<PAGE>   1

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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                             ----------------------

                                    FORM 10-Q

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

                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000

                         COMMISSION FILE NUMBER 0-26542

                           ---------------------------

                        REDHOOK ALE BREWERY, INCORPORATED
             (Exact name of registrant as specified in its charter)

               WASHINGTON                              91-1141254
     (State or other jurisdiction of                (I.R.S. Employer
     incorporation or organization)                Identification No.)

        3400 PHINNEY AVENUE NORTH
           SEATTLE, WASHINGTON                         98103-8624
 (Address of principal executive offices)              (Zip Code)

       Registrant's telephone number, including area code: (206) 548-8000

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

  Common stock, par value $.005 per share: 7,588,786 shares outstanding as of
                               October 31, 2000.

                    Page 1 of 15 sequentially numbered pages

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<PAGE>   2
                        REDHOOK ALE BREWERY, INCORPORATED

                                    FORM 10-Q

                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                               PAGE
                                                                               ----
<S>                                                                            <C>
PART I.   FINANCIAL INFORMATION

ITEM 1.   Financial
          Statements

            Balance Sheets
               September 30, 2000 and December 31, 1999 .....................    3

            Statements of Operations
               Three Months Ended September 30, 2000 and 1999
               and Nine Months Ended September 30, 2000 and 1999.............    4

            Statements of Cash Flows
               Nine Months Ended September 30, 2000 and 1999.................    5

            Notes to Financial Statements....................................    6

ITEM 2.   Management's Discussion and Analysis of Financial Condition
            and Results of Operations .......................................    8

PART II.  OTHER INFORMATION

ITEM 6.   Exhibits and Reports on Form 8-K...................................   14
</TABLE>


                                       2
<PAGE>   3
                        REDHOOK ALE BREWERY, INCORPORATED

                                 BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                       SEPTEMBER 30,      DECEMBER 31,
                                                                           2000               1999
                                                                       ------------       ------------
                                                                       (Unaudited)
<S>                                                                    <C>                <C>
                                     ASSETS
Current Assets:
  Cash and Cash Equivalents .....................................      $  8,115,667       $  5,462,779
  Accounts Receivable ...........................................         1,924,270          1,174,853
  Inventories ...................................................         2,745,543          2,406,797
  Other .........................................................           313,065            331,481
                                                                       ------------       ------------
    Total Current Assets ........................................        13,098,545          9,375,910
Fixed Assets, Net ...............................................        74,682,976         77,739,550
Other Assets ....................................................           443,623            591,431
                                                                       ------------       ------------

      Total Assets ..............................................      $ 88,225,144       $ 87,706,891
                                                                       ============       ============

                    LIABILITIES, PREFERRED STOCK AND COMMON STOCKHOLDERS' EQUITY

Current Liabilities:
  Accounts Payable ..............................................      $  3,042,149       $  2,743,971
  Accrued Salaries, Wages and Payroll Taxes .....................         1,516,834          1,408,552
  Refundable Deposits ...........................................         1,772,419          1,571,028
  Other Accrued Expenses ........................................           721,049            567,206
  Current Portion of Long-Term Debt .............................           450,000            450,000
                                                                       ------------       ------------
    Total Current Liabilities ...................................         7,502,451          6,740,757
                                                                       ------------       ------------
Long-Term Debt, Net of Current Portion ..........................         7,087,500          7,425,000
                                                                       ------------       ------------
Deferred Income Taxes ...........................................         1,722,276          1,627,067
                                                                       ------------       ------------
Convertible Redeemable Preferred Stock ..........................        16,088,355         16,055,055
                                                                       ------------       ------------
Common Stockholders' Equity:
  Common Stock, Par Value $0.005 per Share, Authorized, 50,000,000
    Shares; Issued and Outstanding, 7,611,586 Shares in 2000 and
    7,687,786 in 1999 ...........................................            38,058             38,439
  Additional Paid-In Capital ....................................        56,875,387         56,989,631
  Accumulated Deficit ...........................................        (1,088,883)        (1,169,058)
                                                                       ------------       ------------
      Total Common Stockholders' Equity .........................        55,824,562         55,859,012
                                                                       ------------       ------------
        Total Liabilities, Preferred Stock and
          Common Stockholders' Equity ...........................      $ 88,225,144       $ 87,706,891
                                                                       ============       ============
</TABLE>

