<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 JUNE 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: 7,643,786 shares outstanding as of
June 30, 2000.

                    Page 1 of 16 sequentially numbered pages

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<PAGE>   2

                        REDHOOK ALE BREWERY, INCORPORATED

                                    FORM 10-Q

                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2000

                                TABLE OF CONTENTS


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

ITEM 1.   Financial Statements

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

              Statements of Operations
                 Three Months Ended June 30, 2000 and 1999
                 and Six Months Ended June 30, 2000 and 1999...................    4

              Statements of Cash Flows
                 Six Months Ended June 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 4.   Submission of Matters to a Vote of Security Holders..................   14

ITEM 6.   Exhibits and Reports on Form 8-K.....................................   15
</TABLE>



                                       2
<PAGE>   3
PART I.

ITEM 1. FINANCIAL STATEMENTS


                        REDHOOK ALE BREWERY, INCORPORATED

                                 BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                          JUNE 30,         DECEMBER 31,
                                                                            2000               1999
                                                                        ------------       ------------
                                                                         (Unaudited)
<S>                                                                     <C>                <C>
                                     ASSETS
Current Assets:
  Cash and Cash Equivalents ......................................      $  5,706,650       $  5,462,779
  Accounts Receivable ............................................         2,072,559          1,174,853
  Inventories ....................................................         2,277,077          2,406,797
  Other ..........................................................           449,281            331,481
                                                                        ------------       ------------
    Total Current Assets .........................................        10,505,567          9,375,910
Fixed Assets, Net ................................................        76,257,831         77,739,550
Other Assets .....................................................           455,912            591,431
                                                                        ------------       ------------
      Total Assets ...............................................      $ 87,219,310       $ 87,706,891
                                                                        ============       ============


                            LIABILITIES, PREFERRED STOCK
                          AND COMMON STOCKHOLDERS' EQUITY

Current Liabilities:
  Accounts Payable ...............................................      $  2,802,265       $  2,743,971
  Accrued Salaries, Wages and Payroll Taxes ......................         1,466,403          1,408,552
  Refundable Deposits ............................................         1,740,887          1,571,028
  Other Accrued Expenses .........................................           701,161            567,206
  Current Portion of Long-Term Debt ..............................           450,000            450,000
                                                                        ------------       ------------
    Total Current Liabilities ....................................         7,160,716          6,740,757
                                                                        ------------       ------------
Long-Term Debt, Net of Current Portion ...........................         7,200,000          7,425,000
                                                                        ------------       ------------
Deferred Income Taxes ............................................         1,423,513          1,627,067
                                                                        ------------       ------------
Convertible Redeemable Preferred Stock ...........................        16,077,255         16,055,055
                                                                        ------------       ------------
Common Stockholders' Equity:
  Common Stock, Par Value $0.005 per Share, Authorized, 50,000,000
    Shares; Issued and Outstanding, 7,643,786 Shares in 2000 and
    7,687,786 in 1999 ............................................            38,219             38,439
  Additional Paid-In Capital .....................................        56,923,851         56,989,631
  Accumulated Deficit ............................................        (1,604,244)        (1,169,058)
                                                                        ------------       ------------
      Total Common Stockholders' Equity ..........................        55,357,826         55,859,012
                                                                        ------------       ------------
        Total Liabilities, Preferred Stock and
          Common Stockholders' Equity ............................      $ 87,219,310       $ 87,706,891
                                                                        ============       ============
</TABLE>


                             See Accompanying Notes


                                         3


<PAGE>   4

                        REDHOOK ALE BREWERY, INCORPORATED

                            STATEMENTS OF OPERATIONS

                                   (Unaudited)


