  circulation  are  classified as long-term  liabilities.  At December
31, 2002 and 2003, the amount of these  deposits was  determined  based on the estimated
 redemption of the bottles and  containers by customers and valued using the historic
amount of the deposit.  These deposits are not subject to price  level restatements.

s)   Derivative instruments

The Company  enters into
hedging  contracts  including  cross-currency  interest  rate swap  agreements  and
foreign  currency  forward exchange  contracts.  The contracts  are  accounted  for in
accordance  with  Technical  Bulletin No. 57,  Accounting  for  Derivative Contracts  (TB
57) of the Chilean  Institute of  Accountants.  Under TB 57 all  derivative  instruments
 are recognized on the balance sheet at their fair value.  Derivative instruments are
accounted for as follows:

Hedge of forecasted
transactions:

The
derivative instrument is stated at its fair value on the balance sheet and any change in
the fair value is recognized on the balance sheet as an unrealized gain or loss in Other
liabilities or in Other assets.  When the contract is settled, the unrealized gain or
loss on the instrument is recognized in earnings in Non-operating income or expense in
the Consolidated Statements of Income.

Hedge
of firm commitments:

The
hedged item and derivative  instrument are measured at fair value on the balance sheet.
 Unrealized      gains and losses are  recorded  in  earnings  in  Non-operating  income
or expense in the  Consolidated      Statements  of Income if the net effect is a loss
and  deferred  and  recognized  when the  contract is      settled  if it is a gain.  The
 unrecognized  gains  associated  with  the  derivative  instrument  are      included in
Other liabilities in the Consolidated Balance Sheets.

t)   Cash equivalents

For  purposes  of the
 Consolidated  Statement  of Cash  Flows,  the  Company  considers  all  highly  liquid
investments  purchased  with a  maturity  of three  months  or less to be cash
 equivalents,  including  time deposits, money market funds and securities purchased
pursuant to resale agreements.

Cash flows from operating
activities include all those cash flows related to the primary operating activities of
the Company and also include interest paid, interest income and, in general, all those
cash flows that are not defined as investing or financing activities.  The concept of
operating used in this statement is broader than the concept of operating income used in
the Consolidated Statements of Income.

The balance of cash and cash
equivalents is as follows:

|                                                            | At December 31,
|----------------------------------------------------------- | ---------------
|                                                            | 2003           
|                                                            |                
|                                                            | ThCh$          
|Cash                                                        | 10,865,692     
|Time deposits (Note 3)                                      | 20,430,319     
|Money market funds (Note 3) and promissory notes            | 20,928,511     
|Securities purchased pursuant to resale agreements (Note 6) | 14,131,300     
|                                                            |                
|Total                                                       | 66,355,822     
|                                                            |                

F-15



u)   Revenue recognition

The Company and  subsidiaries
 recognize  revenues upon the physical  delivery of the product,  at which time title
 passes to the  customer.  Viña San Pedro S.A.  recognizes  revenues  relating to export
 sales of wine when the wine is shipped which in  accordance  with  established  sales
terms is when the title passes to the customer.

v)   Advertising and sales
promotion costs

Advertising and sales promotion
 costs are generally  expensed as incurred.  The cost of television and other media
 advertising are deferred and recognized as an expense when the  corresponding
 advertisement  is first shown.

NOTE 2 - ACCOUNTING CHANGES

During 2003,  there were no
 accounting  changes as compared to the prior year that could have a significant effect
on the interpretation of these financial statements.

As  indicated  in Note 1 h),
 effective  January 1, 2002 the  Company  changed  the method used to value its finished
 goods from direct  cost,  which  includes  only raw  materials,  to a method  which
 includes  raw materials,  labor and overhead costs.  For the year ended December 31,
2001, the inventory  portion of Costs of sales in the  Consolidated  Statements  of
Income was stated at  replacement  costs  excluding  labor and overhead  cost.  The
 change  resulted  in a  credit  to  income  amounting  to  ThCh$ 2,105,682,  of  which
ThCh$ 1,754,292  was included in Non-operating  results and ThCh$ 351,390 as a reduction
to Cost of sales in the Consolidated Statements of Income.

During the period ended
December 31, 2002, the Company changed one of the variables used to calculate long-term
severance indemnities.  Through December 31, 2001, the Company estimated the average
remaining years for its workforce to be 8 years.  The new policy estimates that the
workforce will remain employed by the Company until the legal retirement age.  The
revised estimated resulted in a reduced charge to income amounting to ThCh$ 868,194.

NOTE 3 - TIME DEPOSITS AND
MARKETABLE SECURITIES

Time deposits and marketable
securities are summarized as follows:

|                     | At December 31,
|-------------------- | ---------------
|                     | 2003           
|                     |                
|                     | ThCh$          
|Time deposits        | 20,428,174     
|Money market funds   | 20,326,747     
|Common equity shares | 239,000        
|Promissory notes     | 607,459        
|                     |                
|Total                | 41,601,380     
|                     |                

F-16



NOTE 4 - ACCOUNTS RECEIVABLE -
TRADE AND OTHER

Accounts receivable are
summarized as follows:

|                                | At December 31,
|------------------------------- | ---------------
|                                | 2003           
|                                |                
|                                | ThCh$          
|Trade accounts receivable       | 68,446,638     
|Other accounts receivable       | 6,563,923      
|Advances to suppliers           | 2,088,589      
|Allowance for doubtful accounts | (6,308,575)    
|                                |                
|Total                           | 70,790,575     
|                                |                

The changes in the allowance
for doubtful accounts during the years ended December 31, 2003, 2002 and 2001 were as
follows:

|     | Balance at | Additions       |              |             |              
|---- | ---------- | --------------- | ------------ | ----------- | -------------
|     | beginning  | charged to cost | Write-offs   | Price-level | Balance at   
|Year | of period  | and expenses    | of bad debts | restatement | end of period
|     |            |                 |              |             |              
|     | ThCh$      | ThCh$           | ThCh$        | ThCh$       | ThCh$        
|2003 | 5,551,488  | 2,598,096       | (1,735,920)  | (105,089)   | 6,308,575    
|2002 | 6,728,394  | 1,085,353       | (1,777,606)  | (484,653)   | 5,551,488    
|2001 | 7,757,660  | 2,378,476       | (3,174,486)  | (233,256)   | 6,728,394    

NOTE 5  INVENTORIES

Inventories are summarized as
follows:

|                                                  | At December 31,
|------------------------------------------------- | ---------------
|                                                  | 2003           
|                                                  |                
|                                                  | ThCh$          
|Finished goods                                    | 12,682,158     
|Production in process and semi-manufactured goods | 1,324,993      
|Raw materials                                     | 34,996,453     
|Raw materials in transit                          | 867,208        
|Supplies                                          | 2,942,011      
|Grape crop development costs                      | 2,929,906      
|Obsolescence provisions                           | (699,140)      
|                                                  |                
|Total                                             | 55,043,589     
|                                                  |                

F-17



NOTE 6 - OTHER CURRENT ASSETS

Other current assets are
summarized as follows:

|                                                       | At December 31,
|------------------------------------------------------ | ---------------
|                                                       | 2003           
|                                                       |                
|                                                       | ThCh$          
|Securities purchased pursuant to repurchase agreements | 14,128,238     
|Bond discount (Note 11)                                | 59,976         
|Argentine bonds                                        | -              
|Provision for Argentine bonds                          | -              
|Fair value of forward exchange contracts               | -              
|Materials to consume                                   | 377,496        
|Deferred issuance costs                                | 162,856        
|Deferred income taxes (Note 13)                        | 243,455        
|Other                                                  | 162,229        
|                                                       |                
|Total                                                  | 15,134,250     
|                                                       |                

NOTE 7 - PROPERTY, PLANT AND
EQUIPMENT

Property, plant and equipment
(net) are summarized as follows:

|                                          | At December 31,
|----------------------------------------- | ---------------
|                                          | 2003           
|                                          |                
|                                          | ThCh$          
|Land and buildings                        | 82,257,296     
|Vineyards                                 | 25,850,386     
|Machinery and equipment                   | 253,469,168    
|Bottles and containers                    | 99,503,529     
|Fixtures and fittings                     | 37,014,814     
|Construction in progress                  | 7,732,044      
|Promotional assets                        | 57,697,134     
|Fixed assets in transit                   | 1,179,892      
|Software (net)                            | 8,863,432      
|Other fixed assets                        | 1,076,968      
|Increase arising from technical appraisal | 8,996,664      
|Accumulated depreciation                  | (269,836,791)  
|                                          |                
|Total property, plant and equipment (net) | 313,804,536    
|                                          |                

F-18



NOTE 8 - OTHER ASSETS

|                                                            | At December 31,
|----------------------------------------------------------- | ---------------
|                                                            | 2003           
|                                                            |                
|                                                            | ThCh$          
|Land and buildings held for sale (a)                        | 19,611,645     
|Investments in unconsolidated affiliates (b)                | 5,512,207      
|Goodwill (c)                                                | 29,048,233     
|Negative goodwill (d)                                       | (576,291)      
|Prepaid expenses                                            | 1,097,750      
|Discount on issuance of bonds                               | 461,858        
|Investments in other companies                              | 50,325         
|Trademarks                                                  | 7,496,419      
|Accumulated amortization of trademarks                      | (2,187,334)    
|Syndicated loan issuance cost                               | 582,560        
|Recoverable taxes (value added tax)                         | 766,678        
|Recoverable taxes (minimum imputed income tax in Argentina) | 1,228,548      
|Accounts receivable-trade and other                         | 98,447         
|Accounts receivable from related companies (Note 15)        | -              
|Other                                                       | 61,550         
|                                                            |                
|Total                                                       | 63,252,595     
|                                                            |                

(a)      Land and buildings
held for sale are summarized as follows:

|             | At December 31,
|------------ | ---------------
|Location     | 2003           
|             |                
|             | ThCh$          
|Osorno       | 6,976,137      
|Santiago     | 2,505,836      
|La Serena    | 2,271,907      
|Quilicura    | 2,070,504      
|Perú         | 1,651,841      
|Talca        | 1,279,928      
|Limache      | 1,210,358      
|Argentina    | 872,121        
|Viña del Mar | 303,621        
|Concepción   | 282,679        
|Valparaíso   | 123,542        
|Antofagasta  | 62,616         
|Temuco       | 555            
|             |                
|Total        | 19,611,645     
|             |                

F-19



(b)      Investments in
unconsolidated affiliates at December 31 of each year are summarized as follows:

|                                     | Percentage owned | Investment carrying value | Equity in net earnings of affiliated companies recognized  in income (loss)
|------------------------------------ | ---------------- | ------------------------- | ---------------------------------------------------------------------------
|Company                              | 2003             | 2002                      | 2003                                                                       
|                                     |                  |                           |                                                                            
|                                     | %                | %                         | ThCh$                                                                      
|Southern (1)                         | -                | 49.97                     | -                                                                          
|Cervecería Austral S.A. (2)          | 50.00            | 50.00                     | 1,646,966                                                                  
|Finca La Celia S.A. (3)              | -                | 60.33                     | -                                                                          
|Viña Dassualt San Pedro S.A. (4)     | 50.00            | 50.00                     | 1,616,863                                                                  
|Viña Tabali S.A. (5)                 | 50.00            | -                         | 1,621,984                                                                  
|Compañia Cervecera Kunstmann S.A.(6) | 50.00            | 50.00                     | 626,394                                                                    
|                                     |                  |                           |                                                                            
|Total                                |                  |                           | 5,512,207                                                                  
|                                     |                  |                           |                                                                            

|(1) | At
December 31, 2002, the Company had a 49.97% ownership interest in Southern Breweries
Establishment (Southern).  Its primary objective was to maintain an investment in
        Karlovacka Pivovara d.d. (Karlovacka) a brewery operating in Croatia. Southern
had an ownership interest of 68.804% in Karlovacka at December 31, 2002 and 2001.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The Company
acquired this investment in Southern in September 1994,  resulting in goodwill with an
amortized  balance  amounting to ThCh$ 94,869 at December 31, 2003 and         ThCh$
103,771 at December 31, 2002.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On  March
30, 2003, Southern sold its interest in Karlovacka recognizing a profit of ThCh$ 40,442,271
 (historic).  Accordingly, the Company recognized its 49.97% portion         of this gain
equivalent to ThCh$ 20,221,136  (historic) which is recorded as part of Equity in net
income of unconsolidated  affiliates in non-operating income (Note 20)         in the
Consolidated Statement of Operations.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On April
10, 2003, the Company purchased an additional 50% ownership interest of Southern.  There
was no goodwill  associated with this acquisition.  Upon acquisition of         the this
interest, the Company began consolidating the operations of Southern.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | During
November 2000, the Company acquired 50% of Cervecería  Austral S.A.  (Austral) at a
cost of ThCh$ 4,549,729  (historic)  generating  goodwill of ThCh$ 2,367,964
        (historic).  The principal activity of Austral is the production, bottling and
distribution of beer in Chile.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | At December
31, 2003 Cervecería Austral S.A. holds a 99% interest in the subsidiary Comercial
Patagona Limitada.
| | ----------------------------------------------------------------------------------------------------------------

|(3) | The
principal activity of Finca La Celia S.A., an Argentine company, is the production,
 marketing,  and distribution of wine-related and other agricultural products and
        the rental of agricultural  plots,  warehouses,  vineyards and other commercial
 establishments  related to the wine industry.  As discussed in Note 1 b), Finca La Celia
        S.A. was consolidated under Chilean GAAP beginning January 1, 2003.  It was not
consolidated at December 2002 and 2001 because it was in the development stage.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | At December
31, 2003, the Company has an ownership interest of 60.325% in Finca La Celia S.A.  At
December 31, 2003, Finca La Celia S.A. has an ownership interest of 99.9% in Finca
Eugenio Bustos S.A.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-20



|(4) | During
October 2001, Viña San Pedro S.A.  acquired a 50%  joint-venture  stake in the newly
formed Viña Totihue S.A., which is currently in the development  stage.  Viña         San
Pedro S.A. acquired 35,000 shares which were purchased  through a cash payment of US$
800,000  (equivalent to ThCh$ 547,000 - historic) and by contributing land with         a
value of US$ 2,700,000 (equivalent to ThCh$ 1,846,395 - historic).
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On May
7, 2003 Viña Totihue S.A. changed its name to Viña Dassault San Pedro S.A.
| | ---------------------------------------------------------------------------------

|(5) | During
August 2003,  Viña Tabali S.A. was  incorporated  with Viña San Pedro S.A. and Sociedad
 Agricola Rio Negro  Limitada (a related  company),  each  acquiring a 50%
        interest. Viña Tabalí S.A. is in the development stage. Viña San Pedro S.A.
acquired 22,320 shares for ThCh$ 1,635,654 (historic).  There was no goodwill associated
with         this transaction.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(6) | During
May 2002, as a result of the acquisition of Pisconor S.A (formerly, Inversiones Trovador
S.A.), the Company acquired an additional 30.7% ownership interest in Compañía Cervecera
Kunstmann S.A. (CCK) resulting in a total ownership interest of 50.0%.  Prior to May
2002, the Company owned a 19.3% interest in CCK.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

(c)            Goodwill (net of
accumulated amortization) is summarized as follows:

|                                   | At December 31,
|---------------------------------- | ---------------
|Company                            | 2003           
|                                   |                
|                                   | ThCh$          
|Compañía Industrial Cervecera S.A  | 12,617,188     
|Embotelladoras Chilenas Unidas S.A | 8,691,395      
|Viña San Pedro S.A                 | 4,582,186      
|Cervecería Austral S.A             | 2,152,409      
|South Investment Limited           | 909,439        
|Southern Breweries Establishment   | 94,869         
|Aguas Minerales Cachantún S.A      | 747            
|                                   |                
|Total                              | 29,048,233     
|                                   |                

(d)            Negative
goodwill (net of accumulated amortization) is summarized as follows:

|Cervecería Austral S.A  | 124,945 | 161,792
|----------------------- | ------- | -------
|Compañía Industrial S.A | 451,346 | 592,815
|                        |         |        
|Total                   | 576,291 | 754,607
|                        |         |        

F-21



NOTE 9 - SHORT-TERM BORROWINGS

Short-term borrowings relate to
bank loans due within one-year and are denominated in the following currencies:

|                      | At December 31,
|--------------------- | ---------------
|                      | 2003           
|                      |                
|                      | ThCh$          
|United States dollars | 35,580,591     
|UF                    | 30,069         
|Other                 | 201,552        
|                      |                
|Total                 | 35,812,212     
|                      |                

The annual average rate of
interest in 2003 related to the borrowings was approximately 2.1% (2.4% in 2002).