                             See Accompanying Notes


                                       3
<PAGE>   4
                        REDHOOK ALE BREWERY, INCORPORATED

                            STATEMENTS OF OPERATIONS

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                  THREE MONTHS ENDED SEPTEMBER 30,      NINE MONTHS ENDED SEPTEMBER 30,
                                                  -------------------------------       -------------------------------
                                                      2000               1999               2000               1999
                                                  ------------       ------------       ------------       ------------
<S>                                               <C>                <C>                <C>                <C>
Sales ........................................    $ 10,312,808       $  9,622,583       $ 28,876,989       $ 26,606,183
Less Excise Taxes ............................         922,373            893,217          2,671,319          2,461,322
                                                  ------------       ------------       ------------       ------------
Net Sales ....................................       9,390,435          8,729,366         26,205,670         24,144,861
Cost of Sales ................................       6,387,531          5,850,494         18,321,291         16,736,245
                                                  ------------       ------------       ------------       ------------
Gross Profit .................................       3,002,904          2,878,872          7,884,379          7,408,616
Selling, General and Administrative Expenses..       3,160,291          3,057,387          8,508,951          8,314,220
                                                  ------------       ------------       ------------       ------------
Operating Income (Loss) ......................        (157,387)          (178,515)          (624,572)          (905,604)
Interest Expense .............................         153,402            133,430            441,846            391,527
Other Income (Expense)-- Net .................       1,143,147           (195,369)         1,291,444           (112,001)
                                                  ------------       ------------       ------------       ------------
Income (Loss) before Income Taxes ............         832,358           (507,314)           225,026         (1,409,132)
Income Tax Expense (Benefit) .................         305,897           (177,560)           111,551           (493,205)
                                                  ------------       ------------       ------------       ------------
Net Income (Loss) ............................    $    526,461       $   (329,754)      $    113,475       $   (915,927)
                                                  ============       ============       ============       ============
Basic Earnings (Loss) per Share ..............    $       0.07       $      (0.04)      $       0.01       $      (0.12)
                                                  ============       ============       ============       ============
Diluted Earnings (Loss) per Share ............    $       0.06       $      (0.04)      $       0.01       $      (0.12)
                                                  ============       ============       ============       ============
</TABLE>

                             See Accompanying Notes


                                        4
<PAGE>   5
                        REDHOOK ALE BREWERY, INCORPORATED

                            STATEMENTS OF CASH FLOWS

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                            NINE MONTHS ENDED SEPTEMBER 30,
                                                           --------------------------------
                                                               2000                 1999
                                                           -----------          -----------
<S>                                                        <C>                  <C>
OPERATING ACTIVITIES
Net Income (Loss) ..................................       $   113,475          $  (915,927)
Adjustments to Reconcile Net Loss to Net Cash
  Provided by Operating Activities:
    Depreciation and Amortization ..................         2,469,595            2,446,928
    (Gain) Loss on Disposal of Fixed Assets ........          (908,483)             260,000
    Deferred Income Taxes ..........................            95,209             (505,378)
    Net Change in Operating Assets and Liabilities..          (147,803)             924,711
                                                           -----------          -----------
Net Cash Provided by Operating Activities ..........         1,621,993            2,210,334
                                                           -----------          -----------
INVESTING ACTIVITIES
Expenditures for Fixed Assets ......................          (209,518)            (769,320)
Proceeds from Sale of Assets and Other, Net ........         1,692,538              848,481
                                                           -----------          -----------
Net Cash Provided by Investing Activities ..........         1,483,020               79,161
                                                           -----------          -----------
FINANCING ACTIVITIES
Principal Payments on Debt .........................          (337,500)            (337,500)
Other, Net .........................................          (114,625)             100,999
                                                           -----------          -----------
Net Cash Used in Financing Activities ..............          (452,125)            (236,501)
                                                           -----------          -----------
Increase in Cash and Cash Equivalents ..............         2,652,888            2,052,994
Cash and Cash Equivalents:
  Beginning of Period ..............................         5,462,779            3,010,448
                                                           -----------          -----------
  End of Period ....................................       $ 8,115,667          $ 5,063,442
                                                           ===========          ===========
</TABLE>

                             See Accompanying Notes


                                        5
<PAGE>   6
                        REDHOOK ALE BREWERY, INCORPORATED

                          NOTES TO FINANCIAL STATEMENTS
                                   (Unaudited)

1. BASIS OF PRESENTATION

       The accompanying financial statements and related notes should be read in
conjunction with the financial statements and notes thereto included in the
Company's Annual Report on Form 10-K. The accompanying financial statements of
Redhook Ale Brewery, Incorporated (the "Company") have been prepared pursuant to
the rules and regulations of the Securities and Exchange Commission. These
financial statements are unaudited and condensed, and do not contain all of the
information required by generally accepted accounting principles to be included
in a full set of financial statements. In the opinion of management, all
material adjustments necessary to present fairly the financial position, results
of operations and cash flows of the Company, for the periods presented, have
been made. All such adjustments were of a normal, recurring nature. The results
of operations for such interim periods are not necessarily indicative of the
results of operations for the full year.