<TABLE>
<CAPTION>
                                                     THREE MONTHS ENDED JUNE 30,          SIX MONTHS ENDED JUNE 30,
                                                    ----------------------------       -------------------------------
                                                      2000             1999                2000              1999
                                                    -----------      -----------       ------------       ------------
<S>                                                 <C>              <C>               <C>                <C>
Sales ........................................      $10,407,707      $ 9,308,704       $ 18,564,181       $ 16,983,600
Less Excise Taxes ............................          984,131          865,458          1,748,946          1,568,105
                                                    -----------      -----------       ------------       ------------
Net Sales ....................................        9,423,576        8,443,246         16,815,235         15,415,495
Cost of Sales ................................        6,506,026        5,785,682         11,933,760         10,885,751
                                                    -----------      -----------       ------------       ------------
Gross Profit .................................        2,917,550        2,657,564          4,881,475          4,529,744
Selling, General and Administrative Expenses..        2,706,527        3,084,414          5,348,660          5,256,833
                                                    -----------      -----------       ------------       ------------
Operating Income (Loss) ......................          211,023         (426,850)          (467,185)          (727,089)
Interest Expense .............................          147,900          127,679            288,444            258,097
Other Income -- Net ..........................           85,016           47,623            148,297             83,368
                                                    -----------      -----------       ------------       ------------
Income (Loss) before Income Taxes ............          148,139         (506,906)          (607,332)          (901,818)
Income Tax Expense (Benefit) .................           58,737         (177,425)          (194,346)          (315,645)
                                                    -----------      -----------       ------------       ------------
Net Income (Loss) ............................      $    89,402      $  (329,481)      $   (412,986)      $   (586,173)
                                                    ===========      ===========       ============       ============
Basic Earnings (Loss) per Share ..............      $      0.01      $     (0.04)      $      (0.05)      $      (0.08)
                                                    ===========      ===========       ============       ============
Diluted Earnings (Loss) per Share ............      $      0.01      $     (0.04)      $      (0.05)      $      (0.08)
                                                    ===========      ===========       ============       ============
</TABLE>



                             See Accompanying Notes


                                        4

<PAGE>   5

                       REDHOOK ALE BREWERY, INCORPORATED

                            STATEMENTS OF CASH FLOWS

                                  (Unaudited)


<TABLE>
<CAPTION>
                                                           SIX MONTHS ENDED JUNE 30,
                                                         ----------------------------
                                                             2000             1999
                                                         -----------      -----------
<S>                                                      <C>               <C>
OPERATING ACTIVITIES
Net Loss ...........................................     $  (412,986)     $  (586,173)
Adjustments to Reconcile Net Loss to Net Cash
  Provided by Operating Activities:
    Depreciation and Amortization ..................       1,646,039        1,628,119
    Deferred Income Taxes ..........................        (203,554)        (324,174)
    Net Change in Operating Assets and Liabilities..        (333,307)         878,772
                                                         -----------      -----------
Net Cash Provided by Operating Activities ..........         696,192        1,596,544
                                                         -----------      -----------

INVESTING ACTIVITIES
Expenditures for Fixed Assets ......................        (160,321)        (537,113)
Proceeds from Sale of Assets and Other, Net ........          (1,000)         485,343
                                                         -----------      -----------
Net Cash Used in Investing Activities ..............        (161,321)         (51,770)
                                                         -----------      -----------

FINANCING ACTIVITIES
Principal Payments on Debt .........................        (225,000)        (225,000)
Other, Net .........................................         (66,000)         100,999
                                                         -----------      -----------
Net Cash Used in Financing Activities ..............        (291,000)        (124,001)
                                                         -----------      -----------

Increase in Cash and Cash Equivalents ..............         243,871        1,420,773
Cash and Cash Equivalents:
  Beginning of Period ..............................       5,462,779        3,010,448
                                                         -----------      -----------
  End of Period ....................................     $ 5,706,650      $ 4,431,221
                                                         ===========      ===========
</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
include the accounts of Redhook Ale Brewery, Incorporated (the "Company") and
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              SIX MONTHS ENDED
                                                             JUNE 30,                        JUNE 30,
                                                   --------------------------      ----------------------------
                                                      2000           1999             2000             1999
                                                   ----------     -----------      -----------      -----------
<S>                                                <C>            <C>              <C>              <C>
Basic earnings (loss) per share computation:
  Numerator:
    Net income (loss) ........................     $   89,402     $  (329,481)     $  (412,986)     $  (586,173)
                                                   ----------     -----------      -----------      -----------

  Denominator:
    Weighted-average common shares ...........      7,686,335       7,687,687        7,687,061        7,687,587
                                                   ----------     -----------      -----------      -----------
    Basic earnings (loss) per share ..........     $     0.01     $     (0.04)     $     (0.05)     $     (0.08)
                                                   ==========     ===========      ===========      ===========