NOTE 10 - BANK BORROWINGS

The details of bank borrowings
at December 31, 2003 are summarized as follows:

|Bank              | Currency | Current portion | Long-term  | Total at December 31, 2003 | Annual interest rate
|----------------- | -------- | --------------- | ---------- | -------------------------- | --------------------
|                  |          |                 |            |                            |                     
|                  |          | ThCh$           | ThCh$      | ThCh$                      | %                   
|Banco Estado      | UF       | 874,146         | 2,554,705  | 3,428,851                  | 2.46                
|Banco Sudameris   |         | 226,182         | -          | 226,182                    | 4.91                
|Deutsche Bank (1) | US$      | 239,419         | 80,163,000 | 80,402,419                 | Libor + 0.75        
|                  |          |                 |            |                            |                     
|Total             |          | 1,339,747       | 82,717,705 | 84,057,452                 |                     
|                  |          |                 |            |                            |                     

The details of bank borrowings
at December 31, 2002 are summarized as follows:

|Bank            | Currency | Current portion | Long-term | Total at December 31, 2002 | Annual interest rate
|--------------- | -------- | --------------- | --------- | -------------------------- | --------------------
|                |          |                 |           |                            |                     
|                |          | ThCh$           | ThCh$     | ThCh$                      | %                   
|Citibank (2)    | US$      | 16,399,972      | -         | 16,399,972                 | (2)                 
|Banco de Chile  | UF       | 507,940         | -         | 507,940                    | 4.91                
|Banco Estado    | UF       | 866,623         | 3,404,574 | 4,271,197                  | 1.35                
|Banco Santander | UF       | 321,793         | -         | 321,793                    | 4.94                
|Banco Sudameris |         | 120,467         | 228,125   | 348,592                    | 4.61                
|                |          |                 |           |                            |                     
|Total           |          | 18,216,795      | 3,632,699 | 21,849,494                
|                |          |                 |           |                            |                     

F-22



|(1) | On
May 9, 2003, the Company obtained a 5-year syndicated loan amounting to US$ 135,000,000
with twelve foreign and local banks. Deutsche Bank Securities Inc. and BBVA Securities
Inc. are the main agents for the loan and Cervecera CCU Chile Limitada is acting as
guarantor.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The loan requires the Company
to comply with the following covenants:

i)             the  maintenance
of a consolidated  interest  coverage  ratio in both Cervecera CCU Chile Limitada and the
Company of at least 3.0 measured  quarterly  based on a                       moving
average for the last four quarters.

ii)
           the maintenance of a consolidated debt ratio lower or equal to 3.0, in both
Cervecera CCU Chile Limitada and the Company.

iii)
          the maintenance of a minimum consolidated equity of UF 15 million at the end of
each quarter.

iv)
           Additionally,  the loan requires that the Company comply with certain
restrictions of a positive assurance nature, including the observance of the law, making
tax                       payments and  maintenance  of insurance.  It also requires the
Company to comply with certain  restrictions  of a negative  nature,  such as not to
provide                       chattel mortgages,  except those authorized by the
contract,  not to enter into mergers,  except for those permitted,  and not to sell fixed
assets, except                       under the terms and conditions set forth in the
contract.

At
December 31, 2003 the Company was in compliance with all covenants.

|(2) | On
October 25, 1996, the Company  entered into a syndicated loan amounting to  US$ 75,000,000
 with fourteen  foreign banks headed by Citibank,  New York. The loan had a         term
of seven years and was paid in full during 2003. Annual interests rate were Libor plus
0.40 for the first 5 years and Libor plus 0.45 for the last 2 years.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Scheduled maturities of bank
borrowings at December 31, 2003, are as follows:

|Maturing during the years | ThCh$     
|------------------------- | ----------
|                          |           
|2004                      | 1,339,747 
|2005                      | 851,568   
|2006                      | 32,916,768
|2007                      | 32,916,768
|2008                      | 16,032,601
|                          |           
|Total                     | 84,057,452
|                          |           

F-23



NOTE 11 - BONDS PAYABLE

Bonds payable are summarized as
follows:

|                      | At December 31,
|--------------------- | ---------------
|                      | 2003           
|                      |                
|                      | ThCh$          
|Current portion       |                
|Principal             | 1,367,700      
|Accrued interest      | 296,468        
|Total                 | 1,664,168      
|                      |                
|                     
|Long-term - Principal | 18,470,999     
|Total                 | 20,135,167     
|                      |                

The Series C and D Bonds
 consist of an issue of 120 bonds for a total of  UF 1,200,000  (ThCh$ 20,304,000  at
December  31, 2003  exchange  rate) and 70 bonds for a total of UF 700,000  (ThCh$ 11,844,000
 at December 31, 2003  exchange  rate) with 21 and 12 year terms,  respectively.  For
both series,  principal  and interest is payable in  semi-annual installments  with
interest  calculated at a rate of 6% per annum.  At December 31, 2003,  the Company had
made  nineteen  payments of principal,  as stipulated in the placement deed.  The final
payments on the bonds are due on September 30, 2015 and 2006, respectively.

The bonds were placed at a
discount of ThCh$ 727,796  (historical  pesos) which is being amortized over the term of
the bonds.  At December 31, 2003,  ThCh$ 59,976 (ThCh$ 59,947 in 2002) is included using
the effective interest method in Other current assets and ThCh$ 461,858 (ThCh$ 521,491 in
2002) in Other Assets in the Consolidated Balance Sheets.

The bonds have the following
covenants:

i)
    The Company is required to maintain a ratio of total liabilities to equity of two to
one.

ii)
   Current assets must exceed current liabilities during the term of the obligations.

iii)
  The Company must maintain a ratio of its unpledged assets over its unsecured current
liabilities of not less than 1.30.

iv)
   The Company must maintain unpledged assets of not less than 30% of liabilities.

v)
    The Company is restricted by the bond indenture as to which new investments it may
make.

At December 31, 2003 the
Company was in compliance with all the covenants.

F-24



Scheduled maturities of bonds
payable at December 31, 2003 are as follows:

|Maturing during the years | ThCh$     
|------------------------- | ----------
|                          |           
|2004                      | 1,664,168 
|2005                      | 1,367,700 
|2006                      | 1,367,699 
|2007                      | 380,700   
|2008                      | 380,700   
|2009 to 2011              | 3,603,960 
|2012 to 2015              | 11,370,240
|                          |           
|Total                     | 20,135,167
|                          |           

NOTE 12 - ACCRUED EXPENSES AND
OTHER LIABILITIES

The detail of accrued expenses
is summarized as follows:

|Short-term                                                  | 2003       | 2002      
|----------------------------------------------------------- | ---------- | ----------
|                                                            |            |           
|Advertising expenses on invoices not received               | 3,698,317  | 1,701,560 
|Provision for vacation expenses                             | 2,898,025  | 2,944,458 
|Accrued expenses on invoices not received                   | 2,157,858  | 2,239,204 
|Directors' profit sharing                                   | 1,473,712  | 730,568   
|Salaries payable                                            | 99,052     | 107,206   
|Employee benefits                                           | 32,823     | 49,264    
|Fees                                                        | 57,918     | 32,379    
|Provision for severance indemnities                         | 277,732    | 234,838   
|Fair value of forward exchange contracts (1)                | 32,008     | 103,159   
|Sales commissions                                           | 668,380    | 512,127   
|Licenses and consulting                                     | 40,882     | 210,030   
|Accrual for pavement costs required by municipal government | -          | 295,590   
|Provision for lawsuits                                      | 93,375     | 477,275   
|Write-offs of glass bottles                                 | 110,034    | 216,111   
|Prizes for employee achievements                            | 572,381    | 352,957   
|Other accrued expenses                                      | 2,451,928  | 2,616,040 
|                                                            |            |           
|Total                                                       | 14,664,425 | 12,822,766
|                                                            |            |           

F-25



|Long-term                                          | 2003       | 2002     
|-------------------------------------------------- | ---------- | ---------
|                                                   |            |          
|                                                   | ThCh$      | ThCh$    
|Provision for severance indemnities                | 1,112,618  | 1,156,237
|Fair value of cross-currency swap (2)              | 9,141,132  | -        
|Allowance for unrealized profit on hedge operation | 745,080    | -        
|Provision for lawsuits                             | 60,067     | 19,518   
|Other                                              | 916,167    | 717,742  
|                                                   |            |          
|Total                                              | 11,975,064 | 1,893,497
|                                                   |            |          

|(1) | At
December 31, 2003, CCU has three outstanding  forward  contracts to hedge against
 variations in the      exchange  rate  between the US dollar and the Chilean  peso.
 This hedge  covers US  dollar-denominated      investments made by the Company, which is
the seller of US dollars in both contracts.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | At
December 31, 2003, CCU has six outstanding cross-currency contracts intended to protect
the Company against foreign-currency and interest rate risk.  The derivative contracts
are hedges against future interest and capital payments amounting to US$ 96,100,000 in
respect to the 5-year syndicated loan amounting to US$ 135,000,000 described in Note 10.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

NOTE 13 - INCOME TAXES

The  Company ́s  current tax
 provision  for the year ended  December 31, 2003  amounting to  ThCh$ 6,886,622 (ThCh$
 4,585,387  in 2002).  Most of the income tax that would have been  payable on 2002 and
2003  results of operations has been  eliminated by the application of tax loss
 carryforwards  that arose in prior years. At  December 31, 2003,  the  Company  had tax
loss  carryforwards  in Chile  amounting  to  ThCh$ 18,212,888 (ThCh$ 9,207,011 in 2002)
 which  are  available  to apply  against  tax  liabilities  in future  years.  No
expiration date is prescribed by Chilean law for tax loss carryforwards.

Additionally,  CCU  Argentina
 S.A. and its  subsidiaries  and Finca La Celia and  subsidiary  have tax loss
carryforwards  aggregating  ThCh$ 24,578,571  at December 31, 2003  (ThCh$ 17,417,938  in
2002) which may be applied to reduce taxable income in Argentina during a five-year
carryforward period.

The corporate income tax charge
for the years ended December 31, 2003 and 2002, is analyzed as follows:

|                                          | 2003        | 2002       
|----------------------------------------- | ----------- | -----------
|                                          |             |            
|                                          | ThCh$       | ThCh$      
|Current income tax provisions             | 6,842,357   | 4,520,699  
|Other taxes                               | 44,265      | 64,688     
|                                          |             |            
|Total current tax provision               | 6,886,622   | 4,585,387  
|                                          |             |            
|                                         
|Monthly provisional payments              | (4,572,888) | (4,363,534)
|Other credits                             | (806,463)   | (2,691,907)
|                                          |             |            
|Total current tax payable (prepaid taxes) | 1,507,271   | (2,470,054)
|                                          |             |            

F-26



At December 31, 2003 and 2002,
the accumulated balances from deferred taxes originating from temporary differences were
as follows:

|                                               | 2003            | 2002                
|---------------------------------------------- | --------------- | --------------------
|                                               |                 |                     
|                                               | Deferred assets | Deferred liabilities
|                                               | Short-term      | Long-term           
|                                               |                 |                     
|                                               | ThCh$           | ThCh$               
|Allowance for doubtful accounts                | 917,750         | 1,017               
|Provision for staff vacation                   | 410,139         | -                   
|Amortization of intangible assets              | -               | 11,235              
|Fixed asset depreciation                       | -               | -                   
|Severance indemnities                          | -               | -                   
|Adjustment on bottle and container deposits    | -               | -                   
|Software expenses capitalized                  | -               | -                   
|Operating expenses  crop farm                 | -               | -                   
|Tax loss carryforwards                         | 584,009         | 11,150,448          
|Difference in inventory valuation              | 281,445         | -                   
|Unrealized profit on hedge operation           | 5,442           | 1,722,552           
|Allowance for land and buildings held for sale | -               | 1,056,417           
|Unrealized gain                                | -               | 273,873             
|Changes in allowances                          | 162,519         | 613,457             
|Other                                          | 446,603         | 873,036             
|Complementary accounts (net of amortization)   | -               | (93,992)            
|Valuation allowance                            | (1,015,632)     | (7,761,925)         
|                                               |                 |                     
|Total                                          | 1,792,275       | 7,846,118           
|                                               |                 |                     

The  complementary  accounts
 correspond to the  accumulated  effect of deferred income taxes which were not recorded
until January 1, 2000 when Technical  Bulletin No. 60 was adopted.  The complementary
 accounts are amortized over the weighted-average terms of reversal of the corresponding
temporary differences.

F-27



Effect on results

|                                                                                      | 2003        | 2002        | 2001       
|------------------------------------------------------------------------------------- | ----------- | ----------- | -----------
|                                                                                      |             |             |            
|                                                                                      | ThCh$       | ThCh$       | ThCh$      
|Current tax provision                                                                 | (6,886,622) | (4,585,387) | (4,369,929)
|Deferred income tax provision                                                         | 2,526,851   | (2,265,792) | (3,183,746)
|Amortization of effects of deferred income taxes accumulated at beginning of the year | (283,285)   | (516,764)   | 42,633     
|Other - tax refunds                                                                   | (333,971)   | (142,856)   | 77,200     
|                                                                                      |             |             |            
|Total                                                                                 | (4,977,027) | (7,510,799) | (7,433,842)
|                                                                                      |             |             |            

F-28



NOTE 14 - SHAREHOLDERS' EQUITY

The changes in the
Shareholders' equity accounts during 2001, 2002 and 2003 were as follows:

|                                                                           |                  |              |               | Other reserves                                 | Retained earnings           |                                  
|-------------------------------------------------------------------------- | ---------------- | ------------ | ------------- | ---------------------------------------------- | --------------------------- | ---------------------------------
|                                                                           |                  |              |               |                                                |                             |                                  
|                                                                           | Number of shares | Common stock | Share premium | Surplus on technical appraisal of fixed assets | Pre-operating stage deficit | Cumulative translation adjustment
|                                                                           |                  |              |               |                                                |                             |                                  
|                                                                           |                  | ThCh$        | ThCh$         | ThCh$                                          | ThCh$                       | ThCh$                            
|Balances at December 31, 2000 (historical)                                 | 318,502,872      | 158,478,348  | 12,394,153    | 3,263,973                                      | (109,961)                   | 7,868,161                        
|Allocation of 2000 net income                                              |                  | -            | -             | -                                              | 109,961                     | -                                
|Final dividend of Ch$ 7.39 (historical) per share                          |                  | -            | -             | -                                              | -                           | -                                
|Price-level restatement                                                    |                  | 4,912,829    | 384,219       | 101,183                                        | -                           | 243,913                          
|Proportional share of loss of subsidiary in development period             |                  | -            | -             | -                                              | (995,427)                   | -                                
|Interim dividend of Ch$ 33.00 (historical) per share                       |                  | -            | -             | -                                              | -                           | -                                
|Translation adjustment for the year                                        |                  | -            | -             | -                                              | -                           | 2,576,401                        
|Extraordinary dividend of Ch$91.61 (historical) per share                  |                  | -            | -             | -                                              | -                           | -                                
|Net income for the year                                                    |                  | -            | -             | -                                              | -                           | -                                
|                                                                           |                  |              |               |                                                |                             |                                  
|Balances at December 31, 2001                                              | 318,502,872      | 163,391,177  | 12,778,372    | 3,365,156                                      | (995,427)                   | 10,688,475                       
|                                                                           |                  |              |               |                                                |                             |                                  
|Balances at December 31, 2001 restated to constant December 31, 2003 pesos |                  | 165,025,089  | 12,906,156    | 3,398,807                                      | (1,005,381)                 | 10,795,360                       
|                                                                           |                  |              |               |                                                |                             |                                  
|Balances at December 31, 2001 (historical)                                 | 318,502,872      | 163,391,177  | 12,778,372    | 3,365,156                                      | (995,427)                   | 10,688,475                       
|Allocation of 2001 net income                                              |                  | -            | -             | -                                              | 995,427                     | -                                
|Final dividend of Ch$ 33.00 per share                                      |                  | -            | -             | -                                              | -                           | -                                
|Price-level restatement                                                    |                  | 4,901,735    | 383,351       | 100,954                                        | -                           | 275,400                          
|Proportional share of loss of subsidiary in development period             |                  | -            | -             | -                                              | (1,490,485)                 | -                                
|Interim dividend of Ch$ 22.00 per share                                    |                  | -            | -             | -                                              | -                           | -                                
|Translation adjustment for the year                                        |                  | -            | -             | -                                              | -                           | 6,845,460                        
|Net income for the year                                                    |                  | -            | -             | -                                              | -                           | -                                
|                                                                           |                  |              |               |                                                |                             |                                  
|Balances at December 31, 2002                                              | 318,502,872      | 168,292,912  | 13,161,723    | 3,466,110                                      | (1,490,485)                 | 17,809,335                       
|                                                                           |                  |              |               |                                                |                             |                                  
|Balances at December 31, 2002 restated to constant December 31, 2003 pesos |                  | 169,975,841  | 13,293,340    | 3,500,771                                      | (1,505,390)                 | 17,987,428                       
|                                                                           |                  |              |               |                                                |                             |                                  
|Balances at December 31, 2002 (historical)                                 | 318,502,872      | 168,292,912  | 13,161,723    | 3,466,110                                      | (1,490,485)                 | 17,809,335                       
|Allocation of 2002 net income                                              |                  | -            | -             | -                                              | 1,490,485                   | -                                
|Final dividend of Ch$ 33.00 per share                                      |                  | -            | -             | -                                              | -                           | -                                
|Special dividend of Ch$ 177.00 per share                                   |                  | -            | -             | -                                              | -                           | -                                
|Price-level restatement                                                    |                  | 1,682,929    | 131,617       | 34,661                                         | -                           | 179,106                          
|Proportional share of loss of subsidiary in development period             |                  | -            | -             | -                                              | (205,907)                   | -                                
|Interim dividend of Ch$ 33.00 per share                                    |                  | -            | -             | -                                              | -                           | -                                
|Translation adjustment for the year                                        |                  | -            | -             | -                                              | -                           | (18,055,122)                     
|Voluntary reserve                                                          |                  | -            | -             | 22                                             | -                           | -                                
|Net income for the year                                                    |                  | -            | -             | -                                              | -                           | -                                
|                                                                           |                  |              |               |                                                |                             |                                  
|Balances at December 31, 2003                                              | 318,502,872      | 169,975,841  | 13,293,340    | 3,500,793                                      | (205,907)                   | (66,681)                         
|                                                                           |                  |              |               |                                                |                             |                                  

