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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 March 31, 2002

Commission File Number 0-26542
___________________________

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

|                                                                                       |  |                                                
|-------------------------------------------------------------------------------------- |  | -----------------------------------------------
|Washington
(State or other jurisdiction of
incorporation or organization)              |  | 91-1141254
(I.R.S. Employer
Identification No.)
|                                                                                      
|3400 Phinney Avenue North
Seattle, Washington
(Address of principal executive offices) |  | 98103-8624
(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: 6,814,146 shares outstanding as of April 30, 2002.

Page 1 of 15 sequentially numbered pages



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TABLE OF CONTENTS



|           |                                                                                               |                               |  |  |  |  |  | 
|---------- | --------------------------------------------------------------------------------------------- | ----------------------------- |  |  |  |  |  | 
|PART I.   
|           | ITEM 1. Financial Statements                                                                 
|           |                                                                                               | BALANCE SHEETS               
|           |                                                                                               | STATEMENTS OF OPERATIONS     
|           |                                                                                               | STATEMENTS OF CASH FLOWS     
|           |                                                                                               | NOTES TO FINANCIAL STATEMENTS
|           | ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|           | ITEM 3. Quantitative and Qualitative Disclosures about Market Risk                           
|PART II.  
|           | ITEM 6. Exhibits and Reports on Form 8-K                                                     
|           | ITEMS 1, 2, 3, 4 and 5 of PART II                                                            
|SIGNATURES



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REDHOOK ALE BREWERY, INCORPORATED

FORM 10-Q

For The Quarterly Period Ended March 31, 2002

TABLE OF CONTENTS

|        |  |                                                                                       |  |     
|------- |  | ------------------------------------------------------------------------------------- |  | ----
|        |  |                                                                                       |  | Page
|        |  |                                                                                       |  |     
|PART I  |  | Financial Information                                                                 |  |     
|ITEM 1. |  | Financial Statements                                                                  |  |     
|        |  | Balance
Sheets as of March 31, 2002 and December 31, 2001                             |  | 3   
|        |  | Statements
of Operations for the Three Months Ended March 31, 2002 and 2001           |  | 4   
|        |  | Statements of Cash Flows
for the Three Months Ended March 31, 2002 and 2001           |  | 5   
|        |  | Notes to Financial Statements                                                         |  | 6   
|ITEM 2. |  | Managements Discussion and Analysis of Financial Condition
and Results of Operations |  | 8   
|ITEM 3. |  | Quantitative and Qualitative Disclosures about Market Risk                            |  | 14  
|PART II |  | Other Information                                                                     |  |     
|ITEM 6. |  | Exhibits and Reports on Form 8-K                                                      |  | 14  

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PART I.




