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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 20-F



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oREGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g)
OF THE SECURITIES EXCHANGE ACT OF 1934
r

OR


x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934


For the fiscal year ended: December 31, 2002


OR


o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934


for the transition period fromto


Commission file number: 1-14278

QUILMES INDUSTRIAL (QUINSA), SOCIÉTÉ ANONYME

(Exact name of Registrant as specified in its charter)


Grand-Duchy of Luxembourg
(Jurisdiction of incorporation or organization)

84, Grand Rue
L-1660 Luxembourg
Grand-Duchy of Luxembourg
(Address of principal executive offices)

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

|                                                                            |  |                                                                                             
|--------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------
|Title of each class
American Depositary Shares,
representing Class B shares |  | Name of each exchange on which registered
New York Stock Exchange,
Luxembourg Stock Exchange

Securities registered or to be registered pursuant to Section 12(g) of the Act: None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

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:

|                                  |  |  |             | 
|--------------------------------- |  |  | ----------- | 
|Class A shares, without par value |  |  | 647,618,840 | 
|Class B shares, without par value |  |  | 43,388,205  | 

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.

YesX                  No

Indicate by check mark which financial statement item the registrant has
elected to follow.

Item 17X                 
Item 18



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TABLE OF CONTENTS


TABLE OF CONTENTS



|                                       |                                                                                       |  |  |  |  |  |  | 
|-------------------------------------- | ------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|FINANCIAL INFORMATION                 
|FORWARD-LOOKING STATEMENTS            
|TERMS AND CONVENTIONS                 
|MARKET SHARE INFORMATION              
|PART I                                
|                                       | ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS                        
|                                       | ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE                                      
|                                       | ITEM 3. KEY INFORMATION                                                              
|                                       | ITEM 4.INFORMATION ON THE COMPANY                                                    
|                                       | ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS                                 
|                                       | ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES                                   
|                                       | ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS                            
|                                       | ITEM 8. FINANCIAL INFORMATION                                                        
|                                       | ITEM 9. THE OFFER AND LISTING                                                        
|                                       | ITEM 10. ADDITIONAL INFORMATION                                                      
|                                       | ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                  
|                                       | ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES                      
|PART II                               
|                                       | ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES                             
|                                       | ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
|                                       | ITEM 15. CONTROLS AND PROCEDURES                                                     
|                                       | ITEM 16A AUDIT COMMITTEE FINANCIAL EXPERT                                            
|                                       | ITEM 16B CODE OF ETHICS                                                              
|PART III                              
|                                       | ITEM 17. FINANCIAL STATEMENTS                                                        
|                                       | ITEM 18. FINANCIAL STATEMENTS                                                        
|                                       | ITEM 19. EXHIBITS                                                                    
|SIGNATURES                            
|EXHIBIT INDEX                         
|ARTICLES OF INCORPORATION             
|MEMORANDUM OF AGREEMENT               
|LICENSE AGREEMENT                     
|DISTRIBUTION AGREEMENT                
|LIST OF SUBSIDIARIES                  
|CERTIFICATION                         
|CONSENT OF A.C. NIELSEN ARGENTINA S.A.
|CONSENT OF ACNIELSEN CHILE            
|CONSENT OF CCR/IRI                    
|CONSENT OF ACNIELSEN URUGUAY          



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|                           |                                                                                         |          |   |    |  | 
|-------------------------- | --------------------------------------------------------------------------------------- | -------- | - | -- |  | 
|FINANCIAL INFORMATION      |                                                                                         |          | 1 |   
|FORWARD-LOOKING STATEMENTS |                                                                                         |          | 1 |   
|TERMS AND CONVENTIONS      |                                                                                         |          | 2 |   
|MARKET SHARE INFORMATION   |                                                                                         |          | 3 |   
|                           |                                                                                         | PART I   |   |    |  | 
|                           | ITEM 1.    IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS                        |          |   | 4  | 
|                           | ITEM 2.    OFFER STATISTICS AND EXPECTED TIMETABLE                                      |          |   | 4  | 
|                           | ITEM 3.    KEY INFORMATION                                                              |          |   | 4  | 
|                           | ITEM 4.    INFORMATION ON THE COMPANY                                                   |          |   | 15 | 
|                           | 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                            |          |   | 75 | 
|                           | ITEM 8.    FINANCIAL INFORMATION                                                        |          |   | 78 | 
|                           | ITEM 9.    THE OFFER AND LISTING                                                        |          |   | 80 | 
|                           | ITEM 10.   ADDITIONAL INFORMATION                                                       |          |   | 82 | 
|                           | ITEM 11.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                   |          |   | 90 | 
|                           | ITEM 12.   DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES                       |          |   | 92 | 
|                           |                                                                                         | PART II  |   |    |  | 
|                           | ITEM 13.   DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES                              |          |   | 93 | 
|                           | ITEM 14.   MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND
USE OF PROCEEDS |          |   | 93 | 
|                           | ITEM 15.   CONTROLS AND PROCEDURES                                                      |          |   | 93 | 
|                           | ITEM 16A AUDIT COMMITTEE FINANCIAL EXPERT                                               |          |   | 93 | 
|                           | ITEM 16B CODE OF ETHICS                                                                 |          |   | 93 | 
|                           |                                                                                         | PART III |   |    |  | 
|                           | ITEM 17.   FINANCIAL STATEMENTS                                                         |          |   | 93 | 
|                           | ITEM 18.   FINANCIAL STATEMENTS                                                         |          |   | 94 | 
|                           | ITEM 19.   EXHIBITS                                                                     |          |   | 95 | 
|                           | SIGNATURES                                                                              |          |   | 96 | 
|                           | EXHIBIT INDEX                                                                           |          |   | 99 | 





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FINANCIAL INFORMATION

Impact of Argentine Crisis on Presentation of Financial Information

Recent changes to Argentine law have had a significant impact on our
operations. These changes in Argentine law and their impact on our operations
are expected to render any comparison of financial statements of ours for
periods ended after December 31, 2001 with those for periods ended on or prior
to December 31, 2001 meaningless as our historical financial statements are not
indicative of our current financial position or anticipated results of
operations or business prospects, all of which have been materially and
adversely affected since December 31, 2001.

General

This annual report contains our audited consolidated financial statements
as of December 31, 2002 and 2001 and for the three years in the periods ended
December 31, 2002, 2001 and 2000, all of which have been audited by
PricewaterhouseCoopers, independent accountants.

We prepare our consolidated financial statements in U.S. dollars and in
conformity with generally accepted accounting principles used in Luxembourg
(Luxembourg GAAP), which differs in certain significant respects from
generally accepted accounting principles in the United States of America (U.S.
GAAP). Such differences involve methods of measuring the amounts shown in the
financial statements, as well as additional disclosures required by U.S. GAAP.
See Note 27 to our Consolidated Financial Statements as of December 31, 2002
and 2001 and for the years ended December 31, 2002, 2001 and 2000 contained
elsewhere in this annual report (such statements, together with the notes
thereto, are referred to herein as the Consolidated Financial Statements) for
a description of the principal differences between Luxembourg GAAP and U.S.
GAAP, as they relate to us, and a reconciliation to U.S. GAAP of net income
(loss) and shareholders equity. This reconciliation does not include
disclosure of all information that would be required by U.S. GAAP and
Regulation S-X of the Securities and Exchange Act of 1934 (the Exchange Act).

Certain amounts which appear herein (including percentage amounts) may not
sum due to rounding.




FORWARD-LOOKING STATEMENTS

This annual report contains statements that are or may constitute
forward-looking statements. These statements appear throughout this annual
report and include statements regarding our intent, belief or current
expectations, including but not limited to any statements concerning:



| |  | our corporate strategy;                                                                                                                                  
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | our expectations regarding our future performance, revenues, income,
earnings per share, capital expenditures, dividends, liquidity and
capital structure
| 
| |  | our development of new products;                                                                                                                         
| 
| |  | the demand for beer, soft drinks and water;                                                                                                              
| 
| |  | the supply and availability of barley and malt;                                                                                                          
| 
| |  | the results expected from our strategic relationship with Companhia de
Bebidas das Américas (AmBev);                                                   
| 
| |  | our future performance in light of the termination of the
Shareholders Agreement between Quilmes Industrial (Quinsa) Societé
Anonyme and Heineken;      
| 
| |  | trends affecting our financial condition or results of operations;                                                                                       
| 
| |  | our dividend policy;                                                                                                                                     
| 
| |  | the future impact of competition and regulation;                                                                                                         

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| |  | political and economic conditions in the countries in which we or our
affiliates operate or may operate in the future;                                                                 
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | negotiations with our bank creditors concerning the rescheduling of our loans and compliance with our financial covenants;                                                             
| 
| |  | any statements preceded by, followed by or that include the words
believes, expects, predicts, anticipates, intends,
estimates, should, may or similar expressions; and
| 
| |  | other statements contained or incorporated by reference in this annual
report regarding matters that are not historical facts.                                                         

Because such statements are subject to risks and uncertainties, actual
results may differ materially from those expressed or implied by such
forward-looking statements. Factors that could cause actual results to differ
materially include, but are not limited to:



| |  | uncertainties relating to political and economic conditions in Argentina and the other emerging market countries of Latin
America where we conduct our business;
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | inflation and exchange rate risks;                                                                                                                              
| 
| |  | restrictions on the ability to exchange pesos into foreign currencies;                                                                                          
| 
| |  | the devaluation of the peso and other local currencies of the countries where we conduct our business;                                                          
| 
| |  | the adoption of a restrictive currency transfer policy in the countries where we conduct our business;                                                          
| 
| |  | the nature and extent of future competition in our principal markets;                                                                                           
| 
| |  | the factors discussed below under Risk Factors beginning on page 7.                                                                                           

Due to extensive and rapid changes in laws as well as economic and
business conditions in Argentina, it is difficult to predict the impact of such
changes on our financial condition. Other relevant factors may include, but
are not limited to:



| |  | the recession in Argentina; and                          
|- |  | ---------------------------------------------------------
| 
| |  | inflationary pressure and reduction in consumer spending.

You should not place undue reliance on such statements, which speak only
as of the date that they were made. Our independent public accountants have
not examined or compiled the forward-looking statements and, accordingly, do
not provide any assurance with respect to such statements. These cautionary
statements should be considered together with any written or oral
forward-looking statements that we may issue in the future. We do not
undertake any obligation to release publicly any revisions to forward-looking
statements contained in this annual report to reflect later events or
circumstances or to reflect the occurrence of unanticipated events.

For all these forward-looking statements, we claim the protection of the
safe harbor for forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995.




TERMS AND CONVENTIONS

As used throughout this annual report, the terms Quinsa, the Company,
we, us and our refer to Quilmes Industrial (Quinsa), Société Anonyme,
together with our consolidated subsidiaries, except where we make clear that
such terms refer only to the parent company.

Throughout this annual report, we refer to many of our subsidiaries, past
and present, by their initials as follows:

Baesa stands for Buenos Aires Embotelladora S.A.,

2



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CBN stands for Cervecería Boliviana Nacional La Paz,

CBNSC stands for Cervecería Boliviana Nacional Santa Cruz,

CMQ stands for Cervecería y Maltería Quilmes S.A.I.C.A y G.,

CT stands for Cervecería Tarija,

CTq stands for Cervecería Taquiña,

Cympay stands for Cervecería y Maltería Paysandu S.A.,

Edisa stands for Embotelladoras del Interior S.A.,

Enalbo stands for Envases de Aluminio Boliviano S.R.L.,

EUSA stands for Embotelladora del Uruguay S.A.,

FNC stands for Fábricas Nacionales de Cerveza S.A.,

FPV stands for Fábrica Paraguaya de Vidrios S.A.,

Incesa stands for Inversiones Ceverceras Sociedad Anónima,

Malsaf stands for Maltería Safac S.A.,

Mosa stands for Maltería Oriental S.A.,

Paresa stands for Paraguay Refrescos S.A.,

QIB stands for Quilmes International (Bermuda) Ltd.

Throughout this document, references to US$, $ and dollar are to
United States dollars and references to P$ or peso are to Argentine pesos.

Also, unless we indicate otherwise, reference to fiscal years are to our
fiscal years ending on December 31 of the same calendar year. For example,
fiscal 2002 refers to our fiscal year ended December 31, 2002.




MARKET SHARE INFORMATION

Market share information with respect to beer and soft drinks consumed in
Argentina is based on data supplied by A.C. Nielsen Argentina S.A. (Nielsen
Argentina). Market share information presented with respect to beer consumed
in Paraguay is based on data supplied by CCR/IRI. Market share information
presented with respect to beer consumed in Chile and Bolivia is based on data
supplied by Nielsen Chile S.A. (Nielsen Chile) and CCR, respectively. Market
share information presented with respect to soft drinks consumed in Uruguay is
based on data supplied by A.C. Nielsen (A.C. Nielsen). All other information
relating to market share in the various markets we operate in is based on our
estimates. Certain market data which appear herein (including percentage
amounts) may not sum due to rounding.

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PART I




ITEM 1.      IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.




ITEM 2.      OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.




ITEM 3.      KEY INFORMATION

SELECTED FINANCIAL DATA

The following selected consolidated financial data have been derived from
the Consolidated Financial Statements as of the dates and for each of the
periods indicated below. This information should be read in conjunction with
and is qualified in its entirety by reference to the Consolidated Financial
Statements, the notes thereto and the discussion in Item 5. Operating and
Financial Review and Prospects included elsewhere in this annual report. The
selected consolidated statement of income data for the years ended December 31,
2001 and 2002 and the selected consolidated balance sheet data as of December
31, 2001 and 2002, have been derived from our audited Consolidated Financial
Statements, which have been audited by PricewaterhouseCoopers, independent
accountants, and are included elsewhere in this annual report. In their report
dated March 3, 2003, our auditors have noted that our Consolidated Financial
Statements do not include any effects or reclassifications that might result
from the outcome of the negotiations we are currently carrying out with our
creditors, as a result of the non-compliance with restrictive covenants
contained in certain of our financial debt agreements and the right of the
creditors to require we prepay the outstanding balance. We prepare our
Consolidated Financial Statements in U.S. dollars and in conformity with
Luxembourg GAAP, which differs in certain significant respects from U.S. GAAP.
Such differences involve methods of measuring the amounts shown in the
Consolidated Financial Statements, as well as additional disclosures required
by U.S. GAAP. See Note 27 to our Consolidated Financial Statements contained
elsewhere in this annual report for a description of the principal differences
between Luxembourg GAAP and U.S. GAAP, as they relate to us, and a
reconciliation to U.S. GAAP of our net income/(loss) reported under Luxembourg
GAAP for the years ended December 31, 2002, 2001 and 2000, and our
shareholders equity reported under Luxembourg GAAP as of December 31, 2002 and
2001.

The reconciliation does not include disclosure of all information that
would be required by U.S. GAAP and Regulation S-X of the Exchange Act. The
selected consolidated statement of income data for the years ended December 31,
1999 and 1998 and the selected consolidated balance sheet data as of December
31, 1998, 1999 and 2000 are derived from our audited consolidated financial
statements that are not included herein.

|                       |                                                      |  |                                                                   |        |      |  |      |        |      |  |      |        |   |  |   |        |   |  |   |        |  
|---------------------- | ---------------------------------------------------- |  | ----------------------------------------------------------------- | ------ | ---- |  | ---- | ------ | ---- |  | ---- | ------ | - |  | - | ------ | - |  | - | ------ | -
|                       |                                                      |  | 1998                                                              |        | 1999 |  | 2000 |        | 2001 |  | 2002
|                       |                                                      |  |                                                                   |        |      |  |      |        |      |  |     
|                       |                                                      |  | (in US$ millions except for per share information and Other Data)
|Income Statement Data: |                                                      |  |                                                                   |        |      |  |      |        |      |  |      |        |   |  |   |        |   |  |   |       
|Luxembourg GAAP:       |                                                      |  |                                                                   |        |      |  |      |        |      |  |      |        |   |  |   |        |   |  |   |       
|                       | Gross sales                                          |  | $                                                                 | 854.8  |      |  | $    | 819.9  |      |  | $    | 991.9  |   |  | $ | 973.0  |   |  | $ | 488.2  |  
|                       | Taxes                                                |  |                                                                   | (26.4  | )    |  |      | (29.4  | )    |  |      | (36.8  | ) |  |   | (34.3  | ) |  |   | (19.6  | )
|                       |                                                      |  |                                                                   |        |      |  |      |        |      |  |      |        |   |  |   |        |   |  |   |        |  
|                       | Net sales                                            |  |                                                                   | 828.4  |      |  |      | 790.5  |      |  |      | 955.1  |   |  |   | 938.7  |   |  |   | 468.6  |  
|                       | Cost of goods sold                                   |  |                                                                   | (380.0 | )    |  |      | (358.4 | )    |  |      | (495.7 | ) |  |   | (490.4 | ) |  |   | (308.5 | )
|                       |                                                      |  |                                                                   |        |      |  |      |        |      |  |      |        |   |  |   |        |   |  |   |        |  
|                       | Gross profit                                         |  |                                                                   | 448.4  |      |  |      | 432.1  |      |  |      | 459.4  |   |  |   | 448.3  |   |  |   | 160.1  |  
|                       | Selling and marketing expenses                       |  |                                                                   | (201.9 | )    |  |      | (188.6 | )    |  |      | (236.3 | ) |  |   | (235.0 | ) |  |   | (120.5 | )
|                       | Administrative and general expenses                  |  |                                                                   | (80.9  | )    |  |      | (83.1  | )    |  |      | (90.8  | ) |  |   | (76.7  | ) |  |   | (43.2  | )
|                       |                                                      |  |                                                                   |        |      |  |      |        |      |  |      |        |   |  |   |        |   |  |   |        |  
|                       | Operating income (loss)                              |  |                                                                   | 165.6  |      |  |      | 160.4  |      |  |      | 132.3  |   |  |   | 136.6  |   |  |   | (3.6   | )
|                       | Interest income                                      |  |                                                                   | 10.3   |      |  |      | 7.6    |      |  |      | 9.5    |   |  |   | 6.5    |   |  |   | 8.4    |  
|                       | Other income                                         |  |                                                                   | 4.5    |      |  |      | 14.6   |      |  |      | 37.0   |   |  |   | 20.4   |   |  |   | 4.4    |  
|                       | Foreign exchange results and
translation adjustments |  |                                                                   | (4.3   | )    |  |      | (4.0   | )    |  |      | (1.7   | ) |  |   | (12.6  | ) |  |   | (22.9  | )
|                       | Interest expense                                     |  |                                                                   | (11.2  | )    |  |      | (10.1  | )    |  |      | (36.8  | ) |  |   | (32.4  | ) |  |   | (32.8  | )

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|                                                                     |                                                                              |   |                                                                   |         |      |   |        |         |      |   |        |         |   |   |        |         |   |   |        |         |  
|-------------------------------------------------------------------- | ---------------------------------------------------------------------------- | - | ----------------------------------------------------------------- | ------- | ---- | - | ------ | ------- | ---- | - | ------ | ------- | - | - | ------ | ------- | - | - | ------ | ------- | -
|                                                                     |                                                                              |   | 1998                                                              |         | 1999 |   | 2000   |         | 2001 |   | 2002  
|                                                                     |                                                                              |   |                                                                   |         |      |   |        |         |      |   |       
|                                                                     |                                                                              |   | (in US$ millions except for per share information and Other Data)
|                                                                     | Other expenses                                                               |   |                                                                   | (21.1   | )    |   |        | (24.3   | )    |   |        | (25.4   | ) |   |        | (63.3   | ) |   |        | (155.9  | )
|                                                                     |                                                                              |   |                                                                   |         |      |   |        |         |      |   |        |         |   |   |        |         |   |   |        |         |  
|                                                                     | Income (loss) before income taxes,
minority
interest and extraordinary items |   |                                                                   | 143.8   |      |   |        | 144.2   |      |   |        | 114.9   |   |   |        | 55.2    |   |   |        | (202.4  | )
|                                                                     | Income taxes                                                                 |   |                                                                   | (26.6   | )    |   |        | (45.9   | )    |   |        | (27.3   | ) |   |        | 6.1     |   |   |        | 47.6    |  
|                                                                     | Minority interest(1)                                                         |   |                                                                   | (22.7   | )    |   |        | (20.8   | )    |   |        | (16.6   | ) |   |        | (18.0   | ) |   |        | 18.9    |  
|                                                                     |                                                                              |   |                                                                   |         |      |   |        |         |      |   |        |         |   |   |        |         |   |   |        |         |  
|                                                                     | Net income (loss) before
extraordinary items                                 |   | $                                                                 | 94.5    |      |   | $      | 77.5    |      |   | $      | 71.0    |   |   | $      | 43.3    |   |   | $      | (135.9  | )
|                                                                     | Extraordinary items, net of income tax                                       |   |                                                                   |        |      |   |        |        |      |   |        | (51.7   | ) |   |        |        |   |   |        |        |  
|                                                                     | Income taxes                                                                 |   |                                                                   |        |      |   |        |        |      |   |        | 51.3    |   |   |        |        |   |   |        |        |  
|                                                                     | Minority interest                                                            |   |                                                                   |        |      |   |        |        |      |   |        | 2.2     |   |   |        |        |   |   |        |        |  
|                                                                     | Net income (loss)                                                            |   | $                                                                 | 94.5    |      |   | $      | 77.5    |      |   | $      | 72.8    |   |   |        | 43.3    |   |   |        | (135.9  | )
|                                                                     |                                                                              |   |                                                                   |         |      |   |        |         |      |   |        |         |   |   |        |         |   |   |        |         |  
|                                                                     | Net income (loss) per Share(2)                                               |   | $                                                                 | 0.89    |      |   | $      | 0.73    |      |   | $      | 0.68    |   |   | $      | 0.40    |   |   |        | (1.26   | )
|                                                                     | Net income (loss) per ADS(2)                                                 |   |                                                                   | 1.78    |      |   |        | 1.46    |      |   |        | 1.36    |   |   |        | 0.80    |   |   |        | (2.51   | )
|                                                                     | Dividends per Share (2)(3)                                                   |   |                                                                   | 0.25    |      |   |        | 0.30    |      |   |        | 0.30    |   |   |        |        |   |   |        |        |  
|                                                                     | Dividends per ADS(2)(3)                                                      |   |                                                                   | 0.50    |      |   |        | 0.60    |      |   |        | 0.60    |   |   |        |        |   |   |        |        |  
|U.S. GAAP(4):                                                        |                                                                              |   |                                                                   |         |      |   |        |         |      |   |        |         |   |   |        |         |   |   |        |        
|                                                                     | Operating income (loss)                                                      |   | $                                                                 | 155.2   |      |   | $      | 154.3   |      |   | $      | 84.5    |   |   | $      | 64.6    |   |   | $      | (35.2   | )
|                                                                     |                                                                              |   |                                                                   |         |      |   |        |         |      |   |        |         |   |   |        |         |   |   |        |         |  
|                                                                     | Net income (loss)                                                            |   | $                                                                 | 100.6   |      |   | $      | 94.9    |      |   | $      | 62.8    |   |   | $      | (96.4   | ) |   | $      | (121.5  | )
|                                                                     |                                                                              |   |                                                                   |         |      |   |        |         |      |   |        |         |   |   |        |         |   |   |        |         |  
|                                                                     | Basic and diluted net income per
share (5)                                   |   | $                                                                 | 0.14    |      |   | $      | 0.12    |      |   | $      | 0.08    |   |   |        | N/A     |   |   |        | N/A     |  
|                                                                     | Basic and diluted net loss per ADS(5)                                        |   |                                                                   | N/A     |      |   |        | N/A     |      |   |        | N/A     |   |   | $      | (3.39   | ) |   | $      | (2.38   | )
|                                                                     | Basic and diluted net loss per Class
A common share (Class A share)(5)     |   |                                                                   | N/A     |      |   |        | N/A     |      |   |        | N/A     |   |   |        | (0.09   | ) |   |        | (0.11   | )
|                                                                     | Basic and diluted net loss per Class
B common share(Class B share) (5)     |   |                                                                   | N/A     |      |   |        | N/A     |      |   |        | N/A     |   |   |        | (1.70   | ) |   |        | (1.19   | )
|Balance Sheet Data:                                                  |                                                                              |   |                                                                   |         |      |   |        |         |      |   |        |         |   |   |        |         |   |   |        |        
|Luxembourg GAAP:                                                     |                                                                              |   |                                                                   |         |      |   |        |         |      |   |        |         |   |   |        |         |   |   |        |        
|Cash and banks and short-term investments                            |                                                                              | $ | 122.2                                                             |         |      | $ | 131.6  |         |      | $ | 49.8   |         |   | $ | 116.4  |         |   | $ | 162.6  |        
|                                                                     | Total current assets                                                         |   |                                                                   | 346.2   |      |   |        | 415.0   |      |   |        | 350.0   |   |   |        | 348.6   |   |   |        | 299.3   |  
|                                                                     | Tangible fixed assets(6)                                                     |   |                                                                   | 637.1   |      |   |        | 772.8   |      |   |        | 702.9   |   |   |        | 660.5   |   |   |        | 572.8   |  
|                                                                     | Total assets                                                                 |   |                                                                   | 1,060.8 |      |   |        | 1,378.9 |      |   |        | 1,510.7 |   |   |        | 1,451.7 |   |   |        | 1,241.4 |  
|                                                                     | Short-term loans(7)                                                          |   |                                                                   | 96.8    |      |   |        | 305.3   |      |   |        | 252.3   |   |   |        | 211.4   |   |   |        | 273.9   |  
|                                                                     | Long-term loans(7)                                                           |   |                                                                   | 37.0    |      |   |        | 11.8    |      |   |        | 81.3    |   |   |        | 157.4   |   |   |        | 100.7   |  
|                                                                     | Total liabilities                                                            |   |                                                                   | 342.2   |      |   |        | 607.3   |      |   |        | 681.8   |   |   |        | 604.7   |   |   |        | 564.5   |  
|                                                                     | Minority interest                                                            |   |                                                                   | 179.6   |      |   |        | 182.4   |      |   |        | 181.1   |   |   |        | 187.9   |   |   |        | 153.7   |  
|                                                                     | Share capital                                                                |   |                                                                   | 33.0    |      |   |        | 33.0    |      |   |        | 33.5    |   |   |        | 33.5    |   |   |        | 33.5    |  
|                                                                     | Shareholders equity                                                         |   |                                                                   | 539.0   |      |   |        | 589.2   |      |   |        | 647.8   |   |   |        | 659.1   |   |   |        | 523.2   |  
|U.S. GAAP:                                                           |                                                                              |   |                                                                   |         |      |   |        |         |      |   |        |         |   |   |        |         |   |   |        |        
|                                                                     | Total assets                                                                 |   |                                                                   | 983.6   |      |   |        | 1,304.2 |      |   |        | 1,423.5 |   |   |        | 1,007.8 |   |   |        | 813.1   |  
|                                                                     | Shareholders equity                                                         |   |                                                                   | 486.7   |      |   |        | 539.6   |      |   |        | 579.9   |   |   |        | 295.1   |   |   |        | 175.1   |  
|Other Data:                                                          |                                                                              |   |                                                                   |         |      |   |        |         |      |   |        |         |   |   |        |         |   |   |        |        
|Total brewing capacity (hectoliters in
thousands)                    |                                                                              |   | 19,300                                                            |         |      |   | 18,300 |         |      |   | 21,195 |         |   |   | 19,675 |         |   |   | 19,640 |        
|Total beer volume sold (hectoliters in
thousands)                    |                                                                              |   | 11,832                                                            |         |      |   | 11,712 |         |      |   | 11,540 |         |   |   | 12,226 |         |   |   | 11,429 |        
|Total soft drink capacity
(hectoliters in thousands)                 |                                                                              |   | 3,519                                                             |         |      |   | 13,172 |         |      |   | 11,709 |         |   |   | 11,046 |         |   |   | 10,746 |        
|Total soft drink and water volume sold
(hectoliters in thousands)(8) |                                                                              |   | 2,521                                                             |         |      |   | 2,661  |         |      |   | 6,775  |         |   |   | 6,856  |         |   |   | 5,708  |        
|Number of employees                                                  |                                                                              |   | 5,000                                                             |         |      |   | 7,300  |         |      |   | 7,200  |         |   |   | 6,134  |         |   |   | 6,085  |        
|Number of non-voting preferred shares (in
millions)                  |                                                                              |   | 38.2                                                              |         |      |   | 38.2   |         |      |   | 39.8   |         |   |   | N/A    |         |   |   | N/A    |        

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|                                               |  |  |                                                                   |  |      |  |      |  |      |  |      |  |  |  |       |  |  |  |       |  | 
|---------------------------------------------- |  |  | ----------------------------------------------------------------- |  | ---- |  | ---- |  | ---- |  | ---- |  |  |  | ----- |  |  |  | ----- |  | 
|                                               |  |  | 1998                                                              |  | 1999 |  | 2000 |  | 2001 |  | 2002
|                                               |  |  |                                                                   |  |      |  |      |  |      |  |     
|                                               |  |  | (in US$ millions except for per share information and Other Data)
|Number of voting ordinary shares (in millions) |  |  | 68.4                                                              |  |      |  | 68.4 |  |      |  | 68.4 |  |  |  | N/A   |  |  |  | N/A   | 
|Number of Class A shares (in millions)         |  |  | N/A                                                               |  |      |  | N/A  |  |      |  | N/A  |  |  |  | 647.6 |  |  |  | 647.6 | 
|Number of Class B shares (in millions)         |  |  | N/A                                                               |  |      |  | N/A  |  |      |  | N/A  |  |  |  | 43.4  |  |  |  | 43.4  | 



---

|(1) |  | Because the percentage of our indirect ownership varies among our various
consolidated subsidiaries, the calculation of the minority interest in
consolidated net income (loss) during any period is a function of the 15%
ownership by Heineken of QIB, our principal subsidiary. Heineken sold
this interest to AmBev and BAC in January 2003. It is also a function, to
a lesser extent, of the income of each of the operating subsidiaries and
the percentage of each such subsidiarys capital stock owned by minority
shareholders during such period. QIBs holdings in its operating
subsidiaries range from 99.72% to 100% for the most significant Argentine
subsidiary and Chilean subsidiary, to as low as 57.97% in Colosas S.A., a
Paraguayan subsidiary.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Net income per share and dividends per share under Luxembourg GAAP have
been computed based on the weighted average number of total shares
outstanding for the periods presented. No consideration was given to the
stock split that occurred in June 2001 since it had no effect on the
calculation. Therefore, weighted average number of total shares
outstanding used for calculation purposes amounts to 106,568,750 shares
for the years ended December 31, 1998 and 1999; 106,964,085 shares for the
year ended December 31, 2000; and 108,150,089 shares for the years ended
December 31, 2001 and 2002. Net income per share for 2002 represents the
amount of dividends related to either one Class B share or ten Class A
shares. Net income and dividends per ADS have been restated to give
retroactive effect to the change in ratio of Class B shares (after
approval of the recapitalization plan each ADS represents two Class B
shares).                                                                                                                                                                                                                                                                                                                      
|   
|(3) |  | As in 2002, our Board of Directors recommended that we not pay dividends
in 2003. This proposal will be voted on by our shareholders at our annual
general meeting on June 27, 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   
|(4) |  | Certain significant differences exist between Luxembourg GAAP and U.S.
GAAP in connection with the presentation of statement of income line
items. Under Luxembourg GAAP, certain asset impairment and restructuring
charges were recognized as extraordinary items in 2000. Under U.S. GAAP,
as required by APB 30, these charges did not qualify as extraordinary
items. In addition, certain financial results and other income and
expense items included in our Luxembourg GAAP financial statements, would
be included in the determination of operating income (loss) for U.S. GAAP
purposes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   
|(5) |  | Under US GAAP, we have presented basic and diluted earnings per share in
conformity with SFAS No. 128 Earnings per Share and SEC Staff Accounting
Bulletin No. 98 (SAB No. 98) for all periods. In June 2001, our
shareholders approved a capital restructuring by which (i) the then
outstanding number of ordinary shares (68,400,000) were split ten-for-one
and renamed Class A shares and (ii) the then outstanding number of
preferred shares (39,750,089) were converted into ordinary shares on a 1
for 1 basis and renamed Class B shares. As a result, Class B shares have
dividends and liquidation rights equal to ten times the rights of Class A
shares. Therefore, we are required to use the two-class method to report
earnings per share for the years ended December 31, 2001 and 2002. The
two-class method is an earnings allocation formula that determines
earnings per share for each class of common stock according to dividends
declared and participation rights in undistributed earnings. Outstanding
shares during the prior periods were retroactively restated for the stock
split mentioned above. See Note 27 (t) to our Consolidated Financial
Statements for details regarding the calculation. Each ADS represents two
Class B shares.
|   
|(6) |  | Includes industrial land and buildings, machinery, plant and equipment,
and bottles and crates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   
|(7) |  | Short-term loans represent our current loans and short-term portion of
long-term debt. Long-term loans include the non-current portion of
long-term debt due to banks and notes payable. See Notes 14 and 15 to our
Consolidated Financial Statements for details. Under Luxembourg GAAP, we
have classified the long-term portion of our financial debts as
non-current liabilities in accordance with their original terms. The
Company has been unable to comply with certain financial covenants related
to US$ 59.3 million of its long-term loans. Under US GAAP, such debts
would have been classified as current liabilities since our creditors
could require the accelerated repayment of the outstanding balance. See
Note 27 to our Consolidated Financial Statements for details.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|(8) |  | In 1999, only six months of water sales of Eco de los Andes S.A. (Eco de
los Andes) in Argentina have been consolidated, due to our strategic
association with Perrier Vittel S.A. (Perrier Vittel) in July 1999. See
Item 4. Information on the Company # Business Overview. Due to our
acquisition of Baesa in December 1999, Glaciar and other water brands were
included in our portfolio. Water volume sold represented 12.4% and 6.0%
in 2000 and 2001, respectively. This decrease was principally due to the
transfer of Baesas Glaciar and other water businesses in March 2001 to
Eco de los Andes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

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EXCHANGE RATES

Our Consolidated Financial Statements are prepared in U.S. dollars and in
conformity with Luxembourg GAAP. As a result, our Consolidated Financial
Statements do no reflect any exposure to fluctuations in the exchange rate
between the Luxembourg franc and the U.S. dollar.

RISK FACTORS

You should consider the following risks with respect to an investment in
Quinsa and the countries in which we operate.

Risks related to the current economic crisis in Argentina.

Recent political and economic instability in Argentina has hindered commercial
and financial activities.

Since the fourth quarter of 1998, the Argentine economy has been in a
recession, and during the second half of 2001, Argentinas recession worsened
significantly, precipitating the political and economic crisis described in
greater detail below. As a result, Argentinas gross domestic product
decreased by 0.8% in 2000, an estimated 4.4% in 2001, and an estimated 10.9% in
2002, according to the National Institute of Statistics and Census (INDEC).
The unemployment rate increased from 15.4% in May 2000, to 16.4% in May 2001
and 18.3% in October 2001. The unemployment rate was 17.8% in October 2002 as
published by INDEC.

During the second half of 2001, economic uncertainty increased, and
speculation about the eventual default by the Argentine government and
abandonment of the Convertibility regime generated massive capital flight,
resulting in a severe liquidity crisis in the banking sector. On December 3,
2001, the Argentine government effectively froze bank deposits and introduced
exchange controls restricting capital outflows. The measures were designed to
preserve the banking sector from collapse because under the Convertibility Law,
the Central Banks ability to issue pesos in order to provide liquidity was
restricted. Although the deposit freeze was announced as a temporary measure,
it was perceived as a further paralysis of the economy and it worsened the
political, social and economic crises. On December 19, 2001, President de la
Rúa and his entire cabinet resigned; their resignations were accepted on
December 20, 2001. After a series of interim presidents, on January 1, 2002,
Mr. Eduardo Duhalde was elected to complete Mr. de la Rúas term through the
end of 2003.

After his appointment on January 1, 2002, President Duhalde and the
Argentine government undertook a number of far-reaching initiatives, including:



| |  |  | suspending payments of principal and interest on Argentinas
sovereign debt;                                                                                                                                                                                                                            
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | converting U.S. dollar-denominated debts governed by Argentine law
into peso-denominated debts at a one-to-one exchange rate;                                                                                                                                                                           
|
| |  |  | converting U.S. dollar-denominated bank deposits into
peso-denominated bank deposits at an exchange rate of P$1.4 per
US$1.00;                                                                                                                                                                          
|
| |  |  | restructuring bank deposits and continuing restrictions imposed on
bank withdrawals and transfers of funds abroad;                                                                                                                                                                                      
|
| |  |  | amending the Argentine Central Banks charter to allow it to print
currency in excess of the amount of the foreign reserves it holds, make
short-term advances to the federal government and provide financial
assistance to financial institutions with liquidity constraints or
solvency problems; and
|
| |  |  | requiring the obligatory sale by all banks of all their foreign
currency held in Argentina to the Argentine Central Bank at an exchange
rate of P$1.4 per US$1.00 (this initiative is currently suspended).                                                                                             

It is impossible to predict how the Argentine government will ultimately
address the continuing economic crisis. To date, the Argentine government has
promulgated numerous far-reaching and not always consistent laws and
regulations affecting the economy. In addition, the rapid and radical nature
of the recent changes in the Argentine

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social, political, economic and legal (including tax) environment, and the
absence of a clear political consensus or any particular set of economic
policies, have created great uncertainty. As a result, virtually all
commercial and financial activities in Argentina were paralyzed in 2002,
further aggravating the economic recession that precipitated the current
crisis. In addition, unemployment and underemployment continue to create
serious social problems in Argentina. In order to moderate the social
instability arising from the labor situation, the Duhalde administration
included in its 2002 budget, social aid programs aimed at improving health and
food provision, employment generation and a subsidy for the unemployed.
Nevertheless, such programs have yet to mitigate the current social unrest and
unemployment rates have not decreased substantially. These conditions have had
a material adverse effect on our financial condition and results of operations
as they have resulted in reduced consumer spending which has negatively
impacted consumer purchases of our products, thereby causing a reduction in our
net sales. There can be no guarantee that such conditions will not continue in
the future.

President Duhalde called for elections pursuant to which his term expired
on May 25, 2003. Elections for a new president held on April 27, 2003 led to
the election of Nestor Kirchner, a provincial governor, and it remains unclear
how that outcome will affect the composition of the Argentine government, the
laws it promulgates and the economy.

Argentinas insolvency and default on its public debt has aggravated the
current financial crisis.

As a result of its growing fiscal deficit, in December 2000, Argentina
obtained a conditional US$39.7 billion assistance package from the
International Monetary Fund (IMF), other multilateral institutions, foreign
governments, local banks and institutional investors. The IMF conditioned the
availability of a significant portion of the package on the ability of the
Argentine government to reduce its fiscal deficit and implement a sustainable
economic program. Argentina failed to meet the IMFs conditions in March 2001
and failed to comply with a new fiscal deficit target for the fourth quarter of
2001. Such failure triggered the suspension, on December 5, 2001, of further
IMF disbursements.

On December 23, 2001, interim President Rodríguez Saá declared the
suspension of payments on most of Argentinas sovereign debt, which totaled
approximately US$140.5 billion as of December 31, 2001. President Duhalde
ratified this measure on January 2, 2002. Subsequently, in April 2002,
pursuant to the Ministry of Economy Resolution 73/2002, the Argentine
government declared the suspension of payments on all of Argentina  ́s sovereign
debt, with very limited exceptions, until December 31, 2002; such terms were
extended until the end of fiscal year 2003 by the Ministry of Economy
Resolution 158/2003 dated March 13, 2003.

The IMF approved a US$6.6 billion debt rollover for Argentina on January
24, 2003, and agreed to provide a short-term credit line of US$2.9 billion to
Argentina to repay debts to multilateral organizations through August 2003 that
could not be postponed. An initial disbursement of US$1.0 billion was made on
January 28, 2003. The IMF also agreed to extend for one year another US$3.7
billion of payments to the IMF. The agreement clears the way for the
multilateral development banks to resume their support of social programs
following Argentinas recent payment of outstanding obligations to them.
However, Argentinas ability in the short term to stimulate economic growth,
ameliorate social unrest and repay its debt is likely to depend on external
financial assistance. To date, the IMF and other multilateral and
official-sector lenders have indicated an unwillingness to provide any
significant amount of financial aid until a sustainable economic program has
been presented. The IMF, through repeated pronouncements, indicated that a
sustainable economic program should include improving methods of tax
collection, forcefully reforming the tax revenue-sharing method between the
Argentine government and the provinces, and restructuring the foreign
indebtedness on which Argentina has defaulted. The IMFs most recent approvals
included requests that Argentinas executive branch work with the Argentine
Congress to secure approval of the revenue measures necessary to meet fiscal
targets and institute structural reforms to broaden the tax base, improve tax
administration, and reform intergovernmental relations.

As of May 2003, Argentinas total gross public debt was approximately
US$141 billion. The Argentine governments insolvency, its default and its
inability to obtain financing can be expected to affect significantly its
ability to implement any reforms, undermining the private sectors ability to
restore economic growth, and may result in deeper recession, higher inflation,
further unemployment and greater social unrest. As a result, our business,
financial condition and results of operations could be materially and adversely
affected.

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The devaluation of the peso creates greater uncertainty as to Argentinas
economic future.

On January 6, 2002, the Argentine Congress enacted the Public Emergency
Law, which amended certain provisions of the Convertibility Law and eliminated
the requirement that the Argentine Central Banks reserves in gold and foreign
currency at all times be equivalent to at least 100% of the monetary base. The
Public Emergency Law abolished the U.S. dollar to Argentine peso parity regime
and granted the executive branch the power to set the exchange rate between the
peso and foreign currencies and to issue regulations related to the foreign
exchange market. The peso now floats freely, although the Argentine Central
Bank from time to time enters into the market to minimize fluctuations. From a
low of P$3.87 to US$1.00 in June of 2002, the peso has since appreciated
against the dollar, and on June 24, 2003, the peso traded at an exchange rate
of P$2.77 per US$1.00, as published by Banco de la Nación Argentina.

The Argentine governments ability to honor its foreign debt obligations
has been materially and adversely affected by the devaluation of the peso, as
peso-denominated tax revenues constitute the primary source of its earnings,
but most of its financial liabilities are dollar-denominated. The adoption of
austere fiscal measures which would be required to repay the Argentine
governments debt and to balance its budget after the devaluation could lead to
further social unrest and political instability.

In addition, Argentina has found few opportunities to effectively raise
capital in the international markets amid sustained lack of investor confidence
in Argentinas ability to make payments due on its sovereign debt and in the
Argentine economy. The devaluation of the peso and accompanying economic
policy measures were intended to redress the effects of unemployment and to
stimulate economic growth. However, the success of such measures is predicated
on the ability of the Argentine government to elicit confidence among the local
and international financial and business communities in the sustainability of
its reforms, the recovery of liquidity in the banking sector, the stability of
the peso at current exchange levels (which, as noted above, have been supported
in part by Central Bank interventions in the exchange market), and the absence
of significant inflation. Without such confidence, investment is likely to
retract and economic activity to contract further, unemployment could increase
beyond current levels, tax revenue could drop and the fiscal deficit could
widen.

There can be no assurance that the existing political environment and
social conditions in Argentina will allow the Argentine government to implement
the necessary economic policy measures to redress the effects of unemployment,
stimulate economic growth, and restore confidence to international investors
and multilateral credit agencies. Furthermore, there can be no assurance that
such measures, if announced and implemented, will be found to be satisfactory
by international investors and multilateral credit agencies such that new
credit will be made available to both the public and private sectors in
Argentina. Consequently, adverse economic conditions in the Argentine economy
may continue to impair our business and financial condition and results of
operations.

Recent economic and political instability has placed the Argentine financial
system at risk.

Although deposits in the Argentine banking system had been declining for a
number of years, in 2001, and particularly in the fourth quarter, a significant
amount of deposits were withdrawn from Argentine financial institutions as a
result of increasing political instability and uncertainty. This run on
deposits had a material adverse effect on the Argentine financial system as a
whole. For the most part, banks suspended the disbursement of new loans and
focused on collection activities to be able to pay their depositors. The
magnitude of deposit withdrawals, the general unavailability of external or
local credit, together with the restructuring of the public-sector debt with
local holders, a substantial portion of which was placed with banks, created a
liquidity crisis that undermined the ability of many Argentine banks to pay
their depositors.

To prevent a run on the dollar reserves of local banks, on December 1,
2001 the Argentine government under President de la Rúa restricted the amount
of money that account holders could withdraw from banks and introduced exchange
controls restricting capital outflows. Although these restrictions, known as
the corralito, are no longer in place, subsequently, President Duhalde
imposed new restrictions, known as the corralón, and released a schedule
stating how and when deposits would become available. Some of these restrictions, with
certain modifications, are still in place today.

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On February 4, 2002, pursuant to Emergency Decree No. 214, the Argentine
government announced the conversion of all foreign currency denominated
deposits into peso-denominated deposits, set the exchange rate for this
conversion at P$1.4 per U.S. dollar, and announced the issuance by the
government of U.S. dollar-denominated bonds intended to compensate banks for
the losses incurred as a result of the asymmetric conversion of loans and
deposits into pesos. The different exchange rates applied to the conversion of
foreign currency denominated deposits and loans had a material adverse effect
on the financial system.

The corralitoand certain other measures have, to a significant extent,
shielded banks from a further massive withdrawal of deposits, but they have
also led to the paralysis of virtually all commercial and financial activities
and significantly diminished spending and greatly increased social unrest. As
a result, there has been widespread public repudiation of and protests directed
against financial institutions, which have had a material adverse effect on the
Argentine financial system.

On June 1, 2002, the Argentine government enacted Decree No. 905/02, which
gave owners of rescheduled foreign- and peso-denominated bank deposits the
option, during a period of 30 banking business days starting on June 1, 2002,
to receive bonds issued by the Argentine government in lieu of payment of such
deposits. These bonds were applied to the payment of certain loans under
certain conditions, and may also be used, in a limited way, to purchase public
goods, machinery and new cars, to acquire properties under construction, to pay
bank debts, to pay taxes and to invest in trust funds to finance investment
projects. Deposits not exchanged for bonds were considered securities that,
under the conditions established by the Argentine National Securities
Commission, were applied to the subscription of shares and notes and to the
cancellation of certain loans. On September 17, 2002, Decree No. 1836/02
established another exchange option. Depositors, however, showed little
interest in the first or second stages of the voluntary exchange of deposits
for bonds. The Argentine government has continued to indicate that it is
committed to providing depositors the option to exchange their money for bonds,
rather than forcing them to do so through an obligatory exchange. On March 28,
2003, the Argentine government issued Decree No.739/03, which established that
certain depositors whose dollar-denominated accounts had been pesofied in 2002
would be entitled to the option of electing a return of a portion of their
dollar-denominated accounts in the form of a combination of cash and
dollar-denominated Argentine sovereign bonds due 2013.

The Argentine financial system must be restructured for the economy to be
able to grow. Several foreign-controlled banks have closed and, generally,
foreign shareholders have not made additional capital contributions. Given the
loss of confidence of depositors in the financial system, the elimination of
the corralónwould likely result in an attempt by such depositors to withdraw
all of their deposits and convert such pesos into U.S. dollars. Were these
withdrawn amounts to flow into the foreign exchange market, the recent increase
in the level of bank deposits would likely quickly reverse, sharply increasing
the exchange rate and inflation. Moreover, due to the liquidity problems of
Argentine banks, such a situation would likely result in the collapse of the
financial system and could exacerbate the depreciation of the peso. In the
event that the Argentine Central Bank provides financial assistance to
financial institutions in order to avoid such a collapse, liberated funds would
likely flow into the foreign exchange market.

As of the date of this annual report, there are numerous cases pending
before the Argentine Supreme Court challenging the constitutionality of several
of the measures adopted by the government to protect the financial system. On
March 5, 2003, the Argentine Supreme Court held that the Argentine governments
conversion of U.S. dollar-denominated deposits of San Luis province in 2002 was
unconstitutional. It remains unclear how far the Argentine Supreme Court and
the Argentine government will go in terms of re-dollarizing deposits and how a
forced re-dollarization might affect the financial system, the Argentine
economy and the Argentine governments need to issue additional debt.

A collapse of the Argentine banking system or one or more of the largest
banks in the system would have a material adverse effect on the prospects for
economic recovery and political stability and, most likely, a material adverse
affect on us.

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Substantial inflation has occurred and may continue to escalate, which would
undermine prospects for economic recovery in Argentina

On January 24, 2002, the Argentine government amended the Central Banks
charter to allow it to (i) print currency in excess of the amount of foreign
reserves it holds, (ii) make short-term advances to the federal government to
cover its anticipated budget deficits and (iii) provide financial assistance to
financial institutions with liquidity constraints or solvency problems. There
is considerable concern that if the Central Bank prints currency to finance
deficit spending and to improve the liquidity of financial institutions,
significant inflation will result. Past history raises serious doubts as to
the ability of the Argentine government to maintain a strict monetary policy
and control inflation. In the past, inflation materially undermined the
Argentine economy and the Argentine governments ability to create conditions
that would permit growth.

The devaluation of the peso has created pressures on the domestic price
system that generated inflation of 40.9% in 2002, according to INDEC, after
several years of price stability and, in more recent years, price deflation.
Through December 31, 2002, the Wholesale Price Index (WPI) and the Argentine
Consumer Price Index (the CPI) exhibited cumulative increases of 118% and
41%, respectively. Although the WPI and the Argentine CPI increased by
approximately 0.2% and 2.5% in the first quarter of 2003, respectively, very
high inflation and hyperinflation episodes cannot be ruled out.

No assurance can be given that future policies to be adopted by the
Argentine government will be able to control the value of the peso and it is
possible that the peso will be subject to significant fluctuations and
depreciations in the future. Although the value of the peso has stabilized in
recent months, we cannot assure you that this recovery will persist. If the
value of the peso cannot be stabilized by positive expectations for Argentinas
economic future, as well as by strict fiscal and monetary policies, an increase
in inflation rates can be expected.

Risk Factors Related to the Effect on Quinsa of the Current Economic Situation
in Argentina

The Central Bank has imposed restrictions on the transfer of funds outside of
Argentina which could prevent us from receiving sufficient funds from our
Argentine subsidiaries and inhibit the distribution of dividends and payments
on our external debt.

Beginning on December 3, 2001, the Argentine government imposed a number
of monetary and currency exchange control measures that included restrictions
on the free disposition of funds deposited with banks and tight restrictions on
transferring funds abroad, with certain exceptions for transfers related to
foreign trade and other authorized transactions. The restrictions requiring
the Central Banks prior authorization for the transfer of funds abroad in
order to make payments of principal and/or interest, which were in place during
2002, were progressively reduced from January to May 2003, and were,
only with respect to amounts due and unpaid, completely
eliminated on May 6, 2003. In addition, funds may now be transferred abroad
without previous authorization of the Central Bank in order to pay dividends
corresponding to prior periods provided that independent accountants have
certified the financial statements for such period.

Because we are a holding company, our ability to pay dividends and service
any debt obligations depends primarily upon our receipt of sufficient funds
from our principal subsidiary, QIB, which depends in turn on QIBs receipt of
sufficient funds from its subsidiaries, principally those in Argentina, Bolivia
and Paraguay. There can be no assurance that the Argentine Central Bank will
not once again require its prior authorization for dividend payments to our
foreign shareholders or for principal or interest payments by us to our foreign
creditors pursuant to the terms of our existing financial agreements.

Despite the ongoing economic crisis in our principal market, Argentina, we
have been able to continue servicing our debt obligations. There can be no
guarantee, however, that we will be able to continue doing so in the future.
Furthermore, while we have been able to pay out dividends in the past, we did
not pay dividends in 2002, and our Board of Directors is recommending that we
not pay dividends in 2003. There can be no guarantee that we will pay any
dividends in the future.

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Our results of operations have been, and may continue to be, materially
adversely affected by the recent devaluation of the Argentine peso and the
macroeconomic conditions currently prevailing in Argentina.

We realize a substantial portion of our revenues in pesos while our
indebtedness is principally denominated in U.S. dollars. Therefore, not only
has the devaluation of the peso adversely affected the U.S. dollar value of our
earnings, but it has also affected our ability to pay down our
dollar-denominated debt. Any further depreciation of the peso against the U.S.
dollar will correspondingly increase the amount of our debt compared to our
peso-denominated revenues to the extent that we are unable to increase our peso
revenues sufficiently to compensate for the peso devaluation.

Furthermore, recessionary conditions in Argentina have had and are
continuing to have a significant impact on our net income. During the first
half of 2002, Argentinas economy suffered a disruption in traditional systems
of payment due to a severe shortage of liquidity in the marketplace resulting
from (i) the economic recession which reduced excess cash and access to credit,
and (ii) the withdrawal and transfer abroad of large quantities of bank
deposits from local financial institutions. The ensuing shortage of cash
disrupted Argentinas payment system, which has historically favored cash
settlements. The shortage of cash and resulting scarcity of working capital
has contributed to a severe contraction of customary trade credit, which in
turn has brought many commercial activities to a standstill. The disruption of
the payment system has had a particularly significant impact on Argentinas
cash-based informal economy and those who depend on it. The widespread fear
resulting from the significant devaluation of the peso increased demand for
payment in U.S. dollars and consumers became more reluctant to use U.S. dollars
for payments of goods and services. In addition, the current recession coupled
with the devaluation of the peso has led to a reduction of wages in real terms
and of disposable income across all class sectors of the Argentine population.
This reduction in consumer buying power resulted in lower sales of our
products, with a consequent reduction in revenues and cash inflows. During the
first quarter of 2003, our volume sales have increased as have our sales prices
measured in U.S. dollars; there can be no assurances, however, that these
improvements will continue.

Risk Factors Relating to Other Countries in Which We Operate

Latin American economic fluctuations affect our results of operations.

The Argentine economic crisis has had a significant adverse effect on our
other primary markets. In particular, Argentinas existing financial, economic
and political crisis, has had an adverse effect on Paraguay and Uruguay and our
operations in those countries. As a result of the crisis in Argentina, the
governments of these other countries could take action to control inflation and
institute other policies involving wage, price and tariff rate controls as well
as engage in other interventionist measures, which may include freezing bank
accounts and imposing capital controls. Changes in the policies of these
governmental authorities with respect to tariff rates, exchange controls,
regulations and taxation could affect our business and financial results
adversely, as could inflation, devaluation, social instability and other
political, economic or diplomatic developments, including the governments
response to such circumstances. In addition, we cannot assure you that more
restrictive exchange control policies and more significant withholding taxes
will not be implemented by other countries in which we operate in the future.

Our subsidiaries have been negatively affected by currency devaluations and
exchange rate fluctuations.

The devaluation of the local currencies, principally in Argentina,
Paraguay and Uruguay, have adversely affected our profitability in U.S.
dollars. In 2002, even though we raised our nominal prices, the rate of local
currency devaluations far exceeded the rate of inflation in each of our
markets, causing our average sales prices in U.S. dollars to decline. We
cannot assure you that market demand in the future will rise sufficiently to
offset the significant impact of the devaluation of the Argentine peso and
subsequent devaluations of the local currencies in Paraguay and Uruguay that
occurred in 2002.

In view of the foregoing, and in light of the current economic situation
in Argentina and in the other countries in which we operate, you should
recognize that our business, earnings, asset values and prospects have been and
may continue to be materially and adversely affected by developments with
respect to inflation, interest rates, currency fluctuations, government
policies, exchange control regulations, taxation, social instability and other
political, economic or diplomatic developments in or affecting our countries of
operation and Latin America generally. We

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have no control over such conditions and developments and can provide no
assurance that such conditions and developments will not further adversely
affect our operations. See Item 5. Operating and Financial Review and
ProspectsOperating ResultsInflation.

Risk Factors Relating to Quinsa

Our ability to pay dividends and to service our debt obligations depends
primarily upon our receipt of sufficient funds from our principal subsidiary.

Because we are a holding company, our ability to pay dividends and service
any debt obligations depends primarily upon our receipt of sufficient funds
from our principal subsidiary, QIB, which depends in turn on QIBs receipt of
sufficient funds from its direct and indirect subsidiaries in Argentina,
Bolivia, Chile, Paraguay and Uruguay. Beginning on December 3, 2001, the
Argentine government imposed a number of monetary and currency exchange control
measures that included restrictions on the free disposition of funds deposited
with banks and tight restrictions on transferring funds abroad, with certain
exceptions for transfers related to foreign trade and other authorized
transactions. These restrictions were progressively reduced from January to
May 2003 and were completely eliminated on May 6, 2003, for
amounts due and unpaid. (See The Central Bank
has imposed restrictions on the transfer of funds outside of Argentina which
could prevent us from receiving sufficient funds from our Argentine
subsidiaries and inhibit the distribution of dividends and payments on our
external debt above.) There can be no assurance, however, that the Central
Bank will not once again require its prior authorization for dividend payments
to foreign shareholders. If this were to occur, our ability to receive funds
from our Argentine subsidiaries could be inhibited, and this, in turn, would
significantly impact our ability to pay dividends and service our debt
obligations.

Furthermore, the payment of dividends by our various subsidiaries is also,
in certain instances, subject to statutory restrictions and restrictive
covenants in debt instruments, like legal reserve requirements, capital and
retained earning criteria and other restrictions, and is contingent upon the
earnings and cash flow of and permitted borrowings by those subsidiaries. The
inability on the part of some of our subsidiaries to pay dividends would impact
the amount of funds available to us to pay dividends and service our debt
obligations.

We face competition that threatens our market share.

The growth in beer consumption in Argentina, Bolivia, Chile, Paraguay and
Uruguay has attracted new market participants, and has produced intensely
competitive environments in these markets. The participants in these markets
include major local and international concerns with substantial financial
resources and particular industrial strengths. The economic crisis and
devaluations in Argentina and in the other countries in which we operate, may
make it less expensive for international concerns to make investments in these
markets. A continuation of adverse economic conditions in Argentina may result
in increased competition in Argentina, our most important market. We intend to
continue with strategies designed to maintain or improve our competitive
position in our markets but we cannot assume that these strategies will be
successful. Any loss of market share could be permanent. Competition in the
beer market may take the form of aggressive price discounting, which could have
a negative impact on our results of operations. Apart from competition within
each beer market, beer sales also compete against wine and other alcoholic
beverage sales and, to a lesser extent, with soft drinks. You should also read
Item 4. Information on the Company-Business Overview-Competition in the Beer
Industry.

The carbonated soft drink market and non-carbonated beverage market are
also highly competitive. Competition in these markets could cause us to reduce
pricing, increase capital and other expenditures or lose market share, which
could have a material adverse effect on our business and financial results.
We, through our operating subsidiaries, own the largest PepsiCo® bottling
franchise in Argentina and the sole franchise in Uruguay. Our most significant
competitors are local Coca-Cola® bottlers and second-tier brands that compete
exclusively on a price basis. Our market share in some of our markets has
eroded over the past few years. There can be no guarantee that due to the
current economic crisis in Argentina and its impact on the other countries in
which we operate, consumers, and particularly lower income consumers, will not
continue to shift their purchases to lower-cost second-tier brands and away
from our subsidiaries premium products or force our subsidiaries to reduce the
price premiums that they charge for their products. You should also read Item
4. Information on the CompanyBusiness OverviewCompetition in the Soft Drink
Industry.

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We purchase significant quantities of commodities and raw materials, the prices
of which fluctuate widely

We purchase commodities and raw materials for the production of beer and
soft drinks. These commodities and raw materials include barley, malt,
aluminum cans and PET bottle preforms and, to a lesser extent, corn grits, rice
and hops. The prices of these commodities can fluctuate widely and are
determined by global supply and demand and other factors over which we have no
control. Because we rarely engage in hedging our raw material costs, although
this policy may change in the future, any changes in commodity and raw material
prices could have a direct and significant impact on our costs.

In addition, we purchase most of our barley, malt, aluminum cans and
plastic bottle preforms in local currency and principally in Argentina;
therefore, we incur certain costs of sales and expenses in local currencies.
However, because the price of these raw materials may vary with international
prices which are denominated in U.S. dollars, we cannot guarantee that the
percentage of our cost of sales represented by these items will not increase
significantly due to currency devaluation in our countries of operation.

Our business is controlled by two principal shareholders and as a result, our
other stockholders will have little or no influence over stockholder decisions.

A majority of our Class A shares without par value is owned by Beverage
Associates Corp. (BAC), a company organized under the laws of the British
Virgin Islands. BAC was organized by various individual shareholders who are
descendants of the Bemberg family, our founding family. BACs principal
purpose is to hold a controlling interest in the Class A shares, and it
currently holds 52.52% of our outstanding voting shares.

On January 31, 2003, we completed the transactions involved in forming a
strategic relationship with Companhia de Bebidas das Americas (AmBev).
Pursuant to this alliance, we issued 26,388,914 of our Class B shares to AmBev
in exchange for AmBev contributing to Quinsa all the shares of capital stock of
AmBevs subsidiaries which manufacture, market, sell or distribute beer
principally in Argentina, Paraguay and Uruguay. AmBev also purchased
230,920,000 Class A shares from BAC. After additional purchases of our Class B
shares after February 1, 2003, AmBev now owns 36.33% of the total voting rights
of Quinsa. In addition, AmBev has an option to acquire from BAC, and BAC has
an option to sell to AmBev, the remaining 373,520,000 Class A shares owned by
BAC in exchange for newly issued shares of AmBev. These options maybe
exercised by BAC each year starting in 2003 and by AmBev each year starting in
2009. If either AmBev or BAC exercises the option, AmBev will have the right
to elect all of our directors, and all or substantially all of the directors of
our subsidiaries.

Each of AmBev and BAC now have the right to nominate 50% of the directors
constituting our board of directors and 50% of the number of directors of our
subsidiaries that Quinsa is entitled, directly or indirectly, to nominate
pursuant to corporate documents, relevant agreements or applicable law. In
addition, pursuant to an Escrow Agreement dated January 31, 2003 between BAC,
AmBev, Quinsa and The Bank of New York as escrow agent, (the Escrow
Agreement), BAC assigned and transferred 60,000,000 of its Class A shares in
escrow to The Bank of New York as escrow agent, and such Class A shares may
only be voted upon the instructions of both BAC and AmBev to ensure that BACs
voting rights in the Company are equal to those of AmBev. Therefore, as equal
owners of approximately 89% of the voting interest of Quinsa, AmBev and BAC
together have the power to determine all matters requiring shareholder
approval. See Item 4. Information on the CompanyBusiness
OverviewRelationship with AmBev and Item 7. Major Shareholders and Related
Party TransactionsMajor Shareholders.

A default by certain of our subsidiaries could have a significant negative
impact on our business and operations.

Most of our loan agreements contain restrictive covenants that require us
or our subsidiaries to maintain certain financial ratios, limit the amount of
dividends paid (primarily by our Argentine subsidiaries), restrict indebtedness
and guarantee liabilities, among other requirements.

CMQ, our principal Argentine subsidiary, has a significant amount of bank
loans denominated in U.S. dollars. The devaluation of the Argentine peso, as
well as the financial and economic crisis that has been affecting Argentina,
has limited the ability of CMQ to generate sufficient cash flows in order to
comply with certain of its original financial ratio commitments. Consequently,
CMQ management is currently negotiating with lenders to

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obtain, among other things, an extension of the original loan terms and
adjustments to these financial ratios with which the Company was unable to
comply at December 31, 2002. As of this date, the total amount due on
financial loans where documentation provided for the maintenance of certain
financial ratios that had not been maintained amounted to US$221.5 million, of
which, US$59.3 million was classified as long-term debt. The loan agreements
provide that in the case of non-compliance by the Company with any of its
obligations, following due notice to the Company, all amounts owed thereunder
could become due and payable, and no assurances can be given that CMQ will
reach an agreement with its creditors. Failure to reach such an agreement
could trigger an event of default under the loan agreements and accelerate
CMQs payment obligations thereunder.

In addition, certain of our subsidiaries produce, sell and distribute
PepsiCo® soft drinks under exclusive bottling agreements with PepsiCo, Inc.
and/or Seven-Up International (PepsiCo), covering certain regions in
Argentina and all of Uruguay. Because these companies rely upon PepsiCo to
provide them with concentrate and funding for marketing and advertising
expenses, changes in their respective relationships with PepsiCo would have a
material adverse effect on their respective business prospects. There is a
risk that PepsiCo would terminate a franchise agreement upon certain customary
events of default by these subsidiaries. Although no such adverse impact has
occurred as of the date of this annual report, we cannot guarantee that the
Argentine economic crisis will not have an adverse effect on our relationship
with PepsiCo. You should also read Item 4. Information on the
CompanyBusiness OverviewArgentine and Uruguayan Soft Drinks.




ITEM 4.    INFORMATION ON THE COMPANY

HISTORY AND DEVELOPMENT

Quilmes Industrial (Quinsa), Société Anonyme was established as a separate
company incorporated in the Grand-Duchy of Luxembourg (Luxembourg) in 1989
when the brewing interests of Enterprises Quilmes, a publicly traded Luxembourg
holding company, were spun off from the rest of Enterprises Quilmes business
interests. We remain a Luxembourg holding company and we operate through our
subsidiaries, principally QIB, in which we hold an 85% interest. All of our
operating companies are wholly-owned, majority-owned or controlled subsidiaries
of QIB. The address of our principal executive offices is Teniente General
Perón 667, Buenos Aires, Argentina, 1038. Our telephone number is +54 11 4321
2700. Our authorized representative in the United States is Puglisi &
Associates, 850 Library Avenue, Suite 204, P.O. Box 885, Newark, Delaware
19715.

Our predecessor business, Brasserie Argentine, was founded in 1888 in
Paris by Mr. Otto Peter Bemberg. He later established a brewery in the town of
Quilmes, just south of Buenos Aires, in 1890. We eventually established
operations in Paraguay in 1932, in Uruguay in 1965, in Chile at the end of 1991
and in Bolivia in 1996. In the past, the Company has grown through the
expansion of our own facilities, the introduction and development of our own
products, through the acquisition of facilities and brands from other producers
as well as through other strategic acquisitions and investments.

