American Beverage Co Ambev – ‘20-F’ for 12/31/03

On:  Wednesday, 6/30/04, at 5:18pm ET   ·   For:  12/31/03   ·   Accession #:  950157-4-439   ·   File #:  1-15194

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Annual Report of a Foreign Private Issuer   —   Form 20-F
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 20-F        Annual Report of a Foreign Private Issuer --         208    970K 
                          form20-f                                               
 3: EX-1.1      By-Laws                                               24     91K 
 4: EX-2.1      Indenture                                            126    495K 
 5: EX-2.3      Guaranty                                              34    142K 
 6: EX-2.4      Insurance Policy                                      24     96K 
 7: EX-2.5      Agreement Regarding Insurance Policy                  13     50K 
 8: EX-2.6      Application for Political Risk Insurance               6     26K 
 9: EX-4.1      Purchase Agreement                                    37    141K 
10: EX-4.2      Registration Rights Agreement                         16     62K 
11: EX-8.1      List of Material Subsidiaries                          2     11K 
12: EX-11.1     Code of Ethics                                        11     41K 
13: EX-12.1     Principal Executive Officer Certification              2±    11K 
14: EX-12.2     Principal Financial Officer Certification              2±    11K 
15: EX-13.1     Certification of the Principal Executive Officer       1      9K 
16: EX-13.2     Certification of the Principal Financial Officer       1      8K 
 2: EX-99.1     Financial Pages                                      103    432K 

20-F   —   Annual Report of a Foreign Private Issuer — form20-f
Document Table of Contents

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UNITED STATES 
SECURITIES AND EXCHANGE COMMISSION  
Washington, D.C. 20549  

FORM 20-F 

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE      
ACT OF 1934 
For the fiscal year ended December 31, 2003 
Commission file number: 1-15194 
COMPANHIA DE BEBIDAS DAS AMERICAS-AMBEV 
(Exact name of Registrant as specified in its charter)  

                                                        [Enlarge/Download Table]


                                                                                                 
        American Beverage Company-AmBev                    Federative Republic of Brazil         
(Translation of Registrant's name into English)   (Jurisdiction of incorporation or organization)
                        _____________________________                                            
               Rua Dr Renato Paes de Barros 1017, 4o. andar                                      
                       04530-001 Sao Paulo, SP, Brazil                                           
                  (Address of principal executive offices)                                       
                        _____________________________                                            
Securities registered or to be registered pursuant to Section 12(b) of the Act:                  

                                                       NAME OF EACH EXCHANGE
                  TITLE OF EACH CLASS                    ON WHICH REGISTERED

        American Depositary Shares,                    New York Stock Exchange
evidenced by American Depositary                              
Receipts, each representing                                   
100 Common Shares                                             

Common Shares, no par value*                                  

        American Depositary Shares,                    New York Stock Exchange
evidenced by American Depositary                              
Receipts, each representing 100 Preferred                     
Shares                                                        
Preferred Shares, no par value*                               

__________________                                                              

*    Not for trading but only in connection with the registration of the        
American Depositary Shares, pursuant to the requirements of the       
Securities and Exchange Commission.                                   

Securities for which there is a reporting obligation pursuant to Section      
15(d) of the Act:                                                             

                                                       Name of each exchange
           Title of each class                       on which registered

$500,000,000 10 1/2% Notes due December 2011 of      Not Applicable     
Companhia Brasileira de Bebidas guaranteed by                           
Companhia de Bebidas das Americas - AmBev                               

Guaranty of the $500,000,000 10 1/2% Notes due       Not Applicable     
December 2011 by Companhia de Bebidas das                               
Americas - AmBev                                                        

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The number of total outstanding shares of each of the issuer's classes of 
capital or common stock as of May 31, 2004 was: 
15,631,332,792 Common Shares  
21,732,192,808 Preferred Shares 

Indicate by checkmark 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 { } Not Applicable { } 
Indicate by check mark which financial statement item the registrant          
has elected to follow.                                                        

Item 17 { } Item 18 {X} 

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TABLE OF CONTENTS 

                                                                        PAGE

INTRODUCTION..................................................................i 

BACKGROUND ON THE COMPANY.....................................................i 

ACCOUNTING PERIODS AND PRINCIPLES............................................iv 

CURRENCY TRANSLATION..........................................................v 

INDUSTRY DATA................................................................vi 

TRADEMARKS...................................................................vi 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION...................vi 

Item 1.    Identity of Directors, Senior Management and Advisers..............1 

Item 2.    Offer Statistics and Expected Timetable............................1 

Item 3.    Key Information....................................................1 

Item 4.    Information on the Company.........................................27

Item 5.    Operating and Financial Review and Prospects.......................71

Item 6.    Directors, Senior Management and Employees........................111

Item 7.    Major Shareholders and Related Party Transactions.................124

Item 8.    Financial Information.............................................133

Item 9.    The Offer and Listing.............................................141

Item 10.   Additional Information............................................149

Item 11.   Quantitative and Qualitative Disclosures About Market Risk........175

Item 12.   Description of Securities Other than Equity Securities............186

Item 13.   Defaults, Dividend Arrearages and Delinquencies...................186

Item 14.   Material Modifications to the Rights of Security Holders             
           and Use of Proceeds...............................................186

Item 15.   Disclosure Controls and Procedures................................186

Item 16.   Reserved..........................................................186

Item 17.   Financial Statements..............................................186

Item 18.   Financial Statements..............................................186

Item 19.   Exhibits and Certifications.......................................187

Signatures ..................................................................192

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INTRODUCTION  

  This annual report on Form 20-F relates to the two classes of registered
American Depositary Shares (ADSs) of Companhia de Bebidas das Americas - AmBev  
evidenced by American Depositary Receipts (ADRs) representing 100 preferred     
shares of AmBev and ADSs evidenced by ADRs representing 100 common shares of    
AmBev and the U.S.$500,000,000 10 1/2% notes due 2011 of Companhia Brasileira   
de Bebidas (CBB) guaranteed by AmBev (the notes).                               

In this annual report, except as otherwise indicated or as the context
otherwise requires, the "Company", "AmBev", "we", "us" and "our" refers to      
Companhia de Bebidas das Americas - AmBev and its subsidiaries.                 

BACKGROUND ON THE COMPANY 

HISTORY AND DEVELOPMENT OF THE COMPANY                                          

Companhia de Bebidas das Americas - AmBev was incorporated as Aditus  
Participacoes S.A. (Aditus) on September 14, 1998. AmBev is a publicly held     
corporation, incorporated under the laws of the Federative Republic of Brazil.  
Prior to July 1, 1999, it had no operations. On July 1, 1999, the controlling   
shareholders of Companhia Cervejaria Brahma (Brahma) and Companhia Antarctica   
Paulista Industria Brasileira de Bebidas e Conexos (Antarctica), both           
Brazilian corporations, contributed all of their common and preferred shares    
in Brahma and Antarctica in exchange for shares of the same type and class of   
AmBev (the controlling shareholders' contribution). AmBev's principal           
executive offices are located at Rua Dr. Renato Paes de Barros, 1017, 4th       
floor, CEP 04530-001, Sao Paulo, SP, Brazil, Tel.: (55-11) 2122-1200, e-mail:   
ir@ambev.com.br.                                                                

  AmBev is the successor of Brahma. Brahma was founded in 1888 as Villiger
& Cia., and was one of the oldest brewers in Brazil. The Brahma brand was       
registered on September 6, 1888, and in 1904 Villiger & Cia. changed its name   
to Companhia Cervejaria Brahma.                                                 

On March 31, 2001, Brahma was merged into Antarctica, and Antarctica  
changed its name to Companhia Brasileira de Bebidas. This transaction had no    
effect on AmBev's financial statements as each of the entities was              
wholly-owned by AmBev. The transaction permitted AmBev to optimize the future   
use of tax loss carry forwards.                                                 

AmBev and CBB are both Brazilian sociedades anonimas.                 

THE COMBINATION                                                                 

   AmBev was formed through the combination of Brazil's two largest beverage
companies, Brahma and Antarctica (the combination). The combination involved    
the formation of AmBev, as a holding company for Brahma and Antarctica. The     
combination was effected over the course of 1999 and 2000, beginning with the   
contribution of shares of the controlling shareholders of Brahma and            
Antarctica in exchange for shares of AmBev on July 1, 1999, and followed by     
the consummation of transactions by which Antarctica and Brahma became          
wholly-owned subsidiaries of AmBev on September 15, 1999 and September 14,      
2000, respectively, and the public shareholders of Brahma and Antarctica        
became shareholders of AmBev.                                                   

 Pursuant to the controlling shareholders' contribution on July 1, 1999,
Brahma's controlling shareholders, Empresa de Administracao e Participacoes     
S.A. - ECAP (ECAP) and Braco S.A. (Braco), and Antarctica's controlling         
shareholder, Fundacao Antonio e Helena Zerrenner Instituicao Nacional de        

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Beneficencia (FAHZ), contributed all of their common and preferred shares in    
Brahma and Antarctica in exchange for AmBev shares of the same type and class.  

On July 1, 1999, the FAHZ, Braco, and ECAP, the controlling 
shareholders of AmBev, as well as AmBev and Marcel Telles, Jorge Paulo Lemann   
and Carlos Alberto Sicupira, entered into a shareholders' agreement that        
contains provisions relating to the voting of shares of AmBev and the voting    
by AmBev of the shares of its subsidiaries. Messrs. Telles, Lemann and          
Sicupira are indirectly the controlling shareholders of Braco Investimentos     
S.A., which holds all of the AmBev shares previously held by Braco S.A. and has 
succeeded to Braco S.A.'s rights and obligations under the AmBev shareholders'  
agreements. Braco Investimentos S.A. owns 99.74% of the voting shares of ECAP.  
For a detailed description of the AmBev shareholders' agreement, see "Major     
Shareholders and Related Party Transactions--Major Shareholders--AmBev          
Shareholders' Agreement".                                                       

On March 31, 2001, Brahma was merged into Antarctica, and Antarctica  
changed its name to Companhia Brasileira de Bebidas. This transaction had no    
effect on AmBev's consolidated financial statements because each of the         
entities was wholly-owned by AmBev. CBB is AmBev's principal operating          
subsidiary.                                                                     

BRAZILIAN ANTITRUST APPROVAL                                                    

Brazilian antitrust authorities have the power to investigate any     
transaction that results in the concentration of a market share equal to or     
greater than 20% of any relevant market or which involves, among other          
factors, any company with annual gross sales of R$400 million or more. The      
transfer of control of Brahma and Antarctica to AmBev through the controlling   
shareholders' contribution resulted in a market share for AmBev in excess of    
70% of the Brazilian beer market and 20% of the Brazilian soft drinks market.   
Brazilian antitrust authorities therefore reviewed the transaction to           
determine whether it would negatively impact competitive conditions in the      
relevant markets, or whether it would negatively affect consumers.              

The Conselho Administrativo de Defesa Economica (CADE), an independent
agency of the Brazilian Ministry of Justice, is the principal Brazilian         
antitrust authority. On July 14, 1999, CADE issued an interim order in          
connection with the controlling shareholders' contribution that placed          
temporary limits on the actions of Brahma and Antarctica relating to their      
integration. On April 7, 2000, CADE approved the controlling shareholders'      
contribution subject to restrictions designed to prevent AmBev from exercising  
excessive control over the Brazilian beer market. CADE imposed no restrictions  
in connection with soft drinks or other beverages produced by AmBev. On April   
19, 2000, AmBev entered into a performance agreement with CADE pursuant to      
which AmBev agreed to comply with the restrictions imposed by CADE. The         
principal terms of the performance agreement include:                           

 o    For a period of four years, we must share our distribution network
        with at least one regional Brazilian beer company, which cannot have
        a market share in excess of 5% of its respective regional market, in
each of the five regions of Brazil as defined by CADE. This 
obligation is independent of our obligation to share our    
    distribution network with the purchaser of Bavaria for a certain
        specified period of time (see below). We had to choose the companies
 through a public bidding process and had to select those that
        offered to pay us the highest distribution commissions. On September
    10, 2001, after a public bidding process, we signed an agreement
     with Eduardo Bier Comercial de Produtos Alimenticios (Dado Bier),
for the sharing of our distribution network;                

  o    For a period of four years, if we decide to close or dispose of any
    of our beer plants, we must first offer such plant for sale in a
public auction;                                             

o    For a period of five years, if we or any of our subsidiaries     
   dismisses any employee as a result of the restructuring process
relating to the combination and other than for cause, we    

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    must attempt to place the employee in a new job, and provide the
employee with retraining, as appropriate;                   

   o    We and our distributors cannot demand that points of sale operate on
     an exclusive basis, except where our investments and improvements
      are equivalent to a majority of the assets of the point of sale or
      such exclusivity is, in the opinion of the management of the point
of sale, in their interest; and                             

o    A requirement that we sell Antarctica's Bavaria brand and related
      assets. The principal requirements of the Bavaria sale, which have
been completed, were as follows:                            

       (a)  the transfer, to a single purchaser holding no more than 5% of
            the Brazilian beer market, of the Bavaria brand (including the
      Bavaria Pilsen and Bavaria Premium brands) and five beer
plants;                                           

       (b)  the sharing of our distribution network with the purchaser for
         a period of six years, renewable for an additional two-year
       period at the option of the purchaser. During the initial
      four-year period, the purchaser will not have to pay any
             commission for the use of our network, although it will have to
 pay costs associated with freight and distributors'
commissions; and                                  

     (c)  the maintenance prior to sale of specified minimum levels of
          publicity and marketing expenditures relating to the Bavaria
        brand, and the use of reasonable efforts to keep Bavaria's
             market share at a minimum of 4.7% of the Brazilian beer market.

On November 6, 2000, we entered into an agreement with Molson Inc. for
the sale of Bavaria pursuant to the terms of our performance agreement with     
CADE. Our agreement with Molson provided for an initial purchase price of       
R$416.1 million, of which R$191.4 million was received at that time. The        
remaining R$224.7 million was to be payable to us by Molson subject to the      
Bavaria brand reaching certain market thresholds. Molson agreed to pay an       
additional R$44.8 million for each 0.5% increase in market share achieved by    
the Bavaria brand on a yearly basis during a five-year period, up to a maximum  
additional payment of R$224.7 million. At the time of sale, Molson agreed to    
purchase Bavaria at its then-current 4% market share. A minimum market share    
of 6.5%, in addition to intermediary targets, must be attained by 2005 to       
assure receipt of the full contingent price of R$ 224.7 million. Because the    
targets have not been met, we have not recorded in our financial statements     
any portion of this additional consideration. CADE approved this agreement on   
December 13, 2000, and the sale was completed on December 20, 2000. Our         
affiliate Miranda Correa, which owned one of the plants sold to Molson,         
received 5.8% of the proceeds from the sale of the Bavaria brand.               

   Non-compliance with any obligation under the performance agreement during
its five year term will trigger a minimum daily fine of R$5,320 per             
occurrence. This daily fine can be increased up to a maximum of R$106,410 per   
occurrence and may be assessed until such time as we comply with the specific   
obligation. In the event of non-compliance, CADE may also appoint a judicial    
officer to enforce compliance. CADE has the authority to revoke its approval    
of the controlling shareholders' contribution and to file an administrative     
proceeding against us if we do not comply with our obligations. CADE also has   
the general authority to order other remedial measures as provided by law and   
as established under the performance agreement.                                 

On April 30, 2002, Molson decided to terminate early the distribution 
agreement signed at the time of the sale according to the CADE requirements     
under the performance agreement in order to enter into a distribution           
agreement with The Coca-Cola Company.                                           

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 As of December 31, 2002 AmBev had transferred all assets and operations
related to the Bavaria brand to Molson, which included the production and       
ended the distribution of the Bavaria brand in Brazil.                          

ACCOUNTING ASPECTS OF THE COMBINATION                                           

For information on certain accounting aspects of the combination, see 
"Operating and Financial Review and Prospects--Accounting Aspects of the        
Combination".                                                                   

ACQUISITION OF INTEREST IN QUINSA                                               

On January 31, 2003, AmBev consummated its agreements to acquire an   
interest in Quilmes Industrial (Quinsa), Societe Anonyme, the largest           
Argentine brewer, and in Quilmes International (Bermuda) Ltd. (QIB), Quinsa's   
controlled subsidiary. This transaction involved an initial acquisition of      
40.475% of the economic interest in Quinsa. See "Information on the             
Company--Acquisition of Interest in Quinsa". The purchase consideration of      
R$1,717.6 million consisted of a cash payment of R$1,427.9 million and the      
contribution of AmBev's brewery assets located in Argentina, Uruguay and        
Paraguay with a book value (determined under accounting practices generally     
accepted in Brazil) of R$289.7 million. This acquisition granted AmBev further  
access to the Argentine, Bolivian, Uruguayan and Paraguayan markets in which    
Quilmes commands a dominant share, as well as to Quinsa's operations in Chile.  
AmBev will also be able to distribute the Quilmes brands throughout Brazil. A   
put and call option agreement is in place which may result in AmBev acquiring   
an additional 373.5 million Class A shares of Quinsa if Beverage Associates     
(BAC) Corp. exercises its put option, or thereafter if we exercise our call     
option, in either case in exchange for stock of AmBev. The put option granted   
to BAC becomes immediately exercisable in the event of a change of control of   
AmBev occurring prior to January 31, 2006, and will be deemed exercised in the  
event of a change of control of AmBev occurring after that date. Accordingly,   
BAC may seek to exercise the put option in connection with the consummation of  
the Interbrew-AmBev Transactions.                                               

The acquisition of our interest in Quinsa was also subject to the     
approval of Brazilian and Argentine antitrust authorities. For more details of  
the transaction, the Quilmes business and the antitrust restrictions, see       
"Information on the Company--Acquisition of Interest in Quinsa".                

  The accounting effects of the acquisition of our interest in Quinsa were
recognized in our financial statements for the first quarter of 2003, which     
were filed with the Brazilian Securities Commission (CVM) on May 9, 2003. See   
"Operating and Financial Review and Prospects--Accounting aspects of the        
Acquisition of Interest in Quinsa" and "Operating and Financial Review and      
Prospects--Future Impact of Quinsa".                                            

INTERBREW-AMBEV TRANSACTIONS                                                    

Summary                                                               
-------                                                               

On March 3, 2004, AmBev entered into an agreement to acquire Labatt   
Brewing Company Limited (Labatt), a company organized under the laws of         
Canada, from the Belgian brewer Interbrew S.A./N.V. (Interbrew). Labatt is one  
of Canada's leading brewers, with a market share in Canada of approximately     
43% on volumes of approximately 11.5 million hectoliters in 2003. Labatt's      
brand portfolio in Canada includes Labatt Blue[R], Kokanee[R], Keith's[R] and,  
under license, Labatt brews and distributes Budweiser. In exchange for Labatt,  
AmBev will issue to Interbrew approximately 7.9 billion new AmBev common        
shares and 11.4 billion new AmBev preferred shares.                             

Also on March 3, 2004 various entities controlled by AmBev's current  
controlling shareholders, Messrs. Lemann, Telles and Sicupira, entered into an  
agreement with Interbrew and Interbrew's controlling shareholders to exchange   
their controlling interest in AmBev (consisting of approximately 8.25 billion   
AmBev common shares) for 141,712,000 newly-issued ordinary shares of            
Interbrew.                                                                      

The transactions contemplated by these agreements, which we refer to  
collectively as the "Interbrew-AmBev Transactions", are subject to various      
conditions, and the closings of both transactions are contingent upon one       
another. Upon consummation of the Interbrew-AmBev Transactions:                 

o    Labatt will become a wholly owned subsidiary of AmBev; 

      o    Based on current expectations, Interbrew will acquire a total
        of approximately 16.2 billion AmBev common shares and 11.4
           billion AmBev preferred shares, representing an approximately
       69% voting interest and 48% economic interest in AmBev as
           of May 2004. Assuming 100% acceptance by the minority holders
            of AmBev's common shares in the mandatory tender offer ("MTO")
             Interbrew will be required to conduct pursuant to Brazilian law
            following the consummation of the transactions, Interbrew will
    acquire an additional 3.6 billion AmBev common shares,
          increasing its stake in AmBev to an approximately 84% voting
interest and 54% economic interest; and           

     o    Messrs. Lemann, Telles and Sicupira will acquire 141,712,000
             Interbrew shares, representing approximately a 24.7% voting and
        economic interest in Interbrew; Messrs. Lemann, Telles and
      Sicupira, together with Interbrew's existing controlling
             shareholder group, will jointly and equally, indirectly through
      Stichting Interbrew, exercise control over approximately
            321,712,000 Interbrew shares, representing approximately a 56%
 voting interest and economic interest in Interbrew.

AmBev expects that the Interbrew-AmBev Transactions will close in the third     
quarter of 2004. AmBev believes these transactions will allow AmBev to develop  
a presence in the Canadian beer market, provide an opportunity for Interbrew    
to sell AmBev's brands under license in the countries where Interbrew           
operates, and offer the potential for AmBev to benefit from Interbrew's brand   
portfolio through imports of Interbrew brands in countries where AmBev          
operates. The principal agreements with respect to the Interbrew-AmBev          
Transactions are summarized below.                                              

PROPOSED ACQUISITION OF LABATT - INCORPORACAO AGREEMENT       

On March 3, 2004, AmBev entered into the Incorporacao Agreement with  
Interbrew, Labatt and Labatt Brewing Canada Holding Ltd., a wholly owned        
subsidiary of Interbrew ("Mergeco"), which will indirectly own 100% of the      
capital stock of Labatt at the time the transactions contemplated by the        
Incorporacao Agreement are to be consummated. Pursuant to the Incorporacao      
Agreement, Mergeco will be merged into AmBev by means of an Incorporacao under  
Brazilian law, and Interbrew (through the sale shareholder of Mergeco,          
Interbrew International B.V., which is a wholloy owned subsidiary of            
Interbrew) will receive approximately 7.9 billion newly issued AmBev common     
shares and approximately 11.4 billion newly issued AmBev preferred shares. At   
the time of the consummation of the Incorporacao, Mergeco will own 100% of the  
capital stock minus one share of Labatt Holding ApS (Labatt Holdco), a          
corporation organized under the laws of Denmark, and Labatt Holdco will own     
all the capital stock of Labatt. Upon consummation of the Incorporacao, AmBev   
will own 100% of the capital stock of Labatt Holdco, and indirectly, of         
Labatt. Labatt will consist of its Canadian-based operations at the time the    
Incorporacao is consummated.                                                    

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 On May 24, 2004, Interbrew and Fomento Economico Mexicano, S.A. de C.V.
("Femsa") announced that they had reached an agreement to unwind their          
respective indirect minority interests in Femsa Cerveza, S.A. de C.V. ("Femsa   
Cerveza") and Labatt USA L.L.C. ("Labatt USA"). Interbrew has agreed to sell    
its indirect 30% interest in Femsa Cerveza to Femsa for $1.245 billion          
following the closing of the Incorporacao. At the same time, the exclusive US   
distribution rights to Femsa Cerveza's brands will be assigned by Labatt USA    
to a subsidiary of Femsa in exchange for the redemption of Femsa's indirect     
30% interest in Labatt USA. Upon completion of these transactions, Interbrew    
will own 100% of Labatt USA and Femsa will own 100% of Femsa Cerveza. Labatt's  
interests in Femsa Cerveza and Labatt USA have been transferred to another      
subsidiary of Interbrew that is not a subsidiary of Labatt. As a result,        
neither interest will be among the businesses transferred to AmBev pursuant to  
the Incorporacao.                                                               

Accordingly, as a result of the transactions described above and as   
provided in the Incorporacao Agreement, the number of common shares to be       
issued to Interbrew will be reduced approximately 9.5 billion to approximately  
7.9 billion and the number of preferred shares to be issued to Interbrew will   
be reduced from approximately 13.8 billion to approximately 11.4 billion. In    
addition, the aggregate third party net debt of Labatt and its subsidiaries at  
the time the Incorporacao is to be consummated will be C$1.3 billion.           

   Pursuant to the Incorporacao Agreement, AmBev has generally agreed, until
the closing date, or, if the closing does not occur, the second anniversary     
after the termination of the agreement, not to, directly or indirectly, (i)     
acquire or offer or agree to acquire, directly or indirectly, by purchase or    
otherwise, any equity securities or securities convertible into equity          
securities of Interbrew or any of its affiliates or subsidiaries, (ii) propose  
to enter into, directly or indirectly, any merger or business combination       
involving Interbrew or any of its subsidiaries, (iii) otherwise seek to         
influence or control, in any manner whatsoever (including proxy solicitation    
or otherwise), the management or policies of Interbrew or any of its            
subsidiaries, (iv) solicit, initiate or encourage any proposal for an           
amalgamation, a merger or other business combination, sale of securities, sale  
of substantial assets, joint venture, or similar transaction involving AmBev    
(an "AmBev Bid"), (v) enter into any agreement with respect to any AmBev Bid,   
(vi) participate in any discussions or negotiations regarding, or furnish to    
any person any information with respect to, or take any other action to         
facilitate any inquiries or the making of any proposal that constitutes, or     
may reasonably be expected to lead to, any AmBev Bid, (vii) assist, advise or   
encourage (including by knowingly providing or arranging financing for that     
purpose) any other person in doing any of the foregoing, or (vii) disclose any  
intention or plan inconsistent with the foregoing.                              

   Pursuant to the Incorporacao Agreement, each of Interbrew and Labatt have
agreed to a "no solicitation" provision which will remain in effect until the   
closing date or, if the closing does not occur and the agreement is             
terminated, for two years following the date of termination. The "no            
solicitation" provision generally restricts the ability of Interbrew and        
Labatt to solicit or enter into agreements that would enable a third party to   
acquire control over it. In addition, pursuant to the Incorporacao Agreement,   
Interbrew has agreed not to transfer any of the capital stock of Labatt or any  
interest therein, or enter into any contract, option or other arrangement with  
respect to the transfer (including any profit sharing or other derivative       
arrangement) of any of the capital stock of Labatt or any interest therein,     
except in compliance with the provisions of the Incorporacao Agreement.         

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  The closing of the Incorporacao Agreement is subject to the satisfaction
of various conditions, including the approval of the applicable antitrust       
authorities and the closing of the transactions contemplated by the             
Contribution and Subscription Agreement described below.                        

CONTRIBUTION AND SUBSCRIPTION AGREEMENT                               

On March 3, 2004, S-Braco Participacoes S.A., Rougeval Limited, Tinsel
Investments Inc., ECAP, Braco S.A., Braco Management Inc., Tinsel               
Participacoes Ltda., Tinsel Investments S.A. ("Tinsel Lux"), BRC S.A. ("BRC")   
and Bracopar S.A. (collectively, the "SB Group Companies") entered into a       
Contribution and Subscription Agreement with the Stichting Interbrew (the       
"Stichting"), Eugenie Patri Sebastien ("EPS"), and Interbrew. Messrs. Lemann,   
Telles and Sicupira control, directly or indirectly, all of the SB Group        
Companies. The Stichting is a foundation organized under Dutch law which        
currently holds, on behalf of EPS and affiliates of EPS, approximately 275.1    
million ordinary shares of Interbrew, representing approximately 64% of the     
outstanding ordinary shares of Interbrew.(1)                                    

Pursuant to the Contribution and Subscription Agreement, the SB Group 
Companies are in the process of reorganizing their direct and indirect          
holdings of Ambev common shares such that, upon closing of the transactions     
contemplated by the Contribution and Subscription Agreement, an SB Group        
Company (BRC) will contribute to Interbrew 100% of the capital stock of         
another SB Group Company (Tinsel Lux) that will indirectly own (i) a total of   
approximately 4.2 billion AmBev common shares and (ii) approximately 98.64% of  
the capital stock of ECAP, which directly owns approximately 4.0 billion AmBev  
common shares. In exchange for the contribution to Interbrew of 100% of the     
capital stock of Tinsel Lux, Interbrew will issue to BRC approximately 141.7    
million ordinary shares of Interbrew. The closing of the transactions           
contemplated by the Contribution and Subscription Agreement is subject to the   
satisfaction of various conditions, including the approval of the applicable    
antitrust authorities and the closing of the transactions contemplated by the   
Incorporacao Agreement. The Contribution and Subscription Agreement can be      
terminated by mutual consent of the SB Group Companies and Interbrew, or by     
either the SB Group Companies or Interbrew if, prior to closing, the            
Incorporacao Agreement is terminated in accordance with its terms.              

Upon closing of the transactions contemplated by the Contribution and 
Subscription Agreement, Mr. Lemann, Mr. Sicupira and Mr. Telles would           
beneficially own, through their interests in BRC, the Interbrew shares to be    
acquired by BRC, and Interbrew would beneficially own the Ambev common shares   
that are currently beneficially owned by Mr. Lemann, Mr. Sicupira and Mr.       
Telles by virtue of their interests in the SB Group Companies.                  

 Pursuant to the Contribution and Subscription Agreement, each party has
agreed to a "no solicitation" provision which will remain in effect until the   
closing of the transactions contemplated by the Contribution and Subscription   
Agreement or, if the closing does not occur and the agreement is terminated,    
for two years following the date of termination. The "no solicitation"          
provision generally restricts the right of any of the SB Group Companies, on    
the one hand, and Interbrew, EPS and the Stichting, on the other hand, to       
attempt to acquire control over one another without the prior written consent   
of the board of directors of the "target" party, and restricts the ability of   
each party to solicit or enter into agreements that would enable a third party  
to acquire control over it.                                                     

   In addition, pursuant to the Contribution and Subscription Agreement, the
SB Group Companies have agreed not to transfer, directly or                     

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

(1) Based on publicly available information, AmBev believes that: The           
Stichting was organized by members of several Belgian families who              
collectively hold a controlling interest in Interbrew as a means to             
consolidate their shareholdings in Interbrew. In exchange for each Interbrew    
Share transferred to it, the Stichting issues to the transferee a certificate   
representing such share. The Stichting votes all of the Interbrew shares held   
by it at general and extraordinary meetings of Interbrew and is managed by a    
board of directors. The Stichting receives all dividends in respect of the      
Interbrew shares held by it for distribution to its certificate holders. EPS,   
an entity affiliated with such Belgian families, currently holds 176 million    
Stichting certificates, and the Stichting currently holds approximately 275.1   
million Interbrew shares, representing approximately 64% of all outstanding     
Interbrew shares.                                                               

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indirectly, any shares or interests in any SB Group Company or any shares or    
interests in AmBev. Similarly, EPS and the Stichting have agreed not to         
transfer, directly or indirectly, 252 million Interbrew shares (including any   
Stichting certificates representing the 252 million Interbrew shares or any     
other interests in the 252 million Interbrew shares). These restrictions on     
transfer will terminate upon the closing of the transactions contemplated by    
the Contribution and Subscription Agreement, or, if the closing does not        
occur, upon the termination of the Contribution and Subscription Agreement in   
accordance with its terms.                                                      

The Contribution and Subscription Agreement also contains certain     
restrictions on the business and activities of the SB Group Companies and       
AmBev, on the one hand, and Interbrew, EPS and the Stichting, on the other      
hand, until the closing of the transactions contemplated by the Contribution    
and Subscription Agreement. In general, these restrictions obligate the         
parties to conduct their respective businesses in the ordinary course           
consistent with past practice and impose certain limitations with respect to,   
among other things, the incurrence of debt beyond a specified amount,           
significant acquisitions or dispositions, and issuances of stock.               

Mandatory Tender Offer                                      
----------------------                                      

   The Contribution and Subscription Agreement provides that, as required by
Brazilian law, Interbrew will make a mandatory tender offer ("MTO") following   
the closing of the transactions contemplated by the Contribution and            
Subscription Agreement for all shares of AmBev common stock not owned by it.    
As required by Brazilian law, the price to be paid by Interbrew for each share  
of AmBev common stock pursuant to the MTO will be an amount equal to 80% of     
the per share consideration received by the SB Group Companies in respect of    
the contribution of the AmBev common shares.                                    

BAC Tag-Along Right                                         
-------------------                                         

 In addition, the Contribution and Subscription Agreement provides that,
to the extent a BAC shareholder exercises its tag-along right (BAC Tag-Along    
Right) under the stock purchase agreement dated March 1, 2002, as amended,      
between AmBev and BAC, (a) Interbrew will, at such BAC shareholder's option,    
either (i) issue such BAC shareholder a number of shares of Interbrew in        
accordance with the BAC Tag-Along Right, or (ii) purchase such BAC              
shareholder's AmBev common shares for cash, and (b) BRC will (x)                
simultaneously with Interbrew's issuance or payment to such BAC shareholder,    
pay to Interbrew a cash amount equal to any premium paid by Interbrew in        
connection with the BAC Tag-Along Right or (y) elect to reduce the number of    
Interbrew shares being received by BRC equal to such premium divided by the     
closing price of the Interbrew shares on the day immediately prior to the       
closing date of the transactions contemplated by the Contribution and           
Subscription Agreement during which the Interbrew common stock is trading on    
Euronext Brussels.                                                              

Interbrew Shareholders' Agreement                           
--------------------------------                            

  In connection with the Contribution and Subscription Agreement, on March
2, 2004, BRC, EPS, an affiliate of EPS, Rayvax Societe d'Investissements S.A.   
("Rayvax") and the Stichting entered into a shareholders agreement (the         
"Interbrew Shareholders' Agreement") to become effective with respect to its    
operative provisions upon the closing of the transactions contemplated by the   
Contribution and Subscription Agreement. The Interbrew Shareholders Agreement   
will provide for BRC and EPS to hold their interests in Interbrew through the   
Stichting and will address, among other things, certain matters relating to     
the governance and management of the Stichting and Interbrew as well as the     
transfers of interests in Interbrew. Upon the closing of the transactions       
contemplated by the Contribution and Subscription Agreement, BRC will transfer  
all 141.7 million of its Interbrew shares to the Stichting in exchange for      
141.7 million Stichting certificates, and EPS will hold at least 180 million    
Stichting certificates (representing 180 million Interbrew shares). The         
approximately 321.7 million Interbrew shares anticipated to be held by the      
Stichting upon the closing of the transactions contemplated by the              
Contribution and Subscription Agreement will represent approximately 56% of     
all issued and outstanding Interbrew shares at that time.                       

 Pursuant to the terms of the Interbrew Shareholders' Agreement, BRC and
EPS will jointly and equally exercise control over the Stichting and the        
Interbrew shares held by the Stichting. Among other things, BRC and EPS have    
agreed that the Stichting will be managed by an eight-member board of           

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directors and that they each will have the right to appoint four directors to   
the Stichting board. At least seven of the eight Stichting directors must be    
present in order to constitute a quorum, and any action to be taken by the      
Stichting board will, subject to certain qualified majority conditions,         
require the approval of a majority of the directors present, including at       
least two directors appointed by BRC and two appointed by EPS. Subject to       
certain exceptions, all decisions of the Stichting with respect to the          
Interbrew shares it will hold on behalf of BRC and EPS, including how the       
Stichting's Interbrew shares will be voted at all general and extraordinary     
shareholder meetings of Interbrew, will be made by the Stichting board. In      
addition, the Interbrew Shareholders Agreement will provide that the board of   
directors of Interbrew will have between 12 and 14 members, four of which will  
be nominated by EPS, four of which will be nominated by BRC and four to six of  
which will be independent directors nominated by the Stichting's board.         

 The Interbrew Shareholders' Agreement requires the Stichting's board to
meet prior to each shareholder meeting of Interbrew to determine how the        
Stichting's Interbrew shares will be voted. In addition, the Interbrew          
Shareholders Agreement will require Interbrew's bylaws to require               
shareholders' approval with a qualified majority of 75% with respect to a       
number of significant matters affecting Interbrew, including issuances of       
stock (except for issuances made by the board of directors of Interbrew within  
the authorized capital), mergers, large acquisitions and dispositions and       
changes in Interbrew's dividend policy. The Interbrew Shareholders Agreement    
also provides for Interbrew's bylaws to require that a majority of the          
shareholders (50% of votes cast plus one) approve various other matters, such   
as the appointment and dismissal of Interbrew's CEO, ratification of certain    
transactions with affiliates and any other matter that under Belgian law must   
be approved by the shareholders.                                                

   The Interbrew Shareholders' Agreement also contains procedures to address
any deadlocks that may arise as a consequence of the exercise of joint and      
equal control by BRC and EPS. In the event of a deadlock involving any matter   
which requires the 75% supermajority shareholder approval referred to above,    
the Interbrew Shareholders Agreement provides for a "buy/sell" procedure by     
which the party that desires to vote in favor of the particular matter (the     
"approving party") may require that the other party (the "dissenting party")    
take one of two actions: the dissenting party must either buy the approving     
party's Stichting certificates or the dissenting party must sell its Stichting  
certificates to the approving party, in each case at prices set by the          
approving party. The "buy/sell" procedure will not be exercisable by either     
BRC or EPS for the first five years after the closing of the transactions       
contemplated by the Contribution and Subscription Agreement and will also       
impose a 360 day "cooling off" period before the procedure may be exercised     
following any deadlock.                                                         

The Interbrew Shareholders' Agreement provides for restrictions on the
ability of BRC and EPS to transfer their Stichting certificates (and            
consequently their Interbrew shares held through the Stichting). EPS has        
agreed that it will at all times hold, directly or indirectly, no less than     
180,000,000 Stichting certificates (representing 180,000,000 Interbrew          
shares), and BRC has agreed that it will at all times hold, directly or         
indirectly, no less than 141,712,000 Stichting certificates (representing       
141,712,000 Interbrew shares). In addition, the Interbrew Shareholders'         
Agreement will require certain affiliates of EPS whose Interbrew shares are     
not held through the Stichting to vote their Interbrew shares in the same       
manner as the Interbrew shares held by the Stichting and will restrict such     
affiliates' ability to transfer their Interbrew shares in a manner that would   
disrupt the orderly trading of the Interbrew shares. In addition, under the     
Interbrew Shareholders Agreement, EPS and BRC will agree not to acquire any     
shares of capital stock of AmBev, subject to limited exceptions.                

    The Interbrew Shareholders' Agreement will remain in effect for an initial
term of 20 years from the date of closing of the transactions contemplated by   
the Contribution and Subscription Agreement. Thereafter, the Interbrew          
Shareholders Agreement will be automatically renewed for successive renewal     
terms of 10 years each unless, not later than two years prior to the            
expiration of the initial or any renewal term, either BRC or EPS notifies the   
other of its intention to terminate the agreement. Amendments to the            
Stichting's organizational documents (its Conditions of Administration and      
ByLaws) and Interbrew's bylaws, which reflect and implement the agreements      
contained in the Interbrew Shareholders' Agreement, will take effect upon the   
closing of the transactions contemplated by the Contribution and Subscription   
Agreement.                                                                      

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Lock-up Agreements                                            
------------------                                            

  In connection with the Contribution and Subscription Agreement, on March
2, 2004, Interbrew, Mr. Lemann, Mr. Sicupira and Mr. Telles entered into a      
lock-up agreement whereby Mr. Lemann, Mr. Sicupira and Mr. Telles have agreed   
not to transfer, directly or indirectly, or consent to or permit any transfer   
of, any AmBev shares held directly or indirectly by them to any person, and to  
vote and cause any entities they control that hold AmBev shares to vote in      
favor of the transactions contemplated by the Contribution and Subscription     
Agreement, including the Incorporacao and the Incorporacao                      
Agreement, at any AmBev shareholders meeting where these items are on the       
agenda. The transfer restrictions in the lock-up agreement expire on the        
earliest of (i) the closing of the Contribution and Subscription Agreement,     
(ii) the date of termination of the transactions contemplated by the            
Contribution and Subscription Agreement and (iii) June 30, 2005. The voting     
restrictions in the lock-up agreement terminate on the earlier of (i) the       
closing of the transactions contemplated by the Contribution and Subscription   
Agreement and (ii) the date of termination of the Contribution and              
Subscription Agreement.                                                         

  In connection with the Contribution and Subscription Agreement, on March
2, 2004, EPS and BRC entered into a lock-up agreement providing for certain     
restrictions on the transfer by EPS and certain of its affiliates of 72         
million Interbrew shares that are not held on their behalf by the Stichting.    
These transfer restrictions terminate on June 30, 2005. The lock-up agreement   
also contains an undertaking from EPS that, beginning July 1, 2005, they will   
effect any sales of Interbrew shares not required to be held by the Stichting   
on their behalf pursuant to Interbrew Shareholders Agreement in an orderly      
manner so as not to disrupt trading in the Interbrew shares.                    

OVERVIEW OF LABATT                                                              

Labatt is one of Canada's two leading brewers with an estimated market
share of 43% at the end of 2003. Labatt brews approximately 60 different        
brands (including brand extensions) in the specialty import, specialty          
domestic, premium and value segments. Labatt's brand portfolio in Canada        
includes Labatt Blue(R), Kokanee(R) and Keith's(R). Labatt also brews and       
distributes Budweiser, the fastest-growing brand in Canada, under license from  
Anheuser-Busch. Labatt's beer portfolio includes 11 of the top 20 brands sold   
in Canada, including the top-selling and third place beers, Budweiser and       
Labatt Blue(R), respectively. All of Labatt's beer, except for speciality       
imports, is produced in Canada at eight breweries located across Canada.        
Labatt distributes and sells its beers in Canada and the United States. Labatt  
is a wholly owned subsidiary of Interbrew, which acquired Labatt in 1995.       

  As contemplated in the Incorporacao Agreement, Labatt completed a series
of restructuring transactions in May 2004 that included the sale of interests   
in various non-Canadian operating subsidiaries, the winding up of one or more   
holding companies that held such interests, the transfer to a subsidiary of     
Interbrew of various inactive Canadian and U.S. subsidiaries and the transfer   
to another subsidiary of Interbrew of Labatt's 70% interest in Labatt USA and   
its 30% interest in Femsa Cerveza. In addition, certain intercompany            
indebtedness payable by Labatt to a subsidiary of Interbrew was repaid and      
certain indebtedness owing by subsidiaries of Labatt that were transferred to   
subsidiaries of Interbrew was capitalized in advance of the transfers. As a     
result of these restructuring transactions, Labatt's assets now consist         
primarily of a wholly owned Canadian brewing operation, which is referred to    
in this annual report as "Labatt Canada."                                       

Labatt Canada prepared "carve-out" combined financial statements in   
Canadian dollars as at December 31, 2003 and 2002 and for the three-year        
period ended December 31, 2003 in accordance with Canadian generally accepted   
accounting principles. In 2003, Labatt Canada had net sales of C$2,005 million  
compared to C$1,951 million in 2002 and C$1,882 million in 2001, operating      
earnings of C$475 million compared to C$460 million in 2002 and C$397 million   
in 2001 and net earnings of C$273 million compared to C$244 million in 2002     
and C$173 million in 2001. At December 31, 2003, Labatt Canada had total        
assets of C$2,288 million, liabilities of C$1,836 million and shareholders'     
equity of C$452 million compared to C$2,271 million, C$2,069 million and C$202  
million, respectively, as of December 31, 2002. Labatt Canada's eight           
breweries across Canada have an aggregate annual beer production capacity of    
approximately 14.4 million hectoliters. Labatt Canada's total volume of beer    
produced in 2003 was approximately 11.5 million hectoliters.                    

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ACCOUNTING PERIODS AND PRINCIPLES 

  We have prepared our audited annual consolidated financial statements as
of December 31, 2003 and 2002 and 2001 for the three years ended December 31,   
2003 in Brazilian Reais in accordance with accounting practices generally       
accepted in Brazil (Brazilian GAAP), which are based on Brazilian Corporate     
Law (Law 6,404, as amended, by Law No. 9,457/97 and Brazilian Law No.           
10,303/01, which we refer to collectively as Brazilian Corporate Law), the      
rules and regulations issued by the "Comissao de Valores Mobiliarios"- CVM, or  
the Brazilian Securities Commission, and the accounting standards issued by     
the IBRACON - "Instituto dos Auditores Independentes do Brasil", or the         
Brazilian Institute of Independent Accountants), as applied by us in preparing  
our statutory financial statements and annual report and accounts, which        
differ in certain significant respects from accounting principles generally     
accepted in the United States (U.S. GAAP). The audited financial statements     
included in this annual report have been prepared in accordance with Brazilian  
GAAP and include a reconciliation of net income and shareholders equity to      
U.S. GAAP. In addition to the reconciliation of these key balances, the         
financial statements also include a discussion of the reconciling differences   
in accounting principles and the presentation of the U.S. GAAP condensed        
balance sheets and statement of operations in Brazilian Reais. The financial    
information contained in this annual report is in accordance with Brazilian     
GAAP, except as otherwise noted.                                                

Prior to July 1, 1999, the date of the controlling shareholders'      
contribution, AmBev had no material assets, liabilities or operations. AmBev    
was created by the combination of Brahma and Antarctica                         

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on that date and was accounted for as a merger under Brazilian GAAP. However,   
for purposes of presenting the Brazilian GAAP and U.S. GAAP Selected Financial  
Data in this annual report, AmBev was treated as the successor to Brahma. We    
have included in the Selected Financial Data, for comparison purposes, the      
financial information of the predecessor company, Brahma, for the year ended    
December 31, 1999, which under Brazilian GAAP does not include the merger with  
Antarctica.                                                                     

  Percentages and some amounts in this annual report have been rounded for
ease of presentation. Any discrepancies between totals and the sums of the      
amounts listed are due to rounding.                                             

CURRENCY TRANSLATION  

 In this annual report, references to "real", "Reais" or "R$" are to the
Brazilian legal currency. References to "U.S. dollar" or "U.S.$" are to the     
legal currency of the United States and references to "Canadian dollar" or      
"C$" are to the legal currency of Canada. We have translated some of the        
Brazilian currency amounts contained in this annual report into U.S. dollars.   
All financial information relating to us that is presented in U.S. dollars in   
this annual report has been translated from Reais at the period end exchange    
rate or average exchange rate prevailing during the period, as published by     
the Central Bank of Brazil (Central Bank), unless the context otherwise         
requires. The commercial market rate on May 31, 2004 was R$3.1291 to U.S.$1.00  
as published by the Central Bank. The U.S. dollar equivalent information        
presented in this annual report is provided solely for the convenience of the   
readers of this annual report and should not be construed as implying that the  
Brazilian currency amounts represent, or could have been or could be converted  
into, U.S. dollars at such rates or at any rate. See "Key Information-Exchange  
Rate Information-Exchange Controls" for more detailed information regarding     
the translation of Reais into U.S. dollars.                                     

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INDUSTRY DATA 

In this annual report, we refer to information regarding the beverage 
market and its segments and competitors from:                                   

EUROMONITOR                                                                     
Contact: Anne Nugent / Luka Erceg                                               
60-61 Britton Street                                                            
London                                                                          
EC1M5UX                                                                         
Tel.: 44 (0) 20 7251 8024                                                       
www.euromonitor.com http://www.euromonitor.com                                  

ACNIELSEN                                                                       
Contact: Antonio Marcio Mongelli Garotti                                        
Rua Monte Castelo, 55                                                           
Granja Viana                                                                    
Cotia - Sao Paulo                                                               
CEP 06710-675                                                                   
Tel.: 55 11 4613 7000                                                           
www.acnielsen.com.br http://www.acnielsen.com.br                                

PEPSICO                                                                         
Contact: Vasco Luce                                                             
Rua Verbo Divino, 1661 - 7o. andar                                              
Sao Paulo - SP                                                                  
CEP 04719 002                                                                   
Tel.: 55 11 2122 1288                                                           
www.pepsi.com http://www.pepsi.com                                              
www.pepsi.com.br http://www.pepsi.com.br                                        

TRADEMARKS  

This annual report includes names of our products which constitute    
trademarks or trade names which we own or which are owned by others and are     
licensed to us for our use. This annual report also contains other brand        
names, trade names, trademarks or service marks of other companies, and these   
brand names, trade names, trademarks or service marks are the property of       
those other companies.                                                          

CAUTIONARY STATEMENT REGARDING  
FORWARD-LOOKING INFORMATION 

   We make forward-looking statements in this annual report that are subject
to risks and uncertainties. These statements are based on the beliefs and       
assumptions of our management, and on information currently available to us.    
Forward-looking statements include statements regarding the intent, belief or   
current expectations of AmBev or its directors or executive officers with       
respect to, but not limited to:                                                 

o    the declaration or payment of dividends;                         

o    the direction of future operations;                              

o    the implementation of principal operating strategies, including  
    existing, potential acquisition or joint venture transactions or
      other investment opportunities, including, without limitation, the
proposed acquisition of Labatt;                             

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     o    the implementation of AmBev's financing strategy and capital
expenditure plans;                                

    o    the utilization of AmBev's subsidiaries' income tax losses;

     o    the factors or trends affecting AmBev's financial condition,
liquidity or results of operations;               

  o    the implementation of the measures required under AmBev's
performance agreement entered into with CADE; and 

   o    the implementation of the measures required by Argentina's
         Comision Nacional de Defensa de la Competencia (CNDC) under
AmBev's agreements with BAC and Quinsa.           

 Forward-looking statements also include information concerning possible
or assumed future results of operations of AmBev set forth under "Information   
on the Company - Business Overview" and "Financial Information" as well as      
statements preceded by, followed by, or that include, the words "believes",     
"may", "will", "continues", "expects", "anticipates", "intends", "plans",       
"estimates" or similar expressions.                                             

Forward-looking statements are not guarantees of performance. They    
involve risks, uncertainties and assumptions because they relate to future      
events and therefore depend on circumstances that may or may not occur in the   
future. The future results and shareholder values of AmBev may differ           
materially from those expressed in or suggested by these forward-looking        
statements. Many of the factors that will determine these results and values    
are beyond our ability to control or predict. Investors are cautioned not to    
put undue reliance on any forward-looking statements.                           

Investors should understand that the following important factors, in  
addition to those discussed in this annual report, could affect the future      
results of AmBev and could cause results to differ materially from those        
expressed in such forward-looking statements:                                   

 o    general economic conditions in the principal geographic markets of
AmBev, such as the rates of economic growth, fluctuations in
exchange rates or inflation;                                

   o    governmental intervention, resulting in changes to the economic, tax
      or regulatory environment in Brazil or other countries in which we
operate;                                                    

o    industry conditions, such as the strength of product demand, the 
        intensity of competition, pricing pressures, the introduction of new
       products by AmBev, the introduction of new products by competitors,
       changes in technology or in the ability of AmBev to obtain products
       and equipment from suppliers without interruption and at reasonable
prices, and the financial conditions of the customers and   
distributors of AmBev; and                                  

o    operating factors, such as the continued success of sales,       
manufacturing and distribution activities of AmBev and the  
consequent achievement of efficiencies.                     

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PART I  

Identity of Directors, Senior Management and Advisers                           

Not Applicable.                                                                 

Offer Statistics and Expected Timetable                                         

Not Applicable.                                                                 

Key Information                                                                 

AMBEV'S SELECTED FINANCIAL DATA 

   The following financial information of AmBev and Brahma is only a summary
and should be read in conjunction with, and is qualified in its entirety by     
reference to, the audited annual consolidated financial statements of AmBev     
and Brahma and the related notes which are included in this annual report.      

   The following financial information of AmBev and Brahma is only a summary
and should be read in conjunction with, and is qualified in its entirety by     
reference to, the audited annual consolidated financial statements of AmBev     
and Brahma and the related notes which are included in this annual report.      

  Our selected historical financial data prepared under Brazilian GAAP and
U.S. GAAP set forth below as of and for each of the years ended December 31,    
2003, 2002, 2001, 2000 and 1999 have been derived from AmBev's consolidated     
financial statements as of and for the periods ended December 31, 2003, 2002,   
2001 and 2000, and Brahma's consolidated financial statements as of and for     
the period ended December 31, 1999. Brazilian GAAP differs                      
significantly from U.S. GAAP and you should read the financial information in   
conjunction with our audited financial statements, as well as "Operating and    
Financial Review and Prospects".                                                

In September 2003, CBB issued US$500 million 8.75% notes due 2013 in a
transaction exempt from registration under the U.S. Securities Act of           
1933. The original contracted interest rate may be increased by 0.5% if a       
registered exchange offer with respect to the notes is not consummated by       
September 18, 2004.                                                             

  During the year ended December 31, 2002, CBB completed an exchange offer
of the U.S.$ 500 million 10.5% notes due 2011, in the U.S. securities markets.  

   AmBev fully and unconditionally guaranteed these two issuances. Financial
information relating to CBB has not been included within the Selected           
Financial Data, but full consolidating schedules disclosing the balance         
sheets, statements of operations and statements of cash flow as of December     
31, 2003 and 2002 and for each of the years ended December 31, 2003, 2002 and   
2001, under Brazilian GAAP, have been included in [note 24] to our audited      
financial statements, contained within this document.                           

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                                                   STATEMENT OF OPERATIONS DATA                                 

                                         AS OF OR FOR THE YEAR ENDED DECEMBER 31,                               
                                     -------------------------------------------------------------------------  

                                       2003(1)           2002(1)         2001(1)        2000(1)        1999(1)  

                                                   (R$ in millions, except for per share amounts,               
                                                     number of shares and other operating data)                 

                                                                                                                
BRAZILIAN GAAP                                                                                                  

Statement of Operations Data:                                SUCCESSOR                              PREDECESSOR 

Gross sales, before taxes,                                                                                      
   discounts and returns.......        17,143.5         14,279.9         13,131.0      11,282.5         6,846.5 
Net sales......................         8,683.8          7,325.3          6,525.6       5,250.4         3,248.3 
Cost of sales..................        (4,044.2)        (3,341.7)        (3,366.2)     (2,843.7)       (1,905.1)
                                   -------------        --------           -------       -------          ------
Gross profit...................         4,639.6          3,983.6          3,159.4       2,406.7         1,343.2 
Selling and marketing                                                                                           
   expenses....................          (847.1)          (687.2)          (707.8)       (578.6)         (350.7)
Direct distribution expenses...          (648.6)          (537.4)          (467.8)       (337.0)         (225.5)
General and administrative                                                                                      
    expenses(2)................          (417.9)          (373.5)          (351.5)       (373.0)         (206.9)
Depreciation  and amortization of                                                                               
   deferred charges ...........          (420.0)          (334.6)          (256.5)       (202.3)          (95.4)
                                   -------------        --------           -------       -------          ------
                                        2,306.1          2,050.9          1,375.8         915.8           464.7 

Provision for contingencies and                                                                                 
   other.......................          (187.9)          (123.7)           (33.9)       (269.2)          (51.2)
Other operating income, net(4).           246.1            199.4            152.2           9.1            66.3 
Financial income...............           601.8          2,530.3            358.4         374.0           675.1 
Financial expenses.............          (508.7)        (3,277.3)          (861.5)       (698.0)         (804.4)
                                   -------------        --------           -------       -------          ------
OPERATING INCOME (3) ..........         1,964.9          1,379.6            991.0         331.7           350.5 
Non-operating income (expense),                                                                                 
   net(4)......................          (100.7)           (72.2)             2.3          52.7           (19.9)
Income tax benefit (expense)...          (426.1)           280.6            (51.9)        405.4            17.6 
Income before equity in                                                                                         
   affiliates, profit sharing and                                                                               
   minority interest...........         1,438.1         1,588.0             941.4         789.8           348.1 
Profit sharing and contributions          (23.6)         (125.1)           (157.1)        (53.7)          (39.9)
Minority interest..............            (2.9)           47.4               0.3        (265.9)           14.0 
                                   -------------        --------           -------       -------          ------
NET INCOME ....................         1,411.6         1,510.3             784.6         470.2           322.3 
                                   =============        ========           =======       =======          ======

Net income per 1,000 shares                                                                                     
   (excluding treasury shares) at                                                                               
   year end(4).................           37.23            39.48            20.31         12.19           46.66 
Net income per ADS(5) at                                                                                        
   year end....................            3.72             3.95             2.03          1.22            4.67 
Dividends and interest                                                                                          
   attributable to shareholder's                                                                                
   equity per 1,000 shares                                                                                      
   (excluding treasury                                                                                          
   shares)(4)(6) (7)                                                                                            
     Common shares.............           23.15            12.40             7.17          8.00           20.65 
     Preferred shares..........           25.46            13.64             7.89          8.37           22.70 
Number of shares outstanding at                                                                                 
   year end, excluding treasury                                                                                 
   shares (in thousands)                                                                                        
     Common shares.............      15,631,332       15,694,772       15,801,482    15,946,841       2,628,451 
     Preferred shares..........      22,281,302       22,551,143       22,819,443    22,616,017       4,279,160 


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                                                   AS OF OR FOR THE YEAR ENDED DECEMBER 31,                         
                                   -------------------------------------------------------------------------        

                                      2003(1)             2002(1)          2001(1)         2000(1)           1999(1)

                                                 (R$ in millions, except for per share amounts,                     
                                                   number of shares and other operating data)                       
                                                                                                                    
US GAAP                                                                                                             

Net income (loss)..............       1,689.4            1,642.2             840.1           879.2          (173.7) 
Net income per 1,000 shares                                                                                         
   (weighted average)(4)(8)(9)                                                                                      
     - Basic                                                                                                        
         Common shares.........         46.87              45.05             22.84           22.91           (5.60) 
         Preferred shares......         51.56              49.55             25.13           25.20           (5.04) 
     - Diluted                                                                                                      
         Common shares.........         46.52              44.69             22.55           22.05           (5.37) 
         Preferred shares......         51.17              49.16             24.80           24.26           (4.83) 
Net income (loss) per ADS(5)                                                                                        
     - Basic                                                                                                        
         Common shares.........          4.69               4.51              2.28            2.29           (0.56) 
         Preferred shares......          5.16               4.96              2.51            2.52           (0.50) 
     - Diluted                                                                                                      
         Common shares.........          4.65               4.47              2.26            2.21           (0.54) 
         Preferred shares......          5.12               4.92              2.48            2.43           (0.48) 
Dividends and interest                                                                                              
   attributable to shareholders                                                                                     
   equity per 1,000 shares                                                                                          
   (weighted average)(4)(6) (7)                                                                                     
     - Basic                                                                                                        
         Common shares.........         26.32               5.38              6.82            7.60            5.06  
         Preferred shares......         28.96               5.92              7.50            8.37            5.56  
     - Diluted                                                                                                      
         Common shares.........         26.12               5.34              6.73            7.32            4.84  
         Preferred shares......         28.74               5.87              7.40            8.05            5.32  
Weighted average number of shares                                                                                   
   (thousands)(4)(8)(9)(10)                                                                                         
     - Basic                                                                                                        
         Common shares.........    11,894,931         12,061,879        12,259,953      14,265,323      11,949,367  
         Preferred shares......    21,952,196         22,173,258        22,291,121      21,919,724      21,173,565  
     - Diluted                                                                                                      
         Common shares.........    11,894,931         12,061,879        12,259,953      14,475,271      12,206,392  
         Preferred shares......    22,202,776         22,441,743        22,726,632      23,090,525      22,384,145  


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                                                     BALANCE SHEET DATA                                  

                                                        AS OF OR FOR THE YEAR ENDED DECEMBER 31,         

                                      2003(1)         2002(1)         2001(1)        2000(1)      1999(1)
                                                                                                         

                                                (R$ in millions, except for per share amounts,           
                                                  number of shares and other operating data)             
BRAZILIAN GAAP                                                                                           

Balance Sheet Data:                                                                                      
Cash, cash equivalents and short                                                                         
    term investments...........        2,690.0        3,290.0          2,562.9       1,028.3      1,697.4
Total current assets...........        5,500.5        5,571.4          4,684.9       2,687.6      2,723.1
Prepaid retirement benefit cost (14)      22.0           21.6             20.8                           
Investments....................        1,711.4          637.3            662.6         659.6         61.2
Property, plant and equipment,                                                                           
    net........................        4,166.3        3,330.6          3,277.7       3,204.3      1,898.6
Deferred income tax - non-current      1,831.8        1,558.4          1,160.3         996.1        240.8
Total assets...................       14,830.1       12,381.5         11,028.8       8,639.7      5,425.9
Short-term debt(11)............        1,976.1          607.4          1,720.0       1,265.3      1,042.9
Total current liabilities......        4,720.0        2,833.7          3,412.0       2,699.6      1,889.1
Long-term debt(12).............        4,004.3        3,879.3          2,849.4         927.6        938.7
Accrued liability for                                                                                    
    contingencies..............        1,232.9          989.3            815.5         878.0        288.6
Sales tax deferrals and other tax                                                                        
    credits(13)................          772.1          803.1            746.8         650.6        569.6
Post-retirement benefit (14)              72.9           53.4             55.6                           
Total long-term liabilities....        5,605.5        5,339.1          4,164.4       2,350.6      1,872.7
Minority interest..............          196.4           79.1             88.9         512.5         57.7
Subscribed and paid-up                                                                                   
    capital....................        3,124.1        3,046.2          2,994.3       2,565.2        909.3
Shareholders' equity...........        4,382.9        4,129.6          3,363.5       3,077.0      1,606.4

U.S. GAAP                                                                                                

Total assets...................       13,766.0       11,584.6         10,195.9       7,743.0      3,109.7
Shareholders' equity...........        4,382.9        3,960.6          2,839.9       2,378.2      1,628.7


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                                                             OTHER DATA                                                             

                                                             AS OF OR FOR THE YEAR ENDED DECEMBER 31,                               

                                           2003(1)           2002(1)         2001(1)          2000(1)         1999(1)               

                                                                                                                                    
                                                    (R$ in millions, except for per share amounts,                                  
                                                      number of shares and other operating data)                                    

Other Financial Information:                                                                                                        

Net working capital(15)........              780.5          2,737.7          1,273.0           (12.0)           834.0               
Cash dividends paid(6).........            1,026.9            335.6            313.4            221.1           178.2               
Depreciation and amortization of                                                                                                    
    deferred charges (16)......              766.3            659.5            613.9            589.2           438.1               
Capital expenditures(17).......              862.2            544.7            446.8            295.0           312.4               
Operating cash flows -                                                                                                              
    generated(18)..............            2,527.6          3,595.0          1,006.6          1,243.2         1,103.0               
Investing cash                                                                                                                      
    flows - used(18)...........           (2,014.7)        (1,603.1)        (1,687.4)          (100.7)         (299.2)              
Financing cash flows-                                                                                                               
    generated - used(18).......             (346.7)        (2,912.2)         1,418.0         (2,065.7)         (187.4)              

Other Operating Data:                                                                                                               

Total production capacity -                                                                                                         
    beer(19)...................         88.3 million hl  89.7 million hl  89.8 million hl  94.4 million hl    64.4 million hl       
Total production capacity - CSD &                                                                                                   
    NANC(19)...................         45.7 million hl  37.3 million hl  38.8 million hl  36.6 million hl    27.0 million hl       
Total beer volume sold(20).....         62.4 million hl  62.0 million hl  62.4 million hl  64.8 million hl    43.2 million hl       
Total CSD & NANC volume sold(20)        20.5 million hl  18.2 million hl  18.5 million hl  17.2 million hl     8.5 million hl       
Number of employees(21)........                  18,890           18,570           18,136           18,172              9,416       

<FN>                                                                                                                                
FOOTNOTES TO SELECTED FINANCIAL INFORMATION                                                                                         

(1)  Brahma and Antarctica were legally merged to form AmBev on July 1, 1999 under Brazilian GAAP. However, for purposes of this    
     annual report, as AmBev was treated as the successor to Brahma for accounting purposes, financial information of AmBev, the    
     successor, have been included as of and for the three years ended December 31, 2002. The selected financial information in all 
     previous periods has been derived from the audited financial statements of the predecessor company, Brahma.                    