ITEM 1. Financial Statements

REDHOOK ALE BREWERY, INCORPORATED




BALANCE SHEETS

|                                                             |                                                                                                                                                 |                           |                                   |                                                                    |            |             |            |              |            |            |            | 
|------------------------------------------------------------ | ----------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------- | --------------------------------- | ------------------------------------------------------------------ | ---------- | ----------- | ---------- | ------------ | ---------- | ---------- | ---------- | 
|                                                             |                                                                                                                                                 |                           |                                   |                                                                    |            | March 31,   |            | December 31,
|                                                             |                                                                                                                                                 |                           |                                   |                                                                    |            | 2002        |            | 2001        
|                                                             |                                                                                                                                                 |                           |                                   |                                                                    |            |             |            |             
|                                                             |                                                                                                                                                 |                           |                                   |                                                                    |            | (Unaudited) |            |              |            |           
|ASSETS                                                      
|Current Assets:                                              |                                                                                                                                                 |                           |                                   |                                                                    |            |             |            |             
|                                                             | Cash and Cash Equivalents                                                                                                                       |                           | $                                 | 5,491,060                                                          |            |             | $          | 6,363,786    |           
|                                                             | Accounts Receivable                                                                                                                             |                           |                                   | 1,584,444                                                          |            |             |            | 1,406,329    |           
|                                                             | Inventories                                                                                                                                     |                           |                                   | 3,176,931                                                          |            |             |            | 3,139,290    |           
|                                                             | Other                                                                                                                                           |                           |                                   | 206,893                                                            |            |             |            | 168,349      |           
|                                                             |                                                                                                                                                 |                           |                                   |                                                                    |            |             |            |             
|                                                             |                                                                                                                                                 | Total Current Assets      |                                   |                                                                    | 10,459,328 |             |            |              | 11,077,754 |           
|Fixed Assets, Net                                            |                                                                                                                                                 |                           | 70,390,172                        |                                                                    |            |             | 70,968,503 |             
|Other Assets                                                 |                                                                                                                                                 |                           | 78,268                            |                                                                    |            |             | 108,955    |             
|                                                             |                                                                                                                                                 |                           |                                   |                                                                    |            |             |            |             
|                                                             |                                                                                                                                                 |                           | Total Assets                      |                                                                    | $          | 80,927,768  |            |              | $          | 82,155,212 |           
|                                                             |                                                                                                                                                 |                           |                                   |                                                                    |            |             |            |             
|LIABILITIES, PREFERRED STOCK
AND COMMON STOCKHOLDERS EQUITY
|Current Liabilities:                                         |                                                                                                                                                 |                           |                                   |                                                                    |            |             |            |             
|                                                             | Accounts Payable                                                                                                                                |                           | $                                 | 2,030,058                                                          |            |             | $          | 1,939,565    |           
|                                                             | Accrued Salaries, Wages and Payroll Taxes                                                                                                       |                           |                                   | 1,392,577                                                          |            |             |            | 1,657,618    |           
|                                                             | Refundable Deposits                                                                                                                             |                           |                                   | 2,043,879                                                          |            |             |            | 2,000,280    |           
|                                                             | Other Accrued Expenses                                                                                                                          |                           |                                   | 476,640                                                            |            |             |            | 389,847      |           
|                                                             | Current Portion of Long-Term Debt                                                                                                               |                           |                                   | 450,000                                                            |            |             |            | 450,000      |           
|                                                             |                                                                                                                                                 |                           |                                   |                                                                    |            |             |            |             
|                                                             |                                                                                                                                                 | Total Current Liabilities |                                   |                                                                    | 6,393,154  |             |            |              | 6,437,310  |           
|                                                             |                                                                                                                                                 |                           |                                   |                                                                    |            |             |            |             
|Long-Term Debt, Net of Current Portion                       |                                                                                                                                                 |                           | 6,412,500                         |                                                                    |            |             | 6,525,000  |             
|                                                             |                                                                                                                                                 |                           |                                   |                                                                    |            |             |            |             
|Deferred Income Taxes, Net                                   |                                                                                                                                                 |                           | 507,967                           |                                                                    |            |             | 575,340    |             
|                                                             |                                                                                                                                                 |                           |                                   |                                                                    |            |             |            |             
|Commitments                                                  |                                                                                                                                                 |                           |                                   |                                                                    |            |             |            |             
|Convertible Redeemable Preferred Stock                       |                                                                                                                                                 |                           | 16,154,955                        |                                                                    |            |             | 16,143,855 |             
|                                                             |                                                                                                                                                 |                           |                                   |                                                                    |            |             |            |             
|Common Stockholders Equity:                                 |                                                                                                                                                 |                           |                                   |                                                                    |            |             |            |             
|                                                             | Common Stock, Par Value $0.005 per Share, Authorized, 50,000,000
Shares; Issued and Outstanding, 6,818,146 Shares in 2002 and
6,920,046 in 2001 |                           |                                   | 34,091                                                             |            |             |            | 34,600       |           
|                                                             | Additional Paid-In Capital                                                                                                                      |                           |                                   | 55,514,005                                                         |            |             |            | 55,743,429   |           
|                                                             | Accumulated Deficit                                                                                                                             |                           |                                   | (4,088,904                                                         | )          |             |            | (3,304,322   | )         
|                                                             |                                                                                                                                                 |                           |                                   |                                                                    |            |             |            |             
|                                                             |                                                                                                                                                 |                           | Total Common Stockholders Equity |                                                                    |            | 51,459,192  |            |              |            | 52,473,707 |           
|                                                             |                                                                                                                                                 |                           |                                   |                                                                    |            |             |            |             
|                                                             |                                                                                                                                                 |                           |                                   | Total Liabilities, Preferred Stock and
Common Stockholders Equity |            | $           | 80,927,768 |              |            | $          | 82,155,212 | 
|                                                             |                                                                                                                                                 |                           |                                   |                                                                    |            |             |            |             

See Accompanying Notes to Financial Statements

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REDHOOK ALE BREWERY, INCORPORATED




STATEMENTS OF OPERATIONS

(Unaudited)