F-29



a)       As required by Chilean
Law, capital has been modified to reflect the proportional capitalization of the
price-level restatement of equity accounts.

b)       The Companys policy
is to distribute 50% of net profits for the year as dividends.

c)       At the Extraordinary
 Shareholders` meeting on February 26, 2003, the shareholders agreed to distribute a
special dividend of Ch$ 177 per share for a total of ThCh$ 56,375,008  (historic).  Such
dividend was paid          on March 14, 2003.  This special dividend represents
approximately one third of the total amount of ThCh$ 168,700,000 (historic) to be paid as
approved in the same meeting.

d)       At the annual
 Shareholders`  meeting on April 24, 2003, the Shareholders  agreed to distribute a
special dividend of Ch$ 42.59722 per share for a total of ThCh$ 13,567,337  (historic).
 This dividend considered          to distributing a 100% of the 2002 profits.

e)       At the Board of
Directors meeting on August 5, 2003, the directors agreed to distribute the outstanding
balance of the special dividend in two installments,  one of ThCh$ 74,848,175 (historic)
on August 29,  2003          and the other of ThCh$ 37,476,817 (historic) on October 10,
2003.

f)       On December 16, 2003
the Board of Directors agreed to distribute an interim dividend of Ch$33 per share for a
total of ThCh$ 10,510,595 (historic).

g)       At December 31, 2003,
Viña San Pedro S.A. has an ownership  interest of 99.9% in Finca La Celia S.A. in the
Republic of Argentina,  through its subsidiary Viña Urmeneta S.A., which until 2002, was
considered as a          development stage company.  Consequently,  the Company has
recognized in Shareholders ́ equity a Pre-operating-stage  deficit to adjust its
investment to equity value. Such deficit amounted to ThCh$ 1,495,321 at          December
31, 2002, which was adjusted to  ThCh$ 1,419,655  in order to eliminate the effect of an
unrealized profit with Compañía  Industrial  Cervecera S.A.  Effective January 2003,
Finca La Celia S.A. completed          its development stage and its results have been
consolidated with Viña San Pedro S.A.

At December 31, 2003, the
 subsidiary  Viña San Pedro S.A. has a 50% interest in Viña Dassault San Pedro S.A., a
company  considered to be in  development  stage.  Consequently,  the Company  recorded
the related          deficit, amounting to ThCh$ 198,647, directly in equity (ThCh$
85,735 in 2002).

At December 31, 2002, the
subsidiary  Viña San Pedro S.A. has a 50% interest on Viña Tabalí S.A., a company
 considered to be in the  development  stage.  Accordingly,  the Company  recorded the
related  deficit,          amounting to ThCh$ 7,260, for the period from August 2003 to
December 2003.

h)       At the
Shareholders`meeting on April 26, 2002 the Shareholders agreed to distribute a final
dividend of Ch$ 33 per share for a total of ThCh$ 10,510,595 (historic).

i)       At the Board of
Directors Meeting held on December 3, 2002, the directors agreed to distribute an
interim dividend of Ch$ 22.00 per share for a total of ThCh$ 7,007,063 (historic).

F-30



NOTE 15 - ACCOUNTS WITH RELATED
COMPANIES

The Consolidated Balance Sheets
at December 31, 2003 and 2002 includes the following accounts with related companies:

|                                                     | 2003       | 2002     
|---------------------------------------------------- | ---------- | ---------
|                                                     |            |          
|Entity                                               | Receivable | Payable  
|                                                     |            |          
|                                                     | ThCh$      | ThCh$    
|Cotelsa S.A                                          | -          | 45,078   
|Hoteles Carrera S.A                                  | 20,314     | 2,751    
|Quiñenco S.A.                                        | -          | 7,560    
|Anheuser - Busch International Holdings, Inc.        | -          | 225,443  
|Anheuser Busch Latin America Development Corporation | -          | 163,935  
|Editorial Trineo S.A                                 | -          | -        
|Cervecería Austral S.A                               | 64,993     | 121,051  
|Empresa Nacional de Telecomunicaciones               | -          | 1,048    
|Entel PCS Telecomunicaciones S.A                     | -          | 25,835   
|Telefónica del Sur Carrier S.A                       | -          | 858      
|Telefónica del Sur S.A                               | -          | -        
|Banco de Chile                                       | 6,307      | 6,951    
|Viña Dassault San Pedro S.A                          | 341,955    | -        
|Finca La Celia S.A                                   | -          | -        
|Inmobiliaria Norte Verde S.A                         | -          | 21,578   
|Karlovacka Pivovara d.d                              | -          | -        
|Comercial Patagona Ltda                              | 37,388     | 12,215   
|Compañía Cervecera Kunstmann S.A                     | 68,296     | 111,331  
|Finca Eugenio Bustos S.A                             | -          | -        
|Agrícola Río Negro                                   | 12,209     | -        
|Mineral Antofagasta S.A                              | 162        | -        
|Heineken Brouwerijen B.V                             | 85,520     | 252,192  
|Cía de Teléfonos de Coyhaique                        | -          | 316      
|Viña Tabalí S.A.                                     | 29,415     | -        
|Cia Minera Quebrada Blanca                           | 9,533      | -        
|Ferrocarriles de Antofagasta a Bolivia               | 298        | -        
|Latincermex                                          | -          | -        
|Alufoil S.A.                                         | -          | 134,359  
|                                                     |            |          
|Total                                                | 676,390    | 1,132,501
|                                                     |            |          

F-31



The balances receivable at
December 31, 2003 and 2002 are included in the Consolidated Balance Sheets as follows:

|                                           | 2003    | 2002     
|------------------------------------------ | ------- | ---------
|                                           |         |          
|                                           | ThCh$   | ThCh$    
|Current assets                            
|Accounts receivable from related companies | 676,390 | 2,592,140
|                                          
|Other assets (Note 8)                     
|Accounts receivable from related companies | -       | 36,016   
|                                           |         |          
|Total                                      | 676,390 | 2,628,156
|                                           |         |          

NOTE 16 - SIGNIFICANT
TRANSACTIONS WITH RELATED COMPANIES

The principal transactions with
related companies are detailed below:

|Company                      | Relationship    | Transaction                                | 2003        | 2002        | 2001       
|---------------------------- | --------------- | ------------------------------------------ | ----------- | ----------- | -----------
|                             |                 |                                            |             |             |            
|                             |                 |                                            | ThCh$       | ThCh$       | ThCh$      
|Banco de Chile               | Affiliate       | Purchase of time deposits                  | 477,019,999 | 153,316,481 | 123,091,089
|                             |                 | Interest on time deposits                  | 401,320     | 516,717     | 635,675    
|                             |                 | Services received                          | 76,371      | 114,829     | 6,740      
|                             |                 | Interest paid                              | 199,678     | 63,684      | 90,925     
|                             |                 | Collection services                        | 171,895     | 129,810     | 109,634    
|                             |                 | Forward contract                           | 40,152,960  | 62,039,927  | 44,226,879 
|                             |                 | Loans obtained                             | 508,015     | 1,985,340   | -          
|                             |                 | Invoiced services                          | 1,742,290   | 2,289,774   | 782,943    
|                             |                 | Sale of products                           | 5,876       | 2,391       | -          
|Editorial Trineo S.A         | Affiliate       | Purchase of products                       | 375,118     | 184,657     | 18,868     
|                             |                 | Services received (expense)                | 50,451      | 23,033      | 21,957     
|Hoteles Carrera S.A          | Affiliate       | Services received (expense)                | 28,674      | 21,701      | 23,650     
|                             |                 | Sale of products                           | 16,757      | 11,797      | 9,224      
|Inmobiliaria Norte Verde S.A | Affiliate       | Services received (expense)                | 22,504      | 48,904      | 31,374     
|Karlovacka Pivovara d.d      | Affiliate       | Services rendered (income)                 | -           | 34,523      | 148,402    
|Paulaner Brauerei A.G        | Affiliate       |                                           
|                             |                 | Licenses and technical assistance received | 99,998      | 75,231      | 74,152     
|Southern Breweries           |                
|Establishment                | Equity investee | Advances on current account                | -           | 329,316     | 3,333,785  
|                             |                 | Payments on behalf of SBE                  | -           | 138,777     | 393,737    
|                             |                 | Interest charged                           | -           | 55,068      | 525,891    
|Anheuser Busch Inc.          | Affiliate       | Marketing contribution                     | -           | -           | 1,053,782  
|                             |                 | Licenses and technical assistance          | 577,698     | 494,354     | 1,040,118  
|                             |                 | Transfers on current account               | -           | 435,478     | -          
|                             |                 | Purchase of products                       | 2,857,826   | 1,962,266   | 2,262,679  
|                             |                 | Sale of products                           | 1,133,210   | 1,079,337   | 1,361,461  
|Cotelsa S.A                  | Affiliate       | Purchase of products                       | 68,502      | 60,225      | 50,862     
|                             |                 | Purchase of pallets                        | 111,982     | 88,525      | -          
|                             |                 | Services received (expense)                | -           | 3,476       | 3,511      

F-32



|Company                         | Relationship        | Transaction                     | 2003        | 2002        | 2001       
|------------------------------- | ------------------- | ------------------------------- | ----------- | ----------- | -----------
|                                |                     |                                 |             |             |            
|                                |                     |                                 | ThCh$       | ThCh$       | ThCh$      
|Lanzville Investments           |                     |                                 |             |             |            
|Establishment                   | Affiliate           | Interest charged                | -           | 50,723      | 10,303     
|                                |                     | Adjustment paid                 | 1,913       | -           | -          
|Alufoil S.A                     | Affiliate           | Purchase of products            | 755,423     | 706,716     | 589,333    
|Finca La Celia S.A              | Affiliate           | Reimbursement of expenses       | -           | 135,772     | 412,844    
|                                |                     | Purchase of products            | -           | 18,361      | -          
|                                |                     | Fixed asset transfer            | -           | -           | 52,779     
|                                |                     | Interest on current account     | -           | 1,321       | 23,574     
|                                |                     | Services rendered (income)      | -           | 75,665      | -          
|                                |                     | Remittance due to issuance of  
|                                |                     | capital                         | -           | 13,756,231  | -          
|                                |                     | Remittance sent                 | -           | 4,379,614   | -          
|                                |                     | Remittance received             | -           | 4,310,160   | -          
|Empresa Nacional de             |                    
|Telecomunicaciones              | Affiliate           | Services received (expense)     | 353,774     | 360,723     | 384,741    
|Edmundo Eluchans y Cia          | Partner is Director
|                                | of affiliated       | Legal services (expense)        | -           | -           | 6,554      
|Entel PCS                       |                    
|Telecomunicaciones S.A          | Affiliate           | Services received (expense)     | 488,596     | 113,078     | 76,474     
|Banedwards S.A. Corredores      |                    
|de Bolsa                        | Affiliate           | Purchase of investments         | -           | -           | 121,342,989
|                                |                     | Interest on investments         | -           | 21,624      | 60,865     
|                                |                     | Foreign currency transaction   
|                                |                     | (amount paid)                   | -           | -           | 2,415,621  
|Banchile Corredores de Bolsa    | Affiliate           | Purchase of investments         | 174,528,725 | 121,662,984 | 64,741,287 
|                                |                     | Interest on investments         | 197,046     | 42,986      | 115,314    
|                                |                     | Market hedge                    | -           | -           | 620,481    
|Banedwards Administradora       |                    
|de Fondos                       | Affiliate           | Purchase of investments         | -           | -           | 20,304,541 
|                                |                     | Interest on investments         | -           | -           | 16,834     
|Anheuser Busch Lat. Corporation | Affiliate           | Technical assistance           
|                                |                     | (expense)                       | 16,641      | 32,220      | 103,403    
|Cervecería Austral S.A          | Equity investee     | Purchase of products            | 4,935       | 6,645       | 8,581      
|                                |                     | Royalties                       | 463,881     | 337,977     | -          
|                                |                     | Services rendered (income)      | 10,189      | 28,005      | -          
|                                |                     | Sale of raw materials           | 49,390      | 103,096     | -          
|                                |                     | Distribution services (expense) | 17,623      | -           | -          
|                                |                     | Affiliate payments              | 18,616      | -           | -          
|                                |                     | Services rendered               | 59,263      | -           | -          
|                                |                     | Advertising                     | 20,000      | -           | -          
|Comercial Patagona Ltda         | Affiliate           | Purchase of products            | 32,547      | 10,512      | -          
|                                |                     | Services rendered (income)      | 13,824      | 1,523       | -          
|                                |                     | Transport (expense)             | 23,890      | 14,000      | -          
|                                |                     | Sale of products                | 679,716     | 364,280     | -          
|Compañia Cervecera              |                    
|Kunstmann S.A                   | Equity investee     | Purchase of products            | 187,470     | 141,387     | -          
|                                |                     | Technical assistance recovery   | 27,119      | -           | -          
|                                |                     | Affiliate payments              | 63,014      | -           | -          
|                                |                     | Expense recovery                | 29,694      | -           | -          
|Electromecánica Industrial S.A  | Affiliate           | Services received (expense)     | -           | -           | 5,257      
|Soc. Agrícola y Ganadera        |                    
|Río Negro Ltda                  | Affiliate           | Purchase of products            | 337,797     | 9,102       | -          
|                                |                     | Sale of products                | 9,747       | 4,621       | -          

F-33



|Company                        | Relationship       | Transaction                       | 2003    | 2002      | 2001  
|------------------------------ | ------------------ | --------------------------------- | ------- | --------- | ------
|                               |                    |                                   |         |           |       
|                               |                    |                                   | ThCh$   | ThCh$     | ThCh$ 
|Telefónica del Sur Carrier S.A | Affiliate          | Paid services (expense)           | 8,611   | 1,958     | 38,856
|Telefónica del Sur S.A         | Affiliate          | Paid services                     | 2,829   | 11,885    | 2,830 
|Viña Dassault San Pedro S.A    | Affiliate          | Purchase of products              | -       | 3,831     | -     
|                               |                    | Sales of products                 | 151,323 | 75,655    | 15,700
|                               |                    | Fixed asset transfer              | -       | 1,710,517 | 55,183
|                               |                    | Reimbursement of expenses         | 17,913  | 1,768     | -     
|                               |                    | Services rendered (income)        | -       | 71,527    | -     
|Antofagasta Mineral S.A        | Shareholder in     |                                   |         |           |       
|                               | common             | Invoiced products                 | -       | 167       | -     
|Heineken Brouwerijen B.V       | Indirect           | Services billed                   | 17,965  | -         | -     
|                               |                    | Licenses and technical assistance | 238,865 | -         | -     
|Viña Tabalí S.A                | Associated company | Payments on behalf of Tabalí      | 395     | -         | -     

NOTE 17 - COMMITMENTS AND
CONTINGENCIES

At December 31, 2003, Viña San
Pedro S.A. had granted mortgages and pledges over a portion of its property and equipment
with a book value of ThCh$ 4,836,978 to guarantee obligations aggregating ThCh$ 3,428,851.