2.  EARNINGS (LOSS) PER SHARE

       The calculation of adjusted weighted-average shares outstanding for
purposes of computing diluted earnings per share includes the dilutive effect of
all outstanding convertible redeemable preferred stock and outstanding stock
options for the periods in which the Company reports net income. The calculation
uses the treasury stock method in determining the resulting incremental average
equivalent shares outstanding when they are dilutive.

       The following table sets forth the computation of basic and diluted
earnings (loss) per common share:

<TABLE>
<CAPTION>
                                                             THREE MONTHS ENDED                       NINE MONTHS ENDED
                                                                SEPTEMBER 30,                            SEPTEMBER 30,
                                                       -------------------------------          -------------------------------
                                                          2000                1999                  2000               1999
                                                       -----------         -----------          -----------         -----------
<S>                                                    <C>                 <C>                  <C>                 <C>
Basic earnings (loss) per share computation:

  Numerator:
    Net income (loss) ........................         $   526,461         $  (329,754)         $   113,475         $  (915,927)
                                                       -----------         -----------          -----------         -----------
  Denominator:
    Weighted-average common shares ...........           7,618,243           7,687,786            7,663,954           7,687,654
                                                       -----------         -----------          -----------         -----------
        Basic earnings (loss) per
          share ..............................         $      0.07         $     (0.04)         $      0.01         $     (0.12)
                                                       ===========         ===========          ===========         ===========
Diluted earnings (loss) per share computation:

  Numerator:
    Net income (loss) ........................         $   526,461         $  (329,754)         $   113,475         $  (915,927)
                                                       -----------         -----------          -----------         -----------
  Denominator:
    Weighted-average common shares ...........           7,618,243           7,687,786            7,663,954           7,687,654
    Effect of dilutive securities:
        Series B convertible
          preferred stock ....................           1,289,872                  --            1,289,872                  --
        Stock Options, Net ...................               2,827                  --                3,295                  --
                                                       -----------         -----------          -----------         -----------
   Denominator for diluted earnings (loss)
       per share .............................           8,910,942           7,687,786            8,957,121           7,687,654
                                                       -----------         -----------          -----------         -----------
          Diluted earnings (loss)
               per share .....................         $      0.06         $     (0.04)         $      0.01         $     (0.12)
                                                       ===========         ===========          ===========         ===========
</TABLE>


                                       6
<PAGE>   7
                        REDHOOK ALE BREWERY, INCORPORATED

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                   (Unaudited)

3. INVENTORIES

       Inventories consist of the following:

<TABLE>
<CAPTION>
                                                SEPTEMBER 30,      DECEMBER 31,
                                                    2000               1999
                                                -------------      ------------
<S>                                             <C>                <C>
Finished goods .........................         $1,328,603         $1,059,460
Raw materials ..........................            844,994            814,106
Promotional merchandise ................            365,271            342,071
Packaging materials ....................            206,675            191,160
                                                 ----------         ----------
                                                 $2,745,543         $2,406,797
                                                 ==========         ==========
</TABLE>

       Finished goods include beer held in fermentation prior to the filtration
and packaging process.

4. STOCK REPURCHASE PROGRAM

       In May 2000, the Company's Board of Directors approved a common stock
repurchase program pursuant to which up to 500,000 shares of its common stock
may be acquired in the open market or in block transactions. The Company has
purchased an aggregate of 99,000 shares for $152,000 during the period May 2000
through October 2000.

5. SURPLUS REAL ESTATE SALE

       During July 2000, the Company sold a real estate parcel which was
previously used as the Fremont Brewery keg filling, storage and shipping
facility. The parcel was sold for approximately $1.7 million in cash and the
resulting gain of approximately $1.0 million is reflected in Other Income
(Expense) - Net in the statements of operations for the three months and nine
months ended September 30, 2000.


                                       7
<PAGE>   8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

     The following discussion and analysis should be read in conjunction with
the Company's Financial Statements and Notes thereto included herein.

OVERVIEW

     Since its formation, the Company has focused its business activities on the
brewing, marketing and selling of craft beers. For the nine months ended
September 30, 2000, the Company had gross sales of $28,877,000, an increase of
8.5% from the nine months ended September 30, 1999. The Company's sales consist
predominantly of sales of beer to third-party distributors and Anheuser-Busch,
Inc. ("A-B") through the Distribution Alliance. In addition, the Company derives
other revenues primarily from the sale of beer, food, apparel and other retail
items in its brewery pubs. The Company is required to pay federal excise taxes
on sales of its beer. The excise tax burden on beer sales increases from $7 to
$18 per barrel on annual sales over 60,000 barrels and thus, if sales volume
fluctuates, federal excise taxes would change as a percentage of sales.