(2)  General and administrative expenses include director's fees.                                                                   

(3)  Operating income under Brazilian GAAP is presented after financial income and financial expense.                               

(4)  The information is provided per thousand shares because AmBev common and preferred shares are generally traded on the Sao Paulo
     Stock Exchange in blocks of one thousand shares.                                                                               

(5)  ADS represents American Depositary Shares. Each ADS represents 100 shares.                                                     

(6)  Includes dividends, interest attributable to shareholders' equity (including withholding tax paid by AmBev in respect thereof),
     and in 2000, returns of capital of R$111.8 million. Certain distributions in 2000 were made in the form of a return of capital 
     rather than in the form of dividends or interest attributable to shareholders' equity because, prior to the completion of the  
     Brahma conversion, AmBev did not have sufficient retained earnings to pay these amounts as dividends or interest attributable  
     to shareholders' equity. The dividend and interest attributable to shareholders equity per 1,000 shares for Brazilian GAAP     
     purposes is calculated net of withholding tax and therefore represents the amounts received as disclosed in "Dividends". We    
     changed the criteria for reporting this amount in 2002 and therefore the dividends per share disclosed in the years prior to   
     2002 do not conform to that disclosed in our 2001 annual report on Form 20-F.                                                  

(7)  Brazilian GAAP and U.S. GAAP differ on the recognition of declared / proposed dividends, specifically with regard to when the  
     dividend should be recognized. The executive officers are required to propose a dividend at year end, which is subject to      
     ratification by the shareholders at a general meeting and must be recognized under Brazilian GAAP. However, under U.S. GAAP,   
     the proposed dividends may be modified or ratified by the shareholders at a general meeting and are treated as a deduction from
     shareholders' equity.                                                                                                          

(8)  In the U.S. GAAP selected financial data only, all share and per share data have been adjusted to give effect, retroactively,  
     to AmBev's five-for-one split of its common and preferred shares effective October 23, 2000. Because AmBev did not split its   
     ADSs, the ADSs, which prior to the stock split had represented 20 common or preferred shares, represented 100 common or        
     preferred shares following the stock split. In the Brazilian GAAP selected financial information, the historic share and per   
     share information has not been adjusted and therefore reflects the actual number of shares in issue.                           

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(9)  In the U.S. GAAP selected financial data only, earnings per share are calculated dividing the net income by the weighted       
     average number of common and preferred shares outstanding during the relevant periods. In the Brazilian GAAP selected financial
     information section, earnings per share are calculated by dividing by the number of shares outstanding at the year end. AmBev's
     preferred shares are entitled to dividends 10% greater than the dividends paid to common shares.                               

(10) Under U.S. GAAP we have consolidated the net assets of the FAHZ, one of our major shareholders, on our balance sheet as of     
     December 31, 2003, 2002, 2001 and 2000. As a result of our consolidating these net assets, AmBev shares owned by the FAHZ are  
     treated as treasury shares, rather than outstanding shares, thereby reducing the number of our weighted average outstanding    
     shares and increasing our earnings or loss per share. For the purposes of the predecessor company, Brahma, the Brahma Welfare  
     Foundation was treated in a similar manner, resulting in a similar effect in the selected financial information as at and for  
     the year ended December 31, 1999. For further information, please refer to our consolidated financial statements contained     
     within this annual report.                                                                                                     

(11) Includes current portion of long-term debt.                                                                                    

(12) Excludes current portion of long-term debt.                                                                                    

(13) In the financial statements as of and for the year end December 31, 2003, total tax incentives are R$768.7 million, of which   
     R$393.6 million relate to deferred sales tax, and R$375.1 million to ICMS financing incentives.                                

(14) Consistent with accounting practice under Brazilian GAAP, we had not recognized our actuarial obligation                       
     for pension liabilities and post-retirement benefits, including medical benefits to retirees in our financial                  
     statements prior to December 31, 2001. Pension amounts due to the pension plan were treated on an accrual basis                
     as the obligations fell due. However, following the issuance of a new accounting standard (NPC No. 26), we are                 
     required to record these actuarial obligations beginning in 2002. We had the option to account for these                       
     actuarial obligations at December 31, 2001 either against retained earnings or prospectively as a charge                       
     against earnings over five years. We elected to recognize the liability against retained earnings on                           
     December 31, 2001. The standard requires comprehensive recording of pension expenses and obligations on an                     
     actuarial basis instead of, as was previously required, based on the required contributions for the relevant                   
     year.                                                                                                                          

(15) Represents total current assets less total current liabilities.                                                                

(16) Includes depreciation of property, plant and equipment and amortization of deferred charges.                                   

(17) Represents cash expenditures for property, plan and equipment.                                                                 

(18) Operating, Investing and Financing cash flows data is derived from our financial statements included herewith.                 

(19) Represents available production capacity of Brahma and its subsidiaries (and not Antarctica or its subsidiaries) at December   
     31, 1999, and thereafter represents the available production capacity of AmBev and its respective subsidiaries, domestic and   
     international; Quinsa's production capacity not considered; (hl is the abbreviation for hectoliters; CSD & NANC is the         
     abbreviation for Carbonated Soft Drinks and Non Alcoholic and Non Carbonated Soft Drinks).                                     

(20) Represents volumes of Brahma and its subsidiaries (and not Antarctica or its subsidiaries) for the period ended on December 31,
     1999, and thereafter represents full-year volumes of AmBev and its respective subsidiaries; from January 31, 2003, includes 5.8
     million hectoliters of beer and 2.4 million hectoliters of CSD representing our proportional interest in Quinsa volumes.       

(21) Includes all production- and non-production-related employees of Brahma and its subsidiaries at the end of the period ended on 
     December 31, 1999, and thereafter includes all production- and non-production-related employees of AmBev and its respective    
     subsidiaries.                                                                                                                  
</FN>                                                                                                                               


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DIVIDENDS 

DIVIDEND POLICY                                                       

   AmBev intends to pay dividends twice a year to its shareholders; however,
the timing and amount of future dividend payments, if any, will depend upon     
various factors the Board of Directors of AmBev considers relevant, including   
the earnings and the financial condition of AmBev. AmBev's bylaws provide for   
a mandatory dividend of 35% of its annual net income, if any, as determined     
and adjusted under Brazilian GAAP (adjusted income). The mandatory dividend     
includes amounts paid as interest attributable to shareholders' equity, which   
is equivalent to a dividend but is a more tax efficient way to distribute       
earnings because they are generally deductible by the company for Brazilian     
income tax purposes. However, shareholders (including holders of ADSs) have to  
pay Brazilian withholding tax on the amounts received as interest attributable  
to shareholders' equity, whereas no such payment is required in connection      
with dividends received. Although Ambev may distribute earnings in the form of  
interest, the amount received by shareholders is the same or higher as if the   
distribution were made in the form of dividends. Withholding tax is usually     
paid by Brazilian companies, including AmBev, on behalf of their shareholders.  

Adjusted income may be capitalized, used to absorb losses or otherwise
appropriated as allowed under Brazilian Corporate Law; therefore, any adjusted  
income may no longer be available to be paid as dividends. AmBev may also not   
pay dividends to its shareholders in any particular fiscal year, upon the       
determination by the Board of Directors that such distributions would be        
inadvisable in view of AmBev's financial condition. Any such dividends not      
distributed would be allocated to a special reserve account for future payment  
to shareholders, unless it is used to offset subsequent losses. For further     
information on this matter see " - Risk Factors - Risks Relating to our         
Securities - AmBev shareholders may not receive any dividends". Any dividends   
payable on AmBev's preferred shares must be 10% greater than those payable on   
AmBev's common shares. See "Additional Information - Memorandum and Articles    
of Association - Dividends and Reserves - Dividend Preference of Preferred      
Shares".                                                                        

   For further information on Brazilian Corporate Law provisions relating to
required reserves and payment of dividends or interest attributable to          
shareholders' equity, as well as specific rules applicable to the payment of    
dividends by AmBev, see "Additional Information - Memorandum and Articles of    
Association Dividends and Reserves".                                            

AMBEV - DIVIDENDS AND INTEREST ATTRIBUTABLE TO SHAREHOLDERS' EQUITY   

The following table shows the dividends paid by AmBev's predecessor   
Brahma, to its preferred and common shareholders from 1996 through September    
15, 2000, and by AmBev to its preferred and common shareholders since           
September 15, 2000 in Reais and in U.S. dollars translated from Brazilian       
Reais at the commercial exchange rate as of the date of payment. The amounts    
include interest attributable to shareholders' equity, net of withholding tax,  
and return of capital. See "Additional Information - Memorandum and Articles    
of Association - Interest Attributable to Shareholders' Equity".                

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                                                      Reais per                                         
                                                     thousand(1)   U.S. dollar equivalent per           
Earnings generated               First payment date   shares(2)   thousand(1) shares at payment date(4) 
------------------               ------------------  ----------   --------------------------------------
                                                                                                        

First half 1996................. September 26, 1996      0.91     (preferred and common)     0.89       

Second half 1996................   March 21, 1997        1.27     (preferred and common)     1.20       

First half 1997.................   October 9, 1997       1.61          (preferred)           1.47       
                                                         1.46            (common)            1.33       
Second half 1997................     May 7, 1998         1.73          (preferred)           1.51       
                                                         1.57            (common)            1.37       
First half 1998.................   October 8, 1998       1.32          (preferred)           1.12       
                                                         1.20            (common)            1.01       
Second half 1998................    April 5, 1999        2.37          (preferred)           1.37       
                                                         2.16            (common)            1.25       
First half 1999.................    July 20, 1999        1.58          (preferred)           0.88       
                                                         1.44            (common)            0.80       
Second half 1999................   March 15, 2000        2.96          (preferred)           1.70       
                                                         2.69            (common)            1.54       
Extraordinary(3)................   March 23, 2000        1.88          (preferred)           1.09       
                                                         1.88            (common)            1.09       
Extraordinary(3)................  November 30, 2000      2.38          (preferred)           1.22       
                                                         2.38            (common)            1.22       
Second half 2000................  February 20, 2001      4.11          (preferred)           2.05       
                                                         3.74            (common)            1.86       
First half 2001................. September 17, 2001      3.11          (preferred)           1.16       
                                                         2.83            (common)            1.06       
Second half 2001................  February 19, 2002      4.78          (preferred)           1.97       
                                                         4.34            (common)            1.79       
First half 2002.................  November 25, 2002      4.37          (preferred)           1.15       
                                                         3.97            (common)            1.04       
Second half 2002................  February 28, 2003      9.27          (preferred)           2.60       
                                                         8.43            (common)            2.37       
First half 2003.................  October 13, 2003      18.70          (preferred)           6.59       
                                                        17.00            (common)            5.99       
Second half 2003................   March 25, 2004        6.75          (preferred)           2.30       
                                                         6.14            (common)            2.09       

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

(1)  The information is provided per thousand shares because AmBev common and   
  preferred shares are generally traded on the Sao Paulo Stock Exchange in
blocks of one thousand.                                               

(2)  The amounts set forth above are amounts actually received (as adjusted to  
give effect retroactively to AmBev's common and preferred share       
five-for-one stock split effective October 23, 2000) by shareholders, 
which are net of withholding tax. The amounts set forth here represent
   pro-forma U.S. GAAP calculations for the impact of a stock split which is
 not required under Brazilian GAAP. The financial statements present the
  amounts actually disbursed, including the withholding tax on interest on
 shareholders' equity, which was paid on behalf of AmBev`s shareholders.
   The dividends per thousand shares set forth above are calculated based on
the number of shares outstanding at the date the distributions were   
  declared (as adjusted to give effect retroactively to AmBev's common and
preferred share five-for-one stock split effective October 23, 2000). 

(3)  On March 23, 2000 and on November 30, 2000 AmBev distributed R$1.88 (U.S.  
   $1.09) per common and preferred shares and R$2.38 (U.S. $1.22) per common
and preferred shares, respectively, to its shareholders as a return of
capital.                                                              

(4)  Translated to U.S. dollars at the exchange rate in effect at the date      
declared.                                                             

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EXCHANGE RATE INFORMATION 

There are two principal foreign exchange markets in Brazil:           

o    the commercial rate exchange market; and                                   

o    the floating rate exchange market.                                         

       On February 1, 1999, the Central Bank authorized the unification of
the exchange positions of the Brazilian financial institutions in the           
commercial rate exchange market and floating rate exchange market, which led    
to a convergence in the pricing and liquidity of both markets. However, each    
market continues to have a specific regulation. Most trade and financial        
transactions are carried out on the commercial rate exchange market. The        
floating market rate generally applies to transactions to which the commercial  
market rate does not apply. Foreign currencies may only be purchased through a  
Brazilian financial institution authorized to operate in these markets. In      
both markets, rates are freely negotiated but may be strongly influenced by     
Central Bank intervention.                                                      

RECENT HISTORY OF THE BRAZILIAN REAL                                

      From March 1995 through January 1999, the Central Bank allowed the
gradual devaluation of the real against the U.S. dollar. Responding to          
pressure on the real, the Central Bank widened the foreign exchange rate band   
on January 15, 1999 and allowed the real to float freely. The real devalued to  
a low for that year of R$2.165 per U.S. $1.00 on March 3, 1999, but             
subsequently appreciated to R$1.789 per U.S. $1.00 on December 31, 1999,        
representing a net devaluation against the U.S. dollar of 32.4% during 1999.    
In 2000, the real devalued by a further 8.5% against the U.S. dollar.           

      Further deterioration in the political and economic environment in
2001, in addition to the Brazilian energy crisis, resulted in the real          
devaluing by 15.7% against the U.S. dollar in the year. In the final quarter    
of 2001, however, the real actually appreciated by 15.1% from R$2.671 per U.S.  
$1.00 at September 30, 2001 to R$2.3204 per U.S.$1.00 at December 31, 2001.     

       In 2002, as a reaction to political and economic uncertainties, the
global economic downturn, the crisis in Argentina and the Brazilian             
presidential elections, the U.S. dollar appreciated by 34.3% against the real   
to R$3.5333 per U.S.$1.00 at December 31, 2002. While the real has recovered    
during 2003, appreciating 22.3% against the U.S. dollar during 2003, no         
assurance can be given that the real will not devalue further in the future.    
The Central Bank has only intervened occasionally to control unstable           
movements in the foreign exchange rate. See "Risk Factors-Risks Relating to     
Brazil and Other Countries in Which We Operate Related to Brazil-Economic       
uncertainty and volatility in Brazil may adversely affect our business."        

Recently, in 2004, statements from the Federal Reserve of the United  
States regarding a potential increase in the interest rate, in combination      
with other factors, caused some volatility and general economic uncertainty in  
the Brazilian capital markets. As a consequence, the exchange rate as of May    
31, 2004, was R$3.1291 per U.S.$1.00 compared with 2.8892 Reais at December     
31, 2003. The exchange rate reached a low of 2.8022 Reais per U.S. dollar and   
a high of 3.2051 Reais per U.S. dollar during the first five months of 2004.    
The Central Bank reduced the base interest rate from 16.5% to 16.25% in March   
2004, followed by a further reduction in April to 16.0%.                        

 No assurance can be given that the real will not devalue further in the
future. For further information on this matter see "- Risk Factors - Risks      
Relating to Brazil and Other Countries in Which We Operate - Economic           
uncertainty and volatility in Brazil may adversely affect our business".        

 The following tables set forth commercial market rates for the purchase
of U.S. dollars for the periods indicated.                                      

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                            Annual Exchange Rates of Reais per U.S.$1.00
                          ----------------------------------------------------

                            2003       2002       2001        2000      1999
                            --------  ---------   ---------  --------- ---------

Low........................ R$2.8219  R$2.2709    R$1.9357   R$1.7234  R$1.2078 
High.......................   3.6623    3.9552      2.8007     1.9847    2.1647 
Average(1).................   3.0600    2.9983      2.3532     1.8348    1.8514 
Period End.................   2.8892    3.5333      2.3204     1.9554    1.7890 

Source:  Central Bank of Brazil                                                 

(1)  Represents the average of the month-end exchange rates during the          
relevant period.                                                      

                                                        [Enlarge/Download Table]


                                   2004 Monthly Exchange Rates of Reais per U.S.$1.00          
                           --------------------------------------------------------------------
                                                   2004                              2003      
                           ----------------------------------------------------   -------------
                            May        April      March      February    January    December   
                           --------   ---------  --------   ----------  --------- -------------
                                                                                               
Low........................ R$2.9569  R$2.8743   R$2.8752     2.9042      2.8022     2.8883    
High.......................   3.2051    2.9522     2.9410     2.9878      2.9409     2.9434    

-------------                                                                                  
Source:  Central Bank of Brazil                                                                


  Under current legislation, the Brazilian government may impose
temporary restrictions on remittances of foreign capital abroad in the event    
of a serious imbalance or an anticipated serious imbalance of Brazil's balance  
of payments. For approximately six months in 1989 and early 1990, the           
Brazilian government froze all dividend and capital repatriations held by the   
Central Bank that were owed to foreign equity investors in order to conserve    
Brazil's foreign currency reserves. These amounts were subsequently released    
in accordance with Brazilian government directives. We cannot assure you that   
the Brazilian government will not impose similar restrictions on foreign        
repatriations in the future. See "Risk Factors-Factors relating to Brazil and   
Other Countries in Which We Operate-The Brazilian government has exercised,     
and continues to exercise, significant influence over the Brazilian economy;    
Brazilian economic and political conditions have a direct impact on our         
business."                                                                      

 We will pay any cash dividends and make any other cash distributions in
reais. Accordingly, exchange rate fluctuations may affect the U.S. dollar       
amounts received by the holders of ADSs on conversion by the depositary of      
such distributions into U.S. dollars for payment to holders of ADSs.            
Fluctuations in the exchange rate between the real and the U.S. dollar may      
also affect the U.S. dollar equivalent of real price of our shares on the Sao   
Paulo Stock Exchange. For further information on this matter see " - Risk       
Factors - Risks Relating to Our Securities".                                    

EXCHANGE CONTROLS 

There are no restrictions on ownership of the ADSs or the preferred or
common shares by individuals or legal entities domiciled outside of Brazil.     

The right to convert dividend payments, interest attributable to      
shareholders' equity payments and proceeds from the sale of preferred or        
common shares into foreign currency and to remit such amounts outside Brazil    
is subject to exchange control restrictions and foreign investment legislation  
which generally requires, among other things, that relevant investments be      
registered with the Central Bank. Restrictions on the remittance of foreign     
capital abroad could hinder or prevent Banco Itau S.A. (the custodian) or       
holders who have exchanged AmBev's ADSs for shares of AmBev, from converting    
dividend distributions, interest on shareholders' equity or the proceeds from   
any sale of shares of AmBev into U.S. dollars and remitting such U.S. dollars   
abroad. Holders of AmBev ADSs could be adversely affected by delays in or       
refusal to grant any required governmental approval for conversions of real     
payments and remittances abroad.                                                

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Under Brazilian law relating to foreign investment in the Brazilian   
capital markets (Foreign Investment Regulations), foreign investors registered  
with the CVM and acting through authorized custody accounts managed by local    
agents may buy and sell shares on Brazilian stock exchanges without obtaining   
separate certificates of registration for each transaction. Foreign investors   
may register their investment under Law 4,131/62 or Resolution No. 2,689/00 of  
the National Monetary Council.                                                  

Under Resolution No. 2,689, foreign investors may invest in almost all
financial assets and engage in almost all transactions available in the         
Brazilian financial and capital markets, provided that certain requirements     
are fulfilled. In accordance with Resolution No. 2,689, the definition of a     
foreign investor includes individuals, legal entities, mutual funds and other   
collective investment entities, domiciled or headquartered abroad.              

Securities and other financial assets held by a Resolution No. 2,689  
investor must be registered or maintained in deposit accounts or under the      
custody of an entity duly licensed by the Brazilian Central Bank or the CVM.    
In addition, any transfer of securities held under Resolution No. 2,689 must    
be carried out in the stock exchanges or through organized over-the-counter     
markets licensed by the CVM, except for specific types of transfers.            

 Pursuant to the certificates of registration obtained by AmBev from the
Central Bank in the name of the Bank of New York with respect to the AmBev      
ADSs to be maintained by the custodian (Banco Itau S.A. ) on behalf of the      
Bank of New York, the custodian and The Bank of New York will be able to        
convert dividends and other distributions with respect to the AmBev shares      
represented by AmBev ADSs into foreign currency and remit the proceeds outside  
of Brazil. In the event that a holder of AmBev ADSs exchanges such ADSs for     
AmBev shares such holder will be entitled to continue to rely on The Bank of    
New York's certificate of registration for only five business days after such   
exchange, after which such holder must obtain its own certificate of            
registration. Any such holder may not be able to obtain and remit abroad U.S.   
dollars or other hard currencies upon the disposition of the shares or          
distributions with respect to such disposition, unless such holder qualifies    
under the Foreign Investment Regulations or obtains its own certificate of      
registration, and such holder generally will be subject to less favorable       
Brazilian tax treatment than a holder of AmBev ADSs. For further information    
on this matter see "Additional Information - Taxation - Brazilian Tax           
Considerations".                                                                

  Under current legislation, the Brazilian government may impose temporary
restrictions on remittances of foreign capital abroad in the event of a         
serious imbalance or an anticipated serious imbalance of Brazil's balance of    
payments. For approximately six months in 1989 and early 1990, the Brazilian    
government froze all dividend and capital repatriations held by the Central     
Bank that were owed to foreign equity investors in order to conserve Brazil's   
foreign currency reserves. These amounts were subsequently released in          
accordance with Brazilian government directives. We can not assure you that     
the Brazilian government will not impose similar restrictions on foreign        
repatriations in the future. For further information on this matter see " -     
Risk Factors - Risks Relating to Our Securities - Controls and restrictions on  
foreign currency remittance could harm the ability of AmBev to transfer         
dividends payments to off-share investors".                                     

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RISK FACTORS                                                          

Before making an investment decision, you should consider all of the  
information set forth in this annual report. In particular, you should          
consider the special features applicable to an investment in Brazil and         
applicable to an investment in AmBev, including those                           
set forth below. In general, investing in the securities of issuers in          
emerging market countries, such as Brazil, involves a higher degree of risk     
than investing in the securities of issuers in the United States.               

 For purposes of this section, when we state that a risk, uncertainty or
problem may, could or would have an "adverse effect" on us, we mean that the    
risk, uncertainty or problem may, could or would have an adverse effect on our  
business, financial condition, liquidity, results of our operations or          
prospects, except as otherwise indicated or as the context may otherwise        
require. You should view similar expressions in this section as having a        
similar meaning.                                                                

RISKS RELATING TO BRAZIL AND OTHER COUNTRIES IN WHICH WE OPERATE  

    ECONOMIC UNCERTAINTY AND VOLATILITY IN BRAZIL MAY ADVERSELY AFFECT OUR
BUSINESS                                                          

   Our most significant market is Brazil, which has periodically experienced
extremely high rates of inflation. Inflation, along with governmental measures  
to combat inflation and public speculation about possible future measures, has  
had significant negative effects on the Brazilian economy. The annual rates of  
inflation, as measured by the National Consumer Price Index (Indice Nacional    
de Precos ao Consumidor), have decreased from 2,489.1% in 1993 to 9.4% in       
2001. The same index increased to 14.7% in 2002, and decreased to 10.4% in      
2003.                                                                           

 Brazil may experience high levels of inflation in the future. There can
be no assurance that recent lower levels of inflation will continue. Future     
governmental actions, including actions to adjust the value of the real, may    
trigger increases in inflation. We cannot assure you that inflation will not    
affect our business in the future. In addition, the Brazilian government's      
actions to maintain economic stability, as well as public speculation about     
possible future actions, may contribute significantly to economic uncertainty   
in Brazil and to heighten volatility in the Brazilian securities markets and    
securities issued abroad by Brazilian issuers.                                  

The Brazilian currency has devalued periodically during the last four 
decades. Throughout this period, the Brazilian government has implemented       
various economic plans and utilized a number of exchange rate policies,         
including sudden devaluations and periodic mini-devaluations, during which the  
frequency of adjustments has ranged from daily to monthly, floating exchange    
rate systems, exchange controls and dual exchange rate markets. There have      
been significant fluctuations in the exchange rates between Brazilian currency  
and the U.S. dollar and other currencies. For example, the U.S. dollar / real   
exchange rate depreciated from R$1.9554 per US$1.00 at December 31, 2000 to     
R$2.3204 at December 31, 2001 and to R$3.5333 at December 31, 2002. The fear    
of exchange controls accelerated the pace of capital flight. The exchange rate  
reached R$3.9552 per US$1.00 in October 2002. However, the stability            
established by the economic policy initiated by the new government has          
restored some confidence in the market. This resulted in an appreciation of     
the real in 2003 of 22.3%, resulting in an exchange rate of R$2.8892 per        
US$1.00 as of December 31, 2003. We cannot assure you, however, that            
devaluations will not impact our business in the future.                        

Devaluation of the real relative to the U.S. dollar would create      
additional inflationary pressures in Brazil by generally increasing the price   
of imported products and requiring recessionary governmental policies to curb   
aggregate demand. On the other hand, appreciation of the real against the U.S.  
dollar may                                                                      

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lead to a deterioration of the current account and the balance of               
payments, as well as dampen export-driven growth. The potential impact of the   
floating exchange rate and measures of the Brazilian government aimed at        
stabilizing the real is uncertain. In addition, a substantial increase in       
inflation may weaken investor confidence in Brazil, impacting our ability to    
finance our operations through the international capital markets.               

   CONTINUED DECLINES IN THE VALUE OF THE REAL AGAINST THE VALUE OF THE U.S.
DOLLAR HAVE AND MAY CONTINUE TO ADVERSELY AFFECT OUR FINANCIAL PERFORMANCE      

Most of our sales are in reais; however, a significant portion of our 
debt is denominated in or indexed to U.S. dollars. In addition, a significant   
portion of our operating expenses, in particular those related to packaging     
such as aluminum and iron cans and PET bottles, as well as hops and malt are    
also denominated in or linked to U.S. dollars. Therefore, the devaluation of    
the real increases our financial expenses and operating costs and could affect  
our ability to meet our foreign currency obligations. Our current policy is to  
hedge substantially all of our dollar-denominated debt against adverse changes  
in foreign exchange rates; however, we cannot assure you that such hedging      
will be possible at all times in the future.                                    

  INCREASES IN TAXES LEVIED ON BEVERAGE PRODUCTS IN BRAZIL AND HIGH LEVELS
OF TAX EVASION MAY ADVERSELY AFFECT OUR RESULTS AND PROFITABILITY               

Increases in Brazil's already high levels of taxation could adversely 
affect our profitability. Increases in taxes on beverage products usually       
result in higher beverage prices for consumers. Higher beverage prices          
generally result in lower levels of consumption and, therefore, lower net       
sales. Lower net sales result in lower margins because some of our costs are    
fixed and thus do not vary significantly based on the level of production. We   
cannot assure you that the government will not increase current tax levels, at  
both state and/or federal levels, and that this will not impact our business.   

 In addition, the Brazilian beverage industry experiences high levels of
tax evasion, which is primarily due to the high level of taxes on beverage      
products in Brazil. An increase in taxes may lead to an increase in tax         
evasion, which could result in unfair pricing practices in the industry. We     
have proposed to the federal government regulation requiring the mandatory      
installation of flow meters in all Brazilian beer and soft drinks factories in  
order to help the federal and state governments fight tax evasion in the        

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beverage industry. The federal government issued this regulation in 2004 with   
respect to the beer industry only and is expected to enact similar regulations  
with respect to the carbonated soft-drinks industry by the end of 2004. We      
cannot assure you that such regulation will be enacted and have the impact we   
expect. Moreover, if such regulation is not enacted we cannot assure you that   
our business and results of operations will not be further impacted.            

QUINSA IS SUBJECT TO SUBSTANTIAL RISKS RELATING TO ITS BUSINESS AND   
OPERATIONS IN ARGENTINA AND OTHER COUNTRIES IN WHICH IT OPERATES                

   On January 31, 2003, we acquired a significant interest in Quinsa. Quinsa
is a brewing company with a substantial portion of its operations in            
Argentina. As a result, Quinsa's financial conditions and results of            
operations may be adversely affected by Argentine political instability,        
fluctuations in the Argentine economy and governmental actions concerning       
economy, including:                                                             

o  the imposition of exchange controls;                                   

o  the devaluation of the Argentine Peso; and                             

o  other measures enacted by the Argentine government to address          
Argentina's economic crisis.                                        

   If one or more of the events described above were to occur, we may not be
able to realize the benefits we expect from the acquisition of our interest in  
Quinsa, which could adversely impact our business.                              

 U.S. INVESTORS MAY NOT BE ABLE TO EFFECT SERVICE OF PROCESS UPON, OR TO
ENFORCE JUDGMENTS AGAINST US                                                    

   We are organized under the laws of the Federative Republic of Brazil. All
our directors and executive officers and the experts named in this annual       
report are residents of countries other than the United States. All or a        
substantial portion of the assets of such non-resident persons and of AmBev     
are located outside the United States. As a result, it may not be possible for  
investors to effect service of process within the United States upon such       
persons or AmBev, or to enforce against them in U.S. courts judgments obtained  
in such courts based upon civil liability provisions of the Federal securities  
laws of the United States or otherwise.                                         

THE BRAZILIAN GOVERNMENT HAS EXERCISED, AND CONTINUES TO EXERCISE,    
SIGNIFICANT INFLUENCE OVER THE BRAZILIAN ECONOMY; BRAZILIAN ECONOMIC AND        
POLITICAL CONDITIONS HAVE A DIRECT IMPACT ON OUR BUSINESS                       

 The Brazilian economy has been characterized by significant involvement
on the part of the Brazilian government, which often changes monetary, credit   
and other policies to influence Brazil's economy. The Brazilian government's    
actions to control inflation and affect other policies have often involved      
wage and price controls, the Central Bank's base interest rates, as well as     
other measures, such as the freezing of bank accounts, which occurred in 1990.  

   Actions taken by the Brazilian government concerning the economy may have
important effects on Brazilian corporations and other entities, including       
AmBev, and on market conditions and prices of Brazilian securities. Our         
financial condition and results of operations may be adversely affected by the  
following factors and the Brazilian government's response to the following      
factors:                                                                        

o  devaluations and other exchange rate movements;                        

o  inflation;                                                             

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o  exchange control policies;                                             

o  social instability;                                                    

o  price instability;                                                     

o  energy shortages;                                                      

o  interest rates;                                                        

o  liquidity of domestic capital and lending markets;                     

o  tax policy; and                                                        

o  other political, diplomatic, social and economic developments in or    
affecting Brazil.                                                   

PENDING TAX REFORM IN BRAZIL MAY INCREASE OUR TAX BURDEN              

  On April 30, 2003, President Lula submitted to Congress a bill proposing
a constitutional amendment aimed at a broad tax reform. The bill was mainly     
designed to simplify the complex Brazilian fiscal system and reduce tax         
evasion and the public deficit. The bill proposes to eliminate the cascading    
nature of federal taxes and broaden the discussion for the tax reform.          

 The most important changes in the tax reform proposal were to unify the
legislation on the ICMS, IPI and ISS, and to establish five standard tax        
rates. In addition, the CPMF, a provisional levy on bank account transactions,  
would be replaced by a permanent federal tax on financial transfers. The House  
of Representatives voted in favor of the main items of the proposed reform in   
August 2003.                                                                    

   The discussion of the unification of the value-added state-level ICMS tax
was postponed and, according to the Government, it is expected to take place    
in 2004.                                                                        

        The effects of these changes and many other  changes that could result
from the enactment of tax reform's  future phases cannot be quantified.  These  
changes may reduce our results of  operations,  increase our costs or limit our 
profitability, and we may have a higher tax burden if the tax reform bill is    
approved and implemented.                                                       

THE PROPOSED CHANGES IN BRAZILIAN LABOR LAW MAY AFFECT LABOR RELATIONS

 Under the new Brazilian federal government which took office in January
2003, new efforts to implement a revision of the Brazilian Labor Law            
(Consolidacao das Leis do Trabalho, or CLT) were initiated. According to the    
system currently in force, labor relations are strongly regulated. Although     
still protecting fundamental labor rights, the committee in charge of the       
preparation of a new bill (the "Labor Committee") has proposed to include more  
flexibility in the rules regulating labor relations in Brazil, allowing for     
employers and employees to negotiate certain aspects of the employment          
relations. A revision of union relations in Brazil may also be discussed. It    
is not clear whether the proposed changes, if approved by the Congress, would   
be well accepted by employees of Brazilian companies, including                 

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AmBev, and their respective unions. These changes, if implemented, may          
adversely impact our business in the future. At the end of last year, Congress  
approved the proposal to amend the Brazilian Federal Constitution (Proposta de  
Emenda Constitucional, or PEC) on the Social Security System reform. However,   
the PEC affects public employees only (not AmBev employees) and addresses the   
public employees ceiling for retirement benefits, and the retired public        
employees contribution to the Social Security System.                           

 NEW PROPOSED REGULATION ON ALCOHOLIC BEVERAGES MAY ADVERSELY IMPACT OUR
SALES                                                                           

 There are approximately 90 bills under review by Congress with proposed
regulation on the consumption, sales and marketing of alcoholic beverages,      
including beer. Such proposed legislation, if enacted, may impose               
restrictions, among other things, on the advertisement of alcoholic beverage    
products on television during specified times of the day as well as on the      
hours of operation of certain points of sale. It is uncertain whether such      
proposed legislation will be approved by Congress. Similar bills have been      
submitted to a number of state and city councils in states in which we          
operate. In the event Congress or any such state or city councils approve the   
proposed legislation, certain restrictions may apply to our business            
throughout Brazil, or in certain states or cities within Brazil, as the case    
may be. The anti-alcohol regulations, if approved, may adversely impact our     
sales. For further information, please refer to "Information on the Company -   
AmBev Business Overview - Regulation - General."                                

RISKS RELATING TO AMBEV 

We are subject to Brazilian and other antitrust regulations           

  We have a substantial beer market share in Brazil and thus are
subject to regulation under Brazilian antitrust rules. In addition, in          
connection with the combination of Brahma and Antarctica, we entered into a     
performance agreement with the Brazilian antitrust authorities, pursuant to     
which we are subject to certain continuing restrictions over our distribution   
network. Also, the proposed Interbrew-AmBev Transactions are undergoing review  
by the Brazilian antitrust authorities. For further information on this matter  
see "Financial Information - Consolidated Financial Statements and Other        
Financial Information - Legal Proceedings - Antitrust matters". We cannot       
assure you that such transactions will be approved by the Brazilian antitrust   
authorities or that the Brazilian antitrust authorities will not impose         
restrictions or conditions in connection with their approval if granted. We     
are also party to several antitrust legal proceedings. For further information  
on this matter see "Financial Information - Consolidated Financial Statements   
and Other Financial Information - Legal Proceedings - Antitrust matters". We    
cannot assure you that Brazilian antitrust regulation will not affect our       
business in the future.                                                         

AmBev's participation in the Argentine beer market increased          
substantially after the acquisition of our interest in Quinsa. Quinsa is        
subject to regulation under Argentinean antitrust rules. In addition, AmBev     
and Quinsa must comply with the conditions established by the Comision          
Nacional de Defensa de la Competencia ("CNDC"), in connection with the          
acquisition of our interest in Quinsa. For further information on this matter   
see "Information on the Company - AmBev Business Overview - Interest in         
Quinsa". We cannot assure you that Argentinean antitrust regulation will not    
affect Quinsa's business in the future and therefore impact the benefits that   
AmBev anticipates will be generated from this investment.                       

HOLDING COMPANY STRUCTURE                                             

   AmBev is a holding company. The guaranty AmBev entered into in connection
with notes issued by Companhia Brasileira de Bebidas ("CBB") is an obligation   
which derives substantially all of AmBev's                                      

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operating income from its subsidiaries. Accordingly, in paying any amount       
under the guaranty, AmBev will rely on income from dividends and other cash     
flows from its subsidiaries, as well as dispositions of one or more             
subsidiaries or other assets or interests therein. None of AmBev's              
subsidiaries have any obligation, contingent or otherwise, to pay amounts due   
pursuant to the guaranty or to make funds available, whether in the             
form of loans, dividends or otherwise. In general, Brazilian corporations may   
pay dividends only out of net income, retained earnings and revenues reserves,  
if approved by shareholders, after establishing mandatory legal reserves.       
Brazilian Corporate Law requires corporations to allocate 5% of their net       
income in each year to a legal reserve until the amount reserved is equal to    
20% of paid-in-capital. Additionally, our bylaws mandate that we allocate       
35.0% of our net income for dividend distribution. The ability of AmBev's       
subsidiaries to pay such dividends or make such distributions will be subject   
to, among other things, applicable laws and, under certain circumstances,       
restrictions contained in agreements or debt instruments entered into by AmBev  
and any of its subsidiaries. In addition, claims of creditors of AmBev's        
subsidiaries, including trade creditors, will generally have priority as to     
the assets and cash flow of such subsidiaries over AmBev's claims and the       
holders of CBB's notes and the guaranty.                                        

RISKS RELATING TO OUR SECURITIES  

THE RELATIVE VOLATILITY AND ILLIQUIDITY OF THE BRAZILIAN SECURITIES   
MARKETS MAY SUBSTANTIALLY LIMIT YOUR ABILITY TO SELL THE NOTES AT THE PRICE     
AND TIME YOU DESIRE                                                             

Investing in securities in emerging markets, such as Brazil, involves 
greater risk than investing in securities of issuers from more developed        
countries and such investments are generally considered speculative in nature.  

   Brazilian investments, such as investments in our securities, are subject
to economic and political risks, involving, among others:                       

o changes in the regulatory, tax, economic and political environment that   
may affect the ability of investors to receive payment, in whole or in  
part, in respect of their investments; and                              

o restrictions on foreign investment and on repatriation of capital         
invested.                                                               

  The Brazilian securities markets are substantially smaller, less liquid,
more concentrated and more volatile than major U.S. and European securities     
markets, and are not as highly regulated or supervised as these markets. The    
relatively small market capitalization and illiquidity of the Brazilian         
securities markets may substantially limit your ability to sell the notes at    
the price and time you desire.                                                  

    DETERIORATION IN ECONOMIC AND MARKET CONDITIONS IN OTHER EMERGING MARKET
COUNTRIES MAY ADVERSELY AFFECT THE MARKET PRICE OF AMBEV'S SECURITIES           

Economic and market conditions in other emerging market countries,    
especially those in Latin America, influence the market for securities issued   
by Brazilian companies and investors' perception of economic conditions in      
Brazil. Since the fourth quarter of 1997, the international financial markets   
experienced significant volatility, and a large number of market indices,       
including those in Brazil, declined significantly. For example, the Asian       
economic crisis and the 1998 Russian debt moratorium and devaluation of the     
Russian currency triggered securities market volatility in Brazil and other     
emerging market countries' securities markets. More recently, Argentina has     
experienced a financial crisis resulting from its difficulties in servicing     
its large outstanding public debt. Venezuela, Uruguay and Paraguay have         

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also experienced a significant economic downturn. The market value of notes     
may therefore be adversely affected by events occurring outside of Brazil,      
especially in other emerging market countries.                                  

OUR CONTROLLING SHAREHOLDERS ARE ABLE TO DETERMINE THE OUTCOME OF MANY
CORPORATE ACTIONS WITHOUT THE APPROVAL OF NON-CONTROLLING SHAREHOLDERS          

   The controlling shareholders of AmBev, ECAP, Braco Investimentos S.A. and
the FAHZ together hold approximately 76.78% of AmBev's common shares. In        
addition, Marcel Hermann Telles, Jorge Paulo Lemann and Carlos Alberto          
Sicupira, who are directors of AmBev, collectively own, indirectly through      
Braco Management, an investment company directly controlled by Messrs. Telles,  
Lemann and Sicupira, approximately 76.12% of the voting capital of Braco        
Investimentos S.A., which, in turn, owns approximately 98.64% of the voting     
shares of ECAP. Braco Investimentos S.A. and ECAP together hold approximately   
52.60% of the voting common shares of AmBev. Thus, these three directors of     
AmBev have significant influence over AmBev, although several types of matters  
must be decided in accordance with the AmBev shareholders' agreement. For       
further information on this matter see "Major Shareholders and Related Party    
Transactions-Major Shareholders-AmBev Shareholders' Agreement".                 

In addition, upon consummation of the Interbrew-AmBev Transactions,   
Interbrew will hold, directly or indirectly, including through its indirect     
ownership interests in Braco Investimentos S.A. and ECAP, shares of AmBev       
common stock that will represent approximately 69% of the total voting power    
of AmBev's capital stock. Assuming that all minority holders of AmBev common    
stock tender their shares in the mandatory tender offer that Interbrew will be  
required to launch following the consummation of the Interbrew-AmBev            
Transactions, Interbrew's voting interest in AmBev will increase to             
approximately 84%. Interbrew will thus have significant influence over          
AmBev, even though (i) both Braco Investimentos S.A. and ECAP will remain       
subject to the AmBev shareholders' agreement and (ii) Interbrew will be         
jointly controlled by its current controlling shareholders and AmBev's current  
controlling shareholders, Messrs. Lemann, Sicupira and Telles. For further      
information on these matters see "Background on the Company-The                 
Interbrew-AmBev Transactions" and "Major Shareholders and Related Party         
Transactions-Major Shareholders-AmBev Shareholders' Agreement".                 

The controlling shareholders are able to elect the majority of the    
members of the Board of Directors of AmBev and generally determine the outcome  
of other actions requiring the approval of AmBev's shareholders. Under          
Brazilian Corporate Law, the protections afforded to non-controlling security   
holders and the fiduciary duties of directors may, in some respects, be less    
comprehensive than in the United States or other jurisdictions.                 

AMBEV SHAREHOLDERS MAY NOT RECEIVE ANY DIVIDENDS.                     

According to its current bylaws, AmBev must generally pay its         
shareholders 35.0% of its annual net income, as determined and adjusted under   
Brazilian GAAP (adjusted income). The main sources for these dividends are      
AmBev's operating subsidiaries, principally CBB. Adjusted income may be         
capitalized, used to absorb losses or otherwise appropriated as allowed under   
Brazilian GAAP; therefore, adjusted income may no longer be available to be     
paid as dividends. AmBev might not pay dividends to its shareholders in any     
particular fiscal year, upon the determination of the Board of Directors that   
such distributions would be inadvisable in view of AmBev's financial            
condition. While the law does not establish the circumstances rendering the     
payment of dividends inadvisable, it is generally agreed that a company need    
not pay dividends if such payment threatens the existence of the company as a   
going concern or harms its normal course of operations.                         

It is possible, therefore, that shareholders of AmBev will not receive
dividends in any particular fiscal year. Any dividends not distributed would    
be allocated to a special reserve account for future payment to shareholders,   
unless it is used to offset subsequent losses.                                  

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 CONTROLS AND RESTRICTIONS ON FOREIGN CURRENCY REMITTANCE COULD HARM THE
ABILITY OF AMBEV TO TRANSFER DIVIDEND PAYMENTS TO OFF-SHORE INVESTORS           

Brazilian law provides that whenever there is a serious imbalance in  
Brazil's balance of payments or reasons to foresee a serious imbalance, the     
Brazilian government may impose temporary restrictions on the remittance to     
foreign investors of the proceeds of their investments in Brazil. For example,  
for approximately six months in 1989 and early 1990 the Brazilian government    
froze all dividend and capital repatriations that were owed to foreign equity   
investors and held by the Central Bank in order to conserve Brazil's foreign    
currency reserves. These amounts were subsequently released in accordance with  
Brazilian government directives. Similar measures could be taken by the         
Brazilian government in the future.                                             

As a result, the Brazilian government may in the future restrict      
companies such as AmBev from paying amounts denominated in foreign currencies   
or require that any such payments be made in Brazilian reais. The likelihood    
that the Brazilian government would impose such restrictions may be affected    
by the extent of Brazil's foreign currency reserves, the availability of        
foreign currency in the foreign exchange markets on the date a payment is due,  
the size of Brazil's debt service burden relative to the economy as a whole,    
Brazil's policy toward the International Monetary Fund and other factors. We    
cannot assure you that the Central Bank will not modify its policies or that    
the Brazilian government will not institute restrictions or delays on payments  
by Brazilians issuers in respect of securities issued in the international      
capital markets to date. For further information on this matter see " -         
Exchange Controls".                                                             

IF YOU EXCHANGE THE AMBEV ADSs FOR AMBEV SHARES, YOU RISK LOSING SOME 
FOREIGN CURRENCY REMITTANCE AND BRAZILIAN TAX ADVANTAGES                        

The AmBev ADSs benefit from the certificate of foreign capital        
registration of The Bank of New York (as depositary) in Brazil, which permits   
The Bank of New York to convert dividends and other distributions with respect  
to the AmBev shares into foreign currency and remit the proceeds abroad. If     
you exchange your AmBev ADSs for AmBev shares, you will be entitled to rely on  
The Bank of New York's certificate of foreign capital registration for only     
five business days from the date of exchange. After this five-day period, you   
will not be able to remit abroad non-Brazilian currency unless you obtain your  
own certificate of foreign capital registration or you qualify under Brazilian  
foreign investment regulations that entitle some investors to buy and sell      
shares on Brazilian stock exchanges without obtaining separate certificates of  
registration. If you do not qualify under the foreign investment regulations    
you will generally be subject to less favorable tax treatment of dividends and  
distributions on, and the proceeds from any sale of, the AmBev shares. For a    
more complete description of Brazilian restrictions on foreign investments and  
the foreign investment regulations, see "Additional Information - Memorandum    
and Articles of Association - Restrictions on Foreign Investment" and " - Key   
Information Exchange Controls". For a more complete description of Brazilian    
tax regulations, see "Additional Information - Taxation - Brazilian Tax         
Considerations".                                                                

 THE AMBEV ADSs HAVE FEWER AND LESS WELL DEFINED SHAREHOLDERS' RIGHTS AS
COMPARED TO SHAREHOLDERS' RIGHTS OF SIMILAR U.S. COMPANIES                      

AmBev's corporate affairs are governed by AmBev's bylaws and Brazilian
Corporate Law, which may differ from the legal principles that would apply to   
AmBev if the company were incorporated in a jurisdiction in the United States,  
such as Delaware or New York, or in other jurisdictions outside of Brazil. In   
addition, your rights or the rights of holders of the AmBev shares and ADSs     
under Brazilian Corporate Law to protect your interests relative to actions     
taken by AmBev's Board of Directors or controlling shareholders may be fewer    
and less well-defined than under the laws of those other jurisdictions outside  
of Brazil.                                                                      

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  Although Brazilian law imposes restrictions on insider trading and price
manipulation, the Brazilian securities markets may not be as highly regulated   
and supervised as the U.S. securities markets or markets in other               
jurisdictions. In addition, rules and policies against self-dealing and         
regarding the preservation of shareholder interests may be less well-defined    
and enforced in Brazil than in the United States, potentially causing           
disadvantages to holders of the AmBev shares and ADSs. Corporate disclosures    
may be less complete or informative than what may be expected of a U.S. public  
company.                                                                        

 SOME ENTITLEMENTS ARE NOT AVAILABLE TO U.S. HOLDERS OF AMBEV SHARES AND
ADSs                                                                  

 Due to various Brazilian and United States laws and regulations, United
States holders of AmBev shares or ADSs may not be entitled to all of the        
rights possessed by Brazilian holders of AmBev shares. For instance, U.S.       
holders of AmBev shares may not be able to exercise any preemptive or           
preferential rights relating to their shares unless a registration statement    
under the Securities Act is effective with respect to such rights or an         
exemption from the registration requirements thereunder is available.           

RISKS RELATING TO THE NOTES AND THE GUARANTY  

POSSIBLE EXTENSION OF THE EXPECTED MATURITY OF THE NOTES              

Under the terms of the notes and the indentures, if, on the expected  
maturity date for the notes, the insurance policy is in effect or certain       
funds are on deposit in the reserve account and certain specified events have   
occurred and are continuing relating to the imposition of currency exchange     
controls in Brazil, the date for the repayment of the notes will automatically  
be extended until the earlier to occur of (i) twenty-four calendar months from  
the expected maturity date; (ii) the latest date for which funds are available  
in the reserve account or under the letter of credit and under the insurance    
policy to pay interest on the notes; or (iii) the thirtieth day after any such  
currency exchange control event has ended. Accordingly, you should not rely,    
in making your investment decision, on receiving repayment in full of the       
notes on the initial expected maturity date.                                    

Any such extension of the expected maturity date could, depending on  
changes in the financial conditions of CBB, ultimately affect the ability of    
the noteholders to receive all amounts due to them under such international     
notes and the related international indentures.                                 

POSSIBLE LIMITATIONS OF AMBEV's OBLIGATIONS UNDER THE GUARANTY        

   AmBev entered into a guaranty in support of the issuer's obligation under
the notes and the indenture. Our obligation to guarantee the payment of         
amounts of principal, interest or other amounts due under the notes and the     
indenture applies, subject to some limitations, irrespective of whether any     
such amounts are due at maturity of the notes or otherwise.                     

 AmBev has the right under certain limited circumstances to defer making
payments required under the guaranty for a period of up to twenty-four months.  
In such event, noteholders will be required to wait until the end of such       
deferral or suspension period to receive payment on the notes. We cannot        
assure you that AmBev will not experience financial difficulties during such    
period or whether at the end of such period that it will be able to make any    
or all required payments under the guaranty.                                    

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  JUDGMENTS OF BRAZILIAN COURTS ENFORCING OUR OBLIGATIONS UNDER THE NOTES,
THE INDENTURE OR THE GUARANTY WOULD BE PAYABLE ONLY IN REAIS                    

  If proceedings were brought in Brazil seeking to enforce our obligations
under the notes, the indenture, or the guaranty, we would not be required to    
discharge our obligations in a currency other than reais. Under the Brazilian   
exchange control limitations, an obligation to pay amounts denominated in a     
currency other than Brazilian currency, which is payable in Brazil, may only    
be satisfied in Brazilian currency at the rate of exchange, as determined by    
the Central Bank, in effect on the date of payment.                             

   A FINDING THAT THE GUARANTY EXECUTED BY AMBEV WAS A FRAUDULENT CONVEYANCE
COULD RESULT IN NOTEHOLDERS LOSING THEIR LEGAL CLAIM AGAINST AMBEV              

The issuer's obligation to make payments on the notes is supported by 
AmBev's obligation under the guaranty to guarantee payments by CBB on the       
notes. AmBev has been advised by Cravath, Swaine & Moore LLP, its United        
States counsel, that the guaranty is valid and enforceable in accordance with   
the laws of the State of New York. AmBev has been advised by its Brazilian      
legal counsel that the guaranty has been duly authorized under the laws of      
Brazil and is valid, binding and enforceable against AmBev in accordance with   
its terms. In the event that U.S. federal or state fraudulent conveyance or     
similar laws are applied to the guaranty, and the guarantor, at the time it     
entered into the guaranty:                                                      

o was or is insolvent or rendered insolvent by reason of its entry into the 
guaranty;                                                               

o was or is engaged in business or transactions for which the assets        
remaining with AmBev constituted unreasonably small capital; or         

o intended or intends to incur, or believed or believes that it would incur,
debts beyond its ability to pay such debts as they mature; and          

o received or receives less than reasonably equivalent value or fair        
consideration therefore,                                                

then the obligations of AmBev under the guaranty could be avoided, or claims    
in respect of the guaranty could be subordinated to the claims of other         
creditors. Among other things, a legal challenge to the guaranty on             
fraudulent conveyance grounds may focus on the benefits, if any, realized by    
AmBev as a result of CBB's issuance of these notes. To the extent that the      
guaranty is held to be a fraudulent conveyance or unenforceable for any other   
reason, the holders of the notes would not have a claim against AmBev under     
the guaranty and will solely have a claim against CBB. We cannot assure you     
that, after providing for all prior claims, there will be sufficient assets to  
satisfy the claims of the noteholders relating to any avoided portion of the    
guaranty.                                                                       

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   CONTROLS AND RESTRICTIONS ON FOREIGN CURRENCY REMITTANCE COULD IMPEDE OUR
ABILITY TO MAKE PAYMENTS UNDER THE NOTES AND THE GUARANTY                       

Brazilian law provides that whenever there is a serious imbalance in  
Brazil's balance of payments or reasons to foresee a serious imbalance, the     
Brazilian government may impose temporary restrictions on the remittance to     
foreign investors of the proceeds of their investments in Brazil. For example,  
for approximately six months in 1989 and early 1990 the Brazilian government    
froze all dividend and capital repatriations that were owed to foreign equity   
investors and held by the Central Bank in order to conserve Brazil's foreign    
currency reserves. These amounts were subsequently released in accordance with  
Brazilian government directives. Similar measures could be taken by the         
Brazilian government in the future.                                             

As a result, the Brazilian government may in the future (i) restrict  
companies such as CBB and AmBev from paying amounts denominated in foreign      
currencies (such as the notes and the guaranty) or (ii) require that any such   
payments be made in reais. The likelihood that the Brazilian government would   
impose such restrictions may be affected by the extent of Brazil's foreign      
currency reserves, the availability of foreign currency in the foreign          
exchange markets on the date a payment is due, the size of Brazil's debt        
service burden relative to the economy as a whole, Brazil's policy toward the   
International Monetary Fund, and other factors. We cannot assure you that the   
Central Bank will not modify its policies or that the Brazilian government      
will not institute restrictions or delays on payments of external debt.         

  The Brazilian government currently restricts the ability of Brazilian or
foreign persons or entities to convert Brazilian currency into U.S. dollars or  
other currencies, other than in connection with certain authorized              
transactions including, among others, timely payments by CBB on the notes and   
payments by AmBev under the guaranty. We cannot assure you that mechanisms for  
the transfer of reais and conversion into U.S. dollars will continue to be      
available at the time we are required to perform our obligations under the      
notes and the guaranty or that a more restrictive control policy, which could   
affect our ability to make payments under the notes and the guaranty in U.S.    
dollars, will not be instituted in the future. If such financial mechanisms     
are not available, we will have to rely on a special authorization from the     
Central Bank to make payments under the notes and the guaranty in U.S.          
dollars. We cannot assure you that any such Central Bank approval would be      
obtained or that such approval would be obtained on a timely basis.             

In the event that no such additional authorizations are obtained or   
obtainable from the Central Bank for the payment by CBB or AmBev of amounts     
owed under the indenture, the notes or the guaranty, as the case may be, CBB    
or AmBev may be able to lawfully pay the amounts due under the notes or the     
guaranty through an international transfer of reais. Through the international  
transfer of reais mechanism,                                                    

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payments made in reais by CBB or AmBev will be deposited in non-resident        
accounts held by foreign financial institutions, which would then purchase      
U.S. dollars through the floating market, as defined in " - Exchange Rate       
Information" and " - Exchange Controls", and remit U.S. dollars to the          
relevant agent for payment of the notes. No assurance can be given that the     
international transfer of reais or the floating market will remain legally or   
commercially available to Brazilian residents.                                  

As of February 1, 1999, the floating market and commercial market were
unified and Brazilian banks adopted the same rates, leading to a convergence    
in the pricing and liquidity of both markets. Consequently, while there is      
still a regulatory distinction between the two markets, as of the date of this  
annual report, there is no practical distinction between the commercial market  
and the floating market.                                                        

BOOK-ENTRY REGISTRATION                                               

Because transfers and pledges of global notes can be effected only    
through book entries at the Depositary Trust Company ("DTC"), the liquidity of  
any secondary market for global notes may be reduced to the extent that some    
investors are unwilling to hold notes in book-entry form in the name of a DTC   
participant. The ability to pledge global notes may be limited due to the lack  
of a physical certificate. Beneficial owners of global notes may, in certain    
cases, experience delay in the receipt of payments of principal and interest    
since such payments will be forwarded by the paying agent to DTC who will then  
forward payment to the respective DTC participants, who will thereafter         
forward payment directly, or indirectly through Euroclear or Clearstream, to    
beneficial owners of the global notes. In the event of the insolvency of DTC    
or of a DTC participant in whose name global notes are recorded, the ability    
of beneficial owners to obtain timely payment and (if the limits of applicable  
insurance coverage by the Securities Investor Protection Corporation are        
exceeded, or if such coverage is otherwise unavailable) ultimate payment of     
principal and interest on global notes may be impaired.                         

SUBORDINATION TO CERTAIN STATUTORY LIABILITIES                        

Under Brazilian law, our obligations under the guaranty, the notes and
the indenture are subordinated to certain statutory preferences. In the event   
of our bankruptcy, such statutory preferences, such as claims for salaries,     
wages, social security and other taxes, court fees and expenses, will have      
preference over any other claims, including claims by any investor in respect   
of the guaranty.                                                                

   POSSIBLE VOLUNTARY CANCELLATION OF THE INSURANCE POLICY AND THE LETTER OF
CREDIT AND REFUNDING OF AMOUNTS ON DEPOSIT IN THE RESERVE ACCOUNT               

Subject to certain conditions precedent relating to the rating of the 
notes, CBB may request the trustee to cancel the insurance policy, refund all   
amounts on deposit in the reserve account and allow the letter of credit to be  
cancelled after the third anniversary of the closing date. Any such             
cancellation and                                                                

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withdrawal may significantly affect the ability of noteholders to receive       
payments under their notes during a currency exchange control event occurring   
after any such cancellation, withdrawal and refund.                             