|                                             |  |                              |           |      |  |   |           |  
|-------------------------------------------- |  | ---------------------------- | --------- | ---- |  | - | --------- | -
|                                             |  | Three Months Ended March 31,
|                                             |  |                             
|                                             |  | 2002                         |           | 2001
|                                             |  |                              |           |     
|Sales                                        |  | $                            | 8,921,288 |      |  | $ | 8,898,629 |  
|Less Excise Taxes                            |  |                              | 768,832   |      |  |   | 755,616   |  
|                                             |  |                              |           |      |  |   |           |  
|Net Sales                                    |  |                              | 8,152,456 |      |  |   | 8,143,013 |  
|Cost of Sales                                |  |                              | 6,149,819 |      |  |   | 6,218,705 |  
|                                             |  |                              |           |      |  |   |           |  
|Gross Profit                                 |  |                              | 2,002,637 |      |  |   | 1,924,308 |  
|Selling, General and Administrative Expenses |  |                              | 2,807,660 |      |  |   | 2,676,672 |  
|                                             |  |                              |           |      |  |   |           |  
|Operating Income (Loss)                      |  |                              | (805,023  | )    |  |   | (752,364  | )
|Interest Expense                             |  |                              | 53,965    |      |  |   | 130,262   |  
|Other Income (Expense)  Net                 |  |                              | 24,595    |      |  |   | 91,518    |  
|                                             |  |                              |           |      |  |   |           |  
|Income (Loss) before Income Taxes            |  |                              | (834,393  | )    |  |   | (791,108  | )
|Income
Tax Provision (Benefit)               |  |                              | (60,911   | )    |  |   | (265,021  | )
|                                             |  |                              |           |      |  |   |           |  
|Net Income (Loss)                            |  | $                            | (773,482  | )    |  | $ | (526,087  | )
|                                             |  |                              |           |      |  |   |           |  
|Basic Earnings (Loss) per Share              |  | $                            | (0.11     | )    |  | $ | (0.07     | )
|                                             |  |                              |           |      |  |   |           |  
|Diluted Earnings (Loss) per Share            |  | $                            | (0.11     | )    |  | $ | (0.07     | )
|                                             |  |                              |           |      |  |   |           |  

See Accompanying Notes to Financial Statements

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REDHOOK ALE BREWERY, INCORPORATED




STATEMENTS OF CASH FLOWS

(Unaudited)

|                                                                                                   |                     |                                                |          |                              |          |      |            |           |            |  
|-------------------------------------------------------------------------------------------------- | ------------------- | ---------------------------------------------- | -------- | ---------------------------- | -------- | ---- | ---------- | --------- | ---------- | -
|                                                                                                   |                     |                                                |          | Three Months Ended March 31,
|                                                                                                   |                     |                                                |          |                             
|                                                                                                   |                     |                                                |          | 2002                         |          | 2001
|                                                                                                   |                     |                                                |          |                              |          |     
|Operating Activities                                                                               |                     |                                                |          |                              |          |      |            |          
|Net Income (Loss)                                                                                  |                     | $                                              | (773,482 | )                            |          | $    | (526,087   | )        
|Adjustments to Reconcile Net Income (Loss) to Net Cash
Provided by (Used in) Operating Activities: |                     |                                                |          |                              |          |      |            |          
|                                                                                                   |                     | Depreciation and Amortization                  |          |                              | 783,076  |      |            |           | 812,331    |  
|                                                                                                   |                     | Deferred Income Taxes, Net                     |          |                              | (67,373  | )    |            |           | (270,444   | )
|                                                                                                   |                     | Net Change in Operating Assets and Liabilities |          |                              | (273,471 | )    |            |           | (1,361,010 | )
|                                                                                                   |                     |                                                |          |                              |          |      |            |          
|Net Cash Used in Operating Activities                                                              |                     |                                                | (331,250 | )                            |          |      | (1,345,210 | )        
|                                                                                                   |                     |                                                |          |                              |          |      |            |          
|Investing Activities                                                                               |                     |                                                |          |                              |          |      |            |          
|Expenditures for Fixed Assets                                                                      |                     |                                                | (195,930 | )                            |          |      | (156,714   | )        
|Other, Net                                                                                         |                     |                                                | (3,113   | )                            |          |      |           |          
|                                                                                                   |                     |                                                |          |                              |          |      |            |          
|Net Cash Used in Investing Activities                                                              |                     |                                                | (199,043 | )                            |          |      | (156,714   | )        
|                                                                                                   |                     |                                                |          |                              |          |      |            |          
|Financing Activities                                                                               |                     |                                                |          |                              |          |      |            |          
|Principal Payments on Debt                                                                         |                     |                                                | (112,500 | )                            |          |      | (112,500   | )        
|Repurchase of Common Stock                                                                         |                     |                                                | (229,933 | )                            |          |      | (306,252   | )        
|                                                                                                   |                     |                                                |          |                              |          |      |            |          
|Net Cash Used in Financing Activities                                                              |                     |                                                | (342,433 | )                            |          |      | (418,752   | )        
|                                                                                                   |                     |                                                |          |                              |          |      |            |          
|Increase (Decrease) in Cash and Cash Equivalents                                                   |                     |                                                | (872,726 | )                            |          |      | (1,920,676 | )        
|Cash and Cash Equivalents:                                                                         |                     |                                                |          |                              |          |      |            |          
|                                                                                                   | Beginning of Period |                                                |          | 6,363,786                    |          |      |            | 7,487,190 |           
|                                                                                                   |                     |                                                |          |                              |          |      |            |          
|                                                                                                   | End of Period       |                                                | $        | 5,491,060                    |          |      | $          | 5,566,514 |           
|                                                                                                   |                     |                                                |          |                              |          |      |            |          