     The Company's sales volume increased 9.4% to 162,000 barrels for the nine
months ended September 30, 2000, compared to the same period in 1999. In
addition to the level of consumer demand in existing markets, the Company's
sales are also affected by other factors such as competitive considerations,
including the significant number of craft brewers and their promotional pricing
and new product introductions as well as increased competition from imported
beers. Sales in the craft beer industry generally reflect a degree of
seasonality, with the first and fourth quarters historically being the slowest
and the rest of the year typically demonstrating stronger sales. The Company has
historically operated with little or no backlog, and its ability to predict
sales for future periods is limited.

     Under normal circumstances, the Company generally operates its brewing
facilities up to five days per week, two shifts per day. The Company increased
its company-wide annual production capacity from approximately 3,000 barrels in
1982 to approximately 350,000 barrels as of September 30, 2000. Production
capacity of each facility can be added in phases until the facility reaches its
maximum designed production capacity. The decision to add capacity is affected
by the availability of capital, construction constraints and anticipated sales
in new and existing markets. While the maximum designed capacity for each of the
Woodinville and Portsmouth breweries is 250,000 barrels per year, the current
production capacity is 250,000 and 100,000 barrels per year, respectively.
Additional capital expenditures and production personnel would be required to
bring the Portsmouth Brewery to its maximum designed capacity.

     The Company's capacity utilization has a significant impact on gross
profit. When facilities are operating at their maximum designed production
capacities, profitability is favorably affected by spreading fixed and
semivariable operating costs, such as depreciation and production salaries, over
a larger sales base. Most capital costs associated with building a new brewery,
and fixed and semivariable costs related to operating a new brewery, are
incurred prior to, or upon commencement of, production at a facility. Because
the actual production level may be substantially below the facility's maximum
designed production capacity, gross margins are negatively impacted. This impact
is reduced when actual production increases.

     In January 1998, production at the Fremont Brewery was significantly
reduced, and the brewery served as a backup facility to the Woodinville Brewery.
During the quarter ended June 30, 1998, the Company analyzed its current and
future production capacity requirements and its plans for the Fremont Brewery
production assets. Based upon that analysis, the Company decided to permanently
curtail the Fremont Brewery operations and sell substantially all of those
production assets. In compliance with FASB Statement No. 121, the Fremont
production assets were written down to an estimate of their net realizable value
in the quarter ended June 30, 1998. During 1999, the Company completed the sale
of the equipment for an amount approximately equal to its estimated net
realizable value. During July 2000, the Company sold a real estate parcel which
was previously used as the Fremont Brewery keg filling, storage and shipping
facility. The parcel was sold for approximately $1.7 million in cash and the
resulting gain of approximately $1.0 million is reflected in Other Income
(Expense) - Net in the statements of operations for the three months and nine
months ended September 30, 2000.


                                       8
<PAGE>   9

     In addition to capacity utilization, the Company expects other factors to
influence profit margins, including higher costs associated with the development
of newer distribution territories, such as increased shipping, marketing and
sales personnel costs; fees related to the distribution agreement with A-B;
changes in packaging and other material costs; and changes in product sales mix.

     See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Certain Considerations: Issues and Uncertainties."

RESULTS OF OPERATIONS

     The following table sets forth, for the periods indicated, certain items
from the Company's Statements of Operations expressed as a percentage of net
sales.

<TABLE>
<CAPTION>
                                                           THREE MONTHS ENDED      NINE MONTHS ENDED
                                                              SEPTEMBER 30,          SEPTEMBER 30,
                                                           ------------------      ------------------
                                                            2000        1999        2000        1999
                                                           ------      ------      ------      ------
<S>                                                        <C>         <C>         <C>         <C>
Sales .................................................     109.8%      110.2%      110.2%      110.2%
Less Excise Taxes .....................................       9.8        10.2        10.2        10.2
                                                           ------      ------      ------      ------
Net Sales .............................................     100.0       100.0       100.0       100.0
Cost of Sales .........................................      68.0        67.0        69.9        69.3
                                                           ------      ------      ------      ------
Gross Profit ..........................................      32.0        33.0        30.1        30.7
Selling, General and Administrative Expenses ..........      33.7        35.0        32.5        34.4
                                                           ------      ------      ------      ------
Operating Income (Loss) ...............................      (1.7)       (2.0)       (2.4)       (3.7)
Interest and Other Income (Expense) -- Net ............      10.6        (3.8)        3.2        (2.1)
                                                           ------      ------      ------      ------
Income (Loss) Before Income Taxes .....................       8.9        (5.8)        0.8        (5.8)
Provision (Benefit) for Income Taxes ..................       3.3        (2.0)        0.4        (2.0)
                                                           ------      ------      ------      ------
Net Income (Loss) .....................................       5.6%       (3.8)%       0.4%       (3.8)%
                                                           ======      ======      ======      ======
</TABLE>