CROSS-DEFAULT CLAUSES                                                 

As a consequence of a change in control, BNDES may accelerate their   
outstanding loans to AmBev. If they do, noteholders would have the right to     
request acceleration of the notes. To date there has not been a change of       
control, and BNDES does not yet have the right to accelerate the indebtedness.  
We have requested a waiver of this provision from BNDES in connection with the  
Interbrew-AmBev Transactions.                                                   

RISKS RELATING TO THE INSURANCE POLICY  

LIMITED FINANCIAL INFORMATION CONCERNING THE INSURER                

The rating of the notes is in part based on the availability of the 
insurance policy to cover certain risks related to inconvertibility or          
non-transferability of amounts which may be paid by the issuer and the          
guarantor under the indenture, the notes and the guaranty in the event that     
the Brazilian government imposes limitations on the conversion of reais to      
U.S. dollars. No financial information concerning the insurer is included in    
this annual report and statutory financial statements are available from the    
Delaware insurance authorities. The insurer's financial obligations are         
subject to pooling arrangements with its parent and certain of its affiliates,  
which arrangements depend on the financial condition of these entities. No      
financial information concerning these entities is included herein. Any         
decline in the financial condition of the insurer or any of these companies     
may impair the ability of the insurer to pay claims under the insurance policy  
and could result in a downgrade of the rating of the notes.                     

LIMITATION ON AMOUNT OF COVERAGE UNDER THE INSURANCE POLICY           

The insurance policy has a policy payment limit in U.S. dollars which 
corresponds to the amount of scheduled interest due on the notes for eighteen   
months. Combined with the amounts on deposit in a reserve account or available  
under the letter of credit, the amounts available to the trustee from the       
insurance policy should be sufficient to cover the payment of interest due on   
the notes for up to four interest payment periods. If for any reason any        
currency exchange control event were to continue for a period longer than       
twenty-four months (four consecutive interest payment periods) during which     
time CBB or AmBev would otherwise be required to make payments to the trustee   
on behalf of the noteholders under the notes or the guaranty, a default may     
occur on the notes. In such cases, noteholders may, in certain circumstances    
be required to accept reais in satisfaction of the CBB's and AmBev's            
obligation to make payments to the trustee under the notes and the guaranty     
regardless of whether such reais are then convertible into U.S. dollars or any  
other currency. See "- Risks Relating to the Notes and the Guaranty -           
Judgments of Brazilian courts enforcing our obligations under the notes, the    
indenture or the guaranty would be payable only in reais".                      

   CONDITIONAL NATURE OF THE INSURER'S OBLIGATION TO PAY UNDER THE INSURANCE
POLICY                                                                          

   The insurer's obligation to make payments under the insurance policy is
subject to certain conditions, limitations and exclusions including, but not    
limited to:                                                                     

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o the requirement that CBB or AmBev generally either attempt and fail to    
  convert reais to U.S. dollars or attempt and fail to transfer U.S. dollars
from Brazil to the trustee in New York;                                 

o certain events causing the failure of CBB to pay under the indenture or   
AmBev to pay under the guaranty, as the case may be, continuing for the 
entire 180 calendar-day waiting period under the insurance policy;      

o the filing by the trustee, as the insured party under the insurance       
policy, of a claim with the insurer; and                                

o the provision of certain information by the trustee, CBB and AmBev to the 
insurer within the time periods proscribed by the insurance policy in   
connection with the filing of the claim with the insurer.               

  The failure to satisfy any such condition, if not waived by the insurer,
may result in the insurer not being obligated to make any payment on the        
insurance policy.                                                               

In addition, the insurer may in certain circumstances cancel the      
insurance policy, exclude the payment of a claim thereunder and adjust the      
amount of a claim under the insurance policy.                                   

LIMITATION ON TIMING OF PAYMENTS UNDER THE INSURANCE POLICY           

 The insurance policy requires that the insurer make payments in respect
of a claim thereunder 180 days after the original payment schedule for          
principal of, and interest on, the notes. Accordingly, in the event of an       
acceleration of the notes prior to the maturity thereof during certain events,  
the insurer will not be obligated to make such payments in the event of any     
such acceleration.                                                              

RISKS RELATED TO THE PROPOSED INTERBREW-AMBEV TRANSACTION 

THERE MAY BE UNFORESEEN COSTS AND DIFFICULTIES ASSOCIATED WITH THE INTEGRATION  
OF LABATT   

   The proposed Incorporacao transaction will involve the integration of two
companies, AmBev and Labatt, that have previously operated within different     
organizational structures, markets and geographic regions. While we have        
identified certain potential synergies and cost savings that we believe may be  
realizable following the completion of the transaction, there can be no         
assurance that such potential synergies and cost savings will be realized in    
the near future, if at all. Labatt operates in a market and geographic region   
that has different characteristics from the markets and regions in which we     
have historically operated, and as a result, we may encounter unexpected        
challenges and problems in the management and operation of the Labatt           
business. Accordingly, there can be no assurance that substantial expenses and  
delays will not be incurred in the course of the integration. The process of    
coordinating and integrating the acquisition could interrupt or interfere with  
the ordinary operations of the businesses. Any major difficulties encountered   
in the integration of the businesses could have a material adverse effect on    
our business, financial condition and results of operation.                     

THE CONSUMMATION OF THE PROPOSED TRANSACTION IS SUBJECT TO THE SATISFACTION OF  
VARIOUS CONDITIONS AND ANY FAILURE OR DELAY IN THE SATISFACTION OF THOSE        
CONDITIONS COULD DELAY AND POSSIBLY PREVENT THE CONSUMMATION OF THE             
TRANSACTION.                                                                    

  The consummation of the proposed Interbrew-AmBev Transactions is subject
to the satisfaction of various conditions, including the receipt of approval    

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of the Brazilian Central Bank. Any failure or delay in the satisfaction of those
conditions will delay and possibly prevent the consummation of the              
transaction.                                                                    

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INFORMATION ON THE COMPANY                                                      

BRAZILIAN BEVERAGE INDUSTRY OVERVIEW  

THE MARKET                                                            

Brazil has a current population of approximately 177 million and 3.3  
million square miles of territory. According to the Brazilian Institute of      
Geography and Statistics (IBGE), the Brazilian economy contracted by 0.2% in    
2003. The Brazilian beer market is the fourth largest in the world and the      
largest in Latin America, with annual consumption of 85 million hectoliters in  
2003, according to Euromonitor. The Brazilian soft drinks market, 130 million   
hectoliters of consumption in 2002, is the third largest in the world           
according to PepsiCo1. According to the most recent research of IBGE, the       
Brazilian market has a large and youthful consumer base, with 38.1% of the      
Brazilian population under the age of 18. These factors, together with the      
effects of an unequal regional income distribution, present significant         
opportunities for growth in the Brazilian beverage market, especially if        
considered that beer and soft drink consumption is at relative low levels, at   
49 liters per capita per year for beer, according to Euromonitor, and 66        
liters per capita per year for soft drinks, according to PepsiCo.               

POLITICAL AND ECONOMIC ENVIRONMENT                                    

   The political and economic environment in Brazil has and will continue to
have a significant effect on the profitability of Brazilian beverage            
producers. The Brazilian economy experienced rapid growth immediately           
following the introduction of the Real Plan in July 1994, particularly in the   
consumer sector. The Real Plan succeeded in lowering inflation and stimulating  
growth. However, by late 1998, the Brazilian economy's growth had slowed, and   
was aggravated by a significant currency devaluation in January 1999. Gross     
domestic product (GDP) grew at rates of only 0.1% and 0.8% in 1998 and 1999,    
respectively. The economic slowdown resulted in generally flat demand in the    
Brazilian beverage industry from 1996 through 1999. Renewed consumer            
confidence in 1999 and 2000 resulted in GDP growth of 4.4% in 2000. Energy      
rationing caused by water shortages in 2000 and 2001 and the political and      
economic crisis in Argentina, which accelerated during the second half of       
2001, had an adverse effect on market confidence and consumer spending. These   
factors together with the global economic slowdown and the events of September  
11, 2001 in the United States, contributed to the reduction in economic growth  
in Brazil to 1.4% in 2001.                                                      

At the end of 2002, Brazil elected a new president from the Workers   
Party, Luiz Inacio Lula da Silva. In the period leading up to, and subsequent   
to, his election, there was substantial uncertainty relating to the policies    
that the new government would pursue, including the potential implementation    
of macro-economic policies that differed significantly from those of the prior  
administration. This uncertainty resulted in a loss of confidence in the        
Brazilian capital markets, including the steady devaluation of the real         
against the U.S. dollar in that period. In 2002 GDP grew by 1.5%, according to  
IBGE.                                                                           

In January 2003, when the new government took office, it focused on   
building credibility and reversing the economic damage stemming from concerns   
regarding the policies the new government would pursue. As a result,            
macroeconomic policy dominated the agenda in 2003. The two cornerstones of the  
new government's economic policy were the endorsement of the International      
Monetary Fund (IMF) program agreed to by the previous administration in August  
2002 and the announcement of inflation targets for 2003. These initiatives      
were followed by an increase in the primary surplus of the public sector to     
4.25% of GDP (from 3.75% under the IMF program) and a sharp increase in         
interest rates by the Central Bank. Through these actions, the Lula             
administration made clear its commitment to reduce the burden of domestic       

------------------------                                                        
1    PepsiCo has not yet released market information for the 2003 calendar      
   year. We have therefore based our market analysis on 2002 information for
soft drinks.                                                          

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public debt and reverse inflationary expectations. As a result, macroeconomic   
economic indicators improved during 2003. The economy has continued to improve  
slightly during the first five months of 2004. During the first three months    
of 2004, GDP increased by 2.7% over the same period in 2003. Comparing the      
first and the last quarter of 2003, the annualized rate of inflation fell from  
23% to 3%, and inflationary expectations for 2004 are close to the government   
target rates. In addition, the real appreciated 22.3% during the year.          

  Recently, in April 2004, statements from the Federal Reserve Bank of the
United States regarding a potential increase in interest rates, in combination  
with other factors, caused a depreciation of the real. The impact may have a    
negative effect on the Brazilian capital markets as well as the level of        
consumer spending.                                                              

THE BRAZILIAN BEER MARKET                                             

Fourth Largest Market in the World                                    

Brazil is the fourth largest beer market in the world and the first in
Latin America in terms of consumption, according to Euromonitor. The following  
table shows the ranking of beer consumption per country in selected markets in  
2003:                                                                           

COUNTRY                                             2003 ANNUAL CONSUMPTION     
-------------                                     ----------------------------  
                                               (millions of hectoliters)

China.............................................            260               
United States.....................................            239               
Germany...........................................            97                
Brazil............................................            85                
Mexico............................................            52                
Canada............................................            22                
Venezuela.........................................            14                
Argentina.........................................            14                

--------------------                                                            
Source: Euromonitor International, Inc. "World Market for Beer Report, 2003"    

Low Per Capita Beer Consumption                                       

Beer is the second most popular drink category in Brazil after soft   
drinks. However, per capita beer consumption in Brazil is relatively low        
compared to many other large markets, mainly due to the unequal regional        
income distribution among the Brazilian population. Per capita consumption of   
beer has been relatively stable since 1995 despite declines in real wages and   
attempts to access the lower income segments of the population. Per capita      
consumption of beer in Brazil was approximately 48.8 liters per year in 2003,   
and ranks 29th in the world, according to Euromonitor. The following table      
sets forth the world ranking in terms of per capita beer consumption in         
selected countries in 2003:                                                     

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COUNTRY                                         2003 LITERS PER PERSON / YEAR   
----------------                                ------------------------------- 
Germany........................................              119                
United States..................................               85                
Canada.........................................               71                
Venezuela......................................               54                
Mexico.........................................               50                
Brazil.........................................               49                
Argentina......................................               37                

-----------------------                                                         
Source: Euromonitor International, Inc. "World Market for Beer Report, 2003"    

Channels                                                              

  Brazilian beer sales are distributed through several points of sales. We
serve approximately one million points of sale. On-premise sales, particularly  
through bars and restaurants, dominate the market and have the highest          
margins. Off-premise sales, mainly through supermarkets, are highly             
price-sensitive, with cans as the predominant packaging through this channel.   
Channel mix has been stable in the last few years, with supermarkets            
representing approximately 30.1% of the market in 2003, according to            
ACNielsen.                                                                      

Prevalence of Returnable Packaging                                    

   The main packaging in bars and restaurants are 600 ml returnable bottles.
According to ACNielsen, they represented approximately 67.7% of beer sales in   
2003, with the remaining 32.3% consisting of sales of one-way packaging,        
including non-returnable bottles and cans, sold mainly in supermarkets.         
Because on-premise beer sales are typically delivered in returnable bottles,    
the capital expenditures and the commitments necessary to develop an efficient  
bottling operation remain a significant barrier to entry in the Brazilian       
beverage industry.                                                              

Pricing                                                               

Wholesale and retail prices of beer have not been regulated in Brazil 
since July 1990, when formal governmental price controls were lifted. Beer      
sales volume is heavily influenced by pricing. Key factors used in determining  
retail price for beer include brand preference, national and/or local price     
promotions offered by producers, whether consumption takes place on or          
off-premise, product category, whether the packaging is returnable or           
non-returnable, the desired profit margins and the geographical location of     
the retailer.                                                                   

The following table shows our estimate of the breakdown of the average
retail price of beer paid by Brazilian consumers for our products in 2003:      

                                          YEAR ENDED DECEMBER 31, 2003
                                             -----------------------------------
                                          (Industry Margin Pool - %)

Producers...............................                   31%                  
Distributors............................                   10%                  
Retailers...............................                   32%                  
Taxes...................................                   27%                  
                                         ---------------------------------------
Total...................................                   100%                 

---------------------------                                                     
Source: Company Estimates                                                       

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Seasonality                                                           

   Sales of beer in Brazil and AmBev's other principal markets are seasonal,
with stronger sales in the early summer. This is demonstrated by the following  
table, which sets forth our sales by quarter in Brazil for the years            
indicated:                                                                      

                                       YEAR ENDED DECEMBER 31,
                                 -----------------------------------------
                                 2003      2002        2001      2000(1)
                                 ------    ------      ------    ---------
                                   (millions of hectoliters)

First quarter......................  14.1      13.3        15.2        14.3     
Second quarter.....................  13.1      12.9        13.1        13.0     
Third quarter......................  12.0      13.6        13.3        13.7     
Fourth quarter.....................  16.1      18.2        17.4        18.2     
                                ------    ------      ------      ------
Total..............................  55.3      58.0        59.0        59.2     
                                ======    ======      ======      ======

---------------------                                                           
Source: Company figures.                                                        

Amounts may not add due to rounding.                                            

(1)  Includes Antarctica sales and excludes sales of Bavaria.                   

 Our fiscal and accounting year-end falls in the middle of the Brazilian
and South American summer. As a result of increased consumer demand at this     
time, our working capital is seasonally inflated. Certain key global            
competitors with operations predominantly within the Northern hemisphere, who   
also have December year-ends, typically experience below annual average         
consumption patterns at that time. Their working capital trends will therefore  
be affected inversely.                                                          

Taxation                                                              

Brazilian beverage producers operate in a relatively unfavorable tax  
environment, which results in higher beverage prices to consumers. In 2003,     
the average excise and value added taxes (IPI and ICMS) applicable to sale of   
beer paid by Brazilian beer producers, distributors and retailers is estimated  
to equal 77% of AmBev's net sales.                                              

Brazilian taxes on beer products include:                             

o IPI - a federal excise tax imposed on industrialized products. IPI is   
  calculated based on a fixed amount over units sold, varying depending on
the size and packaging of the product, and levied based on "Free on   
Board" ("FOB") sales price of the product.                            

o ICMS - a state value added tax. In the beverage industry, the producer  
has the obligation of collecting the distributor's and the retailer's 
tax debt portion. The ICMS is package-specific in 21 out the 27       
  Brazilian states, varies depending on size, and is levied based on a tax
rate applied to the consumer price with a different tax rate in each  
state.                                                                

  o PIS/COFINS - Prior to December 2002, in compliance with Law 10,637/02, the
federally levied PIS and COFINS taxes were charged over gross revenues
 with two rates of 0.65% and 3.00%, respectively. Since December 2002, a
  new PIS taxation mechanism has been implemented. As a result, PIS is now
  charged as a value added tax, and the rate increased from 0.65 to 1.65%.
According to this new taxation mechanism, taxpayers may recognize PIS 
credits corresponding to 1.65% over certain costs and expenses. Those 
credits can be used to reduce the PIS due on taxable revenues.        

Similarly, in December 2003, in compliance with Law 10,833/03, the    
same taxation mechanism was implemented for COFINS taxation. This law           
increased the tax rate for COFINS from 3.00 to 7.60%, and allowed the           
recognition of tax credits corresponding to 7.60% over certain costs and        
expenses. The law also established specific PIS/COFINS taxation on soda, water  
and beer, in which producers are responsible for the whole chain of PIS/COFINS  
collection (monophase taxation).                                                

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New legislation enacted on December 29, 2003 also provided for a      
specified PIS/COFINS tax on soda, water and beer for which product producers    
bear responsibility for collection throughout the supply chain (monophase       
taxation). In this system, the PIS and COFINS are calculated based on the       
producer's gross revenue by applying, respectively, a 2.5% and 11.9% tax rate.  
The new legislation also gives soda, water and beer producers the right to      
adopt a "special regime" in which products are taxed on a fixed amount based    
on volumes sold.                                                                

As we adopted the special regime for PIS/COFINS, the following new tax
rates are applicable:                                                           

o  Beer: PIS=R$0.0202/litre and COFINS=R$0.0935/litre                       

o  Soda and Water: PIS=R$0.0117/litre and COFINS=R$0.0539/litre             

 To partially mitigate these high tax rates, many states in Brazil offer
attractive sales tax deferral programs to attract investments to their          
regions. See "Operating and Financial Review and Prospects - Sales tax          
deferrals and other tax credits" and "Key Information - Risk Factors - The      
pending tax reform in Brazil may increase our tax burden".                      

THE BRAZILIAN SOFT DRINK MARKET                               

Third Largest Market in the World.                            

Brazil's soft drink market is currently the second largest in Latin   
America and the third largest in the world in terms of sales volume, with       
approximately 130 million hectoliters sold in 2002, according to PepsiCo. The   
following table shows estimated soft drink consumption in selected countries    
in 2002:                                                                        

COUNTRY                        ANNUAL CONSUMPTION         ANNUAL CONSUMPTION    
----------                 --------------------------  ------------------------ 
                            (millions of hectoliters)  (millions of 8 oz. cases)

United States..............            549                       9,672          
Mexico.....................            147                       2,594          
Brazil.....................            130                       2,298          
Germany....................            73                        1,287          
Great Britain..............            57                          998          
China......................            54                          954          

------------------                                                              
Source: PepsiCo                                                                 

Soft Drinks Consumption                                               

 Brazilian soft drink consumption grew considerably in the 1990s but has
remained relatively stable in recent years, according to ACNielsen. For the     
same demographic reasons as for beer consumption, per capita consumption of     
soft drinks remains low at 74.8 liters in 2002, according to PepsiCo. The       
following table, which shows per capita consumption in selected countries in    
2002, demonstrates that Brazil's per capita consumption remains relatively      
low:                                                                            

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                                               LITERS PER PERSON /
COUNTRY                                                    YEAR             
--------------                                     ----------------------   

United States.....................................          189.9               
Mexico............................................          145.0               
Great Britain.....................................           95.2               
Germany...........................................           89.4               
Brazil............................................           74.8               
China.............................................            4.2               

-------------------                                                             
Source: PepsiCo                                                                 

Flavors                                                               

The Brazilian soft drinks market is primarily composed of colas and   
flavored soft drinks. The principal competitor of the colas is Guarana, a       
Brazilian soft drink based on a tropical berry-like fruit that grows in the     
Amazon rainforest. The flavors segment has grown significantly in market share  
in recent years, mainly due to low price producers, called B-Brands. Since      
1999, the market has successfully developed strategies to halt the growth of    
B-Brands, including pricing policies and advertising. New flavors such as       
apple, citrus and strawberry have also been introduced in the previous years    
by low price producers. In 2002, the Coca-Cola Company launched a line of       
flavored beverages using the Fanta brand which includes apple and citrus        
flavors. In 2003, this line was further extended with the addition of a         
strawberry flavored beverage.                                                   

The following table sets forth the percentage of total carbonated soft
drink sales volume by flavor in Brazil during the periods indicated:            

                                   YEAR ENDED DECEMBER 31,
                                 ---------------------------------------------
                                 2003      2002      2001     2000      1999
                                 ------    ------    ------   ------    ------
                               (Flavor Market Share - %)

Guarana........................... 26.4      27.7      28.3     28.1      29.2  
Cola.............................. 46.6      44.3      43.9     42.9      42.3  
Others............................ 27.0      28.0      27.8     29.0      28.5  

--------------------                                                            
Source: AC Nielsen                                                              

Packaging                                                             

   Non-returnable packaging, such as cans and plastic bottles (PET), are the
principal containers used in the Brazilian soft drink market, representing      
approximately 89.8% of the packaging used for soft drinks in 2003. The          
introduction of plastic bottles, specifically the 2-liter PET, has been the     
principal innovating factor in the sector in the last 10 years, decreasing the  
price per liter and facilitating the entry and development of new regional      
low-price competitors, which together represented approximately one third of    
the total market in 2003. While the introduction of non-returnable packaging    
required relatively low investments for the development of an efficient         
bottling operation and distribution network, resulting in consumption           
increase, it is also a less profitable type of packaging, resulting in lower    
industry margins. In 2003 the Coca-Cola Company launched new types of           
non-returnable packaging, such as the 3-liter PET non-returnable bottle. This   
initiative appears to be aimed at reducing the B-brands' market share by        
encouraging the consumption of returnable family size glass bottles, which are  
comparably priced or even cheaper than B-Brands' 2-liter PET non-returnable     
packs.                                                                          

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Channels                                                              

  Due to the price-sensitivity of the market in soft drinks, and the shift
in packaging presentation toward low cost non-returnable plastic bottles, the   
channels through which soft drinks are sold in Brazil have also shifted toward  
off-premise (mainly supermarkets) channels. According to ACNielsen, in 2003     
approximately 24.3% of Brazilian soft drink sales were made on-premise (bars    
and restaurants), with the remaining 75.7% being off-premise, predominantly in  
supermarkets.                                                                   

Pricing                                                               

  There have been no government-imposed price controls on the wholesale or
retail prices of soft drinks since 1990. AmBev's pricing strategy has been and  
will continue to be to narrow the price gap between our brands and the market   
leader brands, through initiatives to improve our revenue management.           

The following table shows our estimate of the breakdown of the average
retail price of soft drinks paid by Brazilian consumers for our products in     
2002:                                                                           

                                                YEAR ENDED DECEMBER 31, 2003
                                               -------------------------------
                                                (Industry Margin Pool - %)

Producers........................................            34.6%              
Distributors.....................................             9.4%              
Retailers........................................            34.8%              
Taxes............................................            21.2%              
                                               -------------------------------
Total............................................             100%              

----------------                                                                
Source:  AmBev                                                                  

Seasonality                                                           

 As with beer, soft drink sales in Brazil and in AmBev's other principal
markets are seasonal, although seasonal variations in soft drink sales tend     
not to be as strong as seasonal variations in beer sales. The following table   
sets forth AmBev's soft drink quarterly sales for the years indicated in        
Brazil:                                                                         

                                           YEAR ENDED DECEMBER 31,
                                        ----------------------------------------
                                        2003      2002      2001       2000(1)
                                       ------    ------    ------     --------
                                           (Millions of hectoliters)

First quarter............................  4.2       4.4       4.7        4.1   
Second quarter...........................  4.1       4.1       4.0        3.7   
Third quarter............................  4.0       4.0       4.4        3.9   
Fourth quarter...........................  5.4       5.7       5.4        5.3   
                                         -------------------------------------
Total.................................... 17.7      18.2      18.5        17.1  
                                         =====================================

-------------------                                                             
Source:  AmBev                                                                  
(1) Includes Brahma and Antarctica sales.                                       

Taxation                                                              

As is the case with beer sales, sales of soft drinks in Brazil are    
subject to a high level of taxation, which results in substantially higher      
prices to consumers. See "Information on the Company - The Brazilian Beer       
Market - Taxation." The overall level of taxation in soft drinks is similar to  
beer, however,                                                                  

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the IPI rate on soft drinks that contain natural fruit juice or vegetable       
extract is reduced by 50%. In 2003, the average excise and value-added taxes    
(IPI and ICMS) applicable to soft drink sales paid by producers, distributors   
and retailers in Brazil is estimated to equal approximately 55% of AmBev's net  
sales.                                                                          

THE BRAZILIAN NON-ALCOHOLIC AND NON-CARBONATED BEVERAGES (NANC) MARKET

NANC consumption                                                      

 The Brazilian NANC market consists primarily of powdered juice, bottled
water, concentrated juice, ready-to-drink (RTD) juice, RTD tea, isotonic sport  
drinks, energy drinks and coconut water, both natural and industrialized. The   
Brazilian NANC market (excluding coconut water) has grown at an annual          
compounded rate of 9.7% per year from 1999 to 2003, according to ACNielsen.     
This, however, still represents less than half of the Brazilian soft drink      
market. The following table sets forth the estimated consumption, by category,  
in Brazil, during the periods indicated:                                        

                                                        [Enlarge/Download Table]


                                                                        YEARS ENDED DECEMBER 31,            
                                                        2003         2002         2001        2000      1999
                                                                       (Millions of hectoliters)            
                                                                                                            
Bottled Water................................           15.5         12.5         11.1        10.0       9.6
Ready-to-drink teas..........................            0.5          0.5          0.4         0.4       0.3
Isotonic sports drinks.......................            0.3          0.3          0.3         0.3       0.4
Powdered juice...............................           24.3         21.5         18.8        17.0      16.5
Concentrated juice ..........................            5.4          6.2          5.8         5.7       5.5
Ready-to-drink juice.........................            1.8          1.6          1.2         0.8       0.7
Energy drinks................................            0.04         0.05         0.04        0.01(1)     -

Total........................................           47.8         42.6         37.6        34.2      33.0

---------------------                                                                                       
Source: ACNielsen                                                                                           

(1)  Energy drinks' volume in 2000 represents only the period from May to                                   
     December; from 2001 on the volumes represent the full year.                                            


Seasonality                                                           

   As with beer and soft drink sales in Brazil, NANC sales are seasonal. The
patterns of seasonality for NANC are similar to those of beer. The following    
table sets forth our quarterly sales volumes in Brazil for the years indicated  
in thousands of hectoliters:                                                    

                                                     YEAR ENDED DECEMBER 31,
                                         2003       2002        2001      2000
                                          -----     ------      ------    ------
                                            (thousands of hectoliters)

First quarter...........................  382        433         225       140  
Second quarter..........................  273        319         159       111  
Third quarter...........................  236        277         187       114  
Fourth quarter..........................  211        404         271       194  
Total................................... 1,101      1,434        842       560  

--------------------                                                            
Source: AmBev                                                                   

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AMBEV BUSINESS OVERVIEW 

HISTORY AND DEVELOPMENT OF THE COMPANY                                

   See "Background on the Company - History and Development of the Company".

OVERVIEW                                                              

  We are the largest brewer in Latin America in terms of sales volumes and
the fifth largest beer producer in the world, according to Euromonitor. We      
produce, distribute and sell beer, soft drinks and other beverage products      
primarily in Brazil, but also in the Dominican Republic, Ecuador, Guatemala,    
Peru and Venezuela. In Brazil, we are the leader in the beer market, with a     
67.2% volume share in 2003, according to ACNielsen; in the soft drinks segment  
we are the second largest competitor, with a 16.6% volume share in 2003, also   
according to ACNielsen. Through the acquisition of our stake in Quilmes         
Industrial Societe Anonyme (Quinsa) in early 2003, we are also present in the   
beverage markets of Argentina, Bolivia, Chile, Paraguay and Uruguay. Quinsa is  
the leader in the beer markets of these countries except for Chile. We are      
also one of the largest Latin American soft drink producers and sole            
distributor of Pepsi beverage products in Brazil. The balance of our business   
is comprised primarily of sales of NANC beverage products, including mineral    
water, isotonic sport drinks, iced tea, and other products.                     

We had consolidated net sales of R$8,683.8 million in 2003 compared to
R$7,325.3 million in 2002. Net sales from our beer operations in Brazil were    
R$6,114.6 million, accounting for 70.4% of our consolidated net sales in 2003.  
Our sales volumes of beer in Brazil totaled 55.0 million hectoliters in 2003.   
In May 2004, our brands accounted for 66.0% of the Brazilian beer market,       
according to ACNielsen. AmBev's proprietary beer brands Skol, Brahma Chopp and  
Antarctica Pielsen are among the most-consumed brands in the world and occupy   
the first, second and the third position, respectively, in the Brazilian beer   
market as of May 2004, according to ACNielsen. Our beer production capacity in  
Brazil is 84.5 million hectoliters per year as of May 2004.                     

  Net sales from our CSD & NANC operations were R$1,332.1 million in 2003,
accounting for approximately 15.3% of AmBev's consolidated net sales. CSD &     
NANC volumes were approximately 18.8 million hectoliters in 2003. In May 2004,  
we had a 16.9% market share of the Brazilian CSD market, according to           
ACNielsen. Our CSD production capacity in Brazil is 37.3 million hectoliters    
per year as of May 2004. The core brands of our CSD portfolio are Guarana       
Antarctica, a proprietary brand, and Pepsi Cola and Pepsi Twist, which we       
license from PepsiCo. Our core portfolio accounted for approximately 84.7% of   
our CSD sales volumes in 2003. In total, we sold approximately 17.7 million     
hectoliters of CSD beverages in 2003 in Brazil. For the year ended December     
31, 2003, net sales from CSD operations in Brazil were R$1,205.1 million,       
accounting for approximately 13.9% of our consolidated net sales. For the year  
ended December 31, 2003, net sales of NANC beverages, including isotonic sport  
drinks Gatorade and Marahon, Fratelli Vita mineral water and Lipton Ice Tea     
among others, were approximately R$127.1 million, accounting for approximately  
1.5% of our consolidated net sales. In total, we sold approximately 1.1         
million hectoliters of NANC beverages in Brazil in 2003.                        

Net sales from our International Operations in 2003 were R$1,046.1    
million, compared to R$396.3 million in 2002, and they represented 12.1% and    
5.4%, respectively, of AmBev's consolidated net sales. Our most significant     
operations outside Brazil are Cerveceria Rio, our subsidiary in Guatemala, and  
Quinsa. Our economic interest in Quinsa was 50.9% at May 31, 2004. The two      
operations together represented 76.1% of our international net sales in 2003.   

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The remainder of our consolidated net sales is composed of sales of   
by-products and malt to third parties in Brazil, which we classify as "Other    
Products." Other Products contributed sales of R$190.9 million in 2003,         
representing 2.2% of AmBev's consolidated net sales.                            

  We have an extensive distribution network, for the sale and distribution
of our products, including a network of approximately 332 exclusive third       
party distributors and 32 own direct distribution centers. In 2003, third       
party distributors accounted for 63.1% of our sales volume in Brazil, while     
our own direct distribution system accounted for 36.9% for the same period.     

 Operations in Brazil are supported by a production system that includes
29 beverage plants, 11 of which are breweries, four of which are CSD & NANC     
bottling plants and 14 of which are mixed plants (both brewing and CSD & NANC   
bottling operations are conducted). The aggregate production capacity of our    
beverage plants is approximately 88.3 million hectoliters of beer and 45.7      
million hectoliters of soft drinks. In addition to the beverage plants, our     
Brazilian operations are also supported by six other facilities: four malting   
plants (one in Brazil, two in Uruguay and one in Argentina), one concentrate    
house and one producer of crown caps (the latter two plants located in          
Brazil).                                                                        

In 2003, AmBev revised how it reports its operating results to better 
reflect the expanding geographical scope of its business. Previously, our       
operating results were categorized into three primary business segments: Beer,  
Soft Drinks and Other Products (including NANC, by-products and malt sales to   
third parties). Both Brazilian and international operations were reflected in   
the results for the beer segment. In order to provide a more meaningful         
presentation of AmBev's operations outside Brazil, which have become            
increasingly relevant following the acquisition of our stake in Quinsa, our     
reports now reflect the following four business segments:                       

o    Beer Brazil                                  

o    CSD and NANC                                 

o    Other Products                               

o    International Operations                     

The consolidation of the first three business segments provides the   
results for AmBev's operations in Brazil ("AmBev Brazil" or "Brazilian          
Operations"). Since sales outside Brazil were insignificant until the end of    
2002, application of our new reporting methodology to prior periods does not    
result in any material changes to the reports previously made available for     
those periods.                                                                  

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COMPETITIVE STRENGTHS                                                 

 Our principal goal is to continue expanding our leading position in the
Brazilian beverage market. We believe that we have several competitive          
strengths that will enable us to achieve this goal, including:                  

  Leading position in one of the largest beverage markets in the world: We
are the leading producer in the Brazilian beer market, which was the fourth     
largest market in the world in 2003, according to Euromonitor. We are also the  
second largest producer in the Brazilian soft drink market, which was the       
third largest in the world in 2001, according to PepsiCo. According to the      
Brazilian Institute of Geography and Statistics ("IBGE"), the Brazilian market  
has a large and youthful consumer base, with 38% of the Brazilian population    
under the age of 18. These factors, together with the effects of an unequal     
regional income distribution, present significant opportunities for growth in   
the Brazilian beverage market. Our leading position in the Brazilian beverage   
market has enabled us to generate a substantial and growing revenue base.       
Moreover, it provides an excellent platform for further growth.                 

Extensive and efficient distribution system: Using our extensive      
distribution network, which combines direct and third-party distribution        
systems, we serve over one million points of sale throughout Brazil with our    
beer, soft drinks and NANC beverage products. This network allows us to deepen  
our market penetration and further enhances our favorable competitive position  
in terms of both cost and service. The integration of our three distribution    
networks (Antarctica, Brahma and Skol), and the expansion of direct             
distribution in large cities will allow us to realize significant cost savings  
and higher margins through economies of scale and delivery of multiple brands   
with the same fixed-cost structure. We believe this integration will also       
result in an alignment of interests and improve brand management.               

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Finally, we use proprietary technology to capture data on sales trends,         
consumption patterns and the sensitivity of demand of each point of sale.       

Broad portfolio of leading brand name products: We offer a complete   
portfolio of beer, soft drink and NANC beverage products, including some of     
the most consumed beer brands in the world. The Skol, Brahma Chopp and          
Antarctica Pilsen brands are the top three beer brands in Brazil, according to  
ACNielsen. Moreover, our beer portfolio had approximately 77% brand preference  
in June 2003, according to our estimates. In addition, we own the second most   
consumed soft drink brand in Brazil, Guarana Antarctica, according to           
ACNielsen. We believe that our extensive beverage portfolios enable us to       
address a wide variety of consumer preferences across consumption occasions,    
demographic profiles and regions.                                               

Low cost producer: We believe that we are one of the lowest cost      
producers in the beer industry. We have increased operating efficiency and      
production capacity through significant investments in plant modernization,     
plant construction and technological advancement. We regularly set benchmarks   
for ourselves against other participants in the beverage industry and           
implement new projects and measures to further improve our productivity. In     
addition, we expect to continue to: (i) achieve further reductions on prices    
of raw material, packaging and utilities through negotiation, development of    
new national and international suppliers and tolling operations; (ii) reduce    
costs and increase yields through the launch of several multifunctional         
initiatives and projects, and new developments in Packaging Engineering; (iii)  
increase process and packaging efficiencies by improving plant floor execution  
to reduce labor costs; and (iv) reduce fixed costs through supplier             
centralization and development.                                                 

 Management expertise: The Brazilian beverage market, one of the largest
beverage markets in the world, presents significant opportunities for growth.   
We believe our management expertise, coupled with our leading brands and our    
extensive network, will allow us to capitalize on such opportunities.           
Moreover, our management possesses over a decade-long track record of           
successfully operating AmBev's business through political instability and       
economic downturns, such as through periods of high inflation and currency      
devaluation. Our management team has proven over time its ability to continue   
creating value even in the most difficult circumstances.                        

BUSINESS STRATEGY                                                     

Our growth strategy is driven by the following objectives: managing   
revenue and creating per capita consumption opportunities; capturing market     
opportunities; improving distribution efficiency; improving point of sale       
execution; leveraging existing profitable opportunities in soft drinks;         
maintaining low costs; and recruiting, training and maintaining the best        
employees.                                                                      

 To grow the top line through revenue management and the creation of per
capita consumption opportunities: We will continue to invest in our brands to   
strengthen consumer preference and are progressively increasing sales volumes   
from our higher margin brands. With consumer preference for our brands already  
at approximately 77% in June 2003, according to our estimates, we have a        
strong base from which to expand consumption by introducing new drinking        
occasions. We have launched new products, such as Skol Beats, re-energized      
heritage brands like Bohemia and Original to meet the preferences identified    
at premium prices, and we also launched Brahma Light. Based on market and       
consumer consumption data, we have targeted a range of opportunities for        
increasing per capita consumption by region, neighborhood, income class and     
consumption pattern. We also believe that we can still identify more            
opportunities to better manage the industry margin pool and to retain more of   
the value of our brands without increasing prices to the consumer above         
inflation.                                                                      

   To capture market opportunities in Brazil: In addition to our strategy to
increase sales of higher margin products and develop new consumption            
opportunities, our knowledge, brands, distribution network and sales            
technology also allow us to capitalize on the significant opportunities for     
growth                                                                          

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offered in our primary mainstream market. The size of Brazil's beverage         
market, its low per capita beverage consumption, and its young and growing      
population combine to create a favorable backdrop for increased domestic        
beverage consumption. Moreover, we believe that improvements in the Brazilian   
economy could result in a growing demand for our products as consumers both     
increase the volume of their consumption and as they shift toward our           
premium-priced beverages instead of lower-priced beverage products made by      
other producers.                                                                

 To improve the efficiency of our distribution network: Delivering three
national beer brands (Antarctica, Brahma and Skol) to one million points of     
sale is the most complex feature of our business. In recent years we have been  
gradually, but steadily, moving towards using direct distribution in major      
cities where economies of scale makes this a logical strategy. At the same      
time, we have been strengthening our system of third-party distribution.        
Instead of operating three inherited, parallel, single-brand systems, we are    
shifting towards a multi-brand network of distributors committed to handling    
all of our brands. Though far from completion, we have already begun to         
realize the revenue benefits of having three brands managed under the same      
sales and distribution process.                                                 

   To improve our point of sale execution through new and creative measures:
We are constantly seeking to improve our point of sales execution through new   
and creative measures. A key marketing initiative has been the introduction     
into the Brazilian market of our custom-made beer refrigerators for use at our  
points of sale. Our beer refrigerators focus on on-premise consumption, and     
are specially designed and built to chill beer at the optimal temperature for   
consumption in Brazil. Before these refrigerators were introduced, most beer    
in Brazil was served to consumers from refrigerators designed to chill soft     
drinks, which traditionally is preferred at warmer temperatures than beer. Our  
special refrigerators, decorated to maximize the visual impact of our Brahma,   
Skol, Antarctica and Bohemia brands, chill our beer products to sub-zero        
(centigrade) temperatures, which market research has shown to be the            
consumers' preferred temperature for beer.                                      

 To leverage the profitability of the soft drink business by taking full
advantage of the current infrastructure and sales technology of our beer        
business: We have a strong product portfolio that includes the three leading    
beer brands in Brazil (Antarctica Pilsen, Brahma Chopp and Skol). Also, our     
portfolio includes two of the top three soft drink brands in Brazil (Guarana    
Antarctica and Pepsi Cola), according to ACNielsen, and brand leaders in        
several niche segments. The stronger our soft drink brands, the better          
supplier we are to the point of sale and the greater the distribution cost      
synergies available to the business as a whole. We have also added more         
high-margin products to our portfolio, such as Gatorade and Pepsi Twist, to     
further enhance our profitability. The development of the soft drink segment    
has been and will continue to be of great strategic importance for us.          

 To maintain our commitment to reduce costs: One of our key strengths is
our ability to maintain and reduce costs. We are already one of the lowest      
cost beer producers in the world, but we still see opportunities to improve     
our productivity. For example, we created a Shared Services Center ("SSC") to   
centralize activities such as logistics, human resources and finance, which     
has allowed the sales and production units to sharpen their focus by            
eliminating these functions. The SSC leverages technology to achieve            
excellence in our processes, and can quickly incorporate new areas of           
operation.                                                                      

 To recruit, train and maintain the best employees: The essence of AmBev
has been, and will continue to be our culture, management strength and depth,   
and the unparalleled productivity of our employees. Our employees are           
carefully recruited and highly trained, as well as confident and demanding. We  
are exceptionally motivated by an aggressive variable pay system that rewards   
performance, ownership and entrepreneurship, while consistently adding          
sustainable shareholder value. AmBev, as a whole, is focused on achieving       
long-term, sustainable results - resilience and financial discipline are        
integral parts of our culture.                                                  

OUR PRODUCTS AND BRANDS                                       

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  We produce beer, soft drinks and non-alcoholic non-carbonated beverages,
including isotonic sport drinks, iced tea and water. Our operations in Brazil   
accounted for approximately 88.0% of our net sales in 2003.                     

The following table presents a breakdown of AmBev's sales volumes by  
business segments:                                                              

                                         YEAR ENDED DECEMBER 31,
                                      ------------------------------------------
                                     2003              2002             2001
                                      ------            ------           -------
                                     (millions of hectoliters)
Beer Brazil..........................  55.3              58.0             59.0  
CSD & NANC...........................  18.8              19.6             19.2  
International Operations.............  10.3(1)            3.9              3.3  

-----------------------------                                                   
Source: Company Information                                                     
(1) Includes Quinsa's volumes in proportion to AmBev's economic stake in Quinsa.

The following table sets forth, as a percentage of total sales, our   
revenue breakdown per business segment during the periods indicated:            

                                         YEAR ENDED DECEMBER 31,
                                      ------------------------------------------
                                    2003               2002             2001
                                    ------             ------           ------
                                   (% of revenues)
Beer Brazil..........................  70.4              75.7             73.9  
CSD & NANC...........................  15.3              16.8             15.8  
International Operations.............  12.0               5.4              6.4  
Other Products.......................   2.2               2.1              3.9  

------------------------------                                                  
Source: Company Information                                                     

Beer Brazil                                                           

 Beer Brazil is our core business and the largest contributor to our net
sales. For the year ended December 31, 2003, Beer Brazil sales accounted for    
70.4% of our net sales, totaling R$6,114.6 million and with sales volumes of    
55.3 million hectoliters.                                                       

Core brands                                                           

  Our beer brands are divided into three main beer brand portfolios: Skol,
Brahma and Antarctica. Each of these portfolios offers a variety of beers,      
including pilsen, pilsner, lager, dark and non-alcoholic beers. Skol Pilsen,    
Brahma Chopp and Antarctica Pilsen, which are all standard pilsen beers, are    
our core products and the flagships of their respective brand portfolios.       

Premium brands                                                        

  The remainder of our beer sales in Brazil relates to premium brands, all
of which are also proprietary brands, with the exception of licensed brands     
Miller and Carlsberg. Bohemia is the leading premium brand in Brazil, growing   
from 0.6% of volume market share in 2001, before its re-launch, to 1.8% in      
December 2003, according to ACNielsen. The development of this brand            
constitutes a significant step towards growing the super premium segment in     
Brazil which represented only 6.4% of industry volumes in 2003, according to    
ACNielsen.                                                                      

In October 2002, we launched Skol Beats, another brand introduced to  
develop the super-premium segment. This pilsen beer portfolio extension has a   
higher alcoholic content and is sweeter than its mother-                        

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brand Skol. The initial launch was concentrated in Sao Paulo, Rio de Janeiro    
and Minas Gerais, and the roll-out for the whole country was performed in       
March 2003.                                                                     

In August 2003, we re-launched Brahma Light. The initial re-launch was
concentrated in metropolitan area of Sso Paulo, in cans and long-necks          
presentations. The national roll-out of Brahma Light is expected to take place  
during 2004.                                                                    

The following table sets forth the market shares of our principal beer
brand portfolios by volume in Brazil:                                           

PORTFOLIO                                          YEAR ENDED DECEMBER 31,      
-------------                                 ----------------------------------
                                              2003                  2002
                                              ---------------   ----------------
                                              (Market Share - %)
Skol.........................................     32.8                  32.7    
Brahma.......................................     20.9                  21.0    
Antarctica...................................     13.5                  13.4    

-------------------                                                             
Source: ACNielsen                                                               

  Our Skol portfolio includes Skol Pilsen, Skol Beats and Carlsberg, which
are pilsen beers, and Caracu, which is a dark beer.                             

Our Brahma portfolio includes Brahma Chopp and Miller Genuine Draft,  
which are pilsen beers and Malzbier, which is a dark beer, Brahma Extra, a      
strong-flavored pilsen beer, Chopp da Brahma, which is a draft beer, and        
Brahma Light, a light beer.                                                     

Our Antarctica portfolio includes Antarctica Pilsen, Bohemia, Polar   
Pilsen, Serramalte, Antarctica Original and Antarctica Pilsener Chopp, which    
are pilsen beers, Antarctica Malzbier and Antarctica Pilsener Chopp Escuro,     
which are dark beers, Polar Export, which is a lager beer, Antarctica Pilsen    
Extra and Antarctica Pilsen Extra Cristal, strong-flavored pilsen beers, and    
Kronenbier, which is an alcohol free beer.                                      

 Sales of beer in Brazil are conducted through an extensive distribution
network, which includes approximately 332 exclusive third party distributors    
and 32 direct distribution centers. Through this network AmBev is able to       
serve approximately one million points of sale every week throughout Brazil.    

 The majority of our beer is sold in 600 ml returnable glass bottles. In
order to maximize sales and per capita consumption of our products, we analyze  
sales data on a regular basis in an effort to develop a mix of product          
presentations that best satisfies our consumers. The following table sets       
forth the historical presentations for our beer products by volume in Brazil:   

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PRESENTATION                                        YEAR ENDED DECEMBER 31,     
------------------                            ----------------------------------
                                               2003         2002          2001
                                              -------       ------        ------
                                              (% volume)
Returnable glass bottles.....................   69%          68%           67%  
Cans.........................................    25           26            27  
Non-returnable glass bottles.................    3            3             3   
Barrels (draft beer).........................    2            2             2   
Others.......................................    1            1             1   

---------------                                                                 
Source: AmBev                                                                   

 Beverage sales in non-returnable packages are less profitable. Cans are
particularly popular with supermarket vendors, primarily because of the need    
to allocate additional space to store returnable bottles.                       

We also export beer from Brazil to countries where we currently do not
have local operations. Total beer exports, however, represented less than 1%    
of Beer Brazil net sales in 2003.                                               

CSD & NANC                                                            

 Sales of CSD & NANC represented approximately 15.3% of our consolidated
net sales in 2003, totaling R$1,332.1 million and with sales volumes of 18.8    
million hectoliters.                                                            

Carbonated Soft Drinks (CSD)                                          

Sales of CSD represented approximately 13.9% of our consolidated net  
sales in 2003, totaling R$1,205.1 million and with sales volumes of 17.7        
million hectoliters. Our strategy with respect to CSD has been to focus our     
efforts on a handful of profitable products which we treat as our core CSD      
portfolio. This portfolio includes the brands Guarana Antarctica, our           
proprietary brand, and Pepsi Cola and Pepsi Twist, which we sell under license  
from PepsiCo.                                                                   

   The following table sets forth market share information for our core soft
drink brands (regular and diet) in Brazil and our other CSD brands:             

                                               YEAR ENDED DECEMBER 31,
                                             -----------------------------------
                                       2003        2002       2001
                                       ------      ------     ------
                                       (% of market share)

Guarana Antarctica...........................  8.2         7.9       8.0        
Pepsi-Cola...................................  4.1         3.9       4.3        
Pepsi Twist..................................  1.6         1.2       0.0        
Others.......................................  2.7         3.0       4.6        

----------------                                                                
Source: AmBev                                                                   

     In addition to our core CSD portfolio, we also sell the following
brands:                                                                         

o    Proprietary brands: Soda Limonada Antarctica (regular and diet), 
       Tonica Antarctica (regular and diet), Club Soda Antarctica, Sukita,
   Guarana Brahma (regular and diet), Limao Brahma, Tonica Brahma.

o    PepsiCo Franchises: Pepsi X, Teem (regular and diet), Seven UP   
(regular and diet).                                         

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Our soft drinks are sold and distributed through our beer distribution
network, which serves on-premise points of sale, as well as supermarkets.       
Guarana Antarctica is also sold in major fast food outlets such as McDonald's   
and Pizza Hut. In 2002 we expanded the Pepsi brand portfolio to include Pepsi   
Twist, which has been well received by consumers.                               

   During the early 1990's, when non-returnable PET packaging was introduced
in the Brazilian CSD market, the industry moved rapidly to one-way              
(non-returnable) presentations, both plastic bottles and cans, as opposed to    
returnable glass bottles. The following table sets forth the historical volume  
breakdown per packaging presentation of our CSD sales:                          

PRESENTATION                                        YEAR ENDED DECEMBER 31      
-------------                                    ------------------------------ 
                                                 2003        2002       2001
                                                -------      ------     ------
                                             (% of volume)
One-way plastic bottles.......................... 70%         66%        65%    
Cans............................................. 23          25         24     
Returnable glass bottles......................... 6           7          9      
Post Mix......................................... 1           2          2      

-------------------------                                                       
Source: Company Information                                                     

We also export CSD from Brazil to other countries. Total CSD exports, 
however, represented less than 1% of CSD & NANC net sales in 2003.              

Non Alcoholic and Non Carbonated Beverages (NANC)                     

 The NANC segment includes sales of mineral water, isotonic sport drinks
and iced tea, which we sell and distribute through our beer distribution        
network. NANC products represented 1.5% of our consolidated net sales in 2003,  
totaling R$127.1 million and posting sales volumes of 1.1 million hectoliters.  

We own 100% of the share capital of Fratelli Vita Bebidas Ltda which  
produces and markets the Fratelli Vita brand of mineral water and the Marahon   
brand of isotonic sport drinks. According to ACNielsen, the Brazilian water     
market was 15.5 million hectoliters in 2003.                                    

The isotonic sports drinks are relatively new to Brazil, and total    
consumption in 2003 was approximately 0.3 million hectoliters, according to     
ACNielsen. Our proprietary brand Marahon is the second most popular brand in    
this market, with a 4.5% average market share by volume in 2003, according to   
ACNielsen. In December 2001, we extended our franchise agreement with PepsiCo   
and incorporated the Gatorade brand into our portfolio. This agreement, which   
expires in 2017, is an extension of AmBev's current agreement with PepsiCo,     
signed in 1997, to produce and distribute Pepsi products in Brazil. This        
partnership reinforces AmBev's strategic target to grow its non-alcoholic       
beverages business. As of January 2002, we began producing and distributing     
Gatorade, the leading brand in this segment, with an average market share in    
2003 of 92.2% according to ACNielsen. In November 2002, we introduced a line    
extension, Gatorade Fierce, a colored isotonic drink, targeting the teenager    
market. For information on the investigation by CADE, the Brazilian Antitrust   
authority, into our Gatorade agreement, see "Consolidated Financial Statements  
and Other Financial Information - Legal Proceedings - Joint Ventures and        
Alliances".                                                                     

Brazilian iced tea consumption was approximately 0.5 million
hectoliters in 2003, according to ACNielsen. Lipton Ice Tea, the other major    
product in our NANC portfolio, is the market leader in the iced tea segment,    
with an estimated market share of 38.5% in 2003, according to ACNielsen. Our    
main competitor in this market is Mate Leao, with a market share of 37.2% in    
2003, also according to                                                         

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ACNielsen. In 2002, the Coca-Cola Company, through an agreement with Nestle,    
introduced the Nestea iced tea, which had a 17.0% of market share in 2003.      

  We previously sold Lipton Ice Tea through a joint venture with
Unilever Brasil Ltda. ("Unilever Brasil"). However, PepsiCo and Unilever        
entered into their own joint venture as of January 2004; as a result, AmBev     
has begun to produce and distribute Lipton Ice Tea as an extension of our       
agreement with PepsiCo.                                                         

Other Products                                              

        The Other Products segment is comprised of sales of by-products from
beverage production and malt. Other Products net sales in 2003 were R$ 191.0    
million, representing 2.2% of AmBev's consolidated net sales.                   

International Operations                                    

 The relevance of International Operations to AmBev's business
increased significantly in 2003. Net sales from International Operations in     
2003 were R$1,046.1 million, representing 12.0% of the company's consolidated   
net sales, compared to 5.4% in 2002.                                            

AmBev's International Operations are comprised of:          

 o    AmBev Peru, our Peruvian subsidiary which owns the Pepsi franchise
  for the metropolitan region of Lima and the north of Peru. The
 franchise was obtained in October 2003 in connection with our
        acquisition of production and distribution assets from Embotelladora
  Rivera. AmBev plans to leverage Pepsi's distribution system to
     launch a beer brand in Peru in the near future. Currently, we are
        building beer production facilities in Lima's metropolitan area. Our
        decision to pursue a beer greenfield project in Peru is based on the
    growth potential of that market, our expansion strategy in Latin
  America, our developed know-how in the launching of greenfield
       projects, and the relatively low entry cost. We expect to start our
operations at the beginning of 2005.                        

o    CA Cerveceria Nacional, our Venezuelan subsidiary, which was     
   acquired in 1994. We sell the Brahma brand in Venezuela, and in
       2003, Brahma had a market share of approximately 7.0%, according to
 Caveface. We have a strong presence in Caracas, the country's
     principal market, holding a market share in the Caracas region of
approximately 23.9%, according to Promoting.                

 o    Cerveceria Rio, AmBev's subsidiary in Guatemala, which was created
through a joint venture with the Central America Bottling   
      Corporation ("CabCorp"), the main Pepsi bottler in Central America
        and the sole Pepsi bottler in Guatemala. Cerveceria Rio launched its
    operations in September 2003 with the introduction of the Brahva
       brand, an adaptation of our Brahma brand. Benefiting from CabCorp's
     efficient and extensive distribution system, we have been able to
capture approximately 30% of the market according to our    
        estimates. Furthermore, in May 2004, we began exports from Guatemala
to Nicaragua where CabCorp also has the Pepsi franchise.    

o    Cerveceria Suramericana ("Cervesur"), our Ecuadorian subsidiary, 
       which was acquired in November 2003. Cervesur sells the Biela brand
      and occupies the second leading position in Ecuador, with a market
share of approximately 6% according to our estimates.       

o    Embotelladora Dominicana CXA ("Embodom"), our subsidiary in the  
       Dominican Republic, which has the Pepsi franchise for the Dominican
Republic. In February 2004, AmBev reached an agreement with 
        Embodom's controlling shareholders to acquire a 51% stake in Embodom
and                                                         

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    jointly explore both the Dominican soft drinks and beer markets.
   AmBev is currently building a beer plant in the region of Santo
 Domingo, which will be contributed to Embodom in exchange for
      additional shares that will increase AmBev's ownership interest in
Embodom to 66%.                                             

o    Our economic stake in Quinsa, which was 49.66% as of December 31,
    2003. Through a shareholders agreement we jointly control Quinsa
    together with Beverage Associates Corporation ("BAC"), a holding
        company representing Quinsa's other controlling shareholders. Quinsa
     is the leader in the beer markets of Argentina, Bolivia, Paraguay
   and Uruguay, and occupies the second leading position in Chile.

        Quinsa is a Luxemboug-based holding company which controls 87.63% of
the outstanding shares of QIB. Th remaining 12.37% interest in Quinsa is held   
by BAC and AmBev, which hold 5.32% and 7.05%, respectively.                     

    Quinsa, through QIB, controls beverage and malting businesses in
five Latin American countries. Its beer brands are strong market leaders in     
Argentina, Bolivia, Paraguay and Uruguay and have a presence in Chile.          
Further, pursuant to a license agreement entered into with AmBev on January     
31, 2003, Quinsa received the exclusive rights to produce and sell AmBev        
brands in Argentina, Bolivia, Chile, Paraguay and Uruguay. Similarly, under a   
distribution agreement entered into between Quinsa and AmBev also on January    
31, 2003, AmBev has the exclusive right to distribute Quinsa's brands in        
Brazil.                                                                         

In the soft drinks market, Quinsa has bottling and franchise
agreements with PepsiCo, which account for 100% of PepsiCo beverage sales in    
Uruguay and more than 80% of PepsiCo beverage sales in Argentina. Soft drink    
sales in Argentina were nearly 5.9 million hectoliters in 2003.                 

     After Heineken terminated its relationship with Quinsa in January
2003, Heineken announced in April 2003 an agreement with the Schorghuber Group  
to acquire a 50% interest in Inversiones y Rentas S.A., the holding company     
that holds a majority of the voting rights of Companias Cervecerias Unidas      
S.A., Quinsa's principal competitor in the Argentine and Chilean beer markets.  
As a consequence of that transaction, Quinsa and Heineken terminated their      
agreement which gave Quinsa the right to produce and sell the Heineken brand in 
Argentina, Bolivia, Chile, Paraguay and Uruguay.                                

For the year ended December 31, 2003, approximately 76.6% of
Quinsa's sales was attributable to sales of beer. The beer business in each of  
Quinsa's countries of operation was characterized by strong competition among   
the major brewers. In recent years these major competitors had expanded into    
new markets, engaged in intensive advertising and promotional campaigns and     
introduced new brands. The acquisition of our interest in Quinsa in January     
2003, however, has impacted the competitive environment in the markets in       
which Quinsa operates as this alliance combines the two largest beer companies  
in Argentina, Paraguay and Uruguay. As of December 2003, Quinsa's breweries     
enjoyed leading market shares of 80.0% in Argentina, 94.3% in Paraguay, 98.5%   
in Uruguay and approximately 97.3% in Bolivia. In Chile, Quinsa's market share  
was 10.0%.                                                                      

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DISTRIBUTION AND SALES                                      

Distribution.                                               

       We maintain an extensive third party and direct distribution system
which has enhanced the penetration of our brands throughout Brazil. Control of  
a strong distribution network is a competitive advantage in the Brazilian       
marketplace due to the large number of small points of sale as well as the      
prevalence of returnable packaging, especially in beer, which must be           
transported both to and from the points of sale. The Brazilian beer market is   
characterized by a high proportion of on-premise consumption. According to      
ACNielsen, approximately 70% of the beer sold in 2003 was consumed on-premise   
in bars, restaurants and small retail establishments, with the remaining 30%    
of sales from supermarkets. Because on-premise beer sales are typically         
delivered in returnable bottles, the capital expenditures and the commitments   
necessary to develop an efficient bottling operation constitute a significant   
barrier to entry in the Brazilian beverage industry. However, as is the case    
in more developed beverage markets, non-returnable packaging in the Brazilian   
market has been growing over the past years and may continue to grow.           

        We currently maintain three separate distribution networks, composed
of exclusive third party distributors and direct distribution. Combined, these  
distribution networks reach over one million individual points of sale in       
Brazil. We are continuously improving the process of multiple-brand             
distribution (in which one distributor distributes two or more of our beer      
portfolios). The consolidation of the three networks into a multi-brand         
system, both in direct and third-party sales, is expected to result not only    
in cost savings, but significantly improved distribution and execution at the   
point of sale.                                                                  

        We utilize the "pre-sell" system as our principal method of sales in
Brazil. Under the pre-sell system, a separate sales representative obtains      
orders from customers prior to the time of delivery by trucks. The pre-sell     
system enables us to utilize our trucks more efficiently, since our route       
trucks can be loaded with precisely the amount needed to meet our customers'    
orders, and it can also provide us real-time information about the product and  
presentation needs of our customers, as the majority of our sales staff relays  
order information to our distribution centers using hand-held computers.        

     One of our major initiatives has been to continuously improve our
distribution network in order to increase the volume of sales and deliveries    
per distributor, thus achieving economies of scale. In connection with our      
on-going goal of increasing the efficiency of our distribution networks, we     
developed an "Excellence Program" to evaluate, train and motivate our           
distributor partners. The Excellence Program allows us to benchmark all         
third-party and direct distribution operations, and is a tool for               
standardizing the specific operating procedures needed to run an efficient      
distribution operation and to maintain brand integrity. This program was        
implemented in 1992 in the Brahma and Skol distribution network and later in    
the Antarctica distribution network. As part of our Excellence Program, we      
have significantly reduced the number of distributors since 1994 and focused    
on increasing the volume and the quality of service provided by these           
distributors. We also intend to expand our direct distribution system in large  
urban areas, thereby incurring additional selling expenses as a result of,      
among other things, expansion of our sales force and increased transportation   
costs. However, we expect that this investment will be more than off-set by     
additional revenues.                                                            

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  Despite the growth of direct distribution, we believe that the
continued development of both our exclusive third-party and direct              
distribution networks are fundamental to our success. We will continue to       
invest in both the third-party and direct systems, including the exchange of    
best practices, to improve overall point-of-sale execution.                     