Diluted earnings (loss) per share computation:
  Numerator:
    Net income (loss) ........................     $   89,402     $  (329,481)     $  (412,986)     $  (586,173)
                                                   ----------     -----------      -----------      -----------

  Denominator:
    Weighted-average common shares ...........      7,686,335       7,687,687        7,687,786        7,687,587
    Effect of dilutive securities:
      Series B convertible preferred stock ...      1,289,872              --               --               --
      Stock Options, Net .....................            110              --               --               --
                                                   ----------     -----------      -----------      -----------
    Denominator for diluted earnings
     (loss) per share ........................      8,976,317       7,687,687        7,687,061        7,687,587
                                                   ----------     -----------      -----------      -----------
      Diluted earnings (loss) per share ......     $     0.01     $     (0.04)     $     (0.05)     $     (0.08)
                                                   ==========     ===========      ===========      ===========
</TABLE>


                                        6

<PAGE>   7
                        REDHOOK ALE BREWERY, INCORPORATED

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                   (Unaudited)


3.  INVENTORIES

    Inventories consist of the following:

<TABLE>
<CAPTION>
                                                               JUNE 30,     DECEMBER 31,
                                                                 2000           1999
                                                              ------------  ------------
<S>                                                           <C>            <C>
     Finished goods ........................................  $ 1,124,392    $1,059,460
     Raw materials .........................................      712,376       814,106
     Promotional merchandise ...............................      273,715       342,071
     Packaging materials ...................................      166,594       191,160
                                                              ------------  ------------
                                                              $ 2,277,077    $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. As of June 30,
2000, the Company had purchased an aggregate of 44,000 shares for $66,000. In
July 2000, an additional 27,000 shares were purchased for $40,500.

5.  SUBSEQUENT EVENT

    During July 2000, the Company sold a real estate parcel which was previously
used as the Fremont Brewery kegging, storage and shipping facility. The parcel
was sold for approximately $1.7 million in cash and the resulting gain of
approximately $900,000 will be reflected in the three-month period ending
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 six months ended June 30,
2000, the Company had gross sales of $18,564,000, an increase of 9.3% from the
six months ended June 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 11.2% to 105,200 barrels for the six
months ended June 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. Shipments in July 2000 increased approximately 10% from
shipments in July 1999.

    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 June 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 of each is 250,000 and 100,000 barrels per year,
respectively. Additional capital expenditures and production personnel will 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. In July 2000, the Company sold a real estate parcel previously
used for the shipping, storage and kegging operations at the Fremont Brewery.
The land was sold for approximately $1.7 million and the resulting gain of
approximately $900,000 will be reflected in the three-month period 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             SIX MONTHS ENDED
                                                        JUNE 30,                 JUNE 30,
                                                    -----------------       -----------------
                                                     2000       1999        2000        1999
                                                    -----       -----       -----       -----
<S>                                                 <C>         <C>         <C>         <C>
Sales .........................................     110.4%      110.3%      110.4%      110.2%
Less Excise Taxes .............................      10.4        10.3        10.4        10.2
                                                    -----       -----       -----       -----
Net Sales .....................................     100.0       100.0       100.0       100.0
Cost of Sales .................................      69.0        68.5        71.0        70.6
                                                    -----       -----       -----       -----
Gross Profit ..................................      31.0        31.5        29.0        29.4
Selling, General and Administrative Expenses..       28.7        36.5        31.8        34.1
                                                    -----       -----       -----       -----
Operating Income (Loss) .......................       2.3        (5.0)       (2.8)       (4.7)
Interest Income (Expense)--Net ................      (0.8)       (1.0)       (0.8)       (1.2)
                                                    -----       -----       -----       -----
Income (Loss) Before Income Taxes .............       1.5        (6.0)       (3.6)       (5.9)
Provision (Benefit) for Income Taxes ..........       0.6        (2.1)       (1.1)       (2.1)
                                                    -----       -----       -----       -----
Net Income (Loss) .............................       0.9%       (3.9)%      (2.5)%      (3.8)%
                                                    =====       =====       =====       =====
</TABLE>


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

    Sales. Total sales increased 11.8% to $10,408,000 for the three months ended
June 30, 2000, compared to $9,309,000 in the comparable 1999 period, resulting
from a 14.2% 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 second quarter of 2000 increased to 58,700 barrels from
51,400 barrels for the same period in 1999. West Coast sales increased 13.9% in
the second quarter of 2000, including a 6.0% increase in Washington State, the
Company's largest market. Sales other than wholesale beer sales, primarily
retail pub revenues totaled $1,082,000 in the three months ended June 30, 2000,
compared to $978,000 in the comparable 1999 period. At June 30, 2000 and 1999,
the Company's products were distributed in 48 states.