Recent Events

Relationship with AmBev

On January 31, 2003, we completed the transactions involved in the
formation of our strategic relationship with AmBev, which we announced on May
1, 2002. AmBev is a holding company whose subsidiaries produce, distribute and
sell beer, soft drinks and other non-alcoholic and non-carbonated beverages
primarily in Brazil, but also in Argentina, Venezuela, Uruguay and Paraguay.
Pursuant to this alliance, we have integrated our own operations in Argentina,
Paraguay and Uruguay with those of AmBev. Throughout this annual report, we
refer to the markets of Argentina, Paraguay, Uruguay, Bolivia and Chile as the
southern cone markets.

We believe that this strategic relationship with AmBev will create value
for our shareholders by better enabling Quinsa to compete in a consolidating
industry, expand our beverage offerings, strengthen our distribution network
and increase our profitability. In connection with the alliance:

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| |  |  | AmBev contributed to Quinsa all the shares of capital stock
of its subsidiaries which manufacture, market, sell or distribute
beer principally in Argentina, Paraguay and Uruguay in exchange for
the issuance by Quinsa of Class B shares to AmBev;                                                        
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | AmBev purchased certain Class A shares from BAC, our primary
shareholder, for cash;                                                                                                                                                                                                                         
|
| |  |  | AmBev received the option to purchase and BAC received the
option to sell the remainder of the Class A shares held by BAC on
certain specified dates, subject to certain pre-closing conditions,
in exchange for newly issued AmBev shares;                                                                 
|
| |  |  | Quinsa, BAC and AmBev entered into an agreement that governs,
among other things, certain matters relating to the voting,
purchase, transfer and issuance of Quinsa shares and representation
on Quinsas board of directors;                                                                               
|
| |  |  | Quinsa and AmBev entered into a license agreement (the
License Agreement) pursuant to which AmBev granted Quinsa and its
subsidiaries a perpetual royalty free exclusive license to
manufacture, market, sell and distribute the AmBev beer brands in
Argentina, Chile, Uruguay, Paraguay and Bolivia; and
|
| |  |  | Quinsa and AmBev entered into a distribution agreement (the
Distribution Agreement) pursuant to which AmBev may distribute
certain of Quinsas beer brands in Brazil.                                                                                                                                     



| |  | The paragraphs that follow discuss some of the agreements related to the
actions described above in further detail.
| |  | -------------------------------------------------------------------------------------------------------------------

Share Exchange Agreement.Pursuant to the May 1, 2002 Share Exchange
Agreement we signed with AmBev (the Share Exchange Agreement), on January 31,
2003, AmBev contributed to Quinsa all the shares (the Southern Holding
Shares) of Linthal S.A., a Uruguayan holding company organized for the purpose
of holding the AmBev businesses that manufacture, market, sell or distribute
beer in Argentina, Paraguay and Uruguay in exchange for 26,388,914 newly issued
Quinsa Class B shares. See Item 10Additional InformationMaterial
Contracts.

Stock Purchase Agreement.On January 31, 2003, concurrently with the
contribution of the Southern Holding Shares and the acquisition of the newly
issued Quinsa Class B shares, AmBev acquired 230,920,000 Quinsa Class A shares
from BAC, without par value, for an aggregate purchase price of US$346,380,000
pursuant to a Stock Purchase Agreement dated May 1, 2002, as amended on January
31, 2003 (the Stock Purchase Agreement). As a result of such transactions,
and including purchases by AmBev of Class B shares after February 1, 2003,
AmBev now owns approximately 36.33% of the total voting rights of Quinsa.

In addition, pursuant to the Stock Purchase Agreement, BAC has granted
AmBev a call option, beginning in April 2009 and in April of each year
thereafter, to acquire the remaining 373,520,000 Quinsa Class A shares held by
BAC in exchange for newly issued shares of AmBev. AmBev has also granted BAC a
put option exercisable in April of each year beginning with April 2003, to sell
AmBev the remaining 373,520,000 Quinsa Class A shares held by BAC in exchange
for newly issued shares of AmBev. BAC did not exercise this put option in
April 2003. In the event of a change in control of AmBev occurring before
January 31, 2006, BAC has a right to accelerate and exercise its put option
immediately. In the event of such a change in control occurring on or after
January 31, 2006, both AmBevs call option and BACs put option will be deemed
to have been exercised prior to the consummation of any change in control of
AmBev. Therefore, in the event of a change in control of AmBev, BAC would
either have the option or the obligation (depending on the date on which the
change in control occurred) to exchange its Quinsa Class A shares for AmBev
shares, if such shares will continue to be listed and traded on a securities
exchange after consummation of the change in control, and otherwise, for the
type and amount of securities, cash or other property that would have been
received by BAC had BAC been the holder of such AmBev shares. The Quinsa Class
A shares transferred in any change of control described above would include the
60,000,000 Class A shares subject to the Escrow Agreement. Pursuant to such
agreement, these shares would be delivered to AmBev on the closing date of the
change in control transaction. See Item 7Major Shareholders and Related
Party

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TransactionsMajor Shareholders. Such change in control of AmBev would
result in a further change in control of Quinsa.

BAC has further agreed under the Stock Purchase Agreement not to transfer
or encumber or permit to be transferred, in any way, any of the remaining
Quinsa Class A shares held by BAC other than to its affiliates, family members,
AmBev or AmBevs designee. In order to ensure delivery of such remaining
Quinsa Class A shares to AmBev, free and clear of all liens and encumbrances,
BAC, AmBev and Quinsa entered into a Share Pledge Agreement dated January 31,
2003, pursuant to which BAC pledged all 373,520,000 of its remaining Class A
shares as security for the performance of its obligations under the Stock
Purchase Agreement.

Quinsa Shareholders Agreement. Pursuant to the Stock Purchase Agreement,
on January 31, 2003, we entered into a Shareholders Agreement with AmBev and
BAC to govern certain matters relating to the voting, transfer and issuance of
Quinsa shares (the Quinsa Shareholders Agreement). Under the Shareholders
Agreement, Quinsa has granted AmBev certain preemptive rights with respect to
Quinsas Class B shares. Until AmBev has acquired 12 million Class B shares,
in addition to those acquired pursuant to the Share Exchange Agreement, Quinsa
may not issue, sell or exchange any Class B shares or grant any rights to
purchase or acquire, or rights that are convertible into or exchangeable for
any Class B shares, unless it has first offered to issue or sell such rights to
purchase or acquire such Class B shares to AmBev and AmBev has refused. After
AmBev has acquired 12 million Class B shares, if Quinsa at any time proposes to
effect a capital increase through the issuance of shares or rights of any class
or series, BAC and AmBev will have the right to subscribe for their
proportionate percentage of such shares or rights. Furthermore, Quinsa has
agreed not to purchase, directly or indirectly, any Class B shares of capital
stock of Quinsa or QIB, until the earlier of (a) the second anniversary of the
date of execution of the Shareholders Agreement or (b) the date on which AmBev
has acquired an aggregate of 12 million Class B shares, in addition to the
Class A shares and Class B shares acquired by AmBev pursuant to the Share
Exchange Agreement or the Stock Purchase Agreement.

The Shareholders Agreement also provides for certain significant
restrictions on BAC and AmBev regarding the acquisition, disposition or
transfer of, or the encumbrance on any Quinsa Class A or Class B shares, other
than in accordance with the terms of the agreements related to the alliance
between Quinsa and AmBev. AmBev further agreed not to acquire any equity or
other ownership interest in, or any substantial assets of, any business
involving the manufacture, marketing, sale or distribution of beverages for a
period of ten years, in Argentina, Paraguay, Uruguay, or Bolivia, other than
through Quinsa or its subsidiaries. In addition, until the consummation of the
put and call options described above, AmBev will not acquire any equity or
other ownership interest in, or any substantial assets of, any business
involving the manufacture, marketing, sale or distribution of beverages in Peru
or Chile, without first offering to Quinsa the opportunity to make such
acquisition; providedthat in the case of Peru, AmBev has the option to either
(i) contribute to Quinsa 50% of the cash consideration agreed to be paid for
such assets or business in exchange for Class B shares, or (ii) acquire 50% of
such assets or business directly, with the remaining 50% acquired by Quinsa.
See Item 7Major Shareholders and Related Party TransactionsMajor
Shareholders for a discussion of the voting rights and veto rights described
in the Quinsa Shareholders Agreement.

Approval of the Argentine Antitrust Authorities; Action by CCU

One of the conditions to closing the transactions contemplated by the
Share Exchange Agreement was the receipt of approval of the Argentine antitrust
authorities of such transactions. On January 13, 2003, the Argentine antitrust
authorities approved the transactions subject to the following conditions:



| |  | Within 12 months of January 13, 2003, AmBev and Quinsa must transfer
ownership of the following assets:
|- |  | -------------------------------------------------------------------------------------------------------

1.     To an independent, financially sound, foreign brewer with no current
production in Argentina:



| |  |  | The Bieckert and Palermo brands and recipes;                                                                                                                                                                                                                           
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | The license for production of the Heineken brand (the
Heineken License); however, we received a notice from Heineken
terminating the Heineken License, and as of June 17, 2003, we no
longer produce Heineken. We must therefore transfer the Imperial
brand instead;

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| |  |  | At the option of the foreign purchaser, the Norte brand. If
an agreement cannot be reached on price, an internationally
recognized investment bank appointed by Quinsa and AmBev shall
establish the price; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | The brewery located in Lujan, Buenos Aires, that produced the
Brahma brand and now produces Brahma, Palermo and Bieckert.                                                                                      

2.     To a third party, not related to the foreign purchaser and not
currently producing beer in Argentina:



| |  |  | Our malt production facility, adjacent to the former Bieckert
brewery located in Llavallol, Buenos Aires. Alternatively, AmBev
and Quinsa can agree to allow such third party to operate the
facility for 10 years.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Within 12 months of January 13, 2003, AmBev and Quinsa must submit
documentation with the relevant Argentine regulators bearing evidence of
their commitment to:
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------

1.     Allow the foreign purchaser access, for a period of 7 years starting on
the date that the Argentine authorities approve compliance with these
conditions, to all of the distribution networks used by AmBev and Quinsa for
the brands sold by the foreign purchaser;

2.     Refrain from forcing or inducing their clients to purchase products
other than beer from them; and

3.     At the option of the foreign purchaser, AmBev and Quinsa must commit to
produce the Bieckert, Palermo, and Imperial brands of beer for the foreign
purchaser for a period of two years starting on the date that the Argentine
authorities approve compliance with these conditions.

In April 2003, Compañía Cervecerías Unidas S.A. (CCU), one of our
competitors who is barred from acquiring any of the Bieckert, Palermo or
Imperial brands, filed a claim in Argentina seeking to enjoin our sale of these
brands because CCU believes it should be entitled to bid for them. CCU is
currently barred from bidding on such brands because it has operations in
Argentina, and therefore does not qualify as a foreign purchaser pursuant to
the Argentine antitrust authoritys stipulations. CCUs claim has tolled the time period in which we are required to sell our brands.

Settlement with Heineken

In June 2002, we received a notice from the International Chamber of
Commerce (the ICC) stating that Heineken, which, at that time, owned 15% of
our principal subsidiary QIB, had begun an arbitration proceeding against
Quinsa and BAC. In its request for arbitration, Heineken alleged that the
proposed AmBev transactions violated certain contracts between Heineken and us.
Heineken requested that the arbitration panel prohibit completion of the AmBev
transactions and declare that Heineken was entitled to purchase Quinsas 85%
interest in QIB for terms economically equivalent to the value placed on QIB
pursuant to the AmBev transactions. Heineken also requested that the
arbitration panel require Quinsa and BAC to pay Heineken an unspecified amount
of money damages.

On January 13, 2003, Heineken, Quinsa and BAC and certain of their
respective affiliates entered into a Memorandum of Agreement whereby Heineken
and Quinsa agreed to terminate the arbitration proceeding before the ICC and
released all claims against each other arising in connection with the AmBev
transaction. Heineken and BAC also released all claims against each other.
The Memorandum of Agreement provided, among other things, for (i) the purchase
by BAC from Heineken of all the shares of QIB held by Heineken for US$102.7
million; (ii) the declaration and payment of a dividend by QIB prior to January
15, 2003, in the amount of US$26.5 million, 15% of which would go to Heineken;
(iii) the termination of the shareholder agreement between QIB, Heineken and
Quinsa, and (iv) the termination of the Technical Assistance Agreements between
Heineken and QIB or its operating companies. In addition, Heineken had the
option to terminate the Heineken License which granted the respective licensees
the rights to produce, sell and distribute Heineken beer in the licensees
territory. Heineken subsequently delivered a notice to the Company terminating
this license as of June 17, 2003. See Beer Operations in the Southern Cone
MarketsRelationship with Heineken.

18



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##### Table of Contents



Letter Agreement Between Quinsa, BAC and AmBev

Simultaneously with the Memorandum of Agreement, Quinsa, BAC and AmBev
executed a Letter Agreement pursuant to which, AmBev agreed to acquire
approximately 57% of the QIB shares that Heineken was selling to BAC, or
approximately 8.6% of all outstanding shares of QIB, for approximately US$58.5
million. The transactions contemplated by the Memorandum of Agreement and the
Letter Agreement occurred concurrently with the transactions contemplated by
the Share Exchange Agreement and the Stock Purchase Agreement on January 31,
2003. As a result, BAC and AmBev now own approximately 6.4% and 8.6%,
respectively of QIBs outstanding stock. Pursuant to the Letter Agreement,
AmBev and BAC have agreed that Quinsa will have the right to purchase the QIB
shares held by AmBev and BAC for cash at fair market value if and when Quinsas
board of directors decides to exercise such right. BAC and AmBev further
agreed to cause all members of the Quinsa board nominated by BAC or AmBev,
respectively, to consider the exercise of the call option in good faith and
cause each such member not to unreasonably withhold its approval of the
exercise of the call option.

Consolidation of Our Bolivian Subsidiaries

Our ownership interests in our Bolivian breweries were consolidated as a
result of the merger of CBN, CBNSC, CSC and CT in the fourth quarter of 2001,
leaving us with a 75.16% indirect ownership interest in CBN. In addition, we
also held a 91.58% interest in CTq, the second largest brewer in Bolivia. In
2002, we increased our interest in CBN to 78.13% and in CTq to 91.95%.
Moreover, in the fourth quarter of 2002, the board of directors of each of
Enalbo (a wholly owned subsidiary of CBN), CBN and CTq voted to merge the three
companies with and into CBN. Once this transaction is completed, we will
indirectly own 79.55% of CBN.

Capital Expenditures

In 2000, excluding bottles, crates and acquisitions, our capital
expenditures amounted to US$60.4 million. They were primarily related to the
(1) continued expansion of the Ypané brewery, (2) construction of a new
distribution center in Paraguay, (3) acquisition of a warehouse adjacent to the
Baesa plant, (4) installation of coolers in our points of sale, (5)
modernization of Baesas facilities and (6) upgrade of our computer systems,
including the installation of SAP.

Capital expenditures in 2001, excluding bottles, crates and acquisitions,
were US$68.7 million, and primarily related to the (1) installation of a new
multi-format line in the Zárate brewery; (2) relocation of a filling line to
the Quilmes brewery from the Lavallol brewery that we closed in 2001; (3)
relocation of bottling lines in Baesas soft drink plant from the North Plant,
which was closed in 2001, to the South Plant in Buenos Aires; (4) merger
between EUSA and FNC which involved closing EUSAs soft drink facility and
adapting FNCs brewery to accommodate soft drink lines; (5) construction of new
buildings in Buenos Aires to house the administrative offices of our soft drink
business and our joint beer and soft drink distribution center; and (6)
continued installation of coolers in our points of sale, particularly in
Paraguay.

Capital expenditures for 2002, excluding bottles, crates and acquisitions,
were US$14.4 million. These expenditures were primarily related to the
installation of new filling lines for our soft drink business in Argentina, the
purchase and installation of coolers to place at our points of sale, and
general maintenance.

The following table summarizes our capital expenditures, excluding
bottles, crates and acquisitions, for each of 2000, 2001 and 2002:

|                               |       |   |                   |      |      |   |      |      |  |  |     |      | 
|------------------------------ | ----- | - | ----------------- | ---- | ---- | - | ---- | ---- |  |  | --- | ---- | 
|                               |       |   | 2000              |      | 2001 |   | 2002
|                               |       |   |                   |      |      |   |     
|                               |       |   | (in US$ millions)
|Brewing Business               |       | $ | 46.5              |      |      | $ | 47.6 |      |  |  | 8.0 |     
|Malting Facilities             |       |   | 0.3               |      |      |   | 0.1  |      |  |  | 0.0 |     
|Soft Drinks and Water Business |       |   | 13.5              |      |      |   | 20.8 |      |  |  | 6.0 |     
|Other                          |       |   | 0.1               |      |      |   | 0.2  |      |  |  | 0.4 |     
|                               |       |   |                   |      |      |   |      |      |  |  |     |     
|                               | Total |   | $                 | 60.4 |      |   | $    | 68.7 |  |  | $   | 14.4 | 
|                               |       |   |                   |      |      |   |      |      |  |  |     |     

19



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##### Table of Contents



In 2000, 2001 and 2002, we spent US$9.8 million, US$3.3 million and US$6.1
million, respectively, on bottles and crates.

Including the acquisitions of new businesses and minority interests, total
capital expenditures amounted to US$208.8 million, US$94.6 million and US$27.2
million in 2000, 2001 and 2002, respectively. During 2002, of the total amount
we invested in capital expenditures and bottles and crates, we invested
approximately 24% of this amount in our Argentine beer business, 40% in our
Argentine soft drink business and 15% in our business in Bolivia. With regard
to the balance of our investment activities for 2002, approximately 55% of our
resources dedicated to this area were used for the acquisition of minority
interests in our Bolivian subsidiaries. We financed all investment activities
with internally generated cash.

Our principal capital expenditures currently in progress are related to
the maintenance and modernization of our facilities, computer systems and
offices, the consolidation of our beer and soft drink businesses in Argentina
and the introduction of glass returnable bottles for our Argentine soft drinks
business. Our capital expenditures are funded principally with internally
generated cash. We intend to fund future capital expenditures with internally
generated cash as well as with borrowings.

BUSINESS OVERVIEW

OVERVIEW

Beer Operations

We are the largest beer producer both in Argentina and in the combined
southern cone markets based on our internal estimates. In 2002, according to
internal estimates, our breweries enjoyed leading market shares of 64.5% in
Argentina, 76.1% in Paraguay, 51.9% in Uruguay and approximately 97.5% in
Bolivia, and in Chile, our market share was 10.8%. On January 31, 2003, we
completed a strategic relationship with AmBev, the largest brewer in Brazil and
in South America, involving the integration of our respective operations in the
southern cone markets. Pursuant to this alliance, we have begun to
manufacture, market, sell and distribute the AmBev beer brands in the southern
cone markets under a perpetual royalty-free exclusive license, and AmBev may
distribute some of our beer brands in Brazil, which would provide us access to
AmBevs extensive distribution network in that country. After accounting for
the AmBev transaction, we estimate that our share of the beer market in
Argentina is currently above 80%, although this will likely decrease once we
are required to sell some of our brands as required by the Argentine antitrust
authority. See History and DevelopmentRecent EventsRelationship with
AmBev, and History and DevelopmentRecent EventsApproval of the Argentine
Antitrust Authorities; Action by CCU. In addition, after completing our
transactions with AmBev, we estimate our market share in Paraguay to be
approximately 93%, and above 98% in Uruguay.

Our consolidated net sales totaled US$468.6 million in the year ended
December 31, 2002, of which US$342.6 million, or 73.1%, was attributable to
sales of beer and US$163.8 million, or 35.0%, was attributable to beer sales in
Argentina. With 11.4 million hectoliters of beer sold in 2002, based on
internal estimates, our sales accounted for 56.6% of all beer sold in the
combined southern cone markets. As of December 2002, we had a total brewing
capacity of 19.6 million hectoliters. For 2002, according to Company estimates
based on AmBevs earning releases, AmBev sold 2.6 million hectoliters in the
southern cone markets, and total sales amounted to US$64.6 million.

Until January 13, 2003, Heineken, one of the largest beer producers in the
world, held a 15% equity interest in QIB. In connection with this
relationship, Heineken provided us with technical advice regarding our brewing
facilities and beer products and granted us the Heineken License, pursuant to
which we manufactured, sold and distributed Heineken beer in the southern cone
markets. In January of 2003, Heineken sold its interest in QIB to BAC for cash
as part of a Memorandum of Agreement between Quinsa, BAC and Heineken.
Subsequently, we received a notification from Heineken terminating the Heineken
License. See History and DevelopmentRecent EventsSettlement with
Heineken.

Points of Sale. Our beer products are sold to more than 450,000 points of
sale throughout the southern cone markets. The number of points of sale
covered by us in each country of operation varies widely from more than
20Table of Contents315,000 in Argentina to 51,000 in Bolivia, 13,300 in Chile, 51,000 in
Paraguay and over 23,500 in Uruguay. The on-premise consumption segment
comprises restaurants and bars, while in the off-premise segment, we
distinguish between supermarkets on the one hand, and primarily convenience
stores, medium size grocery stores and kiosks on the other. As opposed to beer
consumption tendencies in other geographic regions, the on-premise segment
accounts for a smaller percentage of total beer sales in the southern cone
markets. For Argentina, Chile, Paraguay and Uruguay, our sales in the
on-premise segment were 16%, 13%, 25% and 32%, respectively in 2002. The
Bolivian market is different; we sell 49% of our volume in the on-premise
segment. Sales of beer in supermarkets, a less significant sales channel
compared to other more developed markets, accounted for 30.0% of our sales in
Chile, 8.0% of our sales in Argentina, 10.0% of our sales in Uruguay,
approximately 6.0% of our sales in Paraguay and less than 1.0% of our total
sales in Bolivia in 2002. Because of strong consumer preference for our brands
in the southern cone markets and our extensive distribution system, we have
been successful in controlling the significance of supermarkets for our sales,
despite their strong bargaining power.Terms of Sale. Due to the severity of the economic crisis in Argentina
during 2002 and its impact on the economies of neighboring countries, our
management efforts focused on reducing our working capital and maximizing
cash generation. As part of these efforts, we negotiated new credit terms with
most of our clients, particularly those in Argentina, and especially with
supermarkets. Our average receivables measured in terms of days sales
declined from 17 days in 2001, to 11 days in 2002. The length and other terms
of the credit extended often depend on competitive factors and the strategic
importance of the particular outlet.Indirect Sales. The large majority of our beer sales are indirect sales
conducted through independent distributors, except for Chile where direct sales
account for a much larger percentage of our total sales in that market.
Distributors vary in size from small operations with a handful of employees to
larger, established companies. The number of points of distribution within an
area is determined by taking into consideration, among other things, market
needs, number of points of sale to be covered, geographic features and the
availability of communication systems.The following table shows, for each of our countries of operation for the
year ended December 31, 2002, the approximate percentage of our total beer
sales by volume accounted for by independent distributors, the approximate
number of distributors operating in each country and the approximate number of
points of sale covered:Beer Sales through Independent Distributors

|                                      |  |           |     |         |  |       |     |          |  |         |    |     |  |  |     |   |  |  |    |  
|------------------------------------- |  | --------- | --- | ------- |  | ----- | --- | -------- |  | ------- | -- | --- |  |  | --- | - |  |  | -- | -
|                                      |  | Argentina |     | Bolivia |  | Chile |     | Paraguay |  | Uruguay
|                                      |  |           |     |         |  |       |     |          |  |        
|Percentage of Total Sales             |  |           | 84  | %       |  |       | 95  | %        |  |         | 11 | %   |  |  | 58  | % |  |  | 56 | %
|Number of Distributors                |  |           | 242 |         |  |       | 449 | (1)      |  |         | 1  | (2) |  |  | 114 |   |  |  | 22 |  
|Points of Sale Covered
(in thousands) |  |           | 288 |         |  |       | 44  |          |  |         | 2  |     |  |  | 30  |   |  |  | 18 |  



---

|(1) |  | Includes agencies (exclusive and non-exclusive) and distributors.                                                                                                                                                                                                                  
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | For 2001, we reported that the number of independent distributors in
Chile was 189, including 187 wholesalers. Due to the nature of their
business, we have since reclassified these wholesalers as retailers and
therefore, they are included as part of our direct sales efforts.

Normally, arrangements with the distributors in each of our countries of
operation are based on a standard contract that requires the distributor to
carry our products exclusively and grants it exclusive rights to sell those
products within a defined area to retailers. The contract may also prohibit
the distributor from selling to wholesalers and supermarkets to which we
reserve the right to sell products directly. The distributors return empty
bottles and crates to our plants or distribution centers and collect full ones.
When dealing with distributors, the only transportation cost we pay is the
cost of transporting beer from our plants to our distribution centers, although
it is more common for our distributors to collect our bottles and crates at our
plants.

Direct Sales. In Argentina, we use rented vehicles for direct
distribution of our beer to large supermarket chains and to over 28,000
retailers. In Bolivia, we distribute our products using our own sales force,
which accounts for approximately 5.0% of total volume sold and covers 7,300
points of sale. In Chile, our sales are primarily direct via

21



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##### Table of Contents



a fleet of approximately 50 rented trucks that distribute our beer
products to supermarkets and other retailers. In Paraguay, direct sales are
conducted exclusively on a pre-sell system covering more than 21,000 points of
sale, 71% of which are in the capital city of Asunción. In Uruguay, our direct
sales amount to 44% of total beer sales and cover 5,500 points of sale
including wholesalers and supermarkets. In each of the countries in which we
operate, our direct sales are delivered within 24 hours from the time an order
is placed.

Sales Force. In each of our countries of operation, we maintain sales
forces whose responsibilities are divided largely by geographic area or channel
of distribution. In addition to selling our products, our sales forces monitor
the performance of our products in several different ways including making
daily evaluations of sales by brand and presentation, completing monthly
reports on sales by distributor and major retailer, and maintaining registers
of actual and potential points of sale. The sales forces also oversee the
merchandising of our products, maintain frequent customer contact, supervise
the turnover of customers stock of our beverages and monitor the prices
charged to consumers.

Distribution. We deliver our beer products in each of our countries of
operation through a system of breweries, distribution centers and warehouses.
We believe that our extensive and strong distribution systems in each of our
countries of operation have enhanced the profile and penetration of our
well-recognized brands. In addition, in connection with our strategic
relationship with AmBev, we entered into the License Agreement with AmBev in
January 2003, which grants Quinsa and its subsidiaries a perpetual,
royalty-free, exclusive license to use the AmBev beer brands in connection with
the manufacture, marketing, sale and distribution of beer in the southern cone
markets. We believe that we will be able to take advantage of our established
distribution systems to distribute the AmBev beer brands in the southern cone
markets.

Due
to our relationship with AmBev, we will be able to integrate and
consolidate our distribution systems in Argentina, Paraguay and Uruguay. As
part of this process, we might be negotiating the termination of certain existing
distribution agreements we had with third parties, which may involve,
among other things, paying
certain amounts for early termination. We do not believe we will experience any significant
difficulties in connection with the termination of these agreements, and we do
not anticipate any significant impact on our distribution operations as a
result of such terminations.

Future Growth in the Southern Cone Markets. As the following table
demonstrates, per capita beer consumption in each of our countries of operation
remains lower than that in many other countries. We therefore believe that
there is ample room for growth in consumption of beer in all of our markets.

|           |  |                     |    | 
|---------- |  | ------------------- | -- | 
|           |  | Liters per Capita -
|Country    |  | 2001               
|           |  |                    
|USA        |  |                     | 84 | 
|Spain      |  |                     | 79 | 
|Canada     |  |                     | 68 | 
|Venezuela  |  |                     | 81 | 
|Mexico     |  |                     | 52 | 
|Brazil     |  |                     | 49 | 
|Paraguay*  |  |                     | 35 | 
|Argentina* |  |                     | 32 | 
|Chile*     |  |                     | 26 | 
|Uruguay*   |  |                     | 21 | 
|Peru       |  |                     | 20 | 
|Bolivia*   |  |                     | 19 | 



---

|Sources: Canadean Beer Service, The Global Beer Report, October 2002 Edition.
|-----------------------------------------------------------------------------
|                                                                             
|*                                                                            

In addition, compared with the countries of Western Europe and North
America, the demographics in our countries of operation indicate relatively
faster growth in the drinking age population. We believe that we are well
placed to promote and participate in any growth in the regions beer
consumption given what we believe to be our:

22



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##### Table of Contents





| |  | leadership position in the southern cone markets;
|- |  | -------------------------------------------------
| 
| |  | strong and diversified product portfolio;        
| 
| |  | marketing and distribution capabilities;         
| 
| |  | significant market share position; and           
| 
| |  | technologically advanced breweries.              

Soft Drinks and Mineral Water Operations

Our sales of soft drinks in Argentina and Uruguay began in December 1999
with the acquisition of Baesa, the largest PepsiCo® bottler in Argentina and
the sole PepsiCo® bottler in Uruguay. We subsequently acquired a 99.21%
interest in EDISA, the second largest PepsiCo® producer and bottler in
Argentina. CMQ now owns exclusive rights to produce, sell and distribute
PepsiCo® soft drink products, including Pepsi Cola®, Pepsi Cola Light®, Pepsi
Twist®, Pepsi Max®, Seven-Up®, Seven-Up Light®, Mirinda®, Paso de los Toros®,
Kasfruit Juice®, Kas®, Tropicana® and Gatorade®. In December 2001, we
introduced ready-to-drink Tropicana and started manufacturing and distributing
Gatorade nationwide, so that we now distribute the three lines of PepsiCo
beverages. During 2002, we launched Pepsi Twist, and introduced the Gatorade
Fierce line of products. Based on management estimates, we currently control
more than 84% of the production and sale of PepsiCo® carbonated soft drinks in
Argentina and 100% in Uruguay.

Our
mineral water business in Argentina is currently conducted through our 48.95% minority
participation in Eco de los Andes, a joint venture that we formed in 1999 as a
result of our strategic alliance with Perrier Vittel. Eco de los
Andes produces and distributes the Eco de los Andes, Glaciar and
Nestle Pureza Vital brands.

BEER OPERATIONS BY COUNTRY

Argentina

With a population of approximately 37 million, Argentina is our largest
and most important market for beer, and we are the largest beer producer in the
country, according to Nielsen Argentina. We operate five breweries
(including the brewery contributed by AmBev), a bottling
facility in Tucumán, and
a nationwide distribution system for our beer products which we sell under ten
different brands. We also own two malting facilities in the province
of Buenos Aires. Our beer, malt and hops operations in Argentina were
conducted through CMQ, Cervecería del Río Paraná S.A., Cuyo y Norte Argentino
S.A., Patagonia Hops S.A., Malsaf and Bieckert until most of these companies
were merged into CMQ, although CMQ subsequently sold its 100% interest in
Malsaf in September 2001. As a result of an additional acquisition of CMQ
stock during the second quarter of 2002, we own, through QIB, a 99.72%
ownership interest in CMQ, up from 99.67%. We conduct crown bottle top
production operations through Coroplás S.A., in which QIB holds an indirect
99.99% interest, and which, pending regulatory approval, will also merge into
CMQ. See Note 3 to the Consolidated Financial Statements.

Since 1998, per capita consumption of beer has decreased approximately 6%
in Argentina due to recessionary conditions in existence during this period.
The table below shows the total hectoliters of beer consumed in Argentina in
each of 2000 through 2002:

23



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##### Table of Contents



Beer Consumption in Argentina

|     |  |              |        | 
|---- |  | ------------ | ------ | 
|     |  | Hectoliters 
|     |  | in Thousands
|     |  |             
|2000 |  |              | 12,342 | 
|2001 |  |              | 12,170 | 
|2002 |  |              | 12,141 | 



---

|Source: Management estimates based on published reports from three of the four local beer producers.
|----------------------------------------------------------------------------------------------------
|                                                                                                    
|Note: Includes both domestically brewed and imported beer.                                          

According the Nielsen Argentina, on-premise consumption declined from
21.8% in 1999 to 16.1% in 2002. This decline reflects the changes that
occurred in consumer behavior as a result of the difficult economic
circumstances existing in Argentina. Sales of beer in supermarkets accounted
for approximately 14% of total beer sales in Argentina, according to management
estimates.

Sales.
We cover over 315,000 points of sale in Argentina. Approximately
16% of our sales were to the on-premise segment, while our sales of beer in

supermarkets were 8%, and sales of our beer in the remaining off-premise
channels accounted for approximately 76%, of our total sales.

In 2002, we sold a total of 7,619,000 hectoliters of beer in Argentina, a
market share of 64.5% according to Nielsen Argentina. Our sales volume
declined 6.7% from 2001 due to economic conditions which led to aggressive
price discounting by some of our competitors, including AmBev. As a result,
there existed a substantial price gap at the consumer level between our Quilmes
Cristal brand and competing brands. Therefore, while our market share in terms
of volume sold was 64.5%, in terms of revenue from sales, our market share was
67.6%, according to Nielsen Argentina. Returnable formats accounted for 95.3%
of our sales, of which 90.9% were sales of our one-liter returnable bottle.

Our net sales for 2002 were US$163.8 million compared to US$426.4 million
in 2001. This decrease was primarily due to a decrease in volumes sold, as
well as the effects of the devaluation of the Argentine peso in 2002; at
December 31, 2002, the exchange rate was P$3.36 to U.S.$1.00.

24



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##### Table of Contents



The following tables present our domestic beer sales volume, market share
and net sales in Argentina for the years 2000 to 2002:

Quinsas Domestic Beer Sales Volume, Market Share and Net Sales in Argentina

|                                               |  |      |         |      |  |      |         |   |  |  |         |  
|---------------------------------------------- |  | ---- | ------- | ---- |  | ---- | ------- | - |  |  | ------- | -
|                                               |  | 2000 |         | 2001 |  | 2002
|                                               |  |      |         |      |  |     
|Sales volume (hectoliters in thousands) (1)(2) |  |      | 8,350.0 |      |  |      | 8,167.0 |   |  |  | 7,619.0 |  
|Market share (l)                               |  |      | 69.1    | %    |  |      | 67.9    | % |  |  | 64.5    | %
|Net sales (in US$ millions) (3)                |  |      | 455.7   |      |  |      | 426.4   |   |  |  | 163.8   |  



---

|Source of market share information: Nielsen Argentina
|-----------------------------------------------------
|                                                     
|(1)                                                  
|                                                     
|(2)                                                  
|                                                     
|(3)                                                  

Geographic Coverage and Brands.Our beer is sold in all provinces of
Argentina. Approximately 40% of our beer is sold in the city of Buenos Aires
and the surrounding metropolitan area ( greater Buenos Aires), a region of
approximately 17 million people, and which accounts for about one-third of
total beer consumption in the country. Commercially, our Argentine operations
are divided into the following eight geographic divisions:



| |  | greater Buenos Aires;                                                                                                                                              
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | the Atlantic region (comprising the main cities on the coast in the province of Buenos Aires);                                                                     
| 
| |  | the Northeast region (comprising the provinces of Chaco, Formosa, Corrientes and Misiones);                                                                        
| 
| |  | the Litoral region (comprising the provinces of Santa Fé and Entre Ríos);                                                                                          
| 
| |  | the Northwest region (comprising the provinces of Tucumán, Salta, Jujuy, Santiago del Estero and Catamarca);                                                       
| 
| |  | the Central region (comprising the province of Córdoba);                                                                                                           
| 
| |  | the Western region (comprising the provinces of Mendoza, San Luis, San Juan, and La Rioja); and                                                                    
| 
| |  | the Southern region (comprising the rest of the Buenos Aires province, and the provinces of La Pampa, Neuquén, Río Negro,
Chubut, Santa Cruz and Tierra del Fuego).

We serve all of the provinces of Argentina with several distinct brands.
Our leading brand is Quilmes Cristal, which, according to Nielsen Argentina,
was the leading brand in each of the eight regions listed above during 2002,
except for the Western region, where it was second to our Andes brand. Quilmes
Cristal sets the price standard in the industry, and had a national market
share of approximately 44.5% in 2002 according to company estimates. Our
Imperial brand is a premium brand sold mainly in the on-premise segment.
Iguana is a specialty brand malted beer. Andes, along with Norte, are our two
regional brands, and we also sell five other domestic beers in Argentina: (1)
Liberty, a non-alcohol beer; (2) Quilmes Bock, a dark beer sold principally
during winter months; (3) Palermo, which is sold nationally and targets the
low-price segment of the market; (4) Quilmes Light, a beer with a low alcoholic
content; and (5) Bieckert, a value brand.
25Table of ContentsDuring 2002, we produced the Heineken brand locally pursuant to a
trademark license agreement. Heineken targets the premium segment of the
market, and sales of the Heineken brand accounted for approximately 2% of our
sales during 2002. In 2003, however, pursuant to its rights under the
Memorandum of Agreement, Heineken delivered a notice to the Company terminating
this trademark license as of June 2003. Therefore, we no longer produce or
sell the Heineken brand. See History and DevelopmentRecent
EventsSettlement with Heineken.As a condition to approving some of our transactions with AmBev, the
Argentine antitrust authorities have required us to transfer our Imperial,
Bieckert and Palermo brands to a foreign purchaser, and, at the option of such
foreign purchaser, our Norte brand within 12 months of January 13, 2003.
Subsequently, CCU, one of our competitors, filed a claim in Argentina in April
2003 seeking to enjoin our sale of these brands because it believes it should
be permitted to bid for them. CCU is currently barred from acquiring any of
these brands because it conducts beer operations in Argentina, and is therefore
not considered a foreign purchaser under the Argentine antitrust authoritys
stipulations. See History and DevelopmentRecent EventsApproval of the
Argentine Antitrust Authorities. As a result of our alliance with AmBev, as
of February 1, 2003, we have the right to produce and distribute the Brahma
beer brand, which had a market share of 15.9% in 2002, according to Nielsen
Argentina. See History and DevelopmentRecent EventsRelationship with
AmBevApproval of Argentine Antitrust Authorities. Until the claim filed but
CCU is resolved by the courts, we continue to sell all of our brands as well as
Brahma.Brewing Capacity.To increase asset utilization and productivity of our
brewery network in Argentina, during December 2000 we decided to close down our
Lavallol plant used to produce the Bieckert brand and relocate the bottling
line and warehouse to the Quilmes brewery. These actions were completed in
April 2001. Our installed capacity at December 31, 2002 was approximately 13
million hectoliters.Part of our strategic relationship with AmBev involved the contribution by
AmBev of its brewery located in Luján, in the province of Buenos Aires. This
brewery has an installed capacity of 2.9 million hectoliters and had been used
to produce AmBevs Brahma brand. As of May 2003, this brewery is producing the
Brahma, Palermo and Bieckert brands, although the approval of our transaction
with AmBev by the Argentine regulators was conditioned, in part, on the sale of
this brewery. See History and DevelopmentRecent EventsRelationship with
AmBevApproval of the Argentine Antitrust Authorities. We will, however,
continue production at this plant until it is sold, and we have sufficient
capacity to produce the Brahma brands at all of our other breweries in
Argentina. Indeed, as of May 2003 we have begun to produce the Brahma brand at
our facilities for distribution in Argentina.We believe our brewing equipment to be modern and technologically
advanced. In addition, we have made recent investments to allow us to
transport the bulk beer we produce at all of our plants in order to supply our
Tucumán bottling facility. During 2002, the Corrientes plant supplied 47% of
the beer bottled at the Tucumán facility, the Mendoza plant supplied 36%, the
Quilmes plant supplied 16%, and the Zárate plant supplied the rest.The following table provides the location of our beer facilities in
Argentina, their installed capacity and the geographic areas supplied by these
breweries:

|                            |  |                           |  |                                                             
|--------------------------- |  | ------------------------- |  | ------------------------------------------------------------
|Location of Brewery         |  | Installed Capacity        |  | Areas Supplied                                              
|                            |  |                           |  |                                                             
|                            |  | (hectoliters in millions) |  |                                                             
|Quilmes(1)(3)               |  | 5.1                       |  | greater Buenos
Aires, Atlantic, Central and Southern Regions
|Zárate(1)(2)(3)             |  | 4.4                       |  | greater Buenos Aires, Litoral, Atlantic and Central Regions 
|Corrientes(3)               |  | 1.5                       |  | Northeast, Northwest and Litoral Regions                    
|Mendoza(3)                  |  | 2.0                       |  | Western and Southern Regions                                
|Tucumán (bottling facility) |  | 1.2                       |  | Northwest Region                                            
|Luján(4)                    |  | 2.9                       |  | greater Buenos Aires                                        



---

|(1) |  | The Quilmes and Zárate breweries also produce non-returnable bottles that
are sold throughout Argentina.
|--- |  | --------------------------------------------------------------------------------------------------------

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|(2) |  | The Zárate brewery produced, among other brands, Heineken for sale
throughout Argentina; it also produced Heineken in bulk to be sent to
Uruguay for final processing and bottling. As of June 18, 2003, this
brewery no longer produces the Heineken brand.             
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(3) |  | Produces bulk beer to supply our Tucumán bottling facility for final
processing and bottling.                                                                                                                                                                            
|   
|(4) |  | Contributed by AmBev as part of our strategic relationship. We have been
in charge of operations at this brewery since March 2003, although the
approval of our transaction with AmBev by the Argentine regulators was
conditioned, in part, on the sale of this brewery.

Malting
operations. We currently own two malting plants in the
province of Buenos Aires The majority of our malt production is used to supply
our own beer plants. Using the barley we purchase from Argentine farmers as
discussed below, we ordinarily satisfy all of the malt requirements of our
Argentine beer operations and a part of the requirements of our Bolivian,
Chilean and Paraguayan operations. In addition, we exported 10,503 tons of
malt to Brazil. Only occasional excess production is sold to third parties.
In 2002, our malting plant Maltería Tres Arroyos, produced approximately 91,000
tons of malt. In addition, we also own a small malting facility in Llavallol,
Buenos Aires. As a further condition to approving some of our transactions
with AmBev, the Argentine antitrust authorities have required us to transfer
this malting facility to a third party not currently producing beer in
Argentina. See History and DevelopmentRecent EventsApproval of the
Argentine Antitrust Authorities.

Distribution.Sales through independent distributors account for
approximately 84% of our sales. For our direct sales, we use rented vehicles
for direct distribution of our beer to large supermarket chains and to over
28,000 retailers. We operate our distribution system from five facilities and
several distribution centers covering different geographic areas. This helps
us to more effectively serve our regions of distribution as well as reduce
transportation costs, which gives us, we believe, a distinct advantage over our
competitors. In 2000, we unified our beer and soft drink distribution centers
in Mar del Plata, and we did the same for these centers in Buenos Aires in
2001. As a result of our strategic relationship with AmBev, we will be
combining the distribution systems of both companies in Argentina, Paraguay and
Uruguay in an effort to reduce costs and take advantage of resulting synergies.
Consequently, our percentage of direct and indirect sales as part of total
sales may shift in these markets.

Bolivia

In September and December 2000, we indirectly acquired controlling
interests in our previous competitors in Bolivia, CBN and CBNSC, which
increased our ownership interest in these entities to 70.34% and 80.92%,
respectively. With these acquisitions, QIB increased its market share in
Bolivia to approximately 98.1%, according to internal estimates, having
previously acquired the breweries CSC and CTq. During the last quarter of
2001, the boards of directors of CBN, CBNSC, CSC and CT decided to merge with
and into CBN. As a result of the merger, our indirect ownership interests in
these various breweries were consolidated. During 2002, we increased our
indirect ownership in CBN to 78.13% and in CTq to 91.95%. In addition, in the
fourth quarter of 2002, the boards of directors of CBN, CTq and CBNs wholly
owned subsidiary Enalbo, which produces aluminum cans, decided to merge with
and into CBN. Upon completion of this transaction, our indirect ownership in
CBN will be 79.55%.

In order to generate synergies from our brewery acquisitions in Bolivia,
we have undertaken various restructuring measures to reduce our cost structure.
In 2001, we closed three distribution centers and more clearly delineated our
product portfolio to particular consumer segments by eliminating nine of our
Size Keep Units (SKUs). We also centralized administrative functions.
During 2002, we continued the restructuring process by reallocating production
among our different plants, eliminating certain formats and brands, and by
reducing our headcount by 9%. With these changes, we believe we have realized

most of the cost savings resulting from the combination of our businesses in
Bolivia.

The reorganization of our brands and packaging formats have resulted in a
better brand mix per region and to better positioning of our one-way packaging
relative to returnable bottles in terms of pricing. These successes helped to
buoy the average selling prices of our products, which declined only 3% in
dollar terms despite an 8% currency devaluation. We were also able to broaden
the penetration of our largest brand, Paceña, which alone accounted for a
market share of 65.4% during 2002, according to management estimates.

27



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The Bolivian market is strongly influenced by macroeconomic trends and
governmental, regulatory and fiscal policies. In February 2000, the Bolivian
government increased excise taxes on beer by 39%, which was partially
responsible for a 2% decline in market volumes for that year. The tax
increase was eliminated in December 2000, and market volumes for 2001 were
virtually the same as those in 2000, despite a continuing economic recession
and social unrest that hindered distribution. During 2002, market volumes
increased by more than 6% as a result of targeted marketing campaigns and
increased consumer confidence leading up to the presidential election held in
June 2002. We continue to believe that the Bolivian market offers
opportunities for growth due to our strong position in this market, the
favorable age distribution of Bolivias population and the current relatively
low per capita consumption of 20 liters. The table below shows the total
hectoliters of beer consumed in Bolivia in each of 2000 through 2002:

Beer Consumption in Bolivia

|     |  |              |       | 
|---- |  | ------------ | ----- | 
|     |  | Hectoliters 
|     |  | in Thousands
|     |  |             
|2000 |  |              | 1,611 | 
|2001 |  |              | 1,624 | 
|2002 |  |              | 1,730 | 



---

|Note: Includes both domestically brewed and imported beer.
|----------------------------------------------------------
|                                                          
|Source: Management estimates.                             

Sales.We cover approximately 51,000 points of sale in Bolivia. Bolivia
is a different market for us in that 49% of our sales correspond to the
on-premise segment while the supermarket channel accounts for less than 0.5% of
our sales. The remainder of our sales occur in the other off-premise segments.
The beer market in Bolivia is comprised primarily of returnable formats, and
92% of our sales occur in this format.

Sales volumes, including exports, increased from 1,593,000 hectoliters in
2001 to 1,688,000 hectoliters in 2002 as a result of successful marketing
campaigns, the repositioning of our brand portfolio, and increased consumer
confidence due to presidential elections in June 2002. Our total market share
was 97.5% for 2002, according to management estimates.

We had net sales of US$88.7 million, an increase of 2% compared to 2001.
This increase was a result of increased sales in terms of volume which was
partially offset by the 8% devaluation of the local currency.

The following table presents our domestic beer sales volume, market share
and net sales in Bolivia for the years 2000 to 2002:

Quinsas Domestic Beer Sales Volume, Market Share and Net Sales in Bolivia

|                                           |  |      |      |      |  |      |       |   |  |  |       |  
|------------------------------------------ |  | ---- | ---- | ---- |  | ---- | ----- | - |  |  | ----- | -
|                                           |  | 2000 |      | 2001 |  | 2002
|                                           |  |      |      |      |  |     
|Sales volume (hectoliters in thousands)(1) |  |      | 794  |      |  |      | 1,590 |   |  |  | 1,683 |  
|Market share                               |  |      | 49.5 | %    |  |      | 98.1  | % |  |  | 97.5  | %
|Net sales (in US$ millions) (2)            |  |      | 41.2 |      |  |      | 86.7  |   |  |  | 88.7  |  



---

|Source of market share information: Management estimates.
|---------------------------------------------------------
|                                                         
|(1)                                                      
|                                                         
|(2)                                                      

Geographic Coverage and Brands.We have a broad portfolio of brands and
presentations in Bolivia. Our main brand, Paceña, which includes Paceña
Pilsener, a national brand; Tropical Extra, a brand sold in tropical regions;
and Centenario accounts for approximately 67.1% of our sales in Bolivia. Our
other important brands are (1) Taquiña Export, the leader in the Cochabamba
market; (2) Ducal, a regional brand for the Santa Cruz area; (3) Huari, a
premium brand leader in the Oruro region; (4) Imperial and Pilsener, which are
both aimed at the lower

28



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##### Table of Contents



income segment of the market; and (5) Maltín, a
non-alcoholic liquid malt. There are also four other minor brands in terms of
sales, including Heineken, which we imported from Argentina and Holland.
Pursuant to its rights under
the Memorandum of Agreement between Heineken and Quinsa, Heineken
delivered a notice to the Company terminating the trademark license as of June
2003, under which Quinsa produced, marketed and distributed the Heineken brand.
See History and DevelopmentRecent EventsSettlement with Heineken.
Therefore, we no longer import the Heineken brand into Bolivia.

In terms of geographic distribution of consumption, La Paz, Bolivias
capital, accounted for 45% of our volume sales during 2002, Santa Cruz
accounted for 33% and Cochabamba accounted for 11%. We own production
facilities in each of these regions. The balance of our volume sales was
distributed throughout the rest of the country.

Brewing Capacity.We currently operate 6 breweries with a total brewing
capacity of 3.1 million hectoliters. The largest of these breweries is located
in La Paz, and it is principally responsible for production of the Paceña
brand. We operate 2 breweries in the city of Santa Cruz which primarily
produce Maltín, Ducal and Paceña, and our brewery in Cochabamba mostly produces
Taquiña, Maltín and Imperial.

The following table provides the location of our beer facilities in
Bolivia, their installed capacity and the geographic areas supplied by these
breweries:

|                    |  |                           |     |                  |  |                                                                 
|------------------- |  | ------------------------- | --- | ---------------- |  | ----------------------------------------------------------------
|Location of Brewery |  | Installed Capacity        |     | Regions Supplied
|                    |  |                           |     |                 
|                    |  | (hectoliters in millions) |     |                 
|La Paz              |  |                           | 1.1 |                  |  | Principally La Paz (90%
of total production at
this brewery)    
|Santa Cruz (CBN)    |  |                           | 0.6 |                  |  | Principally Santa Cruz
(89% of total
production at this
brewery)
|Santa Cruz (Ducal)  |  |                           | 0.6 |                  |  | Santa Cruz                                                      
|Taquiña             |  |                           | 0.6 |                  |  | Cochabamba                                                      
|Huari               |  |                           | 0.2 |                  |  | Oruro, La Paz and Potosí                                        
|Tarija              |  |                           | (+) |                  |  | Tarija                                                          



---

|(+) Capacity: 38,000 hectoliters
|--------------------------------

Distribution.As part of our restructuring measures to reduce our cost
structure after our acquisitions of CBN and CBNSC, we closed three distribution
centers in Bolivia in 2001. As a result, our beer is distributed from the six
plants operated by Incesa and from three warehouses located within the country.
Sales through independent distributors account for approximately 95% of our
total sales volume in Bolivia. For our direct sales, we distribute our
products using our own sales force, which accounts for approximately 5.0% of
total volume sold and covers 7,300 points of sale.

Chile

Our beer operations in Chile are conducted through Cervecería Chile S.A.
QIB holds, indirectly, a 100% ownership interest in this entity.

While we originally entered the Chilean market with the expectation that
we would be participating in a growing market, this growth has not occurred as
expected, and consumption has actually declined by 4% on a per capita basis
over the past five years. However, since the entry of Chilean brewer CCU to
the Argentine market, our presence in Chile has taken on a strategic
significance for us since we are now both competing in each others principal
market. The following table illustrates beer consumption in Chile in the years
2000 to 2002:

29



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##### Table of Contents



Beer Consumption in Chile

|     |  |              |       | 
|---- |  | ------------ | ----- | 
|     |  | Hectoliters 
|     |  | in Thousands
|     |  |             
|2000 |  |              | 3,945 | 
|2001 |  |              | 3,955 | 
|2002 |  |              | 3,978 | 



---

|Note: Includes both domestically brewed and imported beer.
|----------------------------------------------------------
|                                                          
|Source: Management estimates.                             

Sales.We cover approximately 13,300 points of sale in Chile. Of our
total sales in this country, 13% occurred in the on-premise segment, 30% were
through supermarket channels, and the remaining off-premise segment accounted
for 57% of our sales.

Sales volumes for 2002 were 432,000 hectoliters, an increase of 1.6% over
sales volumes for 2001, while revenues declined 8% to US$22.0 million due
primarily to a 9% devaluation of the local currency against the U.S. dollar.
Our market share in Chile remained virtually unchanged at 10.8% in 2002
compared to 10.7% in 2001. Although our beer operations have recorded losses
since our entry in this market, our earnings before interest, taxes,
depreciation and amortization (EBITDA) have been positive since 2000.

The leading format in the Chilean beer market is the 1-liter returnable
bottle, which accounts for 58% of total volume, while returnable formats as a
whole represent 70% of the total market volume. Non-returnable formats
represent 22% of the Chilean beer market with cans accounting for the largest
presentation of this kind. Kegs represent an additional 8% of the market,
according to management estimates.

The following table presents our domestic beer sales volume, market share
and net sales in Chile from 2000 to 2002:

Quinsas Domestic Beer Sales Volume, Market Share and Net Sales in Chile

|                                              |  |      |      |      |  |      |      |   |  |  |      |  
|--------------------------------------------- |  | ---- | ---- | ---- |  | ---- | ---- | - |  |  | ---- | -
|                                              |  | 2000 |      | 2001 |  | 2002
|                                              |  |      |      |      |  |     
|Sales volume (hectoliters in thousands)(1)(2) |  |      | 377  |      |  |      | 425  |   |  |  | 431  |  
|Market share                                  |  |      | 9.5  | %    |  |      | 10.7 | % |  |  | 10.8 | %
|Net sales (in US$ millions)(3)                |  |      | 26.3 |      |  |      | 23.9 |   |  |  | 22.0 |  



---

|(1) |  | Imported beers are included in the data above but account for no more
than 1% of national market share in any year presented.                                                                                                                                           
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Data does not include sales to our subsidiaries in Argentina and Paraguay
which amounted to 33,000 hectoliters and 5,000 hectoliters in 2000 and
2001, respectively. This data also excludes exports to third parties of
1,000 hectoliters in each of 2000 through 2002.
|   
|(3) |  | Includes exports, if any.                                                                                                                                                                                                                                               

Geographic Coverage and Brands.Our brands are sold throughout Chile.
During 2002, we served Chile with three locally-brewed brands, Becker, Báltica
and Heineken, and we imported the Paceña brand from Bolivia. Our Becker brand
is positioned as an affordable international product; it accounted for 37% of
our sales in 2002. Báltica is a higher alcohol content, dry beer aimed at the
lower-income segment of the market, and accounted for 40% of our total Chilean
beer sales in 2002. Paceña is sold in non-returnable formats, and is sold
primarily in the on-premise segment and in supermarkets.

We targeted the Heineken brand at the premium segment of the market, and
sales of this brand represented 22% of our sales in Chile in 2002. However,
pursuant to its rights under the Memorandum of Agreement, Heineken delivered a
notice to the Company terminating the trademark license as of June 2003, under
which Quinsa produced, marketed and distributed the Heineken brand. See
History and DevelopmentRecent EventsSettlement with

30



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##### Table of Contents



Heineken. Our management is currently evaluating alternatives to replace
this volume. However, if we are not successful in replacing this volume
through sales of other brands, our sales in Chile could be significantly
impacted.

In addition, on January 14, 2003, Heineken announced that it would acquire
a 50% stake in IRSA which owns 62% of CCU, a substantial beer producer whose
share of the Chilean beer market was approximately 89% in 2002, according to
our internal estimates. As part of its purchase of the 50% stake in IRSA,
Heineken intends to transfer the licensing agreements to produce the Heineken
brand in Chile and Argentina to CCU. Thus, if we are unable to find a
replacement for the premium segment in Chile that can successfully compete with
the Heineken brand, we may not be able to recover any loss of sales resulting
from our loss of the Heineken brand.

Brewing Capacity.We operate one brewery in Chile that is located north
of Santiago. The plant currently has a capacity of approximately 0.6 million
hectoliters.

Distribution.In Chile, our sales are primarily direct via a fleet of
approximately 50 rented trucks to supermarkets and other retailers in the on-
and off-premise segment. Direct sales account for 89% of our total volume
sold. We also sell to one distributor which accounts for 11% of our sales. We
distribute our products to the metropolitan Santiago area from our brewery
outside of Santiago and from our distribution centers in Coquimbo, Talca,
Concepción, Temuco and Quilpué for all other regions in the country.

Paraguay

According to CCR, we are the largest beer producer in Paraguay, a country
of 5.8 million people. We conduct our beer operations in Paraguay through
Cervecería Paraguaya S.A., in which QIB holds an 81.85% ownership interest. We
also conduct glass bottle manufacturing operations through FPV, in which QIB
indirectly controls a 73.75% ownership interest.

The market for beer in Paraguay has traditionally distinguished itself
from those in our other countries of operation in certain respects. First,
beer has not faced significant competition from wine as an alternative
alcoholic beverage. Second, domestic beer has faced significant competition
from imported beer, which accounted for a far higher market share in Paraguay
than in neighboring countries. Third, the seasonality of our products is lower
than in other countries where we operate due to warmer conditions throughout
the year.

In recent years however, consumption of beer in Paraguay has been affected
by adverse economic conditions including increased inflation and economic
recession. In addition, during 2002, the Paraguayan economy was severely
affected by the economic crisis in Argentina: Gross Domestic Product (GDP)
declined 2.2%, inflation on consumer prices amounted to approximately 15%, and
the local currency depreciated 52% against the U.S. dollar. As a consequence
of the continued economic decline in Paraguay, per capita consumption of beer
has declined 20% over the last five years, and 16% in 2002 alone. Since these
conditions have rendered imported beer considerably less affordable in Paraguay
(imports accounted for only 1.7% of the market in 2002, according to management
estimates, excluding AmBevs Ouro Fino brand, which we now produce locally), we
believe that we have an additional competitive advantage with respect to the
brands we sell in this country because we are a local brewer.

The following table illustrates the total hectoliters of beer consumed in
Paraguay for the years 2000 to 2002:

Beer Consumption in Paraguay

|     |  |              |       | 
|---- |  | ------------ | ----- | 
|     |  | Hectoliters 
|     |  | in Thousands
|     |  |             
|2000 |  |              | 1,980 | 
|2001 |  |              | 2,145 | 
|2002 |  |              | 1,840 | 



---

|Source: Management estimates.
|-----------------------------

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Returnable formats accounted for approximately 76% of the total market for
beer in Paraguay; the liter and can format represented 64% and 19%,
respectively, of the market during 2002, according to management estimates.

Sales. We cover 51,000 points of sale in Paraguay. The on-premise
segment represented 25% of our sales in 2002, while sales to supermarkets
accounted for approximately 6.0% of our sales. The remaining 69% of our sales
occurred in the other off-premise segments.

Sales volumes declined 16% to 1,402,000 hectoliters in 2002 as a result of
severe economic conditions and, to a lesser extent, competition from AmBev
prior to the completion of the transactions related to our strategic
relationship. Based on actual knowledge of AmBevs beer sales in Paraguay, we
estimate that our market share in 2002 was 76.1%. Based on this same
information from AmBev, we revised downward our market share for 2001 from
83.5% to 78.1%.

During 2002, the devaluation of the local currency in Paraguay far
surpassed consumer inflation in terms of degree. In this economic environment,
we focused on defending our margins by increasing our prices by an average of
18%, while inflation was less than 15%. When measured in terms of U.S.
dollars, however, our average prices declined approximately 18%.

Our revenues for 2002 were US$57.0 million, a 31% decline from 2001. This
decline resulted, in approximately equal parts, from the decline in sales
volume and the effects of the devaluation.

The following table presents our domestic beer sales volume, market share
and net sales for each of 2000 through 2002:

Quinsas Domestic Beer Sales Volume, Market Share and Net Sales in Paraguay

|                                           |  |      |       |      |  |      |       |   |  |  |       |  
|------------------------------------------ |  | ---- | ----- | ---- |  | ---- | ----- | - |  |  | ----- | -
|                                           |  | 2000 |       | 2001 |  | 2002
|                                           |  |      |       |      |  |     
|Sales volume (hectoliters in thousands)(1) |  |      | 1,603 |      |  |      | 1,675 |   |  |  | 1,402 |  
|Market share(1)                            |  |      | 81.0  | %    |  |      | 78.1  | % |  |  | 76.1  | %
|Net sales (in US$ millions) (2)            |  |      | 84.8  |      |  |      | 82.9  |   |  |  | 57.0  |  



---

Source: CCR/IRI and Company estimates.




|(1) |  | Includes domestically brewed and imported beers.
|--- |  | ------------------------------------------------
|   
|(2) |  | Includes exports, if any.                       

Geographic Coverage and Brands.We produce and distribute four principal
domestic brands which are sold throughout Paraguay. Our main brand, and the
leading national brand in Paraguay, is Pilsen, with an estimated market share
of 41.1% in 2002 according to internal estimates.

Our Dorada brand is aimed at the urban markets of the countrys interior,
while Baviera, our third brand, is positioned as a premium beer. These brands,
together with the Quilmes brand, accounted for approximately 36% of our sales
volume in 2002. Cevecería Paraguaya also sells four other brands: Bremen and
Joia, which are both targeted at the low price segment of the market, the
Shandy brand, as well as Heineken, which was imported from Holland. Pursuant
to its rights under the Memorandum of Agreement between Heineken and Quinsa,
Heineken delivered a notice to the Company terminating the trademark license as
of June 2003, under which Quinsa produced, marketed and distributed the
Heineken brand. See History and DevelopmentRecent EventsSettlement with
Heineken. Therefore, we have discontinued the sale of Heineken in Paraguay.
However, as a consequence of our strategic relationship with AmBev, as of
February 2003, we sell AmBevs two brands, Brahma and Ouro Fino, in Paraguay.
Together, these two brands had a joint market share of 19% in 2002, according
to our estimates.

Brewing Capacity.We made investments at our Ypané brewery which doubled
the capacity of the brewery to 2.0 million hectoliters in 2001. These
investments also allowed us to create efficiencies by producing cans and
brewing Quilmes locally. In addition, we closed our Asunción brewery in 2000,
which allowed us to reduce labor and production costs. Thus, we have been able
to increase our capacity while reducing our costs. In addition, our brewing
capacity at the Ypané brewery increased during 2002 to 2.2 million hectoliters.

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As part of our strategic relationship, AmBev contributed the small brewery
where it had been producing its Brahma and Ouro Fino brands to the Company.
During April 2003, we closed this brewery and we transferred production of
AmBevs two brands to our Ypané brewery.

Distribution. We distribute our beer from the Ypané plant as well as from
four distribution centers. We distribute our beer through direct sales in the
cities of Asunción and greater Asunción, Encarnación, Capitán Miranda, Ciudad
del Este, Hernandarias, Presidente Franco, Villa Rica and Coronel Oviedo. We
conduct our direct sales exclusively on a pre-sell system covering more than
21,000 points of sale, 71% of which are in the capital city of Asunción.
Direct sales accounted for 42% of our total sales during 2002. The rest of our
sales are conducted through 114 distributors. As a result of our strategic
relationship with AmBev, we will be combining the distribution systems of both
companies in Argentina, Paraguay and Uruguay in an effort to reduce costs and
take advantage of resulting synergies. Consequently, our percentage of direct
and indirect sales as part of total sales may shift in these markets.

Uruguay

With a population of 3.3 million, Uruguay is our smallest market in terms
of beer sales, although we are the leading beer producer in this market based
on our internal estimates. Our beer operations in Uruguay were conducted
through FNC until November 2001, when the merger between FNC and EUSA, our soft
drink bottling subsidiary, was approved. As result of this merger, QIB holds a
59.64% ownership interest in the combined entity, EUSA, which has changed its
name to FNC S.A. As a consequence of the merger between FNC and EUSA, we
closed our soft drink bottling facility in Montevideo, and manage both our beer
and soft drink business out of our brewery in Uruguay. The consolidation of
these operations has created operational synergies for us and has led to cost
reductions.

In 2000, AmBev, with Danone, acquired a controlling interest in Compañía
Salus S.A. (Salus), and QIB also increased its ownership interest in Salus to
34.66%. AmBev also acquired a controlling interest in the third Uruguayan
brewery Cympay S.A. (Cympay), making the Brazilian brewer the second largest
in the Uruguayan beer business. As part of our strategic relationship, AmBev
contributed the breweries and beer businesses of Salus and Cympay to the
Company. See Brewing Capacity.

The Uruguayan economy has been steadily contracting during recent years,
and particularly so in 2002, as a result of the economic crisis in Argentina.
As a result, beer market volumes in Uruguay declined by 16.5% to 519,000
hectoliters in 2002. The following table shows the consumption of beer in
Uruguay from 2000 to 2002:

Beer Consumption in Uruguay

|     |  |              |     | 
|---- |  | ------------ | --- | 
|     |  | Hectoliters 
|     |  | in Thousands
|     |  |             
|2000 |  |              | 688 | 
|2001 |  |              | 621 | 
|2002 |  |              | 519 | 



---

|Note: Includes domestically brewed and imported beer.
|-----------------------------------------------------
|                                                     
|Source: Company estimates.                           

Based on our estimates, returnable formats account for approximately 91%
of the beer market in Uruguay, while the liter and can formats represented 94%
and 3%, respectively, of the market during 2002. In terms of breakdown by
sales channel, on-premise consumption accounted for 27% of the total market,
while supermarkets and other off-premise sales channels accounted for 14% and
59%, respectively.

Sales. We cover over 23,500 points of sale in Uruguay. 32% of our sales
occurred in the on-premise segment, while supermarket channels accounted for
10% of our sales, and the remaining off-premise segment accounted for 58% of
our sales.