Third-Party Distribution Network.                           

        Our third-party distribution network, currently the primary means of
distribution for our products in Brazil, distributed approximately 63.1% of     
our volume for the year ended December 31, 2003. Approximately 47.7% of such    
volume was sold by distributors of our three main brands. We have exclusive     
agreements with nearly 332 independent distributors who collectively cover all  
26 states in Brazil and the Federal District. As we seek to improve             
efficiencies in our distribution network, including economies of scale, we      
will seek to continue to optimize the consolidation of our three distribution   
networks.                                                                       

Our distribution agreements require the distributor to carry
exclusively our Brahma, Skol and/or Antarctica beer portfolios, as well as our  
core soft drink portfolio, and grant the distributor exclusive rights to sell   
such products within specific channels in a defined territory. In the case of   
soft drinks, where we have a core portfolio sold through all three              
distribution networks, the distributors serving the same territory compete      
with one another; nevertheless, only those designated distributors are          
entitled to sell our soft drinks in that specific territory. Generally, these   
agreements have an initial term of between one and five years, and are          
renewable for an additional term after which the contract will not have a       
pre-determined termination date. In addition, pursuant to our agreement with    
CADE, we are required to share our distribution network with the Dado Bier      
brand, which belongs to a regional producer in the South of Brazil (for         
further information on this matter see "Background on the Company - Brazilian   
Antitrust Approval").                                                           

      The optimal number of distributors within an area is determined by
considering, among other things, market needs, number of points of sale, and    
geographic features. Our sales volume is not concentrated in any one            
distributor within any particular region.                                       

       Our third-party distributors pay for our products either in cash at
time of delivery or through a credit arrangement. Credit terms are typically    
based on the distance between the distributor and the plant, with one extra     
credit day for each 300 kilometers between the plant and the geographical       
region covered by the distributor. Our current average credit term with our     
distributors is approximately two days. We have an administrative team          
dedicated to providing support to our third-party distributors, analyzing ways  
to improve efficiency and reduce costs. Under our Excellence Program we         
continually seek to optimize practices for cost reduction, sales effectiveness  
and customer service. We have also developed several other innovative programs  
aimed at improving our distribution network, such as educational programs at    
our in-house training academy for our in-house and third-party personnel and    
weekly sales force training through satellite broadcasts containing market      
updates and information on our current strategic initiatives.                   

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Direct Distribution System                                  

In addition to our third-party distribution networks, we operate a direct       
distribution system that distributes our products directly to points of sale,   
including both on-premise and off-premise consumption. Our direct distribution  
system includes 32 direct distribution centers that together delivered          
approximately 36.9% of our beverage products by volume for the year ended       
December 31, 2003. We intend to continue expanding the number of brands         
handled by our direct distribution system in larger urban areas and expect      
direct sales to account for up to 50% of our sales by volume in the next        
years.                                                                          

Sales                                                       

Points of Sale                                              

      We restructured our Brazilian sales operations, and as of April 1,
2003, our operations in Brazil are divided into nine geographic regions. Until  
April 1, 2003 we divided our operations into five regions. We expect this       
change to further improve execution as we intend to become closer to the        
market. During 2003, our products were sold in approximately one million        
points of sale throughout Brazil. We sell our beverage products throughout      
Brazil to:                                                                      

o    retail establishments such as restaurants, bars and small- and   
      medium-sized retail outlets, primarily for on-premise consumption;

 o    small self-service stores for both on and off premise consumption;
and                                                         

o    supermarket chains for off-premise consumption.                  

Terms of Sale                                               

      For direct distribution, the terms and other credit conditions are
defined for each point of sale based on a credit score model, with average      
terms of approximately five days. Some specific clients, such as major          
supermarkets and clients with national presence, enjoy longer credit terms      
(average of 20 days).                                                           

Sales Force                                                 

      We maintain separate sales forces for specific groups of products,
organized by geographic region. Each sales force is engaged not only in         
selling our products, but also in monitoring the performance of our products    
in several different ways, including evaluation of sales by brand,              
presentation (packaging) and distribution channel. When a given territory is    
serviced by an exclusive, third-party distributor, the salesperson is an        
employee of the distributor. If the area is serviced by our direct              
distribution system, the salesperson is our employee. Sales personnel are       
offered various incentive packages designed to maximize margins and revenue at  
given price levels and to prevent cannibalizing sales from our other brands.    

Pricing                                                     

       Since the Brazilian government deregulated beer prices in 1990, our
pricing has generally been based upon a suggested retail price issued           
periodically by our headquarters. The final selling price in each of our nine   
market regions is based on the suggested price, and takes into account local    
taxes and competitive pressures. See "- Brazilian Beverage Industry Overview -  
The Brazilian Beer Market - Pricing". Actual prices are reported daily through  
our information network, so that the corporate staff is able to monitor         
discount levels and detect market trends. When determining the suggested        
price, we consider many factors, each of which varies importance from time to   
time. These factors include general economic conditions, regional taxes, the    
success and profitability of our various product presentations, the             

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prices of its competitors, the effects of inflation and the level of its        
costs. We work continuously with the owners of our points of sale to achieve    
competitive consumer prices. Most of our sales force work with handheld         
computers, equipped with a sales algorithm, which enables them to set optimal   
retail prices. There is currently no regulation of wholesale or retail beer or  
soft drink prices in Brazil.                                                    

     SALES OF OUR PRODUCTS ARE NOT DEPENDENT UPON ANY SINGLE CUSTOMER.
OUR LARGEST CUSTOMER ACCOUNTED FOR LESS THAN 3% OF OUR TOTAL NET SALES IN       
2003.                                                                           

Advertising and Promotional Activity.                       

      We advertise and promote our products through television and other
media advertising campaigns, including billboards, and through the sponsorship  
of recreational events. In addition, we engage in various point of sale         
promotions, such as end-aisle displays and special contests, aimed at           
enhancing consumer preference for our brands. In certain competitively key      
outlets, we provide our point of sales establishments with branded furniture    
featuring our products' logos and distinctive color schemes, and, where         
competitively appropriate, promotional banners and posters advertising the      
pricing of our products at that establishment. These programs allow us to gain  
visual dominance of particular points of sale, strengthening our brand and      
encouraging customers to purchase our products.                                 

     On May 24, 2001, we signed an agreement with the Brazilian Soccer
Federation, or the CBF, for sponsorship of the Brazilian national soccer team.  
We have chosen Guarana Antarctica as the soft drink brand to initiate our       
sponsorship campaign. The Guarana Antarctica brand logo is displayed on the     
Brazilian national soccer team training shirt. According to the sponsorship     
agreement, we may also run other promotions, use illustrated cans, distribute   
points of sale merchandising materials and implement advertising campaigns,     
which may be extended to our entire beverage portfolio. We will pay the CBF a   
minimum of U.S.$10 million annually for 18 years. The amount payable by us may  
increase by up to double the minimum amount based on bonus format on the        
performance of our proprietary soft drink market share.                         

 A key marketing initiative has been the introduction into the
Brazilian market of our custom-made beer refrigerators for use in points of     
sale focusing on on-premise consumption, especially designed and built to       
chill beer at the optimal temperature for consumption in Brazil. Before these   
refrigerators were introduced to the points of sale, most beer in Brazil was    
presented to consumers in refrigerators designed to chill soft drinks. Our      
special refrigerators, decorated to maximize the visual impact of our Brahma,   
Skol, Antarctica and Bohemia brands, chill our beer products to sub-zero        
(centigrade) temperatures, which market research has shown to be consumers      
preferred temperature, and have shown a positive impact on sales volumes at     
their locations. As of December 31, 2003, we had installed 186,500              
refrigerators in key locations throughout the country. We plan to install       
significantly more sub-zero coolers at our point of sales.                      

   We regularly conduct market surveys to monitor the image of our
products and the effectiveness of our marketing activities. Within the last     
few years we initiated several marketing plans, which were designed to assist   
in making commercial strategy decisions for each environment in which we        
compete. We also use a telephone service, the "Consumer Service Center," which  
enables us to receive consumers' comments about our products. We received       
approximately 24,000 calls per month from consumers in 2003. Communication      
with consumers is a major priority for us and has been improved by the          
creation of websites for each of our principal beverage brands.                 

Packaging                                                   

 The substantial majority of our beer sales are made in 600 ml
returnable glass bottles. In order to maximize sales and per capita             
consumption of our products, we examine sales data on a regular basis in an     
effort to develop a mix of product presentations to best satisfy our            
customers. The following table sets forth the historical presentations for our  
beer products by volume in Brazil:                                              

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PRESENTATION                                     YEAR ENDED DECEMBER 31,        
--------------                           ---------------------------------------
                                          2003            2002            2001
                                         -------          ------          ------
                                          (% volume)

Returnable glass bottles...............    69%             68%             67%  
Cans...................................    25              26              27   
Non-returnable glass bottles...........     3               3               3   
Barrels (draft beer)...................     2               2               2   
Others.................................     1               1               1   

----------------                                                                
Source: AmBev                                                                   

        Packaging in the Brazilian beer market has been characterized by the
predominance of returnable glass bottles. However, the cans segment grew after  
1994 due to favorable foreign exchange rates, which made it cheaper to import   
aluminum used for can production, as well as the decision by some supermarkets  
to discontinue the sale of beer in returnable bottles. Aluminum can prices      
increased in local currency as a result of the devaluations of the real in      
1999 and 2002. Beverage sales in cans are generally less profitable for us      
because of the lower margins attributable to non-returnable packages. Cans are  
particularly popular with supermarket vendors, primarily because they prefer    
not to allocate the additional space necessary to store returnable bottles.     

      The soft drink industry in Brazil moved rapidly to one-way plastic
bottles and cans as opposed to returnable glass bottles during the early        
1990's. The following table sets forth the packaging presentation of our soft   
drink products by volume in Brazil:                                             

PRESENTATION                                        YEAR ENDED DECEMBER 31,     
------------------                          ------------------------------------
                                            2003           2002           2001
                                             -----         ------         ------
                                           (% of volume)
One-way plastic bottles.................      70%            66%            65% 
Cans....................................      23             25             24  
Returnable glass bottles................      6              7              9   
Post Mix................................      1              2              2   

----------------                                                                
Source: AmBev                                                                   

COMPETITION - BEER                                            

     Beer producers compete for market share through brand preference,
distribution, product availability, pricing, product packaging, consumer        
promotions and service provided to retail outlets, including merchandising      
equipment, maintenance of bottle inventories and frequency of visits.           

     Until July 1999, when Brahma and Antarctica came under our common
control, the Brazilian beer market had three major producers: Brahma, which     
was the market leader through its Brahma and Skol brands, followed by           
Antarctica, owner of the Antarctica Pilsen and Bavaria Pilsen brands (the       
latter of which we sold to Molson Inc. ("Molson") in December 2000 pursuant to  
our performance agreement with CADE; for further information on this matter     
see "Background on the Company - Brazilian Antitrust Approval"), and            
Cervejarias Kaiser Brasil Ltda. ("Kaiser"), owner of the Kaiser Pilsen brand    
(which was sold to Molson in March 2002).                                       

      In December 2002, the three largest beer producers in Brazil were,
respectively, AmBev, Molson (which owns Kaiser and Bavaria) and Grupo           
Schincariol ("Schincariol"). However, during the second half of 2003,           
Schincariol relaunched its core brand, under the name of "Nova Schin" through   
a promotional campaign that significantly increased its market share. As a      
result, Schincariol is now the second largest                                   

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brewer in Brazil, ahead of Molson.                                              

 In December 2003, AmBev, Schincariol and Molson accounted for
approximately 90.4% of beer sales volumes in Brazil, according to ACNielsen.    
The beer business in Brazil is characterized by strong competition among these  
major producers, with each engaging in intensive advertising and promotional    
campaigns, the introduction of new brands and the development of more           
convenient forms of packaging.                                                  

Molson entered the Brazilian beer market in 2000 through the
purchase of the Bavaria brand and related assets from us. See "Background on    
the Company - Brazilian Anti-trust Approval". The Bavaria brand held            
approximately 2.6% of the Brazilian beer market by volume as of December 31,    
2003, according to ACNielsen. Molson's purchase of Kaiser has made it one of    
our largest competitors. Kaiser was a joint venture created in 1982 by          
Heineken N.V. ("Heineken"), the Coca-Cola Company and 18 Brazilian Coca-Cola    
bottlers. Molson's current beer portfolio includes Bavaria Pilsen, Bavaria      
Premium, Bavaria Sem Alcool, Kaiser Pilsen, Kaiser Bock, Kaiser Gold, Kaiser    
Summer Draft, Heineken and Xingu. Generally, Molson's beer prices are lower     
than ours in comparable market segments. Given Molson's financial soundness,    
plus the support of both Heineken and Coca-Cola bottlers, we expect Molson to   
remain a significant competitor in Brazil. As of December 2003, Molson held     
approximately 12.0% of volume market share in the Brazilian beer market,        
according to ACNielsen.                                                         

      Schincariol is a brewer which originated in the Brazilian state of
Sao Paulo and currently has operations across the principal regions of Brazil.  
Its products are generally priced at a significant discount to ours. In 2002,   
Schincariol launched two new brands, Primus and Glacial, which have small       
market shares. In 2003, Schincariol relaunched its core brand under the name    
of Nova Schin, and through a successful advertising campaign was able to        
substantially increase its market share, overtaking Molson as the second        
largest brewer in Brazil. In May 2004, Schincariol filed a complaint with CADE  
challenging the Interbrew-AmBev Transactions as being anti-competitive. For     
further information, see "Financial Information - Consolidated Financial        
Statements and Other Financial Information - Legal Proceedings.".               

     The remaining 9.5% of the Brazilian beer market by volume for the
year ended December 31, 2003 was accounted for by small regional breweries.     
Sales of imported beer are not significant in Brazil, due to the high costs of  
shipping beer to Brazil and an import tariff of 21.5%, except for products      
from Mercosur countries, which are duty-free. ACNielsen estimates that imports  
accounted for less than 1% of total beer consumption by volume in 2003.         
Several super-premium or global beer brands are being produced in Brazil under  
license, including our Miller and Carlsberg brands and Heineken (produced by    
Molson).                                                                        

     Our largest competitor in each of Argentina, Uruguay and Paraguay
used to be Quinsa, which, based on our estimates, held a majority of the beer   
market in each of those countries in 2002. In May 2002, we announced our        
intention to acquire a significant interest in Quinsa, which was successfully   
consummated on January 31, 2003. See "--Acquisition of Interest in Quinsa."     
Our largest competitor in the Venezuelan market is Empresas Polar, which,       
based on our estimates, held a substantial majority share of the beer market    
in 2003.                                                                        

    Our largest competitor in the Peruvian and Ecuadorian markets is
Grupo Bavaria, a Colombian company which controls the largest brewers in those  
countries. Grupo Bavaria had a 90.5% market share in the Ecuadorian beer        
market as of April 2004. In Peru, we estimate that Grupo Bavaria has close to   
a 100% market share with respect to domestic beer sales.                        

 Our largest competitor in the Guatemalan market is Cerveceria
Centroamericana SA, which, based on our estimates, held 70% of the beer market  
in 2003.                                                                        

    Our largest competitor in the Venezuelan beer market is Empresas
Polar, which held 69.0% of the market as of March 2004, accordign to Caveface.  

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    We distribute Miller under license in Brazil. The combination of
South African Breweries plc and Miller, announced in May 2002, may impact this  
distribution agreement, although no discussions have taken place so far.        

COMPETITION - SOFT DRINKS                                   

       As with beer, soft drink producers compete for market share through
brand preference, distribution, product availability, pricing, product          
packaging, consumer promotions, cooling equipment and service provided to       
retail outlets, including merchandising equipment, maintenance of bottle        
inventories and frequency of visits. In recent years, price discounting has     
been frequently used as a means of increasing market share.                     

       As of 2003, The Coca-Cola Company controlled approximately 50.2% of
the Brazilian soft drinks market, according to ACNielsen. The Coca-Cola         
Company owns the Coca-Cola brand, with 32.9% of the total market share,         
according to ACNielsen, and the Sprite and Fanta brands, which are also strong  
brands in the Brazilian flavors segment.                                        

    Our main soft drink brands - Guarana Antarctica, Pepsi and Pepsi
Twist - had a combined market share of 13.9% in 2003, according to ACNielsen.   
AmBev's other brands accounted for a 2.7% market share in 2003, according to    
ACNielsen. The remaining 33.2% of the soft drink volume comes from regional     
low-priced companies focusing on low-income consumers. These B-brand players    
have grown considerably and some have started to invest in advertising,         
including regional TV, merchandising and promotional activities.                

     The Brazilian soft drink market is characterized by three pricing
tiers, with Coca-Cola and Pepsi Twist occupying the highest-priced tier due to  
significant brand preference. The second pricing tier consists principally of   
our Guarana Antarctica, Pepsi Cola, Sukita and Soda Limonada products, as well  
as Coca-Cola's Sprite and Fanta. The remaining soft drink brands and products,  
the B-brands, occupy the third tier.                                            

        The following table sets forth average market prices for the 2-liter
PET packages for selected brands, as of December 2003:                          

BRAND                                                    PRICE (R$/2 LITERS)    
---------                                               ----------------------  

Coca-Cola............................................           R$ 2.34         
Pepsi Twist..........................................              2.26         
Guarana Antarctica...................................              2.06         
Soda Limonada Antarctica.............................              2.06         
Fanta Laranja........................................              2.04         
Sprite...............................................              2.04         
Sukita...............................................              2.02         
7 Up.................................................              2.00         
Pepsi................................................              1.92         
Average Price for B-Brands                                         1.28         

-------------------                                                             
Source: ACNielsen                                                               

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ACQUISITION OF INTEREST IN QUINSA                                               

     In May 2002, we announced our agreements with Quinsa to integrate
our operations in Argentina, Paraguay and Uruguay, which were finalized on      
January 31, 2003. Quinsa is the largest brewer in Argentina, Paraguay, Bolivia  
and Uruguay, and is present in Chile. It is also the main Pepsi bottler in      
Argentina (including Gatorade and Tropicana) and Uruguay. It also has an        
agreement with Nestle Perrier Vittel in Argentina for the production and sale   
of the bottled water brands Eco de los Andes, Glaciar and Nestle Pureza Vital.  

        The combination of assets in Argentina, Paraguay and Uruguay allowed
for the optimization of the operational process, strengthening the financial    
position of both companies and giving us the ability to compete more            
efficiently with other international competitors that sell their products in    
the region. The improvements achieved in results were a consequence of the      
synergies generated by the combination of Quinsa and our industrial assets in   
Argentina, Paraguay and Uruguay, including significant savings in the purchase  
of raw materials, an extensive benchmarking study comparing Quinsa`s and        
AmBev`s operations and revenue management initiatives.                          

       We contributed our beer producing assets in Argentina, Paraguay and
Uruguay (Linthal S.A., La Luisiana S.A., Special Purpose Vehicle Salus S.A.,    
CCBA S.A. and CCBP S.A. and all direct or indirect subsidiaries of these        
companies) to Quinsa in exchange for 26.4 million new Class B shares issued by  
Quinsa. We also, simultaneously, purchased 230.9 million Class A shares from    
Quinsa's controlling shareholder, BAC, for U.S.$346.4 million. As a result, at  
January 31, 2003, we held 36.1% of the voting rights in Quinsa. However,        
pursuant to a shareholders agreement with BAC, we have the right, as long as    
our voting interest in Quinsa does not fall below a certain threshold, to       
appoint 50% of the members of Quinsa's board of directors, with the remaining   
50% being appointed by BAC. Furthermore, pursuant to certain voting             
arrangements with BAC, we have the right, with the same shareholder             
limitations, to cast the same number of votes that BAC has at any Quinsa        
shareholders meeting, which effectively gives us and BAC joint control of       
Quinsa. Also, BAC has granted AmBev a call option to acquire the remaining      
373.5 million Quinsa Class A Shares held by BAC in exchange for newly issued    
shares of AmBev, which call option may be exercised by AmBev beginning in       
April 2009 and in April of each year thereafter, and AmBev has granted BAC a    
put option to sell to AmBev the remaining 373.5 million Quinsa Class A shares   
held by BAC in exchange for newly issued shares of AmBev, which put option may  
be exercised by BAC beginning in April 2003 and in April of each year           
thereafter. The put option granted to BAC becomes immediately exercisable in    
the event of a change of control of AmBev, occurring prior to January 31,       
2006, and will be deemed exercised in the event of a change of control of       
AmBev occurring after that date. Accordingly, BAC may seek to exercise the      
put option in connection with the consummation of the Interbrew-AmBev           
Transactions. With respect to both the call option and the put option, the      
number of AmBev shares to be issued to BAC will be based on a formula which     
will take into account the projected Earnings before Interest, Tax,             
Depreciation and Amortization (EBITDA) of AmBev and Quinsa.                     

     Furthermore, on January 31, 2003, BAC and AmBev also acquired 6.1
million and 8.0 million shares, respectively, of QIB, a subsidiary of Quinsa,   
from Heineken, which represented in the aggregate, a 15% interest in QIB and    
all of the outstanding shares of QIB not owned by Quinsa. The 15% interest was  
reduced to approximately 12.37% during 2003 after Quinsa contributed            
additional assets to QIB in exchange for additional shares of QIB. AmBev, BAC   
and Quinsa have entered into a letter agreement dated as of January 13, 2003,   
with respect to the shares of QIB. Pursuant to the letter agreement, AmBev and  
BAC have agreed that they will not have the right to convert their QIB shares   
into Class B common shares of Quinsa and that Quinsa will have the right to     
purchase the QIB shares held by AmBev and BAC for cash at fair market value,    
if and when the Quinsa board of directors decides to exercise such right.       

       As a result of these transactions, at January 31, 2003, our initial
economic interest in Quinsa amounted to 40.5%.                                  

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      During 2003, we acquired an additional 12.0 million Class B shares
of Quinsa in the open market as permitted by the Quinsa agreements, increasing  
our total economic interest to 49.66% at December 31, 2003. As of May 2004,     
our total economic interest in Quinsa was approximately 50.97%.                 

  In order to benefit from certain corporate taxation incentives
between Argentina and Chile, we have structured the holding in Quinsa through   
two Chilean registered companies, Lambic Chile S.A. and Hohneck Chile S.A.      
Please refer to "Summary - Organizational Structure".                           

       The acquisition of Quinsa was approved with certain restrictions by
the Comision Nacionale de Defensa de la Competencia (Argentine National         
Comission for the protection of Competition - "CNDC").                          

     A summary of the principal restrictions imposed by the CNDC is as
follows:                                                                        

   Quinsa and Ambev ("The Parties") are required to dispose of the
brands Bieckert, Palermo, Imperial and Norte, as well the brewery located in    
Lujan, where the Brahma brand was produced, to an independent brewery, which    
must be financially sound and which does not produce beer in the Argentinean    
Market (the "Purchaser").                                                       

 The Parties are required to submit documentation to the CNDC,
evidencing their commitment to allow the Purchaser, for a period of seven       
years starting on the date of the sale of the assets to the Purchaser, to have  
access to Quinsa's distribution network in Argentina.                           

  The Parties must commit the Purchaser to produce the Bieckert,
Palermo and Imperial brands, for a two-year period, as from the date on which   
such assets are sold.                                                           

     As a consequence of the legal action filed by a subsidiary of the
Compania Cervearias Unidas S.A. (CCU) group in April 2003, through which it     
claimed the right to participate in the process of the acquisition of the       
assets of Cympay and Salus, compliance with the restrictions has been delayed.  

  The results and financial position of Quinsa were consolidated
proportionately in our Brazilian GAAP consolidated financial statements as      
from January 31, 2003. For further information on the impact of this on our     
business, please see "Operating and Financial Review and Prospects -            
Accounting Aspects of the Quinsa Transaction".                                  

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Operations of Quinsa                                          

      Quinsa is a Luxembourg-based holding company which controls 87.63%
of the outstanding shares of QIB. The remaining 12.37% interest in QIB is held  
by BAC and AmBev, which hold 5.32% and 7.05%, respectively.                     

    Quinsa, through QIB, controls beverage and malting businesses in
five Latin American countries. Its beer brands are strong market leaders in     
Argentina, Bolivia, Paraguay and Uruguay and have a presence in Chile.          
Further, pursuant to a license agreement entered into with AmBev on January     
31, 2003, Quinsa received the exclusive rights to produce and sell AmBev        
brands in Argentina, Bolivia, Chile, Paraguay and Uruguay. Similarly, under a   
distribution agreement entered into between Quinsa and AmBev also on January    
31, 2003, AmBev has the exclusive right to distribute Quinsa's brands in        
Brazil.                                                                         

In the soft drinks market, Quinsa has bottling and franchise
agreements with PepsiCo, which account for 100% of PepsiCo beverage sales in    
Uruguay and more than 80% of PepsiCo beverage sales in Argentina. Soft drink    
sales in Argentina attained nearly 5.9 million hectoliters in 2003.             

     After Heineken terminated its relationship with Quinsa in January
2003, Heineken announced in April 2003 an agreement with the Schorghuber Group  
to acquire a 50% interest in Inversiones y Rentas S.A., the holding company     
that holds a majority of the voting rights of Companias Cervecerias Unidas      
S.A., Quinsa's principal competitor in the Argentine and Chilean beer markets.  
As a consequence of that transaction, Quinsa and Heineken terminated their      
agreement which gave Quinsa the right to produce and sell Heineken brand in     
Argentina, Bolivia, Chile, Paraguay and Uruguay.                                

     For the year ended December 31, 2003, 76.6% of Quinsa's sales was
attributable to sales of beer. The beer business in each of Quinsa's countries  
of operation was characterized by strong competition among the major brewers.   
In recent years these major competitors had expanded into new markets, engaged  
in intensive advertising and promotional campaigns and introduced new brands.   
The acquisition of our interest in Quinsa in January 2003, however, has         
impacted the competitive environment in the markets in which Quinsa operates    
as this alliance combines the two largest beer companies in Argentina,          
Paraguay and Uruguay. As of December 2003, Quinsa's breweries enjoyed leading   
market shares of 80.0% in Argentina, 94.3% in Paraguay, 98.5% in Uruguay and    
approximately 97.3% in Bolivia. In Chile, Quinsa's market share was 10.0%.      

JOINT VENTURES AND STRATEGIC ALLIANCES                      

Souza Cruz                                                  

       On November 30, 2000, we announced the formation of a joint venture
with Souza Cruz S.A. (a subsidiary of British American Tobacco plc) to manage   
the purchase of indirect materials that are not strategic to the production     
process, and of services, through a "B2B - Business to Business" portal over    
the Internet. The purpose of this initiative is to create benefits for the      
supply chain, choosing the best practices, optimizing processes, rationalizing  
costs and promoting the access of all and any suppliers to the purchasing       
companies, obtaining better competitive conditions and guaranteeing the         
transparency of the transactions.                                               

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Dado Bier                                                   

       As part of our compliance with our performance agreement with CADE,
we entered into a four-year agreement in September 2001 with Dado Bier, to      
distribute Dado Bier beer in Brazil. We selected Dado Bier after conducting a   
public bidding process for the sharing of our distribution network in           
accordance with performance agreement. Dado Bier will pay a commission for      
using our distribution network.                                                 

Pepsi                                                       

       In 1997, we acquired Pepsi-Cola Engarrafadora Ltda. and PCE Bebidas
Ltda., PepsiCo bottlers in southern and southeastern Brazil, and at the same    
time acquired the exclusive rights to produce, sell and distribute Pepsi soft   
drink products in northeastern Brazil. In 1999, we obtained the exclusive       
rights to produce, sell and distribute Pepsi soft drink products throughout     
Brazil. On October 9, 2000, following the combination, we entered into a new    
franchise agreement with PepsiCo which terminated the Brahma franchise          
agreement and granted us sole bottler and distributor rights for Pepsi soft     
drink products in Brazil. In December 2001 we expanded our partnership with     
PepsiCo to include the production, sale and distribution of Gatorade. The       
Gatorade agreement has been submitted for the review of CADE. The antitrust     
authorities have issued a preliminary opinion for the approval of the           
transaction with no restrictions and we are currently awaiting a final          
decision from CADE. See "Consolidated Financial Statements and Other Financial  
Information - Legal Proceedings - Joint Ventures and Alliances". Our PepsiCo    
franchise agreement expires in 2017, and, thereafter, will be automatically     
renewed for additional ten-year terms absent two years' prior notice by either  
party of its intent not to renew the contract following the expiration of the   
initial or any subsequent term.                                                 

       In October 1999, we entered into a memorandum of understanding with
PepsiCo pursuant to which PepsiCo agreed to license or sell our leading soft    
drink product, Guarana Antarctica, for bottling, sale and distribution by       
PepsiCo outside of Brazil.                                                      

      Since April 2000, when CADE approved the controlling shareholders'
contribution, we have been working towards implementing the licensing or sale   
of Guarana Antarctica with PepsiCo and negotiating the specific terms and       
conditions of the licensing or sale of guarana concentrate or guarana soft      
drinks. We have started to sell Guarana Antarctica in Portugal, Puerto Rico     
and Spain through a franchising agreement with PepsiCo for the production       
(using our concentrate) and distribution of Guarana Antarctica. This venture    
represents less than 1% of our net sales. This agreement has similar terms and  
conditions to those we have been using in licensing agreements for Pepsi        
portfolio brands.                                                               

ETCO                                                        

     On December 30, 2002, AmBev, Souza Cruz, Coca-Cola, and Sindicato
Nacional dos Distribuidores de Combustiveis (Sindicom), among other Brazilian   
non-governmental entities, formed the Brazilian Institute for Ethical           
Competition (ETCO - Instituto Brasileiro de Etica Concorrencial). The main      
purpose of this non-profit organization is to fight tax evasion and illegal     
commerce. ETCO focuses on informing the public about unfair market practices,   
supporting governmental and non-governmental entities and proposing regulation  
regarding this subject. AmBev has also engaged in helping federal and states    
governments to fight tax evasion. The main initiative taken by AmBev, and       
supported by ETCO, was the request to have the government require the           
mandatory installation of flow meters in all Brazilian beer and soft drink      
factories.                                                                      

      In May 2004, the Brazilian government officially released a set of
technical specifications required for the regulation of flow meters installed   
in brewing plants. This announcement enables companies interested in            
installing flow meters to request official certification. Once the              

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government officially certifies the first supplier, the brewers operating in    
Brazil will have up to 6 months to install flow meters in all production        
lines.                                                                          

OTHER ACQUISITIONS AND DISPOSITIONS                         

Salus                                                       

    On October 6, 2000, AmBev and Danone Group acquired 57.3% of the
shares of Salus, the second largest brewer in Uruguay and the local mineral     
water market leader. This acquisition was structured through a joint venture,   
in which Danone Group held a 73.7% stake and AmBev held the remaining 26.3%.    
This acquisition involved two plants, one producing mineral water and another   
producing beer. In 1999, Salus produced 190,000 hectoliters of beer and         
850,000 hectoliters of mineral water. Salus produces the Patricia beer brand.   
As part of the agreement with Quinsa, our 26.3% interest in the Salus joint     
venture was transferred to Quinsa.                                              

Cympay                                                      

      On February 14, 2001, AmBev exercised its option to acquire 95.48%
of the total capital of Cerveceria y Malteria Paysandu S.A. ("Cympay"). The     
interest was acquired from the German group Eufra Holding AG ("Octker") for     
R$56.7 million. The rationale for this acquisition was to increase AmBev's      
international presence in beer as well as to secure additional malting          
capacity. The Nortena and Prinz brands were acquired in the purchase of         
Cympay.                                                                         

      As part of the agreement with Quinsa, the brewing assets of Cympay
were contributed to La Luisiana, the shares of which were subsequently          
transferred to Quinsa.                                                          

Pilcomayo                                                   

      In May 2001, AmBev acquired, directly and indirectly (through Pati
do Alferes Participacoes S.A.), 50.0% of voting and capital stock of            
Pilcomayo, increasing our interest in Pilcomayo to 100.0%, for R$30.5 million.  

Antarctica Polar                                            

As of November 1, 2001, we had acquired outstanding minority
interests in Industria de Bebidas Antarctica Polar ("Polar") amounting to       
R$98.4 million through a series of share repurchases that began in April 2001.  
These share repurchases increased our ownership in Polar to 98.1% of the        
voting capital and 97.4% of the total capital. On August 20, 2002, the          
remaining shares of Polar that we did not already own were redeemed for R$6.8   
million, in which increased AmBev's ownership interest in Polar to 100%. On     
August 30, 2002 Polar was merged into CBB.                                      

Industria de Bebidas Antarctica do Norte-Nordeste (IBANN)   

    AmBev completed the merger of IBANN in November 2001. The amount
paid to the minority shareholders who exercised their appraisal rights was      
R$242.2 million, equivalent to 27.9% of total capital. IBANN has now been       
fully merged into AmBev, and its assets and liabilities were subsequently       
transferred to CBB.                                                             

Cervejaria Astra S.A. (Astra)                               

        During 2002, CBB increased its participation in the total capital of
Astra from 65.5% to 96.7%, through the purchase of Aguia S.A.'s stake in Astra  
and the purchase of shares from minority shareholders. The 2002 stock           
purchases involved a total consideration of R$128.5 million.                    

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Cerveceria Internacional                                    

On July 10, 2001, CCBP acquired the assets of Cerveceria    
Internacional in Paraguay for R$29.2 million consisting of one beer plant with  
an annual installed capacity of 300,000 hectoliters, representing 15.7% of      
Paraguay's annual beer consumption of 1.9 million hectoliters. As part of       
AmBev's acquisition of the interest in Quinsa, our interest in CCBP was         
transferred to Quinsa.                                                          

Aguas Claras                                                

        On September 30, 2001, CBB issued 26,958,767 preferred shares to the
shareholders of Cervejaria Aguas Claras S.A. (Aguas Claras), in exchange for    
40.9% of the preferred shares and 3.0% of the total shares of Aguas Claras. On  
that same date Aguas Claras was incorporated by CBB. The former minority        
shareholder of Aguas Claras and current shareholder of CBB is a federal         
government regional development financing agency, Fundo de Investimentos do     
Nordeste ("FINOR"), which had extended lines of credit to Aguas Claras related  
to its investments in the Northeast region of Brazil and currently owns 0.44%   
of CBB's preferred shares.                                                      

Miranda Correa                                              

    In July of 2002, CBB increased its interest in Miranda Correa, a
beer company in the state of Amazonas, from 60.79% to 99.41%. CBB paid R$1.00   
per share including goodwill of R$5.5 million. In 2000, certain assets          
relating to the Bavaria brand owned by Miranda Correa were transferred to       
Bavaria S.A. ("Bavaria"). On November 6, 2000, we entered into an agreement     
providing for the sale of Bavaria to Molson Inc.; Miranda Correa, which owned   
one of the plants sold to Molson, received 5.8% of the proceeds from the sale   
of Bavaria; for further information on this matter see "Background on the       
Company - Brazilian Antitrust Approval".                                        

Industrias Del Atlantico (IDA)                              

       AmBev recently completed the construction of a brewery in Guatemala
in partnership with CabCorp, the main Pepsi bottler in Central America.         
Operations began in August 2003. Equipment for the Guatemala plant was          
transferred from our other facilities in Brazil due to the overcapacity         
resulting from the Brahma and Antarctica merger. On October 24, 2002, AmBev     
and CabCorp, entered into a joint-venture agreement, setting forth rights and   
obligations for the creation of a strategic regional alliance to collaborate    
in, among other things, the production, importation, distribution, marketing    
and sale of AmBev's products, especially beer, in Guatemala and other Central   
American countries. On August 12, 2003, Monthiers S.A. ("Monthiers"), an        
indirect subsidiary of AmBev, subscribed for 573,092 shares of common stock of  
Industrias Del Atlantico S.A. ("IDA"), a Guatemalan company formerly            
controlled by CabCorp, representing 50% plus one share of the outstanding       
issued and outstanding common stock of IDA. As consideration, Monthiers         
contributed to IDA U.S.$ 7.2 million in debt of IDA relating to credits that    
CBB held against IDA in connection with the import by IDA of certain goods and  
equipment from CBB that had been transferred to Monthier. IDA produces beer in  
Guatemala under the trade name of Cerveceria Rio.                               

Compania Cervecera AmBev Peru S.A.C. ("AmBev Peru")         

     On February 19, 2003, we announced our decision to enter into the
Peruvian beer market through the construction of a production facility and a    
distribution network. The new plant will serve the local market and export to   
certain neighboring countries, such as Ecuador. Our decision to pursue a        
greenfield project in Peru is based on the potential growth of that market,     
our strategy to expand in Latin America, our knowledge and experience in the    
launch of greenfield projects, and the relatively low entry cost.               

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        On October 31, 2003, through our subsidiary Compania Cervecera AmBev
Peru A.C ("AmBev Peru"), AmBev acquired certain assets of Embotelladora Rivera  
in Peru for approximately R$86.7 million. These assets include two soft drinks  
plants, which combined have an estimated production capacity of 6.3 million     
hectoliters per year, and other sales and distribution assets in Lima.          
Contemporaneously with this acquisition, AmBev became PepsiCo's exclusive       
bottler for Northern Peru and Lima. Embotteladora Rivera will sell and          
distribute our beer and soft drinks products in Northern Peru. AmBev expects    
to have a fully operational beer plant in Peru during 2005.                     

Cerveceria Suramericana                                     

  In December 2003, we acquired 80% of the capital of Cerveceria
Suramericana, the second largest brewer in Ecuador, for approximately R$105.6   
million. Through its Biela brand, Cerveceria Suramericana currently holds       
approximately 7.0% of the Ecuadorian beer market, according to our estimates.   
AmBev's plan is to leverage Cerveceria Suramericana's operations to launch a    
brand of its own in Ecuador.                                                    

Embotelladora Dominicana CXA ("Embodom")                    

        On February 12, 2004, we announced an alliance with Embodom, a Pepsi
bottler in the Dominican Republic, in order to jointly produce and market beer  
and soft drinks in the Dominican Republic. AmBev agreed to pay R$204.9 million  
for 51% of Embodom's total capital. In addition, AmBev expects to build a beer  
plant in the region of Santo Domingo, which will be contributed to Embodom in   
exchange for an additional shares that will raise AmBev's stake in Embodom to   
66%.                                                                            

Other restructuring transactions.                           

       On June 11, 2001, CBB spun off its 99.9% interest in the voting and
total share capital of Eagle to AmBev against a R$1,530.8 million reduction in  
the share capital of CBB without affecting the number of shares of CBB. The     
spin-off sought to optimize income and other tax benefits within our corporate  
restructuring program. AmBev continued to own 100% of the voting and total      
share capital of CBB immediately after the spin-off. In July 2003, the shares   
of Eagle held by AmBev were transferred back to CBB in an attempt to optimize   
income and tax benefits.                                                        

        Prior to Brahma's merger into Antarctica, we restructured the assets
and liabilities of certain subsidiaries. The principal components of the        
restructuring were the transfer of substantially all the assets and             
liabilities of CRBS S.A., PepsiCo Engarrafadora Ltda. and Cervejarias Reunidas  
Skol to Brahma as of October 31, 2000.                                          

      We have also made a number of other smaller acquisitions in recent
years.                                                                          

THE OPERATIONS STRUCTURE AT AMBEV                           

        As a result of an internal restructuring in 2002, the Manufacturing,
Logistics, Procurement, and Human Resources areas were grouped under a new      
managerial structure named Operations. Although each of these areas maintains   
its own executive officer and staff, there is a growing effort to better        
integrate their activities and take advantage of their synergies. AmBev         
believes this integration will not only facilitate the management of its        
complex operations but also generate better results by sharing                  
responsibilities and more rapidly responding to market needs.                   

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PRODUCTION AND AVAILABILITY OF RAW MATERIALS                

Beer and soft drink production                              

        Beer production involves several raw material and production stages.
The main ingredient in beer is malt, which is produced by germinating and       
roasting barley in a process called "malting". Malt is mixed with water, hops   
and adjuncts (corn grits or rice, for instance) in the proportions necessary    
to obtain the desired taste. The resulting mixture is called "wort". Wort is    
fermented with selected yeasts to produce beer, which is then filtered and      
bottled. In addition to these natural ingredients, delivery of the product to   
consumers requires packaging such as bottles, aluminum or steel cans, labels    
and crown caps. The majority of the beer brands share the same production       
process until the filtration stage, relatively late in the brewing process,     
which increases efficiency and allows for a better quality control.             

      Soft drinks are produced by mixing water, flavored concentrate and
sugar or sweetener. Water is processed to eliminate mineral salts and filtered  
to eliminate impurities. Purified water is combined with processed sugar or,    
in the case of diet soft drinks, with artificial sweeteners, and concentrate.   
Carbon dioxide gas is injected into the mixture to produce carbonation.         
Immediately following carbonation, the mixture is bottled.                      

        For information on our production facilities, see "- Property, Plant
and Equipment".                                                                 

Raw materials                                               

      AmBev's Procurement department has a centralized structure divided
in six groups: Beer Raw Materials, Soft-drinks Raw Materials, Metals,           
Plastics, Paper Labels and Glass Bottles, and Intermediate Raw Materials        
(created in the beginning of 2003 to focus on the secondary raw materials).     

        The managers of these groups heavily depend on strategic sourcing to
successfully negotiate their portfolios, and they also have developed           
extensive knowledge regarding the commodities purchased by AmBev. Financial     
and supply chain analysis, general industry knowledge, benchmarking studies     
and cost breakdown models, are some of the tools used by the department to      
optimize the negotiations. Inventory levels and payment options are also        
well-monitored in order to efficiently manage our working capital.              

  AmBev has also a National Procurement Center to centralize the
purchase of indirect materials and services and the sales of industrial         
by-products. This center was created to gain leverage and aggregate value,      
delivering better results. In order to achieve the benefits of centralization,  
we rely on modern technology used to exchange information between AmBev and     
its suppliers, as well as an efficient on-line ordering service via AmBev's     
intranet, maximizing the efficiency of order processing.                        

   We believe that most of our supply agreements for raw materials
contain standard commercial terms. We are not dependent on any one supplier     
for a significant portion of our raw materials and the loss of any one or       
limited group of suppliers would not have a materially adverse effect on our    
sources of supply. In recent years, we have not experienced any material        
difficulties in obtaining adequate supplies of raw materials at satisfactory    
prices.                                                                         

        We established a department to focus on the procurement of marketing
and advertisement products and services, searching for new and alternative      
suppliers as part of our outsourcing strategy for these areas. Furthermore, in  
2003, AmBev centralized the Material Requirement Planning ("MRP") of the        
Material Requirement Order departments of all its plants, which has helped to   
lower inventory costs.                                                          

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Beer                                                        

      The main raw materials used in our production are: malting barley,
malt, grits, corn syrup, rice, hops and water.                                  

o    Barley and malt: Malt requirements are met by domestic and       
     international suppliers as well as our own malting facilities. In
      2003, we purchased up to 13% of our malt outside South America, at
     prevailing market rates, which depend partially on the quality of
       the barley harvests, and the remaining 87% within South America. We
   have the capacity to produce 75% of our malt needs from our own
      malting facilities in Brazil, Argentina and Uruguay. We can either
      sell part of our malt production to third parties or use it in our
      own production. We generally contract our annual malt needs in the
       last quarter of the year for the following year's requirements. Due
     to the different geographical areas of our producers, we minimize
     exposure to weather-related harvesting problems. Market prices of
  barley and malt have been relatively volatile. We believe that
    having our agreement with the producers and corporate production
      facilities helps to mitigate the impact of price volatility in our
operations.                                                 

  o    Hops: We use two types of hops in our beer production: hops used to
      give beer its distinctive bitter flavor, which we generally import
      from the United States, and hops used to give beer its distinctive
 aroma, which we generally import from Europe, purchasing from
    several international suppliers. Typical import contracts have a
duration of three years.                                    

o    Adjuncts: Corn syrup, grits and rice are purchased locally, in   
        Brazil, on a regular basis. In the event of a foreseeable decline in
        production, we anticipate our purchases in order to guarantee better
commercial term and the supply.                             

   o    Water: Water represents a small portion of raw material costs. Water
     needs to be treated both before its use in the production process
      and before disposal. We obtain our water requirements from several
       sources, such as: lakes and reservoirs, deep wells located near our
   breweries, rivers adjoining our facilities and public utilities
   companies. We monitor the quality, taste and composition of the
      water we use, and treat it to remove impurities and to comply with
     our own quality standards and applicable regulations. Advances in
technology have reduced our water consumption per hectoliter
 produced. We do not foresee any shortage in our current water
        supply. All our plants already have water treatment facilities and a
        conservation/productivity program has been successfully implemented.
    Substantially all of the water collections in AmBev's production
        facilities have the proper legal authorizations, being in compliance
with the prevailing local laws for the management of water  
       resources. Administrative penalties, such as warnings and fines may
        be imposed for the utilization of water resources without the proper
      authorization. Some states in Brazil, in which management of water
  resources through governmental agencies is more developed, are
        considering the introduction of a tax on the use of water resources.

Soft drinks                                                 

   The main raw materials used in the production of our soft drink
products are: concentrate (including guarana extract), sugar, sweetener, water  
and carbon dioxide gas. Most of these materials are obtained from local         
suppliers. We also have a 505-hectare facility that provides us with 50 to 60   
tons of guarana berries per year, or about 18% of our requirements, with the    
remainder purchased directly from independent farmers in the Amazon region. We  
produce our own concentrates for soft drink production of our proprietary       
brands. The concentrate is mixed with sugar and carbonated water at our         
facilities. The concentrate for Pepsi soft drink products is purchased from     
PepsiCo. Brazil is the biggest producer and exporter of sugar in the world and  
we therefore purchase sugar domestically.                                       

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Packaging                                                   

     Packaging costs are comprised of the cost of non-returnable glass
and PET bottles, aluminum and steel cans, plastic film (shrink and stretch),    
paper labels, plastic closures, metal crowns and paperboard. We use financial   
instruments to hedge the aluminum and sugar costs; for further information on   
this matter see "Quantitative and Qualitative Disclosures About Market Risk".   
For other materials, we usually set a fixed price for the period in accordance  
with the prevailing macroeconomic conditions.                                   

Our main can suppliers are Rexam, Latapack Ball, Metalic and
Crown-Cork. We generally purchase all of the glass bottles used in packaging    
of our products from St. Gobain Emballage, Owens-Illinois Glass Containers and  
Companhia Industrial de Vidros. We obtain the labels for our beer and soft      
drink primarily from local suppliers, mostly from Grafica, a subsidiary of the  
FAHZ. Plastic closures are principally purchased from Alcoa Aluminio and        
Crown-Cork. We also have a plant in Manaus that produces crown caps.            

    Most of our plants have their own polyethylene terephthalate, or
PET, blowing facilities. PET is the material used to make one-way plastic       
bottles for soft drinks. On-site PET blowing allows for substantial savings in  
transportation and storage costs.                                               

PROPERTY, PLANT AND EQUIPMENT                               

   Our properties consist primarily of brewing, malting, bottling,
distribution and office facilities in Argentina, Brazil, the Dominican          
Republic, Ecuador, Guatemala, Peru, Uruguay and Venezuela. In connection with   
our acquisition of the interest in Quinsa, our beer brewing assets in           
Argentina, Uruguay and Paraguay were transferred to Quinsa during 2003.         

  As of December 31, 2003, we own 42 facilities, of which 36 are
beverage plants, including 14 breweries (11 in Brazil, and one each in          
Venezuela, Guatemala, and Ecuador); eight soft drink plants, four in Brazil,    
which produce Brahma, Pepsi and Antarctica brand soft drinks, three in Peru     
and one in the Dominican Republic, which produce both Pepsi and Embodom's       
proprietary brand Red Rock); and 14 mixed plants which produce both beer and    
soft drinks (all 14 in Brazil). Our facilities in Nova Rio and Jacarei          
accounted for 17.2% and 11.8% of our beer production in 2003, respectively.     
Our facilities in Jundiai, Nova Rio and Sapucaia accounted for 33.4%, 13.5%     
and 13.1% of our soft drinks production in 2003 , respectively. On October 31,  
2003, we acquired certain assets of Embotelladora Rivera in Peru, including     
two soft drinks plants, which combined have an estimated production capacity    
of 6.3 million hectoliters per year. Our mineral water plant in Bahia, Brazil,  
was closed during 2003.                                                         

      In 2003, our aggregate beer and soft drink production capacity was
133.9 million hectoliters per year. In 2003, due to the seasonality of our      
business, we utilized 65.6% of our beer and 47.0% of our soft drink capacity    
in Brazil. Our total annual beer production capacity was 88.3 million           
hectoliters, of which 84.5 million hectoliters is in Brazil, two million        
hectoliters in Venezuela, one million hectoliters in Ecuador, and one million   
hectoliters in Guatemala. Our assets in Argentina, Uruguay and Paraguay, with   
a total capacity of approximately three million hectoliters, were transferred   
to Quinsa during 2003. Our total soft drink production capacity was 37 million  
hectoliters in Brazil, which includes the production of both proprietary and    
Pepsi soft drinks, six million hectoliters in Peru, and two million             
hectoliters in the Dominican Republic.                                          

 We own all of our facilities in Brazil. The facilities and/or
equipment in Agudos, Jacarei, Minas Gerais, Nordeste, Aguas da Serra, Aguas     
Claras (Sergipe), Aguas Claras do Sul, Nova Rio, Brasilia, Teresina, Goiania,   
Manaus, Montenegro, Aquiraz, Santa Catarina, Cebrasa, Curitiba, Natal,          
Jacarepagua, Jundiai and Sapucaia branches are encumbered by mortgages to       
secure long-term loans from BNDES, as                                           

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well as from other lenders. The mortgages were provided in connection with      
financing provided to Brahma and Antarctica to modernize their plants.          

       We also own and operate four malt plants, one of which is in Brazil
(Maltaria Navegantes), one in Argentina (Malteria Pampa S.A.) and two in        
Uruguay (Malteria Uruguay S.A. and Cympay S.A.); one concentrate plant; one     
crown cap production facility; 490 hectares of agricultural land, which we use  
for Guarana production and research (see more details under " - Research &      
Development and Knowledge Management") and; three barley-growing facilities.    

      In addition, we rent office facilities in Sao Paulo. The following
is a list of our principal production facilities:                               

Brazil:                                                                         

Plant                                                             Type of Plant 

Agudos, Sao Paulo                                                 Beer          
Brasilia, Federal District                                        Beer          
Curitiba, Parana                                                  Beer          
Equatorial, Maranhao                                              Beer          
Estrela, Rio Grande do Sul                                        Beer          
Goiania, Goias                                                    Beer          
Jacarei, Sao Paulo                                                Beer          
Lages, Santa Catarina                                             Beer          
Montenegro, Rio Grande do Sul                                     Beer          
Natal, Rio Grande do Norte                                        Beer          
Aguas da Serra, Sao Paulo                                         Beer          

Aguas Claras, Sergipe                                             Mixed         
Aquiraz, Rio Grande do Norte                                      Mixed         
Camacari, Bahia                                                   Mixed         
Cebrasa, Goias                                                    Mixed         
Cuiaba, Mato Grosso                                               Mixed         
Jaguariuna, Sao Paulo                                             Mixed         
Jacarepagua, Rio de Janeiro                                       Mixed         
Joao Pessoa, Paraiba                                              Mixed         
Nordeste, Pernambuco                                              Mixed         
Nova Rio, Rio de Janeiro                                          Mixed         
Manaus, Amazonas                                                  Mixed         
Minas, Minas Gerais                                               Mixed         
Teresina, Piaui                                                   Mixed         
Aguas Claras do Sul,  Rio Grande do Sul                           Mixed         

Curitibana, Parana                                                Soft drinks   
Contagem, Minas Gerais                                            Soft drinks   
Jundiai, Sao Paulo                                                Soft drinks   
Sapucaia, Rio Grande do Sul                                       Soft drinks   

Manaus, Amazonas                                                  Crown Cap     
Manaus, Amazonas                                                  Concentrate   
Maltaria Navegantes-Porto Alegre                                  Malt          

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INTERNATIONAL:                                                                  

PLANT                                                             TYPE OF PLANT 
------                                                            ------------- 
CACN, Venezuela                                                   Beer          
Cerveceria Rio, Guatemala                                         Beer          
Cerveceria Suramericana, Equador                                  Beer          

Lima, Peru                                                        Soft Drinks   
Sullana, Peru                                                     Soft Drinks   
Barranca, Peru                                                    Soft Drink    
Embodom, Dominican Republic                                       Soft Drinks   

Cympay, Uruguay                                                   Malt          
MUSA, Uruguay                                                     Malt          
Malteria Pampa, Argentina                                         Malt          

        As part of the agreement relating to the acquisition of our interest
in Quinsa, in January 2003, our beer brewing assets in Argentina, Uruguay and   
Paraguay were transferred as consideration to Quinsa. This transfer allowed     
for the optimization of operating processes and enhancement of productivity in  
Argentina, Uruguay and Paraguay.                                                

     Two greenfield breweries are currently under construction, one in
Peru and one in the Dominican Republic, as part of our Latin American           
expansion plan. More than 90% of the equipment for these plants has been or     
will be transferred from other facilities in Brazil, thereby optimizing the     
over-capacity that resulted from the Brahma-Antarctica integration and          
increasing productivity in our plants. This strategy allows AmBev to reduce     
its investment needs in new plants. In both cases, the expected investment      
should amount to U.S.$38.0 million in Peru and U.S.$38.0 million in the         
Dominican Republic, respectively, including production facilities, working      
capital and pre-operating expenses.                                             

  We also use under-capacity assets to reduce logistics costs in
Brazil. For example, one of our can packaging lines was transferred to our      
plant in the state of Piaui during 2003, and another two are being transferred  
during 2004, one to the state of Goias (Central region) and one to the state    
of Maranhao (North region), reducing our total can freight costs to those       
regions. Minor de-bottlenecking investments at our plants in Anapolis and       
Goiania, which are expected to yield significant beer capacity increases of     
11% and 15% respectively, are expected to be finished by the fourth quarter of  
2004. Paysandu's malt plant (Cympay) is being expanded during 2004, increasing  
its capacity from 95,000 to 130,000 tons of malt per year.                      

INSURANCE                                                     

  We insure our plants and equipment against damage or loss with
recognized insurance companies. We believe that the type and amount of          
insurance we carry conforms with market practices for beverage companies and    
provides prudent levels of coverage for risks associated with our operations.   

LOGISTICS                                                     

       We divide our logistics management into three different dimensions:
long-term planning, short and medium-term planning and execution.               

  On an annual basis, based on macro-economics trends and market
knowledge, AmBev prepares a demand forecast for the following five years. This  
forecast is the primary basis of our long-term logistics planning known as the  
"Director Plan", the main goal of which is to come up with the optimal plant    

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footprint for this period. When running this analysis, logistics must take      
into account external and internal factors such as demand forecast, plants'     
capacities and efficiency evolution, transportation costs, raw materials and    
labor availability, and state taxes. It is during this analysis that we make    
decisions such as whether to open new plants, transfer assets, and increase or  
decrease plant capacity.                                                        

       The output of our long-term planning becomes an input to our yearly
(short-term) budgeting process. We use the information generated in the         
"Director Plan" to determine the volume of each SKU (Stock Keeping Unit)        
produced every month at each of the plants. When running this analysis,         
logistics must update the demand forecast based on the most recent information  
obtained with the Sales Department. This production schedule will be the basis  
for other areas' planning, particularly Manufacturing and Sourcing.             

    Every month, the demand forecast for the following two months is
updated and the logistics reviews its production schedule for each of the       
plants. When doing this, logistics must consider current capacity available at  
each plant, inventory level, and actual transportation and production costs.    
Manufacturing uses this information to adjust its daily production schedule     
and finished goods inventory in order to meet demand requirements. Sourcing     
uses this information to make its decisions regarding quantities to be          
purchased, raw materials inventory levels, future purchasing contracts, and     
hedging alternatives.                                                           

Logistics also uses this production schedule to make our    
transportation planning, taking into account lead times, costs, distances, and  
product shelf lives, among other items. We use a combination of cabotage, rail  
and road modals to move raw materials and finished goods between suppliers,     
plants, and distributors, always trying to reach the optimal combination of     
these different modals. In order to take advantage of scale and to guarantee    
the optimization of routes and intermodal, we centralized our transportation    
operation at our Shared Services Center.                                        

RESEARCH & DEVELOPMENT AND KNOWLEDGE MANAGEMENT             

   AmBev brings innovation and retains knowledge to its businesses
primarily through four areas: (1) its Technological Development Center          
("CDT"), (2) its Barley Development Program; (3) the Santa Helena Farm; and     
(4) the Engineering Center.                                                     

CDT                                                         

       CDT is located at the site of the beer plant in Guarulhos, which is
in the Sao Paulo Metropolitan area. CDT runs a state-of-the-art 10 hectoliters  
pilot brewery that reproduces a plant in a smaller scale and allows AmBev to    
run complex tests. It also has several specific laboratories to support         
development activities, such as the packaging laboratory built in early 2002    
after the creation of a Packaging Innovation team. These laboratories are       
equipped to perform quality checks and to produce samples for internal and      
consumer trials.                                                                

     As of May 2004, CDT had 18 employees, who are trained and sent to
relevant beverage events such as World Fairs. Their primary tasks are the       
development of new beer and non-alcoholic beverage new products, the execution  
of laboratory and sensorial analysis, the development of new specifications     
for both liquids and packages, and the development of alternatives to reduce    
operational costs. Because they retain great knowledge of our products and are  
a self-renewing source of information to AmBev, these employees are carefully   
recruited and closely monitored by our senior management.                       

  CDT, in association with Marketing Intelligence and Innovation
teams, is responsible for the development of new products, including both       
liquid and packaging materials. In 2003, AmBev introduced three new products    
in the Brazilian market: Polar Bock, a dark beer marketed in the south of       
Brazil during                                                                   

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the winter season; Brahma Light, an updated version of our low calorie beer     
marketed under the Brahma brand; and Bohemia Weiss, the wheat beer addition to  
our Bohemia brand. All innovation activities performed by AmBev, both in        
Brazil and in any country AmBev operates, should necessarily be conducted by    
this multi-functional group.                                                    

       Another major function of the CDT is to improve process performance
and to optimize production costs through the introduction of new raw materials  
and processing aids. To do so, the CDT constantly observes the main trends in   
Brewery Equipment and Production Technologies throughout the world. When an     
opportunity is identified, the CDT must analyze advantages and disadvantages,   
formally approve any change through a committee formed by senior managers and   
monitor the introduction of changes directly in the field until the new         
process is fully controlled.                                                    

Barley Development Program                                  

      AmBev Barley Development Program includes four experimental fields
located in Brazil, Uruguay and Argentina. The main objective of this program    
is to develop new barley varieties to increase yield, improve disease           
resistance, and increase malting quality and other traits of agronomic          
importance. All varieties developed in this program are evaluated for brewing   
performance in the CDT before being promoted to commercial levels and           
therefore cultivated in large scale. As of May 2004, three AmBev varieties      
occupied approximately 60% of the Brazilian area. AmBev's total barley          
cultivation area in Brazil, Uruguay and Argentina was approximately 350,000     
hectares and total barley production was approximately 870,000 tons.            

Santa Helena Farm                                           

   The Santa Helena Farm, located in the Amazon Rainforest, at the
guarana growing area in the city of Maues, is an important source of research   
and development for AmBev. Over the last 30 years, AmBev has been investing in  
research and development to improve genetic aspects of guarana seeds at this    
farm. There, we maintain the largest genetic bank of guarana varieties in the   
world. This program primarily intends to: (i) increase crop productivity        
(guarana production in Maues is expected to increase up to eightfold); (ii)     
develop a better resistance to mold diseases, the worst disease for the         
guarana plant; and (iii) supply technical assistance and distribute the         
selected material to the local growers in Maues. The Maues project is also      
improving the economic development in the region.                               