THREE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO THREE MONTHS ENDED
SEPTEMBER 30, 1999

     Sales. Total sales increased 7.2% to $10,313,000 for the three months ended
September 30, 2000, compared to $9,623,000 in the comparable 1999 period,
resulting from a 6.4% increase in sales volume and an increase in other sales,
partially offset by slightly lower average pricing, net of promotional
discounts. Total sales volumes for the third quarter of 2000 increased to 56,900
barrels from 53,500 barrels for the same period in 1999. West Coast sales
remained flat in the third quarter of 2000, including a 4.3% increase in
Washington State, the Company's largest market. Sales other than wholesale beer
sales, primarily retail pub revenues totaled $1,306,000 in the three months
ended September 30, 2000, compared to $1,211,000 in the comparable 1999 period.
At September 30, 2000 and 1999, the Company's products were distributed in 48
states.

     Excise Taxes. Excise taxes were $922,000, or 9.8% of net sales, for the
third quarter of 2000, compared to $893,000, or 10.2% of net sales, for the
comparable period of 1999. In September 2000, a change in Washington State
regulations required that beer taxes previously paid by Washington brewers now
be paid by Washington distributors. As a result, sales and excise taxes
decreased as a percentage of net sales.

     Cost of Sales. Cost of sales increased to $6,388,000 for the three months
ended September 30, 2000, compared to $5,850,000 in the comparable 1999 period,
primarily due to increased sales volumes. The combined utilization rate of
maximum designed capacity for the operating breweries was 45.5% and 42.8% for
quarters ended September 30, 2000 and 1999, respectively. Cost of sales, as a
percentage of net sales, was substantially unchanged at 68.0% for the 2000
period, compared to 67.0% for the 1999 period.

     Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased to $3,160,000 for the third quarter of 2000
from $3,057,000 for the same period of 1999. As a percentage of net sales, these
expenses were 33.7% and 35.0% for the quarters ended September 30, 2000 and
1999, respectively.


                                       9
<PAGE>   10
     Interest Expense. Interest expense increased to $153,000 for the third
quarter of 2000, compared to $133,000 for the comparable 1999 period, reflecting
higher average interest rates partially offset by the effect of lower
outstanding debt.

     Other Income (Expense) -- Net. Other income (expense) - net, increased to
$1,143,000 income in the 2000 third quarter, compared to $(195,000) expense in
the 1999 third quarter. The 2000 period includes a gain of approximately $1.0
million resulting from the sale of a real estate parcel which was previously
used as the Fremont Brewery keg filling, storage and shipping facility. The 1999
period includes a non-cash loss of $260,000 related to the exchange of some
one-half barrel kegs for new one-sixth barrel kegs.

     Income Taxes. The Company's effective income tax rate increased to 36.7%
for the third quarter of 2000 compared to 35.0% for the third quarter of 1999
due to the effect of the real estate sale. The effective income tax rate for the
full year 1999 was 33.5%.

NINE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
1999

     Sales. Total sales increased 8.5% to $28,877,000 for the nine months ended
September 30, 2000, compared to $26,606,000 in the comparable 1999 period,
resulting from a 9.4% increase in sales volume and an increase in other sales,
partially offset by slightly lower average pricing, net of promotional
discounts. Sales volumes for the first nine months of 2000 increased to 162,000
barrels from 148,100 barrels for the same period in 1999. West Coast sales
increased 6.0% in first nine months of 2000, including a 5.6% increase in
Washington State, the Company's largest market. Sales other than wholesale beer
sales, primarily retail pub revenues, totaled $3,223,000 in the nine months
ended September 30, 2000, compared to $2,890,000 in the comparable 1999 period.

     Excise Taxes. Excise taxes increased to $2,671,000, or 10.2% of net sales,
for the first nine months 2000, compared to $2,461,000, or 10.2% of net sales,
for the comparable period of 1999.