Volumes declined 21% to 269,000 in 2002, as a result of severe economic
conditions and, to a lesser extent, as a result of competition from AmBev prior
to the completion of our strategic relationship. Based on actual knowledge

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of AmBevs beer sales in Uruguay, we estimate that our market share in
2002 was 51.9%. Based on this same information from AmBev, we revised downward
our market share for 2001 from 57.7% to 54.6%.

During 2002, the local currency devalued by approximately 84% against the
U.S. dollar, which far surpassed consumer inflation in terms of degree. In
this economic environment, the Company focused on defending its margins by
increasing prices. However, because consumer inflation was approximately 26%
for 2002, our average prices still declined approximately 22% when measured in
terms of U.S. dollars.

Our revenues for 2002 were US$14.2 million, a 39% decline compared to 2001
revenues. Approximately 57% of this decline was due to decreased sales
volumes, while the balance was due to the effects of devaluation.

The following table provides information regarding our beer sales volume,
market share and net sales in Uruguay for the years 2000 to 2002:

Quinsas Beer Sales Volume, Market Share and Net Sales in Uruguay

|                                                 |  |      |      |      |  |      |      |   |  |  |      |  
|------------------------------------------------ |  | ---- | ---- | ---- |  | ---- | ---- | - |  |  | ---- | -
|                                                 |  | 2000 |      | 2001 |  | 2002
|                                                 |  |      |      |      |  |     
|Domestic sales volume
(hectoliters in thousands) |  |      | 375  |      |  |      | 340  |   |  |  | 269  |  
|Market share                                     |  |      | 54.5 | %    |  |      | 54.6 | % |  |  | 51.9 | %
|Exports (hectoliters in thousands)(1)            |  |      | 31   |      |  |      | 11   |   |  |  | 6    |  
|Net sales (in US$ millions) (2)                  |  |      | 26.1 |      |  |      | 23.2 |   |  |  | 14.2 |  



---

|(1) |  | Represent exports to southern Brazil and, in 2000, sales to our operating
subsidiary in Paraguay that amounted to 16,000 hectoliters.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Includes exports, if any.                                                                                                            

Geographic Coverage and Brands.Our beer brands accounted for 51.9% of
all beer sold in Uruguay in 2002 with our Pilsen brand being the leading
national brand and accounting for 42.3% of the market, based on management
estimates. Our beer is sold in all regions of Uruguay, with approximately
57.4% of our sales volume occurring in the metropolitan area of Montevideo,
which accounts for 1.3 million of Uruguays total population. We serve this
market with three domestic brands and four imported brands. The leading brand
in Uruguay is our domestic brand, Pilsen, which in 2002 accounted for
approximately 82% of our beer sales by volume. Pilsen is positioned as a
standard beer; it is strong in all regions of the country, but particularly so
in the interior. Our other Uruguayan brands are Doble Uruguaya and Zillertal.
Doble Uruguaya targets traditional beer consumers in Uruguay, while Zillertal
is our premium brand in this market.

In the import segment of the market, we offered the Heineken brand in
addition to Quilmes, Iguana and Liberty brands. Pursuant to its rights under
the Memorandum of Agreement between Heineken and Quinsa, Heineken delivered a
notice to the Company terminating the trademark license as of June 2003, under
which Quinsa produced, marketed and distributed the Heineken brand. See
History and DevelopmentRecent EventsSettlement with Heineken. Therefore,
we have discontinued the sale of Heineken in Uruguay. However, as a
consequence of our strategic relationship with AmBev, as of February 2003, we
sell AmBevs brands, principally Norteña and Patricia, in Uruguay. Together,
these two brands had a joint market share of 43.9% in 2002, according to our
estimates.

Brewing Capacity.We operated just one brewery in Uruguay during 2002,
which was located in Montevideo. This brewery currently has an approximate
annual capacity of 0.8 million hectoliters, a capacity significantly greater
than Uruguayan demand. As part of our strategic relationship, AmBev has
contributed the beer businesses of Salus and Cympay, each of which included a
brewery, to the Company. The brewery from Salus had been producing AmBevs
Patricia brand and the brewery from Cympay had been producing its Norteña
brand. During April 2003, the Cympay brewery was closed and we transferred
production of the Norteña brand to our plant in Montevideo.

Distribution. For 2002, approximately 56% of our total sales in Uruguay
were indirect sales through 22 distributors, while approximately 44% of total
sales were conducted directly by the Companys sales force, who cover 5,500
points of sale including wholesalers and supermarkets. As a result of the
merger of FNC and EUSA, we closed our soft drink plant, and now we sell and
distribute our beer and soft drinks jointly. We deliver our products

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in the metropolitan area of Montevideo from our production facility there
as well as through four distributors, while we have 18 distributors of our beer
and soft drinks in the interior of Uruguay. As a result of our strategic
relationship with AmBev, we will be combining the distribution systems of both
companies in Argentina, Paraguay and Uruguay in an effort to reduce costs and
take advantage of resulting synergies. Consequently, our percentage of direct
and indirect sales as part of total sales may shift in these markets.

Soft Drink and Bottled Water Operations

Argentina and Uruguay, with populations of approximately 37 million and
3.3 million people, respectively, are characterized by relatively low per
capita consumption of soft drinks. In 2002, the average person in Argentina
and Uruguay consumed approximately 81 liters and 59 liters, respectively,
according to management estimates.

Our sales of soft drinks in Argentina and Uruguay began in December 1999
with the acquisition of Baesa, the largest PepsiCo® bottler in Argentina and
the sole PepsiCo® bottler in Uruguay. Baesa conducted its soft drink
operations in Uruguay through EUSA, its wholly-owned subsidiary. After
receiving approval from the relevant governmental authorities, Baesa merged
with CMQ, a majority shareholder of Baesa and our beer subsidiary in
Argentina, in March 2001. CMQ is the surviving entity, and the Baesa business
has become the soft drink division of our Argentine business. Having chosen to
focus on expanding its ownership interest in PepsiCo® franchises in Argentina
and Uruguay, QIB sold its 57.97% equity stake in Paresa, a Coca-Cola® franchise
in Paraguay, to Coca-Cola® Interamerican Corporation in October 2000.

The synergies resulting from the merger of Baesa have benefited both beer
and soft drink operations through cost reductions and through the adoption of
more efficient fiscal policies. For example, we unified certain distribution
centers of CMQ and Baesa including the warehousing and delivery of beer and
soft drinks in Buenos Aires and Mar del Plata. In addition, the volume of soft
drinks sold through distributors increased due to the integration of the
distribution networks of CMQ and Baesa. During October 2002, we further merged
our Argentine beer and soft drinks operations, including unifying their
administration, so that they ceased to operate as separate businesses.

In December 2000, CMQ acquired a 99.21% equity stake in EDISA, the second
largest PepsiCo® bottler in Argentina. Beginning in August 2001, EDISA and CMQ
agreed that EDISA would manufacture and bottle the PepsiCo® brands while CMQ
would continue the sale and distribution of these brands. In December of 2002,
the boards of directors of CMQ, EDISA and Coroplás S.A. (a wholly-owned
subsidiary of CMQ that produces crown bottle tops) voted to merge these
companies with and into CMQ, which will remain the surviving entity. The
companies executed a merger agreement which will be submitted to the respective
shareholders of each company for approval.

In 2001, we began managing our soft drink operations in Argentina and
Uruguay as separate businesses. In November 2001, we merged our beer
operations in Uruguay conducted through FNC with our soft drink operations
conducted by EUSA. This involved closing the soft drink facility owned by EUSA
and adapting FNCs brewery to accommodate the soft drink lines. Upon the
merger, EUSA remained the surviving entity in which QIB holds a 59.67%
ownership interest. On November 11, 2002, EUSA changed its name to FNC S.A. in
order to preserve the more recognized initials of FNC. Based on management
estimates, we currently control more than 84% of the production and sale of
PepsiCo® carbonated soft drinks in Argentina and 100% in Uruguay.

Until March 2001, Baesa and EDISA sold four water brands in Argentina:
Glaciar, Villa de los Arroyos, La Moderna and Sierras del Sur. We acquired the
Glaciar and Villa de los Arroyos brands of water as part of our acquisitions of
Baesa and EDISA, and sold these mineral water businesses to Hecatón S.A.
(Hecatón) during the first quarter of 2001. As of April 2001, we no longer
consolidate the Glaciar and Villa de los Arroyos businesses in our financial
statements. We hold a 49% ownership interest through QIB in Hecatón.

Prior to December 2001, Hecatón leased the assets related to the mineral
water businesses of Glaciar and Villa de los Arroyos to Eco de los Andes, our
joint venture with Perrier Vittel, which we spun off as a separate company in
1999. On December 12, 2001, the board of directors of Eco de los Andes began
negotiations with Hecatón S.A. to merge the two companies. The boards of
directors of the two companies agreed to the merger because they

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believed it would enable them to take advantage of potential synergies and
economies of scale. This merger was approved by the Argentine regulators
during the second quarter of 2002.

Our current mineral water business in Argentina mainly comprises the Eco
de los Andes and Glaciar brands which we manage through our 48.95% minority
participation in Eco de los Andes. We account for our participation in the
joint venture under the equity method of accounting. See Note 3 to the
Consolidated Financial Statements for details. After the sale of the Glaciar
and Villa de los Arroyos bottled water assets to Hecatón, CMQs only bottled
water sales during 2002 resulted from the sale of minor regional brands,
including La Moderna and Sierras del Sur. See Note 3 to our Consolidated
Financial Statements.

Sales.In 2002, net sales in Argentina for soft drinks (including water,
juices and isotonic beverages) amounted to US$107.3 million, or 22.9% of our
consolidated net sales. Together, Baesa and EDISA, sold 5.3 million
hectoliters of soft drinks and 0.1 million hectoliters of bottled water during
2002. According to Nielsen Argentina, CMQs market share in greater Buenos
Aires, the most densely populated region in Argentina, was 22.6% of the total
greater Buenos Aires market for soft drinks and bottled water.

In Uruguay, EUSA, now FNC S.A., had net soft drink sales of US$8.6
million, and sold 0.2 million hectoliters of soft drinks and water in 2002.
Its market share for soft drinks in Uruguay was 11.3% according to A.C.
Nielsen.

In contrast to our beer sales, soft drinks in non-returnable packaging
accounted for more than 90% of our soft drink sales in Argentina and Uruguay in
2002, with a growing tendency towards sales of our 1.5 liter, 2 liter and 2.25
liter containers, which accounted for 76.5% of our total soft drink sales.
This preference for large format packaging is a result of the unfavorable
economic situation in Argentina and Uruguay, which has led consumers to opt for
the more cost-effective presentations. However, our introduction of the
returnable glass bottle is reversing this trend.

Terms of Sale. Most of our sales of soft drinks and water are made on a
credit basis. Due to the effect of the Argentine economic crisis and
managements focus on reducing our working capital, average credit terms
for our soft drink sales were reduced from 33 days in December 2001, to 21 days
in December 2002. The length and other terms of the credit extended often
depend on competitive factors and the strategic importance of the particular
outlet.

Points of Sale. Our soft drink products are sold to more than 338,000
points of sale, 315,000 of which are located in Argentina and 23,000 of which
are located in Uruguay. In 2002, supermarkets accounted for approximately 25%
of our volume sold in Argentina and approximately 30% in Uruguay.

Geographic Coverage. At the time of its acquisition by CMQ, EDISA owned
bottling facilities in the cities of Tucumán, Rosario and Resistencia in
Argentina, and its franchise covered nine Argentine provinces. During 2001 we
closed 3 soft drink bottling facilities located in Rosario, Resistencia and
Buenos Aires, in order to reduce costs and eliminate redundancies in our
operations. Also during 2001, we incurred different costs through CMQ related
to the introduction and further distribution of soft drinks that allowed CMQ to
begin commercial activities in the province of Neuquen and certain areas of Rio
Negro and La Pampa.

Brands. With merger of Baesa and CMQ, CMQ now owns exclusive rights to
produce, sell and distribute PepsiCo® soft drink products, including Pepsi
Cola®, Pepsi Cola Light®, Pepsi Twist®, Pepsi Max®, Seven-Up®, Seven-Up Light®,
Mirinda®, Paso de los Toros®, Kasfruit Juice®, Kas®, Tropicana® and Gatorade®.
In December 2001, we introduced ready-to-drink Tropicana and started
manufacturing and distributing Gatorade nationwide, so that we now distribute
the three lines of PepsiCo beverages. During 2002, we launched Pepsi Twist,
and introduced the Gatorade Fierce line of products.

Distribution.

In 2002, approximately 55% of our sales volume in Argentina was
distributed directly by our sales force, while 45% was distributed indirectly.
For Uruguay, 44% of our sales volume was direct sales, while 56% was sold
through our distributors.

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Direct Distribution. Direct distribution includes sales to supermarkets,
grocery stores, convenience stores and kiosks as well as sales to the
on-premise market segment such as bars and restaurants. In Argentina, we use
rented vehicles for direct distribution of our soft drink brands to large
supermarket chains and to over 62,000 retailers from our distribution centers.
In 2000, we unified our beer and soft drink distribution centers in Mar del
Plata, and we did the same for these centers in Buenos Aires in 2001. We also
control seven other distribution centers in Córdoba, Tucumán (from where we
also began to distribute beer to supermarkets in 2002), Resistencia, Rosario,
Santa Fe, Santiago and Trellew from which we only distribute our soft drink
brands; however, we intend to unify our beer and soft drink distribution in
these cities as well. By the second half of 2003, we will have unified our
beer and soft drink distribution centers in Rosario.

Indirect Distribution. Indirect distribution includes sales to
distributors and wholesalers. Distributors may distribute our products only in
specified geographic areas, whereas wholesalers are not restricted
geographically.

The following table shows, for each of our countries of operation for the
year ended December 31, 2002, the approximate percentage of total soft drink
sales by volume accounted for by independent distributors, the approximate
number of distributors operating in each country and the approximate number of
points of sale covered:

Soft Drink Sales through Independent Distributors

|                                      |  |           |     |         |  |  |    |  
|------------------------------------- |  | --------- | --- | ------- |  |  | -- | -
|                                      |  | Argentina |     | Uruguay
|                                      |  |           |     |        
|Percentage of Total Sales             |  |           | 45  | %       |  |  | 56 | %
|Number of Distributors                |  |           | 200 | (*)     |  |  | 22 |  
|Points of Sale Covered
(in thousands) |  |           | 255 |         |  |  | 18 |  



---

|(*) |  | Includes 45 distributors who only distribute our soft drinks and 155
distributors who distribute both our soft drink and beer products.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------

Because distributors are limited to sales of our products in specified
geographic areas, we generally maintain written agreements with them.
Normally, arrangements with the distributors in each of our countries of
operation are based on a standard contract that requires the distributor to
carry our products exclusively and grants it exclusive rights to sell those
products within a defined area to retailers. The contract may also prohibit
the distributor from selling to wholesalers and supermarkets to which we
reserve the right to sell products directly. The distributors return empty
bottles and crates to our plants or distribution centers and collect full ones.
When dealing with distributors, the only transportation cost we pay is the
cost of transporting soft drinks from our plants to our distribution centers.

SEASONALITY

Our sales in all of the southern cone markets are impacted by seasonal
changes. The largest percentage of our sales occur in the first and fourth
quarters of the calendar year during the summer season in the Southern
Hemisphere, although this is more the case for our beer sales. The following
charts show a breakdown of volume sales by quarter as a percentage of total
annual sales for each market in which we sell beer and soft drinks:

|          |  |                                                                    |    |             |  |             |    |             |  |      |    |      |  |      |    |      |  |      |    |      |  |      |    |      |  |  |    |   |  |  |    |   |  |  |    |   |  |  |    |    |  |  |    |   |  |  |    |  
|--------- |  | ------------------------------------------------------------------ | -- | ----------- |  | ----------- | -- | ----------- |  | ---- | -- | ---- |  | ---- | -- | ---- |  | ---- | -- | ---- |  | ---- | -- | ---- |  |  | -- | - |  |  | -- | - |  |  | -- | - |  |  | -- | -- |  |  | -- | - |  |  | -- | -
|          |  | Beer Volume Sales by Quarter as a Percentage of Total Annual Sales
|          |  |                                                                   
|          |  | 1st Quarter                                                        |    | 2nd Quarter |  | 3rd Quarter |    | 4th Quarter
|          |  |                                                                    |    |             |  |             |    |            
|          |  | 2000                                                               |    | 2001        |  | 2002        |    | 2000        |  | 2001 |    | 2002 |  | 2000 |    | 2001 |  | 2002 |    | 2000 |  | 2001 |    | 2002
|          |  |                                                                    |    |             |  |             |    |             |  |      |    |      |  |      |    |      |  |      |    |      |  |      |    |     
|Argentina |  |                                                                    | 31 | %           |  |             | 33 | %           |  |      | 30 | %    |  |      | 18 | %    |  |      | 18 | %    |  |      | 17 | %    |  |  | 19 | % |  |  | 20 | % |  |  | 18 | % |  |  | 32 | %  |  |  | 29 | % |  |  | 35 | %
|Bolivia   |  |                                                                    | 14 | %           |  |             | 25 | %           |  |      | 22 | %    |  |      | 11 | %    |  |      | 23 | %    |  |      | 20 | %    |  |  | 24 | % |  |  | 23 | % |  |  | 27 | % |  |  | 51 | %* |  |  | 30 | % |  |  | 31 | %
|Chile     |  |                                                                    | 29 | %           |  |             | 31 | %           |  |      | 31 | %    |  |      | 18 | %    |  |      | 17 | %    |  |      | 17 | %    |  |  | 19 | % |  |  | 19 | % |  |  | 20 | % |  |  | 33 | %  |  |  | 32 | % |  |  | 32 | %
|Paraguay  |  |                                                                    | 29 | %           |  |             | 29 | %           |  |      | 30 | %    |  |      | 20 | %    |  |      | 19 | %    |  |      | 18 | %    |  |  | 19 | % |  |  | 20 | % |  |  | 22 | % |  |  | 32 | %  |  |  | 32 | % |  |  | 30 | %
|Uruguay   |  |                                                                    | 27 | %           |  |             | 28 | %           |  |      | 29 | %    |  |      | 15 | %    |  |      | 14 | %    |  |      | 15 | %    |  |  | 14 | % |  |  | 17 | % |  |  | 14 | % |  |  | 44 | %  |  |  | 41 | % |  |  | 41 | %



---

|* |  | Because we acquired our competitor CBN, the largest Bolivian brewery during
the last quarter of 2000, Bolivian volumes for that quarter are significantly
greater as a percentage of total sales for the year.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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|          |  |                                                                         |    |             |  |             |    |             |  |      |    |      |  |      |    |      |  |      |    |      |  |      |    |      |  |  |    |   |  |  |    |   |  |  |    |   |  |  |    |   |  |  |    |   |  |  |    |  
|--------- |  | ----------------------------------------------------------------------- | -- | ----------- |  | ----------- | -- | ----------- |  | ---- | -- | ---- |  | ---- | -- | ---- |  | ---- | -- | ---- |  | ---- | -- | ---- |  |  | -- | - |  |  | -- | - |  |  | -- | - |  |  | -- | - |  |  | -- | - |  |  | -- | -
|          |  | Soft Drink Value Sales by Quarter as a Percentage of Total Annual Sales
|          |  |                                                                        
|          |  | 1st Quarter                                                             |    | 2nd Quarter |  | 3rd Quarter |    | 4th Quarter
|          |  |                                                                         |    |             |  |             |    |            
|          |  | 2000                                                                    |    | 2001        |  | 2002        |    | 2000        |  | 2001 |    | 2002 |  | 2000 |    | 2001 |  | 2002 |    | 2000 |  | 2001 |    | 2002
|          |  |                                                                         |    |             |  |             |    |             |  |      |    |      |  |      |    |      |  |      |    |      |  |      |    |     
|Argentina |  |                                                                         | 29 | %           |  |             | 30 | %           |  |      | 28 | %    |  |      | 20 | %    |  |      | 20 | %    |  |      | 20 | %    |  |  | 22 | % |  |  | 22 | % |  |  | 22 | % |  |  | 29 | % |  |  | 27 | % |  |  | 30 | %
|Uruguay   |  |                                                                         | 33 | %           |  |             | 33 | %           |  |      | 35 | %    |  |      | 21 | %    |  |      | 21 | %    |  |      | 23 | %    |  |  | 19 | % |  |  | 19 | % |  |  | 19 | % |  |  | 28 | % |  |  | 27 | % |  |  | 23 | %

RAW MATERIALS

Raw Materials  Beer

Beer production involves several raw materials. The main ingredient in
beer is malt, a product made from germinated and roasted barley. Malt is mixed
with water, hops and corn grits or rice in various proportions until the
desired taste is obtained. The resulting mixture is called wort. Wort is malt
that has fermented with selected yeasts to produce beer, which is then
filtered, pasteurized and bottled. Aside from these natural ingredients, beer
production also relies on other raw materials such as bottles, aluminum cans,
labels and crown tops.

We develop, produce and market out of our own farms in Argentina five
barley strains that we use in our beer operations in Argentina and occasionally
in Uruguay. This allows us to exercise a significant degree of control over
the quality of our beer. The barley strains we develop and patent account for
substantially all of the barley grown in Argentina. Since 1982, we have
developed five strains of barley on an experimental farm located in Tres
Arroyos, 500 kilometers southeast of Buenos Aires.

Although we develop the barley strains, we do not grow our barley
requirements. Rather, we sell the barley seed to local farmers under
arrangements pursuant to which we receive specified quantities of the harvested
product. We make any additional purchases of harvested product at prices
negotiated at the time of purchase. Barley is a commodity and the price
loosely follows the price of wheat.

As described above, we purchase malt locally for our operations in
Argentina. For our operations in the other southern cone markets, we purchase
malt from third party suppliers, and occasionally from our operations in
Argentina.

We use either corn grits or rice in our beer production, depending on
market prices, and purchase these products locally in each of our countries of
operation.

We obtain our water requirements from wells located at each of our
breweries in the southern cone markets or from public utilities. We monitor
the quality, taste and composition of the water we use and treat it to remove
impurities and to comply with internal quality standards as well as all
applicable regulations. We do not foresee any shortage in our current water
supply.

Due to the economic situation in Argentina, towards the end of 2001, we
began to purchase most of the raw materials that we used to import from local
suppliers for our Argentine business. Although we did not experience any
supply problems in 2002, if economic conditions worsen, even our local
suppliers of raw materials may have difficulty providing such materials in the
future. Furthermore, since all commodities are pegged to international prices,
their prices are necessarily volatile and any devaluation of the currencies of
the countries in which we operate could impact our direct costs associated with
the purchase of these raw materials.

We purchase most of our requirements for bottles in Argentina from local
suppliers and, on occasion, from our subsidiary FPV in Paraguay. In Chile, we
purchase our bottles from local suppliers, and in Bolivia, we purchase our
bottle requirements locally. In Paraguay, we purchase our bottles locally from
FPV, and in Uruguay, we purchase bottles from local suppliers. We purchase
locally most of our aluminum can and can end requirements for our operations in
Argentina. CBN holds 99.11% of Envases de Aluminio Boliviano S.R.L. which
produces all of the

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aluminum can requirements for our breweries in Bolivia. We purchase
aluminum cans locally for our requirements in Chile, and we import aluminum
cans from Argentina to satisfy our requirements in Paraguay and Uruguay.

In Argentina, as of August 2002 when we stopped purchasing some of our
label requirements from Belgium, we purchase all of our label requirements for
our operations in Argentina locally. Labels are purchased locally for our
requirements in Bolivia; we purchase labels locally for our requirements in
Chile; and we import labels from various countries for our requirements in
Paraguay and Uruguay. In Argentina, Bolivia and Paraguay, crown tops are
purchased locally, and a small portion are imported from Brazil; in Chile, we
import them from Mexico; and in Uruguay, we imported them from Argentina and
Brazil.

Raw Materials Soft Drinks and Bottled Water

We use concentrate, syrup, water, sugar and carbon dioxide gas, as well as
containers purchased from third-party manufacturers in our production of soft
drinks. For our soft drink production, our major raw material cost is for the
purchase of PET which we buy locally, but whose price is determined based on
international prices. We obtain water from publicly available supplies such as
municipal water systems and from our own wells. We purchase most of our raw
material requirements from local independent suppliers in Argentina and
Uruguay, however the prices charged by these suppliers may be tied to hard
currencies.

Our other important cost is related to the concentrate that we purchase
from PepsiCo in local currency. Under the terms of our franchise arrangements,
we must purchase all concentrate used to make PepsiCo® soft drinks from PepsiCo
or its affiliates.

In March 1998, Baesa entered into a five-year supply agreement with Alusud
Argentina S.A. (Alusud), a wholly-owned subsidiary of Alcoa Latin America
Holdings Corp. (Alcoa), to supply us with preforms (which we use to blow into
our plastic PET bottles). We are in the process of renewing this supply
contract for an additional 5-year term. Under this agreement, Alusud manages
and operates our preform plant in Buenos Aires and supplies us with 100% of our
preform requirements. We purchase our preform requirements in Uruguay from
Alcoa.

During 2002, we introduced a returnable 1.25 liter glass bottle in the
Argentine market. We purchase these bottles locally. We also purchase our
12-ounce bottles for the on-premise segment locally and from our Paraguayan
subsidiary, FPV.

None of the raw materials or supplies that we use is currently in short
supply. In the past five years, we have experienced no material difficulties
in obtaining adequate supplies of necessary materials and expect that we will
be able to continue doing so in the future, although we may experience
shortages of some of these materials in the future due to factors beyond our
control. We do not believe that we are dependent on any one supplier for a
material portion of any of our raw materials with the exception of the
concentrate we purchase from PepsiCo. See  Relationship with PepsiCo below.
If necessary, we could satisfy our raw material requirements, other than
concentrate used to make PepsiCo® soft drinks, from alternative suppliers.

MARKETING IN THE SOUTHERN CONE MARKETS

Marketing  Beer

Product Presentations. We sell 33 different brands of beer in 11
different presentations through all major channels of distribution throughout
all of our markets. The vast majority of our beer sales in the southern cone
markets are made in glass containers of various sizes. Our most important
packaging is the one-liter returnable bottle, which represented more than 90%
of our total beer sales volume in Argentina in 2002. This reflects the price
advantage of the one-liter returnable packaging over others as well as
traditional consumer preferences. Even though we have launched different
non-returnable formats over time, the economic situation in most of our markets
has led us to focus on returnable packagings. In 2002, aluminum can sales
accounted for about 3.0% of our total sales volume in Argentina. Elsewhere,
our volume of aluminum cans sold represented 5.8% in Bolivia, 12.7% in Chile,
13.0% in Paraguay and 1.4% in Uruguay. In Chile and Paraguay, the sales of
this presentation increased significantly once local production of cans began
in late 1999. We also sell a 5-liter disposable keg in Argentina

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which is sold primarily through supermarkets. We sell 30-liter kegs in
all of our markets and 50-liter kegs in all of our markets except for Paraguay
and Bolivia.

We believe we have led packaging innovation in our markets over the years.
In 2000, we launched 1/2 liter glass and PET non-returnable bottles under
the Quilmes brand, the latter of which was the first to be introduced in the
Argentine market. We also introduced a one-liter non-returnable bottle for the
Heineken and Iguana brands in Argentina. In Uruguay, we introduced Pilsen in
1/2 liter non-returnable bottles. In Chile, we produce Becker and Báltica
beer in a range of locally produced returnable and non-returnable bottle
presentations with twist-off tops. In 2001, we launched a special Quilmes
bottle of approximately 1/3 of a liter, with a sleeve decorated based on various
themes; a limited edition 5 liter keg; a variety of new designs on our Quilmes
cans; and a shaped can for the Quilmes Cristal brand as well. During 2002,
we introduced a new one-liter returnable bottle for our Becker brand in Chile.

Advertising and Promotional Activity. We invest in advertising and
promotional activities to support the launch of new brands and packaging
formats as well as to maintain the visibility of our other national and
regional brands. We advertise and promote our beer primarily through
television and radio campaigns and, to a lesser extent, through other media
such as newspapers and magazines with large circulations, and billboards in
strategic locations including stadiums and major intersections. We also use
sponsorship of popular and highly publicized sports and other recreational
events as well as sponsorship of individual sports teams as a means of
advertising and marketing our products.

During 2001, we continued to focus our marketing efforts on sports
sponsorships including sponsorship of the national soccer team, the national
rugby squad and the national basketball team in Argentina. We also sponsored
the two most popular soccer teams in Argentina, one soccer team in Uruguay and
various soccer teams in Bolivia. During 2002, our Quilmes brand ceased to
sponsor local soccer teams in Argentina except for a second-division soccer
team based in Quilmes, but we continue to sponsor the national soccer team.
This sponsorship was particularly important for us in 2002, a year in which the
World Soccer Championship was played. We sponsored three national squads
during this tournament, a major sporting event held every four years and
followed by hundreds of millions of viewers worldwide.

We increasingly engage in various point of purchase promotional
activities at the trade level. In the on-premise segment, we place special
emphasis on ensuring that our main outlets are easily identifiable through the
use of promotional sun umbrellas, tables, chairs and draft beer columns
displaying our brand logos. In Argentina, we have also established a trade
marketing department which has been effective in coordinating consumer
promotions and joint promotions with other brands, regions, channels and
companies, in order to maximize the resources we devote to advertising and
promotional activities. Also in Argentina, we have worked closely with
our distribution network to provide proprietary merchandising manuals,
supplementary training, benchmarking activities, marketing and sales software
and advice on optimal infrastructure designs, among other actions.

We regularly conduct surveys in all our markets to monitor the progress of
our products and the success of our marketing strategies. Among many varied
market research techniques, we commission monthly surveys in both the regional
and national markets in which we operate to evaluate the position of our brands
within those markets. We also regularly conduct follow-up tests to evaluate
the effectiveness of particular advertising strategies.

For 2002, our total investment in beer promotion and advertising as a
percentage of sales was 9.8% in Argentina, 6.4% in Bolivia, 16.3% in Chile,
8.3% in Paraguay and 22.9% in Uruguay. We expect that as a consequence of our
strategic relationship with AmBev, our investment in advertising and promotion
will decline in the future as a percentage of revenues.

Pricing. There is no regulation of wholesale or retail beer prices in our
countries of operation. In pricing our products, we consider many factors,
which vary in individual importance from time to time. These factors include
general economic conditions, the success and profitability of our various
product presentations, the prices of our competitors products, the prices of
substitute products such as wine and soft drinks, the effects of inflation and
taxes as well as the level of costs.

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Marketing  Soft Drinks and Bottled Water

Product Presentations. Most of our products are sold in one-way
presentations, principally PET bottles and cans. In any franchise area, we may
sell products in as many as ten different packagings. PepsiCo must approve all
of the packaging formats that we use for PepsiCo® soft drinks. In 2001, we
introduced a new 12 ounce bottle (replacing the 10 ounce bottle) for the
on-premise segment, the most profitable segment in the market. In 2002, we
also introduced an 8-ounce bottle for the Seven-Up and Pepsi brands, targeted
at kiosks and small grocery and convenience stores.

In order to reduce costs associated with one of our major raw materials
used to produce plastic bottles for our soft drinks, and to make our products
more affordable, we introduced the 1.25 liter returnable glass bottles in mid
2002, after meeting with initial success during trials in selected locations
during the second half of 2001. This format has met with continued success; by
March 2003, it accounted for 15% of our sales. We invested a total of US$7
million to introduce this new packaging format, of which, US$5 million was used
to purchase bottles and crates.

Advertising and Marketing Activity. During 2002, we made a strategic
decision not to participate in the B-brand segment of the market. Instead, we
focused on promoting our leading brands through marketing campaigns, new
product launches and packaging innovations. In addition to the introduction of
the 1.25 liter returnable glass bottle, we also (i) narrowed the price gap
between the Mirinda brand, which we had used to compete in the B-brand segment,
and the Pepsi and Seven-Up brands; (ii) launched Pepsi Twist, which was well
received in the consumer market; and (iii) launched the Gatorade Fierce line of
products.

Also, through Pepsi, we began sponsoring a popular Argentine soccer team
in 2002. Our relationship with PepsiCo includes a marketing element to support
the PepsiCo beverages we distribute in each of our franchise territories. See
Relationship with PepsiCo below.

COMPETITION IN THE SOUTHERN CONE MARKETS

Competition  Beer

Factors influencing beer choice among consumers in the southern cone
markets include price and product availability. Beer producers in these
markets have responded to increased competition through promotional activities,
enhanced customer service to retailers and differentiation through brand
presentation. Also, aside from competition with other beer brands, we compete
against producers of wine and other alcoholic beverages as well as with other
soft drink producers, although to a lesser extent.

The beer business in each of our countries of operation has been
characterized by strong competition among the major brewers. The participants
in these markets include major local and international concerns with
substantial financial resources and particular industrial strengths. In recent
years these major competitors had expanded into new markets, engaged in
intensive advertising and promotional campaigns and introduced new brands. We
have increased our advertising and promotion expenditures as new competitors
entered the market with the objective of building brand equity and
protecting our market share. The consummation of our transactions with AmBev in January 2003,
however, has changed the competitive environment in the southern cone markets
somewhat, since this alliance combines the two largest beer companies in
Argentina, Paraguay and Uruguay.

We face competition from Warsteiner Brauerei Hans Cramer GmbH & Co.
(Warsteiner), a large German brewer that serves the Argentine market from its
1.2 million hectoliter brewery at Zárate, also near Buenos Aires. We also
compete with CCU of Chile which acquired the regional Argentine breweries
Campañía Industrial Cervecería Salta S.A., Cervecería Santa Fé S.A. and
Cervecería Córdoba S.A. CCUs share of the Chilean beer market in 2002 was
approximately 89%. CCU of Argentina entered into a brewing joint venture with
Anheuser-Busch Companies, Inc. (Anheuser-Busch), the worlds largest brewer,
to produce, market and distribute Anheuser-Buschs Budweiser brand in
Argentina. The joint venture also distributes the brands produced by CCUs
Argentine breweries, which have an installed capacity of 2.9 million
hectoliters in Argentina.

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Subsequent to the termination of our relationship with Heineken, on
January 14, 2003, Heineken announced that it would acquire a 50% stake in IRSA
which owns 62% of CCU. As part of its purchase of the 50% stake in IRSA,
Heineken intends to transfer the licensing agreements to produce the Heineken
brand in Chile and Argentina to CCU. Therefore, we will begin to compete with
Heineken, through CCU, in at least some of our markets.

Until January 31, 2003, we also faced competition from AmBev, who served
the Argentine market from its 2.9 million hectoliter brewery at Luján, near
Buenos Aires. As a condition to approving some of our transactions with AmBev,
the Argentine antitrust authorities have required AmBev to transfer this
brewery to a foreign purchaser. See Item 4Information on the CompanyHistory
and DevelopmentRelationship with AmBevApproval of the Argentine Antitrust
Authorities.

In Argentina, we have met the challenge of increased competition by giving
our sales force greater autonomy to make sales decisions more quickly in
response to location-specific needs. However, the economic crisis and peso
devaluations in Argentina may make it less expensive for international concerns
to make investments in Argentina. Consequently, a continuation of adverse
economic conditions in Argentina may result in increased competition in our
Argentina markets. We intend to continue with strategies designed to maintain
or improve our competitive position in our markets but we cannot assume that
these strategies will be successful. Any loss of market share could be
permanent. Competition in the beer market may take the form of aggressive
price discounting, which could have a negative impact on our results of
operations. According to Nielsen
Argentina, our market share of the Argentine beer market in 2002 was 64.5%,
compared with 67.1% in 2001 and 67.7% in 2000. After giving effect to our
strategic relationship with AmBev, and until we have sold our beer brands
pursuant to the requirements of the Argentine antitrust authorities, we
calculate our share of the beer market to be above 80%. See History and
DevelopmentRecent EventsRelationship with AmBev. However, we cannot
guarantee that the economic situation in Argentina or other factors such as
aggressive action by our competitors will not cause us to lose market share in
our most important market.

Due to the acquisition of our two previous competitors, CBN and CBNSC, our
market share in Bolivia increased to approximately 98.1% in 2000 and remains
above 97%. Our only competition is from imported beer and minor local brewers.

In Chile, we continue to be the new entrant challenging the leadership of
CCU. As a result of the repositioning of our two main brands in Chile, Becker
and Báltica, and the roll-out of Heineken throughout Chile by the end of 2001,
our domestic volume sales have continued to increase. Our sales volume
increased during 2002 due to the strong performance of all three brands; sales
of Heineken represented 22% of our total sales volume in Chile. Pursuant to
its rights under the Memorandum of Agreement between Heineken and Quinsa,
Heineken delivered a notice to the Company terminating the Heineken License,
under which we produced, marketed and distributed the Heineken brand. See
History and DevelopmentRecent EventsSettlement with Heineken. Therefore,
as of June 2003, we no longer produce nor sell the Heineken brand. Subsequent
to the termination of our relationship with Heineken, on January 14, 2003,
Heineken announced that it would acquire a 50% stake in IRSA which owns 62% of
CCU. As part of its purchase of the 50% stake in IRSA, Heineken intends to
transfer the licensing agreements to produce the Heineken brand in Chile and
Argentina to CCU. Therefore, we will begin to compete with Heineken through
CCU in at least some of our markets, including Chile where Heineken represented
a significant portion of our sales. We cannot guarantee that we will be able
to replace our lost sales due to our loss of the Heineken brand, nor can we
assure you that our sales volume will continue to increase in the future.

In Paraguay and Uruguay, our main competitor during 2002 was AmBev, whose
sales accounted for approximately 19% and 46% in these markets, respectively.
Our strategic relationship with AmBev gives us a combined market share of 95% in
Paraguay and 97% in Uruguay based on management estimates.

Competition  Soft Drinks

The soft drink industry is highly competitive. Our main competitors are
local bottlers of Coca-Cola® brands and bottlers of second-tier brands
(B-brands). In recent years, B-brands have substantially increased their
presence in our core markets. These actions eroded Baesas market share in the
Buenos Aires metropolitan area, the main region in Argentina, from
approximately 27% in 2000 to approximately 23% in 2002. In 2002, our market

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share in Uruguay was 11.3%. We respond to competition in our soft drink
markets through marketing and promotions in diverse segments.

B-brands have historically competed based on their price. Due to worsened
economic conditions in our markets, these brands are having greater difficulty
negotiating terms with suppliers and with clients, notably supermarkets. This
has led to difficulties in terms of financing their working capital and
therefore, we expect competition from low-priced brands to be less aggressive
in the future. In addition, their access to financing for capital expenditures
is restricted, and therefore, their ability to follow our initiatives such as
the introduction of returnable glass bottles is limited.

In 2000, AmBev, with Danone, acquired a controlling interest in Salus, and QIB also increased its ownership interest in Salus to 34.66%. Salus sells mineral water as well as beer in Uruguay, and when AmBev transferred its interest in Salus to Quinsa pursuant to our strategic relationship, the mineral water assets of Salus remained with Danone. Pursuant to their relationship, AmBev and Danone had a non-compete agreement
whereby, among other things, AmBev agreed not to compete with Danone in the mineral water business in Uruguay. Our relationship with AmBev conflicts with this non-compete because Quinsa is involved in the sale of mineral water in Uruguay through EUSA, which has since been renamed FNC S.A.

Currently, we are negotiating with AmBev and Danone to arrive at a solution to AmBevs violation of its non-compete with Danone. While it is too early to predict how this conflict
will be resolved, we do not believe that any resolution will significantly impact our results of operation as our water sales in Uruguay account for only 0.15% of our total consolidated net sales.

MATERIAL LICENSES AND CONTRACTS

Relationship with Heineken

From 1984 to January 13, 2003, Heineken owned a 15% equity interest in our
principal subsidiary, QIB, while we retained the remaining 85%.

QIB Shareholders Agreement. Prior to January 13, 2003, Heineken was an
investor in QIB. Our relationship with Heineken was governed by a
shareholders agreement (the QIB Shareholders Agreement) that gave Heineken
the right to nominate a certain number of nominees to the QIB board of
directors and to the boards of various operating companies. Through January
31, 2003, the board of directors of QIB contained two Heineken nominees and six
Quinsa nominees. In addition, the QIB Shareholders Agreement required the QIB
board of directors and shareholders to obtain the consent of Heineken (such
consent not to be unreasonably withheld by Heineken) prior to undertaking
certain corporate actions including the issuance of new QIB shares, changes to
QIBs articles of association and by-laws, reinvestment of dividends received
by QIB from its operating subsidiaries and a liquidation of QIB.

Heineken was allowed to export its products for sale in Argentina, Chile,
Paraguay or Uruguay only to the extent that (i) our local operating company was
unable to meet demand for those products and (ii) such products were not
produced locally under a Heineken license. Pursuant to trademark license
agreements, we brewed the Heineken brand in Argentina beginning in 1997, and in
Chile beginning in 1999. We ceased to produce the Heineken brand as of June
2003, as further described below.

Under the QIB Shareholders Agreement, Heineken could require us to
purchase Heinekens interest in QIB at fair value if, without Heinekens
consent, we either (x) produced or sold, other than through QIB, a beer brand
from a non-Argentine brewery under a trademark or license and such beer was not
produced by a Heineken group company, or (y) engaged a company that did not
belong to the Heineken group for the provision of technical advice. The AmBev
transactions did not trigger this right because the AmBev beer brands were to
be produced and sold through QIB. In any event, these restrictions ended with
the termination of the Shareholder Agreement described below..

Technical Assistance Agreements. Our relationship with Heineken as a
technical adviser was governed by technical assistance agreements relating to
both our brewing and malting operations. These agreements covered issues
relating to both product quality and the maintenance of production equipment
and facilities. In 2000, 2001 and 2002, fees and expenses paid for services
provided by Heineken were US$1.0 million, US$1.0 million and US$1.5 million,
respectively (excluding salaries paid by us to no more than five Heineken
employees in each year). These fees and expenses are included as technical
advisory service expenses within cost of goods sold in the Consolidated
Statement of Income.

Termination of QIB Shareholders Agreement and Technical Assistance
Agreements. In June 2002, we received a notice from the ICC stating that
Heineken had begun an arbitration proceeding against us and BAC alleging that
the proposed AmBev transactions violated certain contracts between Heineken and
us and asking that the arbitration panel (i) prohibit completion of the AmBev
transactions; (ii) declare that Heineken is entitled to purchase Quinsas 85%
interest in QIB for terms economically equivalent to the value placed by QIB on
the AmBev transactions; and (iii) award money damages to Heineken of an
unspecified amount. Subsequently however, on January 13, 2003, Quinsa, BAC and
Heineken, and certain of their respective affiliates entered into a Memorandum

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of Agreement whereby the parties agreed to settle all disputes and claims
brought by and against each other. The Memorandum of Agreement provided, among
other things, for (i) the purchase by BAC from Heineken of all the shares of
QIB held by Heineken for US$102.7 million; (ii) the declaration and payment by
QIB, prior to January 15, 2002, of a dividend in the amount of US$26.5 million,
15% of which would go to Heineken; (iii) the termination of the shareholder
agreement between QIB, Heineken and Quinsa; and (iv) the termination of the
Technical Assistance Agreements between Heineken and QIB or its operating
companies.

Transfer of Heineken License. In addition, under the Memorandum of
Agreement, Heineken had the option until December 31, 2004 to terminate its
license agreements with QIB or its relevant operating company granting the
licensee the rights to produce, sell and distribute Heineken beer in the
licensees territory. Heineken subsequently delivered a notice to the Company
terminating the trademark license as of June 17, 2003. See History and
DevelopmentRecent EventsSettlement with Heineken.

We do not believe that the termination of the Technical Assistance
Agreements will have any significant impact on our operations or financial
condition. Under the QIB Shareholders Agreement, we could only launch a new
beer product or enter into a new marketing venture in Argentina, Paraguay or
Uruguay if we conducted our business through QIB or one of its subsidiaries.
In addition, the QIB Shareholders Agreement required the QIB board of
directors and shareholders to obtain the consent of Heineken (such consent not
to be unreasonably withheld by Heineken) prior to undertaking certain corporate
actions including the issuance of new QIB shares, changes to QIBs articles of
association and by-laws and the reinvestment of dividends received by QIB from
its operating subsidiaries. With the termination of this Shareholders
Agreement, we have more flexibility to evaluate new product and marketing
ideas. Furthermore, the QIB board of directors is not dependent on the consent
of an outside party with respect to the taking of certain actions.

It is impossible for us to predict how,
if at all, the loss of the
Heineken License will impact our financial results. We may incur certain costs
in connection with the termination of the Heineken license as the Memorandum of Agreement calls for the
transfer of bottles and crates already purchased by CMQ, as well as
Heineken-related promotional material, back to Heineken at no cost. However, we have
been in discussions with Heineken, and it appears that, in fact, we will not incur
these costs, although any costs we might incur will not be material. In
addition, the termination of the Heineken License, along with the QIB
Shareholders Agreement and the Technical Assistance Agreements, paves the way
for Heineken to compete with us directly. We believe the Heineken brand to be
the largest brand in the premium segment of the market in Argentina and Chile,
according to our internal estimates. However, Heineken accounts for less than
2% of our sales in Argentina, and approximately 22% of our sales in Chile.
These two countries account for the vast majority of Heinekens sales in the
southern cone markets. We are currently evaluating possibilities with regard
to replacing Heineken as our premium brand. Nonetheless, we do not believe the
loss of sales from Heineken will have a significant impact on our results. If,
however, the acquisition by Heineken of the 50% stake in IRSA which owns 62% of
CCU, and the resulting transfer of the licensing agreements to produce the
Heineken brand in Chile and Argentina to CCU, creates a more competitive
environment in the southern cone markets, our results of operation could be
impacted.

Relationship with PepsiCo

In December 1999, PepsiCo agreed to grant us exclusive bottling rights for
each of our franchise territories for periods exceeding ten years in duration.
Each franchise agreement requires us to purchase the concentrate and syrups
used to produce PepsiCo® soft drink and fruit juice products from designated
affiliates of PepsiCo. The price we pay for concentrate is calculated on the
basis of the price per unit sold to retailers within a given territory (net of
sales taxes, credit for non-returnable bottles and discounts). In addition,
each franchise agreement requires that we meet certain standards established by
PepsiCo.

The agreements governing our relationship with PepsiCo include franchise
commitment letters with PepsiCo regarding the sale of PepsiCo® soft drink
products in each of our franchise territories, and exclusive bottling
arrangements regarding certain trademarks of PepsiCo. Our franchise commitment
letters operate concurrently with these exclusive bottling arrangements and
terminate automatically if the corresponding bottling arrangement expires or is
terminated.

Our franchise commitment letters with PepsiCo require us to attain minimum
volume and market share levels of the cola market, flavored soft drink market
and total markets, as well as minimum levels of nominal and effective
distribution. These goals vary by franchise territory. Similarly, our
exclusive bottling arrangements require us to

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meet specified market share, distribution and expenditure targets for the
PepsiCo® products that are covered by the corresponding franchise commitment
letters.

Our agreements with PepsiCo define the amount that we are required to
spend for marketing activities, usually as a percentage of total concentrate
purchases. These agreements also establish a framework for funding marketing
expenditures in each of our franchise territories. Pursuant to these
agreements, each franchise territory develops in cooperation with PepsiCo an
annual marketing plan to promote PepsiCo® products in that territory. The
annual marketing plan defines the types and amounts of advertising and
promotional expenses and investments in marketing-related assets that we are
required to fund in each territory. In certain franchise territories, PepsiCo
sets aside a percentage of the amount we pay for concentrate to support these
marketing activities. PepsiCo either gives us these amounts or purchases
services or goods directly from third parties, in both cases to support
marketing activities. In other franchise territories, we pay for all marketing
expenditures directly. If we fail to submit our annual marketing and
advertising plans each year to PepsiCo for its review and approval, or fail to
carry out these plans in all material respects, PepsiCo is entitled to
terminate the franchise agreement. Any termination of our franchise
arrangement with PepsiCo would severely impact our soft drink operations. See
also Item 3. Key InformationRisk FactorsRisk Factors Relating to QuinsaA
default by certain of our subsidiaries could endanger our exclusive bottling
agreements in Argentina and Uruguay.

REGULATION

Production and Marketing.Unlike many other countries, the southern cone
countries do not heavily regulate the production and marketing of alcoholic
beverages. We are not required to comply with any significant regulations,
other than with standards imposed by food and health regulatory agencies,
applicable to our production and marketing of beer, soft drinks and bottled
water.

The drinking age is 21 in Bolivia, 20 in Paraguay and 18 in Chile and
Uruguay. In Argentina, a federal law prohibits the sale of alcoholic beverages
to persons under 18 years of age. The law also establishes specific rules with
respect to the advertising of alcoholic products, including prohibiting the
participation of underage persons in such advertising or any advertising
message that alcohol improves either physical, sexual or intellectual
performance. This law also requires that all alcoholic drink packaging and
advertising state that alcoholic beverages may not be sold to persons under the
age of 18 and that such beverages should be drunk in moderation. Paraguayan
law bans any portrayal of children, family life, the work environment and
sports in alcoholic beverage advertisements, and also regulates the form,
duration and time of the day during which the advertisements can be shown on
TV. In Paraguay, advertisements must also warn against excessive drinking. In
Bolivia, advertisements cannot show people actually drinking beer, they cannot
involve children and they must include a warning against excessive drinking.
In Chile, advertisements can only be shown on TV after 10 p.m., and licenses
are necessary for on-premise consumption. In Uruguay, there are no legal
restrictions regarding advertisements. However, there is an agreement between
advertisers and the government that the advertisement should encourage moderate
consumption, be adult-oriented and should not appear in childrens or youth
programming.

Pricing Controls, Excise Taxes and Import Tariffs.There are no formal
governmental price controls on the wholesale or retail prices of beer, soft
drinks and water in our countries of operation. Sales of our products are
subject to a variety of excise and value added taxes that are generally passed
on to consumers. In February 2000, the Bolivian government increased excise
taxes on beer by 39%. This increase was eliminated in December 2000. During
2002, the Bolivian government increased the excise tax on beer by 6.45%. This
is a fixed amount calculated on a per hectoliter basis. As of 2003, this tax
will be adjusted based on inflation. In 2002, we paid approximately US$60.0
million in excise taxes on a consolidated basis. Any increase in such taxes
may have an adverse effect on the consumption of our products and, to the
extent we are not able to pass on such taxes to consumers, may have a material
adverse effect on our financial condition and results of operations. Our
imports and sales of beer and soft drink products and ingredients across the
borders of our countries of operation are subject to customs tariffs and
duties. In 2002, we paid US$2.7 million in such charges on a consolidated
basis. Operation of the Mercosur Treaty, a common market agreement among
Argentina, Brazil, Paraguay and Uruguay, should result in a gradual decrease in
such tariff charges.

Environmental Regulation; Occupational Safety and Quality Control.Our
operations are subject to national and local environmental laws and regulations
in each of the southern cone countries. The level of environmental

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regulation and enforcement of such regulation is increasing in each of our
markets. All of our business units already comply with the environmental
regulations of their respective jurisdiction, so that incremental investments
in this area are marginal. However, we cannot guarantee that there will not be
significant changes in the regulatory environment. During 2002, our
investments in this area were not material, accounting for no more than 1% of
our capital expenditures.

In addition to efforts to comply with environmental regulation, we also
undertook to improve our quality control systems in our plants and distribution
centers as well as implemented occupational safety measures in Argentina. We
intend to continue to focus on these areas in the future.

ORGANIZATIONAL STRUCTURE

We are a Luxembourg holding company that operates through our
subsidiaries, principally QIB, in which we hold an 85% interest. QIB has
direct and indirect holdings in our various operating subsidiaries in
Argentina, Bolivia, Chile, Paraguay and Uruguay. These holdings range from
99.72% and 100% in CMQ and in our Chilean subsidiary, Cervecería Chile,
respectively, to as low as 57.97% in Colosas S.A., one of our Paraguayan
subsidiaries. QIB owns a 48.95% interest in Eco de los Andes, a company that
sells mineral water in Argentina, and a minority stake in Salus, a
Uruguayan-based company with a strong presence in the beer and water markets of
that country.

We conduct our operations through various subsidiaries in which, in
certain cases, minority shareholders hold significant interests. Most notably,
Heineken held 15% of the capital stock of our principal subsidiary, QIB until
January 13, 2003. As of that date, that 15% stake is held by AmBev and BAC who
own 8.6% and 6.4%, respectively. See History and DevelopmentRecent
EventsSettlement Agreement with Heineken. In Argentina, we conduct our
business primarily through CMQ. Our soft drinks operations in Argentina had
been conducted through Baesa and EDISA.

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The following chart shows our corporate structure and our ownership
interest in our principal operating subsidiaries in Argentina, Bolivia, Chile,
Paraguay and Uruguay as of December 31, 2002:

(ORGANIZATIONAL STRUCTURE CHART)



---

|* |  | QIB holds its interest in Cervecería Chile directly and through
wholly-owned U.S. and Chilean non-operating subsidiaries.
|- |  | -------------------------------------------------------------------------------------------------------------------------

For a list of our direct and indirect equity holdings in each of the
companies which form the Quinsa group, see Note 5 to the Consolidated Financial
Statements.

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The following chart shows our corporate structure and our ownership
interest in our principal operating subsidiaries in Argentina, Bolivia, Chile,
Paraguay and Uruguay as of January 30, 2003 after the completion of our
strategic relationship with AmBev:

(ORGANIZATIONAL STRUCTURE CHART)

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PROPERTY, PLANT AND EQUIPMENT

Property

Our properties consist primarily of brewing, malting, bottling,
distribution and office facilities in Argentina, Bolivia, Chile, Paraguay and
Uruguay. There are no major encumbrances on our properties and we have no
major leased properties. Set forth below by country and type of facility is
certain information, as of December 31, 2002, regarding our principal
production facilities, all of which we own.

|                       |  |                                |                    |                            |        |     |  |  |    |  
|---------------------- |  | ------------------------------ | ------------------ | -------------------------- | ------ | --- |  |  | -- | -
|Type of Facility       |  | Location                       | Technical Capacity | Average Utilized (1)      
|                       |  |                                |                    |                            |        |    
|                       |  |                                |                    | (hectoliters in thousands) |        |     |  | 
|Brewery                |  | Quilmes Argentina             |                    |                            | 5,050  |     |  |  | 56 | %
|Brewery                |  | Zárate  Argentina             |                    |                            | 4,400  |     |  |  | 55 | %
|Brewery                |  | Mendoza  Argentina            |                    |                            | 2,000  |     |  |  | 51 | %
|Brewery                |  | Corrientes  Argentina         |                    |                            | 1,500  |     |  |  | 46 | %
|Beer Bottling Facility |  | Tucumán  Argentina            |                    |                            | 1,200  |     |  |  | 56 | %
|Malting Plant          |  | Tres Arroyos  Argentina       |                    |                            | 92,000 | (2) |  |  | 99 | %
|Malting Plant          |  | Llavallol-Argentina            |                    |                            | 25,000 | (2) |  |  | (3 | )
|Brewery                |  | La Paz  Bolivia               |                    |                            | 1,058  |     |  |  | 78 | %
|Brewery                |  | Taquiña  Bolivia              |                    |                            | 626    |     |  |  | 26 | %
|Brewery                |  | Santa Cruz  Bolivia           |                    |                            | 572    |     |  |  | 23 | %
|Brewery                |  | Santa Cruz  Bolivia           |                    |                            | 640    |     |  |  | 72 | %
|Brewery                |  | Huari  Bolivia                |                    |                            | 173    |     |  |  | 77 | %
|Brewery                |  | Tarija  Bolivia               |                    |                            | 38     |     |  |  | 42 | %
|Brewery                |  | Santiago  Chile               |                    |                            | 640    |     |  |  | 72 | %
|Brewery                |  | Ypané  Paraguay               |                    |                            | 2,176  |     |  |  | 69 | %
|Brewery                |  | Montevideo  Uruguay           |                    |                            | 757    |     |  |  | 35 | %
|Soft Drinks            |  | Montevideo  Uruguay           |                    |                            | 597    |     |  |  | 34 | %
|Soft Drinks            |  | Buenos Aires South  Argentina |                    |                            | 7,180  |     |  |  | 56 | %
|Isotonics(4)           |  | Buenos AiresArgentina         |                    |                            | 336    |     |  |  | 24 | %
|Soft Drinks            |  | Córdoba  Argentina            |                    |                            | 1,260  |     |  |  | 59 | %
|Soft Drinks            |  | Tucumán  Argentina            |                    |                            | 1,075  |     |  |  | 52 | %
|Soft Drinks            |  | Trelew  Argentina             |                    |                            | 298    |     |  |  | 44 | %



---

|(1) |  | Demand for our products is subject to marked seasonal fluctuations.
Consequently, the utilized capacity of our production facilities during
peak months may be considerably higher than the averages shown above. In
addition, average utilized capacity does not necessarily reflect capacity
utilization for any particular presentation.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Measured in tons.                                                                                                                                                                                                                                                                                                                          
|   
|(3) |  | As a condition to their approval of our alliance with AmBev, the
Argentine antitrust authorities have required us to sell this facility or
lease it to third parties for at least 10 years.                                                                                                                                                
|   
|(4) |  | We own only the plant and the equipment at this facility, which we use as
a filling line for the Gatorade® brands we produce. We do not own the
underlying land, although we are not required to pay any amounts under a
lease for use of such land.                                                                                       

To the best of our knowledge, there are no existing environmental issues
affecting our use of these facilities.

Plant Investment/Productivity Gains

From January 1, 2000, through December 31, 2002, we invested approximately
US$141.5 million (excluding expenditures for bottles, crates and acquisitions)
to modernize and expand the capacity of existing facilities. In 2003, we
intend, business conditions permitting, to spend approximately US$36 million
for capital expenditures including bottles and crates. Capital expenditures in
2002, excluding bottles, crates and acquisitions were US$14.4 million. Capital
expenditures were related primarily to the installation of new filling lines
for our soft drinks

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business in Argentina, the purchase of coolers to place at points of sales
and general maintenance. See  History and Development  Capital
Expenditures above.

Increased brewing capacity in recent years has allowed us to participate
in periods of beer consumption growth although such periods have occurred, most
notably in Argentina and Paraguay, when our sales were limited by capacity
constraints. Recent and future increases in capacity should allow us to meet
customer demand in the ordinary course although there may continue to be short
periods, particularly during the high summer season, when we are constrained
for capacity. We have been able to increase productivity in recent years with
more technologically advanced facilities. The strength of our cash flow from
operations in past years has allowed us to finance capital expenditures with
relatively low levels of long term debt. However, due to the economic crisis
in Argentina and its impact on our other southern cone markets, this may not
continue to be the case in the future.

During 2003, we are not planning significant capacity expansion at any of
our breweries. After the completion of our strategic relationship with AmBev,
we in fact closed AmBevs brewery in Paraguay and one of their plants in
Uruguay. In addition, as a condition to their approval of our alliance with
AmBev, the Argentine regulatory authorities have required us to sell AmBevs
brewery in Argentina. See, History and DevelopmentRecent EventsApproval of
the Argentina Regulatory Authorities.

With regard to our soft drinks business, the only capacity expansion we
completed in 2002 was related to the introduction of our returnable glass
bottles. We are not planning any additional capacity expansion for this
business in 2003.




ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

OPERATING RESULTS

Introduction

The following Operating and Financial Review and Prospects should be read
together with Item 3. Key InformationSelected Financial Data and our
Consolidated Financial Statements and related notes appearing elsewhere in this
annual report. In their report dated March 3, 2003, our auditors have noted
that our Consolidated Financial Statements do not include any effects or
reclassifications that might result from the outcome of the negotiations we are
currently carrying out with our creditors, as a result of the non-compliance
with restrictive covenants contained in certain of our financial debt
agreements and the right of the creditors to require we prepay the outstanding
balance. The Consolidated Financial Statements have been prepared in
accordance with Luxembourg GAAP, which differs in certain significant respects
from U.S. GAAP. Note 27 to the Consolidated Financial Statements provides a
description of the principal differences between Luxembourg GAAP and U.S. GAAP,
as they relate to us, and a reconciliation to U.S. GAAP of shareholders equity
as of December 31, 2002 and 2001 and net income (loss) for the years ended
December 31, 2002, 2001 and 2000. The differences involve methods of measuring
the amounts shown in the Consolidated Financial Statements as well as
additional disclosures required by U.S. GAAP. The reconciliation does not
include disclosure of all information that would be required by U.S. GAAP and
Regulation S-X of the Exchange Act.

This Operating and Financial Review and Prospects discussion contains
forward-looking statements that involve risks, uncertainties and assumptions.
These forward-looking statements include, among others, those statements
including the words expects, anticipates, intends, believes and similar
language. The actual results may differ materially from those anticipated in
these forward-looking statements as a result of many factors, including those
set forth elsewhere in this annual report.

Discussion of Critical Accounting Policies

In connection with the preparation of the financial statements included in
this document, we have relied on variables and assumptions derived from
historical experience and various other factors that we deemed reasonable and
relevant. Although we review these estimates and assumptions in the ordinary
course of business, the portrayal of our financial condition and results of
operations often requires our management to make judgments regarding the

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effects of matters that are inherently uncertain on the carrying value of our
assets and liabilities. Actual results may
differ from those estimated under different variables, assumptions or
conditions. In order to provide an understanding about how management forms
its judgments about future events, including the variables and assumptions
underlying the estimates, and the sensitivity of those judgments to different
variables and conditions, we have included comments related to each critical
accounting policy described as follows:



| |  | allowance for doubtful accounts;         
|- |  | -----------------------------------------
| 
| |  | provision for contingencies;             
| 
| |  | recognition of deferred income taxes; and
| 
| |  | impairment of long-lived assets          

Allowance for doubtful accounts

We maintain our allowance for bad debts at a level believed adequate by
our management to reflect probable losses in our trade receivable due to
customer default, insolvency, or bankruptcy. Our management establishes this
provision by using the following criteria: customer credit history, customer
current credit rating and other relevant factors, and such criteria are
re-evaluated on a quarterly basis.

Provision for contingencies

We have certain contingent liabilities with respect to material existing
or potential claims, lawsuits and other proceedings, including those involving
tax, social security and other matters. We accrue a liability when it is
probable that future costs will be incurred and such costs can be reasonably
estimated. Such accruals are based on developments to date, our estimate of
the outcome of these matters, the opinion of our lawyers, and their experience
in contesting, litigating and settling other matters. As the scope of the
liabilities becomes more clearly defined, there may be changes in the estimates
of future costs, which could have a material effect on our future results of
operations and financial condition or liquidity.

Recognition of deferred income taxes

We recognize income taxes using the comprehensive liability method of
accounting. Under this method, deferred tax assets and liabilities are
determined based on the difference between the financial statement and income
tax bases of assets and liabilities and carryforwards using currently enacted
tax rates. We estimate the tax valuation allowance by assessing the future
recoverability of the deferred tax assets. The allowance is based on estimates
of taxable income in each jurisdiction in which we operate and the period over
which the assets will be recoverable. In the event that actual results differ
from those estimates, we may need to establish additional valuation allowances,
and such allowances may be material. We consider the effect of
translating non-monetary assets at historical rates of exchange as
permanent differences in determining deferred income tax.

Impairment of long-lived assets

We periodically evaluate the carrying value of our long-lived assets,
which consist primarily of tangible fixed assets and intangible assets, for
impairment. The carrying value of a long-lived asset is considered impaired by
us when the anticipated discounted cash flows from such asset are separately
identifiable and result in less than its carrying value. In that event, a loss
would be recognized based on the amount by which the carrying value exceeds the
fair market value of the long-lived asset. Fair market value is determined
primarily using the anticipated cash flows discounted at a rate commensurate
with the risk involved. Assets released from productive activities are carried
at the lower of cost or its estimated net realization value. During the year
ended December 31, 2002, we recognized an impairment charge of goodwill related
to the soft drink business in Argentina amounting to US$ 90 million. See Note 4
to our Consolidated Financial Statements.

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Principal differences between Luxembourg GAAP and U.S. GAAP

We prepare our consolidated financial statements in accordance with
Luxembourg GAAP which differ in certain significant respects from U.S. GAAP.
Such differences involve methods of measuring the amounts shown in
the consolidated financial statements as well as additional disclosures
required by U.S. GAAP and Regulation S-X of the Exchange Act. Our Consolidated
Financial Statements include solely a reconciliation of net income (loss) and
shareholders equity to U.S. GAAP. Pursuant to Item 17 of Form 20-F, such
reconciliation does not include disclosure of all information that would be
required by U.S. GAAP and Regulation S-X of the Exchange Act, with the
exception of the presentation of the statement of other comprehensive income as
required by SFAS No. 130, Reporting Comprehensive Income. See Note 27 to our
Consolidated Financial Statements for details.