At December 31, 2003, Viña San
Pedro S.A had commitments related to accounts receivable transferred to third parties
amounting to US$ 18,724,076 (US$ 14,010,833 in 2002).

The Company is party to an
investment  agreement signed on December 14, 1995 between the Company,  CCU Argentina and
Anheuser-Busch that gives Anheuser-Busch the option of increasing its stake in CCU
Argentina S.A. to 20% at a price based on book value plus a premium determined by current
market conditions.  The option arose from the desire of the Company to have
Anheuser-Busch as its strategic partner.  The Company considers this to be an investment
transaction and not a transaction in which goods or services are the consideration
received for the issuance of equity securities. Accordingly, the Company has not recorded
the fair value of this option.

At December 31, 2003, the
Company was a defendant in a number of commercial  lawsuits of the type normally
 associated with the Companys  business and involving claims for damages for
insignificant  amounts.  The Company accrued a provision of ThCh$ 93,375 at December 2003
for these amounts because management  believes that most of the resulting  judgments will
be favorable and any losses incurred will not result in any material liability to the
Company.

At December 31, 2003, the
Company holds investments in Argentina representing 18.86% of total assets (19.54% at
December 31, 2002). Argentina continues to experience an economic situation that includes
high external indebtedness, high interest rates, a significant decrease in the level of
bank deposits, a new exchange rate regime, restrictions on the availability and free
transfer of cash and transfers of foreign currency abroad, a high country risk and an
economic recession for more than four years.  This situation generated a significant
decrease in the demand for goods and services, as well as a significant increase in the
level of unemployment.  In addition, the Argentine governments ability to comply with
its obligations as well as its access to credit lines has been significantly affected by
these circumstances.  Accordingly, the Company has reviewed the valuation of the assets
in that country, concluding that no adjustment is required at December 31, 2003 and 2002
for this concept.

F-34



NOTE 18 - REMUNERATION
OF DIRECTORS

During 2003, the
Directors of the Company and its subsidiaries received ThCh$ 540,563 (ThCh$ 622,576
in 2002 and ThCh$ 642,227 in 2001) with respect to fees for attendance at Board
meetings and reimbursement of expenses, which have been included in the
Consolidated Statements of Income under Selling and administrative expenses. In
addition, an accrual of ThCh$ 1,473,712 was recorded corresponding to the
Directorsparticipation in net income for the year 2003 (ThCh$ 743,389 in 2002 and
ThCh$ 1,075,942 in 2001) which has also been included in Selling and
Administrative expenses in the Consolidated Statements of Income. Additionally
they received ThCh$ 515,846 related with the special dividend paid in April 24, 2003.
(Note 14 d). The participation in earnings is approved each year at the annual
shareholders meeting.

NOTE 19  NON-OPERATING
INCOME

The following items
are included in Non-operating income:

|                                                                                            | 2003       | 2002      | 2001      
|------------------------------------------------------------------------------------------- | ---------- | --------- | ----------
|                                                                                            |            |           |           
|                                                                                            | ThCh$      | ThCh$     | ThCh$     
|Interest earned from investments in banks and other financial institutions                  | 2,529,007  | 1,651,716 | 3,566,173 
|Equity in net income of unconsolidated affiliates                                           | 19,919,343 | 1,197,238 | 997,920   
|Amortization of negative goodwill                                                           | 41,094     | 50,212    | 47,126    
|Gain on sale of properties held for sale and other assets                                   | 1,075,465  | 394,537   | 247,457   
|Rental income                                                                               | 115,348    | 46,689    | 61,921    
|Gain from land contributed to Viña Dassault San Pedro S.A                                   | -          | -         | 439,219   
|Gain on sale of shares of Backus & Johnston S.A                                             | -          | -         | 17,371,002
|Gain on sales of glass, plastic boxes and by-products                                       | 315,447    | 438,612   | 577,958   
|Cumulative effect of accounting change related to capitalization of overhead costs (Note 2) | -          | 1,754,292 | -         
|Other                                                                                       | 494,257    | 817,319   | 915,279   
|                                                                                            |            |           |           
|Other                                                                                       | 24,489,961 | 6,350,615 | 24,224,055
|                                                                                            |            |           |           

NOTE 20- NON-OPERATING
EXPENSES

The following items
are included in the Non-operating expenses:

|                                                          | 2003       | 2002      | 2001      
|--------------------------------------------------------- | ---------- | --------- | ----------
|                                                          |            |           |           
|                                                          | ThCh$      | ThCh$     | ThCh$     
|Interest expense                                          | 5,661,161  | 3,871,422 | 6,457,498 
|Amortization of goodwill                                  | 2,217,480  | 2,588,817 | 2,487,773 
|Equity in loss of unconsolidated affiliates               | 179,718    | 327,026   | 280,250   
|Restructuring costs                                       | -          | 973,631   | 3,650,259 
|Directors participation on special dividend (Note 18)    | 515,846    | -         | 1,517,730 
|Write-offs of fixed assets and other accounts             | 1,037,442  | 598,821   | 449,190   
|Extraordinary severance indemnities                       | 660,343    | -         | -         
|Provision for impairment of property, plant and equipment | 506,468    | 193,816   | 1,403,937 
|Loss on sale of property, plant and equipment             | 71,032     | 108,055   | 408,295   
|Non-recurring legal expenses                              | -          | -         | 562,038   
|Other                                                     | 1,260,247  | 1,059,074 | 653,491   
|                                                          |            |           |           
|Total                                                     | 12,109,737 | 9,720,662 | 17,870,461
|                                                          |            |           |           

F-35



NOTE 21 - PRICE-LEVEL
RESTATEMENT AND EXCHANGE DIFFERENCES

The price-level
restatement adjustment and foreign currency exchange gain (loss) is determined as follows:

|                                                                                        | 2003        | 2002         | 2001        
|--------------------------------------------------------------------------------------- | ----------- | ------------ | ------------
|                                                                                        |             |              |             
|                                                                                        | ThCh$       | ThCh$        | ThCh$       
|Restatement of non-monetary accounts                                                   
|based on Consumer Price Index and UFs:                                                 
|Property, plant and equipment and bottles and containers                                | 2,493,723   | 8,408,759    | 8,640,860   
|Investments in unconsolidated affiliates                                                | 1,411,693   | 4,546,839    | 4,438,239   
|Investments in other companies and marketable securities                                | (31,506)    | 208,645      | 107,850     
|Other assets                                                                            | 858,102     | 2,737,189    | 3,226,527   
|Shareholders equity                                                                    | (2,237,729) | (12,127,769) | (12,175,509)
|Inventories                                                                             | (240,590)   | 657,742      | 1,286,684   
|Increase in liabilities denominated in UFs due to indexation                            | (897,436)   | (2,759,819)  | (2,891,441) 
|Net restatements of income and expense accounts     in terms of year-end constant pesos | (136,026)   | (1,522,480)  | (1,585,783) 
|                                                                                        |             |              |             
|Total price-level restatement                                                           | 1,220,231   | 149,106      | 1,047,427   
|                                                                                        |             |              |             

|Remeasurement and translation of accounts in foreign currencies: |             |             |            
|---------------------------------------------------------------- | ----------- | ----------- | -----------
|Cash                                                             | (580,891)   | 231,744     | 64,893     
|Time deposits and marketable securities                          | (111,853)   | 173,629     | 675,830    
|Accounts receivable-trade and other                              | (1,101,299) | 902,953     | 518,912    
|Accounts receivable from related companies                       | (479,859)   | 159,136     | 1,048,467  
|Inventories                                                      | (50,062)    | 30,580      | 26,750     
|Other current assets                                             | (73,514)    | 8,847       | 72,794     
|Other assets                                                     | (113,382)   | 95,498      | (590,952)  
|Short-term borrowings                                            | 1,112,009   | (1,555,788) | (623,798)  
|Other current liabilities                                        | 532,855     | (1,051,910) | (1,782,143)
|Long-term borrowings and other long-term liabilities             | 837,279     | 131,835     | (847,321)  
|Foreign exchange loss arising from translation                  
|of assets and liabilities in Argentina (net)                     | 70,122      | (2,986,368) | (2,106,376)
|                                                                 |             |             |            
|Total foreign currency exchange gain (loss)                      | 41,405      | (3,859,844) | (3,542,944)
|                                                                 |             |             |            
|Total price-level restatement and exchange differences           | 1,261,636   | (3,710,738) | (2,495,517)
|                                                                 |             |             |            

F-36



Assets and
liabilities denominated in or exposed to the effects of foreign currency are
included in the consolidated financial statements and translated into Chilean
pesos as described in Note 1 e) and m) as follows:

|                              | At December 31,
|----------------------------- | ---------------
|                              | 2003           
|                              |                
|                              | ThCh$          
|Assets                       
|Current assets                | 35,069,345     
|Property, plant and equipment | 73,931,920     
|Other assets                  | 17,788,755     
|                              |                
|Total                         | 126,790,020    
|                              |                
|Liabilities                  
|Current liabilities           | 50,382,199     
|Long-term liabilities         | 81,134,771     
|                              |                
|Total                         | 131,516,970    
|                              |                

The amounts detailed
above include the non-monetary assets and liabilities of investments in foreign
subsidiaries and investees (Compañía Cervecerías Unidas Argentina S.A. and
subsidiaries and Karlovacka Pivovara d.d.) expressed in US dollars and Euros in
conformity with the application of Technical Bulletin No. 64 as described in Note 1 m).

NOTE 22 - SEGMENT
REPORTING

The Company operates
principally in five segments which comprise the production and sale of beer in Chile
and Argentina, soft drinks and mineral water, wine and other activities which include
the production and sale of plastic cases and containers. Total revenue by segment
includes sales to unaffiliated customers, as reported in the Company's Consolidated
Statements of Income, and intersegment sales of plastic cases, which are
accounted for at invoice price.

Operating income is
total revenue less operating expenses, which include Cost of sales and Selling
and administrative expenses. In computing operating income, none of the following
items has been added or deducted: net interest expense, equity in net income
(loss) of unconsolidated affiliates, price-level restatement, other income and
expenses, minority interest and income taxes.

Identifiable assets
by segment are those that are used in the operations in each segment, as reported to
the chief operating decision maker of the Company.

F-37



Segment information is presented below:

|                                                                 | Year
    Ended December 31, 2003
|---------------------------------------------------------------- | --------------------------------
|                                                                 |                                 
|Statement
    of income data                                     | Beer-Chile                      
|                                                                 |                                 
|                                                                 | ThCh$                           
|Net
    sales                                                    | 149,671,908                     
|Intersegment
    sales                                           | -                               
|                                                                 |                                 
|Total
    revenue                                                | 149,671,908                     
|                                                                 |                                 
|Operating
    income (loss)                                      | 36,752,627                      
|                                                                 |                                 
|                                                                
|Equity in
    net income of unconsolidated affiliates            |                                 
|Other income                                                     |                                 
|Interest expense
    (net)                                       |                                 
|Other expenses                                                   |                                 
|Price-level
    restatement                                      |                                 
|                                                                 |                                 
|Income
    before income tax and minority interest               |                                 
|                                                                 |                                 
|Balance Sheet
    Data at December 31, 2003:                    
|Identifiable
    assets                                          | 163,985,460                     
|                                                                 |                                 
|Cash and cash
    equivalents                                    |                                 
|Investments
    in unconsolidated affiliates and other companies |                                 
|Goodwill                                                         |                                 
|Negative goodwill                                                |                                 
|Corporate
    assets                                             |                                 
|                                                                 |                                 
|Total
    consolidated assets                                    |                                 
|                                                                 |                                 
|Sales of each
    segment include:                              
|Beer                                                             | 147,052,841                     
|By-products                                                      | 499,555                         
|Carbonated
    drinks                                            | -                               
|Nectars                                                          | -                               
|Mineral
    waters                                               | -                               
|Wine                                                             | -                               
|Other
    products                                               | 2,119,512                       
|                                                                 |                                 
|Total                                                            | 149,671,908                     
|                                                                 |                                 

F-38



|                                                                              | Year
    Ended December 31, 2002
|----------------------------------------------------------------------------- | --------------------------------
|                                                                              |                                 
|Statement
    of income data                                                  | Beer-Chile                      
|                                                                              |                                 
|                                                                              | ThCh$                           
|Sales
    to unaffiliated costumers                                           | 135,819,742                     
|Intersegment
    sales                                                        | -                               
|                                                                              |                                 
|Total
    revenue                                                             | 135,819,742                     
|                                                                              |                                 
|Operating
    profil                                                          | 27,272,142                      
|                                                                              |                                 
|Equity in
    net income of affiliates companies                              |                                 
|Other income                                                                  |                                 
|Interest expense
    (net)                                                    |                                 
|Other expenses                                                                |                                 
|Price-level
    restatement                                                   |                                 
|                                                                              |                                 
|Income
    from continuing operations before income tax and minority interest |                                 
|                                                                              |                                 
|Identifiable
    assets at December 31                                        | 170,654,000                     
|                                                                              |                                 
|Cash and cash
    equivalents                                                 |                                 
|Investments
    in affiliated and other companies                             |                                 
|Goodwill                                                                      |                                 
|Negative goodwill                                                             |                                 
|Corporate
    assets                                                          |                                 
|                                                                              |                                 
|Total
    assets                                                              |                                 
|                                                                              |                                 
|                                                                             
|Sales of each
    segment include:                                           
|Beer                                                                          | 133,352,081                     
|By-products                                                                   | 440,880                         
|Carbonated
    drinks                                                         | -                               
|Nectars                                                                       | -                               
|Mineral
    waters                                                            | -                               
|Wine                                                                          | -                               
|Other
    products                                                            | 2,026,781                       
|                                                                              |                                 
|Total                                                                         | 135,819,742                     
|                                                                              |                                 

F-39



|                                                                          | Year
     December 31, 2001
|------------------------------------------------------------------------- | ---------------------------
|                                                                          |                            
|Statement of income data                                                  | Beer-Chile                 
|                                                                          |                            
|                                                                          | ThCh$                      
|Sales to unaffiliated costumers                                           | 135,234,395                
|Intersegment sales                                                        | -                          
|                                                                          |                            
|Total revenue                                                             | 135,234,395                
|                                                                          |                            
|Operating profit                                                          | 30,054,001                 
|                                                                          |                            
|Equity in net income of affiliates companies                              |                            
|Other income                                                              |                            
|Interest expense (net)                                                    |                            
|Other expenses                                                            |                            
|Price-level restatement                                                   |                            
|                                                                          |                            
|Income from continuing operations before income tax and minority interest |                            
|                                                                          |                            
|Identifiable assets at December 31                                        | 186,797,663                
|                                                                          |                            
|Cash and cash equivalents                                                 |                            
|Investments in affiliated and other companies                             |                            
|Goodwill                                                                  |                            
|Negative goodwill                                                         |                            
|Corporate assets                                                          |                            
|                                                                          |                            
|Total assets                                                              |                            
|                                                                          |                            
|Sales of each segment include:                                           
|Beer                                                                      | 133,213,796                
|By-products                                                               | 441,618                    
|Carbonated drinks                                                         | -                          
|Nectars                                                                   | -                          
|Mineral waters                                                            | -                          
|Wine                                                                      | -                          
|Other products                                                            | 1,578,981                  
|                                                                          |                            
|Total                                                                     | 135,234,395                
|                                                                          |                            

F-40



Depreciation was allocated to each of the segments as follows:

|Segment                       | 2003       | 2002       | 2001      
|----------------------------- | ---------- | ---------- | ----------
|                              |            |            |           
|                              | ThCh$      | ThCh$      | ThCh$     
|Beer-Chile                    | 19,055,550 | 19,499,687 | 16,628,394
|Beer-Argentina                | 6,771,408  | 10,228,108 | 10,246,975
|Soft drinks and mineral water | 10,761,122 | 10,697,585 | 11,527,026
|Wine                          | 2,374,680  | 1,942,641  | 2,118,959 
|Other                         | 1,198,315  | 1,079,950  | 1,296,294 
|                              |            |            |           
|Total                         | 40,161,075 | 43,447,971 | 41,817,648
|                              |            |            |           

Capital expenditures for each of the segments were as follows:

|Segment                       | 2003       | 2002       | 2001      
|----------------------------- | ---------- | ---------- | ----------
|                              |            |            |           
|                              | ThCh$      | ThCh$      | ThCh$     
|Beer-Chile                    | 5,724,913  | 6,926,702  | 10,910,438
|Beer-Argentina                | 4,762,156  | 780,931    | 4,149,591 
|Soft drinks and mineral water | 5,342,688  | 5,507,225  | 9,606,723 
|Wine                          | 3,357,735  | 4,421,594  | 5,078,142 
|Other                         | 1,715,700  | 1,460,869  | 1,864,089 
|                              |            |            |           
|Total                         | 20,903,192 | 19,097,321 | 31,608,983
|                              |            |            |           

Information about the Company's operations in different geographic areas
is as follows:

|                                                  | 2003       
|------------------------------------------------- | -----------
|                                                  |            
|                                                  | Chile      
|                                                  |            
|                                                  | ThCh$      
|Sales to third parties                            | 345,103,201
|                                                  |            
|Operating income (loss)                           | 49,679,597 
|                                                  |            
|Equity in net income of unconsolidated affiliates |            
|Other income                                      |            
|Interest expense (net)                            |            
|Other expenses                                    |            
|Price-level restatement                           |            
|                                                  |            
|Income before income tax and minority interest    |            
|                                                  |            
|Total assets at December 31, 2003                 | 468,331,711
|                                                  |            

F-41



|                                                  | 2002       
|------------------------------------------------- | -----------
|                                                  |            
|                                                  | Chile      
|                                                  |            
|                                                  | ThCh$      
|Sales to third parties                            | 323,931,730
|                                                  |            
|Operating income (loss)                           | 49,431,404 
|                                                  |            
|Equity in net income of unconsolidated affiliates |            
|Other income                                      |            
|Interest expense (net)                            |            
|Other expenses                                    |            
|Price-level restatement                           |            
|                                                  |            
|Income before income tax and minority interest    |            
|                                                  |            
|Total assets at December 31, 2002                 | 551,468,904
|                                                  |            

|                                                  | 2001       
|------------------------------------------------- | -----------
|                                                  |            
|                                                  | Chile      
|                                                  |            
|                                                  | ThCh$      
|Sales to third parties                            | 318,787,028
|                                                  |            
|Operating income                                  | 51,621,444 
|                                                  |            
|Equity in net income of unconsolidated affiliates |            
|Other income                                      |            
|Interest expense (net)                            |            
|Other expenses                                    |            
|Price-level restatement                           |            
|                                                  |            
|Income before income tax and minority interest    |            
|                                                  |            
|Total assets at December 31,2001                  | 534,279,460
|                                                  |            

NOTE 23 - SUBSEQUENT EVENTS

On January 12, 2004, the
  subsidiary Embotelladoras Chilenas Unidas S.A. entered into a 50% joint venture
  with Empresas Lucchetti S.A., a food company controlled by the Company's majority
  shareholder, to enter the sweet snack business. Each company acquired 50% of
  the shares of Calaf  S.A.
In January 2004, Calaf S.A. acquired the assets of a related company.