Corporate Engineering Center                                  

Located at the Jacarei plant, in the state of Sao Paulo, the
Corporate Engineering Center ("CENG") is AmBev's fourth source of research and  
development. The Center was created in 2001 and restructured in 2002, with the  
intention of centralizing our technical expertise to facilitate the sharing     
and dissemination of knowledge within our organization. In the 2002             
restructuring, the Central Laboratory -- formerly in Rio de Janeiro -- was      
also transferred to Jacarei, fulfilling AmBev's goal to concentrate its         
technical experts at a single site. Both facilities were created after          
searching, identifying, and gathering the best specialists from every           
technical-related branch. Together, they total about 75 professionals from      
Brazil and other Latin American countries.                                      

        The Corporate Engineering Center's team focuses their activities on:
(i) reducing consumption of raw materials and improving losses control; (ii)    
increasing quality control; (iii) increasing assets and man-hours               
productivity; (iv) exploring new processes and technologies; (v) developing     
new projects in accordance with the capital expenditure budget; (vi) analyzing  
current and new production methods and techniques; and (vii) running internal   
and external benchmarking in order to ensure that the best practices are        
shared throughout AmBev.                                                        

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        It is also the responsibility of the Corporate Engineering Center to
manage AmBev's relationships with its technology partners such as consulting    
experts and world leading brewers. For instance, we take advantage of our       
business relations with PepsiCo, Miller and Carlsberg to exchange information   
regarding production technology and processes. We are already engaging in       
benchmarking and sharing of "best practices" with Quinsa. In addition, we       
expect that our relationship with Interbrew to provide opportunities to         
achieve improvements in productivity.                                           

REGULATION                                                  

General                                                     

    In Brazil, it is illegal to sell or serve alcoholic beverages to
persons under 18 years of age. There are no significant regulations, other      
than compliance with standards imposed by food and health regulatory agencies,  
applicable to the production and marketing of soft drinks and non-carbonated    
beverages in Brazil. In addition, there are no licensing requirements for       
points of sale to sell our beer and soft drink products. For a description of   
the environmental regulations we are subject to, see "--                        
Regulation--Environmental matters".                                             

Notwithstanding the foregoing, initiatives to implement more
stringent regulation on the production and marketing of alcoholic beverages     
have been increasing. Recently, representatives in Congress have started new    
discussions on the limitation of sale and marketing of alcoholic beverages.     
Most of the proposed regulation intend to reduce the consumption of alcohol     
and the easy access to alcoholic beverages by the young population, by placing  
new restrictions on the marketing and sale of alcoholic beverages, such as      
restrictions relating to the direct association of alcoholic beverages with     
sports (including the financial support of competitions, sport teams and        
athletes) and the inclusion of warnings to consumers that consuming alcoholic   
beverages can be harmful to their health in advertisements.                     

Environmental matters                                       

      We are subject to federal, state and local laws and regulations in
Argentina, Brazil, the Dominican Republic, Ecuador, Guatemala, Peru, Venezuela  
and Uruguay relating to pollution and the protection of the environment. These  
laws regulate, among other things, air and effluent emissions and require our   
facilities to conform with environmental standards. Administrative, criminal    
and civil penalties may be imposed for non-compliance with environmental laws.  
According to Brazilian legislation, administrative fines for non-compliance     
with environmental laws range from R$500.0 to R$50.0 million.                   

       Currently, we maintain modern effluent treatment systems in each of
our plants, which reduce organic effluents by 95%. In addition, much of our     
industrial waste, which is predominantly non-hazardous in nature, is either     
recycled or sold to third parties.                                              

     In 1998, one of Antarctica's subsidiaries, Antarctica da Amazonia
S.A., entered into an agreement with the Brazilian Federal Environmental        
Agency, ("IBAMA"), under which it committed to maintain and preserve certain    
protected areas and native species of Brazilian nut trees and rubber trees,     
which are part of the Fazenda Santa Helena property, and to restrict its use    
of some herbicide and biocide products in the farming of guarana. Fazenda       
Santa Helena is a cultivation site for the guarana seed, which is used as the   
main raw material in the production of the guarana soft drink. One of CBB's     
former subsidiaries, IBANN, was the successor to Antarctica da Amazonia S.A.'s  
obligations under the agreement with IBAMA. After November 1, 2001, AmBev       
assumed IBANN's obligations under the agreement pursuant to the merger of       
IBANN into AmBev.                                                               

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        Several years ago, we initiated an internal environmental program to
help ensure compliance with environmental regulations and, beginning in 1995,   
established an integrated environmental management system by hiring and         
training environmental supervisors. After the combination, this policy was      
extended to Antarctica's plants. Our environmental department includes          
professionals who are exclusively dedicated to the environmental management of  
our plants, regularly reviewing and, if necessary, revising our environmental   
policies, conducting environmental evaluations of our plants and training our   
employees in environmental matters. In addition, we support environmentally     
friendly projects, including recycling and urban community education projects.  

      Historically, Brahma and Antarctica have made, and AmBev continues
to make, significant capital expenditures to upgrade and maintain our           
facilities in compliance with applicable environmental requirements. Recent     
expenditures incurred in our operations are as follows:                         

                                       YEAR ENDED DECEMBER 31,
                                       ---------------------------------------
                                      2003            2002            2001
                                       ------          ------          -------
                                      (R$ in millions)

Property, plant and equipment........     9.3             2.8             5.1   
Waste treatment......................    38.3            38.8            51.1   

Total..............................    47.6            41.6            56.2 

    We expect to spend in 2004 amounts similar to those spent in the
year 2003 on maintaining and upgrading our facilities in upcoming years. We     
believe that our current operations are in substantial compliance with          
applicable environmental laws and regulations. We are, however, currently       
engaged in litigation under Brazilian environmental laws and regulations        
relating to some of our facilities. See "Financial Information--Consolidated    
Financial Statements and Other Financial Information--Legal                     
Proceedings--Environmental Matters".                                            

Intellectual Property - Trademarks                          

As of May 9, 2004, we had 536 trademarks registered with the
Brazilian Institute of Industrial Property ("INPI"), and used third-party       
trademarks under specific license agreements (Miller, Carlsberg, Gatorade,      
Pepsi and Lipton). All of these trademarks are protected in all material        
respects in Brazil. In addition, we have registered our main trademarks or      
initiated trademark registration processes in approximately 100 countries       
outside of Brazil, including Argentina, Costa Rica, Ecuador, Guatemala,         
Nicaragua, Puerto Rico, Peru, Portugal, Spain, the United States, Uruguay and   
Venezuela in order to ensure protection of the names and logos. As of May 9,    
2004 we had 1,025 trademarks registered outside of Brazil.                      

      Our most important trademarks, including names, are the following:
AmBev, Brahma, Brahma Chopp, Brahma Light, Skol, Skol Beats, Antarctica,        
Antarctica Pilsen, Bohemia, Original, Serra Malte, Malzbier, Kronenbier,        
Polar, Polar Export, Guarana Antarctica, Soda Limonada Antarctica, Agua Tonica  
Antarctica, Fratelli Vita, Marathon and Nectar (registered in Brazil), Guarana  
Antarctica, Brahma, Skol, Beats, Skol Beats and Antarctica (registered outside  
of Brazil).                                                                     

       There are no unregistered trademarks in Brazil that are material to
our business. In Brazil, trademark registration has a term of validity of 10    
years, after which it can be renewed for additional 10-year periods. The        
application for renewal of a trademark must be submitted to the INPI in the     
last year of validity of the trademark registration, or within six months       
after the trademark expiration date upon payment of an additional fee. INPI     
only refuses a renewal in the event that any third party argues that the        

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trademark has lapsed due to lack of use during the prior five years, and such   
fact is deemed by the INPI to have been proven. We expect to apply for renewal  
of registration of all of our material trademarks, so as to avoid their         
expiration. We do not expect any of our material trademarks to lapse in the     
near future. We believe that our significant trademarks are protected in all    
material respects in the markets in which we currently operate.                 

ORGANIZATIONAL STRUCTURE                                    

        AmBev is a holding company. The bulk of our operations are conducted
through one principal operating subsidiary, CBB. Additionally, AmBev            
acquired on January 31, 2003 an initial economic interest of 40.475% in         
Quinsa, which is a holding company with operating subsidiaries in five          
countries. AmBev's economic interest in Quinsa as of May 2004 was               
approximately 50.97%.                                                           

       As a result of a restructuring performed in 2002, AmBev repurchased
the remaining minority interest in Polar and Astra.                             

      The following chart illustrates the ownership structure of AmBev's
principal subsidiaries as of April 30, 2004 based on total share capital        
owned. For a complete list of our material subsidiaries, see Exhibit 8.1 to     
this annual report.                                                             

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ORGANIZATIONAL STRUCTURE
  AmBev and its Principal Operating Subsidiaries

[GRAPHIC OMITTED]   

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Operating and Financial Review and Prospects                                    

OPERATING RESULTS 

INTRODUCTION                                                                    

       This section contains forward-looking statements that involve risks
and uncertainties. Our actual results may differ materially from those          
discussed in the forward-looking statements as a result of various factors      
including, without limitation, those set forth in "Cautionary Statement         
Regarding Forward- Looking Information" and the matters set forth in this       
annual report generally.                                                        

We have prepared our audited annual consolidated financial  
statements as of December 31, 2003, 2002 and 2001 and for the three years       
ended December 31, 2003 in Brazilian Reais in accordance with Brazilian GAAP,   
which differs in certain significant respects from U.S. GAAP. The audited       
financial statements included elsewhere in this annual report have been         
prepared in accordance with Brazilian GAAP and include a reconciliation of net  
income and shareholders' equity to U.S. GAAP, a discussion of the reconciling   
differences in accounting principles, and the presentation of the U.S. GAAP     
condensed balance sheets and statements of operations in Brazilian Reais.       

  AmBev's discussion and analysis of its financial condition and
results of operations are based upon its primary financial statements. As a     
result, the financial information and related discussion and analysis           
contained in this Item are in accordance with Brazilian GAAP and figures are    
in Reais, unless otherwise stated.                                              

CRITICAL ACCOUNTING POLICIES                                                    

     Critical accounting policies are those that are both important to
the portrayal of our financial condition and results and require our            
management's most difficult, subjective or complex judgments, often as a        
result of the need to make estimates about the effect of matters that are       
inherently uncertain. As the number of variables and assumptions affecting the  
possible future resolution of the uncertainties increase, those judgments       
become even more subjective and complex. In order to provide an understanding   
about how our management forms its judgments about future events, including     
the variables and assumptions underlying the estimates, and the sensitivity of  
those judgments to different circumstances, we have identified the following    
critical accounting policies:                                                   

o    Goodwill, Intangible Assets and Amortization           

      o    Pensions, Employee Benefits and the Consolidation of the FAHZ

o    Contingencies                                          

o    Deferred tax                                           

o    Accounting for derivatives                             

GOODWILL, INTANGIBLE ASSETS AND AMORTIZATION                

   We have made acquisitions that included a significant amount of
goodwill and other intangible assets. The accounting for goodwill and           
intangible assets under Brazilian GAAP remains unchanged, with goodwill         
amortized over defined finite periods, as disclosed in note 2(j) to our         
financial statements.                                                           

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        Under Brazilian GAAP, net goodwill was R$1,687.3 million and R$626.9
million at December 31, 2003 and 2002, respectively. This was net of            
accumulated amortization of R$680.3 million and R331.4 million, respectively,   
and negative goodwill of R$176.9 million and R$149.9 million, respectively.     
The amortization charge for the purposes of Brazilian GAAP was R$252.4          
million for the year ended December 31, 2003 and R$105.3 million for the year   
ended December 31, 2002.                                                        

 Under U.S. GAAP, net goodwill was R$253.5 million and R$249.5
million at December 31, 2003 and 2002, respectively. SFAS No. 142, "Goodwill    
and Other Intangible Assets," became effective for acquisitions after June 30,  
2001. This standard requires that goodwill no longer be amortized but tested    
annually for impairment, and we therefore ceased to amortize goodwill as from   
January 1, 2002. The amortization expense under U.S. GAAP related to goodwill   
for the year ended December 31, 2001 was R$35.8 million, was nil for the years  
ended December 31, 2002 and December 31, 2003. Our intangible assets with       
definite useful lives continue to be amortized over the estimated useful lives  
of these assets.                                                                

Our goodwill was grouped into reporting units and tested for
impairment in 2003 and 2002 under the guidance of SFAS No. 142. Reassessment    
of lives of all intangible assets and specific tests for impairment of          
intangible assets with finite lives will continue to be performed annually to   
determine the need for impairment provisions and whenever events or changes in  
circumstances indicate that its carrying value may not be recoverable. Factors  
which could trigger an impairment adjustment include the following:             

    o    significant underperformance relative to expected
           historical or projected future operating results of
reporting units,                        

         o    significant changes in the manner we used the acquired
                 assets or the strategy for our overall business or use of
trade names, or                         

    o    significant negative industry or economic trends.

    We performed the impairment test and determined that no goodwill
impairment existed at December 31, 2003 and 2002.                               

EMPLOYEE BENEFITS--AND THE CONSOLIDATION OF THE FAHZ        

        The FAHZ, one of AmBev's controlling shareholders, provides medical,
dental, educational and social assistance to our current and retired            
employees, as well as their beneficiaries and dependents, as discussed in note  
14 (c) to the financial statements included elsewhere in this report. Prior to  
the combination with Antarctica, Brahma also provided the same benefits         
through the BrahmaWelfare Foundation ("BWF"). The assets of BWF were merged     
into the FAHZ on October 27, 2000 and the former ceased to exist.               

    AmBev can contribute up to 10% of its consolidated net income to
support the FAHZ. At December 31, 2003, the FAHZ owned 24.11% of AmBev's        
voting shares and 10.87% of AmBev's total shares. See "Major Shareholders and   
Related Party Transactions".                                                    

BRAZILIAN GAAP ACCOUNTING                                   

       The FAHZ is a legally distinct entity for the purposes of Brazilian
GAAP. Under Brazilian GAAP, we do not consolidate the assets and liabilities    
of the FAHZ within our financial statements. Similarly, the assets and          
liabilities of the BWF were not consolidated in Brahma's financial statements.  

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Under Brazilian GAAP, we account for all benefit obligations
provided by us, including those in relation to the FAHZ, in accordance with     
the IBRACON Accounting Standard and Procedure NPC No. 26, "Pensions and         
Post-retirement benefits". This standard requires the comprehensive recording   
of pension obligations and expenses on an actuarial basis. We elected pursuant  
to NPC No. 26 to reduce shareholders' equity at December 31, 2001 to reflect    
the accumulated obligation for the actuarial liability due to the FAHZ by       
R$40.6 million (R$61.5 million, net of R$20.9 million deferred tax). We also    
recorded against our shareholder's equity the liability related to the          
benefits which we provide directly to our employees, totaling R$36.7 million    
(R$55.6 million, net of R$18.9 million deferred tax). Prior to the              
implementation of NPC No. 26, for the year ended December 31, 2000, AmBev and   
Brahma expensed all pension and post-retirement contributions, including those  
made by AmBev to the FAHZ, directly to the statement of operations on an        
accrual basis without recognition of the actuarial obligation. From January 1,  
2002, we recognized in income a charge to pensions and post-retirement          
benefits to reflect the change in the actuarial obligation, less the fair       
value of plan assets and the effect of deferrals.                               

Plan assets of the AmBev Pension Fund (IAPP) include amounts
contributed by AmBev and its employees and amounts earned from investing the    
contributions, less benefits paid. Following an actuarial review of the         
defined benefits plan which had been closed to new participants, the net        
assets at December 31, 2003 were considered to be in excess of that required    
to meet the projected benefit obligation. Although AmBev will reduce future     
employer contributions to the minimum permitted by law, Brazilian pension       
regulations currently provide no means for returning this surplus to the        
sponsor. In view of this uncertainty, on December 31, 2003, AmBev included in   
the actuarial determination of the pension obligation at December 31, 2003 and  
2002 a valuation allowance of R$167.1 million and R$133.6 million against the   
plan assets. This allowance affected the pension charge/benefit as from 2002.   

U.S. GAAP ACCOUNTING                                        

Under U.S. GAAP, the assets and liabilities of the FAHZ are 
consolidated within AmBev. These assets would not be distributable to           
shareholders in the event of a bankruptcy. A substantial part of these assets   
are represented by shares in AmBev and have been reflected as treasury shares   
thereby reducing the number of outstanding shares and affecting the             
determination of earnings per share under U.S. GAAP.                            

Under U.S. GAAP, we account for post-retirement benefits in 
accordance with SFAS No. 106 "Employees Accounting for Post-retirement          
Benefits and Other Obligations". We have recorded an accrued liability, based   
on independent actuarial reports at the end of each period, for the retirement  
element of the obligations applicable to the FAHZ.                              

Several statistical data and other factors which attempt to 
anticipate future events are used in calculating the expense and liability      
related to our pension and employee benefit plans. These factors include        
assumptions about the discount rate, expected return on plan assets and rate    
of future compensation increases as determined by us, within certain            
guidelines. In addition, our actuarial consultants also use subjective          
factors, such as withdrawal, turnover and mortality rates. The actuarial        
assumptions we use may differ materially from our actual results, due to        
changing in market and economic conditions, regulatory events, judicial         
rulings, higher or lower withdrawal rates or longer or shorter life spans of    
participants.                                                                   

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CONTINGENCIES                                               

       The preparation of our financial statements requires our management
to make estimates and assumptions regarding contingencies which affect the      
valuation of assets and liabilities at the date of the financial statements     
and the revenues and expenses during the reported period. The most significant  
of these are as follows:                                                        

LEGAL CONTINGENCIES                                   

        We are currently involved in certain legal proceedings, as discussed
in "Financial Information--Legal Proceedings". In the future, management may    
make decisions which impact the structure, operations, and staffing of the      
company, which may result in further claims. Fundamental changes in economic    
conditions may also result in similar restructuring strategies. We have         
recorded liabilities on pending litigation based on estimates of the amounts    
and the range of the losses. Unless impacted by changes in accounting           
standards and practices, we intend to continue to record these liabilities in   
the same manner, based on our assessment of the exposures at that time.         
However, our assumptions and estimates may change in the future based on our    
assessment of any given situation, which may result in changes in future        
provisioning for legal claims.                                                  

LABOR CLAIMS                                          

       Management is required to make estimates of the potential losses on
outstanding labor claims based on the advice of external legal counsel on the   
likelihood of successful outcome. When external counsels advise us that it is   
probable that our case will not prevail we record provisions against these      
exposures based on estimated loss amounts. Brazilian employment and labor       
legislation is extensive and complex, giving rise to many claims from current   
and former employees against us or our subsidiaries. These claims relate        
principally to dismissals, severance, health and safety, supplementary          
retirement benefits and other matters.                                          

TAX CONTINGENCIES                                   

      The complexity of the Brazilian corporate fiscal environment often
results in disputes over a number of different taxes. We are currently          
involved in certain tax proceedings and have filed claims to avoid payment of   
taxes that we do not believe are constitutional. As discussed in note 12 to     
our financial statements, we have accrued the costs for the resolution of the   
losses when we consider loss of our claim to be probable. The tax               
contingencies relate primarily to value-added sales and excise taxes, taxes on  
revenue and income taxes and are described in detail in the financial           
statements. The estimates are developed in consultation with external legal     
counsel and are based upon an analysis of potential results, assuming a         
combination of litigation and settlement strategies. We do not believe these    
proceedings will have a material adverse effect on our financial position. It   
is possible, however, that future results of operations could be materially     
affected by changes in our assumptions, and the effectiveness of our            
strategies with respect to these proceedings.                                   

UNRECOGNIZED EXPOSURES                                

      We have not provided for every potential legal or tax claim on the
balance sheet, but only for those in which we consider loss to be probable. We  
have estimated the total exposures of possible losses, which are not recorded   
as liabilities, to be R$1,266.6 million at December 31, 2003. We believe that   
our estimates are based on reasonable assumptions and assessments of external   
legal counsel, but should the worst case scenario develop, and we were subject  
to losses in all cases, our net impact on the statement of operations would be  
an expense of this amount.                                                      

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DEFERRED TAX                                          

 We recognize deferred tax assets and liabilities based on the
differences between the financial statement carrying amounts and the tax basis  
of our assets and liabilities. We regularly review the deferred tax assets for  
recoverability and will only recognize these if we believe that it is probable  
(under Brazilian GAAP) or more-likely-than not (under U.S. GAAP) that there     
will be sufficient taxable profit against any temporary differences that can    
be utilized, based on historical taxable income, projected future taxable       
income, and the expected timing of the reversals of existing temporary          
differences. Pursuant to CVM regulations, under Brazilian GAAP, we must         
demonstrate that we will recover the tax assets discounted to present value     
based on expected realization dates, within a 10-year period, even though       
these credits have no prescription period for Brazilian tax law purposes.       

       In the event we or one of our subsidiaries operate at a loss or are
unable to generate sufficient future taxable income, or if there is a material  
change in the actual effective tax rates or time period within which the        
underlying temporary differences become taxable or deductible, we evaluate the  
need to establish a valuation allowance against all or a significant portion    
of our deferred tax assets resulting in an increase in our effective tax rate.  

       We do not record deferred tax liabilities on the earnings generated
by our foreign subsidiaries. Based on the advice of external counsel, we        
concluded that these earnings are not taxable on remittance to Brazil. The      
Brazilian fiscal authorities introduced new legislation in the third quarter    
of 2001 to subject offshore earnings to income tax in Brazil from December 31,  
2002, regardless of whether earnings have been remitted to Brazil, and to       
restrict tax planning measures that had been available to companies in Brazil,  
and that we have made use of in the past. We continue to believe that the       
current tax initiatives that we are undertaking will not result in taxes on     
these earnings, based on the advice of external counsel and we have not         
therefore recorded a liability for such taxes in our financial statements. The  
tax authorities, however, may challenge such procedure and, as a consequence,   
may impose income tax and social contribution on the earnings accumulated       
offshore.                                                                       

      As part of the 1997 Pepsi transaction, we acquired the conditional
right to certain tax assets. Had we utilized the assets within the period       
which expired in October 2002, 80% of the benefit would have been returned to   
the seller. Under Brazilian GAAP and U.S. GAAP, we recognized 20% of the tax    
asset at the time of the acquisition and recorded a valuation allowance         
against the 80%. During 2002, as we were confident that it was more likely      
than not that the further 80% would be recovered under U.S. GAAP, we recorded   
a tax benefit of R$148.0 million in 2002 to reflect the tax loss carry forwards 
no longer subject to contingent utilization. This amount was taken directly as  
a benefit to the statement of operations under U.S. GAAP, as opposed to an      
increase in the goodwill of the Pepsi transaction, to reflect the lifting of    
the restrictions which placed recoverability in doubt. We did not record the    
tax asset equivalent to 80% of the available tax losses under Brazilian GAAP    
until 2003, after we met the more stringent rules of the CVM.                   

     Certain other tax assets arising from the Brazilian GAAP purchase
accounting adjustments at the time of the Brahma and Antarctica combination     
and the subsequent downstream merger of Antarctica have not been recorded as    
recovery is not presently considered probable.                                  

ACCOUNTING FOR DERIVATIVES                                  

BRAZILIAN GAAP ACCOUNTING                             

    We enter into foreign currency forward, swap and future contract
agreements (principally for U.S. dollars) to mitigate foreign exchange risk on  
U.S. dollar-denominated debt, financing of imports and payables to foreign      
suppliers. These agreements are marked-to-market and recorded at the lower of   
cost plus interest and market value. The unrealized gains and losses on these   
financial instruments are reported in the statement of operations and included  
in "Financial income" and "Financial expenses".                                 

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      Brazilian GAAP requires us to disclose the fair value of financial
instruments at the balance sheet date but does not require us to record the     
unrealized marked-to-market fair value gains in income in the year. The         
estimated fair value amounts have been determined by the Company using          
available market information and appropriate valuation methodologies. However,  
considerable judgment is necessarily required in interpreting market data to    
develop the estimates of fair value. In summary, the accounting adjustments     
made to reflect our derivative operations generally fall into one of the        
following three categories:                                                     

      (i) Financial instruments utilized to mitigate commodity price and
foreign currency risk related to programmed purchases of raw
      materials are recorded at fair market value with the corresponding
      realized and unrealized gains or losses recognized in inventories.
 Gains and losses on purchases for which we have not yet taken
delivery are included in other assets. Gains and losses are 
       recognized in our results as "Cost of sales" when the corresponding
      products are sold. When these instruments are effected to mitigate
    operating expenses the results are recorded in the corresponding
accounts.                                                   

        (ii) Other financial instruments utilized to manage foreign currency
      cash flow exposure are recorded at the lower of cost or market and
   the realized and unrealized gains and losses on these financial
        instruments are reported in the statement of operations as Financial
income and Financial expenses.                              

      (iii) In the event we decide to cancel the effect of the swaps, we
at times enter into contracts with corresponding offsetting 
       positions, with an identical value at maturity, and settlement date
     and restatement index. This procedure is more cost efficient than
      entering into new hedge contracts. These financial instruments are
       measured and recorded based on the lower of fair value or cost plus
accrued interest (the yield curve).                         

Commodities                                           

   Financial instruments used to mitigate commodity price risk are
recorded at cost plus accrued interest. Unrealized gains at December 31, 2003   
on outstanding contracts totaled R$1.2 million and will be recognized in        
the statement of operations when the products are sold. Realized losses on      
commodity contracts closed during 2003 amounted to R$82.3 million and these     
were recognized as Cost of Sales in the statement of operations to match the    
associated commodity currency cost.                                             

Interest and Foreign Currencies                       

       The fair values of these financial assets provide a shelter for the
currency and interest rate risks accruing from the financial liabilities.       
Although the Company's intention is to maintain these assets, they could be     
realized at the Company's discretion. Should these instruments be settled only  
on their respective maturity dates, the negative effect between the market      
value and estimated yield curve of the instruments would be totally             
eliminated. Had the Company been able to adopt the same criterion to recognize  
its financial liabilities at market value, it would have presented an           
unrealized pre-tax loss of approximately R$202.2 million at December 31, 2003   
as follows:                                                                     

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                                                                [Download Table]


FINANCIAL LIABILITIES       BOOK VALUE     FAIR  VALUE    UNREALIZED GAIN (LOSS) 
                                                                                 
Notes                        R$2,942.9       R$3,270.7                  R$(327.8)
Syndicated loan                1,063.0           938.7                     124.3 
Raw material financing           115.0           113.7                       1.3 
                        ---------------  --------------  ------------------------
                             R$4,120.9       R$4,323.1                  R$(202.2)
                        ---------------  --------------  ------------------------

U.S. GAAP ACCOUNTING                                        

       All derivative financial instrument agreements are marked-to-market
and the realized and unrealized gains and losses on these financial             
instruments used to manage foreign currency and commodity price cash flow       
exposures are reported in the statement of operations and included in           
"Financial income" and "Financial expenses". We have not classified any of our  
derivative transactions as cash flow or fair value hedges to date.              

     The Company believes that swap quotations obtained are reasonable
when compared with information on similar financial instruments traded in the   
Bolsa de Mercadorias & Futuros (BM&F) and that the internally developed         
valuation methodology is consistent with methodologies used by other            
participants in the swap market in Brazil and its results reasonably reflect    
the amount that would be paid or received to settle the swap on the valuation   
date.                                                                           

        Intense volatility in the foreign exchange and interest rate markets
in Brazil observed during 2002 has caused significant changes in forward rates  
and interest rates over very short periods of time, generating significant      
changes in the fair value of such cross-currency interest rate swaps over such  
periods.                                                                        

Consolidation of less than majority owned subsidiaries      

       Under Brazilian GAAP, we record joint-ventures, including investees
in which we share control through our participation in a stockholders'          
agreement under the proportional consolidation method.                          

      For purposes of U.S. GAAP, the subsidiaries that are accounted for
under Brazilian GAAP on a proportional consolidation basis are recorded as      
equity in affiliates under the equity method of accounting.                     

      We do not have any variable interest entities at December 31, 2003
which would be required to be consolidated under the provisions of FASB's       
Financial Interpretation Fin 46-R "Consolidation of Variable Interest Entities  
(revised December 2003)".                                                       

U.S. GAAP RECONCILIATION                                                        

  Our net income in accordance with Brazilian GAAP was R$1,411.6
million in 2003, R$1.510.3 million in 2002 and R$784.6 million in 2001. Under   
U.S. GAAP, we would have reported net income of R$1,689.4 million in 2003,      
R$1,642.2 million in 2002 and R$840.1 million in 2000.                          

  Our shareholders' equity in accordance with Brazilian GAAP was
R$4,308.2 million in 2003, R$4,129.6 million in 2002 and R$3,363.4 million in   
2001. Under U.S. GAAP, we would have reported shareholders' equity of           
R$4,382.9 million in 2003, R$3,960.6 million in 2002 and R$2,839.9 million in   
2001.                                                                           

       The principal differences between Brazilian GAAP and U.S. GAAP that
affected our net income in 2001, 2002 and 2003, as well as shareholders'        
equity at December 31, 2001, 2002 and 2003, relate to the treatment of the      
following items:                                                                

     o    Under Brazilian GAAP, the combination of the two predecessor
           companies Brahma and Antarctica was accounted for as a merger
             at a book value; for the purposes of U.S. GAAP, the transaction
           was treated as an acquisition by Brahma of Antarctica at fair
market value;                                     

  o    Under Brazilian GAAP, goodwill arises from the difference
          between the amount paid and the book value of the net assets
    acquired. Under U.S. GAAP, fair values are assigned to

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           assets, call option and liabilities in business combinations,
            including intangible assets and unallocated goodwill. Non-cash
        consideration paid under U.S. GAAP, when the consideration
     includes assets contributed, shares and put options, is
            determined based on fair values. The changes in the fair value
of the BAC put option were recorded in income;    

   o    Under Brazilian GAAP inflation accounting was discontinued
           effective January 1, 1996. Prior to that date, Brazilian GAAP
        statements included indexation adjustments which partially
          accounted for the effect of inflation on property, plant and
        equipment, investments, deferred charges and shareholders'
            equity, and reported the net charge or credit in the statement
            of operations; for the purposes of U.S. GAAP, Brazil ceased to
      be treated as a highly inflationary economy only as from
      January 1, 1998. Therefore the financial information for
          purposes of U.S. GAAP for the two-year period ended December
            31, 1997 includes additional inflation restatement adjustments
made by applying the IGP-M to permanent assets and
           shareholders' equity. This results in additional depreciation
charges as at December 31, 2003, 2002 and 2001;   

    o    Under Brazilian GAAP, Argentina (through February 2003) and
           Venezuela are accounted for as highly-inflationary economies.
 For purposes of U.S. GAAP, Venezuela ceased to be a
           highly-inflationary economy in 2001. The financial statements
          of the subsidiary in Venezuela included inflation accounting
             adjustments under Brazilian GAAP which were reversed under U.S.
GAAP;                                             

  o    The FAHZ, which provides medical, dental, educational and
         social assistance to current and former employees, has been
       consolidated for the purposes of U.S. GAAP to reflect the
     significant influence that we exert over the investment
     decisions of the FAHZ, in recognition that the benefits
       provided are almost exclusively to our current and former
           employees. Under Brazilian GAAP, we have not consolidated the
           FAHZ. See "--Critical Accounting Policies--Pensions, Employee
Benefits and the Consolidation of the FAHZ";      

     o    Under Brazilian GAAP, certain contractual tax related assets
           arising from the Pepsi transaction in 1997 were recognized in
            2003 when probability of recovery was assured; for purposes of
           U.S. GAAP in 2002 when realization was considered more likely
         than not, we reversed a tax valuation allowance benefitting
           earnings as most of allowance benefitting earnings as most of
           the intangible assets in respect of the Pepsi transaction had
been amortized;                                   

    o    Under Brazilian GAAP, advances to employees for purchase of
      shares are recorded as an asset and the interest accrued
      credited to income. Under U.S. GAAP, as the advances are
          collateralized by the stock issued under the stock ownership
          plan, the loan is reported as a deduction from shareholders'
equity;                                           

       o    Under Brazilian GAAP, prior to December 31, 2001, the expenses
         related to pension plans and other post-retirement benefits
       were recognized on an accrual basis only to the extent of
       required contributions for the relevant year or financial
        period. These expenses were fully recorded on an actuarial
         basis under U.S. GAAP. A valuation reserve recorded against
           surplus plan assets under Brazilian GAAP was reversed in 2002
for purposes of U.S. GAAP;                        

        o    Under Brazilian GAAP, financing charges from borrowings used in
      construction were not capitalized prior to 1996; for the
           purposes of U.S. GAAP, capitalization of the interest expense
          on borrowed funds, excluding foreign exchange losses, during
           construction of major facilities is recognized as part of the
cost of the related assets;                       

   o    Under Brazilian GAAP, the rights to acquire AmBev's shares
          granted to employees, officers and directors under the stock
ownership plan do not result in any expense being 

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   recorded. Under U.S. GAAP, in accordance with APB 25,
             Accounting for Stock Issued to Employees, the rights to acquire
             AmBev's shares granted under the stock ownership plan is deemed
       to give rise to compensation expense to the extent of the
          excess market price of the shares over the purchase price to
employees, officers and directors;                

       o    Under Brazilian GAAP, foreign exchange gains or losses arising
           from the translation of foreign subsidiaries and investees to
           the real are recorded in earnings. For purposes of U.S. GAAP,
           these translation gains and losses are recorded as cumulative
    translation adjustments in other comprehensive income.

   o    Under Brazilian GAAP, dividends proposed by management are
         required to be accrued in our financial statements; for the
            purposes of U.S. GAAP, these may not be accrued until ratified
by the Shareholders Meeting;                      

     o    Under Brazilian GAAP, goodwill is amortized; for purposes of
            U.S. GAAP, beginning on January 1, 2002, goodwill is no longer
amortized but tested annually for impairment;     

o    There are a number of expenses and charges which can be
      capitalized and deferred under Brazilian GAAP, which are
expensed under U.S. GAAP; and                     

 o    Under Brazilian GAAP, certain derivative instruments are
          recorded at the lower of cost plus accrued interest and fair
         market value. Under U.S. GAAP, SFAS No. 133, Accounting for
            Derivative Instruments and Hedging Activities requires that an
     entity recognize all derivatives as either as assets or
         liabilities and measure those instruments at fair value. As
            these transactions do not meet the requirements to qualify for
       hedge accounting under SFAS No. 133, unrealized gains are
    recorded in our results of operations under U.S. GAAP.

      Our audited financial statements included elsewhere in this report
provide for a fuller description of these differences and a reconciliation of   
net income and total shareholders' equity from Brazilian GAAP to U.S. GAAP.     

ACCOUNTING ASPECTS OF THE COMBINATION                                           

    Prior to July 1, 1999, the date of the combination of Brahma and
Antarctica and the controlling shareholders' contribution, AmBev had no         
material assets, liabilities or operations. For legal purposes, AmBev was       
created by the merger of Brahma and Antarctica and became the successor         
company as at that date. For purposes of Brazilian statutory, legal and         
accounting records, we accounted for the combination in accordance with         
Brazilian GAAP in a manner similar to a merger at book value. Under this        
accounting method, the recorded assets and liabilities of Brahma and            
Antarctica were carried over to AmBev's audited consolidated financial          
statements at their historical amounts. The combination did not qualify for a   
pooling-of-interests under U.S. GAAP, for which purposes the combination was    
recorded using the purchase method of accounting. For U.S. GAAP purposes,       
AmBev is treated as the successor to Brahma. As a result, the financial         
statements of AmBev as of and for the year ended December 31, 1999 are the      
financial statements of Brahma as of such date and for such period. The impact  
of these differences has been included in the reconciliation to U.S. GAAP in    
note 22(b) to our audited consolidated financial statements.                    

ACCOUNTING ASPECTS OF THE QUINSA TRANSACTION                                    

    On January 31, 2003, we consummated the acquisition of a 40.475%
initial economic interest in Quinsa. See "Ambev Business Overview -             
Acquisition of Interest in Quinsa."                                             

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     Under Brazilian GAAP we record our interest on the net assets and
financial results of Quinsa based on the proportional consolidation method      
(i.e. line-by-line). For U.S. GAAP purposes our interest in Quinsa is           
accounted for under the equity method for the year ending December 31, 2003.    

Quinsa is an SEC registered entity and files its financial  
statements prepared in U.S. dollars under Luxembourg GAAP with a                
reconciliation of shareholders' equity and net income (loss) to U.S. GAAP.      

IMPACT OF QUINSA                                            

     The acquisition of our interest in Quinsa, consummated on January
31, 2003, is reflected in our consolidated financial statements for the year    
ended December 31, 2003.                                                        

        On January 31, 2003 we acquired 37.5% of the total capital of Quinsa
from BAC and Quinsa and 8.6% of the shares of QIB from Heineken International   
Beheer B.V.C. ("Heineken"). Quinsa owned at that time 85.0% of QIB. As a        
result, at January 31, 2003, we had a total 40.475% economic interest in        
Quinsa. During 2003, we acquired an additional 12.0 million Class B shares of   
Quinsa in the open market, increasing our total economic interest in Quinsa to  
47.99% at December 31, 2003. As Quinsa has repurchased some of its own shares   
during 2004, our economic interest increased to 50.97% as of May 2004. For      
further details on the acquisition, the business of Quinsa and anti-trust       
matters, refer to "Information on the Company-Acquisition of Interest in        
Quinsa." For purposes of Brazilian GAAP, beginning on January 31, 2003, Quinsa  
is proportionally consolidated in our financial statements.                     

    Quinsa has not prepared Brazilian GAAP financial information for
2002. In order to provide comparable data to demonstrate the impact of the      
acquisition of our interest in Quinsa on our results and trends in 2003, we     
have included in the tables below certain key financial indicators as at        
December 31, 2003 and the combination of those balances with the AmBev          
balances before and after the proportional consolidation of Quinsa. Our         
consolidated financial statements, prepared under Brazilian GAAP, included our  
investment in Quinsa on a proportional consolidation basis (i.e.                
line-by-line).                                                                  

                                                        [Enlarge/Download Table]

STATEMENT OF OPERATIONS                       FEBRUARY-DECEMBER 2003         YEAR ENDED DECEMBER 31, 2003
                                             -------------------------      -----------------------------
                                                                             AMBEV                       
                                             100% OF       AMBEV'S           WITHOUT           AMBEV     
 (BRAZILIAN GAAP)                            QUINSA        SHARE(1)(2)       QUINSA (3)     CONSOLIDATED 
                                             -------       ------------     -----------    --------------
                                                                  (R$ in millions)                       
                                                                                                         
Gross Sales...............................   2,542.4        1,125.1         16,018.4         17,143.5    
Net Sales.................................   1,745.5          773.7          7,910.1          8,683.8    
Cost of Sales.............................   (882.4)        (387.3)        (3,656.9)        (4,044.2)    
Gross Profit..............................     863.1          386.4          4,253.1          4,639.6    
Operating Income (4)......................     382.3          175.8          1,789.1          1,964.9    
Net Income................................     316.5          149.7          1,261.9          1,411.6    

BALANCE SHEET                                                      DECEMBER 31, 2003                     
                                             ------------------------------------------------------------

                                                                             AMBEV                       
                                             100% OF       AMBEV'S           WITHOUT         AMBEV       
       (BRAZILIAN GAAP)                      QUINSA        SHARE(1)(2)(5)    QUINSA (3)     CONSOLIDATED 
                                             -------       --------------   -----------    --------------
                                                                  (R$ in millions)                       

Current assets..............................   861.0         427.6          5,072.9           5,500.5    
Long term assets............................   439.6         132.4          2,974.3           3,192.6    
Permanent assets............................ 2,328.5       1,156.3          4,980.7           6,137.0    

Short term borrowings.......................   298.3         148.1          1,828.0           1,976.1    
Other short term liabilities................   477.8         237.3          2,506.6           2,743.9    


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Long term borrowings........................   684.1         339.7          3,664.6   4,004.3
Other long term liabilities.................   119.2          59.2          1,541.9   1,601.1

Minority Interest...........................   402.0         199.6             (3.2)    196.4
Shareholders' equity........................ 1,647.7         818.2          3,490.0   4,308.2

___________________                                                                          

<FN>                                                                                         
(1)  AmBev's share of the unaudited consolidated results of operations and                   
     balance sheet of Quinsa presented under Brazilian GAAP were combined with               
     the corresponding financial information of AmBev and reported in our                    
     audited consolidated financial statements for the year ended December 31,               
     2003. For the purposes of U.S. GAAP, we report our interest in Quinsa on                
     an equity accounting basis and not on a proportional consolidation basis.               
(2)  Represents our economic interest in Quinsa during the eleven months from                
     January 31, 2003 through December 31, 2003.                                             
(3)  Net of adjustments arising from proportional consolidation of Quinsa.                   
(4)  Operating income under Brazilian GAAP is presented after financial income               
     and financial expenses.                                                                 
(5) Represents our economic interest in Quinsa at December 31, 2003.                         

</FN>                                                                                        


Quinsa carries out a significant portion of its business in 
Argentina. Since the fourth quarter of 1998, the Argentine economy has been in  
a recession, and during the second half of 2001, the recession worsened         
significantly, precipitating a political and economic crisis. Recent changes    
to Argentine law in connection with the economic crisis in Argentina have had   
a significant impact on Quinsa's operations. As a result, historical financial  
statements are not indicative of Quinsa's current financial position or         
anticipated results of operations or business prospects, all of which have      
been materially and adversely affected by the economic crisis since December    
31, 2001.                                                                       

 At December 31, 2003, a substantial portion of the financings
incurred by Quinsa's subsidiaries in Argentina was denominated in U.S.          
dollars. The devaluation of the Argentine Peso and the economic crisis in       
Argentina, mainly in 2002, restricted the ability of these subsidiaries to      
generate sufficient cash flows to meet the obligations falling due on the       
dates originally determined for liabilities denominated in foreign currency.    
The management of Quinsa and its subsidiaries renegotiated the maturity terms   
with financial institutions.                                                    

       As of December 31, 2003, we reclassified US$4.2 million of Quinsa's
long-term debt, with respect to which Quinsa was not in compliance with         
certain covenants, to current liabilities. See "Liquidity and Capital           
Resources-Long-term Debt."                                                      

Quinsa carries out a significant portion of its business in 
Argentina. Since the fourth quarter of 1998, the Argentine economy has been in  
a recession, and during the second half of 2001, the recession worsened         
significantly, precipitating a political and economic crisis. Recent changes    
to Argentine law in connection with the economic crisis in Argentina have had   
a significant impact on Quinsa's operations. As a result, historical financial  
statements are not indicative of Quinsa's current financial position or         
anticipated results of operations or business prospects, all which have been    
materially and adversely affected since December 31, 2001. Further information  
is available in Quinsa's annual report on Form 20-F for the fiscal year ended   
December 31, 2003 to be filed with the SEC. Documents filed by Quinsa with the  
SEC, including its 2003 Annual Report and any information therein, are not      
incorporated by reference in this annual report.                                

OTHER ACQUISITIONS/DISPOSITIONS AND ACCOUNTING IMPLICATIONS                     

Industrias Del Atlantico (IDA)                              

On October 24, 2002, AmBev and The Central America Bottling 
Corporation, or CabCorp, entered into a joint-venture agreement, setting forth  
rights and obligations for the creation of a strategic regional alliance to     
collaborate in, among other things, the production, importation, distribution,  
marketing and sale of AmBev's products, especially beer in Guatemala, and       
other Central American countries. On August 12, 2003, Monthiers, an indirect    
subsidiary of AmBev, subscribed for 573,092 shares of common stock of           
Industrias del Atlantico S.A. ("IDA"), a Guatemalan company formerly            
controlled by Cab Corp, representing 50% plus one share of the outstanding      
issued and outstanding common stock of IDA. As consideration, Monthiers         
contributed to IDA U.S.$7.2 million in debt of IDA                              

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relating to credits that CBB held against IDA. These credits had arisen from    
the importation by IDA of certain goods and equipment from CBB and that had     
been transferred to Monthiers.                                                  

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Compania Cervecera AmBev Peru A.C. (AmBev Peru)             

   On October 31, 2003, through our subsidiary Companhia Cervecera
AmBev Peru S.A.C, AmBev acquired certain assets of Embotelladora Rivera in      
Peru for approximately R$86.7 million. These assets include two soft drinks     
plants, which combined have an estimated production capacity of 6.3 million     
hectoliters per year, and other sales and distribution assets in Lima.          
Contemporaneously with this acquisition, AmBev became PepsiCo's exclusive       
bottler for Northern Peru and Lima. Embotteladora Rivera will sell and          
distribute our beer and soft drinks products in Northern Peru. AmBev expects    
to have a fully operational beer plant in Peru in the beginning of 2005.        

Cerveceria SurAmericana (Cervesursa)                        

  In December 2003, we acquired 80% of the capital of Cervesura,
located in Ecuador, for a total consideration of R$105.6, resulting in          
negative goodwill of R$18.5 million.                                            

Astra                                                       

During the months of June and July 2002, CBB, a wholly-owned
subsidiary of AmBev, increased its participation in the total capital of Astra  
from 73.1% to 93.6%, through the purchase of Aguia S.A.'s stake in Astra.       
Through 2002, CBB purchased shares from minority shareholders and increased     
its participation in the total capital of Astra to 96.7%. The 2002 stock        
purchase consideration totaled R$128.5 million, including R$94.3 million of     
goodwill. During 2003, Astra was merged into by CBB as part of our tax          
planning strategy, and a goodwill totaling R$146.3 million was reclassified to  
deferred charges for purposes of Brazilian GAAP. No such reclassification was   
made under U.S. GAAP.                                                           

IBANN                                                       

   On November 1, 2001, the shareholders of AmBev and the minority
shareholders of IBANN, a subsidiary of CBB (and a former Antarctica             
subsidiary), consummated a share exchange and approved the acquisition of the   
remaining interest (35.0%) in IBANN by AmBev. AmBev issued 526,210,199 shares,  
of which 96,712,635 were common shares and 429,497,564 were preferred shares    
in exchange for 17.1% and 45.4% of the common and preferred shares the          
minorities held in IBANN and recorded a capital increase of R$298.3 million.    
On December 10, 2001, we announced that we would pay R$242.2 million to the     
minority shareholders of IBANN who exercised their appraisal rights in lieu of  
accepting the share exchange. Under Brazilian GAAP, we accounted for this as a  
separate transaction, in effect a share buy-back, and recorded it as an         
increase in treasury shares. Under Brazilian GAAP, no goodwill was recognized   
on this transaction, although a capital gain of R$18.2 million was recognized   
in the statement of operations to reflect the difference in the net book value  
of the assets pertaining to the minority shareholders and the appraised book    
value calculated in the previous three months. For the purposes of U.S. GAAP,   
we believe that this transaction was inseparable from the acquisition itself    
and that the capital paid to IBANN minority shareholders was part of the        
consideration for the purchase.                                                 

Bavaria                                                     

On November 6, 2000, we entered into stock and distribution 
agreements providing for the sale of Bavaria S.A. to Molson Inc. See            
"Background on the Company--Brazilian Antitrust Approval". The total            
contingent consideration for the sale was R$416.1 million, of which R$191.4     
million was received at that time. The remaining R$224.7 million would be       
payable to us by Molson subject to the Bavaria brand reaching certain market    
share thresholds. We have not recorded this as an asset on the balance sheet.   
Unless otherwise stated, the historical operating and financial data of AmBev   
includes the operations of Bavaria through October 31, 2000.                    

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Pepsi                                                       

        In 1997, we acquired the Pepsi bottlers in southern and southeastern
Brazil and the exclusive rights to produce, sell and distribute PepsiCo soft    
drink products in northeastern Brazil. Under Brazilian GAAP, the shareholders'  
equity of these bottlers at the date of acquisition was zero, and since we      
paid a nominal amount for the business, no goodwill was recognized. Under U.S.  
GAAP, however, the acquisition gave rise to R$43.8 million of goodwill as of    
December 31, 1997 (which was being amortized over a 10-year period). In 1999,   
we obtained the exclusive rights to produce, sell and distribute PepsiCo soft   
drink products throughout Brazil. See "Information on the Company--AmBev        
Business Overview--Our Products and Brands--Joint Ventures and Strategic        
Alliances".                                                                     

EFFECT OF DIRECT DISTRIBUTION ON RESULTS OF OPERATIONS                          

       Historically, both Brahma and Antarctica distributed their products
through exclusive third-party distribution networks. See "Information on the    
Company--Distribution and Sales". In the second half of 1997, Brahma began to   
implement the direct distribution of its products. For the year ended December  
31, 2003, direct distribution represented 36.9% of our net sales volumes,       
compared to 32.6% and 29.6% in 2002 and 2001, respectively.                     

       As the proportion of our net sales made through direct distribution
rises, our results of operations are affected as follows:                       

        o    Net sales increases. Net sales made through direct distribution
          are greater than net sales made through third-parties. Under
             direct distribution, we receive a higher price for our products
            since third-party distribution fees are not applicable when we
             sell the products ourselves. Freight costs, absorbed by us when
we sell to third-party distributors, are not      

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           deducted when sales are made under direct distribution. Since
             these cost are deducted from gross sales, the effect of greater
direct distribution is an increase in net sales.  

 o    We incur transportation costs. When we sell our products
           directly, we incur freight costs in transporting our products
            between our plant and the point of sale, which are included in
 our cost of sales under U.S. GAAP and in our direct
distribution expenses under Brazilian GAAP.       

o    Our direct distribution expenses increase. Under the   
             third-party distribution system, the salesperson is an employee
      of the distributor, while under direct distribution, the
           salesperson is our employee. As direct distribution grows, we
           incur additional direct distribution expenses from the hiring
             of additional employees which are offset by the increase in net
sales.                                            

o    Our working capital needs increase. Under our direct   
             distribution system, we extend limited credit to some points of
        sale, based on market rates with terms ranging from two to
 twenty one days. Accordingly, as we increase direct
           distribution to the points of sale, our receivables increase.

FOREIGN CURRENCY EFFECTS                                                        

     We have significant amounts of U.S. dollar-denominated assets and
liabilities and operating expenses denominated in or linked to U.S. dollars.    
However, substantially all of our revenues are generated in Reais.              

     During 2003, the appreciation of the Real (22.3% against the U.S.
dollar) had the following effects on our results of operations:                 

      o    As of December 31, 2003, approximately 43% of our total costs
             of sales, for our Brazilian Operations, were linked to the U.S.
        dollar. The appreciation of the Real during the year had a
        favorable effect on the cost of commodities linked to U.S.
        dollars, such as sugar, aluminum and PET resin, as well as
      imported raw materials. For risk management purposes, we
           decided to hedge a significant amount of our foreign exchange
     exposure using derivative instruments, which negatively
      impacted our costs of sales in 2003. By way of contrast,
             significant devaluations of the real (such as during 2002) have
             had an unfavorable effect on the cost of packaging such as cans
and PET bottles as well as imported raw materials.
          Historically, we have been able to raise prices to partially
        offset the cost increase. However, during periods of rapid
       devaluation or when the rate of devaluation significantly
           exceeds that of inflation, we may not be able to raise prices
      at a rate sufficient to offset our cost increases, or to
recover such cost increases in future periods.    

  o    The effects of fluctuations in exchange rates on our U.S.
           dollar transactions (i.e., cash, cash equivalents, short-term
             investments, investments abroad, loans and the unrealized gains
     and losses from foreign currency and interest rate swap
        contracts, among others) are recorded as financial income,
          financial expense and operating income (expense), net in our
statements of operations.                         

     o    As of December 31, 2003, approximately 85% of our total debt
          was denominated in U.S. dollars, which had a positive impact
          during 2003. AmBev seeks to manage its foreign currency debt
             exposure through cash investments in U.S. dollar-linked assets,
swaps and                                         

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         derivatives instruments. In 2003, these hedging instruments
             were negatively impacted as a result of the appreciation of the
           Real during the year. However, as a result of the decrease in
             the U.S. dollar interest rates during 2003, the market value of
           our hedging instruments appreciated considerably, which had a
positive impact on our results.                   

   o    We have policies designed to manage commodity and currency
           risks to protect our U.S. dollar denominated transactions and
          net assets from the significant devaluations of the Real. We
          entered into commodity and cross-currency interest rate swap
       contracts to offset gains or losses generated by our U.S.
             dollar denominated transactions and loans. These swap contracts
      were effective in mitigating the significant losses that
   otherwise would have been recorded at the time of the
          significant devaluations that have occurred since 1999 until
       2002. These foreign currency risk management policies are
            designed to take advantage of tax benefits as the gains mostly
             accrue in offshore, tax-exempt entities, where foreign exchange
          losses are tax deductible. See "Quantitative and Qualitative
Disclosures about Market Risk".                   

According to Brazilian accounting principles, liabilities must be recorded on   
an accrual basis rather than at market value, while assets must be recorded at  
the lower of their market value or accrual value.                               

COMMODITIES PRICE EFFECTS                                                       

      o    AmBev has a significant exposure to fluctuations in the price
            of aluminum, which increased by approximately 18% during 2003,
            increasing our cost of sales. For risk management purposes, we
      entered into hedging agreements during 2003, which had a
         positive impact on our results in 2003. Another significant
           exposure relates to fluctuations in the price of sugar, which
           decreased approximately 40% during 2003, reducing our cost of
sales.                                            

TAXES                                                                           

TAXES ON INCOME.                                            

  Income taxes in Brazil are comprised of federal income tax and
social contribution (which is an additional federal income tax). The composite  
statutory rate applicable for the year ended on December 31, 2003, 2002 and     
2001 was 34%. For the years of 2003, 2002 and 2001, our Brazilian GAAP          
effective tax rate was a charge of 23.2% in 2003, a benefit of 23.7% in 2002,   
and a charge of 6.2% in 2001.                                                   

   The major reasons for the differences between the effective tax
rates and the Brazilian composite statutory rates have been: (i) benefits       
arising from tax-deductible payments of interest on shareholders' equity        
without an interest charge in pre-tax income; (ii) certain non-deductible       
expenses; (iii) earnings from offshore companies not subject to different       
foreign tax rates; (iv) valuation allowances against net operating losses and   
reversals; (v) non-taxable benefits arising from State value-added incentive    
programs; and (vi) re-filings of tax returns following changes in               
interpretation of certain deductions..                                          

     Under U.S. GAAP, we recorded a benefit of R$148.0 million in 2002
corresponding to 80% of the current value of tax loss carry-forwards acquired   
at the time of the Pepsi transaction in 1997 which had been subject to certain  
restrictions through October 2002. Under Brazilian GAAP, which uses different   
measurement criterion, this Pepsi tax asset was recorded as a credit to         
results in 2003.                                                                

TAX LOSSES AVAILABLE FOR OFFSET.                            

        We had recorded tax loss carryforward assets available for offset of
R$1,163.5 million as of December 31, 2003. Income tax losses available for      
offset in Brazil do not expire; however, the annual offset is limited to 30%    
of pretax income.                                                               

  New legislation was introduced in the third quarter of 2001 to
subject offshore earnings to income tax in Brazil regardless of whether         
earnings have been remitted to Brazil and to restrict tax planning              

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measures that have been available to companies in Brazil, including those we    
have made use of in the past. Although we do not believe that earnings that     
have been accumulated offshore will be taxed, the tax authorities may           
challenge our position on this matter and as a result our access to effective   
tax planning measures may be restricted in the future.                          

TAXES ON SALES--RECOGNITION OF BENEFIT.                     

 A long standing tax dispute was decided in favor of Brazilian
taxpayers on May 29, 2001 at an arbitration session of the Court of Appeals.    
As a result of this decision, we reversed part of the provision for Social      
Integration Program tax (PIS), a tax on gross revenues, through a credit of     
R$123.8 million, and which was recorded in provisions for contingencies and     
liabilities associated with legal proceedings in the year ended December 31,    
2001.                                                                           

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YEAR ENDED DECEMBER 31, 2003 COMPARED WITH YEAR ENDED DECEMBER 31, 2002         

        The following table sets forth the consolidated financial highlights
of AmBev for the years ended December 31, 2003 and 2002:                        

  In 2003, AmBev revised how it reports its operating results to
better reflect the expanding geographical scope of its business. Previously,    
our operating results were categorized into three primary business segments:    
Beer, Soft Drinks and Other Products (including NANC, by-products and malt      
sales to third parties). Both Brazilian and international operations were       
reflected in the results for the beer segment. In order to provide a more       
meaningful presentation of AmBev's operations outside Brazil, which have        
become increasingly relevant following the acquisition of our stake in Quinsa,  
our reports now reflect the following four business segments:                   

o    Beer Brazil                                  

o    CSD and NANC                                 

o    Other Products                               

o    International Operations                     

       The consolidation of the first three business segments provides the
results for AmBev's operations in Brazil ("AmBev Brazil" or "Brazilian          
Operations"). Since sales outside Brazil were insignificant until the end of    
2002, application of our new reporting methodology to prior periods does not    
result in any material changes to the reports previously made available for     
those periods.                                                                  

                                                        [Enlarge/Download Table]


                                                                             CONSOLIDATED FINANCIAL HIGHLIGHTS                  
                                                                         -------------------------------------------            
                                                                          2003             2002            % Change             
                                                                         ------           ------          ----------            
                                                                          (R$ in millions, except volume amounts,               
                                                                             percentages and per share amounts)                 
                                                                                                                                
Sales volume--000 hectoliters(1)...............................            84,310          81,590              3.3              
Net sales.....................................................            8,683.8         7,325.3             18.5              
Net revenue per hectoliter--R$/hl..............................             103.0            89.8             14.7              
Cost of sales.................................................           (4,044.2)       (3,341.7)            21.0              
Gross profit..................................................            4,639.6         3,983.6             16.5              
  GROSS MARGIN (%)..........................................                 53.4%           54.4%                              
Selling, general and administrative expenses                                                                                    
  Selling and marketing  expenses...........................               (847.1)         (687.2)            23.3              
  Direct distribution expenses..............................               (648.6)         (537.4)            20.7              
  General and administrative expenses, including directors' fees           (417.9)         (373.5)            11.9              
  fees..........................................................                                                                
    Depreciation and amortization(2)..........................             (420.0)         (334.6)            25.5              
                                                                         (2,333.5)       (1,932.7)            20.7              
                                                                          2,306.1         2,050.9             12.4              
Provisions for contingencies..................................             (187.9)         (123.7)            51.9              
Other operating income, net...................................             (240.1)          199.4                -              
Equity in results of affiliates ..............................               (6.2)              -                -              
Net financial expenses........................................               93.1          (747.1)               -              
Operating income(4) ..........................................            1,964.9         1,379.5             42.4              
    OPERATING MARGIN (%)......................................               22.6%           18.8%                              
Net income....................................................            1,411.6         1,510.3             (6.5)             
    NET MARGIN                                                               16.3%           20.6%                              
EARNINGS PER SHARE - R$/000 SHARES(3).........................               37.23           39.48             (5.7)            

-----------------------                                                                                                         
Amounts may not add due to rounding.                                                                                            

<FN>                                                                                                                            
(1)  Total beverage sales volume combines AmBev's own beverage volume with the company's ownership percentage share of volume in
     Quinsa.                                                                                                                    

(2)  Does not include depreciation recorded on production assets which is recorded within Cost of sales, nor amortization of    
     goodwill which is within Other operating income, net.                                                                      

(3)  Calculated based on year end number of shares, excluding treasury shares.                                                  

(4)  Under Brazilian GAAP, operating income includes net financial expense.                                                     
</FN>                                                                                                                           

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MARGIN ANALYSIS                                                                 

The following table sets forth certain items in our statement of      
operations expressed as percentages of net sales for the years ended December   
31, 2003 and 2002:                                                              

                                                        [Enlarge/Download Table]


                                                                      Year Ended December 31,

                                                                       2003              2002
                                                                        (%)               (%)
                                                                                             
Net sales............................................................. 100.0           100.0 
Cost of sales......................................................... (46.6)          (45.6)
Gross profit..........................................................  53.4            54.4 
Selling and marketing expenses........................................  (9.8)           (9.4)
Direct distribution expenses..........................................  (7.5)           (7.3)
General and administrative expenses, including directors' fees........  (4.8)           (5.1)
Depreciation and amortization.........................................  (4.8)           (4.6)
Provision for contingencies...........................................  (2.2)           (1.7)
Other operating income, net...........................................  (2.8)            2.7 
Net financial expenses................................................   1.1           (10.2)

Operating income[1]...................................................  22.6            18.8 

[1] Under Brazilian GAAP, operating income includes net financial expense.                   


FINANCIAL HIGHLIGHTS BY BUSINESS SEGMENT                                        

  The following table sets forth certain financial highlights by
business segment for the years ended December 31, 2003 and 2002:                

                                                        [Enlarge/Download Table]


                                                                YEAR ENDED DECEMBER 31,                            
                                      -----------------------------------------------------------------------------
                                                    2003                                        2002               
                                      ------------------------------------        ---------------------------------
                                                          INTERNATIONAL                              INTERNATIONAL 
                                        AMBEV BRAZIL       OPERATIONS               AMBEV BRAZIL      OPERATIONS   
                                      ----------------   -----------------        ----------------  ---------------
                                                                                                                   
Net sales..........................      7,637.7           1,046.1                  6,929.0               396.3    
Cost of sales......................     (3,509.4)           (534.7)                (3,127.6)             (214.1)   
Gross profit.......................      4,128.3             511.3                  3,801.4               182.2    

Selling,  general and administrative                                                                               
expenses...........................     (1,957.5)           (376.0)                (1,767.5)             (165.2)   
                                         2,170.7             135.3                  2,033.9                17.0    
Operating income                                                                                                   


NET SALES                                                   

        Net sales increased by 18.5% for the year ended December 31, 2003 to
R$8,683.8 million from R$7,325.3 million in the same period in 2002. This       
increase was not only due to growth in our Brazilian Operations, but also       
growth in our International Operations, mainly as a result of the acquisition   
of our stake in Quinsa and expansion into new international markets.            