See Accompanying Notes to Financial Statements

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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 for the year ended December 31, 2001. 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. Accordingly, certain information and
footnote disclosures normally included in financial statements prepared in
accordance with accounting principles generally accepted in the United States
have been condensed or omitted pursuant to such rules and regulations. These
financial statements are unaudited but, in the opinion of management, reflect
all material adjustments necessary to present fairly the financial position,
results of operations and cash flows of the Company for the periods presented.
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 when the Company reports net income. The calculation
uses the treasury stock method and the as if converted method in determining
the resulting incremental average equivalent shares outstanding when the
outstanding convertible redeemable preferred stock and outstanding stock
options have a dilutive effect.

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

|                                               |              |                                |                                   |   |                              |       |      |   |           |       |  
|---------------------------------------------- | ------------ | ------------------------------ | --------------------------------- | - | ---------------------------- | ----- | ---- | - | --------- | ----- | -
|                                               |              |                                |                                   |   | Three Months Ended March 31,
|                                               |              |                                |                                   |   |                             
|                                               |              |                                |                                   |   | 2002                         |       | 2001
|                                               |              |                                |                                   |   |                              |       |     
|Basic earnings (loss) per share computation:   |              |                                |                                   |   |                              |       |      |  
|                                               | Numerator:   |                                |                                   |   |                              |       |      |   |          
|                                               |              | Net income (loss)              |                                   | $ | (773,482                     | )     |      | $ | (526,087  | )    
|                                               |              |                                |                                   |   |                              |       |      |  
|                                               | Denominator: |                                |                                   |   |                              |       |      |   |          
|                                               |              | Weighted-average common shares |                                   |   | 6,868,733                    |       |      |   | 7,197,513 |      
|                                               |              |                                |                                   |   |                              |       |      |  
|                                               |              |                                | Basic earnings (loss) per share   |   | $                            | (0.11 | )    |   | $         | (0.07 | )
|                                               |              |                                |                                   |   |                              |       |      |  
|Diluted earnings (loss) per share computation: |              |                                |                                   |   |                              |       |      |  
|                                               | Numerator:   |                                |                                   |   |                              |       |      |   |          
|                                               |              | Net income (loss)              |                                   | $ | (773,482                     | )     |      | $ | (526,087  | )    
|                                               |              |                                |                                   |   |                              |       |      |  
|                                               | Denominator: |                                |                                   |   |                              |       |      |   |          
|                                               |              | Weighted-average common shares |                                   |   | 6,868,733                    |       |      |   | 7,197,513 |      
|                                               |              |                                |                                   |   |                              |       |      |  
|                                               |              |                                | Diluted earnings (loss) per share |   | $                            | (0.11 | )    |   | $         | (0.07 | )
|                                               |              |                                |                                   |   |                              |       |      |  

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REDHOOK ALE BREWERY, INCORPORATED

NOTES TO FINANCIAL STATEMENTS (Continued)
(Unaudited)

3. Inventories

Inventories consist of the following:

|                        |  |           |           |              |  |   |           | 
|----------------------- |  | --------- | --------- | ------------ |  | - | --------- | 
|                        |  | March 31, |           | December 31,
|                        |  | 2002      |           | 2001        
|                        |  |           |           |             
|Finished goods          |  | $         | 1,481,609 |              |  | $ | 1,262,737 | 
|Raw materials           |  |           | 895,922   |              |  |   | 960,817   | 
|Promotional merchandise |  |           | 524,655   |              |  |   | 630,554   | 
|Packaging materials     |  |           | 274,745   |              |  |   | 285,182   | 
|                        |  |           |           |              |  |   |           | 
|                        |  | $         | 3,176,931 |              |  | $ | 3,139,290 | 
|                        |  |           |           |              |  |   |           | 

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

4. Stock Repurchase Program

In May 2000, the Board of Directors authorized the repurchase of up to
500,000 shares of the Companys outstanding shares of common stock. Two further
resolutions were passed by the Board of Directors in January and November 2001,
each authorizing the repurchase of an additional 250,000 shares of the
Companys outstanding shares of common stock, bringing the total to 1.0 million
shares. As of March 31, 2002, 870,000 shares of common stock had been purchased
in the open market for $1,480,000. During the three-month period ended March
31, 2002, 102,000 shares of common stock had been purchased in the open market
for $230,000.

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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. The
discussion and analysis includes period-to-period comparisons of the Companys
financial results. Although period-to-period comparisons may be helpful in
understanding the Companys financial results, the Company believes that they
should not be relied upon as an accurate indicator of future performance.