No other
significant events have occurred between December 31, 2003 and the issuance
of these financial statements (January 29, 2004) that could significantly affect
their balances or interpretation.

F-42



NOTE 24 - DIFFERENCES BETWEEN CHILEAN AND UNITED STATES GENERALLY
 ACCEPTED ACCOUNTING PRINCIPLES

Accounting principles
  generally accepted in Chile vary in certain important respects from the accounting
  principles generally accepted in the United States . Such differences involve
  certain methods for measuring the amounts shown in the financial statements,
  as well as additional disclosures required by accounting principles generally
accepted in the United States (US GAAP).

1. Differences in measurement methods

The principal methods applied in the preparation of the accompanying financial
 statements which have resulted in amounts which differ from those that would
have otherwise been determined under US GAAP are as follows:

a) Inflation accounting

The cumulative inflation rate in Chile as measured by the Consumer Price Index
for the three-year period ended December 31, 2003 was approximately 7.1%.

Chilean accounting principles require that financial statements be restated
 to reflect the full effects of loss in the purchasing power of the Chilean peso
 on the financial position and results of operations of reporting entities. The
 method, described in Note 1, is based on a model which enables calculation of
 net inflation gains or losses caused by monetary assets and liabilities exposed
 to changes in the purchasing power of the local currency, by restating all non-monetary
 accounts in the financial statements. The model prescribes that the historical
 cost of such accounts be restated for general price-level changes between the
 date of origin of each item and the year-end, but allows direct utilization
 of replacement values for the restatement of inventories as an alternative to
 the price-level restatement of those assets, but only if the resulting variation
is not material.

The inclusion of price-level adjustments in the accompanying financial statements
 is considered appropriate under the prolonged inflationary conditions which
 have affected the Chilean economy in the past. Accordingly, and as allowed by
 Item 18 to Form 20-F, the effect of price-level changes is not eliminated in
the reconciliation to US GAAP.

b) Revaluations of property, plant and equipment

As mentioned in Note 1 k), certain property, plant and equipment are reported
 in the financial statements at amounts determined in accordance with a technical
 appraisal carried out in 1979. The revaluation of property, plant and equipment
 is an accounting principle that is not generally accepted in the United States
 . The effects of the reversal of this revaluation, as well as of the related
 accumulated depreciation and depreciation charge for the year, is shown in paragraph
1 q) below.

c) Inventory valuation

As at December 31, 2001
  finished and in-process products are reported in the financial statements at
  the replacement cost of the raw materials included therein and therefore exclude
  labor and overhead. The practice of excluding labor and overhead is contrary
  to the accounting principles generally accepted in the United States . The
  adjustment required to conform with US GAAP at December 31,
 2002 and 2001 are shown in paragraph 1 q) below. After the required adjustment
 using the FIFO cost method, the resulting value of inventories is presented
at the lower of cost or market value.

F-43



As discussed in Note 2 above, effective January 1, 2002 the Company changed
 it's methodology used to value its finished products from direct cost including
 only raw materials to a method that includes the cost of inventory associated
 with raw materials, labor and overhead costs. This change in accounting principle
 conforms Chilean GAAP to US GAAP with respect to inventory valuation and therefore
no adjustment is necessary for the year ended December 31, 2003 .

d) Fixed assets held for sale

i. Reversal of impairment

Net income reported in the Chilean GAAP financial statements in prior years
 included the effects of the reversal of a valuation allowance recorded in prior
 years to write-down the carrying value of property, plant and equipment held
 for sale to estimated market value (Note 1 l)). This reversal of a provision
 which established a new cost basis for Chilean GAAP purposes was not in conformity
 with accounting principles generally accepted in the United States and was therefore
 reflected in the reconciliation of net income to US GAAP for that year. The
 effect on the reconciliation of Shareholders' equity is set forth under paragraph
 1 q) below. The US GAAP adjustment will be reversed when these assets are actually
sold.

ii. Accounting for assets held for sale

The Company has classified
  certain fixed assets as Land and building held
 for sale. Under Chilean GAAP long-lived assets are classified as held for sale
 when a Company has the intent to dispose of the asset. Intent is defined
 as management having a plan and commitment to dispose of an asset. The assets
 are written down to fair value when indicators of impairment are present
 and losses are recognized as other non-operating expenses. No depreciation
is recorded for assets classified as held for sale.

Under US GAAP, long-lived
  assets to be disposed of by sale are accounted for under SFAS 144, Accounting for Impairment or Disposal of Long-Lived Assets.
 SFAS 144 requires long-lived assets to be classified as held for sale only
 when certain criteria are met. These criteria include: management has the
  authority to approve action; the asset is available for immediate sale;
  an active program to locate a buyer has been initiated; the sale of the
  asset is probable; the asset is being actively marketed and; it is unlikely
  that a significant change to the disposal plan will be made. If at any
  time the criteria in this paragraph are no longer met, a long-lived asset classified
  as held for sale shall be reclassified as held and used. Long-lived assets
  classified as held for sale are measured at the lower of its carrying
  value amount or fair value less cost to sell and the asset is not depreciated.
Losses are recognized for any subsequent impairment write-down to fair value.

These assets recorded as held for sale under Chilean GAAP do not meet the
 requirements to be classified as held for sale under US GAAP. As these assets
 were recorded at fair value as of December 31, 2003 and 2002 for Chilean GAAP
 purposes, there is no Statement of Income impact for US GAAP purposes as US
 GAAP requires the reclassification of assets held for sale to be made at 1)
 the lower of fair value or 2) the carrying amount of the assets before they
 were classified as held for sale plus the depreciation that would have been
 reclassified as if the assets were classified as held for sale for a all periods
presented.

F-44



e) Deferred income tax

As discussed in Note 14,
  effective January 1, 2000, the Company began applying Technical Bulletin No. 60 of the Chilean Institute of Accountants concerning
 deferred income taxes. Technical Bulletin No. 60 requires the recognition
 of deferred income taxes for all temporary differences arising after January
 1, 2000, whether recurring or not, using an asset and liability approach. For
 US GAAP purposes, the Company has always applied Statement of Financial Accounting
 Standard (SFAS) No. 109, Accounting for Income Taxes, whereby income taxes
 are also recognized using substantially the same asset and liability approach.
 Deferred income tax assets and liabilities established for temporary differences
 between the financial reporting basis and tax basis of the Company's assets
 and liabilities are based on enacted rates at the dates that the temporary
 differences are expected to reverse. The effect of changes in tax rates is
included in income for the period that includes the enactment date.

After the year ended December 31, 1999, Chilean GAAP and US GAAP differ due
 to the recognition for US GAAP purposes of the reversal of deferred income taxes
included in the US GAAP reconciliations in years prior to 2000.

Prior to the implementation of Technical Bulletin No. 60, no deferred income
 taxes were recorded under Chilean GAAP if the related timing differences were
 expected to be offset in the year that they were projected to reverse by new
timing differences of a similar nature.

Furthermore, deferred income tax assets under both Chilean and US GAAP should
 be reduced by a valuation allowance if, based on the weight of available evidence,
 it is more likely than not that some portion or all of the deferred income tax
 assets will not be realized. The valuation allowance should be sufficient to
 reduce the deferred income tax asset to an amount that is more likely than not
to be realized.

The effect of providing for deferred income taxes for the differences between
 the amounts shown for assets and liabilities in the balance sheet and the tax
 bases of those assets and liabilities is included in paragraph 1 q) below and
 certain disclosures required under FAS 109 are set forth under paragraph 3 c)
below.

f) Investment securities

Under Chilean GAAP, investment securities held by the Company, which are publicly
traded, are carried at the lower of cost or market value.

Under SFAS No. 115, Accounting for Certain Investments in Debt and Equity
 Securities, investment securities, which include debt and certain equity securities,
are accounted for as follows:

|- | Debt securities
        that the Company has the positive intent and ability to hold to maturity
        are classified as held-to-maturity securities and are reported at amortized
        cost.                                                                                                        
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|- | Debt and equity securities
     that are bought and held principally for the purpose of selling them in the
     near term are classified as trading securities and are reported at fair value,
   with unrealized gains and losses included in earnings.                                                 
|- | Debt and equity securities
    not classified as either held-to-maturity or trading securities are classified
    as available-for-sale securities and reported at fair value, with unrealized
    gains and losses excluded from earnings and reported in a separate component
  of shareholders' equity.

The effect of the difference
                between Chilean GAAP and US GAAP in accounting for investment securities is
                indicated in paragraph 1 q) below. For the year ended December 31, 2003, the
                Company ́s investments in marketable securities subject to SFAS No. 115
                were not significant and therefore no adjustment to net income as reported
pursuant to Chilean GAAP was necessary.

F-45



g) Goodwill

Under Chilean GAAP, the excess of cost over the net book value of a purchased
 company is recorded as goodwill (the book value purchase method), which is then
 amortized to income over a maximum period of twenty years. Amortization of goodwill
 may be accelerated if the acquired company generates sufficient income to absorb
 the additional amortization in any given year. The excess of net book value
 over the cost of an investment is considered to be negative goodwill under Chilean
 GAAP and is also amortized to income over a maximum period of twenty years.
 The amortization of negative goodwill may be accelerated if the acquired company
sustains losses.

Under US GAAP, goodwill
  and other intangibles are accounted for under SFAS No. 141, Business Combinations and SFAS No. 142, Goodwill and Other Intangible
 Assets. SFAS No. 141 requires the purchase method of accounting be used for
 all business combinations initiated after June 30, 2001 and prohibits the use
 of the pooling-of-interests method of accounting after this date. With respect
 to the purchase method of accounting, the cost of an investment is assigned
 to the tangible and identified intangible assets acquired and liabilities assumed
 on the basis of their fair values at the date of acquisition. Any excess of
 cost over the fair value of net assets acquired is recorded as goodwill. If
 an excess of acquired net assets over cost arises, the excess is allocated to
 reduce proportionally the values assigned to non-current assets (except long-term
 investments in marketable securities) in determining their fair values. If the
 allocation reduces the non-current assets to zero value, the remainder of the
 excess over cost (negative goodwill) is written off immediately as an extraordinary
 gain. SFAS No. 141 establishes specific criteria for the recognition of
 intangible assets separately from goodwill and requires unallocated negative
 goodwill to be written off immediately as an extraordinary gain (instead
of being deferred and amortized).

SFAS No. 142, Goodwill and Other Intangible Assets establishes
the following:

The accounting for a recognized intangible asset is based on its useful
       life to the reporting entity. An intangible asset with a finite useful
      life is amortized over the life of the asset, but goodwill and other intangible
      assets with indefinite useful lives are not amortized.
   The remaining useful lives of intangible assets being amortized are evaluated
       each reporting period to determine whether events and circumstances
      warrant a revision to the remaining period of amortization. If the estimate
      of an intangible asset's remaining useful life is changed, the remaining carrying
       value of the intangible asset is amortized prospectively over the
      revised remaining useful life.
   Goodwill and other intangible assets with indefinite useful lives that are
       not subject to amortization are tested for impairment at least annually.
   All goodwill must be assigned to a reporting unit, which is defined as an
       operating segment or one level below an operating segment.


SFAS No. 142 became effective for years beginning after December 15, 2001.
 Accordingly, goodwill amortization was ceased for US GAAP purposes beginning
in 2002.

The effects of the differences
  between Chilean and US GAAP in accounting for goodwill and negative goodwill
  on the equity investments in Viña San
 Pedro S.A. and Southern Breweries Establishment, the purchases of majority ownership
 interests in Compañía Industrial Cervecera S.A. and Cervecería
 Santa Fe S.A., and the 1999 purchase of an additional 45% interest in ECUSA
are shown in paragraph q) below.

F-46



Under Chilean GAAP, the cost of an equity method investment is separated into
 an investment component (based on the purchase of the proportionate share of
 equity according to book values) and a goodwill component (based on the difference
 between the amount paid and the proportional book value of the investment).
 Under US GAAP, these components are combined in one balance sheet caption as
 an investment, and goodwill is determined in a manner similar to a consolidated
 subsidiary based on proportionate ownership. No disclosure has been presented
 of the effect of the reclassification between goodwill as determined under Chilean
 GAAP for equity method investments and goodwill determined under US GAAP as
the effect of this reclassification is not significant.

h) Minimum dividend

As required by the Chilean
  Companies Act, unless otherwise decided by the unanimous vote of the issued
  and subscribed shares, an open stock corporation in Chile must distribute a
  cash dividend in an amount equal to at least 30% of the Company's net income
  for each year adjusted for the deficit under developing period as determined
  in accordance with Chilean GAAP. Under Chilean GAAP, even through the minimum
  dividend is a legal requirement, the dividend is not recorded until it is declared
  by the Company. Since the payment of the 30% dividend out of each year's income
  is a legal requirement in Chile, a provision has been made in the accompanying
  US GAAP reconciliation in paragraph 1 q) below
 to recognize the corresponding decrease in net equity at December 31, 2003
 and December 31, 2001. At December 31, 2002, no adjustment was necessary
  as the full amount of the required divided was declared as an interim
  dividend and recorded by the Company.

i) Trademarks

Under Chilean GAAP, beginning
  in 1998 trademarks are amortized over a period not exceeding 20 years; prior
  to 1998, trademarks were not required to be amortized. Under US GAAP, trademarks
  with definite useful lives are amortized over the remaining legal life
  or a period not exceeding 40 years. With respect to the purchase in 1999 of
  the additional 45% interest in ECUSA, the purchase price exceeded the fair
  value of the assets acquired and liabilities assumed on the date of purchase.
  As a result, trademarks with an assigned fair value of ThCh$ 7,548,303 were
  determined. Under U.S. GAAP these trademarks are being amortized over a period
  of five years which is the legal life of the trademark. Additionally, trademarks
  held by Viña San Pedro S.A. and Compañía Cervecerías
 Unidas Argentina S.A. are being amortized over 20 years for Chilean GAAP
 but 40 years for U.S GAAP as there is no limited legal life. The adjustments
 for trademarks are reflected in the reconciliation from Chilean GAAP to US
  GAAP in paragraph 1 q) below.

j) Staff severance indemnities

For Chilean GAAP purposes and until January 1, 1999 for US GAAP purposes,
 the Company provides for severance indemnities when rights to such benefits
 have been formally guaranteed to employee groups. Those obligations are based
 on the present value of the liabilities determined at the end of each year based
 on the current salary and number of years of service of each employee. The Company
 uses a real discount rate and projected employee service life based on probable
 tenure for vested employees. The real annual discount rate does not include
 a projection of inflation and accordingly, future salary increases are also
 excluded from the calculation of the obligation, because all such future increases
 are expected to approximate the increase in inflation over a long-term period.
 As discussed in Note 2, during the year ended December 31, 2002, the Company
changed one of the variables used to calculate the long-term severance indemnities.