The principal differences between Luxembourg GAAP and U.S. GAAP, as they
relate to us, are the following:



| | 1.  |  | the application of SFAS No. 52 to the translation into U.S.
dollars of the financial statements of our foreign subsidiaries;                                                                                                                                                                                                                                                                                                                                                                                                                   
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 2.  |  | the reversal of the impairment charge of intangible assets
recognized under Luxembourg GAAP during 2002;                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| | 3.  |  | the reversal of the write-down of inventories recognized
under Luxembourg GAAP in 2002;                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| | 4.  |  | the recognition of certain impairment losses under U.S. GAAP
when the criteria for recognizing impairment losses for assets held
for disposal, as specified in Staff Accounting Bulletin No. 100 and
SFAS No. 121, were met;                                                                                                                                                                                                                                                                                                                   
|
| | 5.  |  | the reversal of certain liabilities pertaining to
restructuring charges recognized as part of the purchase price
allocation of certain acquisitions because the criteria for
recognizing such losses, as specified in EITF 95-3 Recognition of
Liabilities in Connection with a Purchase Business Combination,
have not been met and the reduction of goodwill for tax benefits
derived from a valuation allowance associated with our acquisition
of Baesa under U.S. GAAP while such benefits were charged to income
under Luxembourg GAAP;
|
| | 6.  |  | the accounting of certain business combinations accounted for
as purchases under Luxembourg GAAP while they were accounted for in
a manner similar to a pooling-of-interests under U.S. GAAP;                                                                                                                                                                                                                                                                                                                                                  
|
| | 7.  |  | the recognition of treasury stock as a separate component of
shareholders equity under U.S. GAAP;                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| | 8.  |  | the recognition of certain restructuring costs under U.S.
GAAP when the criteria for recognizing restructuring charges, as
specified in the EITF 94-3, are met;                                                                                                                                                                                                                                                                                                                                                                                
|
| | 9.  |  | the deferral of certain pension costs over the remaining
service years of the beneficiaries under U.S. GAAP;                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| | 10. |  | the deferral of certain pre-operating costs and technical
fees incurred in the construction of a plant under Luxembourg GAAP
while such costs are expensed as incurred under U.S. GAAP, except
for the technical fees which are capitalized as part of the cost of
the asset;                                                                                                                                                                                                                                                                  
|
| | 11. |  | the deferral of certain advertising and other marketing costs
under Luxembourg GAAP while they are expensed as incurred under U.S.
GAAP;                                                                                                                                                                                                                                                                                                                                                                                                       
|
| | 12. |  | the retroactive adjustment, as required by APB No. 18, to
reflect the investment in CBN under the equity method of accounting;                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| | 13. |  | the application of certain U.S. GAAP adjustments, primarily
foreign currency translation adjustments, to the net assets and
liabilities sold which gave rise to differences in the amount of
gain on sale of subsidiaries recognized under Luxembourg GAAP;                                                                                                                                                                                                                                                                                    
|
| | 14. |  | the reversal of certain reconciling items previously
recognized in connection with the management bonus program due to
certain modifications introduced to the plan during 2000;                                                                                                                                                                                                                                                                                                                                                               
|
| | 15. |  | the effect on deferred income taxes of the foregoing
reconciling items, as appropriate; and                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| | 16. |  | the effect on minority interest of the foregoing reconciling
items, as appropriate.                                                                                                                                                                                                                                                                                                                                                                                                                                                            

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We have elected to present the statements of cash flows in the primary
financial statements using the guidance set forth in SFAS No. 95 Statement of
Cash Flows but using Luxembourg GAAP numbers. Since we consider all highly
liquid investments with original maturities of three months or less to be cash
equivalents, no differences exist
between cash flows from operating, investing and financing activities
reported in the primary financial statements and cash flows from operating,
investing and financing activities that would be reported in a statement of
cash flows prepared using U.S. GAAP numbers.

There are additional distinctions between Luxembourg GAAP and U.S. GAAP.
First, certain significant differences exist between Luxembourg GAAP and U.S.
GAAP in connection with the presentation of balance sheet items. Generally,
under Luxembourg GAAP, items with a lower degree of liquidity are disclosed
before items which have higher convertibility into cash. In addition, certain
captioned items differ from balance sheets presented under U.S. GAAP formats.
Also, at December 31, 2002, under Luxembourg GAAP we have classified the
long-term portion of our debts with covenant violations, amounting to US$59.3
million, as non-current liabilities according to their original terms. For US
GAAP purposes, as such debts are callable by the creditors, we have not
obtained a permanent waiver and there is no assurance that an acceleration will
not take place within a one-year period, the entire outstanding balance would
have been classified as a current liability. Second, certain significant
differences exist between Luxembourg GAAP and U.S. GAAP in connection with the
presentation of statement of income line items. Under Luxembourg GAAP, certain
asset impairment and restructuring charges were recognized as extraordinary
items during fiscal year 2000. Under U.S. GAAP, as required by APB 30, these
charges did not qualify as extraordinary items. In addition, certain financial
results and most of other income and expense items included in our Luxembourg
GAAP financial statements, would be included in the determination of operating
(loss) income for U.S. GAAP purposes.

Impact of Changes in our Prices and Changes in Volumes Sold on Our Net Sales

Almost all of the countries in which we operate suffered similar
recessionary conditions in 2000, 2001 and 2002 with Chile and Bolivia being the
exceptions. Both Argentina and Uruguay suffered their fourth consecutive year
of contracting GDP in 2002. GDP growth in Chile and Bolivia also decelerated
between 2000 and 2002. In January 2002, Argentina repealed its Convertibility
Law, which had fixed the foreign currency exchange rate for ten years and
provided for parity between the Argentine peso and the U.S. dollar. This led
to significant devaluations of the peso against all hard currencies, inflation
reached 41% for 2002, and the countrys GDP declined 10.9% during this same
period. These effects also impacted the economies of Paraguay and Uruguay, the
latter having received assistance from the International Monetary Fund to avoid
a total collapse of its financial system. Our consolidated net sales declined
to US$468.6 million in 2002, compared to US$938.7 million in 2001 and $955.1
million in 2000, primarily as a result of the devaluation of the Argentine
peso. Because the rate of devaluation of the local currencies in the southern
cone markets was greater than the respective rates of inflation, the prices of
our products declined when measured in U.S. dollars, since the nominal price
increases we instituted have not been able to keep up with the currency
depreciation. This unfavorable effect accounted for approximately 80% of the
decline in our net sales. The balance of this decline was principally a result
of lower beer volumes sold, particularly in Argentina and Paraguay, and lower
soft drink sales. While it appears that the economic situation has stabilized
in 2003, and GDP growth seems to have resumed in Argentina (although at low
levels), no assurance can be given that these positive changes will continue in
the future.

Impact of Inflation

Our operations are carried out in countries that have experienced high
inflation in the past, as well as government price controls. Our sales and the
majority of our operating costs in each of Argentina, Bolivia, Chile, Paraguay
and Uruguay are denominated in the currency of the respective countries, while
borrowings and purchases of machinery and equipment are often made in U.S.
dollars. During any period when the rate of devaluation of the local currency
against the U.S. dollar exceeds the rate of inflation, almost all income
statement amounts tend to be lower when translated into U.S. dollars than would
be the case in the absence of such an excess. From 2000 to 2002, the rate of
devaluation of local currencies exceeded inflation in the majority of our
markets, with the consequent reduction of sales prices measured in U.S. dollar
terms. Inflation reached almost 41% in Argentina during 2002. By December
2002, the rate of inflation in Argentina had begun to return to previous
levels, and for

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|the first quarter of 2003, it was approximately 2.5%. However,
there can be no assurance that such recent levels will be maintained in the
future nor that significant inflation will not occur again in the southern cone
markets.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The following table provides information relating to the rates of
inflation, as measured by certain national consumer price indices, as well as
the rates of devaluation or appreciation in the southern cone markets for 2000
through 2002:

|          |                                     |  |      |      |      |  |      |       |      |  |  |        |   
|--------- | ----------------------------------- |  | ---- | ---- | ---- |  | ---- | ----- | ---- |  |  | ------ | --
|          |                                     |  | 2000 |      | 2001 |  | 2002
|          |                                     |  |      |      |      |  |     
|Argentina |                                     |  |      |      |      |  |      |       |      |  |  |       
|          | Inflation/(Deflation)               |  |      | (0.7 | %)   |  |      | (1.6  | %)   |  |  | 40.9   | % 
|          | Currency (Devaluation)/Appreciation |  |      | 0    | %    |  |      | 0     | %(1) |  |  | (236.3 | %)
|Bolivia   |                                     |  |      |      |      |  |      |       |      |  |  |       
|          | Inflation/(Deflation)               |  |      | 3.4  | %    |  |      | 0.9   | %    |  |  | 2.5    | % 
|          | Currency (Devaluation)/Appreciation |  |      | (6.7 | %)   |  |      | (6.7  | %)   |  |  | (9.8   | %)
|Chile     |                                     |  |      |      |      |  |      |       |      |  |  |       
|          | Inflation/(Deflation)               |  |      | 4.5  | %    |  |      | 2.6   | %    |  |  | 2.8    | % 
|          | Currency (Devaluation)/Appreciation |  |      | (8.4 | %)   |  |      | (15.1 | %)   |  |  | (9.0   | %)
|Paraguay  |                                     |  |      |      |      |  |      |       |      |  |  |       
|          | Inflation/(Deflation)               |  |      | 8.6  | %    |  |      | 8.4   | %    |  |  | 14.6   | % 
|          | Currency (Devaluation)/Appreciation |  |      | (6.8 | %)   |  |      | (33.2 | %)   |  |  | (52.1  | %)
|Uruguay   |                                     |  |      |      |      |  |      |       |      |  |  |       
|          | Inflation/(Deflation)               |  |      | 5.1  | %    |  |      | 3.6   | %    |  |  | 25.9   | % 
|          | Currency (Devaluation)/Appreciation |  |      | (7.7 | %)   |  |      | (18.1 | %)   |  |  | (84.3  | %)



---

|Note: |  | Currency devaluation/appreciation figures are based on official U.S.
dollar exchange rates and are derived by dividing the exchange rate at
year-end for the current period by the exchange rate at year-end for the
previous period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     
|(1)   |  | Beginning December 21, 2001, all working days until the end of the year
were declared bank holidays. On January 11, 2002, the peso began trading
on a floating rate exchange system, after ten years of dollar-peso parity
under the Convertibility Law which had fixed the exchange rate at P$1.00
to US$1.00. Because an exact exchange rate between the peso and dollar
did not exist at the balance sheet date, the first subsequent rate (P$1.70
per US$1.00) was used for translating monetary assets and liabilities of
the Argentine subsidiaries at December 31, 2001. With the floating rate
system, the peso devalued significantly in 2002, and as of December 31,
2002, the exchange rate was P$3.36 per US$1.00.

Impact of Currency Fluctuations

Financial statements of foreign consolidated and unconsolidated
subsidiaries have been translated into U.S. dollars on the basis of the
financial statements of such subsidiaries expressed in the local currency of
the country of origin. The method of translation involves the translation of
property, other long-lived assets, long-term liabilities and related statement
of income accounts at historical rates of exchange. Additionally, net monetary
asset and liability related translation adjustments are included in our
financial results in period in which they occur. Assets and liabilities
denominated in foreign currencies are translated at the prevailing exchange
rates as of year-end. Transactions denominated in foreign currencies are
translated into U.S. dollars at the prevailing exchange rates on the date of
transaction settlement. See Note 27 to the Consolidated Financial Statements
for a description of foreign currency translation differences between
Luxembourg GAAP and U.S. GAAP.

Our net sales are realized, and a portion of our cash costs related to
sales are incurred, locally and are denominated in local currency. However, on
a consolidated basis, approximately 53% of our cash cost of goods sold (i.e.
excluding depreciation) for 2002 were either costs incurred in hard currencies
or pegged to the U.S. dollar. Most of these costs were related to raw
materials purchased from other southern cone markets, with the exception of
crown bottle tops, which our Chilean subsidiary purchased in Mexico. We also
incurred costs that are tied to the U.S. dollar during 2002 in the area of
selling, administrative and general expenses, including expenses relating to
freight and technology. The percentage of these expenses pegged to the U.S.
dollar (excluding depreciation) was approximately 17%. As devaluation
continues to occur in our local currencies, the costs that we incur in hard

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currency to produce our products will become a larger percentage of our total
costs as our expenses related to these materials increase. As a result, we
cannot assure you that further currency devaluations, particularly in
Argentina, will not continue to adversely affect our results of operations in
the future.

Impact of Economic, Fiscal, Monetary and Political Policies on Our Operations

Economic Crisis in Argentina. We carry out a significant portion of our
business in Argentina, through our principal subsidiary, CMQ. Since the fourth
quarter of 1998, the Argentine economy has been in a recession, and during the
second half of 2001, Argentinas recession worsened significantly,
precipitating a political and economic crisis. On December 3, 2001 the
Argentine government instituted measures restricting the availability and
circulation of cash and the transfer of foreign currency abroad. On December
21, 2001, the government declared a bank holiday that lasted through the end of
2001, and subsequently defaulted on its sovereign debt.

On January 6, 2002, the Argentine Congress enacted the Public Emergency
Law, which amended certain provisions of the Convertibility Law and eliminated
the requirement that the Argentine Central Banks reserves in gold and foreign
currency at all times be equivalent to at least 100% of the monetary base. The
Public Emergency Law abolished the U.S. dollar to Argentine peso parity regime
and granted the executive branch the power to set the exchange rate between the
peso and foreign currencies and to issue regulations related to the foreign
exchange market.

The situation in Argentina led to a significant decrease in the demand for
goods and services and a large rise in the level of unemployment. Listed below
are some of the measures adopted by the government in Argentina that were in
force at the date of issuance of these financial statements. Our management
had to make estimates and assumptions at the date of preparation of these
Consolidated Financial Statements in order to evaluate the impact on the
Company of these measures.

Transfers outside Argentina. During 2002, certain transfers of funds
abroad required the prior approval of the Central Bank. This situation
affected CMQs ability to pay dividends to us as well as CMQs ability to make
payments on its indebtedness to foreign creditors. Subsequent to the date of
our Consolidated Financial Statements, the restrictions requiring the Central
Banks prior authorization for the transfer of funds abroad in order to make
payments of principal and/or interest were progressively reduced from January
to May 2003, and were completely eliminated on May 6, 2003. In addition, funds
may now be transferred abroad without previous authorization of the Central
Bank in order to pay dividends corresponding to prior periods provided that
independent accountants have certified the financial statements for such
period.

Deposits in Argentine financial institutions. Beginning on February 3,
2002, deposits in U.S. dollars or other foreign currencies in Argentine
financial institutions were converted to pesos at the exchange rate of P$1.40
per US$1.00 or its equivalent in such other currency. This did not impact our
results of operation in Argentina.

Conversion of foreign currency denominated debts governed by Argentine
law. Debts in U.S. dollars or other foreign currencies in the Argentine
financial system were converted to pesos at the exchange rate of P$1.00 per
US$1.00 or its equivalent in another currency. As of February 3, 2002 the
reference stabilization index (CER) plus an interest rate were applied to
these debts. The CER is an index that measures the daily rate of change
derived from the monthly change in the Consumer Price Index (CPI) published by
the INDEC. However, because we have no material indebtedness governed by
Argentine law, this policy did not impact our results of operation in any
significant way.

Credits and debts not related to the banking sector. The obligation to
pay sums denominated in U.S. dollars or other foreign currency that were not
related to the banking sector, whatever their origin or nature, were converted
to pesos at the exchange rate of P$1.00 to US$1.00 or its equivalent in such
other foreign currency. The CER was applied to these balances as of February
3, 2002. If application of this provision led to the resulting value of the
item, good or service being higher or lower at the time of payment, either of
the parties could request a fair readjustment of the price. If no agreement
could be reached, the case was submitted to the Argentine courts.

Deferral of the deductions from income tax. The net negative results
caused by the devaluation of the peso, which occurred on January 11, 2002, are
deductible from taxable income over a five-year period beginning in 2002.

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Impact on financial information. In accordance with Luxembourg GAAP, at
December 31, 2002 monetary assets and liabilities of our Argentine subsidiaries
were translated at the exchange rate of P$3.363 per US$ 1 (P$1.70
per US$1.00 as of December 31, 2001). As a result, we recorded a net
translation loss of US$20.2 million during 2002, as compared to US$ 7.2 million
in 2001.

Recent Improvements. Since the last quarter of 2002, the economic
situation in Argentina has evolved more favorably, with the stabilization of
the Argentine peso against the US dollar and a marked deceleration in the rate
of inflation (in particular in the case of wholesale prices). In addition, the
IMF approved a debt rollover for Argentina on January 24, 2003, and agreed to
provide a short-term credit line to Argentina to repay debts to multilateral
organizations through August 2003 that could not be postponed. The IMF also
agreed to extend for one year another US$3.7 billion of payments to the IMF.
The agreement clears the way for the multilateral development banks to resume
their support of social programs following Argentinas recent payment of
outstanding obligations to them. However, Argentinas ability in the short
term to stimulate economic growth, ameliorate social unrest and repay its debt
is likely to depend on external financial assistance. To date, the IMF and
other multilateral and official-sector lenders have indicated an unwillingness
to provide any significant amount of financial aid until a sustainable economic
program has been presented. The future evolution of the economic situation in
Argentina could require the Argentine government to modify measures taken or
issue additional regulations. As a result, our Consolidated Financial
Statements should be read in light of these circumstances.

Summary of Results of Operations

The following table sets forth, for each of the years ended December 31,
2000, 2001 and 2002, selected components of our results of operations as a
percentage of net sales for each of those years.

|                                    |  |      |       |      |  |      |       |   |  |  |       |  
|----------------------------------- |  | ---- | ----- | ---- |  | ---- | ----- | - |  |  | ----- | -
|                                    |  | 2000 |       | 2001 |  | 2002
|                                    |  |      |       |      |  |     
|Net sales                           |  |      | 100.0 | %    |  |      | 100.0 | % |  |  | 100.0 | %
|Cost of goods sold                  |  |      | (51.9 | )    |  |      | (52.2 | ) |  |  | (65.8 | )
|Gross profit                        |  |      | 48.1  |      |  |      | 47.8  |   |  |  | 34.2  |  
|Selling and marketing expenses      |  |      | (24.7 | )    |  |      | (25.0 | ) |  |  | (25.7 | )
|Administrative and general expenses |  |      | (9.5  | )    |  |      | (8.2  | ) |  |  | (9.2  | )
|Operating income (loss)             |  |      | 13.9  |      |  |      | 14.6  |   |  |  | (0.8  | )
|Net income (loss)                   |  |      | 7.6   |      |  |      | 4.6   |   |  |  | (29.0 | )

The following table sets forth, for each country of operation and for the
years ended December 31, 2000, 2001 and 2002, our net sales, operating income
(loss) as well as total assets at the end of each of those years, in each case
before adjustments for intercompany transactions. See Note 21 to the
Consolidated Financial Statements.

|                        |                         |      |                   |       |   |      |   |       |   |  |   |       |  
|----------------------- | ----------------------- | ---- | ----------------- | ----- | - | ---- | - | ----- | - |  | - | ----- | -
|Geographic Segment Data |                         | 2000 |                   | 2001  |   | 2002
|                        |                         |      |                   |       |   |     
|                        |                         |      | (in US$ millions)
|Argentina               |                         |      |                   |       |   |      |   |       |   |  |   |      
|                        | Net sales               |      | $                 | 701.4 |   |      | $ | 699.5 |   |  | $ | 278.5 |  
|                        | Operating income (loss) |      |                   | 108.1 |   |      |   | 93.8  |   |  |   | (29.8 | )
|                        | Total assets            |      |                   | 980.2 |   |      |   | 878.3 |   |  |   | 689.1 |  
|Bolivia                 |                         |      |                   |       |   |      |   |       |   |  |   |      
|                        | Net sales               |      |                   | 42.1  |   |      |   | 86.9  |   |  |   | 88.7  |  
|                        | Operating income        |      |                   | 0.2   |   |      |   | 21.3  |   |  |   | 28.9  |  
|                        | Total assets            |      |                   | 292.6 |   |      |   | 270.4 |   |  |   | 268.5 |  
|Chile                   |                         |      |                   |       |   |      |   |       |   |  |   |      
|                        | Net sales               |      |                   | 26.7  |   |      |   | 23.9  |   |  |   | 22.0  |  
|                        | Operating (loss)        |      |                   | (4.1  | ) |      |   | (3.8  | ) |  |   | (2.9  | )
|                        | Total assets            |      |                   | 29.8  |   |      |   | 27.2  |   |  |   | 22.4  |  
|Paraguay                |                         |      |                   |       |   |      |   |       |   |  |   |      
|                        | Net sales               |      |                   | 130.1 |   |      |   | 85.8  |   |  |   | 59.5  |  
|                        | Operating income        |      |                   | 34.8  |   |      |   | 30.3  |   |  |   | 11.7  |  
|                        | Total assets            |      |                   | 139.4 |   |      |   | 142.1 |   |  |   | 99.6  |  

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|                        |                |      |                   |      |   |      |  |      |   |  |  |      |  
|----------------------- | -------------- | ---- | ----------------- | ---- | - | ---- |  | ---- | - |  |  | ---- | -
|Geographic Segment Data |                | 2000 |                   | 2001 |   | 2002
|                        |                |      |                   |      |   |     
|                        |                |      | (in US$ millions)
|Uruguay                 |                |      |                   |      |   |      |  |      |   |  |  |     
|                        | Net sales      |      |                   | 63.9 |   |      |  | 49.8 |   |  |  | 23.6 |  
|                        | Operating loss |      |                   | (0.8 | ) |      |  | (0.6 | ) |  |  | (3.8 | )
|                        | Total assets   |      |                   | 58.2 |   |      |  | 45.8 |   |  |  | 32.9 |  





---

|Note: | Net sales and operating income (loss) figures in the table above include
intercompany sales and operations that have been eliminated in
consolidation. Total assets figures include intercompany balances that
have been eliminated in consolidation and do not include assets related to
corporate headquarters. See Note 21 to the Consolidated Financial
Statements.
|----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Our results of operations are dependent upon a combination of (1) changes
in volumes of beer consumption in our markets, (2) our ability to sustain our
market share and (3) our ability to maintain positive gross, operating and net
profit margins in relation to our sales. It is therefore important for us to
increase our sales volumes, sustain our prices and/or control our costs in
order to improve our results from operations, especially in Argentina, our
principal market. Due to our alliance with AmBev, we believe our operating
results will improve due to higher volume sales derived from sales of AmBevs
brands in our current markets and also a reduction in our current costs through
synergies. As we currently export very small volumes of beer to Brazil,
potential exports of the Quilmes brand to Brazil through AmBevs extensive
distribution network can only increase our market share in that country;
however, we do not anticipate any significant sales in Brazil in the near term.

Fiscal 2002 Compared with Fiscal 2001

An economic recession that had affected our largest market for three years
eventually led to a run on bank deposits towards the end of 2001, and to
significant government intervention in the financial markets. In January 2002,
the Argentine government repealed the Convertibility Law, as a consequence of
which, the fixed foreign currency exchange rate that had existed for ten years
was abandoned. This led the price of hard currencies to quadruple in the course
of a few months, and to a resurgence of consumer inflation, which amounted to
41% for 2002. The crisis in Argentina severely impacted the economies of
neighboring Paraguay and Uruguay. Both of these countries suffered large
devaluations of their local currencies which far exceeded the rate of consumer
inflation.

Net Sales.We reported consolidated net sales of US$468.6 million for the
year ended December 31, 2002, compared to US$938.7 million in 2001. This
decline was principally due to the devaluation of the Argentine peso. Since
nominal prices are increased at or about the rate of inflation in each market,
and the rate of local currency devaluations far exceeded the rate of inflation
in each of our markets, our average sales prices declined when measured in US
dollars. This unfavorable effect accounted for approximately 80% of the decline
in our net sales. The balance of this decline was principally the result of (i)
lower beer volumes sold, particularly in Argentina and Paraguay, which was
partially offset by greater volume sales in Bolivia, and (ii) lower soft drink
sales.

The net sales performance of each business segment during 2002 is
described below.

Beer.Net beer sales for 2002 declined to US$342.6 million, from US$637.0
million in 2001. The effect of the Argentine peso devaluation on sales prices
measured in US dollars accounted for 79% of the decline, while lower sales
volumes in Paraguay and Argentina (also a consequence of the Argentine economic
crisis) accounted for an additional 14% decline in net beer sales. Lower
average sales prices for beer, measured in US dollars, caused by large
devaluations in all of our markets as explained above, largely accounted for
the remainder of this decline. Total beer volume sold during 2002 was 11.4
million hectoliters, a 6.5% decline compared to 2001. Beer sales represented
73.1% of our total consolidated net sales in 2002 compared to 67.9% of our
total consolidated net sales in 2001.

The economic environment in Argentina contributed to the decline in net
beer sales to US$163.8 million in 2002 from US$426.4 million in 2001. Our beer
sales volume in Argentina decreased to approximately 7,642,000 hectoliters in
2002, compared to 8,193,000 hectoliters in 2001. Signs of recovery finally
appeared in the fourth quarter when sales volumes exceeded those of the same
quarter in 2001 for the first time that year. That improvement has continued
into the first quarter of 2003.

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Our total Bolivian sales volume increased from 1,593,000 hectoliters in
2001 to 1,688,000 hectoliters in 2002. Net beer sales increased from US$86.7
million in 2001 to US$88.7 million in 2002.

In Chile, sales volumes, excluding exports, increased 1.6% to 432,000
hectoliters in 2002 from 425,000 hectoliters in 2001. This improvement was the
result of solid performances by all of our brands, and particularly Becker in
the regular segment of the market. Because of a 9% devaluation of the local
currency which could not be fully offset by nominal price increases, net sales
declined to US$22.0 million in 2002 from US$23.9 million in 2001.

Paraguays economy was severely affected by the Argentine crisis; its
currency suffered a 52% devaluation vis-a-vis the U.S. dollar. This led to
volume declines of approximately 16% during 2002, making total volumes for the
year 1,402,000 hectoliters. Net revenues were US$57.0 million in 2002,
compared to US$82.9 million in 2001.

Our Uruguayan beer net sales decreased to US$14.2 million from US$23.2
million in 2001. This decline was the result of a (i) 57% decrease in volume
sales, which declined to 269,000 hectoliters from 340,000 hectoliters in 2001,
and (ii) 43% decrease in U.S. dollar prices as a result of the devaluation of
the Uruguayan peso by 84%.

Soft Drinks and Water. Volume sales of soft drinks and water declined to
5,592,000 hectoliters in 2002 from 6,857,000 in 2001. The transfer of our
Glaciar water business in March 2001 to Eco de los Andes accounted for 137,000
hectoliters of the decline. In addition, the extremely unfavorable economic
environment in both Argentina and Uruguay led to a decline in consumption and,
to a lesser extent, to a switch to lower-priced brands. Volume sales in
Argentina (including water, juices and isotonic beverages) were 5,468,000
hectoliters in 2002, compared to 6,472,000 hectoliters in 2001. Volume sales in
Uruguay (including water) were 239,000 hectoliters compared to 419,000 a year
earlier.

Net revenues from soft drink and water sales declined from US$279.8
million in 2001 to US$ 116.7 million in 2002. A decline in average sales
prices in U.S. dollar terms, the result of large currency devaluations, was
largely responsible for the decline in net revenues from our soft drink and
water sales. New businesses, such as Gatorade and Tropicana, contributed US$6.8
million in revenues, slightly more than the Glaciar water business revenues
lost as a result of their divestiture.

Cost of Goods Sold.Cost of goods sold was US$308.5 million in 2002,
compared to US$490.4 million in 2001, as a result of the decline in volumes
sold. The large devaluation of the Argentine peso during 2002 increased the
price of certain raw materials, whose cost is linked to the US dollar.
Furthermore, the depreciation of fixed assets is a dollar expense for our
Company. The combination of these effects led to an increase in cost of goods
sold when measured as a percentage of sales, from 52.2% in 2001 to 65.8% in
2002. Stripped of the effect of dollar-denominated depreciation costs (which
are not cash costs) this increase would have been 6.1 percentage points instead
of 13.6.

Gross Profit.Gross profit was US$160.1 million in 2002, compared to
US$448.3 million in 2001. This decline was principally due to the combination
of lower revenues and the effect of the peso devaluation on dollar-linked raw
materials and fixed asset depreciation.

Selling and Marketing Expenses.Our selling and marketing expenses
decreased by 48.7% to US$120.5 million in 2002 from US$235.0 million in 2001.
This decline was principally due to the effect of the peso devaluation on our
labor costs. In addition, we closely monitored our advertising expenditures,
which actually declined as a percentage of sales.

Administrative and General Expenses.As a result of the Companys
continued focus on expense control and cost-reduction initiatives,
administrative and general expenses declined 43.7% to US$ 43.2 million in 2002.
Importantly, in 2002, these expenses included approximately US$5.7 million in
non-recurring fees primarily related to the Companys transaction with AmBev
and the arbitration proceedings with Heineken. Excluding these fees,
administrative and general expenses on a cash basis (i.e. excluding
depreciation) would have declined 54.0%.

Operating Income (Loss).Our operating loss for the period was US$3.6
million, compared to a profit of US$136.6 million in 2001. This difference was
principally due to the effect of the currency devaluations on our

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revenues and
to lower volumes, which more than offset the positive effect of the devaluation
on fixed and other local costs when measured in US dollars.

A meaningful comparison of the Companys results for the year is made
extremely difficult by the sheer magnitude of the Argentine peso devaluation
and its consequences on the Companys financial information. We have tried to
clarify this comparison by stripping out the different components in the table
below:

|                                                      |                            |  |       |        |   |  |        |   | 
|----------------------------------------------------- | -------------------------- |  | ----- | ------ | - |  | ------ | - | 
|Operating Income  Fiscal Year 2001                   |                            |  |       |        |   |  | 136.6  |  
|Revenue variations (net of variable costs) caused by: |                            |  |       |        |   |  |        |  
|Volume differences                                    |                            |  |       |        |   |  | (23.0  | )
|Pricing                                               |                            |  |       |        |   |  | (423.2 | )
|                                                      | - nominal price variations |  |       | 64.8   |   |  |        |   | 
|                                                      | - devaluation effect       |  |       | (488.0 | ) |  |        |   | 
|                                                      |                            |  |       |        |   |  |        |  
|Variable cost variations:                             |                            |  |       |        |   |  | 142.6  |  
|Nominal decreases/(increases)                         |                            |  | (63.9 | )      |   |  |        |  
|Devaluation effect                                    |                            |  | 206.5 |        |   |  |        |  
|                                                      |                            |  |       |        |   |  |        |  
|Fixed cost variations:                                |                            |  |       |        |   |  | 181.7  |  
|Other nominal decreases/(increases)                   |                            |  | 1.3   |        |   |  |        |  
|Devaluation effect                                    |                            |  | 180.4 |        |   |  |        |  
|                                                      |                            |  |       |        |   |  |        |  
|Other cost variations:                                |                            |  |       |        |   |  | (18.3  | )
|Holding losses                                        |                            |  | (11.5 | )      |   |  |        |  
|Other                                                 |                            |  | (6.8  | )      |   |  |        |  
|                                                      |                            |  |       |        |   |  |        |  
|Operating Loss  Fiscal Year 2002                     |                            |  |       |        |   |  | (3.6   | )
|                                                      |                            |  |       |        |   |  |        |  

Interest income.Interest income increased to US$8.4 million in 2002 from
US$6.5 million in 2001, reflecting larger cash balances held as a result of our
business cash generation.

Other income.Other income decreased from US$20.4 million in 2001 to
US$4.4 million in 2002. In 2001, other income included a gain of US$14.9
million from the transfer of the Glaciar and Villa de los Arroyos mineral water
business to Eco de los Andes. See Note 16 to the Consolidated Financial
Statements.

Foreign exchange results and translation adjustments.Foreign exchange
results and translation adjustments increased from a charge of US$12.6 million
in 2001 to a charge of US$22.9 million in 2002. This reflects the effect of
currency devaluations on our net monetary position, since the large devaluation
of the Argentine peso affected the value of local currency-denominated assets
when measured in U.S. dollars. Thus, the charge to our Argentine businesses was
US$ 20.2 million, and accounted for substantially all of the increase.

Interest Expense.Interest expense was US$ 32.8 million in 2002,
virtually unchanged from the US$32.4 million of 2001. This was due to the fact
that our total bank debt increased only slightly, from US$368.8 million in 2001
to US$374.6 million in 2002.

Other Expenses. Other expenses increased from US$63.3 million in 2001 to
US$155.9 million in 2002. Due to the macroeconomic crisis in Argentina, the
Company reviewed the value of its long-lived assets in Argentina and elsewhere.
This review included an assessment of the effect that the economic crisis had
on the future business environment for the soft drinks business. As a result
of this assessment, goodwill was reduced by US$90.0 million, largely accounting
for the increase in other expenses. See Note 17 to the Consolidated Financial
Statements.

Income Taxes.Under present Luxembourg law, so long as we maintain our
status as a holding company, no income tax is payable in Luxembourg by us.
Income taxes reflect the effect of a deferred tax benefit (largely the

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result
of the Argentine peso devaluation on our Argentine subsidiarys
dollar-denominated debt) net of current tax expense. We adopted the criterion
of considering the effects of the translation as a permanent difference when
calculating the deferred tax. Income tax benefit increased to US$47.6 million
compared to a benefit of US$6.1
million in 2001. This was the result of the loss caused by the
devaluation that occurred in Argentina during 2002. See Note 18 to the
Consolidated Financial Statements for details.

Net Income.Based upon the foregoing results, net income (loss) for 2002
was US$(135.9) million, compared to US$43.3 million in 2001.

Fiscal 2001 Compared with Fiscal 2000

The Argentine economy, which affects our largest market, entered a
recession in the fourth quarter of 1998 that resulted in GDP declines of 0.8%
and 4.4% in 2000 and 2001, respectively. During the second half of 2001,
Argentinas recession worsened significantly, precipitating a political and
economic crisis. A run on deposits in the financial system during December
2001 led to the imposition of restrictions on cash withdrawals. This in turn
led to significant declines in consumer spending. In addition, widespread
looting and rioting hindered the Company  ́s ability to deliver its products
during the last month of 2001.

Net Sales.We reported consolidated net sales of US$938.7 million for the
year ended December 31, 2001, a decrease of 1.7% from US$955.1 million in 2000.
Because Baesas water business was only consolidated for the first quarter
2001, our revenues decreased by more than US$11 million compared to 2000.
While our sales volumes on a consolidated basis increased, this was not able to
completely offset our lower average pricing, particularly in Argentina, which
contributed to the decline in our net sales. This reduction in pricing was due
to both the recessionary environment prevailing in the southern cone markets
since 1999 and to aggressive competition in these markets.

Beer.Beer net sales for 2001 increased by 1.2% to US$637.0 million
compared to US$629.4 million in 2000, due primarily to an increase in volume
sold in Bolivia. Total beer volume sold for 2001 were 6% above 2000 at 12.23
million hectoliters. Beer sales represented 67.9% of our total consolidated
net sales in 2001 compared to 65.9% of our total consolidated net sales in
2000. This increase is primarily due to the increase in net sales of beer in
Bolivia due to our acquisition of CBN and CBNSC in the last quarter of 2000.

The economic environment in Argentina contributed to the 6.4% decline in
beer net sales to US$426.4 million in 2001 from US$455.7 million in 2000. Our
beer sales volume in Argentina decreased to approximately 8.2 million
hectoliters in 2001, compared to 8.4 million hectoliters in 2000, while overall
beer consumption in Argentina decreased by approximately 2.0% during the same
period.

Due to a full year of consolidation of CBN and CBNSC, our total Bolivian
sales volume increased from 799,000 hectoliters in 2000 to 1,593,000
hectoliters in 2001. Beer net sales increased from US$41.2 million in 2000 to
US$86.7 million in 2001. Our market share in Bolivia is estimated to be
approximately 98.1%.

In Chile, beer net sales decreased by 9.1% to US$23.9 million in 2001 from
US$26.3 million in 2000, as a result of lower prices in dollar terms as we were
unable to offset a 15% devaluation of the local currency by increasing the
prices of our beer brands. Sales volumes, excluding exports, increased 12.7%
to 425,000 hectoliters in 2001 from 377,000 hectoliters in 2000, increasing our
market share to 10.7% in 2001 from 9.5% in 2000. This increase in Chilean beer
sales was due to the continued success of the locally-produced Heineken brand
in the premium segment as well as the performance of our Becker brand in the
regular segment of the market.

In Paraguay, our market leadership continued, with market share for 2001
averaging 83.5%, up from 81.0% in 2000. Although the countrys economy was
affected by the situation in Argentina, beer volumes increased approximately 5%
during 2001 compared to the previous year. Instrumental in achieving this
result was the strong performance of our premium Baviera brand. In December
2001, we launched Shandy, a combination of beer and fruit juices with three
different tastes: lemon-lime, orange and guaraná. Beer net revenues in this
market decreased to US$82.9 million in 2001 from US$84.8 million in 2000, as a
result of lower average pricing caused, to a large extent, by a 33% devaluation
of the local currency vis-a-vis the US dollar.

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Our Uruguayan beer net sales decreased by 11.1% in 2001 to US$23.2 million
from US$26.1 million in 2000 due to lower sales volume. Domestic beer sales
volume decreased by 9.3% to 340,000 hectoliters in 2001 from 375,000
hectoliters in 2000. Our market share in Uruguay increased to 57.7% in 2001
compared to 54.5% in 2000.

Soft Drinks and Water. Volumes sales of soft drinks and water increased
to 6.9 million hectoliters in 2001 from 6.8 million hectoliters in 2000 as the
acquisitions of the EDISA PepsiCo. franchise in Argentina, compensated for the
transfer of a significant portion of the mineral water business of Baesa to Eco
de los Andes. Net revenues from soft drink and water sales declined from
US$301.3 million in 2000 to US$ 279.8 million in 2001. This decrease resulted
in part from the divestiture of the Glaciar and Villa de los Arroyos mineral
water brands to Eco de los Andes. Net sales of Baesa in Argentina amounted to
US$262.0 million (6.5 million hectoliters of soft drinks and water) in 2001
compared to US$237.7 million (5.3 million hectoliters) in 2000. Market share
for soft drinks in the Buenos Aires metropolitan area was 24.3% in 2001. Eusa,
the only PepsiCo® bottler in Uruguay, sold US$17.8 million (411,000
hectoliters) in 2001, while consolidated sales in 2000 amounted to US$20.8
million (484,000 hectoliters). Market share for soft drinks in Uruguay was
12.0% in 2001. Additionally, in 2000 we sold 1.0 million hectoliters of soft
drinks and water in Paraguay through Paresa.

Eco de los Andess unconsolidated mineral water volumes for the last nine
months of 2001 increased 11.7% to 800,000 hectoliters compared with 716,000
hectoliters for 2000 due to the launch of a new mineral water brand called
Nestle Pureza Vital, and the addition of the Glaciar and Villa de los Arroyos
brands.

Cost of Goods Sold.Cost of goods sold decreased by 1.1% to US$490.4
million in 2001 from US$495.7 million in 2000, primarily due to reductions in
raw materials, labor and other costs. Cost of goods sold as a percentage of
net sales increased to 52.2% in 2001 from 51.9% in 2000.

Gross Profit.Gross profit decreased by 2.4% to US$448.3 million in 2001
from US$459.4 million in 2000, as a result of a decline in revenues. Gross
profit as a percentage of net sales decreased slightly from 48.1% in 2000 to
47.8% in 2001 due to a decrease in average sales prices, which were partially
offset by reductions in raw materials, labor and other costs.

Selling and Marketing Expenses.Our selling and marketing expenses
decreased by 0.6% to US$235.0 million in 2001 from US$236.3 million in 2000 as
a result of reductions principally in advertising expenses which we reduced by
6.8%. Selling and marketing expenses as a percentage of net sales increased
slightly to 25% in 2001 from 24.7% in 2000.

Administrative and General Expenses.Administrative and general expenses
decreased by 15.5% to US$76.7 million in 2001 from US$90.8 million in 2000 due
to reductions in labor and other costs. Contributing to this decline in
expenses was the merger between Baesa and CMQ, which allowed us to eliminate
certain functions as we centralized a large part of the administration of both
businesses. As a percentage of net sales, administrative and general expenses
decreased from 9.5% in 2000 to 8.2% in 2001.

Operating Income.Despite lower revenues, operating income increased by
3.2% to US$136.6 million in 2001 from US$132.3 million in 2000. Operating
income in 2000 includes one year of Glaciar mineral water sales (resulting in a
gain of US$8.5 million) while in 2001 operating income included only the first
quarter of Glaciar sales, which contributed an operating profit of US$ 3.0
million. Even so, cost-cutting measures, and particularly decreases in
administrative expenses, led to an increase in consolidated operating income.
Due to seasonality, the highest sales volume is generally achieved in December
a summer month for the southern cone markets.

Interest income.interest income decreased to US$6.5 million in 2001 from
US$9.5 million in 2000, as the LIBOR and Fed Funds rates, the interest rates
that our financial investments are linked to, decreased.

Other income.Other income decreased from US$37.0 million in 2000 to
US$20.4 million in 2001. In 2000, other income included a gain of US$27.8
million related to the sale of our stake in Paresa. In 2001, it included a
gain of US$14.9 million for the transfer of the Glaciar and Villa de los
Arroyos mineral water business to Eco de los Andes. See Note 16 to the
Consolidated Financial Statements.

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Foreign exchange results and translation adjustments.Foreign exchange
results and translation adjustments increased from US$1.7 million in 2000 to
US$12.6 million in 2001. The monetary position in peso terms of December 2001
generated a positive translation adjustment of US$3.9 million and the
translation adjustment of the tax loss carry forward of Baesa and other net
deferred tax assets generated a negative translation adjustment of
US$12.3 million, leading to a net charge of US$8.4 million. The balance
of these charges (US$4.2 million) was principally due to the effect of the
devaluation of the local currency on net assets in Paraguay.

Interest Expense.Interest expense decreased from US$36.8 million in 2000
to US$32.4 million in 2001 due principally to the decline in the LIBOR rate
during the year, as most of the interest rates on our debt are based on LIBOR.

Other Expenses. Other expenses increased from US$25.4 million in 2000 to
US$63.3 million in 2001 due principally to higher goodwill amortization as a
result of a full year of amortization of EDISA, CBN and CBNSC, the write off of
a subsidiary of Eco de los Andes. (Hielos Merlo S.A.) and higher severance
payments. See Note 17 of the Consolidated Financial Statements.

Income Taxes.Under present Luxembourg law, so long as we maintain our
status as a holding company, no income tax is payable in Luxembourg by us.
Income taxes resulted in a charge of US$27.3 million in 2000 (not including a
US$51.3 million extraordinary gain as explained in Extraordinary Items below),
and an income tax benefit of US$6.1 million in 2001. This variation was due to
higher non-deductible expenses, such as goodwill amortization, translation
expenses and impairment of assets, compared with 2000, all of which were offset
by a deferred tax asset. See Note 18 to the Consolidated Financial Statements
for details.

Extraordinary Items.We did not account for any extraordinary items
during 2001. In 2000, we accounted for extraordinary items totaling a net gain
of US$1.8 million. These items included (1) the asset impairment charges of
US$47.7 million (US$43.1 million net of income tax) primarily related to the
closure of the Lavallol plant in Argentina and certain other manufacturing
facilities in Bolivia and the impairment of equipment at those plants, (2) a
restructuring charge of US$10.0 million (US$8.6 million net of income tax)
primarily related to plant closing costs and certain other severance and
termination charges, and (3) an income tax benefit of US$51.3 million
associated primarily with the change in the valuation allowance of deferred tax
assets related to the Baesa acquisition, as a result of new tax-planning
strategies. Our gain of US$1.8 million from these items was net of the effect
of the applicable minority interest on the foregoing items.

Net Income.Based upon the foregoing results, net income for 2001 was
US$43.3 million, compared to US$72.8 million in 2000.

LIQUIDITY AND CAPITAL RESOURCES

As of December 31, 2002, we had cash and cash equivalents totaling
US$127.1 million, an increase of US$20.9 million from US$106.2 million of cash
and cash equivalents held as of December 31, 2001. This increase resulted from
cash flows provided by operating activities totaling US$62.4 million and the
effect of exchange rate changes on cash and cash equivalents amounting to
US$23.5 million, partially offset by cash used in investing and financing
activities totaling US$65.0 million.

Operating activities

Our operating activities resulted in net cash inflows of US$62.4 million,
US$147.5 million and US$101.0 million for 2002, 2001 and 2000, respectively.
The decrease in cash flows provided by operating activities in 2002 as compared
to 2001 was primarily due to the currency devaluation in Argentina that reduced
prices in dollar terms.

Our operating cash inflows for 2002 primarily resulted from operating
gains (net of non-cash charges) amounting to US$18.1 million, a decrease in
inventories of US$25.8 million and an increase in accounts payable of US$20.0
million. Our operating cash inflows for 2001 principally consisted of
operating gains (net of non-cash charges) of US$209.1 million and decreases in
inventories and accounts receivables totaling US$18.8 million, partially offset
by decreases in taxes payable and other current liabilities and provisions, and
an increase in other

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fixed assets totaling US$79.6 million. Our operating cash
inflows for 2000 primarily resulted from operating gains (net of non-cash
charges) totaling US$192.9 million, partially offset by decreases in accounts
payable and accrued expenses, taxes payable and other current liabilities, and
provisions, totaling US$91.8 million.

Investing activities

Our investing activities resulted in net cash outflows of US$23.4 million,
US$100.6 million and US$123.5 million for 2002, 2001 and 2000, respectively.
Our investing activities in 2002 principally consisted of purchases of tangible
fixed assets totaling US$20.5 million and acquisitions of minority interests
amounting to US$6.7 million. Our investing activities in 2001 primarily
included purchases of tangible fixed assets amounting to US$72.0 million,
acquisitions of minority interests for a total consideration of US$22.6 million
and sales of certain investments totaling US$23.2 million. These investments
were partially offset by the disposition of certain of our water business
assets for US$16.7 million. Our investing activities in 2000 principally
consisted of purchases of tangible fixed assets amounting to US$65.2 million
and the acquisition of subsidiaries (Edisa and CBNSC) and minority interests
(CBN and Baesa) totaling US$134.2 million, partially offset by the net proceeds
from the sale of Paresa amounting to US$54.4 million and the sale of tangible
fixed assets totaling US$22.2 million.

Financing activities

Our financing activities resulted in net cash outflows of US$41.6 million,
US$9.5 million and US$16.4 million for 2002, 2001 and 2000, respectively. Our
financing activities in 2002 principally consisted of the repayment of
short-term and long-term debt totaling US$71.6 million and payments of
dividends to minority shareholders in our subsidiaries in the amount of US$8.3
million, partially offset by new long-term bank loans totaling US$40.0 million.
Our financing activities in 2001 included the repayment of short-term and
long-term bank loans totaling US$109.5 million, the payment of dividends to our
shareholders in the amount of US$32.0 million, the acquisition of treasury
stock totaling US$11.0 million and the payment of dividends to minority
shareholders in our subsidiaries in the amount of US$9.2 million. These
activities were financed with new borrowings of long-term bank loans totaling
US$147.5 million. Our financing activities in 2000 primarily consisted of the
payment of dividends to our shareholders and minority shareholders in our
subsidiaries amounting to US$31.6 million and US$9.9 million, respectively. We
also replaced our outstanding short-term and long-term bank financing in the
amount of US$169.9 million with a new long-term syndicated bank loan for
US$200.0 million.

Capital Expenditures

Our principal capital expenditures currently in progress are related to
the maintenance and modernization of our facilities, computer systems and
offices, the consolidation of our beer and soft drink businesses in Argentina
and the introduction of glass returnable bottles for our Argentine soft drinks
business. Our capital expenditures are funded principally with internally
generated cash. We intend to fund future capital expenditures with internally
generated cash as well as with borrowings. Currently, management expects
capital expenditures for 2003 to be approximately US$36 million, which includes
expenditures for bottles and crates. Estimates of our capital expenditures for
2003 are based on current expectations and are subject to change. We cannot
assure you that actual costs will not exceed estimates or that we will not
reallocate or alter our capital expenditures.

External Funding

Our short-term debt is principally denominated in U.S. dollars and
represents borrowings from banks. At December 31, 2002, our current loans and
short-term portion of long-term debt amounted to US$273.9 million compared to
US$211.4 million at December 31, 2001 and US$252.3 million at December 31,
2000. The decrease from 2000 to 2001 was due principally to the refinancing of
short-term debt with long-term debt and the use of internal cash. The increase
during 2002 resulted from an ongoing negotiation between our subsidiary CMQ and
its creditor banks. CMQ is currently negotiating an extension of the maturity
and certain adjustments to the financial covenants pertaining to its
outstanding debt. While the negotiations are in progress, CMQs creditors
have agreed to extend the maturity for all amounts currently due for periods up
to two months, and CMQ remains current on its interest payment obligations.
There is a risk, however, that CMQ will not be able to reach new agreements
with its creditors. You should also note that under US GAAP, because CMQs
debts are callable by its creditors, we have not obtained a permanent waiver
and there is no assurance that an acceleration will not take place within a
one-year

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period, the entire outstanding balance would have been classified as a
current liability, although under Luxembourg GAAP these debts were classified
as non-current. See Other Liquidity MattersCMQ Liquidity Matters below.

Our long-term debt in principally denominated in U.S. dollars and
represents borrowings from banks. At December 31, 2002, our long-term debt,
excluding the current portion, amounted to US$100.7 million, compared to
US$157.4 million in 2001 and US$81.3 million in 2000. The decrease in our
long-term debt resulted from certain amounts of such debt becoming due or
becoming short-term debt. The average life of this debt was 9 months in 2002,
22 months in 2001 and 15 months in 2000. As of December 31, 2002 and 2001, we
had long-term debt of US$14.3 million and US$27.6 million, respectively, at
fixed interest rates and US$180.4 and US$221.0 million, respectively, at rates
which varied in relation to established indices, principally LIBOR, plus a low
fixed rate. Of our total outstanding long-term debt at December 31, 2002,
US$55.0 will mature in 2004, and US$45.7 will mature in 2005. See Note 14 to
the Consolidated Financial Statements.

Dividends

We did not pay any dividends in 2002, and our Board of Directors is
recommending that no dividends be paid in 2003. In 2001 and 2000, we paid
dividends of US$32.0 million and US$31.6 million, respectively. Dividends paid
in any year are related to results of the previous year. With respect to 2002,
2001 and 2000, dividends to minority shareholders in consolidated subsidiaries,
excluding Heineken, were US$8.3 million, US$2.6 million and US$3.8 million,
respectively. Heineken received dividends from QIB in 2001 and 2000 of US$6.6
million and US$6.1 million, respectively.

Because we are a holding company, our ability to pay dividends and service
any debt obligations depends primarily upon our receipt of sufficient funds
from our principal subsidiary, QIB, which depends in turn on QIBs receipt of
sufficient funds from its direct and indirect subsidiaries in the southern cone
markets. Beginning on December 3, 2001, the Argentine government imposed a
number of monetary and currency exchange control measures that included
restrictions on the free disposition of funds deposited with banks and tight
restrictions on transferring funds abroad, with certain exceptions for
transfers related to foreign trade and other authorized transactions. These
restrictions were progressively reduced from January to May 2003 and were
completely eliminated on May 6, 2003. However, as CMQ did not pay dividends in
2002, these regulations did not impact our financial condition. Nonetheless,
the reintroduction of any such restrictions may inhibit our ability to receive
funds from our Argentine subsidiaries.

Furthermore, the payment of dividends by our various subsidiaries is also,
in certain instances, subject to statutory restrictions and restrictive
covenants in debt instruments, like legal reserve requirements, capital and
retained earning criteria and other restrictions, and is contingent upon the
earnings and cash flow of and permitted borrowings by those subsidiaries. Any
inability on the part of some of our subsidiaries to pay dividends would impact
the amount of funds available to us to pay dividends and service our debt
obligations.

Bermuda does not restrict or tax the payment of dividends by QIB to us,
and Luxembourg does not restrict or impose withholding taxes on the payment of
dividends by us to our shareholders. However, dividends paid by subsidiaries
to QIB are subject to withholding taxes in Bolivia, Chile and Paraguay and, in
certain cases, in Argentina. See Item 10. Additional Information  Exchange
Controls.

Other Liquidity Matters

We believe that our working capital is sufficient for our present
requirements. In response to the economic situation in Argentina and the
highly inflationary environment that existed during most of 2002, we have been
working to reduce our working capital and improve our cash generation. At
December 31, 2002, the average life of our working Capital decreased to 21
days from 25 days in 2001. These figures may vary among the different
countries in which we operate based on the particularities of each market. We
have not experienced significant credit problems with our customers in the
periods under review.

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We do not engage in hedging our foreign exchange exposure or raw material
costs, although our policy may change in the future. As a result, our results
of operations and liquidity may adversely be affected by fluctuations in
commodity prices and exchange rate movements.

The economic situation in Argentina has made access to new credit more
difficult. Although, we have not had difficulty raising capital, we have not
attempted to raise capital either. Indeed, we are focusing our efforts on
paying own our indebtedness. We do not have any off-balance sheet financings
nor securitizations.

CMQ Liquidity Matters.Most of our loan agreements contain restrictive
financial covenants that require us or our subsidiaries to, among other things,
maintain certain financial ratios, limit the amount of dividends paid and
restrict indebtedness. In February 2000, CMQ, our principal Argentine
subsidiary, refinanced $200.0 million of short-term debt with a two-year
amortizing syndicated bank loan (the Syndicated Loan). This bank loan
contains the following financial covenants, in addition to standard and
customary covenants:



| |  | maximum consolidated debt to EBITDA of no more than 3 to 1;                                                                       
|- |  | ----------------------------------------------------------------------------------------------------------------------------------
| 
| |  | minimum net worth of US$250.0 million;                                                                                            
| 
| |  | capital expenditure plus
acquisitions not to exceed US$200.0 million per year (amended to
US$45 million on September 6, 2002); and
| 
| |  | asset sales not to exceed US$50.0 million per year.                                                                               

During 2001, CMQ obtained approximately US$192.8 million in new loans from
a number of different banks. The nature of these loans varied as some were
bullet loans and others were amortization loans; their terms ranged from 1 to 4
years. The loan agreements contain covenants similar to those contained in the
Syndicated Loan.

The first two installments on the Syndicated Loan, totaling US$ 125.0
million, had been paid as of August 2001. During 2002, an additional US$30.0
million was paid on this loan, while the maturity on the balance of US$45.0 was
extended until August 2003. Other loan payments during 2002 amounted to
approximately US$15 million; CMQ also obtained additional financing in the
amount of US$26.9 million. CMQ met all interest payment obligations on its
outstanding debt during this period.

A significant amount of CMQs bank loans are denominated in U.S. dollars.
The devaluation of the Argentine peso, as well as the financial and economic
crisis that has been affecting Argentina, has limited the ability of CMQ to
generate sufficient cash flows in U.S. dollars and comply with certain of its
original financial ratios commitments. Consequently, CMQ management is
currently negotiating with lenders to obtain, among other things, an extension
of the original terms of its loans and adjustments to these financial ratios
with which the Company was unable to comply at December 31, 2002. As of this
date, the total amount due on financial loans where documentation provided for
the maintenance of certain financial ratios that had not been maintained
amounted to US$221.5 million, of which, US$59.3 million was classified as
non-current under Luxembourg GAAP according to their original terms. For US
GAAP purposes, as such debts are callable by the creditors, we have not
obtained a permanent waiver and there is no assurance that an acceleration will
not take place within a one-year period, the entire outstanding balance would
have been classified as a current liability.

The loan agreements provide that in the case of non-compliance by CMQ with
any of its obligations, following due notice to the Company, all amounts owed
thereunder could become due and payable. While CMQ is not in compliance with
its covenants under some of its loan agreements, as of June 24, 2003, CMQ had
not received any notice from its creditors which would make the amounts owed
under the loan agreements become due and payable, and the company expects to
reach an agreement with its bank creditors in the short term. No assurances
can be given, however, that CMQ will reach an agreement with its creditors.
Failure to reach such an agreement could trigger an event of default under the
loan agreements and accelerate CMQs payment obligations thereunder. In
addition, notice triggering payment obligations could be given at any time, and
CMQ would not have any means of curing its defaults on its covenants.

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RESEARCH AND DEVELOPMENT

Research and development costs are expensed in the year in which these
costs are incurred. Historically, these expenses have not been significant.
During the last three years, we did not pay any royalties under our trademark
or franchise license agreements.

TREND INFORMATION

Uncertainties regarding further devaluation and the Argentine economy.We
realize a substantial portion of our revenues in pesos while our indebtedness
is principally denominated in U.S. dollars. Therefore, not only has the
devaluation of the peso adversely affected the U.S. dollar value of our
earnings, but it has also affected our ability to pay down our
dollar-denominated debt. Any further depreciation of the peso against the U.S.
dollar will correspondingly increase the amount of our debt compared to our
peso-denominated revenues.

The current recession coupled with the devaluation of the peso has led to
a reduction of wages in real terms and of disposable income across all class
sectors of the Argentine population. This reduction in consumer buying power
resulted in lower sales of our products with a consequent reduction in revenues
and cash inflows. During the first quarter of 2003, our volume sales have
increased as have our sales prices measured in U.S. dollars, but there can be
no assurances that these improvements will continue.

Furthermore, even though we raised our nominal prices in 2002, the rate of
local currency devaluations in Argentina, Paraguay and Uruguay far exceeded the
rate of inflation in each of these markets, causing our average sales prices in
U.S. dollars to decline. We cannot assure you that market demand in the future
will rise sufficiently to offset the significant impact of the devaluation of
the Argentine peso and subsequent devaluations of the local currencies in
Paraguay and Uruguay that occurred in 2002. In addition, we purchase most of
our barley, malt, aluminum cans and plastic bottle preforms in local currency
and principally in Argentina, and therefore, we incur certain costs of sales
and expenses in local currencies. However, the price of these raw materials
may vary with international grain, aluminum and PET prices, which are
denominated in U.S. dollars. Therefore, we cannot guarantee that the
percentage of our cost of sales represented by these items will not increase
significantly due to further currency devaluation in our countries of
operation.

Because the Argentine economic crisis has had a significant adverse effect
on our other markets, the governments of these other countries could take
action to control inflation and institute other policies involving wage, price
and tariff rate controls as well as engage in other interventionist measures,
which may include freezing bank accounts and imposing capital controls.
Changes in the policies of these governmental authorities with respect to
tariff rates, exchange controls, regulations and taxation could affect our
business and financial results adversely, as could inflation, devaluation,
social instability and other political, economic or diplomatic developments,
including the governments response to such circumstances.

In light of the current economic situation in Argentina and in the other
countries in which we operate, you should recognize that our business,
earnings, asset values and prospects have been and may continue to be
materially and adversely affected by developments with respect to inflation,
interest rates, currency fluctuations, government policies, exchange control
regulations, taxation, social instability and other political, economic or
diplomatic developments in or affecting our countries of operation. We have no
control over such conditions and developments and can provide no assurance that
such conditions and developments will not further adversely affect our results
of operation and financial condition.

Impact of loss of Heineken license. It is impossible for us to predict
how, if at all, the loss of the Heineken license will impact our financial
results. While we believe the Heineken brand to be the largest brand in the
premium segment of the market in Argentina and Chile, according to our internal
estimates, Heineken accounts for less than 2% of our sales in Argentina, and
approximately 22% of our sales in Chile. These two countries account for the
vast majority of Heinekens sales in the southern cone markets. We are
currently evaluating possibilities with regard to replacing Heineken as our
premium brand. Nonetheless, we do not believe the loss of sales from Heineken
will have a significant impact on our results. If, however, the acquisition by
Heineken of the 50% stake in IRSA which owns 62% of CCU, and the resulting
transfer of the licensing agreements to produce the Heineken

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brand in Chile and
Argentina to CCU, creates a more competitive environment in the southern cone
markets, our results of operation could be impacted.

Currently, we are negotiating
with AmBev and Danone to arrive at a solution to AmBevs
violation of its non-compete with Danone. While it is too early to
predict how this conflict will be resolved, we do not believe that any
resolution will significantly impact our results of operation as our
water sales in Uruguay account for only 0.15% of our total
consolidated net sales. See Item 4. Information on
the CompanyBusiness OverviewCompetition in the Southern
Cone MarketsCompetition-Soft Drinks.

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ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

DIRECTORS AND SENIOR MANAGEMENT

Directors

Our administration is conducted by our board of directors which, in
accordance with our articles of incorporation, consists of a minimum of three
and a maximum of 15 members elected at ordinary general meetings of holders of
Class A and Class B shares. In case of a vacancy in any director position, the
remaining directors may temporarily fill such vacancy by a majority vote. The
holders of Class A and Class B shares would be asked to ratify such election at
their next general meeting.

The Quinsa Shareholders Agreement provides, among other things, that so
long as AmBev and BAC each has a certain percentage of all shares entitled to
vote at our shareholders meetings, each of AmBev and BAC will have the right to
nominate 50% of the directors constituting our board of directors. See Item
7Major Shareholders and Related Party TransactionsMajor ShareholdersQuinsa
Shareholders Agreement. As a result, on January 31, 2003, Santiago
Quirno-Bemberg, Stanislas Poniatowski, Louis-James de Viel Castel, Serge de
Ganay and Christian Baillet resigned as members of our Board. The vacancies
were filled on the same date by Carlos Alberto da Veiga Sicupira, Marcel
Herrmann Telles, Magim Rodriguez Júnior, Victório Carlos de Marchi and Roberto
Moses Thompson Motta. Alvaro Sainz de Vicuña was appointed to replace Jean de
Ganay, who resigned on May 8, 2003. All of these directors must be confirmed
at the Annual General Shareholders Meeting scheduled to occur on June 27,
2003.

Thus, our current directors are as follows:

|                                     |  |               |          | 
|------------------------------------ |  | ------------- | -------- | 
|Name                                 |  | Date of Birth
|                                     |  |              
|Jacques-Louis de Montalembert (1)    |  |               | 8-6-45   | 
|Carlos J. Miguens (1)                |  |               | 2-16-49  | 
|Alvaro Sáinz de Vicuña (1)(2)(4)     |  |               | 7-12-52  | 
|Federico Sáinz de Vicuña (1)(2)      |  |               | 2-26-57  | 
|Marcel Herrmann Telles (3)           |  |               | 2-23-50  | 
|Victorio Carlos De Marchi (3)        |  |               | 11-13-38 | 
|Carlos Alberto da Veiga Sicupira (3) |  |               | 5-1-48   | 
|Roberto Moses Thompson Motta (3)     |  |               | 11-6-57  | 
|Magim Rodriguez Júnior (3)           |  |               | 3-22-42  | 
|Beverages
Associates (BAC) Corp.     |  |               |         | 



---

|(1) |  | These directors were nominated by BAC pursuant to its rights under the
Quinsa Shareholders Agreement. See Item 4Information on the
CompanyHistory and DevelopmentRecent EventsRelationship with AmBev,
and Item 7Major Shareholders and Related Party TransactionsMajor
ShareholdersQuinsa Shareholders Agreement.  
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Alvaro Sáinz de Vicuña and Federico Sáinz de Vicuña are brothers.                                                                                                                                                                                                                                                              
|   
|(3) |  | These directors were nominated by AmBev pursuant to its rights under the
Quinsa Shareholders Agreement. See Item 4Information on the
CompanyHistory and DevelopmentRecent EventsRelationship with AmBev,
and Item 7Major Shareholders and Related Party TransactionsMajor
ShareholdersQuinsa Shareholders Agreement.
|   
|(4) |  | Replaced Jean de Ganay on May 9, 2003; Mr de Ganay resigned from Quinsas
board on May 8, 2003.
Following are brief biographies of each of our directors:                                                                                                                                                                      

Jacques-Louis de Montalembertis currently Chairman of the Board of
Directors. He has been a Director of Quinsa since 1989. His term of office
expires in June 2008. He has represented the Bemberg family in Latin America
since 1978 and is a member of various boards of directors, including Cervecería
Chile and Bodegas

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Chandon S.A. He is a member of the Conseil de Surveillance of Bongrain
S.A. and he is chairman of Fundación Pro Vivienda Social.

Carlos J. Miguenshas been a Director of Quinsa since 1989. His term of
office expires in June 2004. His professional experience includes serving as
President of CMQ, Malsaf and Mosa. He has also been President of M.B.P.
International, and is currently President of M.B. Holdings and Agropecuaria
Cantomi.

Alvaro Sáinz de Vicuñahas been a Director of Quinsa and of Quilvest since
1996. His term of office expires in June 2005. He is Chief Executive Officer
and Vice President of the Board of Directors of Sociedad Ibérica de Cartera,
S.A.SIBEC, where he has worked since 1984. He has also held various positions
at Merrill Lynch International Banking Group, Banco Urquijo in Madrid and S.G.
Warburg. He holds a degree in economics and business administration from
Universidad Complutense in Madrid.

Federico Sáinz de Vicuñahas been a Director of Quinsa since June 1993.
His term of office expires in June 2004. He is the President and Chief
Executive Officer of FEIBA S.A. He has held various positions with CS First
Boston Limited, Warner Home Video Española S.A. and Impala S.A. Mr. Sáinz de
Vicuña holds a B.S. degree in economics from The Wharton School of the
University of Pennsylvania.

Marcel Herrmann Tellesis the Co-Chairman of the Board of Directors of
AmBev. He served as Chief Executive Officer of Companhia Cervejaria Brahma
from 1989 to 1999. He is also currently a member of the Board of directors of
Lojas Americanas S.A. Mr. Telles has a degree in economics from the Federal
University of Rio de Janeiro and attended the Owners/presidents Management
Program at Harvard Business School.

Victorio Carlos De Marchiis the Co Chairman of the Board of Directors of
AmBev and the Chairman of the Board of Directors of CBB. He joined Antarctica
in 1961 and helds various positions during his tenure, including Chief
Executive Officer from 1988 to April 2000. He has a degree in economics from
Faculdade de Economia, Finanzas e Administracao de San Paulo and a law degree
from Sao Bernardo do Campo Law School.

Carlos Alberto da Veiga Sicupirais a member of the Board of Directors of
AmBev. He also served as a member of the Board of Directors of Brahma from 1990
until 1999. He is also currently a Managing Partner of GP Investimentos Ltda.,
a director of Artex S.A. and Submarino.com Ltda.. He has a degree in business
administration from the Federal University of Rio de Janeiro and a degree from
the Harvard Business School.

Roberto Moses Thompson Mottais an alternate member of the Board of
Directors of AmBev. He is an officer of GP Investimentos Ltda. He worked in the
corporate finance department of Banco de Investimentos Garantia S.A. from 1986
to 1992. He holds a degree in engineering from the Pontificia Universidade
Católica de Rio e Janeiro, and an M.B.A. from the Whartoon School of the
University of Pennsylvania.

Magim Rodriguez Júniorhas been the Chief Executive Officer of AmBev
since 1999. He is also Chief Executive Officer of CBB. He has been associated
with Brahma since 1989, serving first as Marketing Officer. He holds a degree
in business administration and accounting from Mackenzie University.