Overview

Since its formation, the Company has focused its business activities on
the brewing, marketing and selling of craft beers. For the three months ended
March 31, 2002, the Company had gross sales of $8,921,000, an increase of 0.3%
from the three months ended March 31, 2001. The Companys sales consist
predominantly of sales of beer to third-party distributors and Anheuser-Busch,
Inc. (A-B) through the Companys long-term distribution alliance with A-B
(the Distribution Alliance). In addition, the Company derives other revenues
from sources including 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 (shipments) increased 1.0% to 50,100 barrels
for the three months ended March 31, 2002, as compared to the same period in
2001. 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 and flavored alcohol beverages. 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 operates its brewing facilities up
to five days per week with multiple shifts per day. While the maximum designed
production capacity for each of the Woodinville and Portsmouth breweries is
approximately 250,000 barrels per year, the current production capacity is
approximately 250,000 barrels per year at the Woodinville facility and 100,000
barrels per year at the Portsmouth facility. Production capacity at the
Portsmouth facility can be added in phases until the facility reaches its
maximum designed production capacity of 250,000 barrels per year. Such an
increase would require additional capital expenditures, primarily for
fermentation equipment and production personnel. The decision to add capacity
is affected by the availability of capital, construction constraints and
anticipated sales in new and existing markets.

The Companys capacity utilization has a significant impact on gross
profit. Generally, when facilities are operating at their maximum designed
production capacities, profitability is favorably affected because fixed and
semivariable operating costs, such as depreciation and production salaries, are
spread over a larger sales base. Because current period production levels have
been substantially below the Companys current production capacity, gross
margins have been negatively impacted. This impact is expected to be reduced as
actual production increases.

In addition to capacity utilization, the Company expects other factors to
influence profit margins, including: higher costs associated with the
enhancement of existing and 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.

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Critical Accounting Policies and Estimates

The Companys financial statements are based upon the selection and
application of significant accounting policies that require management to make
significant estimates and assumptions. Management believes that the following
are some of the more critical judgment areas in the application of the
Companys accounting policies that currently affect its financial condition and
results of operations.

Income Taxes.As of December 31, 2001, the Company had approximately
$10.4 million of deferred tax assets, comprised principally of net operating
loss carryforwards that expire from 2012 through 2021. The realization of these
assets is dependent upon estimates of future taxable income resulting from
future reversals of existing taxable temporary differences, which have been
recorded as deferred tax liabilities and exceed the deferred tax assets. During
the 2002 first quarter, the Company established a valuation allowance of
$219,000, thereby reducing the income tax benefit recorded in its statements of
operations. The valuation allowance covers a portion of the Companys deferred
tax assets, specifically net operating tax loss carryforwards, that may expire
before the Company is able to utilize the tax benefit. The Company reviews its
deferred tax assets on a quarterly basis. To the extent that the Company is
unable to produce adequate taxable income in the future, the Company may be
required to cease recognition of additional tax benefits.

Long-Lived Assets.When facts and circumstances indicate that the
carrying values of long-lived assets may be impaired, an evaluation of
recoverability is performed in accordance with FASB Statement No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of,by comparing the carrying value of the assets to projected
future undiscounted cash flows in addition to other quantitative and
qualitative analyses. Upon indication that the carrying value of such assets
may not be recoverable, the Company recognizes an impairment loss by a charge
against current operations. During 2001, the Company performed an analysis of
its brewery assets to determine if an impairment might exist. The Companys
estimate of future undiscounted cash flows indicated that such carrying values
were expected to be recovered. Nonetheless, it is possible that the estimate of
future undiscounted cash flows may change in the future, resulting in the need
to write down those assets to their fair value.

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.

|                                             |  |                    |       |      |  |  |       |   
|-------------------------------------------- |  | ------------------ | ----- | ---- |  |  | ----- | --
|                                             |  | Three Months Ended
|                                             |  | March 31,         
|                                             |  |                   
|                                             |  | 2002               |       | 2001
|                                             |  |                    |       |     
|Sales                                        |  |                    | 109.4 | %    |  |  | 109.3 | % 
|Less Excise Taxes                            |  |                    | 9.4   |      |  |  | 9.3   |   
|                                             |  |                    |       |      |  |  |       |   
|Net Sales                                    |  |                    | 100.0 |      |  |  | 100.0 |   
|Cost of Sales                                |  |                    | 75.4  |      |  |  | 76.4  |   
|                                             |  |                    |       |      |  |  |       |   
|Gross Profit                                 |  |                    | 24.6  |      |  |  | 23.6  |   
|Selling, General and Administrative Expenses |  |                    | 34.4  |      |  |  | 32.9  |   
|                                             |  |                    |       |      |  |  |       |   
|Operating Income (Loss)                      |  |                    | (9.8  | )    |  |  | (9.3  | ) 
|Interest Expense                             |  |                    | 0.7   |      |  |  | 1.6   |   
|Other Income (Expense)  Net                 |  |                    | 0.3   |      |  |  | 1.1   |   
|                                             |  |                    |       |      |  |  |       |   
|Income (Loss) before Income Taxes            |  |                    | (10.2 | )    |  |  | (9.8  | ) 
|Income Tax Provision (Benefit)               |  |                    | (0.7  | )    |  |  | (3.3  | ) 
|                                             |  |                    |       |      |  |  |       |   
|Net Income (Loss)                            |  |                    | (9.5  | )%   |  |  | (6.5  | )%
|                                             |  |                    |       |      |  |  |       |   