    Excise Taxes. Excise taxes increased to $984,000, or 10.4% of net sales, for
the second quarter of 2000, compared to $865,000, or 10.3% of net sales, for the
comparable period of 1999.

    Cost of Sales. Cost of sales increased to $6,506,000 for the three months
ended June 30, 2000, compared to $5,786,000 in the comparable 1999 period,
primarily due to increased sales volumes. The combined utilization rate of
maximum designed capacity for the operating breweries was 47.0% and 41.1% for
quarters ended June 30, 2000 and 1999, respectively. Cost of sales, as a
percentage of net sales, was substantially unchanged at 69.0% for the 2000
period, compared to 68.5% for the 1999 period.

    Selling, General and Administrative Expenses. Selling, general and
administrative expenses decreased to $2,707,000 for the second quarter of 2000
from $3,084,000 for the same period of 1999. As a percentage of net sales, these
expenses were 28.7% and 36.5% for the quarters ended June 30, 2000 and 1999,
respectively. The decrease is due primarily to the June 1999 impact of initial
creative and production costs associated with the advertising campaign in three
key markets that began in June 1999.



                                       9
<PAGE>   10

    Interest Expense. Interest expense increased to $148,000 for the second
quarter of 2000, compared to $128,000 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 - net, increased to $85,000 in
the 2000 second quarter, compared to $48,000 in the 1999 second quarter. The
increase is due to an increase in average balance of interest-bearing deposits
and higher interest rates.

    Income Taxes. The Company's effective income tax rate increased to 39.6% for
the second quarter of 2000 compared to 35.0% for the second quarter of 1999 and
33.5% for the first quarter of 2000. The effective rate was the result of a
change in the estimated annual effective tax rate to 32.0%. The effective income
tax rate for the full year 1999 was 33.5%.

SIX MONTHS ENDED JUNE 30, 2000 COMPARED TO SIX MONTHS ENDED JUNE 30, 1999

    Sales. Total sales increased 9.3% to $18,564,000 for the six months ended
June 30, 2000, compared to $16,984,000 in the comparable 1999 period, resulting
from a 11.2% 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 six months of 2000 increased to 105,200 barrels from
94,600 barrels for the same period in 1999. West Coast sales increased 9.5% in
first six months of 2000, including a 6.4% increase in Washington State, the
Company's largest market. Sales other than wholesale beer sales, primarily
retail pub revenues, totaled $1,917,000 in the six months ended June 30, 2000,
compared to $1,679,000 in the comparable 1999 period.

    Excise Taxes. Excise taxes increased to $1,749,000, or 10.4% of net sales,
for the first six months 2000, compared to $1,568,000, or 10.2% of net sales,
for the comparable period of 1999.

    Cost of Sales. Cost of sales increased to $11,934,000 for six months ended
June 30, 2000, compared to $10,886,000 in the comparable 1999 period, primarily
due to increased sales volumes. The combined utilization rate of maximum
designed capacity for the operating breweries was 42.1% and 37.8% for six months
ended June 30, 2000 and 1999, respectively. Cost of sales, as a percentage of
net sales, was substantially unchanged at 71.0% for the 2000 period, compared to
70.6% for the 1999 period.

    Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased to $5,349,000 for the first six months of 2000
from $5,257,000 for the same period of 1999. As a percentage of net sales, these
expenses were 31.8% and 34.1% for the six months ended June 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 cost savings such as office rent and compensation and decreased
creative and production costs associated with the advertising campaign.

    Interest Expense. Interest expense increased to $288,000 for the six months
of 2000, compared to $258,000 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 - net, increased to $148,000 in
2000, compared to $83,000 in 1999 due to an increase in the average balance of
interest-bearing deposits and higher interest rates.