Beverages Associates (BAC) Corp. Under Luxembourg law, a corporation may serve on the board of directors of another corporation. BAC has authorized William Engels to represent BAC on our Board of Directors. His term of office expires in June 2008.

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Senior Management

Our current executive officers are set forth below. We have a board of
management that helps facilitate coordination between our various business
units. As of December 31, 2002, the five members of the board of management
were Agustín García Mansilla, Carlos Adjoyán, Gustavo Castelli, Nestor Del
Campo, and Faustino Arias.

|                         |  |                                                |  |            |      |         |  |             |  |  |    | 
|------------------------ |  | ---------------------------------------------- |  | ---------- | ---- | ------- |  | ----------- |  |  | -- | 
|                         |  |                                                |  | Current    |      |         |  | Number of  
|                         |  |                                                |  | Position   |      | Date of |  | Years      
|Name                     |  | Position                                       |  | Held Since |      | Birth   |  | with Quinsa
|                         |  |                                                |  |            |      |         |  |            
|Agustín García Mansilla  |  | Chief Executive Officer                        |  |            | 1998 |         |  | 1-11-56     |  |  | 7  | 
|Carlos Adjoyán           |  | Director, Human Resources                      |  |            | 1998 |         |  | 3-5-52      |  |  | 5  | 
|Gustavo Castelli         |  | Chief Financial Officer                        |  |            | 2002 |         |  | 8-10-59     |  |  | 4  | 
|Néstor Del Campo         |  | Director, Argentina
Beverages Division
(ABD) |  |            | 2002 |         |  | 8-3-63      |  |  | 10 | 
|Faustino Arias           |  | Director, International
Beverage Division      |  |            | 2003 |         |  | 6-25-61     |  |  | 17 | 
|Darío Aparicio           |  | Logistics Manager, ABD                         |  |            | 2002 |         |  | 12-11-57    |  |  | 5  | 
|Nicolás Bamberg          |  | Industrial Manager, ABD                        |  |            | 2002 |         |  | 10-28-56    |  |  | 11 | 
|Francis Cressall         |  | Manager, Corporate Finance                     |  |            | 1998 |         |  | 6-3-59      |  |  | 5  | 
|Héctor Dorribo           |  | Group Controller                               |  |            | 2002 |         |  | 4-7-52      |  |  | 22 | 
|Gerardo García Gorostidi |  | Group Treasurer                                |  |            | 1992 |         |  | 3-13-52     |  |  | 27 | 
|Miguel A Gómez Eiriz     |  | General Manager Bolivia                        |  |            | 2003 |         |  | 10-13-62    |  |  | 12 | 
|Adrián González Fischer  |  | National Sales and
Distribution Manager, ABD   |  |            | 2003 |         |  | 2-23-63     |  |  | 10 | 
|Jorge Johnson (1)        |  | General Manager, Cervecería
Paraguaya          |  |            | 1995 |         |  | 9-1-53      |  |  | 12 | 
|Fernando Lascano         |  | Corporate Communications
Manager               |  |            | 2000 |         |  | 12-28-45    |  |  | 3  | 
|Jorge Mastroizzi         |  | Marketing Manager, ABD                         |  |            | 2003 |         |  | 10-4-69     |  |  | 4  | 
|Daniel Montero           |  | Internal Auditor                               |  |            | 1999 |         |  | 5-18-43     |  |  | 4  | 
|Fernando Ragni           |  | Soft Drinks Manager, ABD                       |  |            | 2003 |         |  | 10-7-51     |  |  | 9  | 
|Luis Ramírez (2)         |  | General Manager, Cervecería
Chile              |  |            | 1998 |         |  | 11-20-58    |  |  | 5  | 
|Celso Rojas              |  | General Manager, FPV                           |  |            | 1998 |         |  | 5-10-41     |  |  | 30 | 
|Gustavo Sampayo          |  | General Manager, Uruguay                       |  |            | 2003 |         |  | 9-9-65      |  |  | 16 | 
|Hector Ordoqui           |  | Country Manager, Uruguay                       |  |            | 2003 |         |  | 9-28-42     |  |  | 14 | 
|Silvio Szostak           |  | Chief Information Officer                      |  |            | 1998 |         |  | 9-15-48     |  |  | 5  | 



---

|(1) |  | Jorge Johnson has announced that he will be leaving Quinsa as of December
31, 2003.
|--- |  | -----------------------------------------------------------------------------------
|   
|(2) |  | Luis Ramirez has announced that he will be leaving Quinsa as of July 1,
2003.      

There is no family relationship between any of the members of our senior
management nor between any members of our senior management and the members of
our board. There is no arrangement with our major shareholders, customers,
suppliers or other person pursuant to which the members of our senior
management were selected. Following are brief biographies of each of our
executive officers:

Agustín García Mansilla*has been Chief Executive Officer and Chairman of
the board of management since January 1998. He is a Director of CMQ and of
some of other operating subsidiaries. Prior to his present position, he was
Vice President of Operations for Latin America and General Manager for
Argentina for Burns Philip, General Manager for CALSA, and was Marketing
Manager for a major footwear brand for Alpargatas SAIC. He holds a degree in
Industrial Engineering from the University of Buenos Aires and has also
attended Stanfords Executive Program as well as the program for executives at
the Instituto de Altos Estudios Empresariales.

Carlos Adjoyán* has been Director of Human Resources and a member of the
board of management since joining the Company in 1998. Prior to his current
position, he was Director of Human Resources for Johnson Wax

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Argentina, and
Management Development Manager of Unilever Argentina. He holds a degree in
Industrial Relations from the UADE University.

Gustavo Castelli* has been Chief Financial Officer since 2002.
Previously, he was General Manager for BAESA, as well as Vice President for
Argentina, Chile and Uruguay at Burns Philip. Mr. Castelli earned a CPA degree
and a degree in Business Administration from the Catholic University of
Argentina.

Néstor Del Campo* was appointed Director for ABD in 2002. Prior to that
time, he served as General Manager of CMQ as well as Marketing & Sales Manager
of CMQ. Previously he had been Marketing Manager for Pepsi. He holds a degree
in Business Administration from the Catholic University of Argentina. He has
also attended the Executive Program at Darden School, University of Virginia.

Faustino Arias *has been Director of International Beverages since
January 2003. Previously, he was General Manager of Incesa. Prior to that, he
was Finance and Administration Manager of Cervecería Chile and he worked in the
Zárate Project. He holds a CPA degree from the University of Buenos Aires. He
has also attended the Executive Program at Darden School, University of
Virginia.

Darío Apariciohas been the Logistics Manager of ABD since 2002. Prior to
his current position, he was Industrial Manager at BAESA, Plant Manager at the
Corrientes brewery and Plant Manager at the Llavallol brewery. Mr. Aparicio
holds a degree in Industrial Engineering from University of Buenos Aires.

Nicolás Bamberghas been Industrial Manager of ABD since 2002. Prior to
this position, he was Industrial Manager of CMQ, Plant Manager of the Quilmes
Brewery and Plant Manager of the Zárate Brewery. He holds a degree in
Industrial Engineering from the Catholic University of Argentina. He has also
attended the Executive Program at Darden School, University of Virginia.

Francis Cressallhas been Manager of Corporate Finance since March 1998.
Prior to this position, he was a Vice President with J.P. Morgan. He holds a
degree in Business Administration from the University of Buenos Aires.

Héctor Dorribohas been Group Controller since 2002. Previously, he was
Finance and Administration Manager of CMQ and Controller for CALSA. He holds a
degree in Business Administration from the University of Buenos Aires.

Gerardo García Gorostidihas been Group Treasurer since 1993. Prior to
his current position, he was Treasurer of our Argentine companies, Finance and
Administration Manager of CMQ and Assistant Finance Manager at Compañía Química
S.A. He holds a degree in Economics from the University of Buenos Aires

Miguel Gómez Eirizhas been General Manager of Incesa since January 2003.
Prior to his current position, he was the Finance and Administration Manager at
Baesa, the General Manager of Paresa, the Group Controller at Quinsa and
Finance and Administration Manager of CMQ. Mr. Eiriz earned a CPA degree from
the Catholic University of Argentina.

Adrián González Fischerhas been the National Sales and Distribution
Manager for ABD since April 2003. Previously, he held the position of Sales
Manager of CMQ and prior to that, Distribution and Retail Sales Manager at CMQ.
He was also the Commercial Manager in Chile. Mr. González Fischer earned a
degree in Business Administration from the University of Buenos Aires.

Jorge Johnsonhas been General Manager of Cervecería Paraguaya since 1995.
Prior to that, he was Project Manager at Cervecería Chile, Operations Manager
at Cervecería Paraguaya and a staff engineer at Hidrosan Chile and Empresa
Nacional de Petróleo. He holds an engineering degree from the Catholic
University of Chile and a graduate degree in business administration from the
Escuela de Negocios de Valparaíso, Universidad Adolfo Ibañez. Mr. Johnson has
announced he will be leaving Quinsa as of December 31, 2003.

Fernando Lascanohas been Corporate Communications Manager since September
2000. Previously, he was a professional journalist and chief economic editor
for La Nación, one of the principle newspapers in Buenos Aires.

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Jorge Mastroizzihas been Marketing Manager for ABD since April 2003.
Prior to his current position, he was the Brand Manager for the Quilmes brand.
He also worked as a Product Manager at Molinos Ríos de la Plata SA. Mr.
Mastroizzi holds a degree in Business Administration from the University of
Buenos Aires.

Daniel Monterohas been Corporate Audit Manager since January 1999. Prior
to this position, he was General Audit Vice-President for South America at
Burns Philip International Ltd., General Audit Manager at CALSA and Internal
Audit Manager at General Electric Argentina. He holds a degree in Business
Administration from the Argentine University of Business.

Fernando Ragnihas been Soft Drinks Manager for ADB since April 2003.
Previously, he was Marketing Manager for CMQ, Manager for Commercial Services
at CMQ, Commercial Manager at Bieckert and Marketing Manager at Pepsi
Argentina. Mr. Ragni holds a degree in Advertising from the Universidad del
Salvador.

Luis Ramirezhas been General Manager of Cervecería Chile since 1998.
Previously, he was General Manager of Vital. He holds a Commercial Engineering
degree from the Catholic University of Chile. Mr. Ramirez has announced that
he will be leaving Quinsa as of July 1, 2003.

Celso Rojashas been the General Manager of FPV since 1998. Prior to his
current position, he was Financial Manager and General Manager of Paresa and
Assistant Manager at Citibank Paraguay. He holds a degree in economics from
the Universidad Nacional de Asunción and, since 1971, has been a Professor at
the Catholic University of Paraguay.

Gustavo Sampayohas been General Manager for Uruguay since March 2003.
Prior to his current position, he was Controller of BAESA and Finance and
Administration Manager of PARESA and Cervecería Chile. Mr Sampayo earned a CPA
degree from the University of Buenos Aires and a Masters degree from IAE in
Buenos Aires. He has recently completed the Advanced Executive Program at
Kellogg Business School at Northwestern University.

Hector Ordoquihas been the Country Manager for Uruguay since June 2003.
Prior to his current position, he was General Manager of Uruguay Beverages
Division. He holds an engineering degree from the Universidad de la
República
Oriental del Uruguay, an MS degree from Leeds University, and a degree in
Brewing technology from Berlin University.

Silvio Szostakhas been Chief Information Officer since 1998. Prior to
that, he was Technology Manager and then General Manager at Inventica. He
holds a CPA and Systems Engineering degree from the University of Buenos Aires.



|                                     
|-------------------------------------
|* Members of our board of management.

COMPENSATION

Compensation for directors and executive officers. For the year ended
December 31, 2002, the aggregate amount of compensation paid to all directors
and executive officers as a group was US$3.3 million. In addition, our
incentive plan paid to certain of our directors and officers is comprised of up
to 5% of the annual consolidated net income of QIB, our principal subsidiary.
Actual amounts paid to participants in our incentive plan are based on the
seniority of the individuals position as well as his or her length of
employment with the Company. No amounts were accrued under this plan for 2002
because QIBs consolidated results amounted to a net loss for the year.

Amounts accrued for pension, retirement and similar benefits.

Pension benefits. CMQ, sponsors a defined contribution pension plan (the
Plan) for qualified employees that is funded with contributions from both CMQ
and plan participants. Employees are eligible to participate and may enter the
Plan during the first quarter of each year.

Argentine law provides for mandatory pension benefits to be paid to
retired employees from government pension plans and/or private fund managed
plans (Pension Funds) to which employees may elect to direct their

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mandatory
contributions. Under the features of the Plan, participants may elect to
direct their voluntary contributions to retirement funds or the same Pension
Fund where their mandatory contributions are held. Due to the Argentine
economic crisis, while CMQ remained current on its funding obligations under
the Plan, deposits in private companies were suspended, and the Company
maintained these pension reserves on its records. These reserved contributions
will be deposited with the funds designated by the Plan participants once the
final treatment of the funds already deposited has been determined.

Retirement funds. Provided the participant has elected to direct his or
her contributions to an authorized investment retirement fund, eligible
participants may make monthly pre-tax contributions to the Plan of up to 7.5%
of their eligible earnings, and CMQ makes matching contributions equal to 100%
of the employee contribution. Separate accounts are maintained for each
participant in the Plan. The portion of a participants account attributable
to his or her own contributions will be 100% vested. The portion of the
account attributable to CMQs contributions, including matching contributions,
will vest after the individual has been employed with CMQ for 5 years.
Distributions from the Plan may be made in the form of a lump-sum cash payment
or in installment payments. Under certain circumstances, employees may make
withdrawals from the Plan prior to attaining age 60 in case of male employees
or 55 in case of female employees. During the years ended December 31, 2002
and 2001, CMQ made contributions of approximately US$ 0.1 million and US$ 0.1
million, respectively to the Plan. The amounts corresponding to 2002 have
still not been deposited under the Plan.

Pension funds. Provided the participant has elected to direct his or her
contributions to an authorized Pension Fund, eligible participants may make
monthly pre-tax contributions to the Plan of up to 11% of their eligible
earnings. Elective contributions made by employees are fully vested at all
times. CMQ makes matching contributions equal to 100% of the participants
contribution. Under the pension feature of the Plan, CMQs contributions are
deferred and maintained in separate accounts for each participant until the
participant has completed five years of service with CMQ. Interest income is
recognized based on certain governmental yield rate information. After the
completion of five years of service, CMQs matching contributions are
transferred to the Pension Fund where the participants elective contributions
are being held. Contributions by CMQ were US$ 0.2 million and US$ 0.3 million
in 2002 and 2001, respectively. The amounts corresponding to 2002 have still
not been deposited.

Post-employment benefits. Under the features of the Plan, CMQ also
provides certain benefits to former or inactive plan participants after
employment but before retirement provided the participant completed five years
of service with CMQ. These benefits include disability-related benefits and
death benefits. The Company maintains an insurance policy to cover any
potential liability related to these benefits.

BOARD PRACTICES

The following chart provides the year in which each person became a
director of the Company as well as the date of expiration of their current term
of office:

|                                                                   |  |                |      |            |  |          
|------------------------------------------------------------------ |  | -------------- | ---- | ---------- |  | ---------
|                                                                   |  |                |      |            |  | Term     
|Name                                                               |  | Director Since |      | Expiration
|                                                                   |  |                |      |           
|Jacques-Louis de Montalembert(1)                                   |  |                | 1996 |            |  | June 2008
|Carlos J. Miguens                                                  |  |                | 1989 |            |  | June 2004
|Alvaro Sáinz de Vicuña                                             |  |                | 1996 |            |  | June 2005
|Federico Sáinz de Vicuña                                           |  |                | 1993 |            |  | June 2004
|Marcel Herrmann Telles (2)                                         |  |                | 2003 |            |  | June 2008
|Victorio Carlos De Marchi (2)                                      |  |                | 2003 |            |  | June 2004
|Carlos Alberto da Veiga Sicupira (2)                               |  |                | 2003 |            |  | June 2004
|Roberto Moses Thompson Motta (2)                                   |  |                | 2003 |            |  | June 2005
|Magim Rodriguez Júnior(1)(2)                                       |  |                | 2003 |            |  | June 2008
|Beverage associates (BAC) Corp., represented by William Engels (2) |  |                | 2003 |            |  | June 2008



---

|(1) |  | To be appointed Co-Chairman at the June 27, 2003 Annual General
Shareholders Meeting.
|--- |  | --------------------------------------------------------------------------------------

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|(2) |  | These directors must be confirmed at the Annual General Shareholders
Meeting scheduled for June 27, 2003.
|--- |  | ----------------------------------------------------------------------------------------------------------

None of our directors have entered into service contracts with us or any
of our subsidiaries providing for benefits upon termination of employment.

Committees. We established a disclosure committee (the Disclosure
Committee) which is responsible for monitoring the collection, processing and
submission to the CEO and CFO of information relating to the Company and its
consolidated subsidiaries that is required to be included in disclosure reports
(such as this annual report on Form 20-F) in order to ensure timely and
accurate disclosure of material information. The duties of the Disclosure
Committee include the following: (a) assisting the CEO and CFO in evaluating
the effectiveness of the Companys internal controls and disclosure procedures
within 90 days prior to the filing of annual reports; (b) suggesting any
improvements in internal controls and/or disclosure procedures as a result of
such evaluation; (c) verifying that the Companys processes for information
collection, processing and control are in compliance with its internal controls
and disclosure procedures such that the accuracy of its disclosures can be
verified; and (d) providing assistance in determining whether information may
be considered material to the Company and its subsidiaries. The Disclosure
Committee is comprised of Francis Cressall, our Manager for Corporate Finance;
Hector Dorribo, our Group Controller; Silvio Szostak, our Chief Information
Officer; Daniel Montero, our internal auditor and Coordinator of the Disclosure
Committee; as well as Ricardo Siri, our General Counsel.

As of May 28, 2003, we also established a Compensation Committee. Its
members are Mr. Marcel Telles, Mr. Alberto Sicupira, Mr. William Engels and Mr.
Carlos Miguens. In addition, our Board of Directors is currently in the
process of establishing an Audit Committee, although such committee is not
required under Luxembourg law .

EMPLOYEES

As of December 31, 2002, we employed 6,114 people. Of these 6,114
employees, approximately 3,898 were based in Argentina, 973 in Bolivia, 289 in
Chile, 613 in Paraguay and 341 in Uruguay. Of these same employees, 3,015 are
engaged in industrial activities such as brewing, malting and bottling, 2,454
in commercial activities such as marketing and 645 in finance, administration
and other activities. The average number of temporary employees during 2002
was approximately 600.

Labor relations between our various operating companies and their
employees are governed by 15 different industry-wide collective bargaining
agreements negotiated separately for each operating subsidiary. In Argentina,
Bolivia, Chile, Paraguay and Uruguay, our collective agreements are negotiated
every two years. We believe that we have positive labor relations with our
employees. Except for occasional industrial disputes, we have not experienced
any significant labor strike or other nationwide industrial dispute during the
past five years that has materially affected our results of operations.

SHARE OWNERSHIP

None of our directors or executive officers hold any of the Class A or
Class B shares. No stock options have been granted to our directors, executive
officers or any other employee.

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ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

MAJOR SHAREHOLDERS

Our largest shareholder is BAC, which holds 373,520,000, or 52.52%, of our
outstanding voting shares net of treasury stock. BAC was organized in the
British Virgin Islands in 1994 by various individual shareholders who are
descendants of the Bemberg family, our founding family. BACs principal
purpose is to hold a controlling interest in the Class A shares, and it
currently holds 52.52% of our outstanding voting shares. Shareholders of BAC
are restricted in their ability to transfer shares in BAC to persons other than
BAC shareholders. BACs memorandum of association provides that BAC will begin
liquidation proceedings on December 31, 2004, if, prior to that time, there has
been no shareholder action to specify another date to extend the existence of
BAC.

On January 31, 2003, AmBev subscribed for 26,388,914 Class B shares from
Quinsa and acquired 230,920,000 Class A shares from BAC, together totaling
36.18% of the voting rights in Quinsa. As disclosed in its Schedule 13D/A
filed with the SEC on June 13, 2003, AmBev acquired an additional 1,080,200
Class B shares after February 1, 2003. In addition, pursuant to the Stock
Purchase Agreement, BAC has granted AmBev a call option, beginning in April
2009, to purchase from BAC and AmBev has granted BAC a put option, beginning in
April 2003, to sell to AmBev BACs remaining 373,520,000 Quinsa Class A shares
in exchange for newly issued shares of AmBev. See Item 4  Information on
the Company  History and Development  Recent Events  Relationship with
AmBev.

While AmBev currently owns 36.33% of the voting power in Quinsa, and BAC
owns 52.52% of such voting power, the Escrow Agreement among Quinsa, BAC,
AmBev, and the Bank of New York as escrow agent, ensures that AmBevs voting
rights in the Company are equal to those of BAC. Pursuant to this agreement,
BAC has deposited 60,000,000 of its Quinsa Class A shares with the escrow agent
in order to ensure that such shares will only be voted upon joint written
instructions from both BAC and AmBev for so long as both BAC and AmBev hold the
Requisite Percentage (as defined below). If necessary, the 60,000,000 Class A
shares will be adjusted in amount from time to time to maintain voting parity
between BAC and AmBev.

The following table sets forth the estimated relative ownership interests
in the Class A shares and the Class B shares of BAC, AmBev and our directors
and executive officers as a group and their respective economic and voting
power as of June 2003:

|                  |  |     |             |       |  |          |             |     |  |               |   |  
|----------------- |  | --- | ----------- | ----- |  | -------- | ----------- | --- |  | ------------- | - | -
|                  |  |     |             |       |  |          |             |     |  | Directors and
|                  |  |     |             |       |  |          |             |     |  | Executive    
|                  |  | BAC |             | AmBev |  | Officers
|                  |  |     |             |       |  |         
|Class A shares    |  |     | 373,520,000 |       |  |          | 230,920,000 |     |  |               | 0 |  
|Class B shares    |  |     | 0           |       |  |          | 27,469,114  | (+) |  |               | 0 |  
|Economic Interest |  |     | 27.76       | %     |  |          | 37.58       | %   |  |               | 0 | %
|Voting Power(1)   |  |     | 52.52       | %(*)  |  |          | 36.33       | %   |  |               | 0 | %



|(1) |  | Net of treasury stock                                                                                                                                                 
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(+) |  | Includes 1,080,200 Class B shares acquired after February 1, 2003 as
disclosed on AmBevs Schedule 13D/A filed with the SEC on June 13, 2003.                         
|(*) |  | BACs voting power is limited by the Escrow Agreement, as explained above.
Therefore, pursuant to the Escrow Agreement, each of BAC and AmBev have
equal voting power.

Quinsa Shareholders Agreement

Pursuant to the Quinsa Shareholders Agreement, so long as AmBev and BAC
each has the Requisite Percentage (as defined below) each of AmBev and BAC will
have the right to nominate:



| |  |  | 50% of the directors constituting the Quinsa board of
directors, and                                                                                                                                         
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | for each of our subsidiaries, 50% of the number of directors
that Quinsa is entitled to nominate under such subsidiarys charter
documents or by-laws, any existing shareholders agreement or
applicable law.

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The Quinsa Shareholders Agreement further provides that if either BAC or
AmBev ceases to own at least 40% (the Requisite Percentage) of the combined
ownership of BAC and AmBev of all shares entitled to vote at our shareholder
meetings (such combined ownership interest of BAC and AmBev being termed the
Voting Interest), then the number of directors that each will be entitled to
nominate will be determined based on the percentage of the Voting Interest held
multiplied by number of directors constituting the Quinsa board or, in the case
of one of our subsidiaries, the number of directors that Quinsa is entitled to
nominate, subject to certain exceptions.

Upon exercise of the call option by AmBev or the put option by BAC under
the Stock Purchase Agreement, resulting in the purchase by AmBev of BACs
remaining 373,520,000 Quinsa Class A shares in exchange for newly issued shares
of AmBev, (i) BAC will no longer have any rights to nominate directors; (ii)
the directors nominated by BAC must resign; (iii) as promptly as practicable,
the Quinsa board and each subsidiary board will be reconstituted to include
only directors nominated or approved by AmBev, subject to the rights of any
shareholders under any subsidiarys charter or by-laws or any existing
shareholders agreement to nominate directors; and (iv) the Quinsa Shareholders
Agreement will terminate.

So long as AmBev and BAC each own at least 40% of the Voting Interest,
each will have the right to elect a Co-Chairman of the Quinsa board, as well as
the right to jointly appoint a Chairman of each subsidiary board.

In addition, as long as each of AmBev and BAC owns the Requisite
Percentage, we agreed not to take certain actions, and not to permit our
subsidiaries to take certain action, without the consent of AmBev and BAC.
Examples of actions taken by us or our subsidiaries that could or would require
prior consent by AmBev and BAC include: capital expenditures, material or
multi-year contracts, business outside of beverages or South America, product
pricing, issuance or repurchase of shares or incurrence of debt above certain
threshold amounts, changes in senior management compensation, changes in
dividend policy, merger or sale of Quinsa or its significant subsidiaries,
material asset sales or spin offs, material acquisitions, changes to our
charter or by-laws or those of our significant subsidiaries, filing for
bankruptcy, and liquidation or dissolution for us or our significant
subsidiaries. If AmBevs or BACs Voting Interest decreases, but remains
above certain threshold amounts, then certain actions above will continue to
require consent by both parties, and so long as AmBev and BAC own one-third or
more of the Voting Interest, the affirmative vote of both will be required for
any capital increase. Because the Quinsa Shareholders Agreement does not
include any mechanism for breaking a tie vote on the Quinsa board of directors,
there is a risk that some of the actions described above cannot or will not be
taken.

AmBev also agreed to refrain from acquiring any ownership interest in or
substantial assets of any businesses involving the manufacture, marketing, sale
or distribution of beverages in certain specified regions in South America
without first offering us the opportunity to make such acquisition, with
certain limited caveats.

Disclosure of Shareholder Ownership

Luxembourg law and the rules of the Luxembourg Stock Exchange require any
person who acquires securities representing 10% or more of our total voting
rights to notify us and the Luxembourg Stock Exchange Supervisory Authority of
his or her 10% ownership within seven calendar days of the date he or she knows
or should have known of such ownership. In addition, Luxembourg law requires
any person to disclose to us and the Luxembourg Stock Exchange Supervisory
Authority the percentage of voting rights held by him or her within seven
calendar days from the day he or she knows or should have known that such
percentage, as a result of an acquisition, sale or other transfer of Class A
and/or Class B shares, equals, exceeds or falls below 10%, 20%, 33.3%, 50% or
66.6% of our total voting rights existing at such time, subject to certain
exceptions. The percentage of voting rights held by any such holder includes
voting rights directly and indirectly controlled. On February 4, 2003, BAC
sent a notification to the Luxembourg Stock Exchange and the Luxembourg Stock
Exchange Supervisory Authority advising of its acquisition of 262,340,000 Class
A shares on January 31, 2003, and its sale on the same date of 230,920,000
Class A shares to AmBev. On February 6, 2003, AmBev sent notice to the
Luxembourg Stock Exchange Supervisory Authority advising such entity of, among
other things, (i) its acquisition 36.2% of the total voting rights of Quinsa
represented by the 230,920,000 Class A shares AmBev acquired from BAC and the
26,388,914 newly issued Class B shares AmBev received from Quinsa, and (ii) the
possibility of acquiring a total of 88.7% of the total voting rights of Quinsa upon exercise of the options
with respect to the remaining Class A shares held by BAC. As of June 19, 2003,
no person or entity other than BAC or AmBev had provided any other such
notification with respect to our Class A and/or Class B shares.

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RELATED PARTY TRANSACTIONS

We purchase certain raw materials, goods for resale and services from
related parties. These transactions are summarized as follows:

|                             |       |   |                   |     |      |   |      |      |  |   |     |      | 
|---------------------------- | ----- | - | ----------------- | --- | ---- | - | ---- | ---- |  | - | --- | ---- | 
|                             |       |   | 2002              |     | 2001 |   | 2000
|                             |       |   |                   |     |      |   |     
|                             |       |   | (in US$ millions)
|Purchase of raw materials    |       | $ | 3.0               |     |      | $ | 4.8  |      |  | $ | 9.9 |     
|Transportation services      |       |   | 1.7               |     |      |   | 4.0  |      |  |   | 4.2 |     
|Fees for services            |       |   | 0.6               |     |      |   | 2.9  |      |  |   | 2.8 |     
|Technical assistance fees    |       |   | 1.5               |     |      |   | 1.0  |      |  |   | 1.0 |     
|Purchase of goods for resale |       |   | 0.3               |     |      |   | 0.4  |      |  |   | 0.3 |     
|                             |       |   |                   |     |      |   |      |      |  |   |     |     
|                             | Total |   | $                 | 7.1 |      |   | $    | 13.1 |  |   | $   | 18.2 | 
|                             |       |   |                   |     |      |   |      |      |  |   |     |     

Purchase of Raw Materials. We purchase several raw materials, including
malt and barley, from Heineken, which held 15% of the outstanding shares of QIB
until January 2003. We buy corn grits and rice from Compal, S.A. (Compal)
which is 60% owned by Arfinsa S.A. (Arfinsa). Arfinsa is indirectly owned by
certain members of the Bemberg family, and Compal is our sole supplier of corn
grits and rice. In addition, we will purchase yeast from AmBev for production
of Bramha beer in the southern cone markets.

Transportation Services.Transportes Ader S.A. (Tasa) provides
integrated logistics support for our entire supply chain. This logistics
support includes inbound raw materials supply, finished goods distribution,
dedicated contract carriage, the management of carriers and other supply chain
services. These costs are included as selling and marketing expenses in our
consolidated statement of income. Until the beginning of 2003, Tasa was
controlled by Bemberg Inversiones S.A., an investment firm owned by certain
members of the Bemberg family.

Fees for Services.These fees relate to certain administrative fees
charged by Arfinsa S.A. These costs are included as administrative and general
expenses in our consolidated statement of income. Arfinsa is indirectly owned
by certain members of the Bemberg family.

Purchase of Goods for Resale.We purchased imported bottled beer from
Heineken. However, as of June 17, 2003 we no longer distribute the Heineken
brand in the southern cone markets. See Item 4  History and Development 
Recent Events  Settlement with Heineken.

Technical Assistance Agreements.Until January 2003, our relationship
with Heineken as a technical adviser was governed by technical assistance
agreements relating to both our brewing and malting operations. The technical
assistance agreements covered issues relating to product quality, the
maintenance of production equipment and facilities, the purchase of raw
materials, environmental issues and managerial systems. We could also request
assistance with certain additional services related to our breweries. The fees
and expenses generated under these agreements are included as technical
assistance fees within cost of goods sold in our consolidated statement of
income. Pursuant to the Memorandum of Agreement between Heineken and Quinsa,
these technical assistance agreements were terminated in January 2003. See
Item 4  History and Development  Recent Events  Settlement with
Heineken.

We believe that all the transactions described above are on terms that
would be at least as favorable to those received by an independent third party
in arms-length negotiations. In the ordinary course of business, we
engage in transactions with affiliated entities, and these
transactions are eliminated upon consolidation.

Related party loans and guarantees. On September 22, 1993, QIB signed a
guaranty agreement as the guarantor and primary obligor with the International
Finance Corporation (IFC), a branch of the World Bank, guaranteeing a loan of
US$30.0 million in principal extended by the IFC to CMQ as part of an
investment agreement. As of December 31, 2002, the amount due on the loan
totaled US$4.0 million. In addition, during 2002 and 2001, QIB
guaranteed certain loans of CMQ amounting to approximately US$41.5
million and US$36.0 million, respectively, in connection with
CMQs negotiations with certain creditors. See Item. 5
Operating and Financial Review and ProspectsLiquidity and
Capital ResourcesOther Liquidity MattersCMQ Liquidity
Matters. During the period from 2000 to 2002, the largest
amount guaranteed by QIB at any onetime amounted to US$45.0 million.

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ITEM 8. FINANCIAL INFORMATION

CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION

See Item 17 for our Consolidated Financial Statements.

Legal Proceedings and Contingencies

We have certain contingent liabilities with respect to material existing
or potential claims, lawsuits and other proceedings, including those involving
tax, social security and other matters. We accrue liabilities when it is
probable that future costs will be incurred and such costs can be reasonably
estimated. Such accruals are based on developments to date, our own estimates
of the outcome of these matters, the opinions of our lawyers, and their
experience in contesting, litigating and settling other matters. As the scope
of the liabilities becomes better defined, there will be changes in the
estimates of future costs, which could have a significant effect on our future
financial position or profitability.

Primarily as a result of the acquisitions described in Note 3 to our
Consolidated Financial Statements, and as part of the allocation of the
purchase price of such acquisitions, during 2000 we recognized a contingency
reserve of US$51.4 million with respect to tax, social security and commercial
lawsuits. Such matters arose in the ordinary course of business of the
particular entities prior to our acquisitions.

As of December 31, 2002, we maintained reserves amounting to US$48.9
million to cover contingent liabilities with respect to material existing or
potential claims, lawsuits and other proceedings, including those involving
tax, social security and other matters, and including the balance of the
contingency reserve described in the preceding paragraph. Our past experience
with similar contingencies leads us to believe that our current provisions for
such contingencies are adequate. If all such claims were determined adversely
within the same period, which we believe highly unlikely, our results of
operations for such period would be materially adversely affected.

In 1997, our subsidiary Baesa sold its Brazilian soft-drink business (the
Brazilian Business) to Cervejaria Brahma (the Buyer). At the time of the
sale, the Brazilian Business had certain material existing and potential
claims, lawsuits and proceedings, including those involving tax, social
security and other matters. Under a tax indemnification agreement, Baesa
agreed to indemnify the Buyer for these liabilities, but in no event to exceed
US$20.0 million, and PepsiCo has agreed to indemnify Baesa up to US$10 million.
Therefore, we believe that the reserve established amounting to US$ 9.9
million is adequate to cover losses related to this transaction.

The
Bolivian tax authorities have claimed back taxes from a company in
which CBN used to own a 25% ownership interest, and the Bolivian
courts have ruled in favor of the tax authorities. The claim relates
to back taxes corresponding to periods prior to our acquisition of a
controlling stake in CBN, and did not name CBN as a defendant. While
CBN was never a party to this lawsuit, the company against which the
claim was filed has since ceased to exist, and the Bolivian tax
authorities imposed a lien on CBNs assets in July 2001 in an
effort to obtain payment from CBN. CBNs independent legal
counsel does not believe that the claim will have a material negative
impact on us, principally because CBN was never a party to this
proceeding. However, if we are required to pay under the claim, we
believe that our existing contingency reserves are sufficient to
cover any liability to the Company.

In June 2002, we also received a summons indicating that Heineken had
commenced a legal proceeding against our company in a Luxembourg court. The
summons alleged that our proposed transaction with AmBev violated certain
contractual agreements between Heineken and Quinsa, and requested that the
court issue an order prohibiting the completion of the transaction with AmBev
until the contract dispute is resolved by an arbitrator. Later in June, the
Luxembourg court dismissed Heinekens summons after noting that we and AmBev
had agreed not to complete the AmBev transactions before September 15, 2002,
the earliest date by which the required approval of the Argentina antitrust
authorities was expected. This proceeding has been resolved. See Item 4.
Information on the Company  History and Development  Recent Events 
Settlement with Heineken.

Dividend Policy

For a description of our dividend policy, see Item 10. Additional
Information  Memorandum and Articles of Incorporation  Capital Stock 
Dividends below.

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Significant Changes

Except as otherwise described in our annual financial statements, there
have been no significant changes in our business, financial conditions or
results since December 31, 2002.

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ITEM 9. THE OFFER AND LISTING

Market for the Class B shares

Our ADSs, each representing two Class B shares without par value, are
listed on the New York Stock Exchange (NYSE) and trade under the symbol
LQU. Our Class B shares are listed and trade on the Luxembourg Stock
Exchange (LSE) as well. The Bank of New York is our depositary issuing
American Depositary Receipts (ADRs), pursuant to the Deposit Agreement dated
February 28, 2002 among us, The Bank of New York, as depositary, and the
holders from time to time of ADRs. The ADSs (initially representing our
non-voting shares and now representing Class B voting shares) and non-voting
shares (which are now our Class B voting shares) began trading on the NYSE and
the LSE, respectively, on March 28, 1996. The table below sets forth, for the
periods indicated, the reported high and low daily closing prices of the
non-voting shares or Class B shares, as the case may be, and the ADSs on the
LSE and the NYSE, respectively.

|              |             |   |                            |                     |     |   |      |      |     |   |       |       |  |   |       |       | 
|------------- | ----------- | - | -------------------------- | ------------------- | --- | - | ---- | ---- | --- | - | ----- | ----- |  | - | ----- | ----- | 
|              |             |   | Price per Class B share(1) | Price per ADS(2)(3)
|              |             |   |                            |                    
|              |             |   | High                       |                     | Low |   | High |      | Low
|              |             |   |                            |                     |     |   |      |      |    
|1998          |             | $ | 13.85                      |                     |     | $ | 6.00 |      |     | $ | 28.00 |       |  | $ | 12.75 |      
|1999          |             |   | 12.25                      |                     |     |   | 7.20 |      |     |   | 25.25 |       |  |   | 15.00 |      
|2000          |             |   | 13.75                      |                     |     |   | 7.85 |      |     |   | 28.25 |       |  |   | 15.13 |      
|2001          |             |   | 10.90                      |                     |     |   | 5.00 |      |     |   | 24.12 |       |  |   | 9.95  |      
|2002          |             |   | 6.38                       |                     |     |   | 2.52 |      |     |   | 13.09 |       |  |   | 5.73  |      
|2001          |             |   |                            |                     |     |   |      |      |     |   |       |       |  |   |       |      
|              | 1st Quarter |   |                            | 10.90               |     |   |      | 7.85 |     |   |       | 24.12 |  |   |       | 17.00 | 
|              | 2nd Quarter |   |                            | 10.04               |     |   |      | 8.60 |     |   |       | 21.30 |  |   |       | 17.80 | 
|              | 3rd Quarter |   |                            | 9.86                |     |   |      | 5.52 |     |   |       | 21.10 |  |   |       | 11.49 | 
|              | 4th Quarter |   |                            | 6.34                |     |   |      | 5.00 |     |   |       | 13.60 |  |   |       | 9.95  | 
|2002          |             |   |                            |                     |     |   |      |      |     |   |       |       |  |   |       |      
|              | 1st Quarter |   |                            | 6.10                |     |   |      | 4.31 |     |   |       | 13.01 |  |   |       | 8.75  | 
|              | 2nd Quarter |   |                            | 6.38                |     |   |      | 4.49 |     |   |       | 13.09 |  |   |       | 8.75  | 
|              | 3rd Quarter |   |                            | 4.50                |     |   |      | 3.42 |     |   |       | 9.24  |  |   |       | 6.70  | 
|              | 4th Quarter |   |                            | 3.48                |     |   |      | 2.52 |     |   |       | 7.40  |  |   |       | 5.73  | 
|2003          |             |   |                            |                     |     |   |      |      |     |   |       |       |  |   |       |      
|              | 1st Quarter |   |                            | 3.52                |     |   |      | 2.72 |     |   |       | 8.11  |  |   |       | 6.35  | 
|December 2002 |             |   | 2.86                       |                     |     |   | 2.52 |      |     |   | 6.27  |       |  |   | 5.80  |      
|January 2003  |             |   | 3.46                       |                     |     |   | 2.72 |      |     |   | 8.11  |       |  |   | 6.42  |      
|February 2003 |             |   | 3.36                       |                     |     |   | 2.90 |      |     |   | 7.75  |       |  |   | 6.35  |      
|March 2003    |             |   | 3.52                       |                     |     |   | 3.20 |      |     |   | 7.80  |       |  |   | 7.38  |      
|April 2003    |             |   | 4.74                       |                     |     |   | 3.20 |      |     |   | 10.04 |       |  |   | 7.65  |      
|May 2003      |             |   | 5.52                       |                     |     |   | 4.60 |      |     |   | 11.95 |       |  |   | 9.88  |      



---

|(1) |  | Source: Luxembourg Stock Exchange.                                                                                                                                                                                                                              
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Source: New York Stock Exchange.                                                                                                                                                                                                                                
|   
|(3) |  | The ADSs have been restated to give retroactive effect to the change in
ratio of Class B shares to ADRs. After approval of the recapitalization
plan, each ADR represented two Class B shares, whereas previously each ADR
had represented one non-voting share.

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Market for the Class A shares

Our Class A shares are currently listed and trade in U.S. dollars on the
LSE. The table below sets forth, for the periods indicated, the reported high
and low daily closing prices of our Class A shares on the LSE. The price per
Class A share has been adjusted to reflect the 10:1 stock split that occurred
upon approval of our recapitalization plan by holders of our ordinary and
non-voting shares, including holders of our ADRs, on June 8, 2001. Pursuant to
the recapitalization plan, each ordinary share was redesignated as a Class A
share and split into 10 Class A shares.

|              |             |  |  |  |  |   |                               |       |     |   |       |       | 
|------------- | ----------- |  |  |  |  | - | ----------------------------- | ----- | --- | - | ----- | ----- | 
|              |             |  |  |  |  |   | Price per Class A share(1)(2)
|              |             |  |  |  |  |   |                              
|              |             |  |  |  |  |   | High                          |       | Low
|              |             |  |  |  |  |   |                               |       |    
|1998          |             |  |  |  |  | $ | 1.120                         |       |     | $ | 0.625 |      
|1999          |             |  |  |  |  |   | 0.975                         |       |     |   | 0.712 |      
|2000          |             |  |  |  |  |   | 1.140                         |       |     |   | 0.700 |      
|2001          |             |  |  |  |  |   | 0.980                         |       |     |   | 0.550 |      
|2002          |             |  |  |  |  |   | 0.725                         |       |     |   | 0.430 |      
|2001          |             |  |  |  |  |   |                               |       |     |   |       |      
|              | 1st Quarter |  |  |  |  |   |                               | 0.855 |     |   |       | 0.700 | 
|              | 2nd Quarter |  |  |  |  |   |                               | 0.980 |     |   |       | 0.730 | 
|              | 3rd Quarter |  |  |  |  |   |                               | 0.970 |     |   |       | 0.600 | 
|              | 4th Quarter |  |  |  |  |   |                               | 0.710 |     |   |       | 0.550 | 
|2002          |             |  |  |  |  |   |                               |       |     |   |       |      
|              | 1st Quarter |  |  |  |  |   |                               | 0.630 |     |   |       | 0.430 | 
|              | 2nd Quarter |  |  |  |  |   |                               | 0.725 |     |   |       | 0.462 | 
|              | 3rd Quarter |  |  |  |  |   |                               | 0.700 |     |   |       | 0.500 | 
|              | 4th Quarter |  |  |  |  |   |                               | 0.525 |     |   |       | 0.475 | 
|2003          |             |  |  |  |  |   |                               |       |     |   |       |      
|              | 1st Quarter |  |  |  |  |   |                               | 0.510 |     |   |       | 0.300 | 
|December 2002 |             |  |  |  |  |   | 0.500                         |       |     |   | 0.500 |      
|January 2003  |             |  |  |  |  |   | 0.510                         |       |     |   | 0.500 |      
|February 2003 |             |  |  |  |  |   | 0.500                         |       |     |   | 0.350 |      
|March 2003    |             |  |  |  |  |   | 0.380                         |       |     |   | 0.300 |      
|April 2003    |             |  |  |  |  |   | 0.336                         |       |     |   | 0.290 |      
|May 2003      |             |  |  |  |  |   | 0.470                         |       |     |   | 0.310 |      



---

|(1) |  | Source: Luxembourg Stock Exchange.                                                                                                                               
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | The prices of our Class A shares have been restated to give retroactive
effect to the 10:1 split which occurred as a result of our
recapitalization in June 2001.

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ITEM 10. ADDITIONAL INFORMATION

MEMORANDUM AND ARTICLES OF INCORPORATION

Recapitalization

At an Extraordinary General Meeting held on June 8, 2001, our shareholders
of our ordinary shares, non-voting shares and American Depositary Shares
(ADSs) representing non-voting shares approved the share capital
reorganization plan to alter the respective rights of holders of our ordinary
shares without par value and holders of our non-voting shares including ADS
holders. As a result, we:



| |  | redesignated the outstanding ordinary shares as Class A shares and
split each outstanding ordinary share into ten Class A shares;                                                                                                                 
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | converted the outstanding non-voting shares into Class B voting
ordinary shares and canceled the class of non-voting shares;                                                                                                                      
| 
| |  | adjusted the rights to dividends and liquidation proceeds of the two
classes so that each Class B share is entitled to receive, with
respect to any dividends or liquidation proceeds, ten times the amount
per share paid on the Class A shares; 
| 
| |  | permitted conversion of Class A shares into Class B shares for a
limited period of time each year, provided that as a result of such
conversion a shareholder does not hold more than 5% of the Class B
shares in the aggregate;                  
| 
| |  | restated the existing provision of our Articles (as the term is
defined below) relating to authorized capital and waived preferential
subscription rights of shareholders to subscribe for further issues of
Class A shares or Class B shares; and
| 
| |  | changed the ratio of Class B shares to ADSs from 1:1 to 2:1.                                                                                                                                                                                      

Because the Class B shares now have voting rights, implementation of the plan
has increased the voting power of the public stockholders, although voting
control of Quinsa remains with the holder or holders of the Class A shares.
The purpose of the share capital reorganization plan was to create a publicly
traded security having characteristics that would make it eligible for
investments by Argentine pension funds.

Register

We were incorporated by deed of Maître Camille Hellinckx, a notary
residing in Luxembourg, on December 20, 1989. This deed was published in the
Mémorial Recueil des Sociétés et Associations (the Mémorial), number 209 on
June 26, 1990. Our Statuts Coordonnés, which include both charter and by-laws,
(the Articles) were amended on the following dates: (1) June 11, 1992 by
deed of Maître Camille Hellinckx published in the Mémorial, number 339 on
August 6, 1992; (2) December 10, 1993 by deed of Maître Camille Hellinckx
published in the Mémorial, number 7 on January 7, 1994; (3) June 24, 1994 by
deed of Maître André Schwachtgen, published in the Mémorial, number 325 on
September 6, 1994; (4) February 6, 1996 by deed of Maître Camille Hellinckx
published in the Mémorial, number 117 on March 7, 1996; (5) April 25, 1996 by
deed of Maître Camille Hellinckx published in the Mémorial, number 299 on June
19, 1996; and (6) October 9, 2000 by deed of Maître Reginald Neuman published
in the Mémorial, number 830 on November 13, 2000; (7) June 8, 2001 by deed of
Maître Reginald Neuman published in the Mémorial, number 1173 on December 15,
2001; (8) August 8, 2001 by deed of Maître Reginald Neuman published in the
Mémorial, number 117 on January 22, 2002; and (9) January 31, 2003 by deed of
Maître Jean-Joseph Wagner published in the Mémorial, number 270 on March 13,
2003.

We are registered with the Companies Registrar in Luxembourg under the
number RCB 32.501.

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Objects and Purposes

Article 2 of the Articles states that our object is the direct or indirect
holding of business interests in Luxembourg or foreign corporations or other
business entities as well as the administration, management, control and
development of such business entities.

We may use our resources (1) to organize, manage, enhance in value and
liquidate a portfolio consisting of any securities, patents and licenses, (2)
to participate in the organization, development and control of any business
entity, (3) to acquire by way of capital contribution, subscription,
underwriting, option, purchase or any other manner any securities, patents and
licenses, (4) to sell, transfer, exchange or otherwise enhance the value of
such securities, patents and rights and (5) to provide companies in which we
have an interest any assistance, loans, advances or guarantees. In general, we
may carry out any operations which we deem useful to achieve our corporate
objects and purposes, within the limits established by the law of July 31, 1929
and subsequent amendments.

Article 2 of the Articles states that we may not directly carry on any
industrial activity or maintain a commercial establishment open to the public.

The Board of Directors

Our board of directors consists of a minimum of three and a maximum of 15
members appointed at general meetings. Directors are not required to own our
shares in order to act as members of the board. A directors term of office
may not exceed six years; although directors may be reappointed and dismissed
at any time. The Articles do not provide for classes of directors nor
mandatory retirement of our directors on the basis of age.

Voting.The board of directors meets as often as is required, upon notice
given by either of the co-chairmen or by two directors either at the registered
office or at any place indicated in the notice. The board of directors may
deliberate and act only if a majority of its members are present in person or
by proxy. All decisions are taken by a majority of votes of directors present
or represented. In the event of a tie-vote, the chairman casts the deciding
vote.

If certain proposed amendments to our Articles are approved at the Annual
General Shareholders Meeting scheduled for June 27, 2003, the sentence
regarding tie-votes will be deleted from the Articles.

Powers.The board of directors is vested with broad powers to act on our
behalf. It may authorize all acts of management (including the borrowing of
funds) within our corporate purposes other than those specifically reserved to
general meetings of shareholders. Within the limits of Luxembourg law, the
board of directors may:



| |  | delegate to any of its members, the powers to carry out its decisions and to provide day-to-day management;
|- |  | -----------------------------------------------------------------------------------------------------------
| 
| |  | confer to any person the powers necessary for our technical, administrative and commercial management;     
| 
| |  | constitute any committee and determine its function and authority; and                                     
| 
| |  | authorize all substitutions in the powers it has delegated or conferred.                                   

Compensation.The level of compensation paid to members of the board of
directors is decided at the annual general shareholders meeting. Our directors
have no power to vote compensation to themselves or to other members of the
board.

Conflicts of Interest.Any director who may have an interest adverse to
us with respect to a transaction submitted to the approval of the board of
directors is required to notify the board of such adverse interest. This
notice must be reflected in the minutes of the meeting in question, and the
director is required to abstain from deliberating or voting on such
transaction. In addition, these transactions must be specifically reported at
the next general meeting.

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Capital Stock

Our authorized share capital is US$400,000,000, represented by Class A
shares without par value and Class B shares without par value, totaling
8,729,308,855 shares which includes the number of Class A shares and Class B
shares as are issued and outstanding from time to time. On January 31, 2003,
the board of directors of Quinsa resolved to increase our share capital from
US$33,520,121 to US$41,669,101 by the issuance of 26,388,914 Class B shares to
AmBev pursuant to the Share Exchange Agreement. See Item 4
 History and
Development  Recent Events  Relationship with AmBev. As a result, we
amended our articles of incorporation to reflect this increase in share
capital, as well as the number of Class A shares and Class B shares represented
thereby. Therefore, as of the date of this report, our issued and outstanding
share capital is represented by 647,618,840 Class A shares and 69,777,119 Class
B shares.

Dividends.Each Class B share is entitled, if dividends are declared by the
general meeting of shareholders or, in case of interim dividends, by the board
of directors, to receive an amount of dividends equal to ten times the amount
of dividends to which each Class A share is entitled. The right to dividends
of Class A shares and Class B shares rank pari passuwithout preference to each
other. Prior to paying any dividends, we are required under Luxembourg law to
transfer 5% of our annual net profits to a non-distributable legal reserve
until the reserve amounts to 10% of our issued share capital.

Voting Rights.Each Class A share and each Class B share entitles the holder
to cast one vote at any shareholders meeting. Class A shares and Class B
shares will ordinarily vote as one class at any shareholders meeting. However,
any resolutions affecting the respective rights of particular classes must be
approved separately by each class, pursuant to the quorum and majority
requirements established by Luxembourg law. Our Articles do not provide for
cumulative voting, nor do they contain any provision discriminating against any
existing or prospective holder of such securities as a result of such
shareholder owning a substantial number of our shares.

Rights to Share in Company Profits.The surplus after deduction of charges and
amortizations represents the net profit at the disposal of the general meeting
for free allocation. With the approval of the auditor(s) the board of
directors may initiate interim dividend payments. Dividends decided by the
general meeting as well as those initiated by the board of directors are paid
at the periods and places fixed by the board of directors.

Liquidation Rights.Should a liquidation of Quinsa occur, any surplus assets
available for distribution will be distributed to Class A and Class B
shareholders after payment of all the companys debts and obligations. Each
Class B share is entitled to liquidation proceeds equal to ten times the amount
of liquidation proceeds to which each Class A share is entitled. The rights to
the liquidation proceeds of Class A shares and Class B shares rank pari passu
without preference to each other.

Conversion Rights.Class A shares are convertible into Class B shares at a
ratio of ten Class A shares for 1 Class B share for the first 15 Luxembourg
business days every July, provided (i) Class A holders submit their request to
convert such shares (the Requests) within the given time frame, and (ii) such
request is accompanied by a certification, in such form determined by the
board, by the tendering holder (the Certification) of the amount of Class B
shares he or she holds prior to giving effect to this Request.

The Class A holders will be able to convert all of the Class A shares
covered by his or her Request to the extent that each holders Class B share
holdings does not reach 5%. To the extent that upon effecting the Request, any
Class A holder would be the beneficial owner of 5% or more of the Class B
shares outstanding, the holder will only be allowed to convert as many Class A
shares as would leave the Class A holder with Class B share holdings under 5%.
Class A holders who will not receive all of the Requested shares because the
holder would be the beneficial owner of greater than 5% of the Class B share
holdings, may not withdraw their Request, but will instead receive as many
Requested Class B shares as is possible in accordance with their Request
without triggering the 5% threshold. Class A holders requesting conversion of
their Class A shares will be notified by July 31 of each year whether and to
what extent their Requests were permitted and what their resulting Class B
share holdings are.

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Pre-emptive Rights.Our Articles provide that within the limits of the
authorized share capital referred to above, any issue of shares of any class
may be made with or without reserving to holders of shares of any class a
preferential subscription right for such shares.

Redemption Rights/Sinking Fund.In respect of the Class A or Class B
shares, the Articles do not provide for (1) redemption rights or (2) the
establishment of a sinking fund in respect of the Class A or Class B shares.

Business Combinations.The Articles do not contain any provisions which
would operate only with respect to a merger, acquisition or corporate
restructuring involving us or any of our subsidiaries. Under Luxembourg law,
there are no appraisal rights with respect to the Class A or Class B shares in
the event of a business combination transaction.

Nonresident or Foreign Shareholders.There are no limitations, under
Luxembourg law or the Articles (except as described under Conversion Rights
above), on the right of our nonresident or foreign shareholders to hold the
Class A or the Class B shares.

Transferability.Our shares may be issued in registered or bearer form
and may be converted by shareholders from one form to another. The Class A and
Class B shares in bearer form are transferable by delivery. Those in
registered form are transferable only by a written declaration of transfer,
signed by the transferor and the transferee, or their attorneys-in-fact, and
recorded in our share register.

General Meetings

The annual general meeting of our Class A and Class B shares is held in
the city of Luxembourg, at the place indicated in the notices of meeting, on
the first business day following the fourth Thursday of June at 10:00 AM.
Notices of ordinary and extraordinary general meetings must contain the agenda,
date, time and place of the meeting. These notices are made by announcements
published twice in the Mémorial, as well as in a Luxembourg newspaper and an
international newspaper. There is an eight-day interval between the two
notices, and the second notice is published at least eight days before the
meeting. Notices for any extraordinary general meeting reconvened for lack of
a quorum must also contain, according to Luxembourg law, the result of the
first meeting. These notices must be made by announcements published twice in
the Mémorial and two other Luxembourg newspapers, with a 15-day interval
between the two notices and with the second notice published at least 15 days
before the meeting.

In order to be admitted to general meetings, holders of Class A or Class B
shares must deposit their shares (1) at our registered office at least five
days before the meeting or (2) at the offices of specified depositaries at
least eight days before the meeting. Holders of Class A or Class B shares in
registered form must advise us within five days of the meeting of their
intention to attend the general meeting. If a shareholder intends to vote by
proxy holder, the latter is required to deposit the proxy at our registered
office within five days of the meeting. The board of directors may reduce
these time limits or accept share deposits irrespective of such limits.

Except as set forth below, under Luxembourg law and the Articles,
shareholder action may be taken at a general meeting, the purpose of which is
not to amend the Articles, by a simple majority vote of shares present or
represented. There are no quorum requirements for ordinary meetings.

An extraordinary general meeting convened for the purpose of amending the
Articles must have a quorum of at least 50% of all issued and outstanding Class
A and Class B shares. If a quorum is not present, the meeting may be
reconvened according to Luxembourg law at a later date with no quorum. The
unanimous consent of all holders of Class A and Class B shares is required if
the proposed amendment to the Articles involves (1) changing our jurisdiction
of incorporation or (2) adding to the financial obligations of our
shareholders. For any other amendment to the Articles, a two-thirds majority
vote is required of all Class A and Class B shares present or represented. If
the amendment relates to a matter for which a separate class vote by holders of
Class A and Class B shares is required, the quorum and majority vote
requirements must be fulfilled separately with respect to the Class A and Class
B shares.

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MATERIAL CONTRACTS

In connection with our strategic relationship with AmBev, we entered into
the agreements described below.

Share Exchange Agreement.On May 1, 2002 we signed a Share Exchange
Agreement with AmBev pursuant to which AmBev agreed to contribute to Quinsa all
the Southern Holding Shares related to AmBev subsidiaries that manufacture,
market, sell or distribute beer in Argentina, Uruguay and Paraguay in exchange
for 26,388,914 newly issued Quinsa Class B shares. AmBev contributed the
Southern Holding Shares to Quinsa and Quinsa issued the Class B shares to AmBev
on January 31, 2003. The completion of the transactions contemplated by the
Share Exchange Agreement was subject to the satisfaction of the conditions set
forth in the Share Exchange Agreement, including the approval of the applicable
antitrust authorities, which Quinsa received on January 13, 2003, subject to
certain conditions. See Item 4. Information on the Company  Business
Overview  Recent Events  Approval of the Argentine Antitrust Authorities.
See Item 4  Information on the Company  Business Overview  Recent Events
 Relationship with AmBev.

License Agreement. Pursuant to the Share Exchange Agreement, we entered
into the License Agreement with AmBev on January 31, 2003, pursuant to which
AmBev granted Quinsa and its subsidiaries a perpetual royalty free exclusive
license to manufacture, market, sell and distribute the AmBev beer brands in
Argentina, Chile, Uruguay, Paraguay and Bolivia. The exclusive license is
subject to certain requirements on the part of Quinsa set forth in the License
Agreement including, (i) Quinsas providing access to facilities and regular
updates to AmBev with respect to the licensed AmBev beer; (ii) the requirement
that Quinsa purchase the culture yeast needed for the production of the beer
only from AmBev or its designee; (iii) the requirement that Quinsa refrain from
producing, selling or distributing any other beer marketed or sold in Brazil
under a trademark or trade name that is of Brazilian origin, or from
distributing the licensed AmBev beer outside of its designated territory; and
(iv) the development by Quinsa of policies and strategies relating to the
marketing of the licensed AmBev beer in the regions covered by the license.
The parties also agreed to other undertakings to facilitate each others
performance under the License Agreement.

Distribution Agreement. In addition, pursuant to the Share Exchange
Agreement, we also entered into the Distribution Agreement on January 31, 2003
pursuant to which we have granted AmBev the exclusive right to produce,
distribute and sell certain specified Quinsa beer brands in Brazil in exchange
for a royalty of 3% of the net revenues AmBev receives on the sales of the
licensed Quinsa beer in Brazil. The exclusive license is subject to certain
requirements on the part of AmBev set forth in the Distribution Agreement
including, (i) AmBev providing access to facilities and regular updates to
Quinsa with respect to the licensed Quinsa beer; (ii) the requirement that
AmBev purchase the culture yeast needed for the production of the beer only
from Quinsa or its designee; (iii) the requirement that Quinsa refrain from
distributing the licensed Quinsa beer outside of its designated territory; and
(iv) AmBev achieving certain specified sales volume targets. The parties also
agreed to other undertakings to facilitate each others performance under the
Distribution Agreement.

Quinsa Shareholders Agreement. We entered into the Quinsa Shareholders
Agreement with regard to certain matters relating to the voting, transfer and
issuance of Quinsa shares. See Item 7  Major Shareholders and Related Party
Transactions  Major Shareholders  Quinsa Shareholders Agreement.

Memorandum of Agreement. We entered into a Memorandum of Agreement with
Heineken on January 13, 2003, pursuant to which we agreed with Heineken to
settle and resolve all disputes and claims brought by and against each other in
an arbitration proceeding before the ICC. See Item 4  Information on the
Company  History and Development  Recent Events  Settlement with
Heineken and Item 4  Information on the Company  Beer Operations in the
Southern Cone Markets  Relationship with Heineken.

Letter Agreement between Quinsa, BAC and AmBev.Simultaneously with the
Memorandum of Agreement, Quinsa, BAC and AmBev executed a Letter Agreement
pursuant to which, AmBev agreed to acquire approximately 57% of the QIB shares
that Heineken was selling to BAC, or approximately 8.6% of all outstanding
shares of QIB, for approximately US$58.5 million. As a result, BAC and AmBev
now own approximately 6.4% and 8.6%, respectively of QIBs outstanding stock.
Pursuant to the Letter Agreement, AmBev and BAC have agreed that Quinsa will
have the right to purchase the QIB shares held by AmBev and BAC for cash at
fair market value if and when Quinsas board of directors decides to exercise
such right. See Item 4  Information on the Company  History and
Development  Recent Events  Letter Agreement between Quinsa, BAC and
AmBev.

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EXCHANGE CONTROLS

As a holding company, our ability to pay dividends and service any debt
obligations depends primarily upon our receipt of sufficient funds from our
principal subsidiary, QIB, which depends in turn on QIBs receipt of sufficient
funds from its subsidiaries in Argentina, Bolivia, Chile, Paraguay and Uruguay.

Beginning on December 3, 2001, the Argentine government imposed a number
of monetary and currency exchange control measures that included restrictions
on the free disposition of funds deposited with banks and tight restrictions on
transferring funds abroad, with certain exceptions for transfers related to
foreign trade and other authorized transactions. The restrictions requiring
the Central Banks prior authorization for the transfer of funds abroad in
order to make payments of principal and/or interest, which were in place during
2002, were progressively reduced from January to May 2003, and were completely
eliminated on May 6, 2003. In addition, funds may now be transferred abroad
without previous authorization of the Central Bank in order to pay dividends
corresponding to prior periods provided that independent accountants have
certified the financial statements for such period. However, there can be no
assurance that the Argentine government will not once again place tight
restrictions on the transfer of funds abroad by requiring prior approval from
the Argentine Central Bank. Such restrictions could inhibit our ability to
receive funds from our Argentine subsidiaries.

Bolivia, Chile, Paraguay and Uruguay do not currently restrict the
remittance of dividends paid by subsidiaries to QIB, although Chilean law
precludes persons who are not Chilean residents from repatriating their
investments in Chile for the first year of such investment.

In Argentina, remittance of dividends on profits registered in excess of
accumulated profits as of June 30, 1998 will be subject to a withholding tax
if, and only if, the net income for a given period, according to Argentine
GAAP, is higher than the net income reported in the tax return for the same
period to the Argentine tax authorities. If that were the case, a 35%
withholding tax is applied to the difference. Bolivia has a 12.5% withholding
tax rate on dividends, although there are no taxes withheld on dividends in
Panama, where the holding company of the Bolivian subsidiaries is located.
Chile imposes withholding tax at the statutory rate of 35%, which can be
reduced to an effective withholding rate of 20% to the extent our Chilean
subsidiaries have paid Chilean income tax in the relevant period. Paraguay
imposes a 5% withholding tax on dividends paid to foreign investors. Under
Uruguayan law, there is no withholding tax in respect of payments of dividends
to holding companies incorporated in certain jurisdictions, including Bermuda
(the jurisdiction of incorporation of QIB). Bermuda does not restrict or tax
the payment of dividends by QIB to us, and Luxembourg does not restrict or
impose withholding taxes on the payment of dividends by us to our shareholders.

No assurance can be given that more restrictive exchange control policies
and more significant withholding taxes, which could affect the ability of our
subsidiaries to pay dividends to QIB and ultimately to us, will not be imposed
in the future. The payment of dividends by our various subsidiaries is also in
certain instances subject to statutory restrictions and restrictive covenants
in debt instruments and is contingent upon the earnings and cash flow of and
permitted borrowings by such subsidiaries.

There are no limitations on the right of non-resident or foreign owners to
hold or vote our Class A or Class B shares.

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TAXATION

The following summary describes certain material Luxembourg and United
States federal income tax consequences of the acquisition, ownership and
disposition of ADSs or our Class A or Class B shares by a U.S. holder.

Luxembourg Taxes

Under present Luxembourg law, and provided we maintain our status as a
holding company governed by the law of July 31, 1929, and the grand-ducal
decree of December 17, 1938, no income tax, withholding tax (with respect to
dividends) or capital gains tax is payable in Luxembourg by us. However, under
the grand-ducal decree of December 17, 1938, we are subject to a special tax at
a rate ranging from 0.1% to 3.0% on dividends distributed by us and on any
interest paid by us on any outstanding bonds. In addition, while there does
exist a double tax treaty between the United States and Luxembourg, this treaty
excludes a holding company governed by the law of July 31, 1929 because it is
not a resident company.

Holders of ADSs or our shares, except those who are a resident of (or, in
certain circumstances, formerly a resident of), or are domiciled or have a
permanent establishment in, Luxembourg, are not subject to income tax, wealth
tax, or capital gains tax in respect of the ADSs or shares held, provided
however that a nonresident holder of ADSs or shares will be subject to
Luxembourg tax on capital gains on the disposition of ADSs or shares during the
first six months following their acquisition, if such nonresident holder has
owned alone, or together with his spouse and minor children, directly or
indirectly, at any point within the 5 year term preceding the disposition, more
than 10% (or 25% until and including December 31, 2007 for certain
shareholdings acquired prior to January 1, 2002) of our share capital.

No inheritance tax is payable by a holder of ADSs or shares unless the
deceased holder was a resident of Luxembourg at the time of death.