Three Months Ended March 31, 2002 Compared to Three Months Ended March 31, 2001

Sales. Total sales increased 0.3% to $8,921,000 for the three months
ended March 31, 2002, compared to $8,899,000 for the comparable 2001 period,
attributable to a 1.0% increase in sales volume and an increase in other sales.
Total sales volumes for the first quarter of 2002 increased to 50,100 barrels
from 49,600 barrels for

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the same period in 2001. West Coast sales decreased
2.6% in the first quarter of 2002, including a 2.9% decrease in Washington
State, the Companys largest market. Sales in regions other than the West Coast
increased 5.5% as compared to the corresponding 2001 period. Sales other than
wholesale beer sales, primarily retail pub revenues, totaled $888,000 for the
three months ended March 31, 2002, compared to $811,000 for the
corresponding 2001
period. At March 31, 2002 and 2001, the Companys products were distributed in
48 states.

Excise Taxes. Excise taxes increased to $769,000, or 9.4% of net sales in
the 2002 first quarter, compared to $756,000, or 9.3% of net sales in the 2001
first quarter.

Cost of Sales. Cost of sales decreased 1.1% to $6,150,000 in the first
three months of 2002, compared to $6,219,000 in the corresponding 2001 period, due
to a decrease in utilities and some pub costs offset slightly by higher sales
volume. Cost of sales, as a percentage of net sales, was 75.4% for the 2002
period compared to 76.4% for the 2001 period. The utilization rate, based upon
the breweries combined current production capacity, was 57.3% and 56.7% for
quarters ended March 31, 2002 and 2001, respectively.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased to $2,808,000 in the 2002 first quarter,
compared to $2,677,000 in the 2001 first quarter due to an increase in
advertising and promotion expenditures, including the co-operative advertising
and promotion program with the Companys wholesalers. As a percentage of net
sales, these expenses were 34.4% and 32.9% for the quarters ended March 31,
2002 and 2001, respectively.

Interest Expense.Interest expense decreased to $54,000 for the first
quarter of 2002, compared to $130,000 for the comparable 2001 period,
reflecting the effect of lower outstanding debt and lower average interest
rates.

Other Income Net. Other income  net, decreased to $25,000 in the 2002
first quarter, compared to $92,000 in the 2001 first quarter. The decrease is
due to a decrease in average balance of interest-bearing deposits and lower
average interest rates.

Income Taxes. The Companys effective income tax rate was a 7.3% benefit
the first quarter of 2002, compared to 33.5% for the 2001 first quarter.
During the 2002 first quarter, the Company established a valuation allowance of
$219,000, thereby reducing the income tax benefit recorded in the statements of
operations. The valuation allowance covers a portion of the Companys deferred
tax assets, specifically net operating tax loss carryforwards, that may expire
before the Company is able to utilize the tax benefit. Both periods estimated
effective tax rates were based upon an estimate of the full-year pretax result,
relative to other components of the tax provision calculation, such as the
exclusion of a portion of meals and entertainment expenses from tax return
deductions.

Liquidity and Capital Resources

The Company had $5,491,000 and $6,364,000 of cash and cash equivalents at
March 31, 2002 and December 31, 2001, respectively. At March 31, 2002, the
Company had working capital of $4,066,000. The Companys long-term debt as a
percentage of total capitalization (long-term debt, convertible redeemable
preferred stock and common stockholders equity) was 9.2% at March 31, 2002 and
December 31, 2001. Cash used in operating activities was $331,000 and
$1,345,000 for the three months ended March 31, 2002 and 2001, respectively.
The timing of the collection of accounts receivable in December 2000 and
payment of certain current liabilities in January 2001 contributed to a larger
use of cash from operations during the quarter ended March 31, 2001.