F-47



In accordance with Emerging Issues Task Force Issue No. 88-1, for US GAAP
 purposes the severance indemnities described above are determined based on the
 vested benefits to which the employees are entitled if they separate immediately
 (settlement basis). The difference in accounting for staff severance benefits
 between Chilean and US GAAP is included in the reconciliation to US GAAP under
paragraph 1 q) below.

k) Capitalization of interest

Under Chilean GAAP, the
  capitalization of interest cost associated with projects under construction
  is optional when incurred on debt that is not directly related to such projects.
  Under US GAAP, the capitalization of interest of qualifying assets under construction
  is required, regardless of whether interest is associated with debt directly
  related to a project or not. The effect of the required capitalization pursuant
  to US GAAP and the related depreciation expense of this difference are included
  in paragraph 1 q) below.

l) Comprehensive income

Comprehensive income (loss) is the change in equity of a business enterprise
 during a period from transactions and other events and circumstances from non-owner
 sources. For US GAAP purposes, companies are required to report comprehensive
 income and its components in a full set of general purpose financial statements.
 US GAAP requires that all items that are required to be recognized under accounting
 standards as components of comprehensive income be reported in a financial statement
 that is displayed with the same prominence as other financial statements. Under
 Chilean GAAP, certain investments in foreign subsidiaries which operate in countries
 exposed to significant risk are accounted for under TB 64 (Note 1 m)). As such,
 the differences between the investments` equity value arising from the financial
 statements remeasured at the beginning of the year restated by Chilean inflation,
 plus the proportional share of the investments income (or loss) for the year,
 is recorded in Shareholders` equity. For US GAAP, this difference would be reported
 in Comprehensive income. The information required by this standard is shown
in paragraph 1 q).

m) Development stage results of operations

For Chilean GAAP purposes, investments in majority-owned subsidiaries in the
 development stage are recorded by the equity method and the investor's proportional
 share of the subsidiary's results of operations are recorded as a component
 of Shareholders' equity. For US GAAP purposes, majority-owned subsidiaries in
 the development stage are consolidated and the results of their operations charged
 directly to income. The difference between charging development stage results
 to equity under Chilean GAAP and to income under US GAAP has been included in
 the reconciliation of income under paragraph 1 q) below. No disclosure of the
 effects of consolidation of such subsidiaries has been made because the effects
are not material.

n) Investment in Backus & Johnston
   ( Peru )

The Company held a 4.63%
  ownership interest in UCP Backus & Johnston S.A.
 (Backus & Johnston) at December 31, 2000. During the year 2000, one of
 the Directors of the Company became a member of the Board of Directors of Backus & Johnston.
 As a result, for Chilean GAAP purposes the Company began accounting for its
 investment by the equity method during 2000. For US GAAP purposes, in the absence
 of a company exercising significant influence on an investment, the investment
 would generally be accounted for at cost less any impairment in value that is
 other than temporary. The Company sold its investment in Backus & Johnston
 in March 2001. The effects of accounting for the investment in Backus & Johnston
at cost under US GAAP are included in paragraph 1 q) below.

F-48



o) Accounting for joint
   venture in Viña Dassault San Pedro S.A.

By Public Deed dated October
  4, 2001, Viña San Pedro S.A. and Dassault
 Investment Fund Inc. formed Viña Totihue S.A., a closed Chilean company
 with a capital of US$ 7 million (equivalent to ThCh$ 4,930,559) and with
 70,000 shares of no par value. Dassault Investment Fund Inc. received 35,000
 shares (50% ownership interest) for its contribution in cash of US$ 3.5 million
 (equivalent to ThCh$ 2,465,279). Viña San Pedro S.A. also subscribed
 to 35,000 shares with a payment of US$ 800,000 (equivalent to ThCh$ 563,410)
 and the contribution of land with a value of US$ 2.7 million (equivalent to
 ThCh$ 1,901,787). The land consists of two parcels of land in Chile referred
 to as Totihue which will be used for the production of wine grapes. On May
 7, 2003 Viña Totihue S.A. changed its name to Viña Dassault San
Pedro S.A.

This transaction resulted
  in a gain under Chilean GAAP of ThCh$ 869,740 because the book value of the
  land was ThCh$ 1,032,047. Since Viña Totihue S.A.
 is an equity method investee of Viña San Pedro S.A., the Company deferred
 50% of the gain generated in the transaction and recognized the other 50%
 in Other income in the statement of income for 2001. The deferred gain is
 being amortized to income annually under Chilean GAAP.

Under US GAAP, the exchange
  of the land for an interest in the joint venture did not result in gain recognition
  because the investee received no cash. Accordingly, the gain on the exchange,
  and the subsequent amortization of the deferred gain, have been reversed in
  the reconciliation in paragraph 1 q) below.

p) Derivative financial instruments

The Company enters into foreign currency forward exchange contracts to cover
 the risk of exposure to exchange rate differences on existing items on the balance
 sheet denominated in US dollars. Under these forward contracts, for any rate
 above or below the fixed rate, the Company receives or pays the difference between
 the spot rate and the fixed rate for the given amount at the settlement date.
 The terms of the contracts are generally less than one year. It also enters
 into cross-currency interest rate swaps to in order to hedge its exposure to
 exchange rate and interest rate differences. Under these contracts the Company
 either, i) receives a fixed US dollar amount at a variable interest rate and
 pays a fixed Chilean peso amount at a fixed interest rate, or ii) receives a
 fixed US dollar amount at a fixed interest rate and pays a fixed Chilean peso
 amount at a variable interest rate. Counter-parties to these financial instruments
 expose the Company to credit-related losses in the event of nonperformance;
 however, counter-parties to these contracts are major financial institutions
and the risk of loss due to nonperformance is believed to be minimal.

Under Chilean GAAP, derivatives
  are accounted for in accordance with Technical Bulletin 57, Accounting for Derivative Contracts (TB 57).
  Under TB 57, all derivative financial instruments should be recognized
  on the balance sheet at their fair value. In addition, TB 57 requires that
  derivative financial instruments be classified as Non-hedging (investment)
  instruments and Hedging instruments, the latter further divided into those
covering existing transactions and those covering anticipated transactions.

Contracts to cover existing transactions hedge against the risk of a change
 in the fair value of a hedged item. The differences resulting from the changes
 in the fair value of both the hedged item and the derivative instrument should
be accounted for as follows:

|a. | If the net effect is a loss, it should be recognized in earnings
  in the period of change.                                                                                                                                                                   
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|b. | If the net effect is a gain, it should be recognized when the contract
  is closed and accordingly deferred on the balance sheet.                                                                                                                             
|c. | If the net effect is a gain and net losses were recorded on the transaction
    in prior years, a gain should be recognized in earnings in the current period
  up to the amount of net losses recorded previously.                                           
|d. | If the effect is a net loss and net gains were recorded (as a deferred
    revenue) on the transaction in prior years, the gain should be utilized to
    offset the net loss before recording the remaining loss in the results of
  operations for the year.

F-49



Contracts to cover anticipated transactions are those that have the objective
   of protecting cash flow risks of a transaction expected to occur in the future
   (cash flow hedge). The hedging instrument should be recorded at its fair value
   and the changes in fair value should be stated on the balance sheet as unrealized
   gains or losses. When the contract is closed, the unrealized gains or losses
   on the derivative instrument should be recognized in earnings without affecting
   the cost or sales price of the asset acquired or sold in the transaction. However,
  probable losses arising from purchase commitments should not be deferred.

Non-hedging (investment) instruments should also be presented at their fair
 value, with changes in fair value reflected in the earnings of the period in
which the change in fair value occurs.

At December 31, 2003, the Company had six cross-currency interest-rate swap
 agreements (US dollar to Chilean peso) to buy and sell US dollars for a notional
 amount of US$ 96,110,000. These contracts were obtained to protect the Company
 from foreign exchange and interest-rate risk with respect to long-term bank
debt denominated in US dollars.

At December 31, 2003,
  the Company has three derivative contracts consisting of forward contracts
  to sell US dollars for a notional amount of US$ 25,900,000 maturing in January
  2004. At December 31, 2002, the Company had two derivative contracts consisting
  of forward contracts to sell US dollars for a total notional amount of US$
  12,500,000 (three contracts with a total notional amount of US$ 42,000,000
 at December 31, 2001). In addition, at December 31, 2002, the Company had three
 derivative contracts consisting of forward contracts to buy US dollars for a
 notional amount of US$ 9,500,000. No contracts to purchase US dollars existed
 at December 31, 2001. These forward contracts were obtained to protect the
 Company from foreign exchange risk with respect to money market funds and
trade accounts receivable denominated in US dollars.

Under US GAAP, the Company
  adopted SFAS No. 133, Accounting for Derivative
 Instruments and Hedging Activities, as amended by SFAS 137 and SFAS 138 on
 the same matter (collectively referred to herein as SFAS 133), effective January
 1, 2001. SFAS 133 establishes accounting and reporting standards for derivative
 instruments, including certain derivative instruments embedded in other contracts,
 and for hedging activities. SFAS 133 requires that all derivative instruments
 be recognized on the balance sheet at fair value and that changes in the
 fair value be recognized in income when they occur, the only exception being
 derivatives that qualify as hedges. To qualify the derivative instrument
 as a hedge, the Company must meet strict hedge effectiveness and contemporaneous
 documentation requirements at the initiation of the hedge and assess the
hedge effectiveness on an ongoing basis over the life of the hedge.

At December 31, 2003,
  2002 and 2001, the forward contracts, and at December 31, 2003, the cross-currency
  interest-rate swap contracts designated as hedges for Chilean GAAP purposes,
  did not meet the documentation requirements to be designated as hedges under
  US GAAP. However, no difference exists in the reconciliations of net income
  and shareholders' equity under Chilean GAAP and US GAAP because
 in both cases the derivative instruments are recorded on the balance sheet
 at fair value and changes in fair value are taken to the results of operations
 for the year.

F-50



q)   Effects of
conforming to US GAAP

The  adjustments  to
 reported  net income  pursuant to Chilean  GAAP  required  to conform  with  accounting
principles  generally  accepted in the United  States are as follows (all amounts are
 expressed in thousands of Chilean pesos of December 31, 2003 purchasing power):

|                                                           | 2003         | 2002        | 2001        
|---------------------------------------------------------- | ------------ | ----------- | ------------
|                                                           |              |             |             
|                                                           | ThCh$        | ThCh$       | ThCh$       
|Net income as shown in the Chilean GAAP                   
|financial statements                                       | 54,088,124   | 22,285,535  | 39,923,901  
|Reversal of revaluation adjustment                        
|of property, plant and equipment (par. 1b)                 | (9,420)      | (9,420)     | (9,420)     
|Inclusion of labor and overhead in inventories (par. 1c).. | -            | (3,235,674) | 2,331,802   
|Reversal of additional depreciation on revaluation of     
|fixed assets held for sale (par. 1d)                       | -            | -           | 2,340       
|Adjustment for deferred income taxes (par. 1e)             | 571,901      | 1,302,128   | (5,065,690) 
|Adjustment for amortization of goodwill                   
|and negative goodwill (par. 1 g)                           | 2,176,386    | 2,538,605   | 1,902,849   
|Adjustment to amortization of trademarks for different    
|useful lives (par. 1i)                                     | (1,384,167)  | (1,276,465) | (1,279,469) 
|Adjustment of employee severance indemnities (par. 1j)     | (46,154)     | (785,682)   | (142,842)   
|Adjustment for capitalization of interest cost (par. 1k).. | 43,221       | 219,769     | 588,342     
|Reversal of deficit during development period             
|of subsidiary (par. 1m)                                    | (205,907)    | (1,505,390) | (1,035,543) 
|Reversal of gain on investment in Viña Dassault           
|San Pedro S.A. (par. 1o)                                   | (24,753)     | -           | (439,219)   
|Adjustment for cost method accounting for                 
|Backus & Johnston (par. 1n)                                | -            | -           | (875,966)   
|                                                           |              |             |             
|Net income according to US GAAP                            | 55,209,231   | 19,533,406  | 35,901,085  
|                                                           |              |             |             
|Other comprehensive income adjustments:                   
|Foreign currency translation adjustments (par. 1l)         | (17,876,016) | 7,120,860   | 2,820,314   
|Unrealized (losses) on securities (par. 1f)                | 110,243      | 13,179,506  | (19,466,890)
|                                                           |              |             |             
|Other comprehensive (loss) income adjustments              | (17,765,773) | 20,300,366  | (16,646,576)
|                                                           |              |             |             
|Comprehensive income in accordance with US GAAP(par. 1l)   | 37,443,458   | 39,833,772  | 19,254,509  
|                                                           |              |             |             

F-51



The adjustments
 required to conform net equity amounts to the accounting  principles  generally accepted
in the United States are as follows:

|                                                                | 2003         | 2002        | 2001        
|--------------------------------------------------------------- | ------------ | ----------- | ------------
|                                                                |              |             |             
|                                                                | ThCh$        | ThCh$       | ThCh$       
|Net equity as shown in the Chilean GAAP                        
|financial statements                                            | 278,771,599  | 437,819,530 | 428,161,252 
|Reversal of revaluation of property, plant and                 
|equipment (par. 1 b)                                            | (2,670,685)  | (2,523,720) | (2,523,720) 
|Reversal of accumulated depreciation on revaluation            
|of property, plant and equipment (par. 1b)                      | (226,068)    | (216,648)   | (207,228)   
|Inclusion of labor and overhead in inventories (par. 1c)..      | -            | -           | 3,235,674   
|Reversal of revaluation of fixed assets held                   
|for sale (par. 1d)                                              | (7,331,000)  | (7,556,117) | (7,556,117) 
|Reversal of accumulated depreciation on revaluation            
|of fixed assets held for sale (par. 1d)                         | 1,059,089    | 1,059,089   | 1,059,089   
|Assets (liabilities) from deferred income taxes                
|under FAS 109 (par. 1e)                                         | (1,157,779)  | (1,729,680) | (3,031,808) 
|Adjustment for unrealized (loss) on                            
|investment securities (par. 1f)                                 | -            | -           | 132,028     
|Adjustment of goodwill and negative goodwill on                
|equity investments (par. 1g)                                    | 15,676,538   | 13,500,152  | 10,961,547  
|Minimum dividend permitted by law (par. 1h)                     | (5,715,842)  | -           | (1,042,999) 
|Amortization of trademarks for different useful lives (par. 1i) | (5,192,749)  | (3,808,582) | (2,532,117) 
|Adjustment of employee severance indemnities (par. 1j)          | (2,322,892)  | (2,276,738) | (1,491,056) 
|Adjustment for capitalization of interest cost (par. 1k).       | 4,828,843    | 4,785,622   | 4,565,853   
|Reversal of gain on investment in Viña Dassault San Pedro S.A. 
|(par. 1o)                                                       | (463,972)    | (439,219)   | (439,219)   
|                                                                |              |             |             
|Net equity according to US GAAP                                 | 275,255,082  | 438,613,689 | 429,291,179 
|                                                                |              |             |             
|                                                               
|Accumulated other comprehensive income (loss)                   | 17,699,092   | (2,601,274) | 14,045,302  
|Other comprehensive income (loss) adjustments                   | (17,765,773) | 20,300,366  | (16,646,576)
|                                                                |              |             |             
|Accumulated Other Comprehensive Income                         
|(Loss) in accordance with US GAAP                               | (66,681)     | 17,699,092  | (2,601,274) 
|                                                                |              |             |             
|Total shareholders ́ equity in accordance with US GAAP          
|including accumulated other comprehensive income (loss)         | 275,188,401  | 456,312,781 | 426,689,905 
|                                                                |              |             |             