There is no Luxembourg transfer duty or stamp tax on the purchase or
disposition of shares.

United States Taxes

The following summary describes certain United States federal income tax
consequences of the acquisition, ownership and disposition of ADSs or our
shares, but it does not purport to be a comprehensive description of all of the
tax considerations that may be relevant to a decision to acquire such
securities. The summary applies only to holders that hold ADSs or shares as
capital assets and does not address special classes of holders, such as:



| |  | certain financial institutions;                                                                              
|- |  | -------------------------------------------------------------------------------------------------------------
| 
| |  | insurance companies;                                                                                         
| 
| |  | dealers and traders in securities or foreign currencies;                                                     
| 
| |  | persons holding ADSs or shares as part of a hedge, straddle or other conversion transaction;                 
| 
| |  | persons whose functional currency for U.S. federal income tax purposes is not the U.S. dollar;             
| 
| |  | persons liable for the alternative minimum tax;                                                              
| 
| |  | tax-exempt organizations;                                                                                    
| 
| |  | partnerships or other entities classified as partnerships for U.S. federal income tax purposes; or           
| 
| |  | persons holding ADSs or shares that own or are deemed to own more than ten percent of any class of our stock.

The summary is based upon tax laws of the United States including the
Internal Revenue Code of 1986, as amended to the date hereof (the Code),
administrative pronouncements, judicial decisions and final, temporary

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and proposed Treasury Regulations, changes to any of which may affect the
tax consequences described herein possibly with retroactive effect. In
addition, the summary is based in part on representations of the Depositary and
assumes that each obligation provided for in, or otherwise contemplated by, the
Deposit Agreement or any other related document will be performed in accordance
with its terms. Prospective purchasers of the ADSs or shares should consult
their own tax advisors as to the United States, Luxembourg or other tax
consequences of the purchase, ownership and disposition of such securities in
their particular circumstances, including the effect of any state or local tax
laws.

The discussion below applies to you only if you are a beneficial owner of
ADSs or shares and are, for United States federal income tax purposes:



| |  | a citizen or resident of the United States;                                                                                                                        
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | a corporation, or other entity taxable as a corporation, created or
organized in or under the laws of the United States or of any
political subdivision thereof; or
| 
| |  | an estate or trust the income of which is subject to United States
federal income taxation regardless of its source.                                               

For United States federal income tax purposes, if you hold ADSs you will
be treated as the holder of the underlying Class B shares. Accordingly, no
gain or loss will be recognized if you exchange ADSs for the underlying Class B
shares.

Taxation of Distributions.To the extent paid out of our current or
accumulated earnings and profits (as determined in accordance with United
States federal income tax principles), distributions made with respect to ADSs
or shares (other than certain distributions of our capital stock or rights to
subscribe for shares of our capital stock) will be includible in income as
ordinary dividend income. Under recently enacted legislation, dividends
received by noncorporate U.S. holders on ADSs or shares may be subject to U.S.
federal income tax at lower rates than other types of ordinary income if
certain conditions are met. U.S. holders should consult their own tax advisors
regarding the implications of this new legislation in their particular
circumstances. Such dividends will not be eligible for the dividends received
deduction generally allowed to corporations under the Code. Dividends
generally will constitute foreign source passive income for U.S. foreign tax
credit purposes.

Sale and Other Disposition of ADSs or Shares.For U.S. federal income tax
purposes, gain or loss you realize on (1) the sale or exchange of ADSs or
shares or (2) the Depositarys sale or exchange of shares received as
distributions on the ADSs will generally be subject to United States federal
income tax as capital gain or loss, and will be long-term capital gain or loss
if you held the ADSs or shares for more than one year. The amount of your gain
or loss will be equal to the difference between your tax basis in the ADSs or
shares and the amount realized on their disposition. Gain or loss, if any,
will be U.S. source for foreign tax credit purposes.

Passive Foreign Investment Company Rules.We believe that we will not be
considered a passive foreign investment company, or PFIC, for United States
federal income tax purposes for the taxable year 2002. However, since our PFIC
status for each year depends upon the composition of our income and assets and
upon the market value of our assets (including, among others, equity
investments in non-controlled entities) from time to time, there can be no
assurance that we will not be considered a PFIC. If we were considered a PFIC
for any taxable year during which a U.S. shareholder holds ADSs or shares,
certain adverse consequences could apply to the shareholder, including the
imposition of tax at higher rates than would otherwise apply.

If we are treated as a PFIC for any taxable year, gain recognized by such
U.S. shareholder on a sale or other disposition of the ADS or share would be
allocated ratably over the U.S. shareholders holding period for the ADS or
ordinary share. The amounts allocated to the taxable year of the sale or
exchange and to any year before we became a PFIC would be taxed as ordinary
income. The amount allocated to each other taxable year would be subject to
tax at the highest rate in effect for individuals or corporations, as
appropriate, and an interest charge would be imposed on the amount allocated to
such taxable year. Further, any distribution in respect of ADSs or shares in
excess of 125 percent of the average of the annual distributions on ADSs or
ordinary shares received by the U.S. shareholder during the preceding three
years or the U.S. shareholders holding period, whichever is shorter, would

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be subject to taxation as described above. Certain elections may be
available (including a mark to market election) to United States persons that
may mitigate the adverse consequences resulting from PFIC status.

Information Reporting and Backup Withholding.Payments of dividends and
sales proceeds that are made within the United States or through certain
U.S.-related financial intermediaries generally are subject to information
reporting and to backup withholding unless (i) you are a corporation or other
exempt recipient or (ii) you provide a correct taxpayer identification number
and certify that no loss of exemption from backup withholding has occurred. The
amount of any backup withholding from a payment to you will be allowed as a
credit against your United States federal income tax liability and may entitle
you to a refund, provided that the required information is furnished to the
Internal Revenue Service.

DOCUMENTS ON DISPLAY

We file annual, quarterly and other information with the SEC. You may
read and copy any document that we file at our public reference room at 450
Fifth Street, N.W., Washington, D.C. 20549. You may obtain information on the
operation of the public reference room by calling the SEC at 1-800-SEC-0330.
The SEC also maintains an Internet site at http://www.sec.gov, from where you
can access our filings. Our Internet address is http://www.quinsa.com.

You may request a copy of these filings at no cost, by writing or calling
the office of Francis Cressall, Quilmes Industrial (Quinsa) S.A., Pte. Perón
667, 1038 Capital Federal, Argentina, Tel: +5411-4321-2744.




ITEM 11.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk represents the risk of loss that may impact our consolidated
financial position, results of operations or cash flows due to adverse changes
in financial and commodity market prices and interest rates. We are exposed to
market risk in the areas of interest rates, commodity prices and foreign
currency exchange rates. These exposures are directly related to our use of
agricultural commodities and other raw materials in our operations, and our
normal investing and funding activities. We have established various policies
and procedures to manage our exposure to market risks. This discussion
contains forward-looking statements that are subject to risks and
uncertainties. Actual results could vary materially as a result of a number of
factors. Uncertainties that are either nonfinancial or nonquantifiable, such
as political, economic, tax, other regulatory or credit risks, are not included
in the following assessment of our market risks.

Interest Rate Risk

Our exposure to interest rate risk is limited to the exposure related to
our cash on hand and deposited with banks, and our short-term investments
(referred to as cash and cash equivalents) and short-term and long-term
obligations, which are tied to market interest rates. As of December 31, 2002,
we had cash, cash equivalents and short-term investments) of US$162.6 million.
Our investment portfolio primarily consists of cash equivalents. Accordingly,
the carrying amounts approximate market value.

We had an investment portfolio primarily comprised of fixed income
certificates of deposit until October of 2001. The fixed income certificates
of deposit, like all fixed income securities, were subject to interest rate
risk. We attempted to limit this exposure by investing primarily in short-term
deposits. From November 2001 until the present, we have been principally
investing in over night accounts in order to reduce our financial exposure. We
have a finance group who oversees the management of our debt and investment
portfolio and evaluates investment opportunities and their related risks and
tax consequences as well as overall financing strategies. In view of the nature
of our portfolio, a 10% movement in market interest rates would not have a
significant impact on the total value of our portfolio as of December 31, 2002.

We are exposed to changes in interest rates primarily as a result of our
borrowing activities which include short-term borrowings, variable-rate and
fixed-rate long-term debt used to maintain liquidity and fund our business
operations. The instruments actual cash flows are principally
denominated in U.S. dollars and to a lesser extent in other currencies. Our
interest expense is sensitive to changes in the general level of interest rates
because a

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substantial portion of our short-term debt and long-term debt
arrangements bear interest at variable rates. Therefore, our results of
operations would be affected by interest rate changes. However, the variable
rates on our debt are all substantially in the form of LIBOR plus a certain
spread, which is fixed. Therefore, our only exposure in these cases is to
variations in LIBOR.

As a matter of policy, we do not use derivative instruments to manage
these risks. However, there can be no assurance that such risks would not be
managed in the future through a variety of strategies, including the use of
hedging transactions. We do not use derivative instruments for trading or
speculative purposes.

For debt obligations, the following table presents principal cash flows
and related weighted average interest rates by expected maturity dates. The
information is presented in U.S. dollars which is our reporting currency.

|                          |                   |  |                   |      |          |     |       |    |       |       |      |       |      |      |      |      |          |      |   |      |     |   |   |   |   |   |   |   |       |       |      |       | 
|------------------------- | ----------------- |  | ----------------- | ---- | -------- | --- | ----- | -- | ----- | ----- | ---- | ----- | ---- | ---- | ---- | ---- | -------- | ---- | - | ---- | --- | - | - | - | - | - | - | - | ----- | ----- | ---- | ----- | 
|                          |                   |  | Average           |      |          |     |       |    |       |       |      |       |      |      |      |      |          |      |   |      |     |   |   |   |   |   |   |   |       |       |     
|                          |                   |  | Weighted          |      |          |     |       |    |       |       |      |       |      |      |      |      |          |      |   |      |     |   |   |   |   |   |   |   |       |       |     
|                          |                   |  | Interest Rate     |      | Currency |     | 2003  |    | 2004  |       | 2005 |       | 2006 |      | 2007 |      | Total(1)
|                          |                   |  |                   |      |          |     |       |    |       |       |      |       |      |      |      |      |         
|                          |                   |  | (in US$ millions)
|Fixed rate                |                   |  |                   |      |          |     |       |    |       |       |      |       |      |      |      |      |          |      |   |      |     |   |   |   |   |   |   |   |       |       |      |      
|                          | 4 Loans           |  |                   | 9.5  | %        |     | US$   |    |       | 20.4  |      |       |      |     |      |      |          |     |   |      |     |  |   |   |   |  |   |   |       | 20.4  |     
|                          | 7 loans           |  |                   | 18.0 |          |     | Other |    |       | 7.2   |      |       |      |     |      |      |          |     |   |      |     |  |   |   |   |  |   |   |       | 7.2   |     
|Total fixed rate loans    |                   |  |                   |      |          |     |       |    |       |       | 27.6 |       |      |      |     |      |          |      |  |      |     |   |  |   |   |   |  |   |       |       | 27.6 |      
|Floating rate loans       |                   |  |                   |      |          |     |       |    |       |       |      |       |      |      |      |      |          |      |  |      |     |   |   |   |   |   |  |   |       |       |      |      
|                          | 1 Loan            |  |                   | 3.99 | %(2)     |     |       | P$ |       |       |      | 1.3   |      |      |      | 1.0  |          |      |   |     |     |   |   |  |   |   |   |  |       |       |      | 2.3   | 
|                          | Syndicated 2 Loan |  |                   | 5.0  | %(2)     |     | US$   |    |       | 69.8  |      |       |      |     |      |      |          |     |   |      |     |  |   |   |   |  |   |   |       | 69.8  |     
|                          | Other 20 Loans    |  |                   | 3.3  | %(2)     |     | US$   |    |       | 175.2 |      |       |      | 54.0 |      |      |          | 45.7 |   |      |     |  |   |   |   |  |   |   |       | 274.9 |     
|Total floating rate loans |                   |  | 3.7               | %(2) |          | US$ |       |    | 246.3 |       |      |       | 55.0 |      |      |      | 45.7     |      |   |      |    |   |   |   |  |   |   |   | 347.0 |      
|                          |                   |  |                   |      |          |     |       |    |       |       |      |       |      |      |      |      |          |      |   |      |     |   |   |   |   |   |   |   |       |       |      |       | 
|                          | Total             |  |                   |      |          |     |       |    |       |       |      | 273.9 |      |      |      | 55.0 | (3)      |      |   | 45.7 | (3) |   |   |  |   |   |   |  |       |       |      | 374.6 | 
|                          |                   |  |                   |      |          |     |       |    |       |       |      |       |      |      |      |      |          |      |   |      |     |   |   |   |   |   |   |   |       |       |      |       | 



---

|(1) |  | The carrying amounts of short-term debt and long-term debt approximate
their respective fair values.                                                            
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Plus LIBOR.                                                                                                                                                     
|   
|(3) |  | Includes US$59.3 million that was classified under US GAAP as current as
a consequence of the Company not being able to comply with certain
financial covenants.

Commodity Price Exposure

Agricultural commodities constitute our principal raw materials used in
our business, including barley, malt, rice and corn grits. Other raw materials
purchased include aluminum cans and PET bottle preforms. These raw materials
are normally purchased through supplier contracts. Prices of agricultural
commodities tend to fluctuate due to seasonal, climatic and economic factors
that may also affect our business. We believe that the raw materials for our
products are readily available from a variety of independent suppliers. We are
subject to market risk with respect to the cost of commodities because our
ability to recover increased costs through higher pricing may be limited by the
competitive environment in which we operate. In addition, we do not enter into
commodity futures and options contracts as deemed appropriate to reduce the
effect of price fluctuations. However, we may do so in the future.

For inventory, the following table presents the carrying amount at
December 31, 2002 per major category:

|                                    |       |                    |                   |      | 
|----------------------------------- | ----- | ------------------ | ----------------- | ---- | 
|Commodity Position on Balance Sheet |       | Carrying Amount(1)
|                                    |       |                   
|                                    |       |                    | (in US$ millions)
|Barley Inventory                    |       | $                  | 13.8              |     
|Cans Inventory                      |       |                    | 0.9               |     
|Malt Inventory                      |       |                    | 2.4               |     
|PET preforms Inventory              |       |                    | 0.4               |     
|                                    |       |                    |                   |     
|                                    | Total |                    | $                 | 17.5 | 
|                                    |       |                    |                   |     



---

|(1) |  | The carrying amounts of these inventories approximate their respective
fair values.
|--- |  | -----------------------------------------------------------------------------------

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Foreign Exchange Exposure

We derive almost all of our revenues from operations in Latin America.
The currencies of many countries in Latin America have experienced substantial
depreciation and volatility, particularly against the U.S. dollar, in recent
years. Historically, volatility has been caused by currency devaluation, among
other factors. Currency movements, as well as higher interest rates, have
materially and adversely affected the economies of many Latin American
countries, including our southern cone markets of Argentina, Paraguay, Bolivia,
Chile and Uruguay.

On January 6, 2002, the Argentine Congress enacted the Public Emergency
Law, which amended certain provisions of the Convertibility Law and eliminated
the requirement that the Argentine Central Banks reserves in gold and foreign
currency at all times be equivalent to at least 100% of the monetary base. The
Public Emergency Law abolished the U.S. dollar to Argentine peso parity regime
and granted the executive branch the power to set the exchange rate between the
peso and foreign currencies and to issue regulations related to the foreign
exchange market. The peso now floats freely, although the Argentine Central
Bank from time to time enters into the market to minimize fluctuations. From a
low of P$3.87 to US$1.00 in June of 2002, the peso has since appreciated
against the dollar, and on June 24, 2003, the peso traded at an exchange rate
of P$2.77 per US$1.00, as published by Banco de la Nación Argentina.

Argentine operations accounted for approximately 59.4% of our revenues in
2002, although our results from operations were negative due to the economic
crisis. During 2001, our Argentine operations accounted for 68.7% of our
consolidated operating profit. Devaluation of the Argentine peso coupled with
the financial and economic crisis that has been affecting Argentina, has
limited the capability of CMQ to generate cash flows in US$ and comply with
certain of its original financial ratios commitments under its U.S.
dollar-denominated bank loans. Consequently, CMQ management is currently
negotiating with lenders to obtain, among other things, an extension of the
original terms of its loans and adjustments to these financial ratios with
which the Company was unable to comply at December 31, 2002. As of this date,
the total amount due on financial loans where documentation provided for the
maintenance of certain financial ratios that had not been maintained amounted
to US$221.5 million, of which, US$59.3 million was classified as non-current.
Furthermore, the devaluation of the Argentine peso and any other currency of
the countries in which we operate subjects us to market risk because our costs
of raw materials are linked to hard currencies and may increase significantly
compared to our revenues, which are earned in local currency. However, despite
the economic crisis in Argentina, we have been able to continue servicing our
debt obligations.

Operating in other international markets involves exposure to movements in
other foreign exchange rates, primarily the Bolivian peso, Chilean peso,
Paraguayan guaranies and Uruguayan pesos. Changes in foreign exchange rates
would have the largest impact on translating our international operating profit
into U.S. dollars.

To date, we have not hedged the value of net investments in foreign
currency denominated operations and translated earnings of foreign
subsidiaries. The possibility of hedging in Argentina is, and has been for at
least 18 months, extremely limited, both in terms of the instruments available
and of the lack of liquidity in the markets. We will assess the need to
utilize financial instruments to hedge currency exposures on an ongoing basis.
We also do not use derivative financial instruments for speculative trading
purposes.




ITEM 12.     DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not applicable.

92



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PART II




ITEM 13.     DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

None.




ITEM 14.     MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE
OF PROCEEDS

The Quinsa Shareholders Agreement may require us to obtain the consent of
AmBev and BAC before we fund certain activities or transactions with our
working capital. See Item 7  Major Shareholders and Related Party
Transactions  Major Shareholders  Quinsa Shareholders Agreement.




ITEM 15.     CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures

Within 90 days prior to the date of this report, the Company, under the
supervision and with the participation of the Companys management, including
the Chief Executive Officer and the Chief Financial Officer, performed an
evaluation of the effectiveness of the Companys disclosure controls and
procedures. Based on this evaluation, the Companys Chief Executive Officer and
Chief Financial Officer concluded that the Companys disclosure controls and
procedures are effective for gathering, analyzing and disclosing the
information the Company is required to disclose in the reports it files under
the Securities Exchange Act of 1934, within the time periods specified in the
SECs rules and forms. The Companys management necessarily applied its
judgment in assessing the costs and benefits of such controls and procedures,
which by their nature can provide only reasonable assurance regarding
managements control objectives.

Changes in internal controls

There have been no significant changes in the Companys internal controls
or other factors that could significantly affect internal controls subsequent
to the date of their evaluation.




ITEM 16A     AUDIT COMMITTEE FINANCIAL EXPERT

Not applicable at this date.




ITEM 16B     CODE OF ETHICS

Not applicable at this date.




PART III




ITEM 17.     FINANCIAL STATEMENTS

The following financial statements are filed as part of this Form 20-F:

|                                                                                                                             |  |      |     | 
|---------------------------------------------------------------------------------------------------------------------------- |  | ---- | --- | 
|                                                                                                                             |  | Page
|                                                                                                                             |  |     
|Report of Independent Auditors                                                                                               |  |      | F-2 | 
|Consolidated Balance Sheets as of December 31, 2002 and 2001                                                                 |  |      | F-3 | 
|Consolidated Statements of Income for each of the three years in the
period ended December 31, 2002                          |  |      | F-4 | 
|Consolidated Statements of Changes in Shareholders Equity for each
of the three years in the period ended December 31, 2002 |  |      | F-5 | 
|Consolidated Statements of Cash Flows for each of the three years in
the period ended December 31, 2002                      |  |      | F-6 | 
|Notes to the Consolidated Financial Statements                                                                               |  |      | F-7 | 

93



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QUILMES INDUSTRIAL (QUINSA)
SOCIETE ANONYME
Consolidated Financial Statements
As of December 31, 2002 and 2001 and for each of
the three years in the period ended December 31, 2002





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QUILMES INDUSTRIAL (QUINSA) SOCIETE ANONYME
Index to the Consolidated Financial Statements

|                                                                                                                             |  |     
|---------------------------------------------------------------------------------------------------------------------------- |  | ----
|                                                                                                                             |  | Page
|                                                                                                                             |  |     
|Report of Independent Auditors                                                                                               |  | F-2 
|Consolidated Balance Sheets as of December 31, 2002 and 2001                                                                 |  | F-3 
|Consolidated Statements of Income
for each of the three years in the period ended December 31, 2002                          |  | F-4 
|Consolidated Statements of Changes in Shareholders Equity for each
of the three years in the period ended December 31, 2002 |  | F-5 
|Consolidated Statements of Cash Flows for each of the three years in
the period ended December 31, 2002                      |  | F-6 
|Notes to the Consolidated Financial Statements                                                                               |  | F-7 

F-1



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REPORT OF INDEPENDENT AUDITORS

To the Shareholders of
Quilmes Industrial (QUINSA) Société Anonyme

In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of income, of cash flows and of changes in
shareholders equity present fairly, in all material respects, the financial
position of Quilmes Industrial (QUINSA) Société Anonyme and its subsidiaries at
December 31, 2002 and 2001, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 2002, in
conformity with accounting principles generally accepted in Luxembourg. 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. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States of America, which
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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

As discussed in Note 14 to the consolidated financial statements, the
Company is not in compliance with restrictive covenants contained in certain of
its US dollar-denominated financial debt agreements. Therefore, the creditors
could require the accelerated repayment of the related outstanding debt. The
Companys management is currently negotiating with creditors to obtain an
extension of the due dates and modify the restrictive covenants. The
accompanying consolidated financial statements do not include any effects or
reclassifications that might result from the outcome of this circumstance.

Accounting principles generally accepted in Luxembourg vary in certain
significant respects from accounting principles generally accepted in the
United States of America. The application of the latter would have affected the
determination of consolidated net (loss) income for each of the three years in
the period ended December 31, 2002 and the determination of consolidated
shareholders equity at December 31, 2002 and 2001 to the extent summarized in
Note 27 to the consolidated financial statements.

PRICEWATERHOUSECOOPERS
Luxembourg
March 3, 2003

F-2



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QUILMES INDUSTRIAL (QUINSA) SOCIÉTÉ ANONYME
AND SUBSIDIARIES
Consolidated Balance Sheets
As of December 31, 2002 and 2001
(In US$ million)

|                                     |                                                                  |                                                  |       |        |         |      |         |       |         | 
|------------------------------------ | ---------------------------------------------------------------- | ------------------------------------------------ | ----- | ------ | ------- | ---- | ------- | ----- | ------- | 
|                                     |                                                                  |                                                  |       | 2002   |         | 2001
|                                     |                                                                  |                                                  |       |        |         |     
|Assets                               |                                                                  |                                                  |       |        |         |      |         |      
|Fixed assets                         |                                                                  |                                                  |       |        |         |      |         |      
|                                     | Intangible assets (Note 6)                                       |                                                  |       | 236.0  |         |      |         | 347.9 |        
|                                     | Industrial land and buildings (Note 7)                           |                                                  |       | 254.6  |         |      |         | 259.6 |        
|                                     | Machinery, plant and equipment (Note 7)                          |                                                  |       | 296.6  |         |      |         | 376.9 |        
|                                     | Bottles and crates (Note 7)                                      |                                                  |       | 21.6   |         |      |         | 24.0  |        
|                                     | Other fixed assets (Note 8)                                      |                                                  |       | 97.8   |         |      |         | 50.1  |        
|                                     | Financial Assets (Note 9)                                        |                                                  |       | 28.8   |         |      |         | 34.2  |        
|                                     |                                                                  |                                                  |       |        |         |      |         |      
|                                     |                                                                  |                                                  | 935.4 |        |         |      | 1,092.7 |      
|Current assets                       |                                                                  |                                                  |       |        |         |      |         |      
|                                     | Inventories (Note 10)                                            |                                                  |       | 70.3   |         |      |         | 110.6 |        
|                                     | Trade receivables, net                                           |                                                  |       | 45.9   |         |      |         | 75.8  |        
|                                     | Other current assets (Note 11)                                   |                                                  |       | 20.5   |         |      |         | 37.3  |        
|                                     | Government securities                                            |                                                  |       | 0.3    |         |      |         | 8.5   |        
|                                     | Short-term investments                                           |                                                  |       | 123.3  |         |      |         | 79.2  |        
|                                     | Cash and banks                                                   |                                                  |       | 39.0   |         |      |         | 37.2  |        
|                                     |                                                                  |                                                  |       |        |         |      |         |      
|                                     |                                                                  |                                                  | 299.3 |        |         |      | 348.6   |      
|Prepayments                          |                                                                  |                                                  |       |        |         |      |         |      
|                                     | Prepaid expenses                                                 |                                                  |       | 6.7    |         |      |         | 10.4  |        
|                                     |                                                                  |                                                  |       |        |         |      |         |      
|                                     |                                                                  | Total assets                                     |       |        | 1,241.4 |      |         |       | 1,451.7 | 
|                                     |                                                                  |                                                  |       |        |         |      |         |      
|Shareholders equity and liabilities |                                                                  |                                                  |       |        |         |      |         |      
|Shareholders equity                 |                                                                  |                                                  |       |        |         |      |         |      
|                                     | Share capital (Note 12.a)                                        |                                                  |       | 33.5   |         |      |         | 33.5  |        
|                                     | Paid-in capital (Note 12.b)                                      |                                                  |       | 33.9   |         |      |         | 35.6  |        
|                                     | Reserve for treasury stock (Note 12.c)                           |                                                  |       | 20.5   |         |      |         | 18.8  |        
|                                     | Legal reserve (Note 12.d)                                        |                                                  |       | 3.4    |         |      |         | 3.4   |        
|                                     | Retained earnings (Note 12.e)                                    |                                                  |       | 567.8  |         |      |         | 524.5 |        
|                                     | Net (loss) income for the year                                   |                                                  |       | (135.9 | )       |      |         | 43.3  |        
|                                     |                                                                  |                                                  |       |        |         |      |         |      
|                                     |                                                                  |                                                  | 523.2 |        |         |      | 659.1   |      
|Minority interest                    |                                                                  |                                                  | 153.7 |        |         |      | 187.9   |      
|                                     |                                                                  |                                                  |       |        |         |      |         |      
|                                     |                                                                  | Total shareholders equity and minority interest |       |        | 676.9   |      |         |       | 847.0   | 
|Provisions (Note 13)                 |                                                                  |                                                  | 66.7  |        |         |      | 77.1    |      
|Long-term liabilities                |                                                                  |                                                  |       |        |         |      |         |      
|                                     | Long-term loans and other liabilities (Note 14)                  |                                                  |       | 108.5  |         |      |         | 165.9 |        
|Current liabilities                  |                                                                  |                                                  |       |        |         |      |         |      
|                                     | Current loans and short-term portion of long-term debt (Note 15) |                                                  |       | 273.9  |         |      |         | 211.4 |        
|                                     | Accounts payable and accrued expenses                            |                                                  |       | 93.1   |         |      |         | 123.3 |        
|                                     | Taxes payable and other current liabilities                      |                                                  |       | 22.3   |         |      |         | 27.0  |        
|                                     |                                                                  |                                                  |       |        |         |      |         |      
|                                     |                                                                  |                                                  | 389.3 |        |         |      | 361.7   |      
|                                     |                                                                  |                                                  |       |        |         |      |         |      
|                                     |                                                                  | Total liabilities (including provisions)         |       |        | 564.5   |      |         |       | 604.7   | 
|                                     |                                                                  |                                                  |       |        |         |      |         |      
|                                     |                                                                  | Total                                            |       |        | 1,241.4 |      |         |       | 1,451.7 | 
|                                     |                                                                  |                                                  |       |        |         |      |         |      

The accompanying notes are an integral part of these consolidated financial statements.

F-3



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QUILMES INDUSTRIAL (QUINSA) SOCIÉTÉ ANONYME
AND SUBSIDIARIES
Consolidated Statements of Income
For the years ended December 31, 2002, 2001 and 2000
(In US$ million)

|                                                                             |  |      |        |      |  |      |        |   |  |  |        |  
|---------------------------------------------------------------------------- |  | ---- | ------ | ---- |  | ---- | ------ | - |  |  | ------ | -
|                                                                             |  | 2002 |        | 2001 |  | 2000
|                                                                             |  |      |        |      |  |     
|Gross sales                                                                  |  |      | 488.2  |      |  |      | 973.0  |   |  |  | 991.9  |  
|Taxes                                                                        |  |      | (19.6  | )    |  |      | (34.3  | ) |  |  | (36.8  | )
|                                                                             |  |      |        |      |  |      |        |   |  |  |        |  
|Net sales (Note 21)                                                          |  |      | 468.6  |      |  |      | 938.7  |   |  |  | 955.1  |  
|Cost of goods sold                                                           |  |      | (308.5 | )    |  |      | (490.4 | ) |  |  | (495.7 | )
|                                                                             |  |      |        |      |  |      |        |   |  |  |        |  
|Gross profit                                                                 |  |      | 160.1  |      |  |      | 448.3  |   |  |  | 459.4  |  
|Selling and marketing expenses                                               |  |      | (120.5 | )    |  |      | (235.0 | ) |  |  | (236.3 | )
|Administrative and general expenses                                          |  |      | (43.2  | )    |  |      | (76.7  | ) |  |  | (90.8  | )
|                                                                             |  |      |        |      |  |      |        |   |  |  |        |  
|Operating (loss) income                                                      |  |      | (3.6   | )    |  |      | 136.6  |   |  |  | 132.3  |  
|Interest income                                                              |  |      | 8.4    |      |  |      | 6.5    |   |  |  | 9.5    |  
|Other income (Note 16)                                                       |  |      | 4.4    |      |  |      | 20.4   |   |  |  | 37.0   |  
|Foreign exchange results and translation adjustments                         |  |      | (22.9  | )    |  |      | (12.6  | ) |  |  | (1.7   | )
|Interest expenses                                                            |  |      | (32.8  | )    |  |      | (32.4  | ) |  |  | (36.8  | )
|Other expenses (Note 17)                                                     |  |      | (155.9 | )    |  |      | (63.3  | ) |  |  | (25.4  | )
|                                                                             |  |      |        |      |  |      |        |   |  |  |        |  
|(Loss) income before income taxes, minority
interest and extraordinary items |  |      | (202.4 | )    |  |      | 55.2   |   |  |  | 114.9  |  
|Income taxes (Note 18)                                                       |  |      | 47.6   |      |  |      | 6.1    |   |  |  | (27.3  | )
|Minority interest                                                            |  |      | 18.9   |      |  |      | (18.0  | ) |  |  | (16.6  | )
|                                                                             |  |      |        |      |  |      |        |   |  |  |        |  
|(Loss) income before extraordinary items                                     |  |      | (135.9 | )    |  |      | 43.3   |   |  |  | 71.0   |  
|Extraordinary items, net of income taxes (Note 19)                           |  |      |       |      |  |      |       |   |  |  | (51.7  | )
|Income taxes (Note 18)                                                       |  |      |       |      |  |      |       |   |  |  | 51.3   |  
|Minority interest                                                            |  |      |       |      |  |      |       |   |  |  | 2.2    |  
|                                                                             |  |      |        |      |  |      |        |   |  |  |        |  
|Net (loss) income for the year                                               |  |      | (135.9 | )    |  |      | 43.3   |   |  |  | 72.8   |  
|                                                                             |  |      |        |      |  |      |        |   |  |  |        |  

The accompanying notes are an integral part of these consolidated financial statements.

F-4



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QUILMES INDUSTRIAL (QUINSA) SOCIÉTÉ ANONYME
AND SUBSIDIARIES
Consolidated Statements of Changes in Shareholders Equity
For the years ended December 31, 2002, 2001 and 2000
(In US$ million)

|                                       |  |         |      |         |  |          |       |         |  |             |      |       |  |  |     |  |  |  |        |   |  |  |        |  
|-------------------------------------- |  | ------- | ---- | ------- |  | -------- | ----- | ------- |  | ----------- | ---- | ----- |  |  | --- |  |  |  | ------ | - |  |  | ------ | -
|                                       |  |         |      |         |  |          |       |         |  | Reserve for |      |       |  |  |     |  |  |  |        |   |  | 
|                                       |  | Share   |      | Paid-in |  | treasury |       | Legal   |  | Retained    |      |       |  | 
|                                       |  | capital |      | capital |  | stock    |       | reserve |  | earnings    |      | Total
|                                       |  |         |      |         |  |          |       |         |  |             |      |      
|Balances as of December 31, 1999       |  |         | 33.0 |         |  |          | 37.5  |         |  |             |     |       |  |  | 3.3 |  |  |  | 515.4  |   |  |  | 589.2  |  
|Capital contribution                   |  |         | 0.5  |         |  |          | 16.9  |         |  |             |     |       |  |  |    |  |  |  |       |   |  |  | 17.4   |  
|Dividends to shareholders              |  |         |     |         |  |          |      |         |  |             |     |       |  |  |    |  |  |  | (31.6  | ) |  |  | (31.6  | )
|Net income for the year                |  |         |     |         |  |          |      |         |  |             |     |       |  |  |    |  |  |  | 72.8   |   |  |  | 72.8   |  
|                                       |  |         |      |         |  |          |       |         |  |             |      |       |  |  |     |  |  |  |        |   |  |  |        |  
|Balances as of December 31, 2000       |  |         | 33.5 |         |  |          | 54.4  |         |  |             |     |       |  |  | 3.3 |  |  |  | 556.6  |   |  |  | 647.8  |  
|                                       |  |         |      |         |  |          |       |         |  |             |      |       |  |  |     |  |  |  |        |   |  |  |        |  
|Increase in legal reserve              |  |         |     |         |  |          |      |         |  |             |     |       |  |  | 0.1 |  |  |  | (0.1   | ) |  |  |       |  
|Dividends to shareholders              |  |         |     |         |  |          |      |         |  |             |     |       |  |  |    |  |  |  | (32.0  | ) |  |  | (32.0  | )
|Increase in reserve for treasury stock |  |         |     |         |  |          | (18.8 | )       |  |             | 18.8 |       |  |  |    |  |  |  |       |   |  |  |       |  
|Net income for the year                |  |         |     |         |  |          |      |         |  |             |     |       |  |  |    |  |  |  | 43.3   |   |  |  | 43.3   |  
|                                       |  |         |      |         |  |          |       |         |  |             |      |       |  |  |     |  |  |  |        |   |  |  |        |  
|Balances as of December 31, 2001       |  |         | 33.5 |         |  |          | 35.6  |         |  |             | 18.8 |       |  |  | 3.4 |  |  |  | 567.8  |   |  |  | 659.1  |  
|                                       |  |         |      |         |  |          |       |         |  |             |      |       |  |  |     |  |  |  |        |   |  |  |        |  
|Net loss for the year                  |  |         |     |         |  |          |      |         |  |             |     |       |  |  |    |  |  |  | (135.9 | ) |  |  | (135.9 | )
|Increase in reserve for treasury stock |  |         |     |         |  |          | (1.7  | )       |  |             | 1.7  |       |  |  |    |  |  |  |       |   |  |  |       |  
|                                       |  |         |      |         |  |          |       |         |  |             |      |       |  |  |     |  |  |  |        |   |  |  |        |  
|Balances as of December 31, 2002       |  |         | 33.5 |         |  |          | 33.9  |         |  |             | 20.5 |       |  |  | 3.4 |  |  |  | 431.9  |   |  |  | 523.2  |  
|                                       |  |         |      |         |  |          |       |         |  |             |      |       |  |  |     |  |  |  |        |   |  |  |        |  

The accompanying notes are an integral part of these consolidated financial statements.

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QUILMES INDUSTRIAL (QUINSA) SOCIÉTÉ ANONYME
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
As of December 31, 2002, 2001 and 2000

|                                                                                        |  |      |        |      |  |      |        |   |  |  |        |  
|--------------------------------------------------------------------------------------- |  | ---- | ------ | ---- |  | ---- | ------ | - |  |  | ------ | -
|                                                                                        |  | 2002 |        | 2001 |  | 2000
|                                                                                        |  |      |        |      |  |     
|Cash flows from operating activities:                                                   |  |      |        |      |  |      |        |   |  |  |        |  
|Net (loss) income for the year                                                          |  |      | (135.9 | )    |  |      | 43.3   |   |  |  | 72.8   |  
|Adjustments to reconcile net (loss) income to net cash flow
from operating activities : |  |      |        |      |  |      |        |   |  |  |        |  
|Depreciation                                                                            |  |      | 96.4   |      |  |      | 96.5   |   |  |  | 95.7   |  
|Amortization of goodwill                                                                |  |      | 21.9   |      |  |      | 21.6   |   |  |  | 12.1   |  
|Impairment of intangible asset                                                          |  |      | 90.0   |      |  |      |       |   |  |  |       |  
|Impairment of tangible fixed assets                                                     |  |      | 6.0    |      |  |      |       |   |  |  | 47.7   |  
|Inventories write-down                                                                  |  |      | 10.0   |      |  |      |       |   |  |  |       |  
|Tangible fixed assets write-off                                                         |  |      |       |      |  |      | 1.4    |   |  |  | 3.8    |  
|Deferred income tax                                                                     |  |      | (50.3  | )    |  |      | (13.9  | ) |  |  | (47.5  | )
|Minority interest                                                                       |  |      | (18.9  | )    |  |      | 18.0   |   |  |  | 14.4   |  
|Equity results                                                                          |  |      | 5.2    |      |  |      | 18.3   |   |  |  | 1.3    |  
|Allowance for doubtful accounts                                                         |  |      | 3.2    |      |  |      | 10.7   |   |  |  | 2.9    |  
|Loss (gain) from sale of tangible fixed assets and bottles                              |  |      | 4.8    |      |  |      | (3.0   | ) |  |  | (1.2   | )
|Gain from sale of subsidiaries                                                          |  |      |       |      |  |      | 0.2    |   |  |  | (27.8  | )
|Provisions                                                                              |  |      | 3.5    |      |  |      | 10.2   |   |  |  | 17.7   |  
|Allowance for obsolescence                                                              |  |      | 2.0    |      |  |      | 1.8    |   |  |  | 0.8    |  
|(Gain) loss from conversion                                                             |  |      | (19.8  | )    |  |      | 4.3    |   |  |  |       |  
|Other                                                                                   |  |      |       |      |  |      | (0.3   | ) |  |  | 0.2    |  
|Changes in operating assets and liabilities:                                            |  |      |        |      |  |      |        |   |  |  |        |  
|(Increase) decrease in trade receivables                                                |  |      | (5.0   | )    |  |      | 7.6    |   |  |  | (11.5  | )
|(Increase) decrease in other currents assets                                            |  |      | (13.3  | )    |  |      | (1.7   | ) |  |  | 3.9    |  
|Decrease in inventories                                                                 |  |      | 25.8   |      |  |      | 11.2   |   |  |  | 11.4   |  
|Decrease (increase) in other fixed assets                                               |  |      | 4.4    |      |  |      | (31.2  | ) |  |  | (12.5  | )
|Decrease in prepaid expenses                                                            |  |      | 3.7    |      |  |      | 3.2    |   |  |  | 5.4    |  
|Increase in intangible assets                                                           |  |      |       |      |  |      | (6.0   | ) |  |  |       |  
|Increase (decrease) in accounts payable and accrued expenses                            |  |      | 20.0   |      |  |      | (4.6   | ) |  |  | (45.5  | )
|Increase (decrease) in other long-term liabilities                                      |  |      | 11.3   |      |  |      | 5.1    |   |  |  | (1.0   | )
|Increase (decrease) in taxes payable and other current liabilities                      |  |      | 3.4    |      |  |      | (24.9  | ) |  |  | (26.5  | )
|(Decrease) in provisions                                                                |  |      | (8.6   | )    |  |      | (23.5  | ) |  |  | (19.8  | )
|Increase in interest payable                                                            |  |      | 2.6    |      |  |      | 3.2    |   |  |  | 4.2    |  
|Net cash provided by operating activities                                               |  |      | 62.4   |      |  |      | 147.5  |   |  |  | 101.0  |  
|Cash flows from investing activities:                                                   |  |      |        |      |  |      |        |   |  |  |        |  
|Proceeds from (acquisition) sale of marketable securities                               |  |      |       |      |  |      | (10.2  | ) |  |  | 4.8    |  
|Acquisition of subsidiaries, net of cash received                                       |  |      |       |      |  |      |       |   |  |  | (76.6  | )
|Acquisition of minority interest                                                        |  |      | (6.7   | )    |  |      | (22.6  | ) |  |  | (57.6  | )
|Acquisition of unconsolidated companies                                                 |  |      |       |      |  |      |       |   |  |  | (4.4   | )
|Net proceeds from sale of subsidiaries, net of cash sold                                |  |      |       |      |  |      | 0.5    |   |  |  | 54.4   |  
|Decrease (increase) in other investments                                                |  |      | 0.5    |      |  |      | (13.0  | ) |  |  | (1.1   | )
|Net proceeds from sale of tangible fixed assets                                         |  |      | 3.3    |      |  |      | 16.7   |   |  |  | 22.2   |  
|Purchase of tangible fixed assets                                                       |  |      | (20.5  | )    |  |      | (72.0  | ) |  |  | (65.2  | )
|Net cash used in investing activities                                                   |  |      | (23.4  | )    |  |      | (100.6 | ) |  |  | (123.5 | )
|Cash flows from financing activities:                                                   |  |      |        |      |  |      |        |   |  |  |        |  
|Payment of dividends to shareholders                                                    |  |      |       |      |  |      | (32.0  | ) |  |  | (31.6  | )
|Dividends to minority interest                                                          |  |      | (8.3   | )    |  |      | (9.2   | ) |  |  | (9.9   | )
|Minority interest contributions                                                         |  |      |       |      |  |      | 4.7    |   |  |  | 3.1    |  
|Acquisition of treasury stock                                                           |  |      | (1.7   | )    |  |      | (11.0  | ) |  |  | (5.5   | )
|Payment of debt for Salus acquisition                                                   |  |      |       |      |  |      |       |   |  |  | (2.6   | )
|Decrease in short-term debt                                                             |  |      | (33.3  | )    |  |      | (29.1  | ) |  |  | (126.4 | )
|Proceeds from issuance of long-term debt                                                |  |      | 40.0   |      |  |      | 147.5  |   |  |  | 200.0  |  
|Repayment of long-term debt                                                             |  |      | (38.3  | )    |  |      | (80.4  | ) |  |  | (43.5  | )
|Net cash used in financing activities                                                   |  |      | (41.6  | )    |  |      | (9.5   | ) |  |  | (16.4  | )
|Effect of exchange rate changes on cash                                                 |  |      | 23.5   |      |  |      | 19.0   |   |  |  |       |  
|Increase in cash and cash equivalents                                                   |  |      | 20.9   |      |  |      | 56.4   |   |  |  | (38.9  | )
|Cash and cash equivalents as of the beginning of the year                               |  |      | 106.2  |      |  |      | 49.8   |   |  |  | 88.7   |  
|Cash and cash equivalents as of the end of the year                                     |  |      | 127.1  |      |  |      | 106.2  |   |  |  | 49.8   |  

The accompanying notes are an integral part of these consolidated financial statements.

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QUILMES INDUSTRIAL (QUINSA) SOCIÉTÉ ANONYME AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
for the years ended December 31, 2002, 2001 and 2000
(In US$ million, except share data)



|1. |  | Nature of the Business and Basis of Presentation
|-- |  | ------------------------------------------------

Nature
of operations

The Company is a multinational brewer and marketer of beer and other
beverages, including soft drinks and bottled water. The vast majority of the
Companys volume is sold in Argentina to independent distributors and
retailers. The Company has significant operations in the combined Southern Cone
markets of Argentina, Bolivia, Chile, Paraguay and Uruguay.

Principles
of consolidation

The accompanying consolidated financial statements have been prepared to
reflect the financial position and results of operations of Quilmes Industrial
Société Anonyme (QUINSA), a Luxembourg holding company (a corporation
organized under the laws of the Grand-Duchy of Luxembourg), and its
majority-owned and controlled foreign subsidiaries (collectively referred to as
the Company). The Companys consolidated financial statements include those
subsidiaries in which it holds either directly or indirectly more than 50 % of
the voting right. (See Note 5 for details). All significant intercompany
accounts and transactions have been eliminated.

Basis
of presentation

The consolidated financial statements of the Company have been prepared in
accordance with generally accepted accounting principles used in Luxembourg
(Luxembourg GAAP) and Luxembourg regulations, which differ in certain
significant respects from generally accepted accounting principles in the
United States of America (US GAAP). Such differences involve methods of
measuring the amounts shown in the consolidated financial statements, as well
as additional disclosures required by US GAAP. These consolidated financial
statements include solely a reconciliation of net (loss) income and
shareholders equity to US GAAP. Pursuant to Item 17 of Form 20-F, this
reconciliation does not include disclosure of all information that would be
required by US GAAP and Regulation S-X of the Securities and Exchange
Commission (SEC) of the United States of America (See Note 27).

The Company elects to report its consolidated financial statements in US
dollars (US$).

The preparation of the consolidated 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 and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Estimates are used when accounting for the
allowance for doubtful accounts, depreciation, impairment of long-lived assets,
income taxes, provisions for contingencies and other allowances. Actual results
could differ from those estimates.

Reclassifications

Certain reclassifications have been made to the prior years financial
statements to conform with the current year presentation.

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QUILMES INDUSTRIAL (QUINSA) SOCIÉTÉ ANONYME AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
for the years ended December 31, 2002, 2001 and 2000
(In US$ million, except share data)



|2. |  | Argentine economic situation and its impact on the Companys economic and
financial position
|-- |  | --------------------------------------------------------------------------------------------

Economic Crisis  Argentine scenario

The Company carries out a significant portion of its business in
Argentina, through its principal subsidiary, Cervecería y Maltería Quilmes
S.A.I.C.A. y G. (CMQ). Argentina is immersed in a critical economic climate.
The main features of the current economic context are a major external debt
burden, a financial system in crisis, country risk indicators far above normal
average and an economic recession that has already lasted more than four years.
This situation has led to a significant decrease in the demand for goods and
services and a large rise in the level of unemployment. These circumstances
have affected the Governments ability to comply with existing commitments and
access to bank financing.

As from December 3, 2001 measures were issued to restrict the free
availability and circulation of cash and the transfer of foreign currency
abroad.

As from December 21, 2001 all working days until the closing of the
financial year were declared exchange holidays. Subsequently, the Government
declared default on the external debt.

On January 6, 2002, after a political crisis that resulted in the
resignation of two presidents, the Government enacted Law 25561 (Law on public
emergency and exchange system reform) that involved in depth changes to the
prevailing economic model and the amendment of the Convertibility Law in force
since March 1991. In early February the Government announced new economic
measures through Decree 214 (Restructuring of the financial system) dated
February 3, 2002 and Decree 260 (Exchange Regime) dated February 8, 2002,
substantially modifying some of the measures implemented by the Public
Emergency Law.

Listed below are some of the measures adopted by the Government that are
in force at the date of issuance of these financial statements and the effect
they had on the Companys economic and financial situation.

Exchange system / Transfers outside Argentina

On February 8, 2002 a single free exchange market system was established
through which all transactions involving the exchange of currency are to be
traded, observing the requirements to be laid down by the Argentine Central
Bank. At present certain transfers abroad of a financial nature require the
prior approval of the Central Bank and there are certain requirements for
settling and collecting foreign currency arising from exports. This situation
has affected the normal transfer of dividends from CMQ to the Company as well
as the payment of CMQs indebtedness to foreign financial entities.

Deposits in Argentine financial institutions

As from February 3, 2002 deposits in U.S. dollars or other foreign
currencies in Argentine financial institutions were converted to pesos at the
exchange rate of $ 1.4 per US$ 1 or its equivalent in such other currency.

Financial debts in foreign currency with Argentine financial entities

Debts in U.S. dollars or other foreign currencies in the Argentine
financial system were converted to pesos at the rate of exchange of $ 1 per US$
1 or its equivalent in another currency. As from February 3, 2002 the reference
stabilization index (CER) and an interest rate are applied to these debts. The
CER is an index that measures the daily rate of change derived from the monthly
change in the Consumer Price Index (CPI) published by the INDEC.

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QUILMES INDUSTRIAL (QUINSA) SOCIÉTÉ ANONYME AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
for the years ended December 31, 2002, 2001 and 2000
(In US$ million, except share data)



|2. |  | Argentine economic situation and its impact on the Companys economic and
financial position (continued)
|-- |  | --------------------------------------------------------------------------------------------------------

Credits and debts not related to the financial system

The obligation to pay sums denominated in U.S. dollars or other foreign
currency that are not related to the Argentine financial system, whatever their
origin or nature, were converted to pesos at the exchange rate of $ 1 to US$ 1
or its equivalent in such other foreign currency. The CER is applied to these
balances as from February 3, 2002. If application of this provision were to
lead to the resulting value of the item, good or service being higher or lower
at the time of payment, either of the parties can request a fair readjustment
of the price. If no agreement is reached, the case will be submitted to the
Courts.

Deferral of the deduction of the exchange difference from income tax

The net negative results caused by the devaluation of the peso occurred
on January 11, 2002 are deductible from taxable income over five years,
beginning in 2002.

Impact on financial information

In accordance with Luxembourg GAAP, at December 31, 2002 monetary assets
and liabilities of Argentine subsidiaries were translated at the exchange rate
of $ 3.363 per US$ 1 ($ 1.7 per US$ 1 as of December 31, 2001). As a result,
the Company recorded in financial results a net translation loss of US$ 20.2
million during fiscal year 2002 (US$ 7.2 million in 2001).

The impact on the Company of the measures adopted to date by the Argentine
government has been recognized on the basis of valuations and estimates made by
the Companys management as of the date of this financial statements.

Since the last quarter of 2002 the economic situation has evolved more
favorably, with the stabilization of the Argentine peso against the US dollar
and a significant decline in the rate of inflation (in particular in the case
of wholesale prices). In addition, at the beginning of 2003 a preliminary
agreement was signed with the IMF, which enabled the rolling over of certain
maturities with international lending agencies (IMF, the World Bank, IADB). A
global agreement with Argentinas creditors must still be negotiated, once the
new government has been elected (presidential elections are due to be held in
April 2003).

The future evolution of the economic crisis could require the Argentine
Government to modify measures taken or issue additional regulations. As a
result, the consolidated financial statements should be read in light of these
circumstances.



|3. |  | Acquisitions, joint ventures, mergers and divestitures
|-- |  | ------------------------------------------------------

Acquisitions

Buenos Aires Embotelladora S.A. (Baesa) / Soft drinks business

On December 6, 1999, the Company, through a majority owned subsidiary,
acquired a 51.17% equity interest in Baesa for US$ 80.5 million. Fees and
expenses associated with this acquisition amounted to US$ 2.5 million. In 1999,
Baesa had issued senior notes payable to certain of the selling shareholders in
the amount of US$ 112.3 million. At the time of its acquisition by the Company,
Baesas outstanding balance on these notes was US$ 47.3 million. As part of the
agreement, the Company purchased from the selling shareholders these senior
notes at face value.

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QUILMES INDUSTRIAL (QUINSA) SOCIÉTÉ ANONYME AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
for the years ended December 31, 2002, 2001 and 2000
(In US$ million, except share data)



|3. |  | Acquisitions, joint ventures, mergers and divestitures (continued)
|-- |  | ------------------------------------------------------------------

Acquisitions (continued)

The acquisition was accounted for as a purchase. The excess of the
purchase price over the fair value of the net assets acquired and liabilities
assumed resulted a recognition of goodwill of US$ 82.5 million which is being
amortized over 20 years using the straight-line method.

During the first quarter 2000, the Company recognized certain liabilities
pertaining to restructuring charges totaling US$ 15.0 million as part of the
purchase price allocation and the related effect on minority interest of $7.5
million. Additionally, based on certain working capital variations, the
purchase price was decreased in the amount of US$ 7.0 million. The impact of
these adjustments was an increase of US$ 0.5 million in goodwill.

Also, during the year ended December 31, 2000, the Company finalized its
evaluation of the fair value of assets acquired and liabilities assumed. This
evaluation resulted in a reduction to the value of tangible fixed assets
acquired of US$ 24.2 million.

The results of operations of Baesa have been included in the Companys
consolidated financial statements from the date of acquisition.

During the year ended December 31, 2000, in several transactions the
Company increased its indirect equity ownership in Baesa to 98.66% in exchange
for US$ 53.3 million and the issuance of 1,581,339 of the Companys non-voting
preferred shares. Fees and expenses associated with these acquisitions amounted
to US$ 2.6 million. The Company recorded these acquisitions of additional
ownership interest under the purchase method of accounting as step
acquisitions, resulting in a recognition of additional goodwill of US$ 83.8
million which is being amortized over 20 years using the straight-line method.

Baesa was an Argentine company that had exclusive franchise agreements to
manufacture, bottle and market PepsiCo soft drink brands, primarily in largely
populated provinces of Argentina (Buenos Aires and Córdoba) and in Uruguay.

On September 20, 2000, Cervecería y Maltería Quilmes S.A.I.C.A. y G. ́s
(CMQ) and Baesas Board of Directors decided to merge Baesa with and into CMQ,
a wholly-owned subsidiary of the Company (the Merger). On March 9, 2001 the
Merger was approved by the local authority (Inspección General de Justicia) and
CMQ is the surviving entity.

During the year ended December 31, 2001 the Company incurred, through CMQ,
costs related to the enhancement of the distribution and commercialization of
soft drinks allowing CMQ to begin commercial activities in the Province of
Neuquén and certain zones of Río Negro and La Pampa. These costs totaled US$
4.9 million and were accounted for as intangible assets.

Embotelladoras del Interior S.A. (EDISA)

In December 2000, the Company, through one of its wholly-owned
subsidiaries, purchased a 99.21% indirect equity interest in EDISA, an
Argentine bottler and producer of the Pepsi brand, for US$ 18.3 million. Its
franchise covers the territory of nine Argentine provinces. The acquisition was
accounted for as a purchase. The excess of the total purchase price over the
fair value of total net assets acquired was allocated to goodwill, resulting in
a recognition of goodwill of US$ 45.2 million, which is being amortized over 20
years utilizing the straight-line method.

During the year ended December 31, 2001, the Company finalized its
evaluation of the fair value of assets acquired and liabilities assumed. This
evaluation resulted in an increase to the value of tangible fixed assets
acquired of US$ 3.4 million and in a reduction in goodwill of US$ 2.3 million.
Additionally, during the first quarter 2001, goodwill was increased by US$ 1.1
million as a result of recognizing acquisition expenses incurred.

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QUILMES INDUSTRIAL (QUINSA) SOCIÉTÉ ANONYME AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
for the years ended December 31, 2002, 2001 and 2000
(In US$ million, except share data)



|3. |  | Acquisitions, joint ventures, mergers and divestitures (continued)
|-- |  | ------------------------------------------------------------------

Acquisitions (continued)

Embotelladoras del Interior S.A. (EDISA)

As from August 2001 EDISA and CMQ agreed that the latter would take charge
of the sale and distribution of products from the PepsiCo line. As a result of
this agreement, as from that date, EDISA began to provide manufacturing and
bottling services of such products for CMQ. Additionally, in December 2002,
CMQs, EDISAs and Coroplass (a wholly-owned subsidiary of CMQ) Board of
Directors decided to merge those companies with and into CMQ (the surviving
entity). A preliminary merger agreement was executed between the above
mentioned companies and will be submitted to the respective shareholders
general meetings for its approval.

Fabricas Nacionales de Cerveza S.A.(FNC)  Embotelladora del Uruguay
S.A.(EUSA)

In May 2001, FNC capitalized certain capital reserves by issuing
176,405,900 shares. This operation did not change the shareholders  ́ownership.

During the second quarter 2001, the Company, through QI(B), acquired
47,301,300 shares of FNC for US$ 0.7 million that lead to an increase in
ownership of 3.12%.

Also, during November 2001 the Uruguayan local authority approved the
merger between FNC and EUSA, and EUSA is the surviving entity. As part of this
operation 45,455,956 shares, representing 3.34% of the ownership, were sold to
minority shareholders. As a consequence of these operations the Company has an
indirect ownership in the surviving entity of 59.7 %.

Cervecería Boliviana Nacional La Paz (CBN), Cervercería Boliviana Nacional
Santa Cruz (CBNSC), Cervecería Santa Cruz (SC), Cervecería Taquiña (CTq) and
Inversiones Cerveceras Sociedad Anónima (INCESA)

As of December 31, 1999, the Company had a 14.55% indirect equity interest
in CBN, which in turn had a 30.0% direct equity interest in CBNSC, two Bolivian
brewers. In 1999, the Company accounted for this investment at cost. In
September 2000, the Company increased its indirect equity ownership in CBN to
70.34% for a total consideration of US$ 77.4 million. In December 2000, CBN
acquired an additional 50.92% equity stake in CBNSC. With the increase in
equity ownership of CBN to 70.34%, the Company has effective control, and
therefore, the Company changed its accounting method for CBN from cost to the
consolidation method effective September 1, 2000. Because a controlling
interest in CBN was acquired in September 2000, the results of operations of
CBN have been included in the statements of income for the period beginning
September 1, 2000.

The Company recorded these acquisitions of additional ownership interest
in CBN under the purchase method of accounting as step acquisitions. The excess
of purchase price over the fair value of net assets acquired and liabilities
assumed resulted in a recognition of goodwill amounted to US$ 109.6 million and
is being amortized over 20 years using the straight-line method.

During the year ended December 31, 2001, the Company finalized its
evaluation of the fair value of assets acquired and liabilities assumed. This
evaluation resulted in a reduction of tangible fixed assets acquired of US$ 4.7
million, an increase of goodwill of US$ 3.4 million and a decrease in minority
interest of US$ 1.3 million.

During the year ended December 31, 2001, in several transactions, the
Company increased its indirect ownership in CBN to 74.03% and in CBNSC to
88.92% for a total consideration of US$ 11.4 million and US$ 4.9 million,
respectively. The Company recorded these acquisitions of additional ownership
interests in CBN and CBNSC under the purchase method of accounting as step
acquisitions. The excess of the purchase price over the fair values of net
assets acquired and liabilities assumed resulted in the recognition of goodwill
amounting to US$ 3.5 million and US$ 1 million for CBN and CBNSC acquisitions,
respectively. Goodwill is being amortized over 20 years using the straight-line
method.

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##### Table of Contents



QUILMES INDUSTRIAL (QUINSA) SOCIÉTÉ ANONYME AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
for the years ended December 31, 2002, 2001 and 2000
(In US$ million, except share data)



|3. |  | Acquisitions, joint ventures, mergers and divestitures (continued)
|-- |  | ------------------------------------------------------------------

Cervecería Boliviana Nacional La Paz (CBN), Cervercería Boliviana Nacional
Santa Cruz (CBNSC), Cervecería Santa Cruz (SC), Cervecería Taquiña (CTq) and
Inversiones Cerveceras Sociedad Anónima (INCESA) (Continued)

During the year ended December 31, 2001, as a consequence of
capitalization of loans with shareholders, INCESA increased its capital US$
102.3 million issuing 10,230 shares. Of this shares increase, the Company,
through QI(B), subscribed 9,880 shares. Also, during the year ended December
31, 2001 the Company increased, in several transactions, its indirect ownership
in INCESA through the acquisition of shares from minority shareholders for a
total consideration of US$ 4.5 million. As a result of these operations, as of
December 31, 2001 the Company increased its indirect ownership in INCESA to
96.15 %. The Company recorded these acquisitions of additional ownership
interests under the purchase method of accounting as step acquisitions. The
excess of purchase price over the fair value of net assets acquired and
liabilities assumed resulted in recognition of additional goodwill of US$ 2.6
million.

In the last quarter 2001, CBN  ́s, CBNSC  ́s, SC and Cervecería Tarija  ́s Board
of Directors decided to merge Cervecería Santa Cruz, CBNSC and Cervecería
Tarija with and into CBN (surviving entity). A preliminary merger agreement was
executed between the above mentioned companies, and the merger was approved by
the shareholders of each company in their respective shareholders  ́ general
meetings. The accompanying consolidated financial statements have been
prepared taking into consideration the above mentioned merger and considering
Incesa  ́s equity ownership in the surviving entity (CBN) of 75.16%. During the
second quarter of 2002, the Bolivian authorities approved the merger.

During the year ended December 31, 2002, the Company increased its
indirect ownership in CBN to 78.13% and in CTq to 91.95% for a total
consideration of US$ 3.8 million and US$ 0.1 million, respectively. The Company
recorded these acquisitions of additional ownership interests under the
purchase method of accounting as step acquisitions.

In the last quarter 2002, CBN  ́s, CTq  ́s and Enalbos (a wholly owned CBN
subsidiary) Board of Directors decided to merge those companies with and into
CBN (surviving entity).

After giving consideration to the above mentioned transactions, the
Companys indirect ownership in CBN will be 79.55 %.

Compañía Salus S.A. (Salus)

In September 2000, the Company acquired an additional 6.5% interest in
Salus for US$ 4.4 million increasing its equity ownership to 34.66%.

Other acquisitions

In 2001, the Company, through QI(B), acquired 155,469 shares of CMQ for a
total consideration of US$ 2.0 million, increasing the ownership to 99.67% and
generating goodwill of US$ 1 million. Also, during the second quarter of 2002,
the Company, through QI(B), acquired 35,053 shares of CMQ for a total
consideration of US$ 0.1 million, increasing the ownership to 99.72%.

F-12



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##### Table of Contents



QUILMES INDUSTRIAL (QUINSA) SOCIÉTÉ ANONYME AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
for the years ended December 31, 2002, 2001 and 2000
(In US$ million, except share data)



|3. |  | Acquisitions, joint ventures, mergers and divestitures (continued)
|-- |  | ------------------------------------------------------------------

Joint ventures

Eco
de los Andes S.A. (Eco) / Hecatón S.A. (Hecatón)

In July 1999, the Company entered into a strategic association with
Perrier-Vittel, a company of The Nestle Group, to manage its mineral water
business in Argentina through the formation of a new company, Eco. The Company
consummated a spin-off of its mineral water business and contributed its
related assets to Eco. After the spin-off, the Company retained a 48.83%
interest in Eco. Ecos objective is to focus on the bottling and marketing of
various mineral water brands, including the Eco brand.

During the first quarter 2001, the Company, through Hecatón, CMQ and
EDISA, transferred certain assets related to the mineral water business of
Glaciar and Villa de los Arroyos (VDA) ́s lines of products to Eco.

Also during the year ended December 31, 2001, and in several share
transactions the Company, through QI(B), transferred to Perrier - Vittel 51.00%
of its indirect ownership in Hecaton. As of December 31, 2001, the Company had
an indirect ownership interest in Hecatón of 49.00%.

The above mentioned transactions resulted in an after-tax gain of US$ 16.5
million and was recorded in Other Income during the year ended December 31,
2001.

On December 12, 2001 the Board of Eco began negotiations with Hecatón, in
order to merge both companies. During the second quarter of 2002, the merger
was approved by the corresponding governmental regulator. The objective of this
merger is to better use available resources and to increase administrative
efficiency, therefore improving financial results.

Divestitures

Paraguay Refrescos S.A. (PARESA)

In October 2000, the Company, through its principal subsidiary QI(B), sold
its 57.97% interest in PARESA, one of the Coca-Cola bottlers in Paraguay, to
Coca-Cola Interamerican Corporation in exchange for net proceeds of US$ 63.3
million. In connection with the sale of the company, QI(B) received a dividend
payment of US$ 1.6 million from PARESA. The Company recorded an after-tax gain
of approximately US$ 272.6 million on this sale during 2000. This gain was
included in Other Income in the accompanying consolidated statement of
income.

Maltería Oriental S.A. (MOSA)

In March 2000, the Company, through its principal subsidiary QI(B),
completed the sale of its 58.24% equity stake in MOSA comprising its malt-based
beverage business in Uruguay. This transaction resulted in an after-tax gain of
approximately US$ 0.2 million and was recorded in Other Income in the
accompanying consolidated statement of income. As part of the transaction, the
acquirer assumed MOSAs financial liabilities amounting to US$ 9.7 million.

Maltería Safac S.A. (Safac)

In September 2001, the Company through QI(B) and CMQ, sold its 100%
interest in Safac for a total consideration of US$ 1.5 million. As a result,
the Company recorded an after tax loss of approximately US$ 0.2 million on this
sale in 2001.

F-13



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##### Table of Contents



QUILMES INDUSTRIAL (QUINSA) SOCIÉTÉ ANONYME AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
for the years ended December 31, 2002, 2001 and 2000
(In US$ million, except share data)



|4. |  | Summary of significant accounting principles and policies
|-- |  | ---------------------------------------------------------

This summary of the significant accounting principles and policies of the
Company is presented to assist in evaluating the Companys consolidated
financial statements.

(a)  Revenue recognition

Sales represent the invoiced value of goods sold, net of discounts and
excise taxes. Sales and sales discounts are recognized upon delivery of goods
to customers.

(b)  Statement of cash flows

The Company considers all highly liquid temporary investments with
original maturities of three months or less, consisting of primarily fixed-term
deposits to be cash equivalents for purposes of the statement of cash flows.

(c)  Foreign currency assets and liabilities

Financial statements of foreign consolidated subsidiaries have been
translated into US dollars on the basis of the financial statements of such
subsidiaries expressed in the local currency of the country of origin. The
method of translation involves the translation of property, other long-lived
assets, long-term liabilities and related profit and loss accounts at
historical rates of exchange. Additionally, net monetary asset and liability
related translation adjustments are included in financials results in the
current period. The effects of this translation procedure have been treated as
permanent differences in determining deferred tax.

Assets and liabilities denominated in foreign currencies are translated at
the prevailing exchange rates as of year-end. Transactions denominated in
foreign currencies are translated into US dollars at the prevailing exchange
rates on the date of transaction settlement. Foreign currency transaction gains
and losses are recorded within financial results.