The Company has a credit agreement with a bank under which a term loan
(the Term Loan) and a $10 million revolving credit facility (the Revolving
Facility) are provided. The Term Loan, which originated in June 1997 upon the
conversion of a $9 million secured credit facility, has a five-year term with a
20-year amortization schedule. On June 19, 2001, the credit agreement was
amended to extend the maturity date on the Term Loan to June 5, 2007. As of
March 31, 2002, there was $6.9 million outstanding on the Term Loan, and the
Companys one-month LIBOR-based borrowing rate was approximately
3.19%. The
Companys

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Revolving Facility expires on July 1, 2002 and had no borrowings
outstanding as of March 31, 2002. The Term Loan and the Revolving Facility are
secured by substantially all of the Companys assets. Through June 5, 2002,
interest on the Term Loan will accrue at a variable rate based on the London
Inter Bank Offered Rate (LIBOR) plus 1.25%. Effective June 5, 2002, interest on
the Term Loan will accrue at LIBOR plus 1.75%. The interest rate for the Revolving Facility
is the applicable LIBOR plus 1.00% to 2.00%, depending on the
Companys funded debt ratio. The Company has the option to fix the applicable
interest rate for up to twelve months by selecting LIBOR for one- to twelve-
month periods as a base. The termination of the A-B Distribution Agreement for
any reason or the failure by the Company to perform any of its material
obligations under the A-B Investment Agreement would constitute an event of
default under the credit agreement and the bank may declare the entire
outstanding loan balance immediately due and payable.

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 advertising
expenditures associated with the brand investment and co-operative advertising
programs, 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. However, there
cannot be any guarantee that any additional financing will be available when
needed or at commercially reasonable terms. Capital expenditures for the first
three months of 2002 totaled $196,000. Capital expenditures for full year 2002
are expected to total approximately $675,000.

In May 2000, the Board of Directors authorized the repurchase of up to
500,000 shares of the Companys outstanding shares of common stock. Two further
resolutions were passed by the Board of Directors in January and November 2001,
each authorizing the repurchase of an additional 250,000 shares of its
outstanding shares of common stock, bringing the total authorization to 1.0
million shares. As of March 31, 2002, 870,000 shares of common stock had been
purchased in the open market for $1,480,000. As of April 30,
2002, 874,000
outstanding shares of common stock had been purchased in the open market for
$1,490,000.

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
successful execution of market development and other plans, and the
availability of financing and the issues discussed below. 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,
the introduction of fuller-flavored products by major national brewers, and
recent introductions of flavored alcohol beverages. While the Companys sales
volumes for 2000 and 2001 increased 7.6% and 4.9%, respectively, as compared to
the corresponding prior years volumes, the Company did experience declining
sales volumes ranging from 2.3% to 5.7% for the years 1997 through 1999. If the
Company were to again experience negative sales trends, the Companys future
sales and results of operations would be adversely affected. The Company has

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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 current 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 that could affect cost of sales include changes in
freight charges, the availability and prices of raw materials and packaging
materials, the 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.
During 1999 and 2000, the Company primarily utilized radio, billboard and print
advertising in select markets, while also participating, to a small degree, in
co-operative advertising where the Companys spending is matched dollar for
dollar by the local distributor. In 2001, the Company allocated a larger share
of its advertising spending to its co-operative advertising and promotion
program. The advertising investment 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 selling, general and
administrative expenses in 1999, 2000, 2001, and the first quarter of 2002,
leading to increased losses and a reduction in stockholders equity. In
addition, market and competitive considerations could require an increase in
other promotional costs associated with developing existing and new markets.

Relationship with Anheuser-Busch, Incorporated.Most of the Companys
future sales are expected to be through the Distribution Alliance with A-B. See
the Companys Annual Report on Form 10-K for the year ended December 31, 2001,
Part 1, Item 1  Business  Product Distribution, and Relationship With
Anheuser-Busch, Incorporated for a further description of the relationship with
A-B. If the Distribution Alliance were to be terminated, or if the relationship
between A-B and the Company were to deteriorate, distribution of the Companys
products would suffer significant disruption and would have a long-term
material adverse effect on the Companys sales and results of operations. In
the event that the A-B Distribution Agreement is terminated on or before
December 31, 2004, under circumstances described in Item 1 of the Companys
Annual Report on Form 10-K for the year ended December 31, 2001 (see Business 
Relationship with Anheuser-Busch, Incorporated  A-B Distribution Agreement),
the terms of the Series B Preferred Stock purchased by A-B pursuant to the A-B
Investment Agreement require the mandatory redemption of the Series B Preferred
Stock on December 31, 2004, at a redemption price equal to $12.61 per share
(approximately $16.3 million in the aggregate), plus an amount equal to
accumulated and unpaid dividends thereon. The terms of the Series B Preferred
Stock further provide that if at the time of the mandatory redemption the
Company has insufficient legally available funds to redeem the shares of Series
B Preferred Stock as a whole, those funds that are legally available shall be
used to redeem the maximum number of shares of Series B Preferred Stock. At any
time thereafter when additional funds of the Company become legally available
for the redemption of Series B Preferred Stock, such funds shall be immediately
used to redeem shares of Series B Preferred Stock that have not been previously
redeemed. The Company would not be legally able to redeem shares of Series B
Preferred Stock if, after giving effect to such redemption, the Company would
not be able to pay its debts when due in the usual course of business or the
Companys total assets would be less than the sum of its total liabilities.
Such a mandatory redemption could have a material adverse effect on the
financial position and cash flows of the Company. While the Company believes
that the