     Cost of Sales. Cost of sales increased to $18,321,000 for nine months ended
September 30, 2000, compared to $16,736,000 in the comparable 1999 period,
primarily due to increased sales volumes. The combined utilization rate of
maximum designed capacity for the operating breweries was 43.2% and 39.5% for
nine months ended September 30, 2000 and 1999, respectively. Cost of sales, as a
percentage of net sales, was substantially unchanged at 69.9% for the 2000
period, compared to 69.3% for the 1999 period.

     Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased to $8,509,000 for the first nine months of
2000 from $8,314,000 for the same period of 1999. As a percentage of net sales,
these expenses were 32.5% and 34.4% for the nine months ended September 30, 2000
and 1999, respectively. The increase is due primarily to the continuation of the
advertising campaign in three key markets that began in June 1999, partially
offset by decreased creative and production costs associated with the
advertising campaign.

     Interest Expense. Interest expense increased to $442,000 for the nine
months of 2000, compared to $392,000 for the comparable 1999 period, reflecting
higher average interest rates partially offset by the effect of lower
outstanding debt.

     Other Income (Expense) -- Net. Other income (expense) - net, increased to
$1,291,000 income in 2000, compared to $(112,000) expense in 1999. The 2000
period includes a gain of approximately $1.0 million resulting from the sale of
a real estate parcel which was previously used as the Fremont Brewery keg
filling, storage and shipping facility. The 1999 period includes a non-cash loss
of $260,000 related to the exchange of some one-half barrel kegs for new
one-sixth barrel kegs.

     Income Taxes. The Company's effective income tax rate increased to 49.6%
for the nine months ended September 30, 2000, compared to 35.0% for the same
period in 1999 due to the effect of the real estate sale. The effective income
tax rate for the full year 1999 was 33.5%.


                                       10
<PAGE>   11
LIQUIDITY AND CAPITAL RESOURCES

     The Company had $8,116,000 and $5,463,000 of cash and cash equivalents at
September 30, 2000 and December 31, 1999, respectively. At September 30, 2000,
the Company had working capital of $5,596,000, compared to $2,635,000 at
December 31, 1999. The Company's long-term debt as a percentage of total
capitalization (long-term debt, convertible redeemable preferred stock and
common stockholders' equity) was 9.5% and 9.9% as of September 30, 2000 and
December 31, 1999, respectively. Cash provided by operating activities totaled
$1,622,000 and $2,210,000 for the nine months ended September 30, 2000 and 1999,
respectively. The decrease in operating cash flow in the nine months ended
September 30, 2000, was due to the timing of the collection of accounts
receivable and payment of accounts payable in December 1999. The 1999 cash flow
amount includes the collection of an income tax receivable of approximately
$500,000.

     On June 5, 1997, the Company converted the $9 million outstanding balance
of its secured bank facility (the "Secured Facility") to a five-year term loan
with a 20-year amortization schedule. As of September 30, 2000, there was $7.54
million outstanding on the Secured Facility, and the Company's one-month
LIBOR-based borrowing rate was approximately 7.94%. In addition, the Company has
a $10 million revolving credit facility (the "Revolving Facility") with the same
bank through July 1, 2002, and as of September 30, 2000, there were no
borrowings outstanding on this facility. The Secured Facility and the Revolving
Facility are secured by substantially all of the Company's assets. Interest
accrues at a variable rate based on the London Inter Bank Offered Rate
("LIBOR"), plus 1.25% to 2.00% for the Secured Facility depending on the
Company's debt-to-tangible net worth ratio. The interest rate for the Revolving
Facility is the applicable LIBOR plus 1.00% to 2.00%, depending on the Company's
debt service-to-cash flow ratio. The Company can fix the rate for up to twelve
months by selecting LIBOR for one- to twelve-month periods as a base.

     The Company has required capital principally for the construction and
development of its technologically-advanced production facilities. To date, the
Company has financed its capital requirements through cash flow from operations,
bank borrowings and the sale of common and preferred stock. The Company expects
to meet its future financing needs, including the significantly higher
advertising expenditures, and working capital and capital expenditure
requirements, through cash on hand, operating cash flow and, to the extent
required and available, bank borrowings and offerings of debt or equity
securities.

     Capital expenditures for the first nine months of 2000 totaled $210,000.
Capital expenditures for the full year 2000 are expected to total approximately
$500,000.

     The Company has certain commitments, contingencies and uncertainties
relating to its normal operations. Management believes that any such
commitments, contingencies or uncertainties, including any environmental
uncertainties, will not have a material adverse effect on the Company's
financial position or results of operations.