(d)  Inventories

Inventories are stated at the lower of cost or market value. Cost, which
comprises direct materials, direct labor costs and overhead associated with the
manufacturing processes is calculated using the first-in, first-out method.
During the fourth quarter of 2002 the Company reviewed the recoverable value of
bottles and cases in Argentina (where they are sold to customers), and as a
consequence of the devaluation of the respective local currencies against the
US dollar, a valuation allowance of US$ 12.0 million was recorded as a
reduction of the related inventory balance and recognized within this year
financial results.

(e)  Provision for contingencies and allowances

The Company records an allowance for doubtful accounts based on several
indicators of risk of uncollectability. This allowance is shown as a reduction
of the related receivable balance.

The Company has certain contingent liabilities with respect to material
existing or potential claims, lawsuits and other proceedings, including those
involving tax, social security and other matters. The Company accrues
liabilities when it is probable that future costs will be incurred and such
costs can be reasonably estimated. Such accruals are based on developments to
date, the Companys estimates of the outcome of these matters, the lawyers  ́
opinion, and its experience in contesting, litigating and settling other
matters. As the scope of the liabilities becomes better defined, there will be
changes in the estimates of future costs, which could have a material effect on
the Companys future results of operations and financial condition or
liquidity.

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##### Table of Contents



QUILMES INDUSTRIAL (QUINSA) SOCIÉTÉ ANONYME AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
for the years ended December 31, 2002, 2001 and 2000
(In US$ million, except share data)



|4. |  | Summary of significant accounting principles and policies (continued)
|-- |  | ---------------------------------------------------------------------

(f)  Income taxes

Under present Luxembourg law, so long as the Company maintains its status
as a holding company, no income tax, withholding tax (including with respect to
dividends), or capital gains tax is payable in Luxembourg by the Company.

Income taxes are accounted for using a comprehensive liability method of
accounting for income taxes. Under the comprehensive liability method, deferred
income taxes are recognized for the tax consequences of temporary differences
by applying the statutory tax rate to the difference between the financial
statement carrying amounts and the tax basis of existing assets and
liabilities, calculated on a country by country basis. The effect on deferred
income taxes of a change in tax rates is recognized in income in the period of
enactment. A valuation allowance is established to reduce the carrying amounts
of deferred tax assets unless such assets are more likely to be realized.

(g)  Intangible assets

Goodwill, representing the excess of the purchase price over the fair
value of net assets of acquired businesses, is amortized on a straight-line
basis, primarily, over 20 years. Amortization for the years ended December 31,
2002, 2001 and 2000 was US$ 21.9 million, US$ 21.6 million and US$ 12.1
million, respectively. The ongoing recoverability of goodwill is monitored
based on country by country basis and taking into account significant events or
changes in the overall business environment.

Also, this caption includes costs related with the enhancement of the
distribution and commercialization area of soft drinks that allowed the Company
to begin commercial activities in the Province of Neuquén and certain zones of
Río Negro and La Pampa.

Considering the critical economic situation of Argentina (see further
details in Note 2), during the third quarter of 2002 Companys management
reviewed the value of its tangible and intangible assets in Argentina for
potential impairment (see Note 4 i). Consequently, the Company recorded a US$
90 million write off of goodwill related to the soft drink business. This loss
is included in Other Expenses.

(h)  Tangible fixed assets

Tangible fixed assets primarily consist of industrial land and buildings,
machinery, plant and equipment and bottles and crates. Tangible fixed assets
are carried at cost and include expenditures for new facilities and
expenditures which substantially increase the useful lives of existing
facilities. The cost of maintenance, repairs and minor renewals is expensed as
incurred. When tangible fixed assets are retired or otherwise disposed, the
related cost and accumulated depreciation are eliminated and any gain or loss
on disposition is recognized in financials results.

Bottles and crates are treated as inventories in countries where these
assets are sold to customers. Otherwise, if risk of loss is not effectively
transferred to customers, bottles are included as tangible fixed assets and
depreciated under the straight-line method over their respective economic
lives.

Depreciation is provided on the straight-line method over the following
estimated useful lives: buildings and improvements, 50 years; other tangible
fixed assets, including machinery and equipment, 3 to 10 years.

The carrying value of tangible fixed assets does not exceed its
recoverable value based on estimates made by the Companys management.

F-15



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##### Table of Contents



QUILMES INDUSTRIAL (QUINSA) SOCIÉTÉ ANONYME AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
for the years ended December 31, 2002, 2001 and 2000
(In US$ million, except share data)



|4. |  | Summary of significant accounting principles and policies (continued)
|-- |  | ---------------------------------------------------------------------

(i)  Impairment of long-lived assets

The Company periodically evaluates the carrying value of its long-lived
assets for impairment. The carrying value of a long-lived asset is considered
impaired by the Company when the anticipated discounted cash flows from such
asset are separately identifiable and result in less than its carrying value.
In that event, a loss would be recognized based on the amount by which the
carrying value exceeds the fair market value of the long-lived asset. Fair
market value is determined primarily using the anticipated cash flows
discounted at a rate commensurate with the risk involved. Assets released from
productive activities are carried at the lower of cost or its estimated net
realizable value.

As mentioned in Note 4 (g), during the year ended December 31, 2002, the
Companys management determined that goodwill related with its soft drink
business in Argentina was impaired. Consequently, the Company recorded a US$
90 million write off (see Note 4 g).

(j)  Research and development costs

Research and development costs are expensed in the year in which these
costs are incurred. Historically, these expenses have not been significant.

(k)  Other fixed assets

Other fixed assets consist primarily of deferred income taxes, spare parts
and Argentine Government Bonds.

The Company includes under the heading of Other fixed assets, US$
10,000,000 corresponding to the nominal value of Argentine Government Bonds
purchased by CMQ, and accrued and unpaid interest until year end. These bonds
are denominated in US$ and are due on May 11, 2004. Since February 2002 the
Argentine Government has suspended the monthly interest payment on those bonds.
Although the situation described, added to the crisis that Argentina is
currently living through, raises doubts as to the capacity of the countrys
government to comply with its financial obligations, in view that they shall be
recovered in the form of a like amount tax credit, management estimates that
the Company may be able to recover the par value plus unpaid interest accrued
at the date of maturity of the bonds. Consequently, the investment in these
bonds has been valued at its nominal value plus interest accrued at the end of
the year.

(l)  Financial assets

Financial assets consist primarily of treasury stock and investments in
affiliated companies.

Treasury stock is carried at cost. Dividends collected on theses shares
are deducted from the acquisition cost.

The equity method of accounting is used for the Companys investments in
affiliates where the Company has the ability to exercise significant influence.

(m)  Government securities

At December 31, 2002 government securities consist of Municipal and
Provincial bonds, which have been recorded at fair value, based on quoted
market prices. At December 31, 2001, government securities consisted, primarily
of Argentine government bonds (see Note 4 k, above) that were recorded at
acquisition cost, which did not, exceeded its expected recoverable value.

F-16



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##### Table of Contents



QUILMES INDUSTRIAL (QUINSA) SOCIÉTÉ ANONYME AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
for the years ended December 31, 2002, 2001 and 2000
(In US$ million, except share data)



|4. |  | Summary of significant accounting principles and policies (continued)
|-- |  | ---------------------------------------------------------------------

(n)  Prepaid expenses

Deferred advertising expense, sponsorship and marketing promotional
programs are classified as prepaid expenses. Deferred advertising costs
primarily consist of prepaid radio and television airtime. Deferred advertising
costs are expensed as airtime is consumed, the rest of the deferred prepaid
expenses are amortized under the straight-line method over the respective terms
of the programs. The Company is party to certain sponsorship agreements,
whereby it recognizes the related costs over the life of the agreement,
generally ranging from one to four years.



|5. |  | Summary of the QUINSA group of companies
|-- |  | ----------------------------------------

The consolidated financial statements of QUINSA include the accounts of
QUINSA and foreign controlled and affiliated subsidiaries. The following list
summarizes the direct and indirect equity holdings in each of the companies,
which form the QUINSA group. See Note 3 for a description of acquisitions,
joint ventures and divestitures occurred during the years ended December 31,
2002, 2001 and 2000. Participation of interest owned is shown as of December
31, 2002:

Held directly:



|.Quilmes International (Bermuda) Ltd. (QI(B)), Hamilton, Bermuda, at 85.00%.
The remaining 15.00% is owned by Heineken N.V. (See Notes 19 and 23).
|--------------------------------------------------------------------------------------------------------------------------------------------------

Held indirectly through QI(B):



|.Cervecería y Maltería Quilmes S.A. (CMQ), Buenos Aires, Argentina, at 99.72%. 
|-------------------------------------------------------------------------------
|                                                                               
|.Eco de los Andes S.A., Buenos Aires, Argentina, at 48.95 %.                   
|                                                                               
|.Cervecería Paraguaya S.A., Asunción, Paraguay, at 81.85%.                     
|                                                                               
|.Colosas S.A., Barcequillo, Paraguay, at 57.97%.                               
|                                                                               
|.Noitca Ltd., Tortola, British Virgin Islands and its subsidiaries, at
100.00%.
|                                                                               
|.Langdon Investments Inc., Delaware, USA, at 100.00%.                          
|                                                                               
|.Melville Investments Inc., Delaware, USA, at 100.00%.                         
|                                                                               
|.Sociedad de Inversiones y Comercio Vienher S.A., Panamá, Panamá, at 100.00%.  

Held indirectly through QI (B) at 26.10 % and Noitca at 8.56%



|.Compañía Salus S.A., Uruguay.
|------------------------------

Held indirectly through CMQ:



|.Coroplás S.A., Buenos Aires, Argentina, at 99.99% (*).                                    
|-------------------------------------------------------------------------------------------
|                                                                                           
|.Quilmes Do Brasil Ltda., Porto Alegre, Brazil, at 100.00%.                                
|                                                                                           
|.Publicidad Relator S.A., Buenos Aires, Argentina, at 99.99%.                              
|                                                                                           
|.Embotelladoras del Interior S.A. (Edisa), San Miguel de Tucumán,
Argentina, at 99.21% (*).
|                                                                                           
|.Etel S.A.I.C. y F., Buenos Aires, Argentina, at 99.92 %.                                  
|                                                                                           
|.Seven Up Concesiones S.A.I. y C., Buenos Aires, Argentina, at 99.99%.                     
|                                                                                           
|.Embotelladora Perla del Norte S.A.I.C.I.A. y F., Pergamino, Argentina, at
99.99%.         
|                                                                                           
|.Intergal S.A., Montevideo, Uruguay, at 100.00%.                                           
|                                                                                           
|.Aydecar S.A., Buenos Aires, Argentina, at 99.99 %.                                        

(*) in process of merger with and into CMQ (see Note 3).

Held indirectly through Langdon Investments Inc. at 90.00% and Melville
Investments Inc. at 10.00%:



|.Inversiones Bemberg Chile Ltda., Santiago de Chile, Chile.
|-----------------------------------------------------------

Held indirectly through QI(B) at 88.72% and Inversiones Bemberg Chile Ltda. at
11.28%:



|.Cervecería Chile S.A., Santiago de Chile, Chile.
|-------------------------------------------------

Held indirectly through QI(B) at 50.36% and CMQ at 9.31%:



|.Embotelladora del Uruguay S.A., Montevideo, Uruguay
|----------------------------------------------------

Held indirectly through Cervecería Paraguaya S.A. at 81.11% and Colosas S.A. at
12.70%:



|.Fábrica Paraguaya de Vidrios S.A., Asunción, Paraguay.
|-------------------------------------------------------

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##### Table of Contents



QUILMES INDUSTRIAL (QUINSA) SOCIÉTÉ ANONYME AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
for the years ended December 31, 2002, 2001 and 2000
(In US$ million, except share data)



|5. |  | Summary of the QUINSA group of companies (continued)
|-- |  | ----------------------------------------------------

Held indirectly through QI(B) at 96.16% and Sociedad de Inversiones y Comercio
Vienher S.A. at 0.01%:



|.Inversiones Cerveceras S.A. (Incesa), Panamá, Panamá.
|------------------------------------------------------

Held indirectly through Incesa



|.Cervecería Taquiña S.A. (Taquiña), Cochabamba, Bolivia, at 91.95%.  
|---------------------------------------------------------------------
|                                                                     
|.Cervecería Boliviana Nacional S.A. (CBN), La Paz, Bolivia, at 78.13%

Held indirectly through Embotelladora Perla del Norte S.A.I.C.I.A. y F. at
99.99% and CMQ at 0.01%:



|.Embotelladora 9 de Julio S.A.I.C.I. y F., Pergamino, Argentina.
|----------------------------------------------------------------

Held directly at 90.00% and indirectly through CMQ at 3.00%, Cervecería Chile
S.A. at 1.50%, Cervecería Paraguaya S.A. at 2.50% and Embotelladora del Uruguay
S.A. at 3.00%:



|.Quilmes Industrial S.A., Buenos Aires, Argentina.
|--------------------------------------------------



|6. |  | Intangible assets
|-- |  | -----------------

|                                     |  |                    |       |      |  |  |       | 
|------------------------------------ |  | ------------------ | ----- | ---- |  |  | ----- | 
|                                     |  | As of December 31,
|                                     |  |                   
|                                     |  | 2002               |       | 2001
|                                     |  |                    |       |     
|Goodwill and other intangible assets |  |                    |       |      |  |  |       | 
|Baesa                                |  |                    | 86.5  |      |  |  | 167.8 | 
|Edisa                                |  |                    | 20.6  |      |  |  | 40.7  | 
|Cervecería Boliviana Nacional        |  |                    | 106.8 |      |  |  | 113.1 | 
|Incesa, Taquiña and Santa Cruz       |  |                    | 6.8   |      |  |  | 8.8   | 
|Salus                                |  |                    | 8.9   |      |  |  | 9.4   | 
|Cervecería Bieckert S.A.             |  |                    | 2.4   |      |  |  | 3.1   | 
|Other                                |  |                    | 4.0   |      |  |  | 5.0   | 
|                                     |  |                    |       |      |  |  |       | 
|                                     |  |                    | 236.0 |      |  |  | 347.9 | 
|                                     |  |                    |       |      |  |  |       | 

Due to the critical economic situation of Argentina and its related
effects, during the year ended December 31, 2002, the Companys management
reviewed the value of its intangible assets in Argentina. Consequently,
goodwill related to the soft drink business (BAESA and EDISA) was reduced by
US$ 90.0 million.



|7. |  | Tangible fixed assets
|-- |  | ---------------------

|                                                 |  |       |         |           |  |            |        |            |  |         |        |   |  |  |       |  
|------------------------------------------------ |  | ----- | ------- | --------- |  | ---------- | ------ | ---------- |  | ------- | ------ | - |  |  | ----- | -
|                                                 |  |       |         |           |  | Industrial |        | Machinery, |  | Bottles
|                                                 |  |       |         |           |  | land and   |        | plant and  |  | and    
|                                                 |  | Total |         | buildings |  | equipment  | crates
|                                                 |  |       |         |           |  |            |       
|Total cost or valuation as of January 1, 2002    |  |       | 1,401.7 |           |  |            | 320.5  |            |  |         | 959.3  |   |  |  | 121.9 |  
|Additions (*)                                    |  |       | 27.7    |           |  |            | 1.8    |            |  |         | 12.6   |   |  |  | 13.3  |  
|Disposals                                        |  |       | (56.9   | )         |  |            | (0.7   | )          |  |         | (36.1  | ) |  |  | (20.1 | )
|                                                 |  |       |         |           |  |            |        |            |  |         |        |   |  |  |       |  
|Total cost or valuation as of December 31, 2002  |  |       | 1,372.5 |           |  |            | 321.6  |            |  |         | 935.8  |   |  |  | 115.1 |  
|Accumulated depreciation as of January 1, 2002   |  |       | (741.2  | )         |  |            | (60.9  | )          |  |         | (582.4 | ) |  |  | (97.9 | )
|Additions (*)                                    |  |       | (101.1  | )         |  |            | (6.8   | )          |  |         | (80.9  | ) |  |  | (13.4 | )
|Disposals                                        |  |       | 42.6    |           |  |            | 0.7    |            |  |         | 24.1   |   |  |  | 17.8  |  
|                                                 |  |       |         |           |  |            |        |            |  |         |        |   |  |  |       |  
|Accumulated depreciation as of December 31, 2002 |  |       | (799.7  | )         |  |            | (67.0  | )          |  |         | (639.2 | ) |  |  | (93.5 | )
|                                                 |  |       |         |           |  |            |        |            |  |         |        |   |  |  |       |  
|Net book value as of December 31, 2002           |  |       | 572.8   |           |  |            | 254.6  |            |  |         | 296.6  |   |  |  | 21.6  |  
|                                                 |  |       |         |           |  |            |        |            |  |         |        |   |  |  |       |  

(*)Includes reclassification of cost and accumulated depreciation for US$ 7.2
million and US$4.7 million, respectively, of bottles and crates of Uruguay that
as from January 1, 2002 are treated as tangible fixed assets. Until December
31, 2001, bottles and crates of Uruguay were classified as inventories.

F- 18



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##### Table of Contents



QUILMES INDUSTRIAL (QUINSA) SOCIÉTÉ ANONYME AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
for the years ended December 31, 2002, 2001 and 2000
(In US$ million, except share data)



|7. |  | Tangible fixed assets (continued)
|-- |  | ---------------------------------

|                                                                        |  |       |         |           |  |            |       |            |  |         |        |   |  |  |        |  
|----------------------------------------------------------------------- |  | ----- | ------- | --------- |  | ---------- | ----- | ---------- |  | ------- | ------ | - |  |  | ------ | -
|                                                                        |  |       |         |           |  | Industrial |       | Machinery, |  | Bottles
|                                                                        |  |       |         |           |  | land and   |       | plant and  |  | And    
|                                                                        |  | Total |         | buildings |  | equipment  |       | Crates    
|                                                                        |  |       |         |           |  |            |       |           
|Total cost or valuation as of January 1, 2001                           |  |       | 1,394.2 |           |  |            | 307.0 |            |  |         | 954.8  |   |  |  | 132.4  |  
|Sale of Malteria Safac (Note 3)                                         |  |       | (3.1    | )         |  |            | (1.6  | )          |  |         | (1.5   | ) |  |  |       |  
|Final evaluation of preliminary purchase price
Allocation of EDISA (**) |  |       | 3.4     |           |  |            | (0.8  | )          |  |         | 4.2    |   |  |  |       |  
|Final evaluation of preliminary purchase price
Allocation of CBN (**)   |  |       | (9.8    | )         |  |            |      |            |  |         | (9.8   | ) |  |  |       |  
|Additions                                                               |  |       | 72.0    |           |  |            | 17.4  |            |  |         | 49.3   |   |  |  | 5.3    |  
|Disposals                                                               |  |       | (55.0   | )         |  |            | (1.5  | )          |  |         | (37.7  | ) |  |  | (15.8  | )
|                                                                        |  |       |         |           |  |            |       |            |  |         |        |   |  |  |        |  
|Total cost or valuation as of December 31, 2001                         |  |       | 1,401.7 |           |  |            | 320.5 |            |  |         | 959.3  |   |  |  | 121.9  |  
|Accumulated depreciation as of January 1, 2001                          |  |       | (691.3  | )         |  |            | (59.1 | )          |  |         | (529.9 | ) |  |  | (102.3 | )
|Sale of Malteria Safac (Note 3)                                         |  |       | 1.6     |           |  |            | 1.0   |            |  |         | 0.6    |   |  |  |       |  
|Final evaluation of preliminary purchase price
Allocation of CBN (**)   |  |       | 5.1     |           |  |            |      |            |  |         | 5.1    |   |  |  |       |  
|Additions                                                               |  |       | (96.5   | )         |  |            | (5.1  | )          |  |         | (82.7  | ) |  |  | (8.7   | )
|Disposals                                                               |  |       | 39.9    |           |  |            | 2.3   |            |  |         | 24.5   |   |  |  | 13.1   |  
|                                                                        |  |       |         |           |  |            |       |            |  |         |        |   |  |  |        |  
|Accumulated depreciation as of December 31, 2001                        |  |       | (741.2  | )         |  |            | (60.9 | )          |  |         | (582.4 | ) |  |  | (97.9  | )
|                                                                        |  |       |         |           |  |            |       |            |  |         |        |   |  |  |        |  
|Net book value as of December 31, 2001                                  |  |       | 660.5   |           |  |            | 259.6 |            |  |         | 376.9  |   |  |  | 24.0   |  
|                                                                        |  |       |         |           |  |            |       |            |  |         |        |   |  |  |        |  

* * Related to the final evaluation of the preliminary purchase price allocation
for EDISA and CBN acquisitions, as described in Note 3.



|8. |  | Other fixed assets
|-- |  | ------------------

|                                                                                                     |  |                    |      |      |  |  |      | 
|---------------------------------------------------------------------------------------------------- |  | ------------------ | ---- | ---- |  |  | ---- | 
|                                                                                                     |  | As of December 31,
|                                                                                                     |  |                   
|                                                                                                     |  | 2002               |      | 2001
|                                                                                                     |  |                    |      |     
|Deferred income taxes (Note 18)                                                                      |  |                    | 72.3 |      |  |  | 29.3 | 
|Spare parts                                                                                          |  |                    | 14.4 |      |  |  | 15.2 | 
|Argentine Government Bonds (Note 4 k)                                                                |  |                    | 10.0 |      |  |  |      | 
|Tax receivables                                                                                      |  |                    | 0.1  |      |  |  | 0.9  | 
|Receivables from the sale of fixed assets                                                            |  |                    |     |      |  |  | 0.1  | 
|Others (net of allowance for doubtful
accounts of US$1.9 million in 2002 and
US$2.5 million in 2001) |  |                    | 1.0  |      |  |  | 4.6  | 
|                                                                                                     |  |                    |      |      |  |  |      | 
|                                                                                                     |  |                    | 97.8 |      |  |  | 50.1 | 
|                                                                                                     |  |                    |      |      |  |  |      | 



|9. |  | Financial assets
|-- |  | ----------------

|                             |  |                    |      |      |  |  |      | 
|---------------------------- |  | ------------------ | ---- | ---- |  |  | ---- | 
|                             |  | As of December 31,
|                             |  |                   
|                             |  | 2002               |      | 2001
|                             |  |                    |      |     
|Treasury stock (Note 12)     |  |                    | 20.5 |      |  |  | 18.8 | 
|Investments at equity method |  |                    | 3.8  |      |  |  | 9.0  | 
|Certificates of deposit      |  |                    | 1.7  |      |  |  | 3.3  | 
|Other                        |  |                    | 2.8  |      |  |  | 3.1  | 
|                             |  |                    |      |      |  |  |      | 
|                             |  |                    | 28.8 |      |  |  | 34.2 | 
|                             |  |                    |      |      |  |  |      | 

During the year ended December 31, 2001, the Company restructured its
share capital (see Note 12.a). Before the above mentioned restructuring, the
Company acquired 39,528 voting shares (39,528 Class B shares after
restructuring and conversion), 200,000 non-voting shares (200,000 Class B
shares after restructuring) and 95,800 ADS (47,900 ADS after restructuring) for
a total consideration of US$ 3.1 million. Also, after restructuring, the
Company acquired 426,650 Class A shares and 596,200 ADS (representing 2 Class B
Shares for each ADS) for a total
consideration of US$ 8.2 million. The dividends collected on these shares
are deducted from the acquisition cost and were US$ 0.3 million during 2001.

Additionally, during the year ended December 31, 2002, the Company
acquired 3,308,147 Class A shares for a total consideration of US$ 1.7 million.

F-19



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##### Table of Contents



QUILMES INDUSTRIAL (QUINSA) SOCIÉTÉ ANONYME AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
for the years ended December 31, 2002, 2001 and 2000
(In US$ million, except share data)



|9. |  | Financial assets (continued)
|-- |  | ----------------------------

As of December 31 2002, the details of total treasury shares held by the
Company is as follows:

-     Class A shares: 3,734,797

-     Class B shares: 726,053

-     ADS: 834,116 (representing 2 Class B shares for each ADS)



|10. |  | Inventories
|--- |  | -----------

|                                                                                                 |  |                    |      |      |  |  |       | 
|------------------------------------------------------------------------------------------------ |  | ------------------ | ---- | ---- |  |  | ----- | 
|                                                                                                 |  | As of December 31,
|                                                                                                 |  |                   
|                                                                                                 |  | 2002               |      | 2001
|                                                                                                 |  |                    |      |     
|Finished goods and goods for resale                                                              |  |                    | 17.7 |      |  |  | 28.8  | 
|Work in process                                                                                  |  |                    | 6.6  |      |  |  | 8.3   | 
|Raw material and supplies (net of valuation
allowance of US$12.0 million in 2002 - see
Note 4.d) |  |                    | 44.1 |      |  |  | 71.0  | 
|                                                                                                 |  |                    |      |      |  |  |       | 
|                                                                                                 |  |                    | 68.4 |      |  |  | 108.1 | 
|Advances to suppliers and inventories in transit                                                 |  |                    | 1.9  |      |  |  | 2.5   | 
|                                                                                                 |  |                    |      |      |  |  |       | 
|                                                                                                 |  |                    | 70.3 |      |  |  | 110.6 | 
|                                                                                                 |  |                    |      |      |  |  |       | 



|11. |  | Other current assets
|--- |  | --------------------

|                                |  |                    |      |      |  |  |      | 
|------------------------------- |  | ------------------ | ---- | ---- |  |  | ---- | 
|                                |  | As of December 31,
|                                |  |                   
|                                |  | 2002               |      | 2001
|                                |  |                    |      |     
|Advances to suppliers           |  |                    | 6.2  |      |  |  | 5.6  | 
|Prepaid taxes                   |  |                    | 6.4  |      |  |  | 4.4  | 
|Deferred income taxes (Note 18) |  |                    | 3.2  |      |  |  | 20.9 | 
|Advances to personnel           |  |                    | 0.6  |      |  |  | 1.0  | 
|Others                          |  |                    | 4.1  |      |  |  | 5.4  | 
|                                |  |                    |      |      |  |  |      | 
|                                |  |                    | 20.5 |      |  |  | 37.3 | 
|                                |  |                    |      |      |  |  |      | 



|12. |  | Shareholders equity
|--- |  | --------------------

(a)  Common, preferred stock and capital restructuring

The share capital issued and outstanding is represented by 647,618,840
shares of Class A common stock and 43,388,205 shares of Class B common stock,
both classes without par value. The authorization is valid for five years until
June 2006. The following is a summary of the share activity of the Company:

|                                                    |  |        |              |            |  |              |             |              |  |  |             |   |  |  |            | 
|--------------------------------------------------- |  | ------ | ------------ | ---------- |  | ------------ | ----------- | ------------ |  |  | ----------- | - |  |  | ---------- | 
|                                                    |  | Voting |              | Non-voting |  | Class A      |             | Class B     
|                                                    |  | Shares |              | shares     |  | common stock |             | common stock
|                                                    |  |        |              |            |  |              |             |             
|Balances as of December 31, 1999                    |  |        | 68,400,000   |            |  |              | 38,168,750  |              |  |  |            |   |  |  |           | 
|Capital contribution (i)                            |  |        |             |            |  |              | 1,581,339   |              |  |  |            |   |  |  |           | 
|                                                    |  |        |              |            |  |              |             |              |  |  |             |   |  |  |            | 
|Balances as of December 31, 2000                    |  |        | 68,400,000   |            |  |              | 39,750,089  |              |  |  |            |   |  |  |           | 
|Capital restructuring(ii):                          |  |        |              |            |  |              |             |              |  |  |             |   |  |  |            | 
|Ten-for-one split of ordinary
shares                |  |        | 615,600,000  |            |  |              |            |              |  |  |            |   |  |  |           | 
|Rename of ordinary shares                           |  |        | (684,000,000 | )          |  |              |            |              |  |  | 684,000,000 |   |  |  |           | 
|Conversion of preferred shares
into ordinary shares |  |        | 39,750,089   |            |  |              | (39,750,089 | )            |  |  |            |   |  |  |           | 
|Rename of ordinary shares                           |  |        | (39,750,089  | )          |  |              |            |              |  |  |            |   |  |  | 39,750,089 | 
|Conversion of Class A shares
into Class B shares    |  |        |             |            |  |              |            |              |  |  | (36,381,160 | ) |  |  | 3,638,116  | 
|                                                    |  |        |              |            |  |              |             |              |  |  |             |   |  |  |            | 
|Balances as of December 31,
2001 and 2002           |  |        |             |            |  |              |            |              |  |  | 647,618,840 |   |  |  | 43,388,205 | 
|                                                    |  |        |              |            |  |              |             |              |  |  |             |   |  |  |            | 

F-20



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##### Table of Contents



QUILMES INDUSTRIAL (QUINSA) SOCIÉTÉ ANONYME AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
for the years ended December 31, 2002, 2001 and 2000
(In US$ million, except share data)



|12. |  | Shareholders equity (continued)
|--- |  | --------------------------------

(a)  Common, preferred stock and capital restructuring (continued)

(i)  As discussed in Note 3, during fiscal year 2000 the Company acquired a
direct equity ownership in Baesa of 11.75% from Bayerische Hypo-und Vereinsbank
A.G. The Company completed this acquisition in exchange for 1,581,339 shares of
the Companys non-voting preferred stock. These shares were valued at their
fair value aggregating US$ 17.4 million, which resulted in additional
paid-in-capital of US$ 16.9 million.

(ii)  The Shareholders extraordinary meeting held on June 8, 2001 approved
the capital restructuring proposal as submitted. The restructuring, which was
approved by the separate class vote of each of the preferred and ordinary
shareholders, consisted principally of the following:



|- |  | The 68,400,000 ordinary shares outstanding at that date were split
ten-for-one resulting in 684,000,000 shares, without par value, and
were renamed Class A shares.                                                                                                                                                                                                
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
|- |  | The 39,750,089 non-voting preferred shares outstanding at that date
were converted into ordinary shares, without par value, and renamed
Class B shares. The class of non-voting preferred shares was
cancelled.                                                                                                                                                    
| 
|- |  | Class A and Class B shares shall vote as one class at any
shareholders meeting and each Class A and Class B share shall be
entitled to cast one vote at any shareholders meeting, provided that
any resolutions affecting the rights of a particular class must be
approved separately by the quorum and majority requirements
established by law for each class.
| 
|- |  | Class B shares shall have dividend and liquidation rights equal to ten
times the rights of Class A shares.                                                                                                                                                                                                                                                         
| 
|- |  | Upon the request of holders of Class A shares, the Class A shares may
be converted into Class B shares at the rate of ten Class A shares for
one Class B share. Conversion requests will be accepted during a
limited period of time every year, and are subject to certain
limitations.                                                                           

The Company is listed on the Luxembourg Stock Exchange (LSE) since July
1991 and on the New-York Stock Exchange (NYSE) since March 1996.

Class A and Class B shares have been listed on the Luxembourg Stock
Exchange since June 11, 2001. American Depositary Shares (ADS), each
previously representing one non-voting preferred share, shall, by way of a
reverse ADS split, represent two Class B shares as from June 11, 2001, and
continue to be listed on the New York Stock Exchange.

Pursuant to information requirements from the Luxembourg Stock Exchange,
the Company has also confirmed that during the last financial year and the
current year no public takeover or exchange offers were made by third parties
in respect of its shares, and no public exchange offers were made by it in
respect of other companies shares.

The authorized capital is fixed at US$ 400,000,000 represented by Class A
shares and Class B shares, both without par value, in a total amount of
8,729,855 shares which includes the number of shares of the presently
subscribed capital in such portions of Class A and B shares as shall reflect
the outstanding portions from time to time of Class A and Class B shares under
issued share capital. This authorization is valid for five years until June
2006.

The Board of Directors is authorized to issue convertible bonds for a
five-year period until June 2006. No convertible bonds have been issued as of
December 31, 2002.

F-21



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##### Table of Contents



QUILMES INDUSTRIAL (QUINSA) SOCIÉTÉ ANONYME AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
for the years ended December 31, 2002, 2001 and 2000
(In US$ million, except share data)



|12. |  | Shareholders equity (continued)
|--- |  | --------------------------------

(b) Paid-in capital

In accordance with regulations established in the Luxembourg Corporation
Law, during fiscal year 2002 US$ 1.7 million (US$ 18.8 million in 2001) of the
paid-in capital balance was allocated to the reserve for treasury stock (to be
ratified by the Ordinary General Meeting of 2003).

(c) Reserve for treasury stock

Under Luxembourg regulations, the Company has to maintain a
non-distributable reserve for treasury stock. In order to comply with that
requirement, the Ordinary General Meetings held on June 28, 2002 and June 29,
2001 approved the allocation of US$ 11.0 million and US$ 7.8 million,
respectively, from the Issue Premium to that reserve. In addition, the Company
allocated an additional US$ 1.7 million due to treasury stock acquired during
the year ended December 31, 2002 (to be ratified by the Ordinary General
Meeting of 2003).

(d) Legal reserve

Under Luxembourg Corporation Law, a minimum of 5% of net income
(determined on the Companys stand alone financial statements) for the year
calculated in accordance with Luxembourg GAAP must be appropriated by
resolution of the shareholders to a legal reserve until such reserve reaches
10% of the outstanding capital. This reserve is not available for distribution.

(e) Retained earnings

Retained earnings are generally distributable to the extent that the
legislation of the jurisdiction, in which such retained earnings are held, so
permits.



|13. |  | Provisions
|--- |  | ----------

|                                                  |  |                    |      |      |  |  |      | 
|------------------------------------------------- |  | ------------------ | ---- | ---- |  |  | ---- | 
|                                                  |  | As of December 31,
|                                                  |  |                   
|                                                  |  | 2002               |      | 2001
|                                                  |  |                    |      |     
|Contingencies (Note 23)                           |  |                    | 48.9 |      |  |  | 51.8 | 
|Employee benefits (Note 22)                       |  |                    | 1.8  |      |  |  | 2.9  | 
|Acquisition-related and restructuring charges (i) |  |                    | 5.1  |      |  |  | 9.0  | 
|Baesas indemnification agreement (ii)            |  |                    | 9.9  |      |  |  | 9.9  | 
|Others                                            |  |                    | 1.0  |      |  |  | 3.5  | 
|                                                  |  |                    |      |      |  |  |      | 
|                                                  |  |                    | 66.7 |      |  |  | 77.1 | 
|                                                  |  |                    |      |      |  |  |      | 

(i) Acquisition-related and restructuring charges comprised primarily
severance and other termination benefits and certain exit costs related to the
closure of plants.

(ii) In 1997, Baesa sold its Brazilian soft-drink business (the Brazilian
Business) to Cervejaria Brahma (the Buyer). At the time of the sale, the
Brazilian Business had certain material existing and potential claims, lawsuits
and proceedings, including those involving tax, social security and other
matters. Under a tax indemnification agreement, Baesa has agreed to indemnify
the Buyer for these liabilities, but in no event to exceed US$ 20.0 million. In
this connection, PepsiCo has also agreed to reimburse Baesa up to US$ 10
million. Therefore, in managements opinion, the reserves established are
adequate to cover losses related to this transaction.

F-22



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##### Table of Contents



QUILMES INDUSTRIAL (QUINSA) SOCIÉTÉ ANONYME AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
for the years ended December 31, 2002, 2001 and 2000
(In US$ million, except share data)



|14. |  | Long-term loans and other liabilities
|--- |  | -------------------------------------

|                                |  |                    |       |      |  |  |       | 
|------------------------------- |  | ------------------ | ----- | ---- |  |  | ----- | 
|                                |  | As of December 31,
|                                |  |                   
|                                |  | 2002               |       | 2001
|                                |  |                    |       |     
|Due to banks                    |  |                    | 87.0  |      |  |  | 157.4 | 
|Notes payables                  |  |                    | 13.7  |      |  |  |      | 
|Deferred income taxes (Note 18) |  |                    | 1.3   |      |  |  | 0.7   | 
|Other accounts payable          |  |                    | 6.5   |      |  |  | 7.8   | 
|                                |  |                    |       |      |  |  |       | 
|                                |  |                    | 108.5 |      |  |  | 165.9 | 
|                                |  |                    |       |      |  |  |       | 



| |  | CMQ (formerly Baesa) has outstanding notes as described below that are
classified as current and long-term notes payable:
| |  | -------------------------------------------------------------------------------------------------------------------------

|                                                                                 |  |                    |      |      |  |  |      | 
|-------------------------------------------------------------------------------- |  | ------------------ | ---- | ---- |  |  | ---- | 
|                                                                                 |  | As of December 31,
|                                                                                 |  |                   
|                                                                                 |  | 2002               |      | 2001
|                                                                                 |  |                    |      |     
|Series A, due September 1, 2005,
interest at 11% per annum, payable
semiannually |  |                    | 2.7  |      |  |  | 2.7  | 
|Series B, due September 1, 2005,
interest at 12% per annum, payable
semiannually |  |                    | 11.5 |      |  |  | 11.5 | 
|                                                                                 |  |                    |      |      |  |  |      | 
|                                                                                 |  |                    | 14.2 |      |  |  | 14.2 | 
|                                                                                 |  |                    |      |      |  |  |      | 



| |  | The following table categorizes long-term loans by interest rate:
| |  | -----------------------------------------------------------------

|                                                  |  |                    |       |      |  |  |        |  
|------------------------------------------------- |  | ------------------ | ----- | ---- |  |  | ------ | -
|                                                  |  | As of December 31,
|                                                  |  |                   
|                                                  |  | 2002               |       | 2001
|                                                  |  |                    |       |     
|Less than 4%                                      |  |                    | 29.4  |      |  |  | 3.1    |  
|From 4 to 5.99%                                   |  |                    | 151.1 |      |  |  | 92.2   |  
|From 6 to 7.99%                                   |  |                    |      |      |  |  | 151.3  |  
|From 8 to 9.99%                                   |  |                    |      |      |  |  |       |  
|From 10 to 11.99%                                 |  |                    | 2.7   |      |  |  | 2.7    |  
|More than 11.99%                                  |  |                    | 11.5  |      |  |  | 11.5   |  
|                                                  |  |                    |       |      |  |  |        |  
|Total                                             |  |                    | 194.7 |      |  |  | 260.8  |  
|Less current portion of long-term loans (Note 15) |  |                    | (94.0 | )    |  |  | (103.4 | )
|                                                  |  |                    |       |      |  |  |        |  
|Total loan-term loans                             |  |                    | 100.7 |      |  |  | 157.4  |  
|                                                  |  |                    |       |      |  |  |        |  

The Companys long-term debt is principally denominated in US dollars and
represents borrowings from banks. As of December 31, 2002 and 2001, the Company
had long-term debt of US$ 14.3 million and US$ 27.6 million, respectively, at
fixed interest rates and US$ 180.4 and US$ 221.0 million, respectively, at
rates which varied in relation to established indices, principally LIBOR, plus
a low fixed rate.

The aggregate maturities of long-term loans as of December 31, 2002 are as
follows:

|      |  |        |       |  | 
|----- |  | ------ | ----- |  | 
|Year  |  | Amount
|      |  |       
|2004  |  |        | 55.0  | 
|2005  |  |        | 45.7  | 
|      |  |        |       |  | 
|Total |  |        | 100.7 | 

F-23



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##### Table of Contents



QUILMES INDUSTRIAL (QUINSA) SOCIÉTÉ ANONYME AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
for the years ended December 31, 2002, 2001 and 2000
(In US$ million, except share data)

14.     Long-term loans and other liabilities (continued)

QI(B) Commitments

On September 22, 1993 QI(B), (the guarantor and primary obligor), signed a
guaranty agreement with the IFC guaranteeing a loan of US$ 30.0 million in
principal extended by the IFC to CMQ on the basis of an investment agreement.
As of December 31, 2002, the amount due from that loan totaled US$ 4.0 million.
Additionally, during 2002 and 2001, QI(B) granted certain loans of CMQ for
approximately US$ 41.5 million and 36.0 million, respectively.

Compliance of certain covenants / Debt refinancing

Most of the Companys loan agreements contain restrictive covenants that
require the Company or its subsidiaries to maintain certain financial ratios,
limit the amount of dividends paid, restrict indebtedness and guarantee
liabilities, among other requirements.

CMQ has a significant amount of bank loans denominated in US dollars.
Devaluation of the Argentine Peso as well as the financial and economic crisis
that has been affecting Argentina, has limited the ability of that subsidiary
to generate cash flows in and comply with certain financial ratios originally
committed to. Consequently, management is carrying out negotiations with
lenders in order to obtain, among other matters, an extension of the original
loan terms, new credit facilities and the change of certain indices and
financial ratios originally committed to with which the Company had been unable
to comply at December 31, 2002.

At December 31, 2002 the total amount due on financial loans including
indices and financial ratios that had not been able to be complied with
amounted to US$ 221.5 million, of which US$ 59.3 million was classified as
long-term debt, according to the maturities originally agreed. Certain clauses
included in the loan contracts foresee that in the case of non-compliance by
the Company with any of its obligations, following due notice to the Company,
the entire debt could be considered due and payable.

15.Current loans and short-term portion of long-term debt

|                                            |  |                    |       |      |  |  |       | 
|------------------------------------------- |  | ------------------ | ----- | ---- |  |  | ----- | 
|                                            |  | As of December 31,
|                                            |  |                   
|                                            |  | 2002               |       | 2001
|                                            |  |                    |       |     
|Overdraft facilities                        |  |                    | 1.5   |      |  |  | 0.8   | 
|Short-term loans                            |  |                    | 178.4 |      |  |  | 107.2 | 
|Notes payable (Note 14)                     |  |                    | 0.5   |      |  |  | 14.2  | 
|Financial leasing (Note 14)                 |  |                    | 1.3   |      |  |  | 4.3   | 
|Current portion of long-term debt (Note 14) |  |                    | 92.2  |      |  |  | 84.9  | 
|                                            |  |                    |       |      |  |  |       | 
|                                            |  |                    | 273.9 |      |  |  | 211.4 | 
|                                            |  |                    |       |      |  |  |       | 

The Companys short-term debt is principally denominated in US dollars and
represents mainly, borrowings from banks.

16.Other income

|                                                |  |                         |     |      |  |      |      |  |  |  |      | 
|----------------------------------------------- |  | ----------------------- | --- | ---- |  | ---- | ---- |  |  |  | ---- | 
|                                                |  | Year ended December 31,
|                                                |  |                        
|                                                |  | 2002                    |     | 2001 |  | 2000
|                                                |  |                         |     |      |  |     
|Gain from sale of interest in related
companies |  |                         |    |      |  |      |     |  |  |  | 27.8 | 
|Recovery of expenses                            |  |                         | 1.3 |      |  |      | 0.3  |  |  |  | 2.2  | 
|Rental income                                   |  |                         | 0.2 |      |  |      | 0.9  |  |  |  | 0.9  | 
|Sale of Glaciar and VDA water business
(Note 3) |  |                         |    |      |  |      | 14.9 |  |  |  |     | 
|Gain from sale of tangible fixed assets         |  |                         |    |      |  |      | 3.0  |  |  |  | 1.2  | 
|Others                                          |  |                         | 2.9 |      |  |      | 1.3  |  |  |  | 4.9  | 
|                                                |  |                         |     |      |  |      |      |  |  |  |      | 
|                                                |  |                         | 4.4 |      |  |      | 20.4 |  |  |  | 37.0 | 
|                                                |  |                         |     |      |  |      |      |  |  |  |      | 

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QUILMES INDUSTRIAL (QUINSA) SOCIÉTÉ ANONYME AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
for the years ended December 31, 2002, 2001 and 2000
(In US$ million, except share data)

17.Other expenses

|                                                               |  |                         |       |      |  |      |      |  |  |  |      | 
|-------------------------------------------------------------- |  | ----------------------- | ----- | ---- |  | ---- | ---- |  |  |  | ---- | 
|                                                               |  | Year ended December 31,
|                                                               |  |                        
|                                                               |  | 2002                    |       | 2001 |  | 2000
|                                                               |  |                         |       |      |  |     
|Severance costs and other benefits to
employees (i)            |  |                         | 4.6   |      |  |      | 9.3  |  |  |  | 2.1  | 
|Amortization of goodwill                                       |  |                         | 21.9  |      |  |      | 21.6 |  |  |  | 12.1 | 
|Impairment of goodwill (see Note 4.g)                          |  |                         | 90.0  |      |  |      |     |  |  |  |     | 
|Tangible fixed assets write-off and other                      |  |                         | 6.0   |      |  |      |     |  |  |  | 3.8  | 
|Inventories write-off (see Note 4.d))                          |  |                         | 12.0  |      |  |      |     |  |  |  |     | 
|Amortization and other expenses related
to unproductive assets |  |                         | 1.6   |      |  |      | 3.1  |  |  |  | 1.5  | 
|Labor lawsuits and termination of
distribution agreement       |  |                         | 1.5   |      |  |      | 3.7  |  |  |  | 2.0  | 
|Loss from sale of tangible fixed assets
and bottles            |  |                         | 4.8   |      |  |      |     |  |  |  |     | 
|Interest in related companies (ii)                             |  |                         | 5.2   |      |  |      | 18.3 |  |  |  |     | 
|Research and development costs                                 |  |                         | 0.2   |      |  |      | 0.4  |  |  |  | 0.5  | 
|Other                                                          |  |                         | 8.1   |      |  |      | 6.9  |  |  |  | 3.4  | 
|                                                               |  |                         |       |      |  |      |      |  |  |  |      | 
|                                                               |  |                         | 155.9 |      |  |      | 63.3 |  |  |  | 25.4 | 
|                                                               |  |                         |       |      |  |      |      |  |  |  |      | 



|(i)  |  | The Company expenses severance indemnities incurred in the normal
course of business when paid.                                                                                           
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|(ii) |  | In 2001 includes a write off made by Eco of approximately U$S 12.7
million of the goodwill originally generated as a consequence of the
acquisition of Hielos Merlo (an Ecos subsidiary).

18.Income taxes

|                     |  |                         |       |      |  |      |       |   |  |  |       |  
|-------------------- |  | ----------------------- | ----- | ---- |  | ---- | ----- | - |  |  | ----- | -
|                     |  | Year ended December 31,
|                     |  |                        
|                     |  | 2002                    |       | 2001 |  | 2000
|                     |  |                         |       |      |  |     
|Current tax expense  |  |                         | 2.7   |      |  |      | 7.8   |   |  |  | 17.5  |  
|Deferred tax benefit |  |                         | (50.3 | )    |  |      | (13.9 | ) |  |  | (47.5 | )
|                     |  |                         |       |      |  |      |       |   |  |  |       |  
|Income tax benefit   |  |                         | (47.6 | )    |  |      | (6.1  | ) |  |  | (30.0 | )
|                     |  |                         |       |      |  |      |       |   |  |  |       |  

The Company has adopted the criterion of considering the effects of the
translation as a permanent difference when calculating the deferred tax (see
Note 4.c). Income tax benefit differs from the amounts computed by applying the
statutory rate for each country to pre-tax (loss) income for the year ended
December 31, as follows:

|                                                        |  |                         |        |      |  |      |       |   |  |  |       |  
|------------------------------------------------------- |  | ----------------------- | ------ | ---- |  | ---- | ----- | - |  |  | ----- | -
|                                                        |  | Year ended December 31,
|                                                        |  |                        
|                                                        |  | 2002                    |        | 2001 |  | 2000
|                                                        |  |                         |        |      |  |     
|Net (loss) income before taxes
and minority interest    |  |                         | (202.4 | )    |  |      | 55.2  |   |  |  | 57.2  |  
|Blended average income tax rate                         |  |                         | 34.9   | %    |  |      | 33.6  | % |  |  | 30.9  | %
|                                                        |  |                         |        |      |  |      |       |   |  |  |       |  
|Income tax (benefit) expense
at blended income tax rate |  |                         | (70.6  | )    |  |      | 18.5  |   |  |  | 17.6  |  
|Foreign exchange and change in
valuation allowance      |  |                         | (42.3  | )    |  |      | (31.7 | ) |  |  | (47.3 | )
|Non-deductible expenses                                 |  |                         | 61.4   |      |  |      | 5.8   |   |  |  | 4.1   |  
|Tax promotional benefits                                |  |                         | (1.7   | )    |  |      | (4.8  | ) |  |  | (3.5  | )
|Others                                                  |  |                         | 5.6    |      |  |      | 6.1   |   |  |  | (0.9  | )
|                                                        |  |                         |        |      |  |      |       |   |  |  |       |  
|                                                        |  |                         | (47.6  | )    |  |      | (6.1  | ) |  |  | (30.0 | )
|                                                        |  |                         |        |      |  |      |       |   |  |  |       |  

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QUILMES INDUSTRIAL (QUINSA) SOCIÉTÉ ANONYME AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
for the years ended December 31, 2002, 2001 and 2000
(In US$ million, except share data)

18.Income taxes (continued)

The tax effects of temporary differences that give rise to significant
portions of the Companys deferred tax assets and liabilities are presented
below:

|                                                   |  |                    |       |      |  |  |        |  
|-------------------------------------------------- |  | ------------------ | ----- | ---- |  |  | ------ | -
|                                                   |  | As of December 31,
|                                                   |  |                   
|                                                   |  | 2002               |       | 2001
|                                                   |  |                    |       |     
|Tax loss carry-forwards                            |  |                    | 87.0  |      |  |  | 103.8  |  
|Deferred exchange loss                             |  |                    | 8.2   |      |  |  | 50.6   |  
|Employee benefits accruals                         |  |                    | 1.7   |      |  |  | 5.0    |  
|Provisions                                         |  |                    | 4.0   |      |  |  | 5.3    |  
|Depreciation                                       |  |                    | 0.5   |      |  |  | (1.9   | )
|Allowance for doubtful accounts and other reserves |  |                    | 1.9   |      |  |  | 2.3    |  
|Others                                             |  |                    | (2.6  | )    |  |  | (2.4   | )
|                                                   |  |                    |       |      |  |  |        |  
|Subtotal                                           |  |                    | 100.7 |      |  |  | 162.7  |  
|Valuation allowance                                |  |                    | (26.7 | )    |  |  | (113.6 | )
|                                                   |  |                    |       |      |  |  |        |  
|Net deferred tax asset                             |  |                    | 74.0  |      |  |  | 49.1   |  
|                                                   |  |                    |       |      |  |  |        |  

Balance sheet classification of net deferred tax asset (liability) is
disclosed below:

|                                     |  |                    |      |      |  |  |      |  
|------------------------------------ |  | ------------------ | ---- | ---- |  |  | ---- | -
|                                     |  | As of December 31,
|                                     |  |                   
|                                     |  | 2002               |      | 2001
|                                     |  |                    |      |     
|Deferred tax asset - current         |  |                    | 3.2  |      |  |  | 20.9 |  
|Deferred tax asset - Non-current     |  |                    | 72.3 |      |  |  | 29.3 |  
|Deferred tax liability - current     |  |                    | (0.2 | )    |  |  | (0.4 | )
|Deferred tax liability - Non-current |  |                    | (1.3 | )    |  |  | (0.7 | )
|                                     |  |                    |      |      |  |  |      |  
|Net deferred income tax asset        |  |                    | 74.0 |      |  |  | 49.1 |  
|                                     |  |                    |      |      |  |  |      |  

As of December 31, 2002 the Company and its subsidiaries had accumulated
tax loss carryforwards of approximately US$ 303.2 million (US$ 355.0 million as
of December 31, 2001), of which US$ 51.9 million (US$ 51.1 million as of
December 31, 2001) have no expiration dates.

In assessing the realizability of deferred tax assets, management assesses
the likelihood that either a portion or all of the deferred tax assets will not
be realized. The ultimate realization of deferred tax assets is dependent upon
the generation of future taxable income during the periods in which those
temporary differences become deductible. Management considers the scheduled
reversal of deferred tax liabilities, projected future taxable income, and tax
planning in making these assessments. Based on current financial information,
the Company is uncertain that it will recover its entire deferred tax assets
through future taxable income. Accordingly, at December 31, 2002, the Company
had recognized a valuation allowance of US$ 26.7 million (US$ 113.6 million at
December 31, 2001) against its deferred tax assets generated by tax loss
carryforwards and the net negative results caused by the devaluation of the
Argentine Peso.

During the year ended December 31, 2000, as a result of new tax-planning
strategies, the Company recognized an income tax benefit of US$ 53.8 million
associated primarily with the change in the valuation allowance of deferred tax
assets related to the Baesa acquisition, of which US$ 51.3 million were
included in extraordinary items.

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QUILMES INDUSTRIAL (QUINSA) SOCIÉTÉ ANONYME AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
for the years ended December 31, 2002, 2001 and 2000
(In US$ million, except share data)

19.     Extraordinary items

During the year ended December 31, 2000, the Company recognized asset
impairment and restructuring charges of US$ 57.7 million (US$ 51.7 million net
of income tax). These charges relate to the closure of the Lavallol plant in
Argentina and certain other manufacturing facilities in Bolivia, the impairment
of equipment at those plants and plant closing related costs and certain other
severance and termination charges. The asset impairment charges primarily
reflected the reduction in the carrying value of the land and buildings to
their estimated fair market value based on current selling prices for
comparable real estate, less costs to sell, and the write-off of the net book
value of machinery and equipment which could not be redeployed. The
restructuring actions in Bolivia, in response to synergies obtained through
recent acquisitions, included a reduction of the cost structure primarily
through closing facilities.

Also, during the year ended December 31, 2000, the Company recognized as
an extraordinary item an income tax benefit of US$ 51.3 million associated
primarily with the change in the valuation allowance of deferred tax assets
related to the Baesa acquisition. This extraordinary item is captioned as
Income Taxes in the statement of income.

20.     Related parties

The Company purchases certain raw materials, goods for resale and services
from related parties. These transactions are summarized as follows:

|                             |  |                         |     |      |  |      |     |  |  |  |     | 
|---------------------------- |  | ----------------------- | --- | ---- |  | ---- | --- |  |  |  | --- | 
|                             |  | Year ended December 31,
|                             |  |                        
|                             |  | 2002                    |     | 2001 |  | 2000
|                             |  |                         |     |      |  |     
|Purchase of raw materials    |  |                         | 3.0 |      |  |      | 4.8 |  |  |  | 9.9 | 
|Transportation services      |  |                         | 1.7 |      |  |      | 4.0 |  |  |  | 4.2 | 
|Fees for services            |  |                         | 0.6 |      |  |      | 2.9 |  |  |  | 2.8 | 
|Technical assistance fees    |  |                         | 1.5 |      |  |      | 1.0 |  |  |  | 1.0 | 
|Purchase of goods for resale |  |                         | 0.3 |      |  |      | 0.4 |  |  |  | 0.3 | 

Purchase
of raw materials: The Company has purchased several raw
materials, including malt and barley, from Heineken (which held 15% of the
outstanding shares of QI(B), the Companys principal subsidiary) (See Note 23)
and corn grits and rice from Compal S.A. (Compal) which
is 60% owned by Arfinsa
S.A. (Arfinsa). Arfinsa is indirectly own by certains members of the
Bembergs family, and Compal is our sole supplier of corn grits
and rice.

Transportation
services: Transportes Ader S.A. (TASA) provides
integrated logistics support of the Companys entire supply chains, from
inbound raw materials supply through finished goods distribution, including
dedicated contract carriage, the management of carriers, and other supply chain
services. These costs are included as selling and marketing expenses in the
consolidated statement of income.

Fees
for services: These fees relate to certain administrative fees
charged by Arfinsa. These costs are included as administrative and general
expenses in the consolidated statement of income.

Technical
Assistance Agreements: The Companys relationship with Heineken
as a technical adviser was governed by technical assistance agreements relating
to both the brewing and malting operations. The technical assistance
agreements cover issues relating to both product quality and the maintenance of
production equipment and facilities. Heineken assisted the Company in the
quality control process by conducting laboratory analyses of raw materials,
taste tests, evaluations of our own technical reports and annual technological
audits of the operating companies and provided advice regarding the purchase
of raw materials, environmental issues and managerial systems. Furthermore,
under the technical assistance agreements, the Company could request certain
additional services with respect to its breweries, including assistance in
planning and constructing new breweries, training brewers and engineers and
developing new products, production methods and packaging materials. These fees
and expenses are included as technical assistance fees within cost of goods
sold in the consolidated statement of income.

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QUILMES INDUSTRIAL (QUINSA) SOCIÉTÉ ANONYME AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
for the years ended December 31, 2002, 2001 and 2000
(In US$ million, except share data)

20.Related parties (continued)

As a consequence of the agreement reached with Heineken in January 2003,
the Company has agreed to cease producing and selling the Heineken brand during
2003 (see Note 23). Consequently, the above mentioned agreement was
terminated.

Purchase
of goods for resale:The Company purchases imported bottled beer
from Heineken (which held 15% of the outstanding shares of QI(B), the Companys
principal subsidiary). As mentioned above, during 2003 the Company will cease
to sell the Heineken brand (See note 23).

21.Credit concentration and geographic information

Most of the Companys customers are located in South America. No single
customer accounted for more than five percent of the Companys sales or
receivables in the years disclosed.

|                          |  |                         |       |      |  |      |       |   |  |  |       |  
|------------------------- |  | ----------------------- | ----- | ---- |  | ---- | ----- | - |  |  | ----- | -
|                          |  | Year ended December 31,
|                          |  |                        
|                          |  | 2002                    |       | 2001 |  | 2000
|                          |  |                         |       |      |  |     
|Net sales                 |  |                         |       |      |  |      |       |   |  |  |       |  
|Argentina                 |  |                         | 278.5 |      |  |      | 699.5 |   |  |  | 701.4 |  
|Bolivia                   |  |                         | 88.7  |      |  |      | 86.9  |   |  |  | 42.1  |  
|Chile                     |  |                         | 22.0  |      |  |      | 23.9  |   |  |  | 26.7  |  
|Paraguay                  |  |                         | 59.5  |      |  |      | 85.8  |   |  |  | 130.1 |  
|Uruguay                   |  |                         | 23.6  |      |  |      | 49.8  |   |  |  | 63.9  |  
|Consolidation adjustments |  |                         | (3.7  | )    |  |      | (7.2  | ) |  |  | (9.1  | )
|                          |  |                         |       |      |  |      |       |   |  |  |       |  
|                          |  |                         | 468.6 |      |  |      | 938.7 |   |  |  | 955.1 |  
|                          |  |                         |       |      |  |      |       |   |  |  |       |  

|                                                   |  |                         |       |      |  |      |       |   |  |  |       |  
|-------------------------------------------------- |  | ----------------------- | ----- | ---- |  | ---- | ----- | - |  |  | ----- | -
|                                                   |  | Year ended December 31,
|                                                   |  |                        
|                                                   |  | 2002                    |       | 2001 |  | 2000
|                                                   |  |                         |       |      |  |     
|Operating (loss) income                            |  |                         |       |      |  |      |       |   |  |  |       |  
|Argentina                                          |  |                         | (29.8 | )    |  |      | 93.8  |   |  |  | 108.1 |  
|Bolivia                                            |  |                         | 28.9  |      |  |      | 21.3  |   |  |  | 0.2   |  
|Chile                                              |  |                         | (2.9  | )    |  |      | (3.8  | ) |  |  | (4.1  | )
|Paraguay                                           |  |                         | 11.7  |      |  |      | 30.3  |   |  |  | 34.8  |  
|Uruguay                                            |  |                         | (3.8  | )    |  |      | (0.6  | ) |  |  | (0.8  | )
|Corporate headquarters &
consolidation
adjustments |  |                         | (7.7  | )    |  |      | (4.4  | ) |  |  | (5.9  | )
|                                                   |  |                         |       |      |  |      |       |   |  |  |       |  
|                                                   |  |                         | (3.6  | )    |  |      | 136.6 |   |  |  | 132.3 |  
|                                                   |  |                         |       |      |  |      |       |   |  |  |       |  

|                                          |  |                    |         |      |  |  |         |  
|----------------------------------------- |  | ------------------ | ------- | ---- |  |  | ------- | -
|                                          |  | As of December 31,
|                                          |  |                   
|                                          |  | 2002               |         | 2001
|                                          |  |                    |         |     
|Identifiable assets                       |  |                    |         |      |  |  |         |  
|Argentina                                 |  |                    | 689.1   |      |  |  | 878.3   |  
|Bolivia                                   |  |                    | 268.5   |      |  |  | 270.4   |  
|Chile                                     |  |                    | 22.4    |      |  |  | 27.2    |  
|Paraguay                                  |  |                    | 99.6    |      |  |  | 142.1   |  
|Uruguay                                   |  |                    | 32.9    |      |  |  | 45.8    |  
|Corporate headquarters                    |  |                    | 123.5   |      |  |  | 105.6   |  
|Consolidated adjustments and eliminations |  |                    | 5.4     |      |  |  | (17.7   | )
|                                          |  |                    |         |      |  |  |         |  
|                                          |  |                    | 1,241.4 |      |  |  | 1,451.7 |  
|                                          |  |                    |         |      |  |  |         |  

22.     Personnel

Personnel expenses amounted to US$ 79.0 million, US$ 186.4 million and
193.3 million in the years ended December 31, 2002, 2001 and 2000,
respectively.

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QUILMES INDUSTRIAL (QUINSA) SOCIÉTÉ ANONYME AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
for the years ended December 31, 2002, 2001 and 2000
(In US$ million, except share data)

23.Employee benefits

(a)  Defined contribution pension plan

One of the Companys majority owned subsidiaries, CMQ, sponsors a defined
contribution pension plan (the Plan). CMQ sponsors a Plan for qualified
employees that is funded with contributions from both CMQ and plan
participants. A group of employees are eligible to participate and may enter
the Plan during the first quarter of each year.

Argentine laws provide for mandatory pension benefits to be paid to
retired employees from government pension plans and/or private fund managed
plans (Pension Funds) to which employees may elect to direct their mandatory
contributions. Under the features of the Plan, participants may elect to direct
their voluntary contributions to Retirement Funds or the same Pension Fund
where their mandatory contributions are held.

Based on the uncertainty regarding the updating of the funds deposited,
generated by the current economic crisis that Argentina is experiencing, which
involved the departure from monetary convertibility in this country, although
the plan remained current, deposits in private companies were suspended,
maintaining the reserves on the Companys records. The reserved contributions
will be deposited once the final treatment of the funds already deposited has
been determined.

Retirement
Funds

Provided the participant has elected to direct his or her contributions to
an authorized Investment Retirement Fund, eligible participants may make
monthly pre-tax contributions to the Plan of up to 7.5% of their eligible
earnings. This defined contribution plan provides monthly matching CMQ
contributions equal to 100% of the employee contribution. Separate accounts are
maintained for each participant in the Plan. The portion of a participants
account attributable to his or her own contributions will be 100% vested. The
portion of the account attributable to the CMQs contributions, including
matching contributions, will vest after 5 years of service with CMQ.
Distributions from the Plan may be made in the form of a lump-sum cash payment
or in installment payments. Employees may make withdrawals from the Plan prior
to attaining age 60 in case of male employees or 55 in case of female
employees. During the years ended December 31, 2002, 2001 and 2000, CMQ made
contributions of approximately US$ 0.1 million, 0.1 million and US$ 0.1
million, respectively. The amounts corresponding to 2002 have still not been
deposited.

Pension
Funds

Provided the participant has elected to direct his or her contributions to
an authorized Pension Fund, eligible participants may make monthly pre-tax
contributions to the Plan of up to 11% of their eligible earnings. Elective
contributions made by employees are fully vested at all times. CMQ makes
matching contributions at the rate of 100% of the participants contribution.
Under the pension feature of the Plan, CMQs contributions are deferred and
maintained into separate accounts for each participant upon the completion of
five years of service with CMQ. Interest income is recognized based on certain
governmental yield rate information. After the completion of five years of
service, CMQs matching contributions are transferred to the Pension Fund where
the participants elective contributions are being held. Contributions by CMQ
were US$ 0.2 million, US$ 0.3 million and 0.7 million in 2002, 2001 and
2000, respectively. The amounts corresponding to 2002 have still not been
deposited.

(b)  Post-employment benefits

Under the features of the Plan, CMQ also provides certain benefits to
former or inactive plan participants after employment but before retirement
provided the participant completed five years of service with CMQ. These
benefits include disability-related benefits and death benefits. The Company
maintains an insurance policy to cover any potential liability related to these
benefits.

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QUILMES INDUSTRIAL (QUINSA) SOCIÉTÉ ANONYME AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
for the years ended December 31, 2002, 2001 and 2000
(In US$ million, except share data)

23.     Employee benefits (continued)

(c)  Management bonus program

Certain of our directors and officers participate in remuneration plans on
the basis of performance and seniority pursuant to which up to 5% of the annual
consolidated net income of QIB, our principal subsidiary, is set aside to pay
incentive compensation to such directors and officers.

24.     Contingencies / Restricted assets

Bolivia

As a consequence of a federal and state tax claim initiated against a
former CBNs subsidiary, the Bolivian Supreme Court of Justice ruled out that
assets of CBN be restricted. Tax claimed by Bolivian authorities amounts to
approximately US$ 10.0 million. In legal counsels opinion, as the claim was
initiated against CBNs subsidiary (not CBN itself) and therefore CBN was not a
part of that lawsuit, the final outcome of this process can not have a material
negative impact on CBN.

During 2000, as part of the acquisitions described in Note 3, as well as
its ongoing operations in general, the Company recorded a contingency reserve
of US$ 51.4 million for tax, social security and commercial lawsuits. At
December 31, 2002 this contingency reserve amounts to US$ 48.9 million.

Relation with Heineken. Heineken settlement.

In June 2002, Quinsa received a notice from the International Chamber of
Commerce stating that Heineken, which owned 15% of our principal subsidiary
QIB, had begun an arbitration proceeding against the Company and Beverage
Associates Corp. (BAC). In its request for arbitration, Heineken alleged
that the proposed Companhia de Bebidas Das Américas (AmBev) transaction
violated certain contracts between Heineken and the Company. Heineken had
requested that the arbitration panel prohibit completion of the AmBev
transaction and declare that Heineken was entitled to purchase Quinsas 85%
interest in QIB for terms economically equivalent to the value placed by QIB on
the AmBev transaction. Heineken had also requested that the arbitration panel
require Quinsa and BAC to pay Heineken an unspecified amount of money in
damages.