    Income Taxes. The Company's effective income tax rate decreased to 32.0% for
the six months ended June 30, 2000, compared to 35.0% for the same period in
1999. The effective income tax rate for the full year 1999 was 33.5%. The lower
estimated tax rate is due to lower estimates of the full-year pretax loss,
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.



                                       10
<PAGE>   11

LIQUIDITY AND CAPITAL RESOURCES

    The Company had $5,707,000 and $5,463,000 of cash and cash equivalents at
June 30, 2000 and December 31, 1999, respectively. At June 30, 2000, the Company
had working capital of $3,345,000, compared to $2,635,000 at December 31, 1999.
The Company's long-term debt as a percentage of total capitalization (long-term
debt, preferred stock and common stockholders' equity) was 9.7% and 9.9% as of
June 30, 2000 and December 31, 1999, respectively. Cash provided by operating
activities totaled $696,000 and $1,597,000 for the six months ended June 30,
2000 and 1999, respectively. The decrease in operating cash flow in the six
months ended June 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 June 30, 2000, there was $7.65 million
outstanding on the Secured Facility, and the Company's one-month LIBOR-based
borrowing rate was approximately 7.98%. In addition, the Company has a $10
million revolving credit facility (the "Revolving Facility") with the same bank
through July 1, 2001, and as of June 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 six months of 2000 totaled $160,000.
Capital expenditures for the full year 2000 are expected to total approximately
$750,000.

    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 1997, 1998 and 1999, due primarily to
slower sales in the highly competitive draft beer market. If negative sales
trends were to continue, 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 and June 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, during periods when the Company's breweries are
producing below 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 six 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-Alliance wholesaler, K&L Distributors, Inc., an
A-B affiliated wholesaler in the Seattle area, accounted for approximately 15%
of the Company's sales in the first six 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. In recent years
the Company's sales volumes have 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
remaining 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.

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 anticipates that the adoption of this new accounting standard will not
have a material impact on its financial position or results of operations.



                                       13
<PAGE>   14

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

    The Company does not have any derivative financial instruments as of June
30, 2000. 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 Item 2 "Management's Discussion and Analysis of Financial
Condition and Results of Operations."


PART II.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The Company's Annual Meeting of Shareholders was held on May 23, 2000. The
following matters were voted upon by the shareholders with the results as
follows:

     (1) The following persons were nominated by the Board of Directors and each
     was elected to serve as a director until the next Annual Meeting of
     Shareholders or until his or her earlier retirement, resignation or
     removal: Paul S. Shipman, M. Colleen Beckemeyer, John T. Carleton, Frank H.
     Clement, Jerry D. Jones, Anthony J. Short, Walter F. Walker and Dennis P.
     Weston.

     The number of votes cast for or withheld for each director nominee was as
     follows:

<TABLE>
<CAPTION>
         NOMINEE                         FOR                 WITHHELD
         <S>                          <C>                     <C>
         Paul S. Shipman              8,178,197               371,066
         M. Colleen Beckemeyer        8,172,046               377,217
         John T. Carleton             8,178,112               371,151
         Frank H. Clement             8,178,242               371,021
         Jerry D. Jones               8,364,825               184,438
         Anthony J. Short             8,174,579               374,684
         Walter F. Walker             8,177,012               372,251
         Dennis P. Weston             8,179,144               370,119
</TABLE>

     (2) The shareholders voted 8,499,082 shares in the affirmative, 24,566
     shares in the negative and 25,615 shares abstained to ratify the
     appointment of Ernst & Young LLP, as independent auditors for the Company's
     year ending December 31, 2000.



                                       14
<PAGE>   15


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a) EXHIBITS

    The following exhibits are filed as part of this report.

       27      Financial Data Schedule for the six months ended June 30, 2000.

(b) REPORTS ON FORM 8-K

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


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



                                       15
<PAGE>   16


                                    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 August 8, 2000.


                                        REDHOOK ALE BREWERY, INCORPORATED


                                        BY:   /s/  Bradley A. Berg
                                           -----------------------------------
                                              Bradley A. Berg
                                              Executive Vice President and
                                              Chief Financial Officer


                                         BY:   /s/  Anne M. Mueller
                                            -----------------------------------
                                               Anne M. Mueller
                                               Controller and Treasurer,
                                               Principal Accounting Officer


DATE: August 8, 2000


                                       16