                                       11
<PAGE>   12
CERTAIN CONSIDERATIONS: ISSUES AND UNCERTAINTIES

     The Company does not provide forecasts of future financial performance or
sales volumes, although this Quarterly Report contains certain other types of
forward-looking statements that involve risks and uncertainties. The Company
may, in discussions of its future plans, objectives and expected performance in
periodic reports filed by the Company with the Securities and Exchange
Commission (or documents incorporated by reference therein) and in written and
oral presentations made by the Company, include forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, or
Section 21E of the Securities Exchange Act of 1934, as amended. Such
forward-looking statements are based on assumptions that the Company believes
are reasonable, but are by their nature inherently uncertain. In all cases,
there can be no assurance that such assumptions will prove correct or that
projected events will occur. Actual results could differ materially from those
projected depending on a variety of factors, including, but not limited to, the
issues discussed below, the successful execution of market development and other
plans and the availability of financing. While Company management is optimistic
about the Company's long-term prospects, the following issues and uncertainties,
among others, should be considered in evaluating its business prospects and any
forward-looking statements.

     Effect of Competition on Future Sales. The domestic market in which the
Company's craft beers are sold is highly competitive due to the proliferation of
small craft brewers, including contract brewers, the increase in the number of
products offered by such brewers, increased competition from imported beers and
the introduction of fuller-flavored products by major national brewers. The
Company's revenue growth rate began to slow in late 1996, and sales volume
declined between 2.3% and 5.7% during the years 1997, 1998 and 1999, due to the
highly competitive draft beer market. If the Company were to experience negative
sales trends, the Company's future sales and results of operations would be
adversely affected. Sales volumes during the quarters ended September 30, 1999,
December 31, 1999, March 31, 2000, June 30, 2000 and September 30, 2000,
increased from 5.8% to 14.2% compared to corresponding prior year periods. The
Company has historically operated with little or no backlog and, therefore, its
ability to predict sales for future periods is limited.

     Sales Prices. Future prices the Company charges for its products may
decrease from historical levels, depending on competitive factors in the
Company's various markets. The Company has participated in price promotions with
its wholesalers and their retail customers in most of its markets. The number of
markets in which the Company participates in price promotions and the frequency
of such promotions may increase in the future.

     Variability of Gross Margin and Cost of Sales. The Company anticipates that
its future gross margins will fluctuate and may decline as a result of many
factors, including disproportionate depreciation and other fixed and
semivariable operating costs, depending on the level of production at the
Company's breweries in relation to maximum designed production capacity. The
Company's high level of fixed and semivariable operating costs causes gross
margin to be very sensitive to relatively small increases or decreases in sales
volume. In addition, other factors affect cost of sales including changes in:
shipping costs, availability and prices of raw materials and packaging
materials, mix between draft and bottled product sales, the sales mix of various
bottled product packages and Federal or state excise taxes. Also, as sales
volumes through the Distribution Alliance increase, the alliance fee, and other
staging and administrative costs, would increase.

     Advertising and Promotional Costs. Prior to June 1999 the Company had done
very limited advertising. Based upon market and competitive considerations, the
Company determined that a significant increase in such spending was appropriate.
Accordingly, in June 1999 the Company began a brand investment program that
significantly increased advertising and related costs. The increased advertising
investment continued in the first nine months of 2000 and is expected to
continue for the foreseeable future with the objective of establishing or
maintaining momentum towards capturing a larger share of the fragmented craft
beer market. This increased spending has significantly increased the Company's
net losses and decreased its stockholders' equity. In addition, market and
competitive considerations could require an increase in other promotional costs
associated with developing existing and new markets.


                                       12
<PAGE>   13
     Relationship with Anheuser-Busch, Incorporated. Most of the Company's
future sales are expected to be through the Distribution Alliance with A-B. If
the Distribution Alliance were to be terminated, or if the relationship between
A-B and the Company were to deteriorate, the Company's sales and results of
operations could be materially adversely affected. While the Company believes
that the benefits of the Distribution Alliance, in particular distribution and
material cost efficiencies, offset costs associated with the Alliance, there can
be no assurance that these costs will not have a negative impact on the
Company's profit margins in the future.

     Dependence on Third-Party Distributors. The Company relies heavily on
third-party distributors for the sale of its products to retailers. The
Company's most significant non-Distribution Alliance wholesaler, K&L
Distributors, Inc., an A-B affiliated wholesaler in the Seattle area, accounted
for approximately 16% of the Company's sales in the first nine months of 2000.
Substantially all of the remaining sales volumes are now through the
Distribution Alliance to A-B affiliated distributors, most of whom are
independent wholesalers. A disruption of wholesalers' or A-B's ability to
distribute products efficiently due to any significant operational problems,
such as wide-spread labor union strikes, or the loss of K&L Distributors as a
customer, or the termination of the Distribution Alliance could have a material
adverse impact on the Company's sales and results of operations.