F-52



The following
 summarizes the changes in Shareholders'  equity under US GAAP during the years ended
December 31, 2003, 2002 and 2001:

|                                                                                                                                                  | ThCh$        
|------------------------------------------------------------------------------------------------------------------------------------------------- | -------------
|                                                                                                                                                  |              
|Balance at December 31, 2000                                                                                                                      | 447,955,627  
|                                                                                                                                                  |              
|Dividend
                declared                                                                                                                 | (44,523,949) 
|Reversal
                of accrued minimum dividend from prior year                                                                              | (1,042,999)  
|Net
                income for the year                                                                                                           | 35,901,085   
|Reversal
                of gross unrealized gains on investments                                                                                
|that
                are available-for-sale from prior year, net of tax                                                                           | (13,400,655) 
|Gross
                unrealized gains on investment that are available-for-sale at year                                                         
|-
                end, net of tax                                                                                                                 | 110,904      
|Cumulative
                translation adjustment for the year                                                                                    | 4,291,166    
|                                                                                                                                                  |              
|Balance at December 31, 2001                                                                                                                      | 429,291,179  
|                                                                                                                                                  |              
|Dividend
                declared                                                                                                                 | (18,056,906) 
|Minimum
                dividend at year-end required by law                                                                                      | 1,042,999    
|Net
                income for the year                                                                                                           | 19,533,406   
|Reversal
                        of gross unrealized gains on investments that are available-for-sale
                from prior year, net of tax | (110,904)    
|Cumulative
                translation adjustment for the year                                                                                    | 6,913,915    
|                                                                                                                                                  |              
|Balance at December 31, 2002                                                                                                                      | 438,613,689  
|Dividend
                declared                                                                                                                 | (194,796,874)
|Minimum
                dividend at year-end required by law                                                                                      | (5,715,842)  
|Net
                income for the year                                                                                                           | 55,209,231   
|Cumulative
                translation adjustment for the year                                                                                    | (18,055,122) 
|                                                                                                                                                  |              
|Balance at December 31, 2003                                                                                                                      | 275,255,082  
|                                                                                                                                                  |              

F-53



2. US GAAP Condensed Financial Statements

CONSOLIDATED BALANCE SHEET
        Adjusted for general price-level
        changes and expressed in thousands
        of constant Chilean pesos of December 31,
                2003

|                                             | As of December 31, 2003                                      
|-------------------------------------------- | -------------------------------------------------------------
|                                             |                                                              
|                                             | Consolidated
        Balance Sheet under
        Chilean GAAP
|                                             |                                                              
|                                             | ThCh$                                                        
|ASSETS                                      
|CURRENT ASSETS                              
|Cash and cash equivalents (1)                | 66,355,822                                                   
|Marketable securities                        | 846,459                                                      
|Investments in available-for-sale securities | -                                                            
|Accounts receivable-trade and other          | 70,790,575                                                   
|Accounts receivable from related companies   | 676,390                                                      
|Inventories                                  | 55,043,589                                                   
|Prepaid expenses                             | 3,263,586                                                    
|Prepaid taxes                                | 2,165,654                                                    
|Deferred income taxes                        | 243,455                                                      
|Other current assets                         | 155,586                                                      
|                                             |                                                              
|Total current assets                         | 199,541,116                                                  
|                                             |                                                              
|PROPERTY, PLANT AND EQUIPMENT, net           | 313,804,536                                                  
|OTHER ASSETS                                 | 63,252,595                                                   
|                                             |                                                              
|Total assets                                 | 576,598,247                                                  
|                                             |                                                              
|LIABILITIES AND SHAREHOLDERS' EQUITY        
|CURRENT LIABILITIES                         
|Short-term borrowings                        | 35,812,212                                                   
|Current portion of long-term debt            | 3,035,779                                                    
|Dividends payable                            | 11,280,528                                                   
|Accounts payable                             | 38,228,633                                                   
|Notes payable                                | 159,387                                                      
|Other payables                               | 4,573,303                                                    
|Accounts payable to related companies        | 1,132,501                                                    
|Accrued expenses                             | 14,632,561                                                   
|Withholding taxes payable                    | 9,958,054                                                    
|Income tax                                   | 1,507,271                                                    
|Other current liabilities                    | 282,732                                                      
|                                             |                                                              
|Total current liabilities                    | 120,602,961                                                  
|                                             |                                                              
|LONG-TERM LIABILITIES                       
|Long-term debt                               | 101,622,104                                                  
|Accrued expenses                             | 2,400,532                                                    
|Deferred income taxes                        | 14,687,189                                                   
|Deposits on bottles and containers           | 20,238,024                                                   
|                                             |                                                              
|Total long-term liabilities                  | 138,947,849                                                  
|                                             |                                                              
|Total liabilities                            | 259,550,810                                                  
|                                             |                                                              
|MINORITY INTEREST                            | 38,275,838                                                   
|                                             |                                                              
|SHAREHOLDERS' EQUITY                        
|Common stock                                 | 169,975,841                                                  
|Share premium                                | 13,293,340                                                   
|Other reserves                               | 3,228,205                                                    
|Retained earnings                            | 92,274,213                                                   
|                                             |                                                              
|Total shareholders' equity                   | 278,771,599                                                  
|                                             |                                                              
|Total liabilities and shareholders' equity   | 576,598,247                                                  
|                                             |                                                              

|(1) | This caption includes time deposits, marketable
                                securities and securities under resale agreements amounting to ThCh$ 20,430,319
                ThCh$ 20,928,511 and ThCh$ 14,131,300, respectively, which are cash equivalents.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-54



CONSOLIDATED BALANCE SHEET

Adjusted for general price-level
                changes and expressed in thousands 
        of constant Chilean pesos of December
31, 2003

|                                             | As of December 31, 2002                                                              
|-------------------------------------------- | -------------------------------------------------------------------------------------
|                                             | Consolidated
        Balance
                Sheet under
                Chilean GAAP
|                                             | ThCh$                                                                                
|                                             |                                                                                      
|ASSETS                                      
|CURRENT ASSETS                              
|Cash and cash equivalents (1)                | 93,099,117                                                                           
|Time deposits                                | 12,793                                                                               
|Marketable securities                        | 198,627                                                                              
|Investments in available-for-sale securities | -                                                                                    
|Accounts receivable-trade and other          | 69,643,817                                                                           
|Accounts receivable from related companies   | 2,592,140                                                                            
|Inventories                                  | 46,851,775                                                                           
|Prepaid expenses                             | 2,710,900                                                                            
|Prepaid taxes                                | 2,470,054                                                                            
|Deferred income taxes                        | 946,540                                                                              
|Other current assets                         | 1,821,080                                                                            
|                                             |                                                                                      
|Total current assets                         | 220,346,843                                                                          
|                                             |                                                                                      
|PROPERTY, PLANT AND EQUIPMENT, net           | 334,053,444                                                                          
|OTHER ASSETS                                 | 104,246,463                                                                          
|                                             |                                                                                      
|Total assets                                 | 658,646,750                                                                          
|                                             |                                                                                      
|LIABILITIES AND SHAREHOLDERS' EQUITY        
|CURRENT LIABILITIES                         
|Short-term borrowings                        | 28,412,934                                                                           
|Current portion of long-term debt            | 19,908,992                                                                           
|Dividends payable                            | 7,417,288                                                                            
|Accounts payable                             | 41,605,334                                                                           
|Notes payable                                | 763,172                                                                              
|Other payables                               | 4,337,253                                                                            
|Accounts payable to related companies        | 926,733                                                                              
|Accrued expenses                             | 12,822,766                                                                           
|Withholding taxes payable                    | 7,170,200                                                                            
|Other current liabilities                    | 125,218                                                                              
|                                             |                                                                                      
|Total current liabilities                    | 123,489,890                                                                          
|                                             |                                                                                      
|LONG-TERM LIABILITIES                       
|Long-term debt                               | 24,179,246                                                                           
|Accrued expenses                             | 1,175,755                                                                            
|Deferred income taxes                        | 18,209,549                                                                           
|Deposits on bottles and containers           | 11,871,436                                                                           
|                                             |                                                                                      
|Total long-term liabilities                  | 55,435,986                                                                           
|                                             |                                                                                      
|Total liabilities                            | 178,925,876                                                                          
|                                             |                                                                                      
|MINORITY INTEREST                            | 41,901,344                                                                           
|                                             |                                                                                      
|SHAREHOLDERS' EQUITY                        
|Common stock                                 | 169,975,841                                                                          
|Share premium                                | 13,293,340                                                                           
|Other reserves                               | 19,982,809                                                                           
|Retained earnings                            | 234,567,540                                                                          
|                                             |                                                                                      
|Total shareholders' equity                   | 437,819,530                                                                          
|                                             |                                                                                      
|Total liabilities and shareholders' equity   | 658,646,750                                                                          
|                                             |                                                                                      

|(1) | This caption includes time deposits, marketable securities and securities under
 resale agreements amounting to ThCh$ 27,337,334, ThCh$ 13,640,724 and ThCh$
 41,592,659, respectively, which are cash equivalents.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-55



CONSOLIDATED STATEMENT OF INCOME

Adjusted for general price-level changes and expressed in thousands
    
of constant Chilean pesos of December 31, 2003

|                                                  | For the year ended December 31, 2003                 
|------------------------------------------------- | -----------------------------------------------------
|                                                  |                                                      
|                                                  | Consolidated
Statement of 
Income under 
Chilean GAAP
|                                                  |                                                      
|                                                  | ThCh$                                                
|OPERATING RESULTS                                
|Net sales                                         | 384,064,231                                          
|Cost of sales                                     | (189,203,934)                                        
|                                                  |                                                      
|Gross margin                                      | 194,860,297                                          
|Selling and administrative expenses               | (148,997,512)                                        
|                                                  |                                                      
|Operating income                                  | 45,862,785                                           
|                                                  |                                                      
|NON-OPERATING RESULTS                            
|Non-operating income                              | 24,489,961                                           
|Non-operating expenses                            | (12,109,737)                                         
|Price-level restatements and exchange differences | 1,261,636                                            
|                                                  |                                                      
|Income before income taxes                       
|and minority interest                             | 59,504,645                                           
|Income taxes                                      | (4,977,027)                                          
|Minority interest                                 | (439,494)                                            
|                                                  |                                                      
|NET INCOME                                        | 54,088,124                                           
|                                                  |                                                      

F-56



CONSOLIDATED STATEMENT OF INCOME

Adjusted for general price-level changes and expressed in thousands
    
        of constant Chilean pesos of December 31, 2003

|                                                  | For the year ended December 31, 2002                  
|------------------------------------------------- | ------------------------------------------------------
|                                                  |                                                       
|                                                  | Consolidated 
Statement of 
Income under 
Chilean GAAP
|                                                  |                                                       
|                                                  | ThCh$                                                 
|OPERATING RESULTS                                
|Net sales                                         | 349,349,505                                           
|Cost of sales                                     | (172,156,846)                                         
|                                                  |                                                       
|Gross margin                                      | 177,192,659                                           
|Selling and administrative expenses               | (139,051,067)                                         
|                                                  |                                                       
|Operating income                                  | 38,141,592                                            
|                                                  |                                                       
|NON-OPERATING RESULTS                            
|Non-operating income                              | 6,350,615                                             
|Non-operating expenses                            | (9,720,662)                                           
|Price-level restatements and exchange differences | (3,710,738)                                           
|                                                  |                                                       
|Income before income taxes                       
|and minority interest                             | 31,060,807                                            
|Income taxes                                      | (7,510,799)                                           
|Minority interest                                 | (1,264,473)                                           
|                                                  |                                                       
|NET INCOME                                        | 22,285,535                                            
|                                                  |                                                       

F-57



CONSOLIDATED STATEMENT OF INCOME

Adjusted for general price-level changes and expressed in thousands
    
        of constant Chilean pesos of December 31, 2003

|                                                  | For the year ended December 31, 2001               
|------------------------------------------------- | ---------------------------------------------------
|                                                  |                                                    
|                                                  | Consolidated
Statement of
Income under
Chilean GAAP
|                                                  |                                                    
|                                                  | ThCh$                                              
|OPERATING RESULTS                                
|Net sales                                         | 374,088,147                                        
|Cost of sales                                     | (176,934,187)                                      
|                                                  |                                                    
|Gross margin                                      | 197,153,960                                        
|Selling and administrative expenses               | (151,742,625)                                      
|                                                  |                                                    
|Operating income                                  | 45,411,335                                         
|NON-OPERATING RESULTS                            
|Non-operating income                              | 24,224,055                                         
|Non-operating expenses                            | (17,870,461)                                       
|Price-level restatements and exchange differences | (2,495,517)                                        
|                                                  |                                                    
|Income before income taxes                       
|and minority interest                             | 49,269,412                                         
|Income taxes                                      | (7,433,842)                                        
|Minority interest                                 | (1,911,669)                                        
|                                                  |                                                    
|NET INCOME                                        | 39,923,901                                         
|                                                  |                                                    

F-58



3. Additional disclosure requirements

a) Reclassifications for US GAAP purposes

Income and expenses

Under Chilean GAAP the following income and expenses arising during the years
        2003, 2002 and 2001 are classified as Non-operating income and expenses whereas
        under US GAAP they would be classified as Operating income and expenses:

|                                                      | 2003    | 2002    | 2001   
|----------------------------------------------------- | ------- | ------- | -------
|                                                      |         |         |        
|                                                      | ThCh$   | ThCh$   | ThCh$  
|Non-operating income:                                
|Gain on sales of glass, plastic boxes and by-products | 315,447 | 438,612 | 577,958
|Amortization of negative goodwill                     | 41,094  | 50,212  | 47,126 
|Rental income                                         | 115,348 | 46,689  | 61,921 
|Other                                                 | 10,903  | 42,165  | 217,325
|                                                      |         |         |        
|.                                                     | 482,792 | 577,678 | 904,330
|                                                      |         |         |        

|Non-operating expenses:                                                   |           |           |           
|------------------------------------------------------------------------- | --------- | --------- | ----------
|Amortization of goodwill                                                  | 2,217,480 | 2,588,817 | 2,487,773 
|Provision
                for impairment of property, plant and equipment | 506,468   | 193,816   | 1,403,937 
|Loss on sale of property, plant and equipment                             | 71,032    | 108,055   | 408,295   
|Write-offs of account receivable and other accounts                       | 1,037,442 | 598,821   | 449,190   
|Amortization of intangibles                                               | 1,301     | 1,301     | 12,405    
|Non-recurring legal expenses                                              | -         | -         | 562,038   
|Extraordinary severance indemnities                                       | 660,343   | -         | -         
|Director's participation based on extraordinary dividend                  | 515,846   | -         | 1,517,730 
|Restructuring costs and indemnities                                       | -         | 973,631   | 3,650,259 
|                                                                          |           |           |           
|                                                                          | 5,009,912 | 4,464,441 | 10,491,627
|                                                                          |           |           |           

Selling and administrative expenses-
                Under Chilean GAAP, shipping and handling costs are charged to Selling
                        and administrative expenses whereas under US GAAP they would be classified
                        in Cost of sales. Shipping and handling costs were ThCh$ 18,247,426, ThCh$ 17,357,906 and ThCh$ 16,681,006
in 2003, 2002 and 2001, respectively.