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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 also relies heavily
on non-Alliance third-party distributors for the sale of its products to
retailers. The Companys most significant non-Alliance wholesaler, K&L
Distributors, Inc., that although not part of the Alliance is a distributor in
the A-B distribution network, accounted for approximately 14% of the Companys
sales in the first three months of 2002. Substantially all of the remaining
sales volume is through the Distribution Alliance to wholesalers that are part
of the A-B distribution network, most of which 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, 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.While the
Companys sales volumes for 2000 and 2001 increased 7.6% and 4.9%,
respectively, as compared to the corresponding prior years volumes, the
Company did experience declining sales volumes ranging from 2.3% to 5.7% for
the years 1997 through 1999. Those declines coincided with significantly slower
sales growth of 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, after performing an
analysis of the Companys current and future production capacity
requirements, production at the Fremont Brewery was permanently
curtailed and the assets were written down to an estimate of their
net realizable value. The Company will continue to evaluate whether
it expects to recover the costs of its two remaining production
facilities over the course of their useful lives. If facts and circumstances indicate
that the carrying value of these long-lived assets may be impaired, an evaluation of
recoverability will be performed in accordance with FASB Statement No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long Lived Assets to
be Disposed Of, by comparing the carrying value of the assets to projected
future undiscounted cash flows in addition to other quantitative and
qualitative analyses. If management believes that the carrying value of such
assets may not be recoverable, the Company will recognize an impairment loss by
a charge against current operations.

Income Tax Benefits.As of December 31, 2001, the Company had federal
income tax net operating loss carryforwards (NOLs) of $26.5 million,
substantially all of which expire from 2012 through 2021. These NOLs can
generally be carried forward no more than 20 years to offset regular tax
liabilities in future years. During the 2002 first quarter, the Company
established a valuation allowance of $219,000, thereby reducing the income tax
benefit recorded in its statements of operations. The valuation allowance
covers a portion of the Companys deferred tax assets, specifically net
operating tax loss carryforwards, that may expire before the Company is able to
utilize the tax benefit. The Company reviews its deferred tax assets on a
quarterly basis. To the extent that the Company is unable to produce adequate
taxable income in the future, the Company may be required to cease recognition
of additional tax benefits.

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Recent Accounting Pronouncements

In August 2001, the FASB issued Statement of Financial Accounting
Standards (SFAS) No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets,which supercedes SFAS No. 121, Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of. SFAS No. 144
retains the fundamental provisions of SFAS No. 121 but sets forth new criteria
for asset classification and broadens the scope of qualifying discontinued
operations. SFAS 144 is applicable to financial statements issued for fiscal
years beginning after December 15, 2001. Adoption of SFAS 144 did not have an
impact on the Companys financial condition or results of operations.




ITEM 3.Quantitative and Qualitative Disclosures about Market Risk

The Company has assessed its vulnerability to certain market risks,
including interest rate risk associated with financial instruments included in
cash and cash equivalents and long-term debt. Due to the nature of these
investments and the Companys investment policies, the Company believes that
the risk associated with interest rate fluctuations related to these financial
instruments does not pose a material risk.

The Company did not have any derivative financial instruments as of March
31, 2002.




PART II.




ITEM 6.Exhibits and Reports on Form 8-K



|(a) |  | Exhibits
|--- |  | --------

None.



|(b) |  | Reports on Form 8-K
|--- |  | -------------------

None were filed during the quarter ended March 31, 2002.




ITEMS 1, 2, 3, 4 and 5 of PART II are not applicable and have been omitted.

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SIGNATURES

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

|             |  |                                   |  |                                                                                                
|------------ |  | --------------------------------- |  | -----------------------------------------------------------------------------------------------
|May 14, 2002 |  | REDHOOK ALE BREWERY, INCORPORATED
|            
|            
|             |  | BY:                               |  | /s/ David J. Mickelson                                                                         
|             |  |                                   |  |                                                                                                
|             |  |                                   |  | David J. MickelsonExecutive Vice President,
Chief Financial Officer and Chief Operating Officer
|            
|            
|             |  | BY:                               |  | /s/ Anne M. Mueller
Anne M. MuellerController and Treasurer,
Principal Accounting Officer      

15