Furthermore, in June 2002, Quinsa also received a summons indicating that
Heineken had commenced a legal proceeding against the Company in a Luxembourg
court. Like the arbitration notice, the summons alleged that the proposed
transaction with AmBev violated certain contractual agreements between Heineken
and Quinsa, and requested that the court issue an order prohibiting the
completion of the transaction with AmBev until the contract dispute was
resolved by an arbitrator. Also in June, the Luxembourg court dismissed
Heinekens summons after noting that Quinsa and AmBev had agreed not to
complete the AmBev transaction before the required approval of the Argentina
antitrust authorities was obtained.

On January 14, 2003 Quinsa and Heineken announced that they had entered
into an agreement to settle the above mentioned arbitration proceeding.
Pursuant to the settlement agreement BAC agreed to purchase Heinekens 15%
equity interest in QIB, for an aggregate price of US$ 102.7 million. BACs
purchase of the QIB shares occurred simultaneously with the completion of
the AmBev transaction (see Note 26).

As a result of the settlement agreement, the shareholders agreement
between Quinsa and Heineken relating to Heinekens investment in QIB was
terminated.

BAC has assigned to AmBev and AmBev has agreed to acquire approximately
57% of the QIB shares that BAC agreed to purchase from Heineken.

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QUILMES INDUSTRIAL (QUINSA) SOCIÉTÉ ANONYME AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
for the years ended December 31, 2002, 2001 and 2000
(In US$ million, except share data)

25.Remuneration of Board

In accordance with article 14 of the Articles of Incorporation, a
remuneration of US$ 0.2 million (US$ 1.3 million and US$ 2.0 million for the
years 2001 and 2000) will be proposed for the year 2002. No delegation of tasks
was made by the Board of Directors to any of its members resulting in any other
salary allocation or remuneration.

26.     Strategic Alliance

On May 1, 2002 it was announced that an agreement had been signed by which
Quinsa and AmBev agreed to merge the activities of AmBev in Argentina, Paraguay
and Uruguay relating to the production and sale of beer with the activities
carried out by Quinsa. As a result of the agreement, Quinsa will be granted an
exclusive license to produce and distribute the Brahma brand in the Southern
Cone free of charge. It also provides for the distribution by AmBev of the
Quilmes brands in Brazil. This agreement was subject to several conditions,
such as approval by Argentinas National Commission of Defense of Competition,
the local control authority.

On January 13, 2003 the Commission approved this agreement for Argentina,
imposing certain restrictions such as the sale of some brands currently
marketed by Quinsa and the sale of certain productive assets.

As a result of this approval by the Commission, on January 31, 2003 Quinsa
and AmBev signed an agreement by which the terms of the strategic alliance were
established between the parties. This alliance included the merger into Quinsa
of Linthal S.A. (Linthal), a company that controls the beer activities carried
out by AmBev in Argentina, Paraguay and Uruguay. Company Management
understands that this alliance will allow the optimization of the operating
processes and the strengthening of the Companys financial position at the same
time as it will allow the Company to reach a more competitive position in the
region in order to compete with other international companies.

The above mentioned transaction is governed by certain agreements
described in further detail in the paragraphs that follows.

Share Exchange Agreement.AmBev agreed to contribute to Quinsa all the
shares of capital stock of its subsidiaries (the Southern Holding Shares)
which manufacture, market, sell or distribute beer in Argentina, Uruguay,
Paraguay and Bolivia in exchange for 26,388,914 newly issued Quinsa Class B
shares. Pursuant to the Share Exchange Agreement, Quinsa and AmBev will also
execute (i) an agreement granting to Quinsa the exclusive right to manufacture,
market, sell and distribute the AmBev beer brands in Argentina, Chile, Uruguay,
Paraguay and Bolivia, and (ii) a distribution agreement pursuant to which AmBev
will agree to distribute the Quilmes Cristal brand in Brazil. The Companys
rights with respect to the AmBev beer products are required to be perpetual and
Quinsa will not be required to pay any royalty or other fees to AmBev in
exchange for these rights.

Stock Purchase Agreement.In connection with the Share Exchange
Agreement, AmBev and BAC entered into a Stock Purchase Agreement, dated May 1,
2002 pursuant to which, AmBev agreed to acquire from BAC 230,920,000 Class A
shares, without par value, of Quinsa for an aggregate purchase price of
US$346,380,000. In addition to the initial purchase of shares, BAC granted
AmBev a call option, beginning in 2009, to acquire the remaining
373,520,000 Quinsa Class A shares held by BAC in exchange for newly issued
shares of AmBev, and AmBev granted BAC a put option, beginning in 2003, to sell
AmBev the remaining 373,520,000 Quinsa Class A shares held by BAC in exchange
for newly issued shares of AmBev. In the event of a change in control in
AmBev, BAC may, and, provided that the change of control occurs more than three
years after the initial cash purchase of Class A shares, AmBev may accelerate
and exercise its put option.

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QUILMES INDUSTRIAL (QUINSA) SOCIÉTÉ ANONYME AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
for the years ended December 31, 2002, 2001 and 2000
(In US$ million, except share data)

26.     Strategic Alliance (continued)

Quinsa Shareholders Agreement. Pursuant to the Stock Purchase Agreement,
Quinsa agreed to enter into a Shareholders Agreement with AmBev and BAC to
govern certain matters relating to the voting, transfer and issuance of Quinsa
shares. Under the Shareholders Agreement, Quinsa will grant AmBev certain
preemptive rights with respect to Quinsas Class B shares.

Pursuant to the Quinsa Shareholders Agreement, so long as AmBev and BAC
each has the Requisite Percentage (as defined below) each of AmBev and BAC will
have the right to nominate:



| |  |  | 50% of the directors constituting the Quinsa board of
directors, and                                                                                                                                      
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | for each of our subsidiaries, 50% of the number of
directors that BAC is entitled to nominate under such subsidiarys
charter documents or by-laws, any existing shareholders agreement
or applicable law.

Upon exercise of the Call Option by AmBev or the Put Option by BAC,
whereby AmBev purchases the remaining 373,520,000 Quinsa Class A shares in
exchange for newly issued shares of AmBev, BAC will no longer have any rights
to nominate directors, the directors nominated by BAC must resign and, as
promptly as practicable, the Quinsa board and each subsidiary board will be
reconstituted to include only directors nominated or approved by AmBev, subject
to the rights of any shareholders under any subsidiarys charter or by-laws or
any existing shareholders agreement to nominate directors.

So long as AmBev and BAC each own at least 40% of the Voting Interest,
each will have the right to elect a Co-Chairman of the Quinsa board, as well as
the right to jointly appoint a Chairman of each subsidiary board.

27.Differences between Luxembourg GAAP and US GAAP

The Companys consolidated financial statements are prepared in accordance
with Luxembourg GAAP, which differ in certain significant respects from US
GAAP. Such differences involve methods of measuring the amounts shown in the
consolidated financial statements, as well as additional disclosures required
by US GAAP. These consolidated financial statements include solely a
reconciliation of net (loss) income and shareholders equity to US GAAP.
Pursuant of Item 17 of Form 20-F, this reconciliation does not include
disclosure of all information that would be required by US GAAP and Regulation
S-X of the Securities and Exchange Commission of the United States of America.

The principal differences between Luxembourg GAAP and US GAAP are
described below, together with an explanation, where appropriate, of the
methods used in the determination of the necessary adjustments.

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QUILMES INDUSTRIAL (QUINSA) SOCIÉTÉ ANONYME AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
for the years ended December 31, 2002, 2001 and 2000
(In US$ million, except share data)

27.     Differences between Luxembourg GAAP and US GAAP (continued)

|                                                                  |  |                                                                    |        |                         |       |      |       |   |        |   |      |  |       |  
|----------------------------------------------------------------- |  | ------------------------------------------------------------------ | ------ | ----------------------- | ----- | ---- | ----- | - | ------ | - | ---- |  | ----- | -
|                                                                  |  |                                                                    |        | Year ended December 31,
|                                                                  |  |                                                                    |        |                        
|Reconciliation of net (loss) income:                              |  | 2002                                                               |        | 2001                    |       | 2000
|                                                                  |  |                                                                    |        |                         |       |     
|Net (loss) income as reported under Luxembourg GAAP               |  |                                                                    | (135.9 | )                       |       |      | 43.3  |   |        |   | 72.8 | 
|US GAAP adjustments:                                              |  |                                                                    |        |                         |       |      |       |   |        |   |      | 
|                                                                  |  | Foreign currency translation (Note 27 (a))                         |        |                         | (87.0 | )    |       |   | (135.0 | ) |      |  | 8.7   |  
|                                                                  |  | Impairment of intangible assets (Note 27 (b))                      |        |                         | 90.0  |      |       |   |       |   |      |  |      |  
|                                                                  |  | Write-down of inventories (Note 27 (c))                            |        |                         | 12.0  |      |       |   |       |   |      |  |      |  
|                                                                  |  | Impairment of tangible fixed assets (Note 27 (d))                  |        |                         |      |      |       |   | (31.5  | ) |      |  | 31.5  |  
|                                                                  |  | Differences in basis relating to purchase
accounting (Note 27 (e)) |        |                         | 2.5   |      |       |   | 3.2    |   |      |  | (53.6 | )
|                                                                  |  | Accounting for business combinations (Note 27 (f))                 |        |                         | 1.1   |      |       |   | 0.1    |   |      |  | 1.7   |  
|                                                                  |  | Restructuring (Note 27 (h))                                        |        |                         | (2.7  | )    |       |   | (9.2   | ) |      |  | 6.6   |  
|                                                                  |  | Pension plan (Note 27 (i))                                         |        |                         | (0.2  | )    |       |   | (0.3   | ) |      |  | (0.3  | )
|                                                                  |  | Pre-operating costs (Note 27 (j))                                  |        |                         | (0.2  | )    |       |   | 0.1    |   |      |  | (0.1  | )
|                                                                  |  | Prepaid expenses (Note 27 (k))                                     |        |                         | 0.5   |      |       |   | (0.2   | ) |      |  | 1.0   |  
|                                                                  |  | Change to consolidation (Note 27 (l))                              |        |                         | 0.1   |      |       |   | 0.1    |   |      |  | (2.5  | )
|                                                                  |  | Gain on divestitures of subsidiaries (Note 27 (m))                 |        |                         |      |      |       |   |       |   |      |  | 7.1   |  
|                                                                  |  | Management bonus program (Note 27 (n))                             |        |                         |      |      |       |   |       |   |      |  | (3.8  | )
|                                                                  |  | Deferred income tax effect of above (Note 27 (o))                  |        |                         | 1.8   |      |       |   | 8.6    |   |      |  | (6.8  | )
|                                                                  |  | Minority interest effect of above (Note 27 (p))                    |        |                         | (3.5  | )    |       |   | 24.4   |   |      |  | 0.5   |  
|                                                                  |  |                                                                    |        |                         |       |      |       |   |        |   |      |  |      
|Net (loss) income under US GAAP                                   |  |                                                                    | (121.5 | )                       |       |      | (96.4 | ) |        |   | 62.8 | 
|                                                                  |  |                                                                    |        |                         |       |      |       |   |        |   |      |  |      
|Basic and diluted earnings per share under US GAAP
(Note 27 (t)): |  |                                                                    |        |                         |       |      |       |   |        |   |      | 
|Net loss per Class A common share                                 |  |                                                                    | (0.11  | )                       |       |      | (0.09 | ) |        |   | N/A  | 
|Net loss per Class B common share                                 |  |                                                                    | (1.19  | )                       |       |      | (1.70 | ) |        |   | N/A  | 
|Net income per common share                                       |  |                                                                    | N/A    |                         |       |      | N/A   |   |        |   | 0.08 | 

|                                                       |                      |                                                                    |       |                    |        |   |       |  |        |  
|------------------------------------------------------ | -------------------- | ------------------------------------------------------------------ | ----- | ------------------ | ------ | - | ----- |  | ------ | -
|                                                       |                      |                                                                    |       | As of December 31,
|                                                       |                      |                                                                    |       |                   
|Reconciliation of shareholders' equity:                |                      | 2002                                                               |       | 2001              
|                                                       |                      |                                                                    |       |                   
|Shareholders equity as reported under Luxembourg GAAP |                      |                                                                    | 523.2 |                    |        |   | 659.1 | 
|                                                       | US GAAP adjustments: |                                                                    |       |                    |        |   |       |  |       
|                                                       |                      | Foreign currency translation (Note 27 (a))                         |       |                    | (438.2 | ) |       |  | (347.9 | )
|                                                       |                      | Impairment of intangible assets (Note 27 (b))                      |       |                    | 90.0   |   |       |  |       |  
|                                                       |                      | Write-down of inventories (Note 27 (c))                            |       |                    | 12.0   |   |       |  |       |  
|                                                       |                      | Differences in basis relating to purchase accounting (Note 27 (e)) |       |                    | (56.2  | ) |       |  | (58.7  | )
|                                                       |                      | Accounting for business combinations (Note 27 (f))                 |       |                    | (18.9  | ) |       |  | (20.0  | )
|                                                       |                      | Treasury stock (Note 27 (g))                                       |       |                    | (20.5  | ) |       |  | (18.8  | )
|                                                       |                      | Restructuring (Note 27 (h))                                        |       |                    | 4.8    |   |       |  | 7.5    |  
|                                                       |                      | Pension plan (Note 27 (i))                                         |       |                    |       |   |       |  | 0.2    |  
|                                                       |                      | Pre-operating costs (Note 27 (j))                                  |       |                    | 1.1    |   |       |  | 1.3    |  
|                                                       |                      | Prepaid expenses (Note 27 (k))                                     |       |                    |       |   |       |  | (0.5   | )
|                                                       |                      | Change to consolidation (Note 27 (l))                              |       |                    | (1.1   | ) |       |  | (1.2   | )
|                                                       |                      | Deferred income tax effect of above (Note 27 (o))                  |       |                    | 3.5    |   |       |  | 1.7    |  
|                                                       |                      | Minority interest effect of above (Note 27 (p))                    |       |                    | 75.4   |   |       |  | 72.4   |  
|                                                       |                      |                                                                    |       |                    |        |   |       | 
|Shareholders equity under US GAAP                     |                      |                                                                    | 175.1 |                    |        |   | 295.1 | 
|                                                       |                      |                                                                    |       |                    |        |   |       | 

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QUILMES INDUSTRIAL (QUINSA) SOCIÉTÉ ANONYME AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
for the years ended December 31, 2002, 2001 and 2000
(In US$ million, except share data)

27.Differences between Luxembourg GAAP and US GAAP (continued)

Description of
changes in shareholders equity under US GAAP:

|                                                                   |  |              |        |      |  |  |        |  
|------------------------------------------------------------------ |  | ------------ | ------ | ---- |  |  | ------ | -
|                                                                   |  | Year ended  
|                                                                   |  | December 31,
|                                                                   |  |             
|                                                                   |  | 2002         |        | 2001
|                                                                   |  |              |        |     
|Shareholders equity under US GAAP as of
the beginning of the year |  |              | 295.1  |      |  |  | 579.9  |  
|Distribution of cash dividends                                     |  |              |       |      |  |  | (32.0  | )
|Purchase of treasury stock                                         |  |              | (1.7   | )    |  |  | (11.0  | )
|Foreign currency translation                                       |  |              | 3.2    |      |  |  | (145.4 | )
|Net loss under US GAAP                                             |  |              | (121.5 | )    |  |  | (96.4  | )
|                                                                   |  |              |        |      |  |  |        |  
|Shareholders equity under US GAAP as of the
end of the year       |  |              | 175.1  |      |  |  | 295.1  |  
|                                                                   |  |              |        |      |  |  |        |  

Description of reconciling items:

(a)  Foreign currency translation

Under Luxembourg GAAP, financial statements of foreign consolidated and
unconsolidated subsidiaries have been translated to US$ on the basis of the
financial statements of such subsidiaries expressed in the local currency of
the country of origin. The method of translation involves the translation of
property, other long-lived assets, long-term liabilities and related profit and
loss accounts at historical rates of exchange. Additionally, net monetary asset
and liability related translation adjustments are included in earnings in the
current period.

Under US
GAAP, the financial statements of the Companys subsidiaries are
translated in accordance with SFAS No 52 Foreign Currency Translation.
Financial statements of foreign operations where the local currency is the
functional currency are translated using period-end exchange rates for assets
and liabilities, and weighted average exchange rates during the period for the
results of operations. Adjustments resulting from these translations are
accumulated and reported as a component of accumulated other comprehensive
income (loss) in shareholders equity.

(b)  Impairment of intangible assets

As mentioned in Note 4(c), under Luxembourg GAAP long-lived assets are
translated into US dollars at historical rates of exchange. Since the Company
carries out most of its operations in Argentina, its cash flows suffered a
significant decrease in 2002 when measured in US dollars as a result of the
devaluation of the Argentine peso. Accordingly, during fiscal 2002 the Company
recognized an impairment charge of goodwill related to the Argentine soft drink
business amounting to US$ 90 million.

Under US GAAP, the Company translates its long-lived assets at current
rates of exchange since the Argentine peso is considered to be the functional
currency for the Companys operations in Argentina. Accordingly, long-lived
assets are tested for impairment based on the Companys functional currency. As
a result of the analysis made by the Companys management no impairment
has been recognized under US GAAP.

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QUILMES INDUSTRIAL (QUINSA) SOCIÉTÉ ANONYME AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
for the years ended December 31, 2002, 2001 and 2000
(In US$ million, except share data)

27.     Differences between Luxembourg GAAP and US GAAP (continued)

Adoption
of FAS 142 and FAS 144

Under US GAAP, the Company adopted Statement of Financial Accounting
Standards No. 142, Goodwill and Other Intangible Assets (FAS 142) effective
January 1, 2002. FAS 142 addresses financial accounting and reporting for
acquired goodwill and other intangible assets and supersedes Accounting
Principles Board Opinion No. 17, Intangible Assets. Under FAS 142, goodwill
and indefinite lived intangible assets are no longer amortized but are reviewed
at least annually for impairment. Intangible assets that are not deemed to have
an indefinite life will continue to be amortized over their useful lives and
are also subject to review for impairment. Upon adoption of FAS 142, in
accordance with the transition provisions, the Company determined that
previously recognized goodwill represents licenses and trademarks that qualify
for separate recognition as identifiable intangible assets in accordance with
FAS 142. These intangible assets continue to be amortized over their remaining
estimated useful lives (originally 20 years) and, therefore, no difference
exists in amortization charges as a result of adopting FAS 142 as compared with
prior years. Amortizable intangible assets are tested for impairment in
accordance with the provisions of Statement of Financial Accounting Standards
No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (FAS
144). In accordance with FAS 144, long-lived assets and certain identifiable
intangibles are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may be impaired.
Recoverability of assets to be held and used is measured by a comparison of the
carrying amount of an asset to undiscounted future net cash flows expected to
be generated by the asset. If such assets are considered to be impaired on this
basis, the impairment loss to be recognized is measured by the amount by which
the carrying amount of the assets exceeds the fair value of the assets. The
Company adopted FAS 144 effective January 1, 2002. As a result of the analysis
made by the Companys management, no impairment has been recognized under US
GAAP.

(c)  Write-down of inventories

Under Luxembourg GAAP, bottles and cases that are considered inventories
held for resale are translated into US dollars at historical rates of exchange.
As a result of the devaluation of the Argentine peso that occurred in 2002, the
Company assessed the valuation of bottles and cases held for sale to customers
and reduced their value to their estimated net realizable value. The write-down
recognized in earnings during 2002 amounted to US$ 12.0 million.

Under US GAAP, no write-down is necessary since inventories are stated at
historical cost in Argentine pesos and translated into US dollars at current
rates of exchange.

(d)  Impairment of tangible fixed assets

As discussed in Note 19, under Luxembourg GAAP, during fiscal year 2000
the Company recognized an impairment charge of US$ 47.7 million related to the
closure of the Lavallol plant in Argentina. The Lavallol plant was disposed of
in April 2001. The asset impairments reflected the reduction in the carrying
value of the land and buildings to their estimated fair market value based on
current selling prices for comparable real estate, less costs to sell, and the
write-off of the net book value of machinery and equipment which could not
be redeployed.

Under US GAAP, the Company reversed the total amount of the impairment
related to the Lavallol plant amounting to US$ 31.5 million because the
criteria for recognizing impairment losses for assets held for disposal, as
specified in Staff Accounting Bulletin No. 100 Restructuring and Impairment
Charges and SFAS No. 121 Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed Of (SFAS 121), were not met at
December 31, 2000. The impairment charge was recognized during fiscal year 2001
when the plant was disposed of. The remainder of the charge recorded under
Luxembourg GAAP for fiscal year 2000 was also a charge to earnings under US
GAAP as it met the requirements for recording an impairment under SFAS 121.

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QUILMES INDUSTRIAL (QUINSA) SOCIÉTÉ ANONYME AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
for the years ended December 31, 2002, 2001 and 2000
(In US$ million, except share data)

27.     Differences between Luxembourg GAAP and US GAAP (continued)

(e)  Differences in basis relating to purchase accounting

Under Luxembourg GAAP and US GAAP the Company applied the purchase method
of accounting to all of the acquisitions of businesses. Accordingly, the fair
market value of the assets acquired and liabilities assumed was estimated and
the excess of the purchase price over the fair value was considered goodwill.
The US GAAP adjustment for Differences in basis relating to purchase
accounting reflects the application of certain US GAAP adjustments when
estimating the fair value of such acquired assets and liabilities assumed. This
adjustment gives rise to differences in amortization expense.

The 2000 adjustment relates to the purchase accounting for the Baesa
acquisition and is comprised of (i) the reversal of certain liabilities
recognized under Luxembourg GAAP pertaining to restructuring charges of US$ 2.6
million (See Note 27 (h) for details) and their related deferred tax assets
(US$ 0.8 million) and (ii) the reversal of the income tax benefit recognized
under Luxembourg GAAP associated with the change in the valuation allowance of
deferred tax assets originally recorded in the purchase price allocation of US$
53.8 million. These differences gave rise to a decrease in the amount of
goodwill recorded under Luxembourg GAAP for US$ 55.6 million and therefore,
lower amortization expense charges totaling US$ 2.1 million, US$ 2.8 million
and US$ 0.2 million for the years ended December 31, 2002, 2001 and 2000,
respectively.

As stated in Note 3, during fiscal year 2001 the Company increased its
ownership interest in certain subsidiaries. Therefore, goodwill recognized
under Luxembourg GAAP was increased as a result of certain US GAAP adjustments
totaling US$ 1.0 million. In addition, as stated in Note 27 (h), under US GAAP
the Company reversed US$ 7.5 million of certain liabilities recognized under
Luxembourg GAAP pertaining to restructuring charges recognized in the purchase
price allocation of CBN acquisition (See Note 27 (h) for details). These
adjustments gave rise to a decrease in amortization expense of US$ 0.4 million
and US$ 0.4 million for fiscal year 2002 and 2001, respectively.

(f)  Accounting for business combinations

During 1992, the Company accounted for certain business combinations using
the purchase method of accounting under Luxembourg GAAP. As such, assets
acquired and liabilities assumed were recorded at their estimated fair market
values. Under US GAAP, these business combinations would have to be considered
a transaction between entities under common control and would have to be
accounted for in a manner similar to a pooling of interests. As such, assets
and liabilities would have to be recorded using their respective historical
costs. Accordingly, the excess over the historical cost of the acquired net
assets at the date of the combination would have been accounted for as a
dividend. The foregoing gave rise to differences in depreciation expense
charges.

In addition, during 1999, the Company recognized an impairment charge
related to the tangible fixed assets, which had a stepped up carrying basis as
discussed above. Under US GAAP, such fixed assets had been recognized using the
historical cost basis, and as a result, the impairment charge would not have
been necessary under US GAAP.

(g)  Treasury stock

Under Luxembourg GAAP, treasury stock is carried at cost and is classified
as an asset in the consolidated balance sheet. Under US GAAP, treasury stock is
presented as a separate component of shareholders equity.

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QUILMES INDUSTRIAL (QUINSA) SOCIÉTÉ ANONYME AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
for the years ended December 31, 2002, 2001 and 2000
(In US$ million, except share data)

27.     Differences between Luxembourg GAAP and US GAAP (continued)

(h)  Restructuring

As discussed in Note 19, under Luxembourg GAAP, during fiscal year 2000
the Company recognized restructuring charges of US$ 10.0 million related to
severance, termination and relocation costs associated with the closure of the
Lavallol plant and certain other termination costs incurred in several
subsidiaries of the Company. Under US GAAP, the Company applied the guidance of
Emerging Issues Task Force Issue No. 94-3, Liability Recognition for Certain
Employee Termination Benefits and Other Costs to Exit and Activity (EITF
94-3). As such, during fiscal year 2000 the Company reversed US$ 6.6 million
of restructuring charges recognized under Luxembourg GAAP as certain criteria
specified by EITF 94-3 were not met. These restructuring charges were
recognized as a charge to earnings during fiscal year 2001 when this criteria
is met.

In addition, during fiscal year 2000 the Company recognized certain
liabilities pertaining to restructuring charges totaling US$ 15.0 million and
US$ 9.1 million as part of the purchase price allocation of Baesa and CBN
acquisitions, respectively. Under US GAAP, the Company applied EITF 95-3
Recognition of Liabilities in Connection with a Purchase Business Combination
(EITF 95-3). As such, during fiscal year 2000 and 2001 the Company reversed
US$ 2.6 million and US$ 7.5 million of these restructuring charges against
goodwill, respectively, as certain criteria specified by EITF 95-3 were not
met. These restructuring charges are being recognized in earnings when paid
(US$ 2.7 million and US$ 2.6 million for fiscal year 2002 and 2001,
respectively).

(i)  Pension plan

The Company has given retroactive benefits to certain pension plan
participants, and recognized the prior services costs in 1993 and 1994. Under
US GAAP, such costs would be recognized as pension expenses over the remaining
service years of the beneficiaries.

(j)  Pre-operating costs

Under Luxembourg GAAP, the Company has capitalized certain payroll, other
administrative expenses and technical fees incurred in the construction of a
plant as pre-operating costs during 1994 through 1996. Under US GAAP, such
costs would be expensed as incurred, except for the technical fees, which would
have to be capitalized as part of the cost of the related fixed asset.

Under Luxembourg GAAP, such technical fees were amortized over five years.
Under US GAAP, the fees actually capitalized are being depreciated under the
straight-line method over periods ranging from 15 to 50 years. The foregoing
gives rise to differences in the amount of amortization and depreciation
charges recorded.

(k)  Prepaid expenses

The Company has capitalized certain costs related to advertising and
certain other marketing efforts. Under US GAAP, such costs would be expensed as
incurred.

(l)  Change to consolidation

As discussed in Note 3, during the year ended December 31, 2000, the
Company acquired an additional 55.79% in Cervecería Boliviana Nacional La Paz
(CBN). With the increase in equity ownership of CBN to 70.34%, the Company
has effective control, and therefore, the Company changed its accounting method
from the cost to the consolidation method effective September 1, 2000. Because
a controlling interest in CBN was acquired in September 2000, the results of
operations of CBN have been included in the statements of income for the period
beginning September 1, 2000. As of December 31, 1999, the investment in CBN was
recorded at cost.

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QUILMES INDUSTRIAL (QUINSA) SOCIÉTÉ ANONYME AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
for the years ended December 31, 2002, 2001 and 2000
(In US$ million, except share data)

27.     Differences between Luxembourg GAAP and US GAAP (continued)

(l)  Change to consolidation (continued)

Under US GAAP, the financial statements of prior periods would be
retroactively adjusted as required by APB 18 to reflect the investment under
the equity method of accounting. The equity (loss) income adjustment reflects
the Companys 2.5% ownership for 1998 and its 14.55% ownership for 1999 and
from January 1, 2000 through August 31, 2000. This adjustment gives rise to
differences in amortization expense.

(m)  Gain on divestitures of subsidiaries

As discussed in Note 3, under Luxembourg GAAP, the Company recorded during
fiscal year 2000 an aggregate after-tax gain of US$ 27.8 million on the sale of
two subsidiaries. However, under US GAAP such after-tax gains would have been
increased to US$ 34.9 million. The application of US GAAP adjustments,
primarily foreign currency translation adjustments, to the net assets and
liabilities of such subsidiaries gives rise to differences in the amount of
gain on sale of subsidiaries which would have to be recognized under US GAAP.

(n)  Management bonus program

Under Luxembourg GAAP, the Company charged compensation expense under its
management bonus program (the Bonus Plan) to the statement of income in the
period such costs were determined. Under US GAAP, when the payment of a
compensation award is contingent upon the completion of future service, such
costs are recognized over the period that such services are performed.

During 2000, certain modifications were introduced to the Bonus Plan.
Bonuses awarded are no longer related to future services. As such, no
differences exist between Luxembourg GAAP and US GAAP in connection with the
Bonus Plan. The 2000 net income adjustment represents the reversal of the
balance of the prior periods related adjustments to US GAAP.

(o)  Deferred income tax

The adjustment represents the effect on deferred income taxes of the
foregoing reconciling items, as appropriate.

(p)  Minority interest

The adjustment represents the effect on minority interest of the foregoing
reconciling items.

(q)  Balance sheet presentation and classification differences

Certain significant differences exist between Luxembourg GAAP and US GAAP
in connection with the presentation of balance sheet items. Generally, under
Luxembourg GAAP, items with lower degree of liquidity are disclosed before
items which have higher convertibility into cash. In addition, certain
captioned items differ from balance sheets presented under US GAAP formats.

As discussed in Note 14 to the consolidated financial statements, as a
result of the devaluation of the Argentine peso as well as the financial and
economic crisis that has been affecting Argentina, at December 31, 2002 CMQ has
not complied with certain restrictive covenants set forth in its bank loan
agreements. As a consequence of that non-compliance, the creditors could
require the accelerated repayment of all amounts due amounting to US$ 221.5
million, of which US$ 59.3 million have been classified as non-current
liabilities according to their original terms.

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QUILMES INDUSTRIAL (QUINSA) SOCIÉTÉ ANONYME AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
for the years ended December 31, 2002, 2001 and 2000
(In US$ million, except share data)

27.     Differences between Luxembourg GAAP and US GAAP (continued)

(q)  Balance sheet presentation and classification differences
(continued)

The Companys management is carrying out negotiations with lenders in
order to obtain, among other matters, an extension of the original loan terms,
new credit facilities and the change of the above mentioned covenants. Under US
GAAP, Statement of Financial Accounting Standards (SFAS) No.78
Classification of Obligations That Are Callable by the Creditor clarifies how
obligations that are callable by the creditor should be presented by the debtor
in a classified balance sheet. Specifically, it addresses whether an obligation
should be classified as a current liability if the debtor is in violation of a
provision of a long-term debt agreement at the balance-sheet date and (a) the
violation makes the obligation callable at the balance-sheet date or (b) the
violation, if not cured within a specified grace period, will make the
obligation callable within one year from the balance-sheet date. Pursuant to
this guidance and given that the Company has not obtained a permanent waiver
and there is no assurance that an acceleration will not take place within a one
year period, for US GAAP purposes the entire outstanding balance would have
been classified as a current-liability.

(r)  Statement of income classification differences

Certain significant differences exist between Luxembourg GAAP and US GAAP
in connection with the presentation of statement of income line items.

As discussed in Note 19, under Luxembourg GAAP, certain asset impairment
and restructuring charges were recognized as extraordinary items during fiscal
year 2000. Under US GAAP, as required by APB 30, these charges did not qualify
as extraordinary items. In addition, certain financial results and other income
and expense items included in the Luxembourg GAAP financial statements of the
Company, would be included in the determination of operating income for US GAAP
purposes.

(s)  Comprehensive (loss) income

On January 1, 1998, the Company adopted SFAS No. 130, Reporting
Comprehensive Income. SFAS No. 130 establishes guidelines for the reporting
and display of comprehensive income and its components (revenues, expenses,
gains and losses) in a full set of general purpose financial statements. SFAS
No. 130 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. Accumulated other comprehensive income (loss) is
presented below, net of income tax expense/benefit:

|                                |  |                         |        |      |  |      |        |   |  |  |      |  
|------------------------------- |  | ----------------------- | ------ | ---- |  | ---- | ------ | - |  |  | ---- | -
|                                |  | Year ended December 31,
|                                |  |                        
|                                |  | 2002                    |        | 2001 |  | 2000
|                                |  |                         |        |      |  |     
|Net (loss) income under US GAAP |  |                         | (121.5 | )    |  |      | (96.4  | ) |  |  | 62.8 |  
|Other comprehensive loss:       |  |                         |        |      |  |      |        |   |  |  |      |  
|Foreign currency translation    |  |                         | 3.2    |      |  |      | (145.4 | ) |  |  | (2.8 | )
|                                |  |                         |        |      |  |      |        |   |  |  |      |  
|Comprehensive (loss) income     |  |                         | (118.3 | )    |  |      | (241.8 | ) |  |  | 60.0 |  
|                                |  |                         |        |      |  |      |        |   |  |  |      |  

|                                     |  |                    |        |      |  |      |        |   |  |  |       |  
|------------------------------------ |  | ------------------ | ------ | ---- |  | ---- | ------ | - |  |  | ----- | -
|                                     |  | As of December 31,
|                                     |  |                   
|                                     |  | 2002               |        | 2001 |  | 2000
|                                     |  |                    |        |      |  |     
|Accumulated other comprehensive loss |  |                    | (204.4 | )    |  |      | (207.6 | ) |  |  | (62.2 | )
|                                     |  |                    |        |      |  |      |        |   |  |  |       |  

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QUILMES INDUSTRIAL (QUINSA) SOCIÉTÉ ANONYME AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
for the years ended December 31, 2002, 2001 and 2000
(In US$ million, except share data)

27.     Differences between Luxembourg GAAP and US GAAP (continued)

(t)  Earnings per share

Under US GAAP, the Company computes earnings per common share in
accordance with SFAS No. 128 Earnings Per Share (SFAS No.128). Under the
provisions of SFAS No.128, basic earnings per common share (Basic EPS) is
computed by dividing income available to common stockholders by the
weighted-average number of common shares outstanding during the period. Income
available to common stockholders is computed by deducting preferred stock
dividends (if applicable for the period) from net income. Diluted earnings per
common share (Diluted EPS) is computed by dividing net income by the sum of
the weighted-average number of common shares plus dilutive common shares for
the period. The calculation of diluted net (loss) income per share excludes
potential common shares if their effect is anti-dilutive. There were no
dilutive common stock equivalents for all periods presented.

As stated in Note 12(a), on June 8, 2001 the Companys shareholders
approved a capital restructuring by which (i) the then outstanding number of
ordinary shares (68,400,000) were split ten-for-one and renamed Class A common
shares and (ii) the then outstanding number of preferred shares (39,750,089)
were converted into ordinary shares at a rate 1 per 1 and renamed Class B
common shares. As a result, Class B shares have dividends and liquidation
rights equal to ten times the rights of Class A shares. Therefore, the Company
is required to use the two-class method to report its earnings per share for
the years ended December 31, 2002 and 2001. The two-class method is an earnings
allocation formula that determines earnings per share for each class of common
stock according to dividends declared and participation rights in undistributed
earnings.

Outstanding shares during prior periods were retroactively restated for
the stock split mentioned above.

The following tables set forth the computation of basic and diluted net
(loss) income per share for the periods indicated:

|                                              |                                             |  |              |             |  
|--------------------------------------------- | ------------------------------------------- |  | ------------ | ----------- | -
|                                              |                                             |  | Year ended  
|                                              |                                             |  | December 31,
|                                              |                                             |  | 2000        
|                                              |                                             |  |             
|Numerator:                                    |                                             |  |              |            
|                                              | Net income                                  |  |              | 62.8        |  
|                                              | Preferred stock dividends declared and paid |  |              | (11.3       | )
|                                              |                                             |  |              |             |  
|                                              | Net income available to common shareholders |  |              | 51.5        |  
|Denominator:                                  |                                             |  |              |            
|                                              | Weighted-average shares outstanding         |  |              | 683,769,940 |  
|                                              |                                             |  |              |             |  
|Basic and diluted net income per common share |                                             |  | 0.08         |            
|                                              |                                             |  |              |             |  

|                                            |                                     |  |                              |             |         |  |       |            |  
|------------------------------------------- | ----------------------------------- |  | ---------------------------- | ----------- | ------- |  | ----- | ---------- | -
|                                            |                                     |  | Year ended December 31, 2001
|                                            |                                     |  |                             
|                                            |                                     |  | Class A                      |             | Class B
|                                            |                                     |  |                              |             |        
|Numerator:                                  |                                     |  |                              |             |         |  |       |           
|                                            | Actual dividends declared           |  |                              | 20.3        |         |  |       | 11.7       |  
|                                            | Allocated undistributed net loss    |  |                              | (76.9       | )       |  |       | (51.5      | )
|                                            |                                     |  |                              |             |         |  |       |            |  
|                                            | Net loss                            |  |                              | (56.6       | )       |  |       | (39.8      | )
|Denominator:                                |                                     |  |                              |             |         |  |       |           
|                                            | Weighted-average shares outstanding |  |                              | 661,973,336 |         |  |       | 23,457,253 |  
|                                            |                                     |  |                              |             |         |  |       |            |  
|Basic and diluted net loss per common share |                                     |  | (0.09                        | )           |         |  | (1.70 | )         
|                                            |                                     |  |                              |             |         |  |       |            |  

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QUILMES INDUSTRIAL (QUINSA) SOCIÉTÉ ANONYME AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
for the years ended December 31, 2002, 2001 and 2000
(In US$ million, except share data)

27.     Differences between Luxembourg GAAP and US GAAP (continued)

(t)  Earnings per share (continued)

|                                            |  |                                     |       |                              |             |         |       |   |            |  
|------------------------------------------- |  | ----------------------------------- | ----- | ---------------------------- | ----------- | ------- | ----- | - | ---------- | -
|                                            |  |                                     |       | Year ended December 31, 2002
|                                            |  |                                     |       |                             
|                                            |  |                                     |       | Class A                      |             | Class B
|                                            |  |                                     |       |                              |             |        
|Numerator:                                  |  |                                     |       |                              |             |         |       |  
|                                            |  | Actual dividends declared           |       |                              |            |         |       |   |           |  
|                                            |  | Allocated undistributed net loss    |       |                              | (72.8       | )       |       |   | (48.7      | )
|                                            |  |                                     |       |                              |             |         |       |   |            |  
|                                            |  | Net loss                            |       |                              | (72.8       | )       |       |   | (48.7      | )
|Denominator:                                |  |                                     |       |                              |             |         |       |  
|                                            |  | Weighted-average shares outstanding |       |                              | 645,096,279 |         |       |   | 40,993,920 |  
|                                            |  |                                     |       |                              |             |         |       |   |            |  
|Basic and diluted net loss per common share |  |                                     | (0.11 | )                            |             |         | (1.19 | )
|                                            |  |                                     |       |                              |             |         |       |   |            |  

(u)  Statements of cash flows

The Company has elected to present the statements of cash flows in the
primary financial statements using the guidance set forth in SFAS No. 95
Statement of Cash Flows but using Luxembourg GAAP numbers. As further
described in Note 4.(b), the Company considers all highly liquid investments
with original maturities of three months or less to be cash equivalents. As a
result, no differences exist between cash flows from operating, investing and
financing activities reported in the primary financial statements and cash
flows from operating, investing and financing activities that would be reported
in a statement of cash flows prepared using US GAAP numbers.

Under US GAAP, however, the total amounts of cash and cash equivalents at
the beginning and end of the years shown in the statements of cash flows are
required to be the same amounts as similarly titled line items shown in the
balance sheets, as of those dates.

The following table reconciles the balances included as cash and banks in
the balance sheets to the total amounts of cash and cash equivalents at the
beginning and end of the years shown in the statements of cash flows:

|                                |                                      |  |                    |      |      |  |       |      |  |  |      |      | 
|------------------------------- | ------------------------------------ |  | ------------------ | ---- | ---- |  | ----- | ---- |  |  | ---- | ---- | 
|                                |                                      |  | As of December 31,
|                                |                                      |  |                   
|                                |                                      |  | 2002               |      | 2001 |  | 2000 
|                                |                                      |  |                    |      |      |  |      
|Cash and banks                  |                                      |  | 39.0               |      |      |  | 37.2  |      |  |  | 35.6 |     
|Cash equivalents:               |                                      |  |                    |      |      |  |       |      |  |  |      |     
|                                | Time deposits and money-market funds |  |                    | 88.1 |      |  |       | 69.0 |  |  |      | 14.2 | 
|                                |                                      |  |                    |      |      |  |       |      |  |  |      |     
|Total cash and cash equivalents |                                      |  | 127.1              |      |      |  | 106.2 |      |  |  | 49.8 |     
|                                |                                      |  |                    |      |      |  |       |      |  |  |      |     

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QUILMES INDUSTRIAL (QUINSA) SOCIÉTÉ ANONYME AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
for the years ended December 31, 2002, 2001 and 2000
(In US$ million, except share data)

27.     Differences between Luxembourg GAAP and US GAAP (continued)

(u)  Statements of cash flows (continued)

Under US GAAP, as required by SFAS 95, supplemental cash flow information
should be disclosed as presented below:

|                                         |                                                                           |  |                         |      |      |  |      |      |  |  |      |       |  
|---------------------------------------- | ------------------------------------------------------------------------- |  | ----------------------- | ---- | ---- |  | ---- | ---- |  |  | ---- | ----- | -
|                                         |                                                                           |  | Year ended December 31,
|                                         |                                                                           |  |                        
|                                         |                                                                           |  | 2002                    |      | 2001 |  | 2000
|                                         |                                                                           |  |                         |      |      |  |     
|Cash paid during the year for:           |                                                                           |  |                         |      |      |  |      |      |  |  |      |      
|                                         | Interest                                                                  |  |                         | 26.5 |      |  |      | 16.8 |  |  |      | 32.6  |  
|                                         | Income tax                                                                |  |                         | 8.7  |      |  |      | 23.6 |  |  |      | 54.2  |  
|Non-cash activities:                     |                                                                           |  |                         |      |      |  |      |      |  |  |      |      
|                                         | Issuance of preferred shares in exchange for
minority interest            |  |                         |     |      |  |      |     |  |  |      | 17.4  |  
|                                         | Acquisition of subsidiaries through issuance of
debt                      |  |                         |     |      |  |      |     |  |  |      | 18.0  |  
|                                         | Sale of subsidiaries through an increase in
other current assets          |  |                         |     |      |  |      | 1.0  |  |  |      | 0.4   |  
|                                         | Increase in tangible fixed assets through an
increase in accounts payable |  |                         |     |      |  |      |     |  |  |      | 5.0   |  
|Acquisition of unconsolidated companies: |                                                                           |  |                         |      |      |  |      |      |  |  |      |      
|                                         | Equity / Cost                                                             |  |                         |     |      |  |      |     |  |  |      | (5.7  | )
|                                         | Goodwill                                                                  |  |                         |     |      |  |      |     |  |  |      | 10.1  |  
|                                         |                                                                           |  |                         |      |      |  |      |      |  |  |      |      
|                                         | Purchase price                                                            |  |                         |     |      |  |      |     |  |  |      | 4.4   |  
|                                         | Seller financing                                                          |  |                         |     |      |  |      |     |  |  |      |      |  
|                                         |                                                                           |  |                         |      |      |  |      |      |  |  |      |       |  
|                                         |                                                                           |  |                        |      |      |  |      |      |  |  | 4.4  |      
|                                         |                                                                           |  |                         |      |      |  |      |      |  |  |      |       |  
|Acquisition of minority interests:       |                                                                           |  |                         |      |      |  |      |      |  |  |      |      
|                                         | Minority interests                                                        |  |                         | 6.7  |      |  |      | 14.6 |  |  |      | (8.8  | )
|                                         | Goodwill                                                                  |  |                         |     |      |  |      | 8.0  |  |  |      | 83.8  |  
|                                         |                                                                           |  |                         |      |      |  |      |      |  |  |      |      
|                                         | Purchase price                                                            |  |                         | 6.7  |      |  |      | 22.6 |  |  |      | 75.0  |  
|                                         | Acquisition through issuance of preferred shares                          |  |                         |     |      |  |      |     |  |  |      | (17.4 | )
|                                         |                                                                           |  |                         |      |      |  |      |      |  |  |      |       |  
|                                         |                                                                           |  | 6.7                     |      |      |  | 22.6 |      |  |  | 57.6 |      
|                                         |                                                                           |  |                         |      |      |  |      |      |  |  |      |      

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QUILMES INDUSTRIAL (QUINSA) SOCIÉTÉ ANONYME AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
for the years ended December 31, 2002, 2001 and 2000
(In US$ million, except share data)

27.     Differences between Luxembourg GAAP and US GAAP (continued)

(u)  Statements of cash flows (continued)

|                             |                                                        |  |                         |   |      |  |      |   |  |  |      |       |  
|---------------------------- | ------------------------------------------------------ |  | ----------------------- | - | ---- |  | ---- | - |  |  | ---- | ----- | -
|                             |                                                        |  | Year ended December 31,
|                             |                                                        |  |                        
|                             |                                                        |  | 2002                    |   | 2001 |  | 2000
|                             |                                                        |  |                         |   |      |  |     
|Acquisition of subsidiaries: |                                                        |  |                         |   |      |  |      |   |  |  |      |      
|                             | Industrial land and buildings                          |  |                         |  |      |  |      |  |  |  |      | 40.7  |  
|                             | Machinery, plant and equipment                         |  |                         |  |      |  |      |  |  |  |      | 53.5  |  
|                             | Bottles and crates                                     |  |                         |  |      |  |      |  |  |  |      | 6.1   |  
|                             | Other fixed assets                                     |  |                         |  |      |  |      |  |  |  |      | 0.9   |  
|                             | Financial assets                                       |  |                         |  |      |  |      |  |  |  |      | 10.5  |  
|                             | Inventories                                            |  |                         |  |      |  |      |  |  |  |      | 13.9  |  
|                             | Trade receivables                                      |  |                         |  |      |  |      |  |  |  |      | 9.8   |  
|                             | Other current assets                                   |  |                         |  |      |  |      |  |  |  |      | 4.1   |  
|                             | Prepaid expenses                                       |  |                         |  |      |  |      |  |  |  |      | 1.5   |  
|                             | Restricted cash and short-term investments             |  |                         |  |      |  |      |  |  |  |      |      |  
|                             |                                                        |  |                         |   |      |  |      |   |  |  |      |      
|                             | Total non-cash assets acquired                         |  |                         |  |      |  |      |  |  |  |      | 141.0 |  
|                             | Provisions                                             |  |                         |  |      |  |      |  |  |  |      | 65.9  |  
|                             | Long-term loans and other liabilities                  |  |                         |  |      |  |      |  |  |  |      | 16.1  |  
|                             | Current loans and short-term portion of
long-term debt |  |                         |  |      |  |      |  |  |  |      | 18.8  |  
|                             | Accounts payable and accrued expenses                  |  |                         |  |      |  |      |  |  |  |      | 26.7  |  
|                             | Taxes payable and other current liabilities            |  |                         |  |      |  |      |  |  |  |      | 18.2  |  
|                             |                                                        |  |                         |   |      |  |      |   |  |  |      |       |  
|                             | Total non-cash liabilities assumed                     |  |                         |  |      |  |      |  |  |  |      | 145.7 |  
|                             |                                                        |  |                         |   |      |  |      |   |  |  |      |      
|                             | Net non-cash (liabilities) assets
(assumed) acquired   |  |                         |  |      |  |      |  |  |  |      | (4.7  | )
|                             | Cash and cash equivalents                              |  |                         |  |      |  |      |  |  |  |      | 4.3   |  
|                             |                                                        |  |                         |   |      |  |      |   |  |  |      |      
|                             | Net (liabilities) assets (assumed) acquired            |  |                         |  |      |  |      |  |  |  |      | (0.4  | )
|                             | Minority interest                                      |  |                         |  |      |  |      |  |  |  |      | (19.7 | )
|                             | Equity interest                                        |  |                         |  |      |  |      |  |  |  |      | (28.8 | )
|                             | Goodwill                                               |  |                         |  |      |  |      |  |  |  |      | 154.8 |  
|                             |                                                        |  |                         |   |      |  |      |   |  |  |      |      
|                             | Purchase price                                         |  |                         |  |      |  |      |  |  |  |      | 105.9 |  
|                             | Cash and cash equivalents acquired                     |  |                         |  |      |  |      |  |  |  |      | (4.3  | )
|                             | Seller financing                                       |  |                         |  |      |  |      |  |  |  |      | (18.0 | )
|                             |                                                        |  |                         |   |      |  |      |   |  |  |      |       |  
|                             |                                                        |  |                        |   |      |  |     |   |  |  | 83.6 |      
|                             | Baesas purchase price adjustment                      |  |                         |  |      |  |      |  |  |  |      | (7.0  | )
|                             |                                                        |  |                         |   |      |  |      |   |  |  |      |       |  
|                             |                                                        |  |                        |   |      |  |     |   |  |  | 76.6 |      
|                             |                                                        |  |                         |   |      |  |      |   |  |  |      |      

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QUILMES INDUSTRIAL (QUINSA) SOCIÉTÉ ANONYME AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
for the years ended December 31, 2002, 2001 and 2000
(In US$ million, except share data)

27.     Differences between Luxembourg GAAP and US GAAP (continued)

(u)  Statements of cash flows (continued)

|                                 |                                                        |  |                         |   |      |  |      |      |   |  |      |       |  
|-------------------------------- | ------------------------------------------------------ |  | ----------------------- | - | ---- |  | ---- | ---- | - |  | ---- | ----- | -
|                                 |                                                        |  | Year ended December 31,
|                                 |                                                        |  |                        
|                                 |                                                        |  | 2002                    |   | 2001 |  | 2000
|                                 |                                                        |  |                         |   |      |  |     
|Sale / Spin off of subsidiaries: |                                                        |  |                         |   |      |  |      |      |   |  |      |      
|                                 | Intangible assets                                      |  |                         |  |      |  |      |     |   |  |      | 0.6   |  
|                                 | Industrial land and buildings                          |  |                         |  |      |  |      | 0.6  |   |  |      | 8.4   |  
|                                 | Machinery, plant and equipment                         |  |                         |  |      |  |      | 0.9  |   |  |      | 32.6  |  
|                                 | Bottles and crates                                     |  |                         |  |      |  |      |     |   |  |      | 5.7   |  
|                                 | Financial assets                                       |  |                         |  |      |  |      |     |   |  |      | 1.3   |  
|                                 | Inventories                                            |  |                         |  |      |  |      |     |   |  |      | 13.2  |  
|                                 | Trade receivables                                      |  |                         |  |      |  |      |     |   |  |      | 5.8   |  
|                                 | Other current assets                                   |  |                         |  |      |  |      | 0.3  |   |  |      | 2.2   |  
|                                 | Prepaid expenses                                       |  |                         |  |      |  |      |     |   |  |      | 1.7   |  
|                                 |                                                        |  |                         |   |      |  |      |      |   |  |      |      
|                                 | Total non-cash assets sold                             |  |                         |  |      |  |      | 1.8  |   |  |      | 71.5  |  
|                                 | Provisions                                             |  |                         |  |      |  |      | 0.1  |   |  |      | 0.1   |  
|                                 | Long-term loans and other liabilities                  |  |                         |  |      |  |      |     |   |  |      |      |  
|                                 | Current loans and short-term portion of
long-term debt |  |                         |  |      |  |      |     |   |  |      | 9.7   |  
|                                 | Accounts payable and accrued expenses                  |  |                         |  |      |  |      |     |   |  |      | 5.1   |  
|                                 | Taxes payable and other current liabilities            |  |                         |  |      |  |      |     |   |  |      | 3.4   |  
|                                 |                                                        |  |                         |   |      |  |      |      |   |  |      |       |  
|                                 | Total non-cash liabilities sold                        |  |                         |  |      |  |      | 0.1  |   |  |      | 18.3  |  
|                                 |                                                        |  |                         |   |      |  |      |      |   |  |      |      
|                                 | Net non-cash assets sold                               |  |                         |  |      |  |      | 1.7  |   |  |      | 53.2  |  
|                                 | Cash and cash equivalents                              |  |                         |  |      |  |      |     |   |  |      | 9.3   |  
|                                 |                                                        |  |                         |   |      |  |      |      |   |  |      |      
|                                 | Net assets sold                                        |  |                         |  |      |  |      | 1.7  |   |  |      | 62.5  |  
|                                 | Minority interest                                      |  |                         |  |      |  |      |     |   |  |      | (26.2 | )
|                                 | Equity interest                                        |  |                         |  |      |  |      |     |   |  |      |      |  
|                                 | Gain from the sale                                     |  |                         |  |      |  |      | (0.2 | ) |  |      | 27.8  |  
|                                 |                                                        |  |                         |   |      |  |      |      |   |  |      |      
|                                 | Sell price                                             |  |                         |  |      |  |      | 1.5  |   |  |      | 64.1  |  
|                                 | Cash and cash equivalents sold                         |  |                         |  |      |  |      |     |   |  |      | (9.3  | )
|                                 | Seller financing                                       |  |                         |  |      |  |      | (1.0 | ) |  |      | (0.4  | )
|                                 |                                                        |  |                         |   |      |  |      |      |   |  |      |       |  
|                                 |                                                        |  |                        |   |      |  | 0.5  |      |   |  | 54.4 |      
|                                 |                                                        |  |                         |   |      |  |      |      |   |  |      |      

F-44



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ITEM 18.     FINANCIAL STATEMENTS

We have responded to Item 17 in lieu of responding to this Item.

94



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ITEM 19.     EXHIBITS

Exhibits:

| |      |  |  |                                                                                                                                                                                                                                                                                                                                                           
| | ---- |  |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1.1  |  |  | Articles of Incorporation of Quinsa, as amended (equivalent of both charter and by-laws).                                                                                                                                                                                                                                                                 
| |      |  |  |                                                                                                                                                                                                                                                                                                                                                           
| | 2.1  |  |  | Deposit Agreement dated February 28, 2002 among Quinsa, The Bank of New York and the
holders from time to time of American Depositary Receipts issued thereunder
(incorporated by reference to the registration statement on Form F-6 filed on February
20, 2002; File No. 333-83226).                                                                    
| |      |  |  |                                                                                                                                                                                                                                                                                                                                                           
| | 2.2  |  |  | Form of American Depositary Receipt for Quinsa Class B shares (included in Exhibit 2.1).                                                                                                                                                                                                                                                                  
| |      |  |  |                                                                                                                                                                                                                                                                                                                                                           
| | 4.1  |  |  | Share Exchange Agreement dated May 1, 2002 among Companhia de Bebidas das Américas -
AMBEV and Quinsa (incorporated by reference to Exhibit 2.1 of the Schedule 13D relating
to Quinsa, filed on May 13, 2002 by AmBev).                                                                                                                                  
| |      |  |  |                                                                                                                                                                                                                                                                                                                                                           
| | 4.2  |  |  | Memorandum of Agreement dated January 13, 2003 between Heineken, Quinsa, BAC and certain
of their respective affiliates dated January 13, 2003.                                                                                                                                                                                                           
| |      |  |  |                                                                                                                                                                                                                                                                                                                                                           
| | 4.3  |  |  | Letter Agreement dated January 13, 2003 between AmBev, BAC and Quinsa (incorporated by
reference to Exhibit 2.4 of the Schedule 13D/A relating to Quinsa filed on February 4,
2003 AmBev).                                                                                                                                                                
| |      |  |  |                                                                                                                                                                                                                                                                                                                                                           
| | 4.4  |  |  | Quinsa Shareholders Agreement dated as of January 31, 2003 among BAC and AmBev
(incorporated by reference to Exhibit 2.5 to Amendment No. 1 to the Schedule 13D
relating to Quinsa filed on February 4, 2003 AmBev).                                                                                                                                      
| |      |  |  |                                                                                                                                                                                                                                                                                                                                                           
| | 4.4  |  |  | License Agreement dated January 31, 2003 between Quinsa and AmBev.                                                                                                                                                                                                                                                                                        
| |      |  |  |                                                                                                                                                                                                                                                                                                                                                           
| | 4.5  |  |  | Distribution Agreement dated January 31, 2003 between Quinsa and AmBev.                                                                                                                                                                                                                                                                                   
| |      |  |  |                                                                                                                                                                                                                                                                                                                                                           
| | 8.1  |  |  | List of Subsidiaries.                                                                                                                                                                                                                                                                                                                                     
| |      |  |  |                                                                                                                                                                                                                                                                                                                                                           
| | 10.1 |  |  | Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                   
| |      |  |  |                                                                                                                                                                                                                                                                                                                                                           
| | 10.2 |  |  | Resolution of the Office of Competition, Deregulation and Consumer Advocacy of the
Ministry of Production of the Republic of Argentina regarding the business combination
of AmBev and Quinsa  English Translation (incorporated by reference to Exhibit 2.09 to
Amendment No. 1 to the Schedule 13D relating to Quinsa filed on February 4, 2003 AmBev).
| |      |  |  |                                                                                                                                                                                                                                                                                                                                                           
| | 10.3 |  |  | Share Pledge Agreement dated as of January 31, 2003, among BAC, AmBev and Quinsa
(incorporated by reference to Exhibit 2.9 to Amendment No. 1 to the Schedule 13D
relating to Quinsa filed on February 4, 2003 AmBev).                                                                                                                                    
| |      |  |  |                                                                                                                                                                                                                                                                                                                                                           
| | 10.4 |  |  | Escrow Agreement dated as of January 31, 2003, among BAC, AmBev and The Bank of New York
(incorporated by reference to Exhibit 2.10 to Amendment No. 1 to the Schedule 13D
relating to Quinsa filed on February 4, 2003 AmBev).                                                                                                                           
| |      |  |  |                                                                                                                                                                                                                                                                                                                                                           
| | 10.5 |  |  | Consent of A.C. Nielsen Argentina S.A.                                                                                                                                                                                                                                                                                                                    
| |      |  |  |                                                                                                                                                                                                                                                                                                                                                           
| | 10.6 |  |  | Consent of ACNielsen Chile.                                                                                                                                                                                                                                                                                                                               
| |      |  |  |                                                                                                                                                                                                                                                                                                                                                           
| | 10.7 |  |  | Consent of CCR/IRI.                                                                                                                                                                                                                                                                                                                                       
| |      |  |  |                                                                                                                                                                                                                                                                                                                                                           
| | 10.8 |  |  | Consent of ACNielsen Uruguay.                                                                                                                                                                                                                                                                                                                             

95



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SIGNATURES

Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the Registrant certifies that it meets all of the requirements for
filing on Form 20-F and has duly caused and authorized the undersigned to sign
this annual report on its behalf.

|                    |  |                                               |  |                                                                            
|------------------- |  | --------------------------------------------- |  | ---------------------------------------------------------------------------
|                    |  | QUILMES INDUSTRIAL (QUINSA) Société, Anonyme.
|                   
|                    |  | By:                                           |  | /s/ Gustavo CastelliName: Gustavo Castelli
Title:   Chief Financial Officer
|                   
|Date: June 27, 2003 |  |                                               |  |                                                                            

96



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CERTIFICATION

I, Agustín García Mansilla, certify that:



|1. |  | I have reviewed this annual report on Form 20-F of Quilmes Industrial
(QUINSA), Société Anonyme;                                                                                                                                                                                                                        
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual
report;                   
|  
|4. |  | The registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:                                                                                                



| | a) |  | designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this annual
report is being prepared;
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this annual report (the Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrants
ability to record, process, summarize and report financial data and
have identified for the registrants auditors any material
weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves management
or other employees who have a significant role in the registrants
internal controls; and                                                                                                                                        



|6. |  | The registrants other certifying officer and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|      |              
|----- | -------------
|Date: | June 27, 2003

|                                      
|--------------------------------------
|/s/ Agustín García Mansilla[Signature]
|                                      
|Chief Executive Officer[Title]        

97



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##### Table of Contents



CERTIFICATION

I, Gustavo Castelli, certify that:



|1. |  | I have reviewed this annual report on Form 20-F of Quilmes Industrial
(QUINSA), Société Anonyme;                                                                                                                                                                                                                        
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual
report;                   
|  
|4. |  | The registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:                                                                                                



| | a) |  | designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this annual
report is being prepared;
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this annual report (the Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        

5.     The registrants other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):



| | a) |  | all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrants
ability to record, process, summarize and report financial data and
have identified for the registrants auditors any material
weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves management
or other employees who have a significant role in the registrants
internal controls; and                                                                                                                                        



|6. |  | The registrants other certifying officer and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|           |         
|---------- | --------
|Date: June | 27, 2003

|                               
|-------------------------------
|/s/ Gustavo Castelli[Signature]
|                               
|Chief Executive Officer[Title] 

98



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EXHIBIT INDEX

|            |      |             |  |                                                                                                                                                                                                                                                                                                                                                           
|----------- | ---- | ----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |      | Description
|            |      |            
|            | 1.1  |             |  | Articles of Incorporation of Quinsa, as amended (equivalent of both charter and by-laws).                                                                                                                                                                                                                                                                 
|            |      |             |  |                                                                                                                                                                                                                                                                                                                                                           
|            | 2.1  |             |  | Deposit Agreement dated February 28, 2002 among Quinsa, The Bank of New York and the holders
from time to time of American Depositary Receipts issued thereunder (incorporated by reference
to the registration statement on Form F-6 filed on February 20, 2002; File No. 333-83226).                                                                    
|            |      |             |  |                                                                                                                                                                                                                                                                                                                                                           
|            | 2.2  |             |  | Form of American Depositary Receipt for Quinsa Class B shares (included in Exhibit 2.1).                                                                                                                                                                                                                                                                  
|            |      |             |  |                                                                                                                                                                                                                                                                                                                                                           
|            | 4.1  |             |  | Share Exchange Agreement dated May 1, 2002 among Companhia de
Bebidas das Américas  AMBEV and
Quinsa (incorporated by reference to Exhibit 2.1 of the Schedule 13D relating to Quinsa, filed
on May 13, 2002 by AmBev).                                                                                                                                  
|            |      |             |  |                                                                                                                                                                                                                                                                                                                                                           
|            | 4.2  |             |  | Memorandum of Agreement dated January 13, 2003 between Heineken, Quinsa, BAC and certain of
their respective affiliates dated January 13, 2003.                                                                                                                                                                                                           
|            |      |             |  |                                                                                                                                                                                                                                                                                                                                                           
|            | 4.3  |             |  | Letter Agreement dated January 13, 2003 between AmBev, BAC and Quinsa (incorporated by
reference to Exhibit 2.4 of the Schedule 13D/A relating to Quinsa filed on February 4, 2003
AmBev).                                                                                                                                                                
|            |      |             |  |                                                                                                                                                                                                                                                                                                                                                           
|            | 4.4  |             |  | Quinsa Shareholders Agreement dated as of January 31, 2003 among BAC and AmBev (incorporated by
reference to Exhibit 2.5 to Amendment No. 1 to the Schedule 13D relating to Quinsa filed on
February 4, 2003 AmBev).                                                                                                                                      
|            |      |             |  |                                                                                                                                                                                                                                                                                                                                                           
|            | 4.4  |             |  | License Agreement dated January 31, 2003 between Quinsa and AmBev.                                                                                                                                                                                                                                                                                        
|            |      |             |  |                                                                                                                                                                                                                                                                                                                                                           
|            | 4.5  |             |  | Distribution Agreement dated January 31, 2003 between Quinsa and AmBev.                                                                                                                                                                                                                                                                                   
|            |      |             |  |                                                                                                                                                                                                                                                                                                                                                           
|            | 8.1  |             |  | List of Subsidiaries.                                                                                                                                                                                                                                                                                                                                     
|            |      |             |  |                                                                                                                                                                                                                                                                                                                                                           
|            | 10.1 |             |  | Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                   
|            |      |             |  |                                                                                                                                                                                                                                                                                                                                                           
|            | 10.2 |             |  | Resolution of the Office of Competition, Deregulation and Consumer Advocacy of the Ministry of
Production of the Republic of Argentina regarding the business combination of AmBev and Quinsa
- English Translation (incorporated by reference to Exhibit 2.09 to Amendment No. 1 to the
Schedule 13D relating to Quinsa filed on February 4, 2003 AmBev).
|            |      |             |  |                                                                                                                                                                                                                                                                                                                                                           
|            | 10.3 |             |  | Share Pledge Agreement dated as of January 31, 2003, among BAC, AmBev and Quinsa (incorporated
by reference to Exhibit 2.9 to Amendment No. 1 to the Schedule 13D relating to Quinsa filed on
February 4, 2003 AmBev).                                                                                                                                    
|            |      |             |  |                                                                                                                                                                                                                                                                                                                                                           
|            | 10.4 |             |  | Escrow Agreement dated as of January 31, 2003, among BAC, AmBev and The Bank of New York
(incorporated by reference to Exhibit 2.10 to Amendment No. 1 to the Schedule 13D relating to
Quinsa filed on February 4, 2003 AmBev).                                                                                                                           
|            |      |             |  |                                                                                                                                                                                                                                                                                                                                                           
|            | 10.5 |             |  | Consent of A.C. Nielsen Argentina S.A.                                                                                                                                                                                                                                                                                                                    
|            |      |             |  |                                                                                                                                                                                                                                                                                                                                                           
|            | 10.6 |             |  | Consent of ACNielsen Chile.                                                                                                                                                                                                                                                                                                                               
|            |      |             |  |                                                                                                                                                                                                                                                                                                                                                           
|            | 10.7 |             |  | Consent of CCR/IRI.                                                                                                                                                                                                                                                                                                                                       
|            |      |             |  |                                                                                                                                                                                                                                                                                                                                                           
|            | 10.8 |             |  | Consent of ACNielsen Uruguay.