Cash
      and cash equivalents - As shown in Note 1 t), Cash and cash equivalents
included in the Consolidated Statement of Cash Flows are recorded in separate
captions on the balance sheet under Chilean GAAP. They are required to be shown
combined as a single caption in balance sheets prepared under US GAAP. Accordingly,
the following cash equivalents should be reclassified and included in the caption
Cash and cash equivalents for US GAAP presentation purposes:

|                                             | 2003       | 2002      
|-------------------------------------------- | ---------- | ----------
|                                             |            |           
|                                             | ThCh$      | ThCh$     
|Time deposits                                | 20,430,319 | 27,337,334
|Mutual fund shares                           | 20,928,511 | 13,640,724
|Securities purchased under resale agreements | 14,131,300 | 41,592,657
|                                             |            |           
|Total                                        | 55,490,130 | 82,570,715
|                                             |            |           

F-59



b)   Earnings per
share

Disclosure of the
following  earnings per share  information is not generally  required for presentation in
financial  statements under Chilean accounting principles, but is required under US GAAP:

|                                                   | 2003    | 2002    | 2001   
|-------------------------------------------------- | ------- | ------- | -------
|                                                   |         |         |        
|                                                   | ThCh$   | ThCh$   | ThCh$  
|                                                  
|Basic and diluted earnings per share under US GAAP | 172.99  | 56.90   | 112.7  
|                                                   |         |         |        
|Weighted-average number of shares of common stock 
|outstanding for basic and diluted earnings        
|per share (in thousands)                           | 318,503 | 318,503 | 318,503

Earnings  per share is
 determined  by dividing the net income for the year under US GAAP by the
 weighted-average  number of shares of common stock outstanding during each year.

c)   Income taxes

The provision for
income taxes charged to results is summarized as follows:

|                                   | 2003        | 2002        | 2001        
|---------------------------------- | ----------- | ----------- | ------------
|                                   |             |             |             
|                                   | ThCh$       | ThCh$       | ThCh$       
|                                  
|Current tax expense                | (7,513,016) | (4,728,243) | (4,292,729) 
|Deferred tax under Chilean GAAP    | 2,535,989   | (2,782,556) | (3,141,113) 
|Additional deferred tax to conform
|with US GAAP                       | 571,901     | 1,302,128   | (5,065,690) 
|                                   |             |             |             
|Total provision for US GAAP        | (4,405,126) | (6,208,671) | (12,499,532)
|                                   |             |             |             

F-60



Deferred tax assets
(liabilities) under US GAAP are summarized as follows at December 31 of each year:

|                                             | 2003         | 2002         | 2001        
|-------------------------------------------- | ------------ | ------------ | ------------
|                                             |              |              |             
|                                             | ThCh$        | ThCh$        | ThCh$       
|                                            
|Property, plant and equipment                | (20,830,550) | (20,770,302) | (17,914,792)
|Employee severance indemnities               | -            | (86,736)     | -           
|Investments in other companies               | -            | -            | -           
|Inventories                                  | (675,776)    | -            | (292,990)   
|Other liabilities                            | (738,307)    | -            | (180,653)   
|Adjustment on bottles and container deposits | (1,921,481)  | (1,748,599)  | (1,343,137) 
|                                             |              |              |             
|Gross deferred tax liabilities               | (24,166,114) | (22,605,637) | (19,731,572)
|                                             |              |              |             
|                                            
|Accounts receivable                          | 950,640      | 791,563      | 750,357     
|Investments in other companies               | -            | 356,693      | 128,538     
|Inventories                                  | -            | 111,705      | -           
|Other assets                                 | 1,351,207    | 283,343      | -           
|Tax loss carryforwards                       | 11,734,457   | 7,627,576    | 5,274,929   
|Less: Valuation allowance                    | (8,777,557)  | (6,536,564)  | (4,994,953) 
|Employee severance indemnities               | 394,892      | -            | 13,308      
|Other                                        | 2,910,962    | 978,633      | 1,270,945   
|                                             |              |              |             
|Gross deferred tax assets                    | 8,564,601    | 3,612,949    | 2,443,124   
|                                             |              |              |             
|Net deferred tax assets (liabilities)        | (15,601,513) | (18,992,688) | (17,288,448)
|                                             |              |              |             

The provision for
income taxes differs from the amount of income taxes determined by applying the
applicable  Chilean  statutory income tax rate of 16.5% in 2003, 16,0% in 2002 and 15% in
2001 to pretax income as a result of the following differences:

|                                                                | 2003        | 2002        | 2001       
|--------------------------------------------------------------- | ----------- | ----------- | -----------
|                                                                |             |             |            
|                                                                | ThCh$       | ThCh$       | ThCh$      
|                                                               
|At statutory Chilean tax rate                                   | 9,836,369   | 4,118,732   | 7,391,394  
|Increase (decrease) in rates resulting from:                   
|Non-deductible expenses                                         | 3,824,294   | 4,602,228   | 4,881,467  
|Non-taxable income                                              | (7,405,496) | (1,925,089) | (2,075,239)
|Tax credits                                                     | (842,139)   | (615,714)   | (295,859)  
|International income tax differences                            | (1,007,902) | 28,514      | 708,891    
|Increase in Chilean tax rates (effect on deferred income taxes) | -           | -           | 1,888,878  
|                                                                |             |             |            
|At effective tax rates                                          | 4,405,126   | 6,208,671   | 12,499,532 
|                                                                |             |             |            

In  accordance  with
Chilean law, the Company and each of its  subsidiaries  compute and pay income tax on a
separate  return basis and not on a consolidated basis.

The Argentine enacted
income tax rate was 35% during the years 2001 to 2003.

Certain of the Chilean
 subsidiaries have tax loss carryforwards  aggregating ThCh$ 18,212,888 at December 31,
2003 (ThCh$ 9,207,011 in 2002) which have no expiration date.  Additionally,  CCU
Argentina and its  subsidiaries  and Finca La Celia S.A. and subsidiary,  have tax loss
 carryforwards  aggregating  ThCh$  24,578,571 at December 31, 2003 (ThCh$  17,417,938 in
2002) which may be applied to reduce taxable  income in Argentina  during a five-year
 carryforward  period.  These tax losses  resulted in a deferred tax asset for 2003 of
ThCh$ 11,734,457  (ThCh$ 7,627,576  in  2002).  Valuation  allowances  of ThCh$
 8,777,557  in 2003 and  ThCh$  6,536,564  in 2002 were provided against certain of the
deferred tax assets of the Argentine  subsidiaries  because it is currently  expected
that those assets will probably not be realized before they expire.

F-61



d)   Investment
securities

The book value of
investment  securities  totaled ThCh$ 846,459 at December 31, 2003 and  ThCh$ 211,419 at
December 31, 2002. There was no  significant  difference  between book value and market
value at December 31, 2003 or December 31, 2002 (see  paragraph 1 f) above). All
investment securities are classified as available-for-sale at December 31, 2003 and 2002.

e)   Fair value

The following  methods
and assumptions were used to estimate the fair value of each class of financial
 instrument at December 31, 2003 and 2002 for which it is practicable to estimate such
value:

- Cash     Cash
is stated at carrying amount, which is equivalent to fair value.

- Time deposits
and marketable securities     Fair value of time  deposits  was  determined  using
 rates  currently  available  in the market and the fair value of  marketable
     securities is based on quoted market prices for the marketable securities.

- Investments in
other companies     Fair value of common stock in companies is based on quoted market
prices for the stock.

- Securities
purchased under resale agreements     Fair value of securities  purchased under
resale  agreement  included in Other current assets was determined  using interest rates
     currently offered for similar financial instruments.

- Bank
borrowings and bonds payable     Fair value of bank  borrowings  and bonds  payable
was  estimated  using the interest  rate that the Company would pay for similar
     loans.

- Financial
Instruments     The fair value of foreign  currency forward exchange  contracts and
swap contracts is based on estimated market  valuations.  Such      values attempt to
approximate  the economic value at the balance sheet date of a position using prices and
rates at the average of      the  estimated  bid and offer for the  respective
 underlying  assets or reference  rates and/or  mathematical  models,  as deemed
     appropriate by the Company. In the absence of sufficient or meaningful market
 information,  such valuations or components thereof      may be theoretical in whole or
in part.

- Deposits on
bottles and containers     The carrying  value of deposits on bottles and containers
 approximates  the fair value as the carrying value reflects the amounts      that would
be required to settle the obligation.

F-62



The estimated fair
values of the Company's financial instruments is summarized as follows:

|                                       | December 31, 2003 | December 31, 2002
|-------------------------------------- | ----------------- | -----------------
|                                       |                   |                  
|Assets                                 | Carryingamounts   | Fairvalue        
|                                       |                   |                  
|                                       | ThCh$             | ThCh$            
|                                      
|Cash                                   | 10,865,692        | 10,865,692       
|Time deposit and marketable securities | 41,601,380        | 41,601,380       
|Investments in other companies         | 50,325            | 50,325           
|Securities purchased pursuant to      
|resale agreements                      | 14,128,238        | 14,128,238       
|Other current assets                   | 59,976            | 59,976           
|                                       |                   |                  
|Total assets                           | 66,705,611        | 66,705,611       
|                                       |                   |                  
|                                      
|Liabilities                           
|                                      
|                                      
|Bank borrowings (short-term)           | 35,812,212        | 35,665,409       
|Bonds payable (short-term)             | 1,664,168         | 2,463,490        
|Current portion of long-term          
|bank borrowings                        | 1,339,747         | 2,824,894        
|Bank borrowings (long-term)            | 82,717,705        | 82,774,874       
|Bonds payable (long-term)              | 18,470,999        | 18,800,673       
|Forward contract                       | 32,008            | 32,008           
|Swap contracts                         | 9,387,579         | 9,387,579        
|                                       |                   |                  
|Total liabilities                      | 149,424,418       | 151,948,927      
|                                       |                   |                  

f)   Concentrations
of credit and other risk

The Company has
accounts with a variety of banks and does not hold  significant  deposits with any single
bank.  The Company has a wide customer  base and  trades  with a large  number  of small
 customers.  Consequently,  the  Company  does not  believe  that it has any significant
 concentrations  of credit risk at December  31,  2003.  The  beverage  business  is
highly  competitive  in both Chile and Argentina,  where the Company competes with other
enterprises.  Additionally,  in view of the favorable  long-term economic  conditions in
Chile, other enterprises may be expected to enter the countrys beer, wine and soft drink
markets.

The Companys  results
may be materially  adversely  affected from time to time by significant  increases in
advertising  and promotion costs, loss of sales volume,  price discounting,  or a
combination of these and other factors related to the competitive beer, wine and soft
drinks markets in Chile and Argentina.

h)   Restructuring
Costs

During 2000, the
Company  implemented a plan to reorganize and restructure  certain of its business
activities at the Company level and at  certain  subsidiaries.  The  restructuring
 consisted  of a series of  planned  actions,  including  a  reduction  in the number of
employees,  and the closing of plant  facilities.  In  connection  with these  actions,
 the  Company  recorded  restructuring  charges totaling  ThCh$ 3,650,259 in 2001 and
ThCh$ 973,631 in 2002 which were classified as non-operating  expenses. At December 31,
2002, all the restructuring activities related to the 2000 and 2001 programs were
completed and all costs had been paid.

F-63



The restructuring
charges are summarized as follows:

|                                                           | 2003  | 2002   
|---------------------------------------------------------- | ----- | -------
|                                                           |       |        
|                                                           | ThCh$ | ThCh$  
|                                                          
|Employee severance indemnities paid by CCU Argentina       | -     | 423,360
|Employee severance indemnities for corporate restructuring | -     | 550,271
|                                                           |       |        
|Total                                                      | -     | 973,631
|                                                           |       |        

i)  Derivative
instruments and hedging activities

The  Companys
 activities  expose it to a variety  of market  risks,  including  risks  related  to the
 effects of changes in foreign currency  exchange rates and interest  rates.  These
 financial  exposures are monitored and managed by the Company as an integral part of its
overall risk management  program.  The Companys risk management  program focuses on the
 unpredictability  of financial markets and seeks to reduce the potentially adverse
effects that the volatility of these markets may have on its operating results.

At December 31, 2003,
the Company had six  cross-currency  interest-rate swap agreements (US dollar to Chilean
peso) to buy and sell US dollars for a notional  amount of US$  96,110,000.  These
 contracts  were  obtained to protect the Company from  foreign  exchange and
interest-rate risk with respect to long-term bank debt denominated in US dollars.

At December 31, 2003,
 the Company has three  derivative  contracts  consisting of forward  contracts to sell
US dollars for a notional amount of US$  25,900,000  maturing in January  2004.  At
December 31, 2002,  the Company had two  derivative  contracts  consisting of forward
 contracts to sell US dollars for a total notional  amount of US$ 12,500,000  (three
 contracts with a total notional amount of US$ 42,000,000  at December 31, 2001).  In
addition,  at December 31, 2002, the Company had three  derivative  contracts  consisting
of forward  contracts to buy US dollars for a notional  amount of  US$ 9,500,000.  No
contracts to purchase US dollars existed at December 31, 2001.  These forward  contracts
were obtained to protect the Company from foreign  exchange risk with respect to mutual
fund shares and trade accounts receivable denominated in US dollars.

As  described  further
in Note 1 p) at  December  31,  2003,  2002 and 2001,  the forward  contracts,  and at
December  31,  2003,  the cross-currency  interest-rate  swap  contracts  designated  as
 hedges  for  Chilean  GAAP  purposes,  did not meet  the  documentation requirements to
be designated as hedges under US GAAP.

4.   Recent accounting
pronouncements

Effective January 1,
2003, the Company adopted SFAS No. 146,  Accounting for Costs Associated with Exit or
Disposal  Activities (SFAS 146), which addresses  financial  accounting and reporting
for costs associated with exit or disposal activities and nullifies Emerging Issues Task
Force (EITF) Issue No. 94-3,  Liability  Recognition for Certain Employees Termination
Benefits and Other costs to Exit an Activity  (including  Certain Costs Incurred in a
 Restructuring).  The adoption of SFAS No. 146 did not have a material effect on the
Companys consolidated financial position, results of operation or cash flows.

F-64



Effective January 1,
2003, the Company adopted FASB  Interpretation  No. 45,  Guarantors  Accounting and
Disclosure  Requirements for Guarantees,  Including  Indirect  Guarantees of
 Indebtedness of Others (FIN 45). FIN 45 requires that upon issuance of a guarantee,
the Company must  disclose  and may be required to recognize a liability  for the fair
value of the  obligation  it assumes  under that guarantee.  The initial  recognition
 and  measurement  requirement  of FIN 45 is effective  for  guarantees  issued or
modified  after December 31, 2002. The adoption of FIN 45 did not have a material  effect
on the Companys  consolidated  financial  position,  results of operation or cash flows.

Effective  February 1,
2003, the Company  adopted FASB  Interpretation  No. 46,  Consolidation  of Variable
 Interest  Entities (FIN 46). FIN 46 (an  interpretation  of ARB 51) has recently
 introduced a new  consolidation  model focused on  identifying  entities for which a
controlling  financial  interest is achieved  through means other that voting  rights.
 Under this  interpretation,  a variable interest entity must be consolidated  if certain
 consolidation  requirements  are met. An enterprise  should  consolidate an entity if
that enterprise has a variable interest in the entity that will absorb a majority of the
entitys  expected losses,  receive a majority of the  entitys  expected  residual
 returns,  or both.  FIN 46,  as revised by FIN 46R,  was  effective  on  February 1,
2003 for new transactions  and is effective for  reporting  periods  after March 15, 2004
for  transactions  entered into prior to February 1, 2003. The Company has not entered
into any new  transactions  subject to FIN 46 since  February 1, 2003. The impact of the
adoption of FIN 46 on transactions prior to February 1, 2003 in not expected to have a
material effect on the Companys  consolidated  financial position, results of operations
or cash flows.

In April 2003,  the
FASB issued SFAS No. 149,  Amendment of Statement  133 on Derivative  Instruments  and
Hedging  Activities.  This Statement  amends  and  clarifies  financial  accounting  and
 reporting  for  derivative  instruments,  including  certain  derivative instruments
 embedded in other contracts  (collectively  referred to as  derivatives)  and for
hedging  activities  under SFAS No. 133, Accounting  for Derivative  Instruments and
Hedging  Activities.  The Company adopted the provisions of SFAS No. 149 on July 1,
2003, which did not have a material effect on the Companys consolidated financial
position, results of operation or cash flows.

In May 2003, the FASB
issued SFAS No. 150,  Accounting for Certain Financial  Instruments with Characteristics
of both Liabilities and Equity.  This  Statement  establishes  standards  of  how an
 issuer  classifies  and  measures  certain  financial  instruments  with characteristics
 of both  liabilities and equity.  It requires that an issuer classify a financial
 instrument that is within its scope as a liability (or an asset in some  circumstances).
 This  Statement is effective for financial  instruments  entered into or modified after
May 31, 2003,  and  otherwise is effective  July 1, 2003.  The Company  adopted the
 provisions  of SFAS No. 150 on July 1, 2003, which did not have a material effect on the
Companys consolidated financial position, results of operation or cash flows.

F-65



Report of Independent
Registered Public Accounting Firm
on
Financial Statement Schedules

To the Board of
Directors   of Compañia Cervecerias Unidas S.A:

Our audits of the consolidated financial statements referred to in our report dated January 29, 2004
  appearing in the 2003 Form 20-F also include an audit of the financial statement schedules listed in
  Schedule II of this Form 20-F.  In our opinion, this financial statement schedule presents fairly, in all
  material respects, the information set forth therein when read in conjunction with the related
  consolidated financial statements.

PricewaterhouseCoopers LLP
Santiago, Chile 
 June 24, 2004



Schedule II
Valuation and Qualifying Accounts and Reserves

Figures in million of
Chilean pesos as of December 31, 2003

|                   |                              | Additions                     | Deductions             |                     
|------------------ | ---------------------------- | ----------------------------- | ---------------------- | --------------------
|                   |                              |                               |                        |                     
|Description        | Balance at begging of period | Charges to costs and expenses | Inventories write-offs | Bad debts write-offs
|2001               |                              |                               |                        |                     
|Doubtful accounts  | 7,758                        | 2,378                         |                        | (3,174)             
|Inventory accruals | 721                          | 152                           | (142)                  |                     
|2002               |                              |                              
|Doubtful accounts  | 6,728                        | 1,085                         |                        | (1,778)             
|Inventory accruals | 783                          | 111                           | (68)                   |                     
|2003               |                              |                              
|Doubtful accounts  | 5,551                        | 2,598                         |                        | (1,736)             
|Inventory accruals | 857                          |                               | (210)                  |