     Customer Acceptance, Consumer Trends and Public Attitudes. If consumers
were unwilling to accept the Company's products or if general consumer trends
caused a decrease in the demand for beer, including craft beer, it could
adversely impact the Company's sales and results of operations. The alcoholic
beverage industry has become the subject of considerable societal and political
attention in recent years due to increasing public concern over alcohol-related
social problems, including drunk driving, underage drinking and health
consequences from the misuse of alcohol. If beer consumption in general were to
come into disfavor among domestic consumers, or if the domestic beer industry
were subjected to significant additional governmental regulation, the Company's
sales and results of operations could be adversely affected.

     Effect of Sales Trends on Brewery Efficiency and Operations. During 1997,
1998 and the first half of 1999, the Company's sales volumes declined modestly.
Those declines coincided with significantly slower sales growth in the highly
competitive craft beer segment. The Company's breweries have been operating at
production levels substantially below their actual and maximum designed
capacities. Operating breweries at low capacity utilization rates negatively
impacts gross margins and operating cash flows generated by the production
facilities. In 1998, the Company permanently curtailed production at its Fremont
Brewery and wrote the related assets down to their estimated net realizable
value. The Company will continue to evaluate whether it expects to recover the
costs of its two production facilities over the course of their useful lives.

     Impact of Year 2000. The Company previously discussed the nature and
progress of its plans to become Year 2000 ready. In late 1999, the Company
completed software upgrades and testing of systems. The Company experienced no
significant disruptions in critical information technology and operational
systems and believes those systems successfully responded to the Year 2000 date
change. The Company incurred less than $75,000 of costs during 1999 in
connection with upgrades and modifications of its systems. The Company is not
aware of any material problems resulting from Year 2000 issues, either with its
products, its internal systems, or the products and services of third parties.
The Company will continue to monitor its critical computer applications and
those of its suppliers and vendors to ensure that any latent Year 2000 matters
that may arise are addressed promptly.


                                       13
<PAGE>   14
RECENT ACCOUNTING PRONOUNCEMENTS

     In June 1998, the FASB issued Statement of Financial Accounting Standards
No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS
133"). This statement establishes accounting and reporting standards for
derivative instruments and for hedging activities. In June 1999, the FASB issued
SFAS 137, "Accounting for Derivative Instruments and Hedging Activities -
Deferral of the Effective Date of FASB Statement No. 133", to defer the
effective date of SFAS 133 until fiscal years beginning after June 15, 2000.

     The Company does not have any derivative financial instruments as of
September 30, 2000. The Company has reviewed SFAS 133 and the adoption of SFAS
133 does not have a material impact on its financial position or results of
operations. However, the Company is exposed to interest rate risk. The Company's
long-term debt bears interest at a rate that is tied to a variable rate.
Information pertaining to the Company's debt balance and terms is set forth
above in this "Management's Discussion and Analysis of Financial Condition and
Results of Operations - Liquidity and Capital Resources."

PART II.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)  EXHIBITS

     The following exhibits are filed as part of this report.

<TABLE>
<S>              <C>
         10.27   Employment Agreement between Registrant and David J. Mickelson,
                 dated August 1, 2000

         10.28   Employment Agreement between Registrant and Allen L. Triplett,
                 dated August 1, 2000

         10.29   Employment Agreement between Registrant and Pamela J. Hinckley,
                 dated August 1, 2000

         10.41   Employment Agreement between Registrant and Greg Marquina,
                 dated August 1, 2000

         10.42   Fourth Amendment to Amended and Restated Credit Agreement
                 between U.S. Bank National Association and Registrant, dated
                 August 10, 2000

         27      Financial Data Schedule for the nine months ended September 30,
                 2000.
</TABLE>

(b)  REPORTS ON FORM 8-K

     None were filed during the quarter ended September 30, 2000.

ITEMS 1, 2, 3, 4 AND 5 OF PART II ARE NOT APPLICABLE AND HAVE BEEN OMITTED.


                                       14
<PAGE>   15

                                    SIGNATURE

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Seattle,
State of Washington, on November 9, 2000.

                                       REDHOOK ALE BREWERY, INCORPORATED

                                          BY: /s/  David J. Mickelson
                                              ----------------------------------
                                                   David J. Mickelson

                                                   Executive Vice President,
                                                   Chief Financial Officer and
                                                   Chief Operating Officer


                                          BY: /s/  Anne M. Mueller
                                              ----------------------------------
                                                   Anne M. Mueller

                                                   Controller and Treasurer,
                                                   Principal Accounting Officer

DATE: November 9, 2000


                                       15