BRAZILIAN OPERATIONS                                        

      Net sales from our Brazilian Operations increased by 10.2% for the
year ended December 31, 2003 to R$7,637.7 million from R$6,929.0 million in     
the same period in 2002, primarily as a result of our revenue management        
initiatives, better execution at the point of sale, an increase in volumes      
sold directly and certain price realignments implemented during 2003.           

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       BEER BRAZIL. Net sales of beer in Brazil increased by 10.2% for the
year ended December 31, 2003 to R$6,114.6 million from R$5,546.4 million in     
the same period in 2002, despite a 4.7% decrease in volumes sold as a resulted  
of a 2.1% decline in the Brazilian beer market, according to ACNielsen, and a   
lower weighted average market share in the preiod (67.3% in the year ended      
December 31, 2003 compared to 68.4% in the same period in 2002). Net sales per  
hectoliter increased by 15.7% to R$110.7 in 2003 from R$95.6 in 2002, mainly    
as a result of our revenue management initiatives, better brand mix, higher     
volumes sold through our direct distribution network and a price realignment    
implemented in June/July 2003. During the year, consumer prices for our main    
brands remained in line with inflation. Other reasons for the growth in net     
sales per hectoliter of Brazilian beer include: (i) the launch of new super     
premium brands such as Bohemia Dark, Bohemia Weiss and Brahma Light; (ii) the   
revitalization of our super premium brand Original; and (iii) further           
initiatives in sales force training to help standardize and improve point of    
sale execution.                                                                 

     CSD&NANC. Net sales increased by 8.4% for the year ended December
31, 2003 to R$1,332.1 million from R$1,228.9 million in the same period in      
2002. In the carbonated soft drink division (CSD), net sales increased by 9.9%  
for the year ended December 31, 2003 to R$1,205.1 million from R$1,096.3        
million in the same period in 2002, primairly as a result of 13.1% higher net   
revenues per hectoliter combined with a 2.8% decrease in volumes sold.          
Although total soft drink volumes sold decreased by 2.8%, our core portfolio -  
Guarana Antarctica and Pepsi - volumes sold increased by 5.3% in 2003           
reflecting our strategy to focus on high margin brands, as well as the          
introduction of Pepsi Twist in a 2 liter PET bottle package. Net sales per      
hectoliter for soft drinks increased by 13.1% for the year ended December 31,   
2003 to R$68.1 in 2003 from R$60.2 in the same period in 2002, mainly as a      
result of better brand mix (the percentage of our core portfolio in total       
volumes sold increased to 84.7% from 78.2%), higher volumes sold through our    
direct distribution network and price initiatives implemented during 2003. A    
higher percentage of PET bottles in the packaging mix contributed to partially  
offset the gains in net sales per hectoliter described above.                   

     In the non-alcoholic and non-carbonated beverage division (NANC),
net sales decreased by 4.2% for the year ended December 31, 2003 to R$127.1     
million from R$132.7 million in the same period in 2002. This 4.2% decrease in  
net sales reflects AmBev's strategy to focus on high margin products, mainly    
Gatorade, resulting in a 23.2% decrease in volumes sold, but a 24.7% increase   
in net sales per hectoliter.                                                    

    OTHER PRODUCTS.  Net sales increased by 24.2% for the year ended
December 31, 2003 to R$190.9 million from R$153.7 million in the same period    
in 2002, primairly as a result of higher malt and by-products volumes sold to   
third parties.                                                                  

INTERNATIONAL OPERATIONS                                    

       Net sales increased by 164.0% for the year ended December 31, 2003,
to R$1,046.1 million from R$396.3 million in the same period in 2002,           
primarily as a consequence of an adequate combination of strategic alliances,   
joint ventures, greenfield projects and acquisitions, which allowed us to       
expand our operations into most of South American and to initiate operations    
in the Central America region. On January 31, 2003 we completed the             
acquisition of our interest in Quinsa, initially obtaining an economic          
interest of 40.475%. During the course of 2003, we acquired an additional 12.0  
million Quinsa Class B shares through open market purchases, increasing our     
economic interest in Quinsa to over 50% by the end of the year. In 2003,        
Quinsa contributed net sales of R$773.7 million, or 74.0% of our International  
Operations' net sales. In September 2003, we initiated our operations in the    
Guatemalan beer market through our joint venture with the local Pepsi bottler,  
The Central America Bottling Corporation (CabCorp). Our Guatemalan operations   
contributed a net sales of R$22.0 million in 2003. In November 2003, we         
acquired various assets from Embotelladora Rivera in Peru, including PepsiCo's  
franchise agreement for Northern Peru and Lima, as well as two soft drink       
plants in Peru and some sales and distribution assets in Lima. Our Peruvian     
assets contributed net sales of R$23.6 million in 2003. Finally, in December    
2003, we acquired Cerveceria SurAmericana, the second largest brewer in         
Ecuador.                                                                        

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COST OF SALES                                                 

      Total cost of sales increased by 21.0% for the year ended December
31, 2003 to R$4,044.2 million from R$3,341.7 million in the same period in      
2002. During most of 2003 and 2002, we had currency hedge agreements in place   
to manage our exposure to variable U.S. dollar-linked costs, such as costs      
associated with aluminum cans, malt, hops sugar and PET resin. As opposed to    
2002, however, the U.S. dollar exchange rate implicit in our currency hedge     
agreements was higher than the exchange rate prevailing in the market (we       
refer to this difference as the "currency hedge effect"), generating a loss of  
R$99.0 million in 2003 (which had the effect of increasing our costs of sales   
by R$99.0 million) as compared to a gain of R$345.7 million in 2002 (which had  
the effect of reducing our costs of sales by R$345.7 million).                  

      As a percentage of our net sales, total cost of sales increased to
46.6% in 2003 from 45.6% in 2002.                                               

      The following table sets forth a breakdown of total costs of sales
and cost of sales per hectoliter:                                               

                                                        [Enlarge/Download Table]


                                                                         COST BREAKDOWN                             
                                             -----------------------------------------------------------------------
                                                 2003           2002           2003          2002         % CHANGE  
                                             ---------         ------         ------        ------        ----------
                                                  (R$ in millions)                    R$/hl                  (%)    
                                                                                                                    
BRAZILIAN OPERATIONS                                                                                                
Raw material................................       998.9           794.2         13.5           10.2           31.9 
Packaging...................................     1,548.9         1,383.1         20.9           17.8           17.4 
Labor.......................................       195.4           212.3          2.6            2.7           (3.5)
Depreciation................................       272.0           316.9          3.7            4.1          (10.0)
Other.......................................       494.2           421.2          6.7            5.4           23.0 
TOTAL BRAZILIAN COST OF SALES...............     3,509.4         3,127.6         47.4           40.3           17.6 
International Operations....................       534.7           214.1         52.2           54.3           (4.0)
TOTAL COST OF SALES.........................     4,044.1         3,341.7         48.0           41.0           17.1 


-------------------------                                                       
Amounts may not add due to rounding.                                            

BRAZILIAN OPERATIONS                                          
---------------------                                         

       Total cost of sales for our Brazilian Operations increased by 12.2%
for the year ended December 31, 2003 to R$3,509.4 million from R$3,127.6        
million in the same period in 2002. As noted above, our cost of sales was       
negatively affected by the U.S. dollar exchange rate implicit in our hedging    
obligations in 2003 compared to the implicit exchange rate in 2002.             

      On a per hectoliter basis, our Brazilian Operations' cost of sales
increased by 17.6% for the year ended December 31, 2003 to R$47.4/hl from       
R$40.3/hl in the same period in 2002. The negative impact of the implicit       
exchange rate for our cost of sales in 2003 was partially offset by our         
efforts to reduce our cost of sales by: (i) reducing prices paid for raw        
material, packaging and utilities through negotiation, development of new       
domestic and international suppliers and tolling arrangements; (ii) increasing  
conversion yields through several multifunctional initiatives and projects;     
(iii) packaging engineering; (iv) process and packaging efficiency through      
improved plant floor execution; and (v) reducing fixed costs through            
centralization.                                                                 

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BEER BRAZIL. Cost of sales for our Brazilian Beer Operations
increased by 11.9% for the year ended December 31, 2003 to R$2,503.6 million    
from R$2,237.1 million in the same period in 2002, primarily as a result of     
the higher U.S. dollar exchange rate implicit in our cost of sales in 2003      
compared to 2002.                                                               

   On a per hectoliter basis, cost of sales for our Brazilian Beer
Operations increased by 17.5% for the year ended December 31, 2003 to           
R$45.3/hl from R$38.6/hl in the same period in 2002. The primary negative       
factor which affected costs of sales in 2003 was a higher percentage of         
imported barely in our malt mix, mainly as a result of the poor barley harvest  
in South America, as well as lower volumes, which increased the fixed cost per  
hectoliter.                                                                     

 CSD&NANC. Cost of sales for our Brazilian CSD&NANC Operations
increased by 9.7% for the year ended December 31, 2003 to R$887.3 million from  
R$809.0 million in the same period in 2002. On a per hectoliter basis, cost of  
sales increased 14.6% for the year ended December 31, 2003 to R$47.2/hl from    
R$41.2/hl in the same period in 2002, primarily as a result of the higher U.S.  
dollar exchange rate implicit in our costs in 2003 compared to 2002, which      
more than offset the gains generated by a greater efficiency in the bottling    
lines as well as a higher presence of PET bottles in our packaging mix,         
instead of aluminum cans.                                                       

INTERNATIONAL OPERATIONS                                    
-------------------------                                   

      Cost of sales for our International Operations increased by 149.8%
for the year ended December 31, 2003 to R$534.7 million from R$214.1 million    
in the same period in 2002, primarily reflecting our new international          
operations that were expanded during 2003. On a per hectoliter basis, cost of   
sales for our International Operations decreased by 4.0% for the year ended     
December 31, 2003 to R$52.2/hl from R$54.3/hl in the same period in 2002,       
mainly reflecting the synergies realized in connection with the transfer to     
Quinsa of our assets in Argentina, Paraguay and Uruguay and improvements in     
the general economic situation in Argentina during 2003.                        

GROSS PROFIT                                                

        Gross profit increased by 16.5% for the year ended December 31, 2003
to R$4,639.6 million from R$3,983.6 million in the same period in 2002. Gross   
margin as a percentage of sales decreased slightly to 53.4% in 2003 from 54.4%  
in 2002. All improvements achieved through our revenue management initiatives   
were offset by lower volumes and the negative effect of our currency hedge      
obligations on our variable dollar-linked costs.                                

SELLING AND MARKETING EXPENSES                                

        Selling and marketing expenses increased by 23.3% for the year ended
December 31, 2003 to R$847.1 million from R$687.2 million for the same period   
in 2002, primarily as a result of new International Operations commenced        
during 2003. Selling and marketing expenses for our Brazilian Operations        
remained almost unchanged in 2003 (R$627.9 million) compared to 2002 (R$628.5   
million).                                                                       

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DIRECT DISTRIBUTION EXPENSES                                

     Direct distribution expenses include product delivery charges and
delivery personnel required to distribute our products. Direct distribution     
expenses increased by 20.7% for the year ended December 31, 2003 to R$648.6     
million from R$537.4 million in the same period in 2002. Reflecting our         
strategy to increase the percentage of volumes of our Brazilian Operations      
sold through our direct distribution network, volumes sold directly             
represented 36.9% of total volume sold in 2003, compared to 32.6% in 2002.      

        On a per hectoliter basis, Brazilian Operations' direct distribution
expenses increased 18.4% for the year ended December 31, 2003 to R$22.2/hl      
from R$18.7/hl for the same period in 2002. Higher freight costs, mainly a      
result of higher fuel costs, along with higher fixed costs per hectoliter,      
were the main reasons that negatively impacted the direct distribution          
expenses per hectoliter. Higher fixed costs per hectoliter were primarily the   
result of the increase in the number of direct distribution centers combined    
with lower overall volumes sold, especially in the second half of the year.     

    Volumes sold directly in our International Operations, mainly in
Venezuela, represented 84.4% of total volumes sold in that country for the      
year ended December 31, 2003, compared to 82.1% in the same period in 2002.     
Direct distribution costs per hectoliter were R$39.4/hl, in 2003, an increase   
of 6.3% over the same period in 2002.                                           

GENERAL AND ADMINISTRATIVE EXPENSES                         

       General and administrative expenses increased by 11.9% for the year
ended December 31, 2003 to R$417.9 million from R$373.5 million in the same     
period in 2002, primarily as a result of International Operations commenced     
during 2003. General and administrative expenses for our Brazilian Operations   
were R$351.6 million in 2003, roughly in line with the R$346.4 million          
registered in 2002. Costs associated with the opening of new regional offices,  
as well as certain one-time expenses related to information technology          
projects, fully offset any cost reductions achieved through our initiatives to  
reduce general and administrative expenses.                                     

DEPRECIATION AND AMORTIZATION                               

       Depreciation and amortization increased by 25.5% for the year ended
December 31, 2003 to R$420.0 million from R$334.6 million in the same period    
in 2002. Brazilian Operations' depreciation and amortization increased by       
16.9% for the year ended December 31, 2003 to R$372.9 million from R$319.0      
million in 2002, reflecting the investments in our direct distribution network  
and sub-zero coolers, which we continue to install at strategically located     
high volume points of sale. During the next two to three years we will be       
significantly increasing our investments in our sub-zero coolers as part of     
our strategy to enhance our point of sale execution and to leverage our         
distribution efficiency. Thus, depreciation should grow proportionally.         
International Operations' depreciation and amortization increased by 202.3%     
for the year ended December 31, 2003 to R$47.1 million from R$15.6 million in   
2002, primarily as a result of the expansion of our international activities.   

Provisions for contingencies                                

Net provisions for contingencies charged to the statement of
operations amounted to R$187.9 million for the year ended December 31, 2003,    
compared to R$123.7 million charged in the same period in 2002. Provisions for  
contingencies with respect to Brazilian Operations were 231.8 million in 2003,  
mainly comprised of: (i) R$104.9 million for labor provisions; (ii) R$77.4      
million for ICMS tax credit with respect to purchases of property, plant and    
equipment prior to 1996, which are under dispute; (iii) R$35.2 million related  
to a dispute regarding whether financial income is                              

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subject to PIS/COFINS tax; and (iv) a provision of R$9.7 million related to     
the termination of certain third-party distributor distribution agreements.     

         Provisions for contingencies for International Operations were R$43.8
million, related mostly to our proportional consolidation of Quinsa.            

OTHER OPERATING INCOME (EXPENSE), NET                       

       Other (net) operating expenses for the year ended December 31, 2003
was R$240.1 million, compared to income of R$199.4 million in the same period   
in 2002. Brazilian Operations contributed with R$230.7 million in expenses      
related to: (i) foreign exchange losses in our subsidiaries abroad              
(principally malting plants in Argentina and Uruguay whose functional currency  
is the U.S. dollar), which totaled R$128.8 million; (ii) R$195.5 million of     
goodwill amortization, mainly related to Antarctica, Astra and Quinsa; and      
(iii) R$16.5 million related to the pension cost arising from the Company's     
actuarial liabilities under Brazilian GAAP. Other operating income of R$175.9   
million, related to tax incentives realized by AmBev's subsidiaries (mainly     
CBB), and R$16.6 million, resulting from early payment of sales tax (ICMS) at   
a discount, contributed to partially offset other operating expenses            
associated with our Brazilian Operations.                                       

    Other operating expenses for International Operations were R$9.4
million, mainly attributable to Quinsa's activities.                            

NET FINANCIAL EXPENSES                                      

       Our financial income consists of realized and unrealized gains from
financial instruments, foreign exchange gains (losses) on investments,          
financial income on cash equivalents and others. Our financial expenses         
consist of foreign exchange gains (losses) on loans, realized and unrealized    
losses from financial instruments, interests and charges on loans, taxes on     
financial transactions, interest on contingencies and others.                   

   We enter into hedging transactions to address AmBev's Brazilian
foreign currency debt exposure, which involve cash investments in U.S.          
dollar-linked assets, as well as the use of swaps and derivatives. As a result  
of Brazilian accounting requirements, volatility in the Real/U.S. dollar        
exchange rate and interest rates can cause significant variations in financial  
income and expenses.                                                            

     Financial income for the year ended December 31, 2003 was R$601.8
million, compared to R$2,530.3 million in the same period in 2002. The effect   
of the appreciation of the real during 2003, resulting in losses attributable   
to our cash and assets linked to the U.S. dollar (R$97.2 million) in contrast to
a gain registered in 2002 (R$1,007.2), as a result of the devaluation of real   
during 2002, more than offset the positive effect of the appreciation of the    
market value of certain assets during 2003, due to the decrease in the risk     
aversion and also lower interest rates prevailing in the market. Pursuant to    
Brazilian GAAP, we were not able to book an unrealized gain of R$205.9 million  
in the market value of certain assets, as such values exceeded the              
corresponding yield curve accrual values.                                       

        Financial expenses for the year ended December 31, 2003 were R$508.7
million, compared to R$3,277.3 million in the same period in 2002. Once again,  
the appreciation of the Brazilian real during 2003 accounts for this            
difference. During 2002, the real devaluation negatively affected the value of  
our U.S. dollar denominated debt. Conversely, the appreciation of the           
Brazilian real in 2003 reduced the Real value of our U.S. dollar denominated    
debt.                                                                           

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OPERATING INCOME                                            

       Operating income increased by 42.4% for the year ended December 31,
2003 to R$1,964.9 million from R$1,379.5 million in the same period in 2002.    
The increase in operating income was attributable primarily to the following    
factors: (i) increase in gross profit from our Brazilian Operations; (ii) the   
expansion of our international activities; and (iii) the appreciation of        
the Brazilian real.                                                             

NON-OPERATING INCOME (EXPENSE), NET                         

Non-operating expenses increased by 39.5% for the year ended
December 31, 2003 to R$100.7 million from R$72.2 million in the same period in  
2002. Brazilian Operations non-operating expenses amounted to R$80.4 million,   
mainly as a result of an expense of R$47.9 million related to losses on the     
sale of fixed assets, and expenses of R$32.6 million related to Quinsa's share  
buyback programs, which, despite increasing AmBev's stake in the Company, had   
a negative effect on Quinsa's shareholders equity because of the difference     
between the market value of Quinsa's shares over their book value.              
International Operations contributed with non-operating expenses of R$20.2      
million.                                                                        

INCOME TAX BENEFIT (EXPENSE)                                  

    Our consolidated income tax and social contribution for the year
ended December 31, 2003 was a charge of R$426.1 million. At the nominal tax     
rate of 34%, income tax for the year ended December 31, 2003 would have         
amounted to R$625.8 million. Our effective income tax rate in the year ended    
December 31, 2003 was positively affected by: (i) the benefit from tax          
deductible distribution of interest attributed to shareholders' equity          
(R$152.7 million); (ii) tax losses arising from the previous year (R$148.0      
million), primarily from the Pepsi transaction; (iii) non-taxable equity gains  
attributable to subsidiaries (R$59.8 million); and (iv) the write-off of        
goodwill in connection with the merger of a subsidiary (R$37.1 million). The    
losses of subsidiaries abroad not subject to taxation (R$182.9 million)         
negatively affected our actual tax rate.                                        

PROFIT SHARING AND CONTRIBUTIONS                              

     Provision for employee and management profit sharing decreased by
81.1% for the year ended December 31, 2003 to R$23.7 million from R$112.3       
million in the same period in 2002. The significant decrease is primarily a     
result of the non-payment of performance bonuses to which certain managers and  
employees would have been entitled if certain corporate goals and other         
performance targets had been achieved in 2003. The R$23.7 million relates to    
financial awards distributed in accordance with our Manufacturing Excellence    
Program and to the proportional consolidation of Quinsa's profit sharing        
program.                                                                        

MINORITY INTEREST                                           

      Minority shareholders in our subsidiaries shared in gains of R$2.9
million for the year ended December 31, 2003, compared to losses of R$47.4      
million in 2002. This change is related to the improved performance and         
extension of our International Operations in 2003.                              

NET INCOME                                                  

        Net income decreased by 6.5% for the year ended December 31, 2003 to
R$1,411.6 million from R$1,510.3 million in the same period in 2002.            

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YEAR ENDED DECEMBER 31, 2002 COMPARED WITH YEAR ENDED DECEMBER 31, 2001         

        The following table sets forth the consolidated financial highlights
of AmBev for the years ended December 31, 2002 and 2001:                        

                                                        [Enlarge/Download Table]


                                                                         CONSOLIDATED FINANCIAL HIGHLIGHTS                  
                                                                    -------------------------------------------             
                                                                        2002            2001           % CHANGE             
                                                                    -----------       ---------       ---------             
                                                                    (R$ in millions, except volume amounts,                 
                                                                       percentages and per share amounts)                   
                                                                                                                            
Sales volume--000 hectoliters(1)...............................       81,590         81,695              (0.1)              
Net sales.....................................................         7,325.3        6,525.6            12.3               
Net revenue per hectoliter--R$/hl..............................           89.8           79.9            12.4               
Cost of sales.................................................        (3,341.7)      (3,366.2)           (0.7)              
Gross profit..................................................         3,983.6        3,159.4            26.1               
    Gross margin (%)..........................................            54.4%          48.4%                              
Selling, general and administrative expenses                                                                                
    Selling and marketing  expenses...........................          (687.2)        (707.8)           (2.9)              
    Direct distribution expenses..............................          (537.4)        (467.8)           14.9               
    General  and  administrative  expenses,  including                  (373.5)        (351.5)            6.3               
    directors' fees...........................................                                                              
    Depreciation and amortization(2)..........................          (334.6)        (256.5)           30.4               
                                                                      (1,932.7)      (1,783.6)            8.4               
                                                                       2,050.9        1,375.8            49.1               
Provisions for contingencies..................................          (123.7)         (33.9)          264.9               
Other operating income, net...................................           199.4          152.2            31.0               
Net financial expenses........................................          (747.1)        (503.1)           48.5               
Operating income(4)...........................................         1,379.5          991.0            39.2               
    Operating margin (%)......................................            18.8%          15.2%                              
Net income....................................................         1,510.3          784.6            92.5               
    Net margin                                                            20.6%          12.0%                              
Earnings per share - R$/000 shares(3).........................            39.48          20.42           93.3               

------------------                                                                                                          
Amounts may not add due to rounding.                                                                                        

<FN>                                                                                                                        
(1)  Includes sales volume of beer, soft drinks and non-alcoholic non-carbonated beverages.                                 

(2)  Does not include depreciation recorded on production assets which is recorded within Cost of sales, nor amortization of
     goodwill within Other operating income, net.                                                                           

(3)  Calculated based on year end number of shares, excluding treasury shares.                                              

(4)  Under Brazilian GAAP, operating income includes net financial expense.                                                 
</FN>                                                                                                                       


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MARGIN ANALYSIS                                                                 

    The following table sets forth certain items in our statement of
operations expressed as percentages of net sales for the years ended December   
31, 2002 and 2001:                                                              

                                                        [Enlarge/Download Table]


                                                                     Year Ended December 31, 
                                                                     2002              2001  
                                                                      (%)               (%)  
                                                                                             
Net sales...........................................................  100.0            100.0 
Cost of sales.......................................................  (45.6)           (51.6)
Gross profit........................................................   54.4             48.4 
Selling and marketing expenses......................................   (9.4)           (10.8)
Direct distribution expenses........................................   (7.3)            (7.2)
General and administrative expenses, including directors' fees......   (5.1)            (5.4)
Depreciation and amortization.......................................   (4.6)            (3.9)
Provision for contingencies.........................................   (1.7)            (0.5)
Other operating income, net.........................................    2.7              2.3 
Net financial expenses..............................................  (10.2)            (7.7)

Operating income[2].................................................   18.8             15.2 


FINANCIAL HIGHLIGHTS BY BUSINESS SEGMENT                                        

  The following table sets forth certain financial highlights by
business segment for the years ended December 31, 2002 and 2001:                

                                                        [Enlarge/Download Table]


                                                                  YEAR ENDED DECEMBER 31,                           
                                          --------------------------------------------------------------------------
                                                      2002                                        2001              
                                          --------------------------------        ----------------------------------
                                                           INTERNATIONAL                               INTERNATIONAL
                                          AMBEV BRAZIL       OPERATIONS             AMBEV BRAZIL         OPERATIONS 
                                          -------------   ----------------        ----------------    --------------
                                                                                                                    

Net sales..........................         6,929.0              396.3                 6,111.1               414.4  
Cost of sales......................        (3,127.6)            (214.1)               (3,165.3)             (200.9) 
                                          ----------           --------              ----------            -------- 
Gross profit.......................         3,801.4              182.2                 2,945.8               213.5  
Selling,  general and administrative                                                                                
expenses...........................        (1,767.5)            (165.2)               (1,598.9)             (184.6) 
                                          ----------           --------              ----------            -------- 
                                            2,033.9               17.0                 1,346.9                28.9  

[2]  Under Brazilian GAAP, operating net financial expense.                                                         


NET SALES                                                   

        Net sales increased by 12.3% for the year ended December 31, 2002 to
R$7,325.3 million from R$6,525.6 million in the same period in 2001. This       
increase was primarily due to the growth of beer and CSD beverages in our       
Brazilian Operations, through improved revenue management and the continued     
standardization of best practices within the Skol, Brahma and Antarctica        
distribution networks. International Operations in Paraguay contributed to      
this increase in net sales, while performances in Argentina, Uruguay and        
Venezuela were impacted by economic crisis, political uncertainty and           
social-economic turmoil in those countries.                                     

BRAZILIAN OPERATIONS                                        

     Net sales for our Brazilian Operations increased by 13.4% for the
year ended December 31, 2002 to R$6,929.0 million from R$6,111.1 million in     
the same period in 2001, primarily as a result of the                           

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revenue management initiatives implemented during the year in all Brazilian     
beverage divisions, as well as the increase in the percentage of volume sold    
through our direct distribution network.                                        

BEER BRAZIL. Net sales increased by 15.0% for the year ended
December 31, 2002 to R$5,546.4 million from R$4,824.5 million in the same       
period in 2001, mainly as a result of revenue management initiatives and        
better execution at the point of sale. Net sales per hectoliter increased       
16.9% to R$95.6 in 2002 from R$81.8 in 2001 while sales volumes fell 1.7%.      
During the year, consumer prices for our main brands remained in line with      
inflation. Other reasons for the growth in net sales of Brazilian beer include  
the increase in the proportion of direct sales, further initiatives in sales    
force training to help standardize and improve point of sale execution, the     
revitalization of our super premium brand Bohemia and the launch of             
high-margin products, such as Skol Beats and Chopp Express, to target specific  
niches in the Brazilian market.                                                 

      CSD&NANC. Net sales increased by 19.2% for the year ended December
31, 2002 to R$1,228.9 million from R$1,030.8 million in the same period of      
2001. In the carbonated soft drink division (CSD), net sales increased by       
13.4% for the year ended December 31, 2002, to R$1,096.2 million from R$967.0   
million in the same period in 2001 as a direct result of our strategy to focus  
on AmBev's core brands -- Guarana Antarctica and Pepsi -- and leverage point    
of sale execution from our leading beer brands. AmBev's core brands volume      
increased by 6.8% and represented 78.2% of total sales, compared to 72.4% in    
2001. Sales volume for the full portfolio decreased 1.1%. Net sales per         
hectoliter rose 14.6% as a result of our strategy to narrow the price gap of    
our products to 5-10% below those of the market leader and the successful       
launch in 2002 of Pepsi Twist, which is premium priced and achieved 1.2%        
market share as of December 31, 2002. Additionally, an increase in one-way      
packaging to 92.5% of sales volume in 2002, compared to 90.8% in 2001, as well  
as higher levels of direct distribution, also contributed to the overall        
growth in net sales per hectoliter.                                             

     In the non-alcoholic and non-carbonated beverage division (NANC),
net sales increased by 108.2% for the year ended December 31, 2002 to R$132.7   
million from R$63.7 million in the same period of 2001. The introduction of     
the Gatorade brand into our portfolio was the primary reason for this           
increase. NANC volumes sold increased by 70.2% in 2002, mainly driven by        
isotonic sales volumes, which increased more than threefold, as well as         
mineral water sales volumes, which increased 23.3%. Also, as a result of the    
introduction of the Gatorade brand into our portfolio, net sales per            
hectoliter increased by 22.3% for the year ended December 31, 2002 to R$92.6    
from R$75.7 in the same period of 2001.                                         

   OTHER PRODUCTS. Net sales decreased by 40.0% for the year ended
December 31, 2002 to R$153.7 million from R$255.9 million in the same period    
in 2001. The removal of Molson's Bavaria brand from our distribution network    
in the first half of 2002 was the primary reason for the weak performance of    
this division in 2002.                                                          

INTERNATIONAL OPERATIONS                                    

    Net sales outside of Brazil decreased by 4.4% for the year ended
December 31, 2002 to R$396.3 million from R$414.4 million in the same period    
in 2001. While sales volume grew 14.3% to 3.9 million hectoliters and the       
packaging mix and increase in direct distribution positively impacted sales,    
net sales per hectoliter fell as a result of significant currency               
depreciation. The proportion of one-way packaging increased to 29.0% in 2002    
from 15.3% in 2001. Direct sales in the cities of Buenos Aires and Caracas      
accounted for 40.2% and 82.6% of total sales, respectively.                     

    AmBev's international segment volume growth was achieved through
market share gains in Argentina, Paraguay, Uruguay and Venezuela, as a result   
of the expansion of direct sales in major cities and the replication of point   
of sale execution best practices in those markets. Volume growth was also due   

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to the start up of our operations in Paraguay, which accounted for an           
additional 0.4 million hectoliters for the full year in 2002, compared to only  
39,500 hectoliters for the two months of production in 2001.                    

COST OF SALES                                               

    Total cost of sales fell by 0.7% for the year ended December 31,
2002 to R$3,341.7 million from R$3,366.2 million in the same period in 2001.    
During most of 2002 our derivative financial instruments fully mitigated the    
effect of the devaluation of the real on our U.S. dollar-linked costs such as   
aluminum cans, malt and hops, compensating for the 21.6% average devaluation    
of the Real (34.3% comparing December 31, 2002 to December 31, 2001). Our cost  
of sales would have been R$345.7 million higher had we not contracted these     
derivative financial instruments. The average exchange rate for the hedging     
transactions was R$2.42 per U.S.$1.00, compared to a market average exchange    
rate of R$2.99 per U.S.$1.00 in 2002. Total cost of sales, excluding            
depreciation, increased to R$3,016.7 million in 2002, which is 0.3% above the   
same period in 2001. Variable costs, which mainly include packaging (aluminum   
cans and PET bottles), and raw material costs (malt, sugar and hops)            
represented 70.4% and 68.9% of the total cost of sales in 2002 and 2001,        
respectively.                                                                   

      As a percentage of our net sales, total cost of sales decreased to
45.6% in 2002 from 51.6% in 2001.                                               

        The following table sets forth the total cost breakdown, and cost of
sales per hectoliter:                                                           

                                                        [Enlarge/Download Table]


                                                                         COST BREAKDOWN                         
                                             -------------------------------------------------------------------
                                                    2002         2001         2002      2001         % CHANGE   
                                             ------------     --------      -------    ------        -----------
                                                  (R$ in millions)                R$/hl                  (%)    

                                                                                                                
Brazilian Operations                                                                                            
Raw material................................        794.2        778.6         10.2       9.9            2.8    
Packaging...................................      1,383.1      1,412.4         17.8      18.0           (1.3)   
Labor.......................................        212.3        204.7          2.7       2.6            4.6    
Depreciation................................        316.9        346.1          4.1       4.4           (7.7)   
Other.......................................        421.2        423.5          5.4       5.4            0.2    
Total Brazilian cost of sales...............      3,127.6      3,165.3         40.3      40.4           (0.4)   
International Operations....................        214.1        200.9         54.3      58.4           (6.9)   
Total Cost of Sales.........................      3,341.7      3,366.2         41.0      41.2           (0.6)   

Amounts may not add due to rounding.                                                                            


BRAZILIAN OPERATIONS                                        

      Total cost of sales for our Brazilian Operations decreased by 1.2%
for the year ended December 31, 2002 to R$3,127.6 million from R$3,165.3        
million in the same period in 2001. This was primarily possible due to the      
derivative financial instruments put in place in 2002. In addition to the       
effect of the derivative financial instruments, a decrease in Brazil Beer       
sales volumes and the shift in the packaging mix toward returnable containers   
for both beer and soft drinks, also positively affected our Brazilian           
Operations cost of sales.                                                       

     BEER BRAZIL. Despite the impact of the devaluation of the Real on
U.S. dollar-denominated commodity prices, such as aluminum cans and malt, cost  
of sales for beer decreased 1.7% for the year ended December 31, 2002 to        
R$2,237.1 million from R$2,274.7 million in the same period in 2001, and cost   
of sales per hectoliter remained stable at R$38.6. The main reason this         
decrease was possible was due to the derivative financial instruments put in    
place in 2002.                                                                  

      In addition to the effect of the derivative financial instruments,
the shift in the packaging mix toward returnable containers also contributed    
to the decrease in costs per hectoliter sold. As a percentage                   

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of sales, cost of sales for beer decreased from 47.1% in 2001 to 40.3% in       
2002, as costs were offset by higher net sales per hectoliter and operating     
cost savings from our cost cutting program of R$43.2 million.                   

        CSD&NANC. Cost of sales for CSD&NANC increased by 12.6% for the year
ended December 31, 2002 to R$809.0 million from R$718.4 million in the same     
period in 2001, despite the effect of the derivative financial instruments      
offsetting the devaluation of the Real. The main reasons for this increase      
were the shift in the packaging mix toward non-returnable containers for CSD    
beverages, which represented 92.5% of sales volumes in 2002 compared to 90.8%   
in 2001, as well as the introduction of Gatorade brand in our NANC portfolio.   
As a percentage of sales, cost of sales for CSD&NANC decreased from 69.7% in    
2001 to 65.8% in 2002.                                                          

INTERNATIONAL OPERATIONS                                    

     International beer operations cost of sales increased by 6.5% for
the year to December 31, 2002 to R$214.1 million from R$200.9 million in the    
same period in 2001. This increase was as a result of the combination of a      
14.4% higher volumes sold with a decrease of 6.9% in cost of sales per          
hectoliter. Cost of sales per hectoliter decreased to R$54.3 for the year       
ended December 31, 2002 from R$58.4 in the same period in2001.                  

GROSS PROFIT                                                

        Gross profit increased by 26.1% for the year ended December 31, 2002
to R$3,983.6 million from R$3,159.4 million for the same period in 2001. Gross  
margin increased to 54.4% in 2002 from 48.4% in 2001. This improvement was      
principally due to increased net sales per hectoliter caused by revenue         
management initiatives and a higher percentage of direct sales.                 

SELLING AND MARKETING EXPENSES                              

       Selling and marketing expenses decreased by 2.9% for the year ended
December 31, 2002 to R$687.2 million from R$707.8 million. While we reduced     
fixed expenses, we maintained our continuous investments in brand equity,       
including the launching of new beer products and the Guarana Antarctica         
sponsorship of the Brazilian national soccer team.                              

DIRECT DISTRIBUTION EXPENSES                                

     Direct distribution expenses include product delivery charges and
the cost of sales and delivery personnel required to distribute our products.   
Direct distribution expenses increased by 14.9% for the year ended December     
31, 2002 to R$537.4 million from R$467.8 million in the same period in 2001.    
This growth was mainly due to higher direct sales, which accounted for 32.6%    
of total sales volume in 2002, compared to 29.6% during 2001. Although the      
increase in direct distribution results in higher net sales since we sell       
directly to the retailer, we also assume the cost of the sales force as well    
as the necessary transportation and storage expenses. As a percentage of net    
sales, direct distribution expenses remained almost stable at 7.3% for the      
year ended December 31, 2002.                                                   

GENERAL AND ADMINISTRATIVE EXPENSES                         

   General and administrative expenses increased 6.3% for the year
ended December 31, 2002 to R$373.5 million from R$351.5 million due             
principally to initiatives in optimization of processes and a corporate         
restructuring, including the benefits realized through the creation of the      
Shared Services Center (SSC), located at the Jaguariuna plant in Sao Paulo. By  
rationalizing administrative operating activities, we expect to recognize the   
benefit of further process efficiencies and fixed cost reduction in the short   
term, and faster implementation of new technologies in the medium term.         

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DEPRECIATION AND AMORTIZATION                               

       Depreciation and amortization increased by 30.4% for the year ended
December 31, 2002 to R$334.6 million from R$256.5 million in the same period    
in 2001. This increase reflects both the investment in our sub-zero coolers,    
which are placed at strategically located points of sale, and the investments   
in direct distribution. During the next two to three years the company will be  
significantly increasing its investment in our sub-zero coolers as part of our  
strategy to enhance our point of sale execution and to leverage our             
distribution efficiency. Thus, depreciation should grow proportionally.         

PROVISIONS FOR CONTINGENCIES                                

Net provisions for contingencies charged to the statement of
operations amounted to R$123.7 million for the year ended December 31, 2002,    
compared to R$33.9 million charged in the same period in 2001.                  

      The principal component of the provisions in 2002 includes R$120.9
million for legal exposures related to a modification of the PIS/COFINS tax     
base in Brazil which should remain provisioned until final ruling. Further      
legal issues arising in 2002 resulting in exposures include R$30.1 million for  
labor and other legal issues, as well as R$6.5 million attributable to the      
principal and fines for a pending IPI and ICMS sales taxes payment issue.       

These charges were partially offset by the reversal of ICMS 
provisions from previous periods of R$8.1 million, the reversal of R$6.0        
million associated with legal issues with third-party distributors and R$19.7   
million for other items, all of which had been accrued in previous periods.     

OTHER OPERATING INCOME (EXPENSE), NET                       

    Other operating income (expense), net increased by 31.0% for the
year ended December 31, 2002 to R$199.4 million from R$152.2 million in the     
same period in 2001. The principal components of other operating income in      
2002 were foreign exchange gains in our subsidiaries abroad (principally        
malting plants in Argentina and Uruguay whose functional currency is the U.S.   
dollar), which totaled R$128.8 million, a R$151.9 million gain on financed      
sales taxes which were forgiven by the government (tax incentives), and a       
R$26.6 million gain associated with sales tax issues (PIS, COFINS, ICMS and     
IPI). All other items accounted for R$14.8 million.                             

These amounts were partially offset by goodwill amortization
(Antarctica, Cympay and Salus) of R$105.3 million and provisions for losses on  
obsolete bottles and crates, which amounted to R$17.4 million for the period    
ended December 31, 2002.                                                        

NET FINANCIAL EXPENSES                                      

       Our financial income consists not only of interest income, but also
of foreign exchange fluctuations and gains on derivatives, including foreign    
currency swaps and forward contracts. Our financial expenses consist of         
interest charges on debt, but also include Brazilian financial transaction      
taxes and bank charges, interest on contingencies, and foreign exchange         
fluctuations, principally on debt, and losses on derivatives, including cross   
currency interest rate swaps and forward contracts.                             

     Financial income increased 606.0% for the year ended December 31,
2002 to R$2,530.3 million from R$358.4 million in 2001. Financial expenses      
increased by 280.4% for the year ended December 31, 2002 to R$3,277.3 million   
from R$861.5 million in the same period in 2001. Net financial expenses,        
therefore, for the year ended December 31, 2002 were 48.5% above the prior      
year period at R$747.1 million from R$503.1 million in the same period in       
2001.                                                                           

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OPERATING INCOME                                            

       Operating income increased by 39.2% for the year ended December 31,
2002 to R$1,379.5 million from R$991.0 million in the same period in 2001.      

     This increase was primarily the result of a 26.1% growth in gross
profit as a result of the revenue management initiatives on the key beer        
brands, as well as our financial instruments strategy which mitigated the       
impact of higher U.S. dollar-denominated costs in local currency due to the     
devaluation of the real in 2002.                                                

NON-OPERATING INCOME (EXPENSE), NET                         

   Non-operating income (expense) amounted to an expense of R$72.1
million for the year ended December 31, 2002, compared to income of R$2.3       
million for the same period in 2001. The principal items within non-operating   
income (expense) in 2002 were a R$41.6 million impairment charge for losses on  
assets held for sale and a R$30.5 million provisioned for all other items.      

INCOME TAX BENEFIT (EXPENSE)                                

    Taxes on income amounted to a benefit of R$280.6 million for the
year ended December 31, 2002, compared to a tax charge of R$51.9 million in     
the same period in 2001. At statutory income tax rates, the charge for income   
tax and social contribution would have amounted to R$444.5 million in 2002.     
Non-taxable gains generated in subsidiaries abroad, that arose principally due  
to foreign exchange gains on cash in U.S. dollars, amounted to a benefit of     
R$735.2 mi llion in 2002, compared to R$151.5 million in 2001. All other items  
accounted for a charge of R$10.1 million in 2002.                               

PROFIT SHARING AND CONTRIBUTIONS                            

      Provision for employee and management profit sharing grew by 38.1%
for the year ended December 31, 2002 to R$112.3 million from R$81.3 million in  
the prior year. This amount relates to performance based bonuses, which are     
calculated based on the achievement of corporate, department or business unit,  
and individual goals, established by the Board of Directors, including, among   
others, certain Economic Value Added ("EVA") targets which were met in 2002.    
According to AmBev's bylaws, the profit sharing payments are limited to 10%     
of net income for employees and 5% for executives. During 2002, AmBev           
contributed R$12.8 million to the FAHZ, to ensure that the Foundation's future  
actuarial obligations were fully funded and expensed this amount directly to    
income.                                                                         

MINORITY INTEREST                                           

        Minority shareholders in our subsidiaries shared in losses of R$47.3
million for the year ended December 31, 2002, compared to losses of R$0.3       
million in 2001. Higher losses were due principally to the economic crisis      
which negatively affected the net income of our international beer operations.  

NET INCOME                                                  

 Net income grew 92.5% for the year ended December 31, 2002 to
R$1,510.3 million from R$784.6 million in the same period in 2001.              

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LIQUIDITY AND CAPITAL RESOURCES                                                 

Our primary sources of liquidity have historically been cash flows from         
operating activities and borrowings. Our material cash requirements have        
included the following:                                                         

o    the servicing of our indebtedness;                     

o    capital expenditures;                                  

o    our share buyback program;                             

o    payments of dividends and interest attributable to     
shareholders' equity;                             

   o    increases in ownership of our subsidiaries or companies in
which we have equity investments; and             

    o    investments in companies participating in the brewing, soft
drink and malting industries.                     

        Our cash and cash equivalents and short-term investments at December
31, 2003, 2002 and 2001 were R$2,690.0 million, R$3,290.0 million and           
R$2,562.9 million, respectively. The increase in the amount of our cash and     
cash equivalents at the end of 2003 compared to the end of 2002 was primarily   
a result of: (i) payment for the acquisition of our interest in Quinsa and      
other acquisitions; (ii) payment of dividends during the year; and (iii)        
capital expenditures. Proceeds from the issuance of CBB's US$500 million        
10-year senior notes in September 2003 and liquidation of certain short-term    
investments positively affected our cash position. The decrease in the amount   
of our cash and cash equivalents at the end of 2002 compared to the end of      
2001 was principally due to the repayment of debt in 2002 which was partially   
offset by higher operating cash flows and the fact that our cash position at    
the end of 2001 reflected the issuance of CBB's US$500 million notes in         
December 2001.                                                                  

        We believe that cash flows from operating activities, available cash
and cash equivalents and short-term investments, along with our derivative      
instruments and our access to borrowing facilities, will be sufficient to fund  
our capital expenditures, debt service and dividend payments going forward.     

CASH FLOWS                                                                      

OPERATING ACTIVITIES                                        

    Our cash flows from operating activities decreased 29.7% for the
year ended December 31, 2003 to R$2,527.6 million from R$3,595.0 million for    
the year ended December 31, 2002. All the foregoing factors were partially      
mitigated by other transactions generating a net cash inflow of R$8.3 million   
in 2003.                                                                        

      Our cash flows from operating activities totaled R$3,595.0 million
for the year ended at December 31, 2002 and R$1,006.6 million for the year      
ended at December 31, 2001. Our cash generated in 2002 increased by 257.1%      
when compared to 2001, as a consequence, primarily, of a 92.5% net income       
growth in 2002, the latter being driven primarily by revenue management         
initiatives and the use of commodity financial instruments which mitigate our   
exposure to U.S. dollar-denominated costs.                                      

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INVESTING ACTIVITIES                                        

  Cash flows used in our investing activities for the year ended
December 31, 2003 totaled R$2,014.7 million compared to R$1,603.1 million for   
the year ended December 31, 2002. The increased cash utilized in investing      
activities in 2003 compared to 2002 primarily reflects the acquisition of our   
economic interest in Quinsa and our investments in new markets in South and     
Central America, such as Ecuador, Peru and Guatemala, as well as investments    
in our direct distribution network, mainly through the acquisition of           
third-party distributors.                                                       

        Cash flows used in our investing activities were R$1,603.1 million for
the year ended December 31, 2002 and R$1,687.4 million for the year ended       
December 31, 2001.  The lower cash utilized in investing activities in 2002     
compared to 2001 reflects the investment in Cympay, Polar, Pilcomayo and IBANN  
in 2001, partially offset by the higher net investment in Astra in 2002 and     
the receipt of proceeds of R$98.3 million from the disposal of assets           
principally from the Antarctica subsidiaries.  In 2001, the disposal of assets  
generated R$42.2 million.                                                       

FINANCING ACTIVITIES                                        

       Cash flows used in financing activities for the year ended December
31, 2003 totaled R$346.7 million, compared to R$2,912.2 million for the year    
ended December 31, 2002. The proceeds of loans, primarily the U.S.$500 million  
10-year Senior Notes issued in September 2003, as well as the cash generated    
from our operating activities, were used to repay R$2,510.1 million in debt in  
2003. Debt repayments in 2002 amounted to R$2,925.3 million and in 2001         
amounted to R$1,343.9 million.                                                  

      Cash flows used in financing activities were R$2,912.2 million for
the year ended December 31, 2002, compared to proceeds of R$1,418.0 million in  
2001. The proceeds of loans, plus cash generation, were used to repay           
R$2,925.3 million of debt in 2002, including a significant amount of            
short-term foreign currency-denominated trade finance debt. Repayments in 2001  
amounted to R$1,343.9 million.                                                  

   As of December 31, 2003, our outstanding debt totaled R$5,980.4
million (of which R$1,976.1 million was short-term debt, including R$1,427.4    
million of the current portion of long-term debt). Our debt consisted of        
R$901.5 million of real-denominated debt and R$5,078.9 million of foreign       
currency-denominated debt. The weighted average annual interest rate for the    
short and long-term portions of the local currency-denominated debt at          
December 31, 2003 was 12.1% and 6.8%, and the average duration was 5 months     
and 2.3 years, respectively. The weighted average annual interest rate for the  
short and long-term portions of the foreign currency-denominated debt was       
approximately 7.0% and 10.5%, and the average duration was 6 months and 7.0     
years, respectively.                                                            

      As of December 31, 2002, our outstanding consolidated debt totaled
R$4,486.7 million (of which R$607.4 million was short-term debt, including      
R$292.5 million of the current portion of long-term debt). Our debt consisted   
of R$988.1 million of real-denominated debt and R$3,498.6 million of foreign    
currency-denominated debt. The weighted average annual interest rate for the    
short and long-term portions of the local currency-denominated debt at          
December 31, 2003 was 11.6% and 8.1%, and the average duration was 6 months     
and 2.5 years, respectively. The weighted average annual interest rate for the  
short- and long-term portions of the foreign currency-denominated debt was      
approximately 9.9% and 9.7%, and the average duration was 5 months and 4.8      
years, respectively.                                                            

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   As of December 31, 2001, our outstanding debt totaled R$4,569.4
million (of which R$1,720.0 million was short term debt, including R$280.3      
million of the current portion of long term debt). Our debt consisted of        
R$1,042.0 million of real-denominated debt and R$3,527.4 million of foreign     
currency-denominated debt. The weighted average annual interest rate for the    
short and long-term portions of the local currency-denominated debt at          
December 31, 2003 was 11.0% and 9.0%, and the average maturity was 6 months     
and 2.6 years, respectively. The weighted average annual interest rate for the  
short and long-term portions of the foreign currency-denominated debt was       
approximately 5.6% and 10.3%, and the average maturity was 7 months and 6.5     
years, respectively.                                                            

        The following tables set forth our net debt consolidated position as
of December 31, 2003, 2002 and 2001:                                            

                                                        [Enlarge/Download Table]


                                                             NET DEBT CONSOLIDATED POSITION               
                                                ----------------------------------------------------------
                                                            2003                           2002           
                                                ----------------------------   ---------------------------
                                                LC(1)     FC(2)      TOTAL      LC(1)     FC(2)      TOTAL
                                              -------    -------    -------    ------   -------   --------
                                                                    (R$ in millions)                      
                                                                                                          
Short-term debt(3)..................            262.0    1,714.1    1,976.1    269.1      338.3      607.4
Long-term debt......................            639.5    3,364.8    4,004.3    719.0    3,160.3    3,879.3
TOTAL...............................            901.5    5,078.9    5,980.4    988.0    3,498.6    4,486.7

Cash and cash equivalents and                                                                             
   short-term investments...........                                ----------                    --------
                                                                    2,690.0(4)                     3,290.0
Net debt............................                                3,290.4                        1,196.7

<FN>                                                                                                      
Amounts may not add due to rounding.                                                                      
(1)  LC = Local Currency                                                                                  
(2)  FC = Foreign Currency                                                                                
(3)  Includes the current portion of long-term debt.                                                      
</FN>                                                                                                     


                                                        [Enlarge/Download Table]


                                                                  NET DEBT CONSOLIDATED POSITION                        
                                             -------------------------------------------------------------------------- 
                                                           2002                                    2001                 
                                             -----------------------------------     ---------------------------------- 
                                               LC(1)        FC(2)         TOTAL        LC(1)        FC(2)        TOTAL  
                                             --------     --------      --------     --------      --------     --------
                                                                          (R$  in millions)                             
                                                                                                                        
Short-term debt(3)..................            269.1        338.3         607.4        271.0       1,449.0      1,720.0
Long-term debt......................            718.9      3,160.3       3,879.3        771.0       2,078.4      2,849.4
Total...............................            988.0      3,498.7       4,486.7      1,042.0       3,527.4      4,569.4

Cash and cash equivalents and                                                                                           
   short-term investments...........                                    --------                                --------
                                                                         3,290.0                                 2,562.9
Net debt............................                                     1,196.7                                 2,006.4
<FN>                                                                                                                    
Amounts may not add due to rounding.                                                                                    
(1)  LC = Local Currency                                                                                                
(2)  FC = Foreign Currency                                                                                              
(3)  Includes the current portion of long-term debt.                                                                    
</FN>                                                                                                                   

SHORT-TERM DEBT                                             

 As of December 31, 2003 our short-term debt totaled R$1,976.1
million, consisting primarily of the current portion of our syndicated loan     
denominated in Japanese Yen which matures in August 2004. As of December 31,    
2003, 86.7% of our short-term debt was denominated in foreign currencies, with  
an annual weighted average interest rate of approximately 7.0%. The Japanese    
Yen-denominated loan represented 53.8% of our short-term debt.                  

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       As of December 31, 2002 our short-term debt totaled R$607.4 million
and consisted primarily of financing for the importation of raw materials and   
equipment, and working capital. As of December 31, 2002, 55.7% of our           
short-term debt was denominated in foreign currencies, with an annual weighted  
average interest rate of approximately 9.9%.                                    

LONG-TERM DEBT                                              

      As of December 31, 2003, our long-term debt, excluding the current
portion of long-term debt, totaled R$4,004.3 million, of which R$639.5 million  
was denominated in Reais. The remainder was denominated primarily in U.S.       
dollars. The current portion of our local long-term debt totaled R$1,427.4      
million as of December 31, 2003.                                                

                                                           LONG-TERM
                                                            DEBT MATURITY(1)

2005...........................................................     232.5       
2006...........................................................     390.9       
2007...........................................................     152.8       
2008...........................................................     150.0       
2009...........................................................      20.4       
2010...........................................................      53.2       
2011...........................................................   1,498.1       
2012 and later.................................................   1,506.4       
TOTAL..........................................................   4,004.3       

Amounts may not add due to rounding.                                            
(1) Excludes the current portion of long-term debt.                             

      In accordance with our foreign currency risk management policy, we
have entered into forward and cross-currency interest rate swap contracts in    
order to mitigate currency and interest rate risks. See "Quantitative and       
Qualitative Disclosures About Market Risk" for our policy with respect to       
mitigating foreign currency and interest rate risks through the use of          
financial instruments and derivatives.                                          

      As of December 31, 2002, our long-term debt, excluding the current
portion of long-term debt, totaled R$3,879.3 million, of which R$718.9 million  
was denominated in Reais. The remainder was denominated in U.S. dollars and     
Japanese Yen. The current portion of our local long-term debt totaled R$292.5   
million as of December 31, 2002.                                                

      As of December 31, 2001, our long-term debt, excluding the current
portion of long-term debt, totaled R$2,849.4 million, of which R$771.0 million  
was denominated in Reais. The remainder was denominated in Japanese Yen and     
U.S. dollars. The current portion of our long-term debt totaled R$280.3         
million as of December 31, 2001.                                                

     Our cash interest paid was, R$ 256.2 million, R$559.5 million and
R$260.5 million for the years ended December 31, 2003, 2002, and 2001,          
respectively.                                                                   

      In August 2001, AmBev raised Japanese Yen 39,060 million through a
syndicated loan. The loan has a three-year maturity and an interest rate of     
Yen LIBOR plus 2.37% per annum. We have contracted cross currency interest      
rate swaps and forward contracts to mitigate the currency risk, swapping the    
currency to U.S. dollars and fixing our interest rate at LIBOR plus 5.7% per    
annum, varying over the term of the loan. This exposure was simultaneously      
swapped to Reais at a floating rate of interest consistent with our treasury    
policies. This loan is jointly guaranteed by AmBev and its subsidiaries and is  
subject to indebtedness and liquidity ratios.                                   

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   In December 2001, CBB issued U.S.$500 million 10 1/2% Notes due
2011, fully guaranteed by AmBev. This offering significantly increased the      
average maturity of our outstanding debt. On August 28, 2002, we completed an   
SEC registered exchange offer. These notes contain certain covenants and        
events of default which, if triggered, cause accelerated amortization. The      
proceeds of the syndicated loans and the notes issued in 2001 were used         
principally to repay short-term debt, but also to finance part of AmBev's       
capital expenditure program and for general corporate purposes.                 

   In September 2003, CBB issued U.S.$500 million 8 3/4% Notes due
2013, fully guaranteed by AmBev. The transaction was priced at 99.674% of the   
nominal principal amount with a coupon rate of 8.75%. These notes contain       
certain covenants and events of default which, if triggered, cause accelerated  
amortization. The proceeds of the notes issued in 2003 were used principally    
to repay short-term debt, to finance part of AmBev's capital expenditure        
program, and also for general corporate purposes. The original contracted       
interest rate may be increased by 0.5%, if the notes are not registered with    
the SEC by September 18, 2004.                                                  

As of December 31, 2003, our local currency long-term debt  
borrowings consisted primarily of long-term plant expansion and other loans     
from governmental agencies including the Brazilian Economic and Social          
Development Bank (BNDES), and BNDES programs, including the Fund for Financing  
the Acquisition of Industrial Machinery and Equipment (FINAME), and the         
Financing Fund for Studies and Projects (FINEP).                                

   Our reais denominated long-term borrowings at December 31, 2002
consisted primarily of long-term plant expansion and other loans from           
governmental agencies including BNDES, and BNDES programs, including FINAME,    
and FINEP. In May 2001 we entered into an additional line of credit agreement   
with BNDES totaling R$216.5 million, of which R$168.2 million was received in   
2001. The line of credit is payable in monthly installments with final          
maturity in December 2008.                                                      

   On December 31, 2001, R$3,527.4 million of our total borrowings
(including the current portion of long term debt) were denominated in foreign   
currencies. At the December 31, 2001 exchange rate, R$694.7 million             
represented the Japanese Yen denominated syndicated loan, R$1,164.6 million     
the U.S. dollar denominated 10 Year Senior Loan Notes, R$1,178.5 million        
represented the U.S. dollar denominated raw material import financing, and the  
remainder of R$489.6 million other U.S. dollar denominated debt.                

A substantial portion of the financings incurred by Quinsa's
subsidiaries in Argentina is denominated in U.S. dollars. The devaluation of    
the Argentine Peso and the economic crisis in Argentina, mainly in 2002,        
restricted the ability of these subsidiaries to generate sufficient cash flows  
to meet the obligations falling due on the dates originally determined for      
liabilities denominated in foreign currency. The management of Quinsa and its   
subsidiaries renegotiated the maturity terms with financial institutions.       

At December 31, 2003, Quinsa was in default of certain loan 
covenants. Quinsa's management has concluded the process of renegotiating the   
terms of the affected loans. As of December 31, 2003, we reclassified           
approximately US$4.2 million of Quinsa's long-term debt, with respect to which  
Quinsa was not in compliance with certain covenants, to current liabilities.    

      Quinsa's results of operations are proportionately consolidated in
our financial statements for 2003.                                              

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SECURED DEBT                                                

 Certain of our loans, with an aggregate outstanding principal
balance of R$620.5 million at December 31, 2003, are secured by either our      
facilities located in, or equipment in our facilities located in, Agudos,       
Jacarei, Aguas Claras (Sergipe), Nova Rio (Rio de Janeiro), Teresina, Manaus,   
Aquiraz, Natal, Jacarepagua, Curitiba and Cuiaba. The loans, which include the  
loans provided by BNDES and FINEP, were used to expand or modernize our         
facilities and equipment.                                                       

SALES TAX DEFERRALS AND OTHER TAX CREDITS                   

      We currently participate in several programs by which a portion of
payments of value-added tax on sales and services (ICMS) due from sales         
generated by specific production facilities are deferred for periods of         
generally five years from their original due date. The total amount deferred    
at December 31, 2003, including ICMS financing, was R$768.7million, as          
disclosed in note 11 to our financial statements. Percentages deferred          
typically range from 40% to 100% over the life of the program. Balances         
deferred generally accrue interest and are partially inflation indexed, with    
adjustments generally set at 60% to 80% of a general price index. The amount    
of sales taxes deferred as of December 31, 2003, R$393.6 million, included a    
current portion of R$161.8 million (classified under other taxes and            
contributions payable), and R$231.8 million payable thereafter. The remaining   
R$375.1 million relates to ICMS financing. We also participate in ICMS          
value-added tax credit programs offered by various Brazilian states which       
provide tax credits to offset ICMS value-added tax payable. In return, we are   
committed to meeting certain operational requirements including, depending on   
the State, production volume and employment targets, among others. The grants   
are received over the lives of the respective programs. In the years ended      
December 31, 2003 and 2002 we recorded R$175.9 million and R$151.9 million,     
respectively, of tax credits as gains on tax incentive programs. The benefits   
granted are not subject to withdrawal in the event that we do not meet the      
program's targets; however, future benefits may be withdrawn.                   

COMMITMENTS AND CONTINGENCIES                               

The following table and discussion provide additional disclosure regarding our  
material contractual obligations and commercial commitments as of December 31,  
2003.                                                                           

                                                        [Enlarge/Download Table]

                                                            LESS                                      
                                                            THAN 1       1-3       3-5     MORE THAN  
      CONTRACTUAL OBLIGATIONS                     TOTAL      YEAR       YEARS     YEARS     5 YEARS   
---------------------------------------------- ---------- ---------- ---------- ---------- ---------- 
                                                        (in millions of Reais)                        
                                                                                                      
Long-term debt................................   5,431.7    1,427.6      623.4     302.8    3,077.9   
Sales tax deferrals...........................     396.0      161.8      103.9     130.3          -   
Capital expenditure commitments                    100.0      100.0                                   
Aluminium procurements........................   3,300.0    1,100.0    2,200.0                        
Plastic procurements..........................     196.0       98.0       98.0                        
                                                ---------- ---------- ---------- ---------- ----------
  Total contractual cash commitments..........   9,423.7    2,887.4    3,025.3    433.10    3,077.9   

The above table does not reflect contractual commitments discussed in "Off-                           
Balance Sheet Arrangements"                                                                           
<FN>                                                                                                  
(1)  Includes current portion. Detailed in note 10 to our audited financial                           
     statements.                                                                                      
(2)  The sales tax deferrals are detailed in note 11 to our financial                                 
     statements. The total amount deferred of R$572.3 million considered in                           
     that note includes R$393.6 million of sales tax deferrals and R$375.1                            
     million of ICMS financing initiatives. The latter is included within the                         
     long-term debt balance in the table above, as they are financing in                              
     nature.                                                                                          
(3)  We have contracts with certain key suppliers to buy volumes of key                               
     materials in our production and packaging processes. We have a contract                          
     to purchase R$98.0 million per annum for the next three years of plastics                        
     for PETs. Further, we have contracts to buy other key materials,                                 
     including aluminum and natural gas, but without fixed volumes or values.                         
     These amounts are currently unquantifiable, and have therefore not been                          
     included in the table above.                                                                     
</FN>                                                                                                 

     Pursuant to the agreement with BAC relating to the Quinsa Class A
Shares, AmBev has a call option to acquire 373.5 million Quinsa Class A Shares  
held by BAC in exchange for newly issued shares of AmBev, which may be          
exercised by AmBev beginning in April 2009 and in April of each year            
thereafter. Conversely, BAC has a put option to sell to AmBev the 373.5         
million Quinsa Class A Shares                                                   

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held by BAC in exchange for newly issued shares of AmBev, which may be          
exercised by BAC beginning in April 2003 and in April of each year thereafter.  
The put option held by BAC is immediately exercisable upon a change of control  
of AmBev/occurring prior to January 31, 2006, and will be deemed exercised in   
the event of a change of AmBev occurring after that date. Accordingly, BAC may  
seek to exercise the put option in connection with the consummation of the      
Interbrew-AmBev Transactions. See "Information on the Company--Acquisition of   
Interest in Quinsa". The price of the shares will be calculated based on the    
EBITDA of both AmBev and Quinsa at the time of exchange. Even though the put    
and call options are not considered a commitment on our part, either we or BAC  
may decide to exercise it in the future.                                        

 We are subject to numerous commitments and contingencies with
respect to tax, labor, distributors and other claims. To the extent that we     
believe these contingencies will probably be realized, they have been recorded  
in the balance sheet. As discussed in "Operating and Financial Review and       
Prospectus--Critical Accounting Policies--Contingencies--Unrecognized           
exposures", these have been estimated at R$1,266.6 million but are not          
considered commitments.                                                         

CAPITAL INVESTMENT PROGRAM                                  

  In 2003, capital expenditures on property, plant and equipment
totaled R$862.2 million. These expenditures primarily included investments in   
quality, automation, modernization, replacement of packaging lines, and others  
of approximately R$162.7 million; investment in warehousing for direct          
distribution of R$405.9 million; investments in coolers of R$157.8 million;     
expenditures for the replacement of bottles and crates of R$112.2 million; and  
continued investments in information technology of R$23.6 million.              

At December 31, 2003, our investments in subsidiaries and   
affiliates, including acquisitions of intangible assets net of cash, totaled    
R$1,745.3 million. This amount included the acquisition of our economic         
interest in Quinsa. The purchase price of our initial 40.475% economic          
interest in Quinsa included a cash disbursement of R$1,429.0 million in 2003.   
As of December 31, 2003, we had disbursed an additional R$249.6 million to      
increase our economic interest in Quinsa to 49.66% through the purchase of an   
additional 12.0 million Quinsa Class B shares on the open market. Also          
included in the R$1,745.3 million are the acquisition of our interests in our   
Peruvian and Ecuadorian assets.                                                 

  In 2002, capital expenditures on property, plant and equipment
totaled R$522.3 million. These expenditures included investments in quality,    
automation, modernization, replacement of packaging lines, and others of        
approximately R$192.8 million, investment in warehousing for direct             
distribution of R$149.9 million, cooler investments of R$72.4 million,          
expenditures for the replacement of bottles and crates of R$77.7 million and    
continued investments in information technology of R$29.6 million. Investments  
in subsidiaries and affiliates, including acquisition of intangible assets net  
of cash, totaled R$75.6 million and included the purchase of an additional      
stake in Astra.                                                                 

        In 2001, capital expenditures in plant and equipment totaled R$446.8
million. These expenditures included investments in quality, automation,        
modernization, replacement of packaging lines, and others of approximately      
R$261.0 million, investment in warehousing for direct distribution of R$83.4    
million, expenditures for the upgrade and replacement of bottles and crates of  
R$66.5 million and continued investments in information technology of R$35.9    
million. Investments in subsidiaries and affiliates, including acquisition of   
intangible assets net of cash, totaled R$220.1 million and included the         
purchase of 95.4% of the voting capital of Cympay and the increase of our       
participation in Polar to 98.1% of the voting capital.                          

We continually evaluate possible acquisitions, products and 
technologies that are complementary to our business and any such acquisitions   
or investments may be financed with additional debt. We announced our           
investment in a facility in the Dominican Republic in February 2004. This       
project will                                                                    

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involve the acquisition of 51% of the capital of Embodom that includes a soft   
drink facility and distribution network, and construction of a beer facility    
in Santo Domingo. This investment will involve approximately U.S.$33 million    
of capital expenditures, working capital and launch expenses during 2004. We    
expect operations to commence during 2004.                                      

        AmBev is currently constructing a brewery in Peru. Certain equipment
is being transferred from facilities in Brazil to optimize underutilized        
assets following the Brahma and Antarctica merger. Total expected investment    
should amount to U.S.$30 million.                                               

      We anticipate an increase in capital expenditures during 2004 as a
result of our focus on the construction of new facilities in South and          
Central America, and increased investment in bottles and packaging in           
connection with our expansion into new markets.                                 

OFF-BALANCE SHEET ARRANGEMENTS                                                  

We have a number of off-balance sheet items which have been 
disclosed elsewhere in this annual report. They include the following:          

        o    Future committed capital expenditures of R$100.0 million, which
      have been disclosed in "-Liquidity and Capital Resources
-Commitments and contingencies";                  

       o    The FAHZ. As described in "-Critical Accounting Policies", for
       the purposes of Brazilian GAAP, we do not consolidate the
            assets and liabilities of the FAHZ, although we do so for U.S.
       GAAP purposes. While we record the benefit obligation for
      Brazilian GAAP, the remaining assets and liabilities are
            off-balance sheet for the purposes of Brazilian GAAP financial
         statements. See note 14 (c) of the financial statements for
more information;                                 

       o    We have a number of derivatives that we manage to mitigate our
             exposure to risk, as disclosed in "Quantitative and Qualitative
       Disclosures about Market Risk". The nominal value of open
             derivatives contracts (both assets and liabilities) at December
31, 2003 is R$6,379.7 million;                    

      o    Packaging purchase contracts. We have included details of our
           contract commitments not currently held on balance sheet with
            regard to raw material purchase contracts in "-Commitments and
           Contingencies". This includes commitments to purchase R$196.0
           million of plastic and R$2,300.0 million of aluminum over the
following three years;                            

     o    Contingencies which represent possible, though not probable,
          risk of loss have not been provided in our balance sheet and
amount to R$1,266.6 million;                      

      o    We have contracts regarding our sales of the Bavaria brand to
          Molson, and the acquisition of our interest in Quinsa, which
          have potential future impacts. With regard to the former, we
             may receive further disposal proceeds, subject to certain brand
     market share criteria being met. See "Background on the
            Company--Brazilian Antitrust Approval". With regard to Quinsa,
             we may be obliged to acquire the remaining interest, subject to
         certain put and call options, which can be exercised by the
       shareholders of BAC or ourselves. See "Information on the
             Company--Joint Ventures and Strategic Alliances". These do not,
            however, represent guarantees, but will only be realized based
         on the occurrence of contingent events. AmBev's interest in
       Quinsa is accounted for on the proportional consolidation
     method under Brazilian GAAP and on the equity basis for
               purposes of U.S. GAAP.  Our put agreement is not reflected on our
Brazilian GAAP balance sheet.                     

We have no special purpose vehicles or other unconsolidated 
interests in which we have material commitments, guarantees or contingencies.   

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Directors, Senior Management and Employees                                      

DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES  

     The Board of Directors and the executive officers oversee AmBev's
administration. The Board of Directors is comprised of three to 15 members who  
must be shareholders of AmBev and provides the overall strategic direction of   
AmBev. Directors are elected at general shareholders' meetings by holders of    
common shares for a three-year term, reelection being permitted. Day-to-day     
management is delegated to the executive officers of AmBev, who must number at  
least two but no more than 15. The Board of Directors appoints executive        
officers for a three-year term, reelection being permitted. The AmBev           
shareholders' agreement regulates the election of directors of AmBev by the     
controlling shareholders. See "Major Shareholders and Related Party             
Transactions--AmBev Shareholders' Agreement--Management of AmBev".              

DIRECTORS                                                                       

  The following table sets forth information with respect to the
directors of AmBev:                                                             

                                                        [Enlarge/Download Table]


BOARD OF DIRECTORS(1)                                                                                                            
                                                                                             DIRECTOR        TERM                
NAME                                            AGE(2)  POSITION                              SINCE         EXPIRES              
--------------------------------------------------------------------------------------------------------------------             
                                                                                                                                 
Marcel Herrmann Telles.....................       54    Co-Chairman and Director               1999          2005                
Victorio Carlos De Marchi..................       65    Co-Chairman and Director               1999          2005                
Magim Rodriguez Junior.....................       62    Vice Chairman and Director             2004          2007                
Jorge Paulo Lemann.........................       64    Director                               1999          2005                
Carlos Alberto da Veiga Sicupira...........       56    Director                               1999          2005                
Jose Heitor Attilio Gracioso...............       72    Director                               1999          2005                
Roberto Herbster Gusmao....................       81    Director                               1999          2005                
Vicente Falconi Campos.....................       63    Director                               1999          2005                
Diego Fernando Miguens Bemberg.............       49    Director                               2003          2005                

ALTERNATE MEMBERS                                                                                                                

Roberto Moses Thompson Motta...............       46    Alternate Director                     1999          2005                
Fersen Lamas Lambranho.....................       42    Alternate Director                     2002          2005                

<FN>                                                                                                                             
(1)  Marcel Telles, Co-Chairman of the Board of Directors of AmBev, is also a member of the Board of Directors of Braco          
     and ECAP, the former controlling shareholders of Brahma, while Victorio Carlos De Marchi, a Co-Chairman of the Board        
     of Directors, was appointed by the FAHZ, the former controlling shareholder of Antarctica.  Braco and ECAP appointed        
     two additional  directors--Jorge Paulo Lemann and Carlos Alberto Sicupira.  The FAHZ appointed two additional               
     directors--Jose Heitor Attilio Gracioso and Roberto Herbster Gusmao.  Both alternate directors were appointed by Braco and  
     ECAP, the former controlling shareholders of Brahma.  Diego Fernando Miguens Bemberg was appointed in  substitution of      
     Jose de Maio Pereira da Silva by the members of the Board of Directors according to the terms of the Company's bylaws,      
     referred by Quinsa.  Magim Rodriguez Junior, the former Chief Executive Officer of AmBev, was appointed Vice-Chairman of the
     Board of Directors by the members of the Board of Directors according to the terms of the Company's bylaws. The alternate   
     members of the Board of  Directors of AmBev were  appointed  in order to replace,  if and when necessary, any of the        
     directors appointed by Braco and ECAP.                                                                                      

(2)  Age as at May 31, 2004.                                                                                                     
</FN>                                                                                                                            

     The following are brief biographies of each of AmBev's directors:

      MARCEL HERRMANN TELLES. Mr. Telles is the Co-Chairman of the Board
of Directors of AmBev. Mr. Telles is a partner of GP Investimentos Ltda. He     
served as Chief Executive Officer of Companhia Cervejaria Brahma from 1989 to   
1999. Currently, he is also a member of the Board of Directors of Lojas         
Americanas S.A. Mr. Telles has a degree in economics from Universidade Federal  
do Rio de Janeiro and attended the Owners/Presidents Management Program at      
Harvard Business School. His principal business address is Rua Dr. Renato Paes  
de Barros 1017, 4th floor, Sao Paulo, Brazil.                                   

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      VICTORIO CARLOS DE MARCHI. Mr. De Marchi is the Co-Chairman of the
Board of Directors of AmBev and the Chairman of the Board of Directors of CBB.  
Mr. De Marchi joined Companhia Antarctica Paulista in 1961 and held various     
positions during his tenure, including Chief Executive Officer from 1998 to     
April 2000. Mr. De Marchi was also president of the Brewing Industry National   
Association ("Sindicerv") until February 2002 and is a member of the            
Orientation Committee of FAHZ. Mr. De Marchi has a degree in economics from     
Faculdade de Economia, Financas e Administracao de Sao Paulo and a law degree   
from Faculdade de Direito de Sao Bernardo do Campo. His principal business      
address is Rua Dr. Renato Paes de Barros 1017, 4th floor, Sao Paulo, Brazil.    

     MAGIM RODRIGUEZ JUNIOR. Mr. Rodriguez is the Vice-Chairman of the
Board of Directors of AmBev. He served as Chief Executive Officer of AmBev      
from 1999 to 2003. He is also Chief Executive Officer of CBB. He has been       
associated with Brahma since 1989, serving first as Marketing Executive         
Officer. He holds a degree in business administration and accounting from       
Universidade Mackenzie. His principal business address is Rua Dr. Renato Paes   
de Barros 1017, 4th floor, Sao Paulo, Brazil.                                   

        JORGE PAULO LEMANN. Mr. Lemann is a member of the Board of Directors
of AmBev. Mr. Lemann is a partner of GP Investimentos Ltda. He is also a board  
member of Lojas Americanas S.A., the Gillette Company and Swiss Re; Chairman    
of the Latin American Advisory Committee of the New York Stock Exchange;        
founder and board member of Fundacao Estudar, provider of scholarships for      
students in Brazil; and member of the Advisory Board of DaimlerChrysler. He     
previously served as a member of the Board of Directors of Brahma from 1990 to  
1999. He holds an B.A. degree from Harvard Business School, class of 1961. His  
principal business address is Av. Brig. Faria Lima, 3729, 7th floor, Sao        
Paulo, Brazil.                                                                  

     CARLOS ALBERTO DA VEIGA SICUPIRA. Mr. Sicupira is a member of the
Board of Directors of AmBev. He also served as a member of the Board of         
Directors of Brahma from 1990 until 1999. Mr. Sicupira is a partner of GP       
Investimentos Ltda. He is also currently a board member of Sao Carlos           
Empreendimentos e Participacoes, ALL and Lojas Americanas S.A. He is also a     
member of the Board of Associates of Harvard Business School since 1988. Mr.    
Sicupira has a degree in business administration from the Universidade Federal  
do Rio de Janeiro and a degree from the Harvard Business School. His principal  
business address is Av. Brig. Faria Lima, 3729, 7th floor, Sao Paulo, Brazil.   

       JOSE HEITOR ATTILIO GRACIOSO. Mr. Gracioso is a member of the Board
of Directors of AmBev. Mr. Gracioso joined Companhia Antarctica Paulista in     
1946 and held various positions during his tenure. In 1994, Mr. Gracioso was    
elected to Antarctica's Board of Directors and, in 1999, he was elected         
Chairman of the Board of Directors of Antarctica, a position he held until      
April 2000. He holds a degree in marketing from the Escola Superior de          
Propaganda de Sao Paulo, a degree in business administration from Fundacao      
Getulio Vargas and a degree in law from Faculdade de Direito de Sao Bernardo    
do Campo. His principal business address is Av. Brig. Faria Lima, 3900, 11th    
floor, Sao Paulo, Brazil.                                                       

   ROBERTO HERBSTER GUSMAO. Mr. Gusmao is a member of the Board of
Directors of AmBev. He was previously Vice-Chairman of the Board of Directors   
of Companhia Antarctica Paulista from 1998 until April 2000. Mr. Gusmao was     
Chief Executive Officer of Cervejaria Antarctica-Niger S.A. from 1968 to 1982,  
and from 1986 to 1997. He was the Brazilian Minister of Trade and Industry      
from 1985 to 1986 and CEO of Banco de Desenvolvimento do Estado de Sao Paulo    
from 1982 to 1983. Mr. Gusmao was also a professor and founder of graduation    
and post-graduation programs at Fundacao Getulio Vargas from 1954 to 1969. Mr.  
Gusmao has a law degree from Faculdade de Direito da Universidade de Minas      
Gerais. His principal business address is Av. Brig. Faria Lima, 3900, 11th      
floor, Sao Paulo, Brazil.                                                       

  VICENTE FALCONI CAMPOS. Mr. Campos is a member of the Board of
Directors of AmBev. He serves as a member of the Institutional Council of       
Fundacao de Desenvolvimento Gerencial (FDG) and is a member of the Board of     
Directors of Sadia. Mr. Campos is also a consultant for the Brazilian           
government and Brazilian and multinational companies such as Grupo Gerdau,      
Grupo Votorantin and                                                            

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Mercedes Benz. He holds a degree in Mining and Metal Engineering from           
Universidade Federal de Minas Gerais, and M.Sc. and Ph.D. degrees from          
Colorado School of Mines (USA). His principal business address is Av.           
Contomo, 7962, 10th floor, Belo Horizonte, Brazil.                              

        DIEGO FERNANDO MIGUENS BEMBERG. Mr. Bemberg is a member of the board
of Directors of AmBev. He also serves as a member of the board of Directors of  
BAC, Dinaluca S.A., Abrojo Alto S.A., Inversiones Delta S.A., Mojame S.A., MB   
Holding S.A., Cadiluna S.A., Los Menucos S.A., Patagonia Gold S.A., Mineria     
Puerto Madryn S.A., Minamalu S.A., MPV S.A. and Puerto Chico S.A. Mr. Bemberg   
is an entrepreneur with principal business address at Av. del Libertador 498,   
27th floor, Buenos Aires, Argentina.                                            

     ROBERTO MOSES THOMPSON MOTTA. Mr. Motta is an alternate member of
the Board of Directors of AmBev. Mr. Motta is a partner of GP Investimentos     
Ltda. He is also a board member of Submarino and, Lojas Americanas S.A.. He     
worked in the investment banking division of Banco de Investimentos Garantia    
S.A. from 1986 to 1992. He holds a degree in engineering from Pontificia        
Universidade Catolica do Rio de Janeiro, and an M.B.A. from the Wharton School  
of the University of Pennsylvania. His principal business address is Av. Brig.  
Faria Lima, 3729, 7th floor, Sao Paulo, Brazil.                                 

       FERSEN LAMAS LAMBRANHO. Mr. Lambranho is an alternate member of the
Board of Directors of AmBev. Mr. Lambranho is a partner at GP Investimentos     
Ltda. and has been a Board Member of Lojas Americanas since 1998, of Telemar    
since 1999 and of Sao Carlos Empreendimentos e Participacoes since 1999. Prior  
to joining GP Investimentos, Mr. Lambranho was CEO of Lojas Americanas. Mr.     
Lambranho has a B.S. in Engineering from Universidade Federal do Rio de         
Janeiro, an M.S. in Business Administration from Universidade Federal do Rio    
de Janeiro (COPPEAD) and an O.P.M. (Owners/Presidents Management Program) from  
Harvard Business School. His principal business address is Av. Brigadeiro       
Faria Lima 3729, 7th floor, Sao Paulo, Brazil.                                  

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EXECUTIVE OFFICERS                                          

  The following table sets forth information with respect to the
executive officers of AmBev:                                                    

                                                        [Enlarge/Download Table]


                                                                                     CURRENT               
                                                                                     POSITION      TERM    
NAME                                      AGE(1)  TITLE                              HELD SINCE    EXPIRES 
----------                                ------  -------------------------------    ----------    --------
                                                                                                           
Carlos Alves de Brito(2)................    44    Chief Executive Officer                2004         2005 
Juan Manuel Vergara Galvis(3)...........    44    International Executive Officer        2004         2005 
Luis Felipe Pedreira Dutra Leite........    38    Chief Financial Officer and            2000         2006 
                                                  Investor Relations Officer                               
Jose Adilson Miguel.....................    62    Retail Executive Officer               2000         2006 
Claudio Braz Ferro......................    49    Industrial Executive Officer           2000         2006 
Miguel Nuno da Mata Patricio............    38    Marketing Executive Officer            2000         2006 
Pedro de Abreu Mariani..................    37    General Counsel                        2004         2005 
Luiz Fernando Zielger de Saint Edmond       38    Sales Executive Officer                2004         2005 

<FN>                                                                                                       
(1)  Age at May 31, 2004.                                                                                  
(2)  Mr. Brito has been an Executive Officer since 2000; however, he was appointed CEO in 2004.            
(3)  Mr. Vergara has been an Executive officer since 2000; however, he was appointed International         
     Executive Officer in 2004.                                                                            
</FN>                                                                                                      

    The following are brief biographies of each of AmBev's executive
officers.                                                                       

      CARLOS ALVES DE BRITO. Mr. Brito is the Chief Executive Officer of
AmBev and Chief Operating Officer of CBB. He served as Chief Operating Officer  
of AmBev from 2000 to 2003. He joined Brahma in 1989 and has held various       
management positions during his tenure. Mr. Brito holds a degree in mechanical  
engineering from the Federal University of Rio de Janeiro and an M.B.A. from    
Stanford University. His principal business address is Rua Dr. Renato Paes de   
Barros 1017, 4th floor, Sao Paulo, Brazil.                                      

JUAN MANUEL VERGARA GALVIS. Mr. Vergara is the International
Executive Officer of AmBev. He served as the Executive Soft Drink and           
Non-alcoholic Non-Carbonated Beverages Officer of AmBev from 2001 to 2003.      
Prior to this appointment he was the Marketing Executive Officer of Brahma and  
AmBev from 1997 to 2000. He holds a degree in business administration from the  
Colegio de Estudos Superiores de Administracion, in Bogota, Colombia. His       
principal business address is Rua Dr. Renato Paes de Barros 1017, 4th floor,    
Sao Paulo, Brazil.                                                              

      LUIS FELIPE PEDREIRA DUTRA LEITE. Mr. Dutra is the Chief Financial
Officer and Investor Relations Officer of AmBev and the Chief Financial         
Officer of CBB. He joined Brahma in 1990 and has held numerous positions        
during his tenure. Mr. Dutra holds a degree in economics and an M.B.A. in       
financial management from Universidade de Sao Paulo. His principal business     
address is Rua Dr. Renato Paes de Barros 1017, 4th floor, Sao Paulo, Brazil.    

      JOSE ADILSON MIGUEL. Mr. Miguel is the Retail Executive Officer of
AmBev. He has held various management positions during his tenure with Brahma   
since 1962. He was appointed Commercial Manager in 1970, General Marketing      
Manager in 1976, and Marketing Executive Officer in 1980. His principal         
business address is Rua Dr. Renato Paes de Barros 1017, 4th floor, Sao Paulo,   
Brazil.                                                                         

        CLAUDIO BRAZ FERRO. Mr. Ferro is the Industrial Executive Officer of
AmBev and CBB. He joined Brahma in 1977 as a Brew Master and was responsible    
for the production and bottling divisions. In 1984, he was appointed Manager    
of the Industrial Department and in 1990, Manager of the Rio de Janeiro plant.  
He holds a degree in industrial chemistry from Universidade Federal de Santa    
Maria. His principal business address is Rua Dr. Renato Paes de Barros 1017,    
4th floor, Sao Paulo, Brazil.                                                   

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       MIGUEL NUNO DA MATA PATRICIO. Mr. Patricio is the Executive Officer
of Marketing of AmBev. He joined the company in 1999. Mr. Patricio has a        
degree in business administration from Fundacao Getulio Vargas in Sao Paulo.    
His principal business address is Rua Dr. Renato Paes de Barros 1017, 4th       
floor, Sao Paulo, Brazil.                                                       

        PEDRO DE ABREU MARIANI. Mr. Mariani is the General Counsel of AmBev.
He joined the Company in 2004. He holds a law degree from Pontificia            
Universidade Catolica do Rio de Janeiro and a L.L.M. from the London School of  
Economics and Political Science. His principal business address is Rua Dr.      
Renato Paes de Barros, 1017, 4th floor, Sao Paulo, Brazil.                      

      LUIZ FERNANDO EDMOND. Mr. Edmond is the Sales Executive Officer of
AmBev. He joined the Company in 1990 in the first group of trainees and held    
various positions in the Distribution, Commercial, and Direct Distribution      
Departments. Mr. Edmond has an engineering degree from Universidade Federal do  
Rio de Janeiro. His principal business address is Rua Dr. Renato Paes de        
Barros, 1017, 4th floor, Sao Paulo, Brazil.                                     

BOARD PRACTICES AND CORPORATE GOVERNANCE                                        

      In 2003, we held numerous meetings with investors and analysts. We
also participated in conferences and road shows in Brazil, the United States    
and Europe. Additionally, our Investor Relations website is constantly          
updated, providing the market with information which is virtually real-time.    

     We host quarterly conference calls, transmitted simultaneously on
the Internet, to clarify financial and operating results as well as answer      
questions from the investment community. In March 2003, we organized our first  
site visit for investors and analysts.                                          

FISCAL COMMITTEE                                            

     At AmBev's Annual and Extraordinary Shareholders' Meeting held on
April 28, 2004, the re-appointment of a Fiscal Committee was approved by        
present shareholders for the fiscal year 2004. The members of the Fiscal        
Committee will remain in office until the next annual shareholder's meeting     
which will deliberate on the financial statements of the fiscal year ended      
December 31, 2004. Although AmBev's Fiscal Committee is not permanent,          
shareholders have been approving the re-appointment of Fiscal Committees for    
each fiscal year since AmBev's first Annual Shareholders' Meeting in 2000,      
which occured promptly after CADE approved the combinatin of Antartica and      
Brahma to form AmBev. Both Brahma and Antarctica had fiscal committees similar  
to AmBev's.                                                                     

       The responsibilities of the Fiscal Committee include supervision of
management performing analyses and rendering opinions regarding AmBev's         
financial statements and performing other duties in accordance with Brazilian   
Corporate Law. Current members of the committee are Messrs.                     
Antonio Luiz Benevides Xavier, Everardo de Almeida Maciel and Jose Fiorita,     
and their alternate members are Messrs. Luiz de Santa Ritta Matta, Ricardo      
Scalzo and Jose Botafogo Goncalves, respectively. None of the members of the    
Fiscal Committee is also a member of the Board of Directors or of the           
Executive Committee.                                                            

THE BOARD OF DIRECTORS                                      

  Except for Mr. Magim Rodriguez Junior, recently appointed Vice
Chairman of the Board of Directors; Mr. Diego Meguens, who was appointed        
member of the Board of Directors in 2003 as a result of the acquisition of our  
interest in Quinsa; and Mr. Fersen Lambranho, who was appointed an alternate    
member of the Board of Directors in 2002, all of the current members and        
alternate members of the Board of Directors of AmBev have been members since    
1999 and had their mandates renewed in 2002 until 2005.                         

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      The Board members use their extensive knowledge of the business to
ensure that AmBev reaches its long-term goals and maintains their short-term    
competitiveness. Also, the Board of Directors ensures that AmBev pursues its    
short-term business goals without compromising the Company's long-term growth,  
while ensuring that AmBev's corporate values are practiced and known.           

  The Company's Chairman of the Board of Directors and the Chief
Executive Officer are separate positions held by different people. The Board    
of Directors is supported in its decision-making by the following committees:   

EXECUTIVE COMMITTEE                                         

     The Executive Committee is the main link between the policies and
decisions made by the Board of Directors and AmBev's management team. The       
Executive Committee's explicit responsibilities are:                            

  o    to present medium-term planning proposals to the Board of
Directors;                                        

      o    to propose AmBev's annual performance targets and the budgets
needed to attain the projected goals; and         

        o    to monitor AmBev's standing through analysis of its results and
market developments.                              

  The Committee is also responsible for the interests of AmBev's
employees, and its members are involved in recruiting programs, variable        
compensation policies and in the spreading of our culture.                      

        Current members of the committee are Messrs. Marcel Herrmann Telles,
Victorio Carlos De Marchi and Magim Rodriguez Junior.                           

      Throughout the year, the Executive Committee holds seven meetings,
during which it addresses, among other matters: actual results versus           
performance targets; the market; integrated planning; goals; budget;            
personnel; investment plans; remuneration policy; and pricing policy.           

AUDIT COMMITTEE                                             

        The Audit Committee, created in 2001, acts on behalf of the Board of
Directors and is responsible for the integrity and accuracy of our              
consolidated financial statements and the performance of internal and external  
auditors. It also oversees the legal compliance of our operations, the          
management of internal controls and the appointment of the external auditors.   

   Current members of the committee are Messrs. Victorio Carlos De
Marchi, Jose Heitor Attilio Gracioso and Jorge Paulo Lemann.                    

    Throughout the year, the Audit Committee holds four meetings, in
which are discussed, among other matters: AmBev's financial statements;         
internal audits; tax risks; and compliance with the Sarbanes-Oxley Act.         

FINANCE COMMITTEE                                           

     The Finance Committee analyzes and monitors our annual investment
plan and ensures that it is carried out. This Committee assesses merger and     
acquisition opportunities before forwarding them to the Board of Directors. It  
is also the Finance Committee's responsibility to evaluate the best capital     
structure AmBev to maximize EVA.                                                

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        Current members of the committee are Messrs. Marcel Herrmann Telles,
Carlos Alberto da Veiga Sicupira, Roberto Moses Thompson Motta and Luis Felipe  
Pedreira Dutra Leite.                                                           

       Throughout the year, the Finance Committee holds three meetings, in
which are discussed, among other matters: budget; financial risk analysis;      
treasury policy; and merger and acquisition opportunities.                      

CONSULTING COMMITTEE                                        

       The Shareholders General Meeting held on April 25, 2003, included a
provision in the Company's Bylaws authorizing the Board of Directors to create  
a Consulting Committee, formed by three independent members appointed by the    
Board of Directors for terms of three years or in case of vacancy. The          
Consulting Committee shall have the following functions:                        

o    to issue opinions to: the Shareholders General Meetings
           concerning the conducting of the business and compliance with
           statutory obligations by the Company's senior management; the
          Company's management discussion and analysis report; and any
     submissions to be made by the Board of Directors to the
Shareholders General Meetings;                    

 o    to provide economic, industry and commercial data to the
       Board of Directors related to the Company's main business
purposes, including opinions and recommendations; 

    o    to make recommendations concerning new business and general
issues submitted to their consultation.           

    The current members of the Consulting Committee appointed by the
Board of Directors on June 11, 2003, with a term expiring in 2006, are:         
Messrs. Jose de Maio Pereira da Silva, Paulo Cezar Castello Branco Chaves de    
Aragao and Ary Oswaldo Mattos Filho.                                            

COMPENSATION                                                                    

       The aggregate remuneration of all members of the Board of Directors
and senior management of AmBev in 2003 for services in all capacities amounted  
to R$5.9 million, including variable pay (bonuses). The members of the Board    
of Directors and senior management received some additional benefits provided   
to all AmBev employees and their beneficiaries and covered dependents, such as  
medical assistance, educational expenses and supplementary social security      
benefits. All such benefits were provided through the FAHZ and, prior to this   
the Brahma Welfare Foundation. The Board of Directors and AmBev's senior        
management also receive benefits pursuant to AmBev's pension, profit sharing    
plan, and share purchase plan. For a description of these plans see "--Plans".  

  There are no benefits in kind provided to the directors of the
Company. Neither are there agreements between AmBev and any of its directors    
providing for benefits upon termination of employment.                          

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EMPLOYEES                                                                       

As of December 31, 2003, AmBev and its subsidiaries had     
approximately 18,890 employees, approximately 52% of whom were engaged in       
production, 41% of whom were engaged in sales and distribution and 7% of whom   
were engaged in administration.                                                 

       The following table sets forth the number of employees of AmBev and
its subsidiaries as of the end of the years indicated:                          

EMPLOYEES AS OF DECEMBER 31,  
--------------------------------------------------------------------    
2003                       2002                       2001  
---------------            ----------------            -------------    

18,890                     18,570                     18,136  

      The following table shows the geographical distribution of AmBev's
employees as of December 31, 2003:                                              

GEOGRAPHICAL DISTRIBUTION OF AMBEV EMPLOYEES
--------------------------------------------------------------------------
LOCATION                                               NUMBER OF EMPLOYEES
------------------------------------------             -------------------

Brazil....................................                    16,384      
Venezuela.................................                     1,168      
Peru......................................                       826      
Guatemala.................................                       199      
Uruguay...................................                       188      
Argentina.................................                       125      
                                                       -------------------
                                                        18,890
                                                       ===================

TRAINING.                                                   

In 1995, Brahma created the "Brahma University" (now "AmBev 
University") to train and enhance our employees' performance, and the           
performance of our distributors' employees. In 2003, the AmBev University       
provided specific training for 1,579 employees and its distributors, totaling   
6,788 hours of training. At the management level, AmBev's senior management     
and executive officers participate in several business and technical training   
programs at leading United States and European universities. Training schools   
in our major facilities provide courses, mainly technical in nature, for        
supervisory and operating personnel. Together with the Brazilian beer           
producers' association, Sindicerv, AmBev also has established a training        
school at Vassouras, near Rio de Janeiro, which includes a micro brewery,       
bottling line and malting plant. AmBev also maintains a partnership with        
SIEBEL Institute in Chicago and with Domens Academie in Munich, Germany, where  
its personnel responsible for beer production are introduced to new worldwide   
technologies and is able to visit other brewers and equipment suppliers.        

    AmBev also operates the AmBev University TV. The University is a
proprietary distance-learning tool operated over a secure satellite             
broadcasting system that connects all of AmBev's business units and a majority  
of our third-party distributors. In 2003, we provided standardized effective    
training to nearly 12,500 sales people. The television program coursework is    
reinforced and supplemented with online testing to closely monitor the          
learning process of each sales person, allowing us to pinpoint weaknesses and   
then act to provide individual training programs, as well as providing          
feedback to improve the quality of the broadcast. AmBev believes that its       
personnel are well trained and kept abreast of current technical and business   
developments.                                                                   

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INDUSTRIAL RELATIONS.                                       

      All of AmBev's employees are represented by labor unions, but only
7.5% of our employees in Brazil are actually members of labor unions. The       
number of administrative and distribution employees who are members of labor    
unions is not significant. Salary negotiations are conducted annually between   
the workers' unions and AmBev. Collective bargaining agreements are negotiated  
separately for each facility or distribution center. AmBev's collective         
bargaining agreements have a term of one year, and AmBev usually enters into    
new collective bargaining agreements on or prior to the expiration of the       
existing agreements. AmBev believes that its relation with its employees is     
satisfactory, and there have been no strikes or significant labor disputes in   
the past nine years.                                                            

HEALTH AND SEVERANCE BENEFITS.                              

       In addition to wages, AmBev's employees receive additional benefits
from AmBev. Some of these benefits are mandatory under Brazilian law, some are  
provided for in collective bargaining agreements, and others are voluntarily    
given by AmBev. The benefits packages of AmBev's employees consist of benefits  
provided both by AmBev directly and by AmBev through the FAHZ, which provides   
medical, dental, educational and social assistance to current and retired       
employees of AmBev and their beneficiaries and covered dependents, either for   
free or at a reduced cost. AmBev may voluntarily contribute up to 10% of its    
consolidated net income, as determined in accordance with Brazilian Corporate   
law and AmBev's bylaws, to support the FAHZ. As part of the process of          
merging the Brahma Welfare and FAHZ (see "Major Shareholders and Related Party  
Transactions--Major Shareholders--Share Ownership History of AmBev's Major      
Shareholders"), an actuarial evaluation was carried out to determine the level  
of contributions required to be made to the FAHZ to provide benefits to all     
employees compatible with those formerly provided by the Brahma Welfare         
Foundation.                                                                     

        AmBev is required to contribute 8.5% of each employee's gross pay to
an account maintained in the employee's name in the Government Severance        
Indemnity Fund (FGTS). Under Brazilian law, AmBev is also required to pay       
termination benefits to employees dismissed without just cause, equal to 50%    
of the accumulated contributions made by AmBev to the FGTS during the           
employee's period of service. For CBB, we have a preliminary injunction         
("liminar") that allows the company to contribute 8% and 40% respectively.      

STOCK OWNERSHIP PLAN.                                       

       AmBev has a stock ownership plan designed to attract and retain the
services of qualified directors, executives and employees. Both common and      
preferred shares may be granted in the plan. As of December 31, 2003 the plan   
had outstanding and exercisable rights to acquire 733,689,000 shares of AmBev.  
The plan is administered by a committee, which includes non-management members  
of the Board of Directors of AmBev. This committee periodically creates         
programs under the stock ownership plan, defining the terms and employees to    
be included, and establishes the price at which the rights to acquire shares    
are to be issued. This price may not be less than 90% of the average price of   
the shares traded on the stock market on the previous three business days,      
adjusted by an inflation index to be defined by the committee for each          
program. The number of shares which may be granted in each year cannot exceed   
5% of the total number of shares outstanding of each type of shares, although   
the amount has always remained significantly below this level. When shares are  
acquired by the employee, AmBev issues new shares or transfers treasury shares  
to the option holder. Stock ownership rights granted have no final date to be   
exercised. When the grantee leaves the company (other than upon retirement),    
the rights to acquire shares are forfeited. If an employee decides to sell      
shares acquired under the plan or an employee leaves the company, AmBev has     
the right to buy such shares at a price equal to:                               

  o    the inflation indexed price paid by such employee, if the
        employee sells the shares during the first 30 months after
shares are acquired by the employee;              

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 o    50% of the inflation indexed price paid, plus 50% of the
             prevailing market price, if the employee sells the shares after
            the first 30 months but before the 60th month after shares are
acquired by the employee; or                      

        o    the market price, if the employee sells the shares more than 60
months after shares are acquired by the employee. 

  For plans granted prior to 2003, the subscription price of the
shares could be paid over time, such period normally not exceeding four years   
and at an interest rate of 8% per annum over a designated general price index.  
These loans are guaranteed by the shares which will be acquired under the       
plan. In order to comply with the Sarbanes-Oxley Act of 2002, we are currently  
revising the terms of our stock ownership plan to extend the financing for the  
purchase of shares upon exercise of the right to acquire such shares            
exclusively to our employees and not to officers or directors. At December 31,  
2003 the outstanding balance of the subscription price yet to be paid amounted  
to R$234.7 million and is classified as an asset under Brazilian GAAP and a     
deduction from shareholders' equity under U.S. GAAP.                            

AMBEV PENSION PLAN.                                         

    AmBev's pension plans are administered by the AmBev Pension Fund
(Instituto AmBev de Previdencia Privada - "IAPP") which is the successor of     
the Brahma Pension Fund - Instituto Brahma de Seguridade Social - as from       
December 8, 2000.                                                               

       The AmBev Pension Fund operates both a defined benefit pension plan
and a defined contribution plan, which supplements benefits that the Brazilian  
government social security system provides to our employees. The AmBev Pension  
Fund was established solely for the benefit of our employees and its assets     
are held independently. We nominate the three directors of the AmBev Pension    
Fund. As of December 31, 2003, we had 4,662 participants in our plan of which   
2,778 participated in the defined benefit plan and 1,884 in the defined         
contribution plan.                                                              

  The AmBev Pension Fund is available to both active and retired
employees. Three months after joining us, employees may opt to join the         
defined contribution plan. Upon leaving (unless upon retirement) members are    
required to leave the AmBev Pension Fund. Members who joined after 1990 and     
request to leave will receive their contributions in a single inflation         
indexed installment.                                                            

       Prior to May 1998, when the defined contribution plan was launched,
there was only a defined benefit plan. The defined benefit plan was closed to   
new participants as of this date. New employees of AmBev can only join the      
defined contribution plan. At the time of adoption of the defined contribution  
plan, active participants were given the option either to remain in the old     
plan, or transfer their accumulated benefits to the defined contribution plan.  
The defined contribution plan covers substantially all new employees.           

        Pension costs relating to the AmBev contributed to IAPP for the year
ended December 31, 2003, were approximately R$ 4.4 million compared to R$ 4.2   
million in 2002.                                                                

  The plan assets are comprised principally of time deposits and
equity securities (including 9,595,170 preferred shares and 88,664,850 common   
shares of AmBev at December 31, 2003 with a total market value of R$63.4        
million as of December 31, 2003), government securities and properties. All     
benefits are calculated and paid in inflation indexed reais.                    

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PROFIT-SHARING PLAN.                                        

       AmBev's bylaws provide for the distribution of up to 10% of AmBev's
net income, as determined in accordance with Brazilian GAAP, to its employees.  
Executive officers are eligible for profit sharing in an amount not to exceed   
the lower of their annual remuneration or 5% of AmBev's net income in the       
aggregate.                                                                      

 Payments under AmBev's profit sharing plan are subject to the
availability of cash resources of AmBev. Executive officers' bonuses are        
determined based upon the achievement of corporate, department or               
business-unit and individual goals, established by the Board of Directors. All  
other employees of AmBev are entitled to performance based variable bonuses     
calculated on an annual basis.                                                  

        Among all employees, up to 70% working at our headquarters and up to
60% of production, sales and distribution employees, can be awarded bonuses.    
The distribution of these bonuses is subject to a three-tier system in which    
AmBev must first achieve efficiency targets approved by the Board of            
Directors. Following that, each business unit must achieve its targets and      
finally individual performance is ranked. Beginning in April 2003, AmBev        
changed the rules for individual bonuses of the sales supervisors. Their        
results are ranked each quarter and bonuses are paid twice a year, in August    
and in February.                                                                

    Our annual targets may be changed by the Board of Directors. For
employees involved in operations, we have a collective award for production     
sites and distribution centers with outstanding performances. The bonus award   
at the plant level is based on a ranking between the different plants, which    
based on their relative ranking may or may not receive the bonus.               

  Expenses of AmBev provisioned under these programs amounted to
R$23.7 millions for the year ended December 31, 2003, R$112.3 million for the   
year ended December 31, 2002 and R$81,3 million for the year ended December     
31, 2001.                                                                       

 Bonuses, commissions and collective awards to be shared among
employees depend on the financial results of AmBev and up to 25% of AmBev's     
annual EVA (Economic Value Added) may be distributed, depending on the target   
real EBITDA growth. According to AmBev's annual real EBITDA growth, the total   
amount shared among employees, as a percentage of AmBev's annual EVA, is as     
follows:                                                                        

o    EBITDA growth < 15% = 0                                

o    EBITDA growth from 15% up to 19.99% = 15% EVA          

o    EBITDA growth from 20% up to 20.99% = 20% EVA          

o    EBITDA growth form 21% up to 21.99% = 21% EVA          

o    EBITDA growth from 22% up to 22.99% = 22% EVA          

o    EBITDA growth from 23% up to 23.99% = 23% EVA          

o    EBITDA growth from 24% up to 24.99% = 24% EVA          

o    EBITDA growth > 25% = 25% EVA                          

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DIRECTOR AND SENIOR MANAGEMENT SHARE OWNERSHIP                                  

      The following table shows the amount, type and percentage of class
of our equity securities held by members of our Board of Directors and by       
senior management as of May 31, 2004:                                           

                                                        [Enlarge/Download Table]


                                                        AMOUNT AND PERCENTAGE     AMOUNT AND PERCENTAGE 
NAME                                                      OF COMMON SHARES         OF PREFERRED SHARES  
-------------------------------------------------        ---------------------     ---------------------
                                                                                                        
Marcel Herrmann Telles(1)........................          *                         *                  
Victorio Carlos De Marchi(2).....................          *                         *                  
Magim Rodriguez Junior...........................          *                         *                  
Jorge Paulo Lemann(3)............................          *                         *                  
Carlos Alberto da Veiga Sicurpira(4) ............          *                         *                  
Jose Heitor Attilio Gracioso(5)..................          *                         *                  
Roberto Herbster Gusmao(6).......................          *                         *                  
Vicente Falconi Campos...........................          *                         *                  
Diego Fernando Miguens Bemberg...................          *                         *                  
Roberto Moses Thompson Motta(7)..................          *                         *                  
Fersen Lamas Lambranho...........................          *                         *                  
Carlos Alves de Brito............................          *                         *                  
Juan Manual Vergara Galvis.......................          *                         *                  
Luis Felipe Pedreira Dutra Leite.................          *                         *                  
Jose Adilson Miguel(8)...........................          *                         *                  
Claudio Braz Ferro...............................          *                         *                  
Miguel Nuno da Mata Patricio.....................          *                         *                  
Luiz Fernando Zielger de Saint Edmond............          *                         *                  

<FN>                                                                                                    
*    Indicates that the individual holds less than 1% of the class of securities.                       

(1)  Does not include 4,214,345,035 common shares owned by Braco Investimentos                          
     S.A. and 4,039,568,225 common shares owned by ECAP. Mr. Telles owns                                
     indirectly 18.82% of the voting capital of Braco Investimentos S.A.,                               
     which, in turn, owns 99.74% of the voting shares of ECAP, and is also an                           
     intervening party to the AmBev shareholders' agreement. See "Major                                 
     Shareholders and Related Party Transactions-- Major Shareholders--AmBev                            
     Shareholders' Agreement". Mr. Telles is also a trustee of the FAHZ. For                            
     information regarding the shareholdings of the FAHZ, see "Major                                    
     Shareholders and Related Party Transactions--AmBev's Major Shareholders".                          

(2)  Mr. De Marchi is a trustee of the FAHZ. For information regarding the                              
     shareholding of the FAHZ, see "Major Shareholders and Related Party                                
     Transactions--AmBev's Major Shareholders".                                                         

(3)  Does not include 4,214,345,035 common shares owned by Braco Investimentos                          
     S.A. and 4,039,568,225 common shares owned by ECAP.                                                
     Mr. Lemann owns indirectly 42.12% of the voting capital of Braco Invest.                           
     S.A., which, in turn, owns 99.74% of the voting shares of ECAP, and is                             
     also an intervening party to the AmBev shareholders' agreement. See                                
     "Major Shareholders and Related Party Transactions--Major                                          
     Shareholders--AmBev Shareholders' Agreement".                                                      

(4)  Does not include 4,214,345,035 common shares owned by Braco Investimentos                          
     S.A. and 4,039,568,225 common shares owned by ECAP. Mr. Sicupira owns                              
     indirectly 15.17% of the voting capital of Braco Investimentos S.A.,                               
     which, in turn, owns 99.74% of the voting shares of ECAP, and is also an                           
     intervening party to the AmBev shareholders' agreement. See "Major                                 
     Shareholders and Related Party Transactions--Major Shareholders--AmBev                             
     Shareholders' Agreement".                                                                          

(5)  Mr. Gracioso is a trustee of the FAHZ. For information regarding the                               
     shareholding of the FAHZ, see "Major Shareholders and Related Party                                
     Transactions--AmBev's Major Shareholders".                                                         

(6)  Mr. Gusmao is a trustee of the FAHZ. For information regarding the                                 
     shareholding of the FAHZ, see "Major Shareholders and Related Party                                
     Transactions--AmBev's Major Shareholders".                                                         

(7)  Does not include 4,214,345,035 common shares owned by Braco Investimentos                          
     S.A. and 4,039,568,225 common shares owned by ECAP. Mr. Motta is an                                
     executive officer of Braco Investimentos S.A. and ECAP.                                            

(8)  Mr. Miguel is a trustee of the FAHZ. For information regarding the                                 
     shareholding of the FAHZ, see "Major Shareholders and Related Party                                
     Transactions--AmBev's Major Shareholders".                                                         
</FN>                                                                                                   

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DIFFERENCES BETWEEN THE UNITED STATES AND THE BRAZILIAN CORPORATE GOVERNANCE    
PRACTICES                                                                       

        The SEC approved in November 2003 the new corporate governance rules
established by the NYSE. According to these rules, foreign private issuers      
that are listed on the NYSE must disclose the significant ways in which their   
corporate governance practices differ from the corporate governance standards   
established by the NYSE.                                                        

        In Brazil, the CVM has provided guidance to the market with a set of
recommendations on differentiated corporate governance practices which are not  
yet required but strongly recommended. Additionally, the Sao Paulo Stock        
Exchange (BOVESPA) and the Brazilian Institute of Corporate Governance (IBGC)   
have developed guidelines to help with the dissemination of corporate           
governance practices.                                                           

   The principal differences between the NYSE corporate governance
standards and our corporate governance practices are as follows:                

INDEPENDENCE OF DIRECTORS AND INDEPENDENCE TESTS            

        NYSE corporate governance standards require listed companies to have
a majority of independent directors and set forth the principles by which a     
listed company can determine whether a director is independent. "Controlled     
companies" such as AmBev need not comply with this requirement.                 

The Brazilian corporate law and our bylaws require that our 
directors be elected by our shareholders at a general shareholders meeting.     
Currently, all of our directors are appointed by our controlling shareholders;  
minority shareholders are represented through one seat in our Fiscal            
Committee.                                                                      

      Brazilian corporate law and the CVM establish rules in relation to
certain qualification requirements and restrictions, investiture,               
compensation, duties and responsibilities of a company's executives and         
directors.                                                                      

EXECUTIVE SESSIONS                                          

        NYSE corporate governance standards require non-management directors
of a listed company to meet at regularly scheduled executive sessions without   
management.                                                                     

    According to the Brazilian corporate law, up to one third of the
members of the board of directors can also hold management positions. However,  
none of our directors holds a management position at this time and,             
accordingly, we believe we would be in compliance with this NYSE corporate      
governance standard.                                                            

NOMINATING/CORPORATE GOVERNANCE AND COMPENSATION COMMITTEES 

      NYSE corporate governance standards requires that a listed company
have a nominating/corporate governance committee and a compensation committee   
each                                                                            

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composed entirely of independent directors with a written charter that          
addresses certain duties. "Controlled companies" such as AmBev need not comply  
with this requirement.                                                          

     In addition, we are not required under Brazilian law to have, and
accordingly we do not have, a nominating committee, corporate governance        
committee or compensation committee. Currently, all of our directors are        
nominated by our controlling shareholders. The role of the corporate            
governance committee is generally performed by either our board of directors    
or our senior management. With respect to compensation, under Brazilian         
corporate law, the shareholders determine the total or individual compensation  
of the companys directors and executive officers, including benefits and        
allowances at a general shareholder's meeting.                                  

AUDIT COMMITTEE AND AUDIT COMMITTEE ADDITIONAL REQUIREMENTS 

     NYSE corporate governance standards require that a listed company
has an audit committee composed of three independent members that satisfy the   
independence requirements of Rule 10A-3 under the Exchange Act, with a written  
charter that addresses certain duties.                                          

   The Brazilian corporate law requires us to have a non-permanent
fiscal committee. The fiscal committee operates independently from our          
management and from our registered independent public accounting firm. Its      
principal function is to examine the financial statements of each fiscal year   
and provide a formal report to our shareholders. We do not maintain a           
permanent fiscal committee; however, our shareholders have annually approved    
the establishment of a fiscal committee since its first adoption in 2000,       
right after CADE officially approved the combination (both Brahma and           
Antarctica had implemented their respective fiscal committees prior to the      
combination).                                                                   

We also have an audit committee, but it is not composed of  
independent directors. In order to comply with the requirements of the          
Sarbanes-Oxley Act and the rules of the NYSE, we are committed to altering the  
composition of our audit committee so that it contains solely independent       
members by July 2005.                                                           

SHAREHOLDER APPROVAL OF EQUITY COMPENSATION PLANS           

      NYSE corporate governance standards require that shareholders of a
listed company must be given the opportunity to vote on all equity              
compensation plans and material revisions thereto, subject to certain           
exceptions.                                                                     

       Our board of directors is responsible for voting on the issuance of
new equity in connection with our existing stock option plans, provided that    
the limit of our authorized capital is respected. Any issuance of new shares    
that exceeds such authorized capital is subject to shareholder approval.        

CORPORATE GOVERNANCE GUIDELINES                             

     NYSE corporate governance standards require that a listed company
must adopt and disclose corporate governance guidelines that address certain    
minimum specified                                                               

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standards which include, director qualification standards, director             
responsibilities, director access to management and independent advisors,       
director compensation, director orientation and continuing education,           
management succession, annual performance evaluation of the board.              

   We believe the corporate governance guidelines applicable to us
under Brazilian corporate law are consistent with the guidelines established    
by the NYSE. We have adopted and observe the Policy of Disclosure of Acts or    
Relevant Facts and the Preservation of Confidentiality, which deals with the    
public disclosure of all relevant information as per CVM's guidelines. Also,    
we comply with the CVM rules relating to transactions involving the dealing by  
our management in our securities.                                               

    We have a constantly updated investor relations website. We also
host quarterly conference calls with investors which are broadcasted live       
through the internet and have prepared a manual for disclosure and information  
use and the policies for negotiating securities, which is also available at     
our website.                                                                    

CODE OF BUSINESS CONDUCT AND ETHICS                           

     NYSE corporate governance standards require that a listed company
must adopt and disclose a code of business conduct and ethics for directors,    
officers and employees and promptly disclose any waivers of the code for        
directors or officers.                                                          

     We have adopted a code of ethics that applies to all officers and
employees. There are no waivers to our code of ethics.                          

CERTIFICATION REQUIREMENTS                                    

NYSE corporate governance standards require that each listed
company's Chief Executive Officer must certify to the NYSE each year that he    
or she is not aware of any violation by the company of NYSE corporate           
governance standards.                                                           

      As required by Section 303A.12(b) of the NYSE corporate governance
standards, our Chief Executive Officer will promptly notify the NYSE in         
writing after any of our executive officers becomes aware of any material       
non-compliance with any applicable provisions of the NYSE corporate governance  
standards.                                                                      

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Major Shareholders and Related Party Transactions                               

MAJOR SHAREHOLDERS  

INTRODUCTION                                                                    

     As of May 31, 2004, AmBev had 15,631,332,792 common voting shares
and 21,732,192,808 preferred non-voting shares outstanding. AmBev has           
registered two classes of American Depositary Shares (ADSs) pursuant to the     
Securities Act: ADSs evidenced by American Depositary Receipts (ADRs)           
representing 100 preferred shares, and ADSs evidenced by ADRs representing 100  
common shares. As of May 31, 2004, there were 90,322,022 preferred ADSs         
outstanding (representing 9,032,202,200 preferred shares) and 576,171 common    
ADSs outstanding (representing 57,617,100 common shares). AmBev ADRs are        
issuable by The Bank of New York pursuant to deposit agreements for common and  
preferred shares.                                                               

CONTROL                                                                         

       AmBev is controlled by Braco Investimentos S.A., ECAP and the FAHZ,
which own in the aggregate 77.08% of AmBev's common shares outstanding. In      
addition, Braco Investimentos S.A., ECAP and the FAHZ, as well as Marcel        
Telles, Jorge Paulo Lemann and Carlos Sicupira, as intervening parties, are     
parties to a shareholders' agreement relating to AmBev. See "--AmBev            
Shareholders' Agreement". As of May 31, 2004, FAHZ owns 24.27% of the common    
shares outstanding of AmBev. Braco Investimentos S.A. and ECAP collectively     
own 52.80% of the common shares outstanding of AmBev. Braco Investimentos S.A.  
owns 99.74% of the voting shares of ECAP. Braco Investimentos S.A. is an        
investment company, substantially all the assets of which consist of the        
shares of AmBev and ECAP previously held by Braco S.A..                         

  Braco S.A., which used to own the AmBev common shares and ECAP
shares now owned by Braco Investimentos S.A., was itself controlled by S-Braco  
Participacoes S.A. ("S-Braco"), an investment company, substantially all the    
assets of which consisted of shares of AmBev and Braco S.A. 50%, 25% and 25%,   
respectively, of the common shares of S-Braco were indirectly owned by Mr.      
Lemann, Mr. Sicupira and Mr. Telles through four Brazilian holding companies,   
Santa Judith Participacoes S.A. ("Santa Judith"), Santa Irene Participacoes     
S.A. ("Santa Irene"), Santa Estela Participacoes S.A. ("Santa Estela") and      
Santa Prudencia Participacoes S.A. ("Santa Prudencia", and together with Santa  
Judith, Santa Irene and Santa Estela, the "Santas"). In connection with the     
internal restructuring of the SB Group Companies pursuant to the Contribution   
and Subscription Agreement, (i) all AmBev common shares previously owned by     
S-Braco were transferred to Braco S.A., (ii) S-Braco and the Santas were        
dissolved and, most recently, (iii) Braco S.A. transferred all of the AmBev     
common shares (including the AmBev common shares originally held by S-Braco)    
and all of the ECAP shares held by it to Braco Investimentos S.A. Messrs.       
Lemann, Telles and Sicupira currently indirectly own, respectively,             
approximately 42.12%, 18.82% and 15.17% of the voting shares and total capital  
stock of Braco Investimentos S.A. Upon completion of the internal               
restructuring of the SB Group Companies pursuant to the Contribution and        
Subscription Agreement, Messrs. Lemann, Telles and Sicupira will own,           
respectively, 50%, 25% and 25% of the successor to S-Braco, which will          
indirectly own (through BRC S.A.) approximately 81.63% of the voting shares     
and total capital stock of Braco Investimentos S.A.                             

SHARE BUYBACK PROGRAM                                       

     In 2003, we acquired 63.5 million common shares and 529.3 million
preferred shares in connection with our share buyback program, at a cost of     
R$310.0 million. In 2002, we acquired 89.5 million common shares and 701.3      
million preferred shares in connection with our share buyback program,          
totaling R$337.1 million. Both in 2003 and 2002, a portion of the common        
shares and preferred shares purchased by us were acquired by us pursuant to     
put options sold in connection with our share buyback program.                  

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AMBEV'S MAJOR SHAREHOLDERS                                                      

       The following table sets forth information, as of May 31, 2004 with
respect to any person known to AmBev to be the beneficial owner of 5% or more   
of AmBev's outstanding shares:                                                  

                                                        [Enlarge/Download Table]


                                                   Amount and Percentage         Amount and Percentage  
                                                     of Common Shares             of Preferred Shares   
                                                -------------------------       ------------------------
                                                                                                        
The Bank of New York - ADR Department(1)....       57,617,100        0.37%      9,032,202,200     41.56%
Braco Investimentos S.A.(2).................    4,214,345,035       26.96%                  -          -
ECAP(3).....................................    4,039,568,225       25.84%                  -          -
FAHZ(4).....................................    3,794,204,726       24.27%        397,172,513      1.83%
Caixa da Previdencia dos Funcionarios do                                                                
Banco Central do Brasil - PREVI.............       73,340,770        0.47%      3,323,156,855     15.29%
Fundacao Banco Central Previdencia                                                                      
Privada--Centrus.............................     853,197,735        5.46%                  -          -
Marcel Herrmann Telles(5) ..................                5        0.00%        213,145,000      0.98%
Jorge Paulo Lemann(6).......................               10        0.00%                  -          -
Carlos A. Sicupira(7).......................                5        0.00%                  -          -

<FN>                                                                                                    
(1)  Represents the number of shares held in the form of ADSs. The Bank of New                          
     York is the depositary of AmBev shares in accordance with the deposit                              
     agreement entered into with AmBev and the owners of AmBev ADSs.                                    

(2)  Does not include shares owned by ECAP. Braco Investimentos S.A. owns                               
     99.74% of the voting shares of ECAP. Mr. Telles, a Co-Chairman of the                              
     Board of Directors of AmBev and a counselor of the FAHZ, Mr. Lemann and                            
     Mr. Sicupira, each a member of the Board of Directors of AmBev, currently                          
     indirectly own, respectively, approximately 18.82%, 42.12% and 15.17% of                           
     the voting shares and total capital stock of Braco Investimentos S.A.                              

(3)  Does not include shares owned by Braco Investimentos S.A. Braco                                    
     Investimentos S.A. owns 99.74% of the voting shares of ECAP. Mr. Telles,                           
     a Co-Chairman of the Board of Directors of AmBev and a counselor of the                            
     FAHZ, Mr. Lemann and Mr. Sicupira, each a member of the Board of                                   
     Directors of AmBev, currently indirectly own, respectively, approximately                          
     18.82%, 42.12% and 15.17% of the voting shares and total capital stock of                          
     Braco Investimentos S.A.                                                                           

(4)  Mr. Telles, Victorio Carlos De Marchi, Jose Heitor Attilio Gracioso and                            
     Roberto Herbster Gusmao, directors of AmBev, and Jose Adilson Miguel, an                           
     officer of AmBev, are counselors of the FAHZ.                                                      

(5)  Does not include 8,253,913,260 common shares owned by Braco Investimentos                          
     S.A. and ECAP. Mr. Telles currently indirectly own approximately 18.82%                            
     of the voting shares and total capital stock of Braco Investimentos S.A.,                          
     which, in turn, owns 99.74% of the voting shares of ECAP, and is also an                           
     intervening party to the AmBev shareholders' agreement.                                            

(6)  Does not include 8,253,913,260 common shares owned by Braco Investimentos                          
     S.A. and ECAP. Mr. Lemann currently indirectly own approximately 42.12%                            
     of the voting shares and total capital stock of Braco Investimentos S.A.,                          
     which, in turn, owns 99.74% of the voting shares of ECAP, and is also an                           
     intervening party to the AmBev shareholders' agreement.                                            

(7)  Does not include 8,253,913,260 common shares owned by Braco Investimentos                          
     S.A. and ECAP. Mr. Sicupira currently indirectly own approximately 15.17%                          
     of the voting shares and total capital stock of Braco Investimentos S.A.,                          
     which, in turn, owns 99.74% of the voting shares of ECAP, and is also an                           
     intervening party to the AmBev shareholders' agreement.                                            
</FN>                                                                                                   

 For a description of the Company's major shareholders' voting
rights, see "AmBev Shareholders' Agreement".                                    

OPTIONS AND WARRANTS                                        

  On February 14, 1996, Brahma's Board of Directors approved the
private placement of 404,930,519 warrants at R$50 per 1,000-share lot,          
exercisable on a one-to-five basis (already adjusted for the stock split that   
occurred in 2000) during the month of April 2003 at a strike price of           
R$1,000.00 per one thousand common or preferred shares (the right of each       
warrant to subscribe for shares would be adjusted proportionately should there  
be any splits, reverse splits or distributions of stock dividends). Each        
warrant was originally issued to holders of a block of 17 shares of Brahma,     
whether preferred or common. The subscription price for each of the warrants    
was adjusted pursuant to the IGP-M inflation index, reduced by dividends paid   
and accrued interest at the rate of 12% per year. At the Brahma shareholders'   
meeting that considered the Brahma conversion, common shareholders voted to     
cancel the Brahma warrants and replace them with new AmBev warrants, which      
entitled holders to subscribe for AmBev shares in accordance with the original  
terms and conditions applicable to the Brahma warrants. The                     

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404,930,519 warrants entitled holders to subscribe for a total of 710,195,105   
newly issued common shares and 1,314,457,490 newly issued preferred shares of   
AmBev.                                                                          

        Although the warrants expired in April 2003 without being exercised,
the criteria to be used in the calculation of the strike price of the warrants  
is being disputed by a number of holders of warrants in the courts of Sao       
Paulo and Rio de Janeiro. These proceedings may yet result in the issuance of   
shares pursuant to the warrants. See "Financial Information--Consolidated       
Financial Statements and Other Information--Legal Proceedings--Options and      
Warrants."                                                                      

AMBEV SHAREHOLDERS' AGREEMENT                                                   

   On July 1, 1999 FAHZ, Braco S.A. and ECAP, as well as AmBev and
Messrs. Jorge Paulo Lemann, Marcel Telles and Carlos Alberto Sicupira, the      
latter four as intervening parties, entered into a shareholders agreement (the  
"AmBev Shareholder's Agreement") with respect to the voting of the shares of    
AmBev and the voting by AmBev of the shares of its subsidiaries (including      
Brahma and Antarctica), among other matters.                                    

      On March 2, 2004, the FAHZ, Braco S.A. and ECAP, along with AmBev,
Mr. Lemann, Mr. Sicupira, Mr. Telles and Interbrew, as intervening parties,     
executed the first amendment to the AmBev Shareholders' Agreement to, among     
other things, (i) provide that each of the FAHZ, Braco S.A. and ECAP may        
appoint two observers to the meetings of the board of directors of AmBev,       
without a right to vote; (ii) create a financial committee and an audit         
committee; (iii) provide that Braco S.A. and ECAP shall have the right to       
elect, from among the directors they are entitled to appoint, one effective     
member and the respective alternate appointed by Interbrew; (iv) eliminate the  
right of first refusal with respect to the dispositions of AmBev shares; (v)    
restrict the disposal of shares, directly or indirectly, by the FAHZ, Braco     
S.A. and ECAP through private trades, on the securities market or on the        
over-the-counter market, including by way of tender offers, either voluntary    
or mandatory, as long as the corporate control of Interbrew is shared with Mr.  
Lemann, Mr. Sicupira and Mr. Telles, except for the indirect disposal of        
shares among Mr. Lemann, Mr. Sicupira and Mr. Telles or to Interbrew or its     
affiliates and other limited exceptions; (vi) terminate the provisions          
relating to the buy-sell rights of the FAHZ, Braco S.A. and ECAP; and (vii)     
extend the term of the agreement so as to expire on July 1, 2019, subject to    
the option of Braco S.A. and ECAP to accelerate the termination of the AmBev    
Shareholders' Agreement in the event that the current procedure for the         
election of the members of the Board of Trustees of the FAHZ is modified or     
ceases to be observed, other than as a result of a change in law or regulation  
applicable to the FAHZ. Furthermore, the first amendment to the AmBev           
Shareholders' Agreement approved amending AmBev's bylaws to increase the        
mandatory minimum dividend to 35%.                                              

The following discussion relates to the AmBev Shareholders' 
Agreement, as modified by the first amendment. In addition, Braco Investimentos 
S.A. has succeeded to the rights and obligations of Braco S.A. under the AmBev  
Shareholders' Agreement, as so amended.                                         

MANAGEMENT OF AMBEV                                         

    Although each common share of AmBev entitles shareholders to one
vote in connection with the election of AmBev's Board of Directors, AmBev's     
controlling shareholders, the FAHZ, Braco Investimentos S.A. and ECAP, have     
the ability to elect the majority of AmBev's directors. Because the election    
of any director by minority (non-controlling) shareholders would require,       
under Law 6,404/76, at the time of execution of the AmBev Shareholders'         
Agreement, the adoption of a cumulative vote procedure, the provisions of the   
AmBev Shareholders' Agreement on the management of AmBev were based on the      
assumption that no directors will be elected by minority shareholders of        
AmBev.                                                                          

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Due to the changes introduced by Law No. 10,303/01, minority
shareholders holding at least 15% of voting capital and preferred shareholders  
(whose shares are not entitled to vote or are entitled to a restricted voting   
right) holding at least 10% of the company's total capital may elect one        
member of the Board of Directors and its alternate member. Additionally, if     
neither the minority shareholders nor the preferred shareholders (whose shares  
are not entitled to vote or are entitled to a restricted voting right) do not   
achieve such percentages as mentioned above, they can jointly appoint one       
member of the Board of Directors and its alternate member once they represent,  
together, at least 10% of the companys total capital. In order to exercise      
these rights, any of these shareholders must prove that it has uninterruptedly  
held the corresponding shares for at least three months prior to the            
respective shareholders' meeting.                                               

        If such prerogative is exercised collectively with the adoption of a
cumulative voting procedure, the controlling shareholders are entitled to       
elect the same number of members plus one, independently of the number of       
directors.                                                                      

 Additionally, until the 2005 annual shareholders meeting, the
director appointed by preferred shareholders (individually or cumulatively)     
shall be selected from a three-name list previously prepared by the             
controlling shareholder.                                                        

        Presently, under the AmBev Shareholders' Agreement, as amended, each
of the FAHZ, Braco Investimentos S.A. and ECAP will have representation on the  
Board of Directors of AmBev and its subsidiaries and, in addition to the        
members and respective alternates they are entitled to appoint, each of FAHZ,   
on the one hand, and Braco Investimentos S.A. and ECAP, on the other hand, may  
appoint up to two observers to attend AmBev's board meetings, without voting    
rights. The boards of directors of AmBev and its subsidiaries will each be      
comprised of at least three and no more than 15 regular members and the same    
number of alternates, with a term of office of three years and reelection       
being permitted. FAHZ will have the right to appoint four directors and their   
respective alternates to the boards of directors of AmBev and its               
subsidiaries, so long as it maintains a minimum ownership of AmBev voting       
shares equivalent to the ownership of common shares that FAHZ held as of July   
1, 1999, when the AmBev Shareholders' Agreement was entered into. At that time  
FAHZ held 459,521,728 common shares, which was adjusted for the five-for-one    
stock split that took effect on October 23, 2000 and is currently equivalent    
to 2,297,608,640 common shares. FAHZ is not allowed under the AmBev             
Shareholders' Agreement to appoint more than four directors in the event that   
its holding of AmBev common shares increases. FAHZ will always be entitled to   
appoint at least one director as long as it holds a minimum of 10% of AmBev's   
voting shares. Braco Investimentos S.A. and ECAP, acting jointly, have the      
right to appoint members and their respective alternates to the boards of       
directors of AmBev and its subsidiaries, in a number proportionate to the       
number of members appointed by FAHZ. Such proportion is based on the ratio      
between the FAHZ's holding and the aggregate holdings of Braco Investimentos    
S.A. and ECAP in the voting capital of AmBev. According to the amended AmBev    
Shareholders' Agreement, Braco Investimentos S.A. and ECAP shall have the       
right to elect, from among the directors whom they are entitled to appoint in   
the manner provided for in Item 4.2 of the first amendment to the AmBev         
Shareholders' Agreement, one effective member, and respective alternate,        
appointed by Interbrew.                                                         

       The AmBev Shareholders' Agreement provides that AmBev will have two
co-Chairmen with identical rights and duties, one appointed by FAHZ and the     
other by Braco Investimentos S.A. and ECAP, jointly. In the event of a          
deadlock, neither of the Co-Chairmen has a deciding vote on matters submitted   
to the Board of Directors of AmBev.                                             

    Each of FAHZ, or Braco Investimentos S.A. and ECAP together, may
remove a director that it has appointed to the Board of Directors of AmBev or   
its subsidiaries, and each also has the right to appoint the respective         
replacement or a new alternate, if the originally appointed alternate is        
confirmed for the vacant position.                                              

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 Each of FAHZ, Braco Investimentos S.A. and ECAP has agreed to
exercise its voting rights in the shareholders' meetings of AmBev and its       
subsidiaries in such a way that it may elect the largest possible number of     
directors in each of AmBev and its subsidiaries. The FAHZ, Braco Investimentos  
S.A. and ECAP will agree on the method of casting their votes in order to       
accomplish this purpose in the event of adoption of cumulative vote procedure   
under Brazilian law, under which each common share is entitled to as many       
votes as there are directors to be elected.                                     

       The AmBev Shareholders' Agreement establishes that the shareholders
may, by consensus, establish committees within the AmBev's board of directors,  
with the purpose of looking into specific matters which analyses require that   
their members have specific technical knowledge. The Audit Committee, the       
Consulting Committee, the Executive Committee, the Financial Committee and the  
Fiscal Committee have already been created. See "Directors, Senior Management   
and Employees - Board Practices and Corporate Governance".                      

   The AmBev Shareholders' Agreement provides that AmBev will have
one Chief Executive Officer (Director General) and Officers with no specific    
designation to be elected by AmBev's Board of Directors.                        

Preliminary Meetings and Exercise of Voting Rights.           

On matters submitted to a vote of the shareholders or their 
representatives in the boards of directors of AmBev or its subsidiaries, FAHZ,  
Braco Investimentos S.A. and ECAP have agreed to endeavor first to reach a      
consensus with respect to voting their common shares of each of AmBev and its   
subsidiaries, and as how to direct their representatives to vote on the matter  
being submitted. Law No. 10,303/01 recognizes the shareholders agreement as     
the appropriate instrument to determine how power should be exercised by the    
controlling shareholders. In order to reach such a consensus (except with       
respect to the election of Board members, which is subject to specific rules),  
the AmBev Shareholders' Agreement provides that the parties shall hold a        
preliminary meeting in advance of all meetings of shareholders or boards of     
directors of AmBev or of its subsidiaries, with the purpose of discussing and   
determining a consensus position to be taken by the parties in such meetings.   
This procedure makes it more likely that a matter approved by the controlling   
shareholders will also be approved at a shareholders' meeting.                  

If the parties fail to reach a consensus with respect to a  
particular matter, the position to be adopted by all parties to the agreement   
will be determined by the group holding the greatest number of AmBev voting     
common shares, which currently are Braco Investimentos S.A. and ECAP. However,  
this rule does not apply in connection with the election of members of boards   
of directors, as described above under "Management of AmBev", and with respect  
to fundamental matters which require unanimous approval by FAHZ, Braco          
Investimentos S.A. and ECAP, as follows:                                        

o    any amendment to the bylaws of AmBev and/or any of its 
          subsidiaries with the purpose of amending: (i) the corporate
   purposes, (ii) the term of duration, and/or (iii) the
      composition, powers and duties of the management bodies;

        o    approval of the annual investment budget of AmBev and/or any of
             its subsidiaries when the amount of the investments exceed 8.7%
            of net sales of the company foreseen for the same fiscal year.

       o    designation, dismissal and substitution of the Chief Executive
Officer of AmBev;                                 

       o    approval or amendment to the renumeration policy for the Board
            of Directors and of the executive board of AmBev as well as of
its subsidiaries;                                 

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      o    approval of stock option plans for the managers and employees
of AmBev and/or its subsidiaries;                 

 o    change in the dividend policy of AmBev and/or any of its
subsidiaries;                                     

o    increases in the capital of AmBev and/or any of its    
      subsidiaries, with or without preemptive rights, through
            subscription, creation of a new class of shares, or changes in
    the characteristics of the existing shares, as well as
           decreases of capital, issuances of debentures (whether or not
     convertible into shares), warrants, and the creation of
             founders' shares by AmBev and/or any of its subsidiaries except
          when such legal businesses are carried out between AmBev and
its subsidiaries or between the subsidiaries;     

o    amalgamations, spin-offs, transformations, mergers,    
             acquisitions, and divestments involving AmBev and/or any of its
       subsidiaries, in the latter case, (a) when such operation
      involves a company that is not a subsidiary, directly or
            indirectly, of AmBev, and (b) provided that the transaction in
            question results in the reduction in the average dividend paid
    by AmBev in the past five years, adjusted by the IGP-M
             published by Fundacao Getulio Vargas as of the date of payment;

       o    the creation, acquisition, assignment, transfer, establishment
           of an encumbrance on and/or disposal of shares, quotas and/or
             any securities issued by any of AmBev's subsidiaries, under any
          title or form, except in the benefit of AmBev and/or another
subsidiary;                                       

    o    the incurrence by AmBev and/or any of its subsidiaries of a
      debt transaction that results in a net debt/equity ratio
greater than 60/40;                               

       o    the execution, amendment, termination, renewal or cancellation
    of any contracts, agreements or the like involving the
registered or deposited trademarks of AmBev or its
subsidiaries;                                     

      o    the extension of loans or the offer of guarantees of any kind
             by AmBev and/or any of its subsidiaries to any third parties in
          an amount greater than 1% of AmBev's shareholders' equity as
     set forth in the last audited balance sheet prepared in
             accordance with Brazilian GAAP, except in favor of employees of
         AmBev and its subsidiaries, or in favor of the subsidiaries
themselves;                                       

o    election of members of committees of AmBev's Board of  
Directors;                                        

    o    cancellation of the registration of AmBev and/or any of its
subsidiaries as publicly traded companies;        

   o    petition for an arrangement with creditors (concordata) or
     acknowledgment of bankruptcy by AmBev and/or any of its
subsidiaries;                                     

o    liquidation or dissolution of AmBev and/or any of its  
subsidiaries; and                                 

        o    appointment of the external auditors of AmBev and/or any of its
subsidiaries.                                     

        The AmBev Shareholders' Agreement provides that whenever the parties
fail to reach a consensus in a preliminary meeting as to any matter listed      
above, they will exercise their voting rights so as not to approve such         
matter. The AmBev Shareholders' Agreement provides that any votes cast by       
FAHZ, Braco or ECAP, or by any of the board members appointed by each of them,  
in violation of the provisions of the agreement will be deemed null, void and   
ineffective.                                                                    

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Transfer of Shares                                            

       The AmBev Shareholders' Agreement contains the following provisions
concerning the transfer of shares:                                              

        o    FAHZ, Braco Investimentos S.A. and ECAP have agreed: (i) not to
       dispose, directly or indirectly, of their shares, through
            private trades, on the stock market or on the over-the-counter
            market, including by way of tender offers, either voluntary or
          mandatory, except as provided for in Section VI of the AmBev
           Shareholders Agreement, during the term of the agreement, and
          (ii) not to create any type of encumbrance on its shares, in
           both cases, without the prior written consent of FAHZ, in the
        case of Braco Investimentos S.A. and ECAP, and without the
            prior written consent of Braco Investimentos S.A. and ECAP, in
the case of FAHZ;                                 

   o    In the event that the shares of AmBev owned by FAHZ on one
            hand, and Braco Investimentos S.A. and ECAP, on the other hand
           become subject to seizure, attachment, judicial surety or any
            other restrictive measure, and such restriction is not removed
       or waived within 30 days after its imposition, the shares
      subject to the restriction shall be automatically deemed
         offered for sale to the other party. This offer will remain
          open for 30 days, and the price for the AmBev shares will be
             the lesser of either the book value of the AmBev shares, as per
    the latest audited balance sheet of AmBev, prepared in
       accordance with Brazilian GAAP, and adjusted by the IGP-M
             inflation index or the average quoted market price of the AmBev
            shares on stock exchanges in the 20 days prior to the petition
             for removal or waiver of the restriction. If the obligations in
           respect of such restriction exceed the above price, the party
       whose shares have been subject to the restriction will be
            liable for the difference that the other party may be required
           to deposit in order to acquire the shares. If the obligations
          in respect of such restriction were lower than the price for
       the AmBev shares as described above, than the party whose
             shares have been subject to the restriction will be entitled to
           receive the difference between the price for the AmBev shares
 and the obligations in respect of such restriction.

      o    If any of FAHZ, on one hand, and Braco Investimentos S.A. and
     ECAP, together on the other hand, intends to dispose of
       subscription rights corresponding to AmBev shares that it
            holds, it must first offer such rights to the other party, who
             will then be required to exercise its right of first refusal to
    subscribe the new shares to be issued, within 10 days;

       The shareholders' agreement provides that any transfer of shares or
subscription rights or creation of encumbrances in which the aforementioned     
provisions on rights of first refusal are not observed will not be valid.       
AmBev's management is also prohibited from reflecting any such events in the    
company's corporate books and recent changes introduced by Law No. 10,303/01    
confirms the applicability of the AmBev Shareholders' Agreement in such cases.  

SPECIFIC PERFORMANCE                                          

      Obligations of the parties under the AmBev Shareholders' Agreement
will be subject not only to specific performance but will also bind third       
parties to the terms of the agreement, in effect declaring null and void any    
action taken in its contravention so long as rights and obligations of third    
parties stem from the agreement.                                                

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SHAREHOLDERS' VOTING RIGHTS AGREEMENT                                           

   As of August 30, 2002, each of the Santas, with Mr. Lemann, Mr.
Sicupira and Mr. Telles, as intervening parties and S-Braco, Braco S.A., ECAP   
and AmBev, as acknowledging parties, entered into a shareholders' voting        
rights agreement (the "Shareholders' Voting Rights Agreement") with respect to  
Mr. Lemann's, Mr. Sicupira's and Mr. Telles' respective indirect interests in   
each of S-Braco, Braco S.A., ECAP and AmBev. In the Shareholders' Voting        
Rights Agreement, each of the Santas (and Mr. Lemann, Mr. Sicupira and Mr.      
Telles) agreed to exercise their respective influence in S-Braco, Braco S.A.,   
ECAP and AmBev in full compliance with the terms of the Shareholder's Voting    
Rights Agreement. The Santas agreed that the board of Directors of S-Braco      
shall consist of four members and that the executive committees of Braco S.A.   
and ECAP should consist of two to four members, respectively. Each block of     
voting shares representing 25% of the voting shares of S-Braco shall entitle    
its owner(s), at all times, to designate (i) one member of the Board of         
Directors of S-Braco, (ii) one member of the executive committees of Braco      
S.A. and ECAP, respectively, and (iii) one member of the Board of Directors of  
AmBev and the respective alternate member (or such higher number of             
individuals as proves necessary to maintain control over AmBev's Board of       
Directors, alone or in conjunction with FAHZ, pursuant to the AmBev             
Shareholder's Agreement). The Santas further agreed that resolutions            
concerning S-Braco, Braco S.A., ECAP and AmBev relating to certain issues may   
only be approved by prior unanimous vote of the Santas. On other issues not     
requiring unanimity, Mr. Lemann, Mr. Sicupira and Mr. Telles, as the            
controlling shareholders of the Santas, shall in turn, have a binding personal  
casting vote to resolve any deadlock with respect to such issues. The           
Shareholder's Voting Rights Agreement also contained, among others, terms and   
conditions (a) restricting the vehicles by which Mr. Lemann, Mr. Sicupira and   
Mr. Telles, and their respective direct descendants could hold shares of        
S-Braco, Braco S.A., ECAP and AmBev and (b) prohibiting the pledging of shares  
of S-Braco, Braco S.A., ECAP and AmBev by any of the Santas as security for     
the obligations of third parties which could result in the potential transfer   
of ownership or control of such shares.                                         

   Additionally, Santa Judith, Santa Irene, Santa Estela and Santa
Prudencia, as well as Mr. Lemann, Mr. Sicupira and Mr. Telles, the latter       
three as intervening parties, were parties to a shareholders' property rights   
agreement relating to the disposition of shares of S-Braco.                     

    Notwithstanding the dissolution of S-Braco and the Santas or any
other transaction in connection with the internal restructuring of the SB       
Group Companies pursuant to the Contribution and Subscription Agreement,        
Messrs. Lemann, Telles and Sicupira have entered into an agreement confirming   
that their relationship with respect to their interests in Braco Investimentos  
S.A., ECAP and AmBev will continue to be governed by substantially similar      
arrangements.                                                                   

AMBEV SHARE TRANSFER AGREEMENT AND AMBEV GOVERNANCE AGREEMENT                   

  Pursuant to the stock purchase agreement dated May 1, 2002 (as
amended, the "Stock Purchase Agreement"), between AmBev and BAC, for the        
purchase by AmBev of 230,920,000 Class A common shares, without par value, of   
Quinsa, on January 31, 2003, FAHZ, Braco S.A. and ECAP, as well as AmBev and    
BAC entered into (i) a share transfer agreement related to the capital stock    

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of AmBev (the "AmBev Share Transfer Agreement") and (ii) a governance           
agreement related to the governance of AmBev (the "AmBev Governance             
Agreement"). The AmBev Share Transfer Agreement and the AmBev Governance        
Agreement will not become effective until shares of AmBev are acquired by BAC.  

       Pursuant to the AmBev Share Transfer Agreement, among other things,
(i) BAC has agreed not to transfer any common shares of AmBev held by BAC,      
except for transfers to affiliates or family members ("Permitted                
Transferees"), other than in accordance with the provisions of the AmBev        
Shareholders Agreement, (ii) BAC and its Permitted Transferees have granted     
Braco S.A. and ECAP a right of first refusal on any transfer of common shares   
of AmBev to third parties, pursuant to which BAC will not transfer any common   
shares of AmBev (except to Permitted Transferees) unless BAC or its Permitted   
Transferees shall have first offered to sell such common shares of AmBev to     
Braco S.A. and ECAP, (iii) Braco S.A. and ECAP have granted BAC and its         
Permitted Transferees tag-along rights pursuant to which BAC and its Permitted  
Transferees have the right to sell at the same price and on the same terms and  
conditions as Braco S.A. and ECAP in connection with any sale by Braco S.A.     
and ECAP of more than 50% of the AmBev shares held by Braco S.A. and ECAP to a  
third person or any sale of a majority of the outstanding shares of Braco and   
ECAP (for the implications of such tag along rights for the Interbrew-AmBev     
transactions see "Background on the Company - The Interbrew-AmBev Transactions  
Contribution and Subscription Agreement - BAC Tag-along Right", (iv) BAC and    
its Permitted Transferees have granted Braco S.A. and/or ECAP drag-along        
rights pursuant to which in the event that Braco S.A. or ECAP propose to sell   
in a bona fide arm's-length sale more than 50% of their common shares of AmBev  
to any unaffiliated third party, Braco S.A. and ECAP have the right to require  
BAC and its Permitted Transferees to sell to the proposed transferee all or a   
portion of their common shares of AmBev for the same per share consideration,   
in the same pro rata portion and on the same terms and conditions as proposed   
to be received by Braco and ECAP, and (v) AmBev has granted to BAC and its      
Permitted Transferees the preemptive rights set forth in Article 171 of the     
Brazilian corporation law. Pursuant to the AmBev Governance Agreement, among    
other things, (i) BAC and its Permitted Transferees have the right to nominate  
a number of directors of AmBev proportionate to their percentage ownership of   
the total outstanding common shares of AmBev, provided that BAC and its         
Permitted Transferees have the right to nominate at least one director as long  
as BAC and its Permitted Transferees continue to own at least 90% of the        
common shares of AmBev acquired by them pursuant to the options under the       
Stock Purchase Agreement and (ii) for so long as BAC and its Permitted          
Transferees have at least 90% of the shares of AmBev acquired pursuant to the   
consummation of the options, certain matters will not be approved by the        
shareholders meeting or the board of directors of AmBev without the vote of     
BAC.                                                                            

RELATED PARTY TRANSACTIONS  

MATERIAL RELATED PARTY TRANSACTIONS                                             

      We engage in the purchase and sale of raw material with affiliated
entities, which are eliminated on consolidation in our financial statements,    
with the exception of entities under common control (which are proportionally   
consolidated), as described in note 2 (b) to our financial statements.          

     AmBev has entered into an agreement with FAHZ for the purchase of
certain labels for the beer packaging. FAHZ, as described in "Operating and     
Financial Review and Prospects - Critical Accounting policies", provides        
medical, dental and social assistance to current and former employees and       
their dependents. FAHZ owned 24.1% of AmBev's voting shares and 10.9% of our    
total shares on December 31, 2003. FAHZ is not consolidated in our Brazilian    
GAAP financial statements. During the year ended December 31, 2003, we          
purchased labels on an arms-length basis with a value of R$25.3 million from    
the FAHZ.                                                                       

       The Company financed in the past its employees' purchases of shares
pursuant to AmBev's stock ownership plan. See "Directors, Senior Management     
and Employees - Employees - Stock Ownership Plan". Such financing option has,   
however, been removed from the stock ownership plans approved subsequent to     
the enactment of the Sarbanes-Oxley Act. Nevertheless, the previous stock       
ownership plans provide for such extensions of credit, even though none have    
been requested to date.                                                         

     We have entered into a variety of agreements with Quinsa and BAC,
Quinsa's controlling shareholder, relating to the acquisition of our interest   
in Quinsa. See "Information on the Company - Acquisition of Interest in         
Quinsa".                                                                        

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       Between June 6, 2003 and June 16, 2003, we acquired from Mr. Marcel
Herrmann Telles, a director of AmBev and a member of our controlling group,     
156,875,520 preferred shares held directly by him which had been subscribed by  
Mr. Telles upon exercise of certain rights to acquire shares granted to him     
under the stock ownership plan. Pursuant to the stock ownership plan, if the    
holder is going to sell the shares more than 60 months after the shares are     
acquired by the employee, we have the right to buy the preferred shares issued  
thereunder at market price. Mr. Telles sold his 156,875,520 preferred shares    
to us more than 60 months after he acquired the shares, for which we paid       
R$93.4 million, which was the market price of the shares calculated pursuant    
to the terms of the stock ownership plan.                                       

   On June 3, 2004, we acquired from Mr. Magim Rodriguez Junior, a
director of AmBev, 160,000,000 preferred shares held directly by him which had  
been subscribed by Mr. Rodriguez upon exercise of certain rights to acquire     
shares granted to him under the stock ownership plan. Pursuant to the stock     
ownership plan, if the holder is going to sell the shares more than 60 months   
after the shares are acquired by the employee, we have the right to buy the     
preferred shares issued thereunder at the market price. Mr. Rodriguez sold his  
160,000,000 preferred shares to us more than 60 months after he acquired the    
shares, for which we paid R$96.5 million, which was the market price of the     
shares calculated pursuant to the terms of the stock ownership plan.            

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Financial Information                                                           

CONSOLIDATED FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION 

CONSOLIDATED FINANCIAL STATEMENTS                                               

See "Financial Statements".                                 

LEGAL PROCEEDINGS                                                               

      Except as set forth below, there are no legal proceedings to which
we are party, or to which any of our properties are subject which, either       
individually or in the aggregate, may have a material adverse effect on our     
results of operations, liquidity or financial condition. For further details,   
see note 12 of our consolidated financial statements.                           

CIVIL CLAIMS.                                               

     As of March 31, 2004 we had 3,261 civil claims pending, including
distributors and product related claims. We are the plaintiff in 1,334 and the  
defendant in 1,927 of these claims, respectively. We have established           
provisions in the amount of R$100.3 million as of December 31, 2003, in         
connection with civil claims in which we believe there is a probable chance of  
loss.                                                                           

  On December 2, 2002, a court in the state of Rio Grande do Sul
prohibited the sale of Kronenbier in that state on the grounds that the beer    
could not be classified as a non-alcoholic beverage because it has a 0.34%      
alcohol level. We have appealed this ruling and a final decision by the         
supreme court is pending. Meanwhile, the superior court has temporarily         
allowed the sale of Kronenbier in the State of Rio Grande do Sul. The lawsuit   
aims to suspend the sale of the beer only. In a similar lawsuit pending in the  
state of Parana, damages and the reimbursement of the revenues from the         
Kronenbier sales in Parana are demanded. We believe that our views will         
prevail in this matter and have not made a provision for any amount.            

        On April 11, 2003, the Federal District Public Attorney initiated an
administrative civil public investigation regarding advertisements that         
allegedly have the potential to induce teenagers and children to consume        
alcoholic beverages in a Skol and Brahma beer marketing campaign. We are        
negotiating a settlement with the Federal District Public Attorney and on May   
07, 2004, we filed a petition informing it about our educational campaigns and  
social projects for the Brazilian population, together with a draft providing   
for adjustments to our marketing campaigns to avoid any possible inducement of  
teenagers and children to consume alcoholic beverages. We believe that the      
investigation will end without any material disbursement on our part and        
therefore have not made a provision for any amount in connection with this      
investigation.                                                                  

        On February 29, 2000, five former shareholders of Antarctica who had
exercised appraisal rights under the Antarctica conversion jointly filed a      
lawsuit against us and Antarctica in the 18th Civil Court of the City of Sao    
Paulo. These former shareholders claim that the decision taken at the           
Antarctica shareholders' meeting held on September 2, 1999, changing the        
valuation method for determining the value of the Antarctica shares subject to  
appraisal rights from the book value to economic value of such shares was       
invalid, because it occurred after the plaintiffs had exercised their           
appraisal rights. These plaintiffs claim compensation in the total amount of    
approximately R$0.8 million (the current debt amount is R$1.1 million). On      
July 21, 2001, the court dismissed the action against Antarctica. On December   
21,                                                                             

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2001 the judge adjudicated in favor of the minority shareholders requiring      
us to pay the difference between the value of the shares. We have appealed      
this ruling and expect to prevail in the court of appeals based upon advice     
from our external counsel. Based upon this expectation, we have not made a      
provision for any amount.                                                       

        A court in the city of Sao Paulo, state of Sao Paulo, has restricted
AmBev from advertising soft drinks on television during the hours that          
children's programming airs and imposed information requirements on our         
advertisements, labels and containers informing consumers about the damages     
that excessive sugar could bring to health as well as the risk of obesity. We   
have appealed the restrictions and requirements and are pending decision by     
the superior court. On May 18, 2004, another lawsuit was filed against AmBev    
in a court in the city of Ribeirao Preto, state of Sao Paulo, to impose         
similar restrictions and requirements. We are currently drafting a response to  
such law suit. We expect to prevail in both the supreme court and the court in  
the city of Ribeirao Preto based upon advice from our external counsel. Based   
upon this expectation, we have not made a provision for any amount.             

OPTIONS AND WARRANTS                                        

In 2002, AmBev decided to request a ruling from the CVM in  
connection with a dispute between AmBev and some of its warrant holders         
regarding the criteria used in the calculation of the strike price of certain   
AmBev warrants. See "Major Shareholders--Options and Warrants". On April 17,    
2003, the CVM ruled that the criteria used by AmBev to calculate the strike     
price was correct. In response to the CVM's final decision, some of the         
warrant holders filed separate lawsuits before the courts of Sao Paulo and Rio  
de Janeiro seeking to reverse the CVM's decision.                               

      Although the warrants expired without being exercised, the warrant
holders claim that the strike price should be reduced to take into account the  
strike price of certain rights granted by AmBev to its officers and employees   
since 1996 to acquire shares of AmBev, as well as for the strike price of       
other stock purchase warrants issued in 1993. The warrant holders requested     
preliminary injunctions for: (1) the immediate issuance by AmBev of the shares  
corresponding to the total amount of warrants held by the plaintiffs; and (2)   
the right to subscribe for these shares at the substantially lower              
subscription price described above.                                             

     Although the lower courts have granted preliminary injunctions to
the plaintiffs in most cases, those decisions have been reversed by the Courts  
of Appeals of the states of Sao Paulo and Rio de Janeiro. Based on advice from  
our external counsel, we believe that we have a good chance of prevailing in    
these proceedings. Because the dispute is based on whether we should receive,   
as a subscription price, a lower price or the price that we consider adequate,  
without any contingent liability (except for legal fees), a provision of        
amounts with respect to these proceedings is not applicable.                    

      Currently, we have been notified of six proceedings and 11 holders
claiming such rights and we estimate that the aggregate subscription price of   
all the shares will be R$1,022.4 million based on a strike price of R$0.90977   
for preferred shares and R$0.91595 for voting shares. One of the warrant        
holders argues that the strike price thereof should be R$0.13581. The maximum   
dilution for the existing shareholders would be the difference between these    
values. AmBev has filed counterclaims on these lawsuits.                        

TAX MATTERS                                                 

AmBev has filed claims against the Brazilian tax authorities
alleging that certain taxes are unconstitutional. These legal tax proceedings   
include claims for income taxes, the value added tax (ICMS), the excise tax     
(IPI) and revenue taxes (PIS and COFINS). As these claims are contingent on     
obtaining favorable judicial decisions, the corresponding assets which might    
arise in the future are only recorded once it becomes certain that we will      
receive the amounts previously paid or deposited.                               

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As of March 31, 2004, we had approximately 21,424 tax claims                    
pending, including judicial proceedings and administrative investigations.      
Most of these claims relate to ICMS and IPI. We have made provisions of         
R$940.6 million in connection with these tax proceedings for which we believe   
there is a probable chance of loss.                                             

INCOME TAX AND SOCIAL CONTRIBUTION                          

Beginning in 1997, an amendment to the tax law confirmed the
deductibility of interest attributable to shareholders' equity for social       
contribution and income tax purposes. Brahma filed a lawsuit with the 22nd      
Federal Court of Rio de Janeiro requesting the recovery of social contribution  
taxes previously paid for the fiscal year of 1996 in the amount of R$20.1       
million. The Federal Court granted Brahma an injunction recognizing the         
deductibility of payment of interest attributable to shareholders' equity and,  
as a result, allowed Brahma to suspend the payment of social contribution       
amounts owed in 1999 up to the amount not deducted in 1996, thereby allowing    
Brahma to offset the amounts of taxes unduly paid in 1996 against the amounts   
owed in 1999. In April 2001, the Federal Court of Appeals reversed the Federal  
Court's injunction. On April 3, 2002, we appealed the Federal Court of          
Appeal's judgment to the Brazilian Supreme Court and to the Superior Court of   
Justice.                                                                        

VALUE-ADDED TAX, EXCISE TAX AND TAXES ON NET SALES          

 In October 1996, a tax law allowed credits of ICMS on capital
expenditures to be offset against the amounts payable on such tax. Based on     
this law and on certain constitutional principles, some of our subsidiaries     
filed several lawsuits with State Courts to allow them to offset ICMS tax paid  
prior to 1996 and with IPI excise tax paid in the 1997 against similar taxes    
payable in 1996. We made a provision regarding the amounts offset, including    
the interest and penalties that could become payable should we lose these       
lawsuits.                                                                       

During 1999, a new law came into effect requiring Brazilian 
companies to pay PIS and COFINS not only on sales and services net sales, but   
also on financial income. We have not been paying PIS and COFINS as required    
by the new law, as we have obtained injunctions permitting the non-payment of   
these additional taxes on the basis that the new law is unconstitutional. As    
such new taxes remain in force until a final ruling is rendered, we recorded    
the accumulated amount of R$355,9 million as "provisions for contingencies and  
other" as of March 31, 2004. We will not be permanently relieved of the         
obligation to pay such taxes unless and until a final favorable ruling is       
rendered.                                                                       

Before December 2002, in compliance with Law 10,637/02, the 
federally levied PIS and COFINS taxes were charged over gross revenues with     
two rates of 0.65% and 3.00%, respectively. Since December 2002, a new PIS      
taxation mechanism has been implemented. As a result, PIS is now charged as a   
value added tax, increasing its tax rate from 0.65 to 1.65%. According          
to this new taxation mechanism, taxpayers may recognize PIS credits             
corresponding to 1.65% over certain costs and expenses. Those credits can be    
used to reduce the PIS due on the Company taxable revenues.                     

      Similarly, in December 2003, in compliance with the Law 10,833/03,
the same taxation mechanism was implemented for COFINS taxation. This law       
increased the tax rate for COFINS from 3.00 to 7.60%, and the recognition of    
tax credits corresponding to 7.60% over certain costs and expenses was granted  
to Companies. The mentioned law also determined a specific PIS/COFINS taxation  
on soda, water and beer, in which producers are responsible for the whole       
chain of PIS/COFINS collection (monophase taxation). As we adopted the special  
regime for PIS/COFINS, the following new tax rates are applicable:              

                                                                [Download Table]

                                                                                 
o  BEER: PIS=R$0.0202/liter and COFINS=R$0.0935/liter                            
   ----                                                                          

o  CARBONATED SOFT DRINKS AND WATER: PIS=R$0.0117/liter and COFINS=R$0.0539/liter
   --------------------------------                                              

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    Certain Brazilian taxpayers are prosecuting claims to be able to
exclude for the period from 1988 to 1995, in the calculation basis (i.e., the   
gross revenue of the sixth previous month) the indexation for inflation prior   
to the calculation of the PIS tax. The taxpayers argue that Complementary Law   
7/70 does not require indexation of the calculation basis, and the provision    
in the Decree laws, which created indexation of the calculation basis, was      
overturned by the Federal Supreme Court and the Senate. The tax authorities     
asserted that the Federal Supreme Court and Senate actions affected only the    
determination of the calculation basis, but did not affect the definition of    
the indexation procedure in the Decree Laws.                                    

      On May 29, 2001 (ruling published on June 11, 2001) an arbitration
session of the Court of Appeals ruled in favor of the taxpayer. In the          
administrative system, the decisions have been favorable to the taxpayers, and  
the tax authorities are no longer issuing new infraction notices regarding      
this issue. Although the issue has not yet received a final ruling, the         
taxpayers described in the immediate preceding paragraph are likely to          
prevail.                                                                        

      On October 15, 2001, we concluded the preliminary determination of
the credits arising in the five year prescriptive period prior to the date of   
our claim. The provision for the PIS liability, including interest and          
charges, totaling R$138.7 million was reversed to income and recorded in        
"Value added and excise taxes on sales" during 2001 and we are currently        
awaiting a final decision.                                                      

DISTRIBUTORS AND PRODUCT-RELATED CLAIMS                     

     Numerous breach of contract claims have been filed against CBB by
former distributors of Brahma and Antarctica whose contracts were terminated    
due to low sales volume, failure by distributors to meet our guidelines and a   
general rationalization of the distribution network. Most claims are still      
under review by the lower level courts, in some we have appealed and are now    
in intermediate court levels, and a few are currently being reviewed by the     
highest level Court of Appeals in Brazil, the Supreme Court of Justice.         
Additionally, former Antarctica distributors, among a few other distributors,   
have filed breach of contract claims against us. These distributors either      
seek to amend or modify certain terms and conditions of their distribution      
agreement or allege we have breached the contracts. Notwithstanding, the        
agreements continue to be in full force and effect and continue to be           
performed regardless of any court proceedings.                                  

      The aggregate amount of these claims is R$425.4 million. AmBev has
established provisions in the amount of R$19.1 million in connection with       
these claims as of March 31, 2004, based on the advice of outside legal         
counsel. We intend to continue a program of increasing our direct distribution  
and, in areas where we continue to use third party distributors, may terminate  
existing distributors in favor of new distributors. We expect this program to   
result in additional lawsuits.                                                  

     There are currently eleven administrative proceedings against CBB
under CADE's review, each of them commenced by former or present distributors   
who challenge the legality of market practices of CBB under distribution        
arrangements and request the suspension of such market practices. CADE has      
dismissed ten of those complaints, concluding that CBB did not engage in any    
of the alleged illegal activities. The remaining one proceeding is still under  
review by CADE.                                                                 

ANTITRUST MATTERS                                           

9         THE COMBINATION                                                       

      We currently have six antitrust investigations pending against us,
which have been initiated by CADE following its investigations in connection    
with the combination.                                                           

      The first proceeding refers to complaints brought by the Brazilian
Association of Antarctica Distributors (ABRADISA), alleging that provisions in  
our distribution agreements are illegal exclusivity provisions. After           
appropriate investigations, on February 22, 2002, the antitrust authorities     
(Secretaria de                                                                  

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Direito Economico-SDE) decided to accept the proceedings against us to          
determine whether there is circumstantial evidence relating to unfair market    
practices. The antitrust authorities are seeking to determine whether or not    
the following main practices are taking place: (i) establishment of minimum     
quotas for retailers to purchase our beverages; (ii) imposition of sale price   
to retailers; (iii) whether the share of the distribution network among         
Antarctica, Skol and Brahma products has resulted in damages to retailers'      
fair competition; (iv) unjustified increase in price; and (v) unfair            
competition between retailers and direct distribution. On March 29, 2002 we     
filed our defense. Presently, this proceeding is awaiting dismissal by the SDE  
as in March 2003 CBB and its forty-one distributors executed a Term of          
Transaction (Termo de Transacao) that has been fully complied by all its        
parties. On November 4, 2003 the ABRADISA President filed a petition in this    
proceeding stating that the Term of Transaction has been fully complied by all  
its parties and that ABRADISA has no interest to proceed with this proceeding.  

   In 2002, a distributor in the state of Alagoas filed a petition
requesting the Department of Justice to investigate the fulfillment of the      
terms of CADE's performance agreement. The Department of Justice requested      
information from AmBev on July 16, 2002. On August 12, 2002, we presented our   
defense. We expect the Department of Justice to withdraw the charges with no    
further implication to AmBev. Based on the arguments presented before the       
antitrust authorities on May 7, 2003 and on advice received from outside        
counsel, we believe that we have a good chance of being successful in these     
proceedings. Therefore, we have not made a provision for any amount.            

        On April 24, 2003, Cervejaria Braumeister, a small brewer with which
we have executed an exclusivity agreement filed a complaint with the SDE        
alleging that we have breached the antitrust performance agreement that we      
have signed with CADE relating to the Brahma and Antarctica combination by      
imposing exclusivity on them. On October 20, 2003 we presented our defense. We  
expect this complaint to be dismissed as we have obtained a judicial opinion    
in our favor.                                                                   

     The Department of Justice in the state of Rio Grande do Sul filed
two proceedings in connection with the lay-off of employees in the beer plants  
of Estrela and Montenegro. We have entered into a settlement agreement with     
the Department of Justice in the proceeding related to the Estrela plant,       
which has been judicially confirmed. We are still discussing a settlement with  
the Department of Justice in the Montenegro proceeding.                         

   On February 13, 2004, the Labor Union of the Food and Beverages
Industry Workers ("Sindicato dos Trabalhadores nas Industrias de Alimentacao e  
Bebidas") of the city of Jacarei, State of Sao Paulo, filed a proceeding with   
CADE in connection with the lay-off of employees in our beer plant in Jacarei.  
In this proceeding, this union alleges that we have breached our antitrust      
performance agreement signed with CADE relating to the Brahma and Antarctica    
combination under which we have committed to maintain the level of employment   
in our plants. On June 14, 2004 we presented our defense. We expect this        
proceeding to be dismissed as we have complied with all the provisions of the   
mentioned antitrust performance agreement.                                      

      On May 17, 2004 Schincariol, which is currently one of our largest
competitors, filed a complaint with the antitrust authorities (Secretaria de    
Direito Economico-SDE) asking it to investigate the legality of our customer    
loyalty program (Programa de Fidelidade). Our was created to benefit our loyal  
retailers. SDE has not yet made any decision on this complaint. The standard    
procedure is for SDE to launch a preliminary investigation.                     

JOINT VENTURES AND ALLIANCES                                

      Brahma's joint ventures with Miller and Unilever Brasil Ltda., its
franchise agreement with PepsiCo and Skol's licensing agreement with Carlsberg  
were all required to be submitted to CADE for                                   

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approval. See "--Joint Ventures and Strategic Alliances". In October 1998,      
CADE approved the franchise agreement with PepsiCo International, Inc. In       
early 1999, CADE approved Brahma's joint venture with Unilever Brasil Ltda.,    
which resulted in the creation of Ice Tea do Brasil Ltda. Also in 1999, the     
Skol licensing arrangement with Carlsberg was approved by CADE. Miller license  
arrangement was approved in 1997.                                               

        CADE is currently reviewing our cooperation with Souza Cruz S.A. for
the implementation of "Cportal", a business to business website. On November    
28, 2001, CADE unconditionally approved the cooperation with Souza Cruz S.A.    
regarding the implementation of Agrega, a business-to-business website,         
through which the acquisition of MRO (materials, repairs and operation)         
products and services would be negotiated. The Agrega joint venture was         
commenced on November 30, 2000. On April 8, 2003, the Public Attorney of CADE   
issued an opinion favorable to the approval of this cooperation, together with  
some recommendations. Currently we are awaiting CADE's decision on this         
matter.                                                                         

   As a result of PepsiCo's acquisition of Gatorade and subsequent
licensing of the trademark to us, CADE began analyzing the isotonic market      
concentration. The company has agreed to keep all the labor positions related   
to Gatorade production, while the marketing policies for Gatorade and Marathon  
will be maintained independently. The company has also agreed not to reveal     
the secrets regarding the production. Two CADE members have voted for the       
approval of the transaction with restrictions, including the sale of Marathon.  
We are awaiting CADE's final approval.                                          

      On July 23, 2003, CADE approved with no restrictions our agreement
with Quinsa to distribute Quinsa beer in Brazil. This agreement is pending the  
approval of Argentinean antitrust authorities as it also provides for the       
distribution of Brahma in Argentina.                                            

INTERBREW-AMBEV TRANSACTIONS                                

Currently CADE is reviewing our Act of Concentration (Ato de
Concentracao) relating to the Interbrew-AmBev Transactions. On March 18, 2004,  
we formally notified the Brazilian antitrust authorities of the proposed        
Interbrew-AmBev Transactions. On May 27, 2004, the SAE, an office within the    
Ministry of Finance and one of the three bodies responsible for reviewing the   
transaction, issued an opinion recommending approval, without restriction, on   
the basis that the transactions would not affect the domestic beer market.      
Schincariol filed an opposition to the transaction that has been rejected by    
the SAE. On June 29, 2004, SDE issued an opinion concurring in SAE's            
recommendation that the transaction be approved without restriction. The        
transactions have been submitted to CADE, the ultimate Brazilian antitrust      
authority, for a final decision. While we believe that the proposed             
Interbrew-Ambev Transactions do not raise concerns with respect to competition  
within Brazil, we cannot assure you that the Brazilian antitrust authorities    
will approve the transactions or that the Brazilian antitrust authorities will  
not impose retrictions or conditions in connection with their approval if       
granted.                                                                        

CANADIAN REGULATORY APPROVAL                                

Competition Act                                             

    On March 30, 2004, the Canadian Commissioner of Competition (the
"Commissioner") issued an advanced ruling certificate ("ARC") with respect to   
the Interbrew Ambev Transactions, exempting the transactions from the           
pre-merger filing provisions of the Competition Act of Canada. In addition, if  
the transactions are substantially completed within one year after the ARC is   
issued, the Commissioner cannot seek an order enjoining or rescinding the       
transactions.                                                                   

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Investment Canada Act                                       

     The parties have determined that the Interbrew-AmBev Transactions
are not subject to review or approval under the Investment Canada Act. The      
parties intend to file a notice of investment as required under the Investment  
Canada Act within 30 days after the closing date.                               

E.U. REGULATORY APPROVALS                                   

    On March 31, 2004, the German Federal Cartel Office approved the
merger filing made by AmBev. Other than the filing in Germany, the              
Interbrew-AmBev Transactions will not require notification under the European   
Community Merger Regulation.                                                    

CVM                                                         

       Caixa de Previdencia dos Funcionarios do Banco do Brasil - PREVI, a
Brazilian pension fund holding approximately 8.98% of AmBev's capital stock,    
filed an administrative complaint against AmBev with the CVM on April 8, 2004,  
alleging abuse of position by AmBev's controlling shareholders and breach of    
fiduciary duty by AmBev's directors in connection with the approval of the      
Interbrew-AmBev Transactions. The complaint requests, among other things, that  
CVM render an opinion contesting the legality of the transaction and intervene  
to prevent the closing of the Incorporacao. On May 4, 2004, AmBev filed a       
response to the complaint with the CVM, which was supported by three opinions   
of renown Brazilian legal scholars. The complaint is still being reviewed by    
the CVM and we do not know when the CVM will conclude its review. A decision    
pending on such complaint does not, however, prevent the consummation of the    
Interbrew-AmBev Transactions.                                                   

      Following the announcement of the Interbrew-AmBev Transactions, we
were notified by the CVM that it detected what it perceived to be unusual       
trading patterns in shares of AmBev in the weeks preceding the announcement.    
The CVM, in accordance with what we understand to be its standard procedures,   
requested from us and from Braco S.A. a list of all directors, officers,        
employees, accountants, lawyers, investment bankers and other consultants       
involved in the Interbrew-AmBev Transactions. That information has been         
supplied to the CVM. According to certain public statements of staff members    
and commissioners of the CVM, the CVM is investigating the possibility that     
the trading of AmBev shares based on non-public information occurred. We        
believe that CVM's investigation is pending; however, we have no indication of  
when the investigation will conclude.                                           

LABOR MATTERS                                               

        We are involved in approximately 9,500 legal proceedings with former
and current employees, mainly relating to dismissals, severance, overtime,      
health and safety premiums, supplementary retirement benefits and other         
matters, all of which are awaiting judicial resolution.                         

      We have established provisions in the amount of R$204.7 million as
of March 31, 2004, in connection with all labor proceedings in which we         
believe there is a probable chance of loss. In Brazil, it is not unusual for a  
company to be a defendant in a large number of labor claims.                    

In compliance with CADE's decision approving the controlling
shareholders' contribution and the performance agreement that we entered into   
with CADE, any dismissals must be made in accordance with the restrictions      
imposed by the decision. See "Background on the Company-Brazilian Antitrust     
Approval". We are involved in some lawsuits filed by dismissed employees        
claiming reinstatement in view of the CADE decision.                            

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ENVIRONMENTAL MATTERS                                       

     On November 7, 2001, the District Attorney of Manaus (Promotoria)
notified us that a criminal lawsuit had been initiated against IBANN, our       
subsidiary, and three of its officers in the district court of the State of     
Manaus claiming damages for harm allegedly done to the Igarape dos Franceses    
forest. On March 21, 2002, the district attorney proposed a settlement through  
a series of environmental projects. On November 19, 2002 we entered into an     
agreement with the District Attorney which included the reforestation of an     
area of the Igarape dos Franceses forest and the purchase of equipment used by  
the governmental agencies to protect the environment. We have complied with     
all the terms of the agreement which will be homologated at a judicial hearing  
which has yet to be scheduled.                                                  

     On February 5, 2002, we entered into a performance agreement with
the Brazilian Department of Justice in order to promote the rehabilitation of   
"the Fazenda Campos". Under this agreement we are supposed to clean and         
reforest this area until the end of November, 2003. At that time, the           
Brazilian Department of Justice will issue a legal opinion. We have already     
cleaned and reforested the land, and currently we are monitoring the growth of  
the forest.                                                                     

    In August 2003, the company Oliveira Comercio de Sucatas filed a
complaint with the District Attorney of the city of Pedreira, in the State of   
Sao Paulo, alleging that CBB is using the waste disposal site of the city as a  
disposal for toxic garbage. In September 2003, we presented our response and    
have performed all the necessary studies which allowed us to conclude that CBB  
has not disposed any toxic garbage there were no actions causing harm to the    
environment. We are awaiting a Judicial Power decision on this matter. Based    
on the results of our studies, as well as the retaliatory nature of Oliveira    
Comercio de Sucatas' complaint filed immediately following a termination of a   
service contract, we believe CBB will be cleared.                               

        The District Attorney in charge of protecting the environment in the
State of Rio de Janeiro has requested the initiation of a civil investigation   
to investigate anonymous reports of the pollution allegedly caused by Nova      
Rio, AmBev's beer plant located in the city of Rio de Janeiro in the State of   
Rio de Janeiro. Currently this investigation is under the phase of collection   
of information. We expect this investigation to be dismissed as we have         
presented several expert opinions, including the one from the State             
environmental agency (FEEMA) which shows the non existence of environmental     
damages. Due to the wide repercussion of this matter in the media, the          
Legislative Power initiated a Parliamentary Commission of Investigation         
(Comissao Parlamentar de Inquerito-CPI) to investigate the facts. Our           
corporate relations officer, Milton Seligman, has testified in a public         
hearing related to this matter. We expect the CPI to be dismissed as we         
presented expert opinions showing the non-existence of any environmental        
damages by our Nova Rio beer plant.                                             

      In the first quarter of 2003, we proposed a draft of a performance
agreement establishing "Policies of Odors Emission" to the Brazilian            
Department of Justice and Brazilian Environmental Authorities. Until May 2004,  
no legal opinion was issued by the Brazilian Department of Justice or by the    
Environmental Authorities.                                                      

DIVIDEND POLICY                                             

For information regarding our dividend policy, see "Key     
Information--Selected Financial Data--Dividends--Dividend Policy".              

SIGNIFICANT CHANGES                                         

        Except as otherwise described in our annual financial statements and
the Interbrew-AmBev Transactions, there have been no significant changes in     
our business, financial conditions or results since December 31, 2003.          

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The Offer and Listing                                                           

PRINCIPAL MARKET AND TRADING MARKET PRICE INFORMATION 

       AmBev is registered as a publicly held company with the CVM and has
been listed on the Brazilian stock exchanges since December 17, 1998, under     
the name of Aditus Participacoes S.A. Because AmBev was originally              
incorporated as a shelf company without any operational activity, there was no  
market for AmBev shares until September 17, 1999, two business days after the   
Antarctica conversion. From September 17, 1999 until September 15, 2000, the    
first date following the Brahma conversion, there was a limited trading market  
for AmBev shares. For a description of the combination transactions that led    
to the formation of AmBev, including the Antarctica and Brahma conversions,     
see "The Combination and Antitrust Approval". AmBev shares are quoted on the    
Sao Paulo Stock Exchange under the symbols "AMBV3" (common shares) and "AMBV4"  
(preferred shares). Until April 28, 2000, the AmBev shares were traded in the   
Rio de Janeiro Stock Exchange and other Brazilian stock exchanges under the     
symbols "AMBVON" (common shares) and "AMBVPN" (preferred shares).               

On October 20, 2000, the shareholders of AmBev present at an
extraordinary general meeting unanimously approved a five-for-one stock split   
of the company's outstanding common and preferred shares. See note 15(a)(ii)    
in the consolidated financial statements.                                       

SHARES                                                                          

      The table below shows the quoted high and low closing sales prices
in reais on the Sao Paulo Stock Exchange for AmBev's preferred and common       
shares for the indicated periods. All prices quoted below relating to periods   
prior to September 15, 2000, relate to high and low closing sales prices in     
reais on the Sao Paulo Stock Exchange for preferred and common shares of        
Brahma, AmBev's predecessor. All share prices, including prices relating to     
Brahma preferred and common shares, have been restated to reflect AmBev's       
five-for-one stock split described in the preceding paragraph.                  

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TRADING PRICES ON THE SAO PAULO STOCK EXCHANGE: PREFERRED SHARES(1) 
------------------------------------------------------------------- 
                        PER 1,000 PREFERRED SHARES
                       -------------------------------
                        HIGH                 LOW
                       ------------         ----------
                        (in reais)
ANNUAL                                                                          
-----------------------------                                                   
2003.........................         R$739               R$474                 
2002.........................           550                 391                 
2001.........................           581                 406                 
2000.........................           488                 208                 
1999.........................           272                  92                 
1998.........................           176                  78                 

QUARTERLY                                                                       
-----------------------------                                                   
2003                                                                            
First Quarter.............         R$562               R$474              
Second Quarter............           613                 543              
Third Quarter.............           703                 563              
Fourth Quarter............           739                 600              
2002                                                                            
First Quarter.............         R$500               R$437              
Second Quarter............           497                 398              
Third Quarter.............           460                 391              
Fourth Quarter............           550                 421              

MONTHLY                                                                         
-----------------------------                                                   
2003                                                                            
January...................         R$545               R$474              
February..................           515                 479              
March.....................           562                 491              
April.....................           584                 543              
May.......................           613                 588              
June......................           600                 580              
July......................           604                 586              
August....................           655                 563              
September.................           703                 608              
October...................           660                 613              
November..................           700                 600              
December..................           739                 659              

Source:  Bloomberg                                                              

(1)  For a period of time commencing on September 17, 1999, two business days   
after the Antarctica conversion, and prior to September 15, 2000, the 
  first date following the Brahma conversion, there did exist two separate
  trading markets for the shares of AmBev and Brahma, AmBev's predecessor.
Due to the limited trading volume in AmBev's shares throughout this   
period, however, this chart only relates to the stock prices of Brahma
  shares for the period of time commencing on September 17, 1999 and prior
to September 15, 2000.                                                

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TRADING PRICES ON THE SAO PAULO STOCK EXCHANGE: COMMON SHARES(1)    
----------------------------------------------------------------    
                     PER 1,000 COMMON SHARES
                     -----------------------------
                       HIGH                LOW
                       ------------        -----------
                        (in reais)
ANNUAL                                                                          
2003.........................         R$640               R$415                 
2002.........................           489                 355                 
2001.........................           540                 350                 
2000.........................           470                 158                 
1999.........................           190                  92                 
1998.........................           160                  77                 

QUARTERLY                                                                       
2003                                                                            
First Quarter.............         R$480               R$415              
Second Quarter............           540                 470              
Third Quarter.............           630                 484              
Fourth Quarter............           640                 550              
2002                                                                            
First Quarter.............         R$445               R$385              
Second Quarter............           420                 355              
Third Quarter.............           410                 360              
Fourth Quarter............           489                 385              

MONTHLY                                                                         
2003                                                                            
January...................         R$470               R$415              
February..................           450                 420              
March.....................           480                 425              
April.....................           505                 470              
May.......................           540                 515              
June......................           530                 500              
July......................           520                 500              
August....................           560                 484              
September.................           630                 570              
October...................           620                 550              
November..................           627                 560              
December..................           640                 595              

Source:  Bloomberg                                                              

(1)  For a period of time commencing September 17, 1999, two business days      
after the Antarctica conversion, and prior to September 15, 2000, the 
  first date following the Brahma conversion, two separate trading markets
 existed for the shares of AmBev and Brahma, AmBev's predecessor. Due to
the limited trading volume in AmBev's shares throughout this period,  
   however, this chart only relates to the stock prices of Brahma shares for
 the period of time commencing September 17, 1999 and prior to September
15, 2000.                                                             

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ADRS                                                                            

  AmBev has registered two classes of American Depositary Shares
(ADSs) pursuant to the Securities Exchange Act: ADSs evidenced by American      
Depositary Receipts (ADRs) representing 100 preferred shares, and ADSs          
evidenced by ADRs representing 100 common shares. The ADSs have been listed on  
the New York Stock Exchange since September 15, 2000 and trade under the        
symbols "ABV.c" (ADSs representing AmBev common shares) and "ABV" (ADSs         
representing AmBev preferred shares). On October 20, 2000, the shareholders     
present at an extraordinary general meeting unanimously approved a              
five-for-one stock split of the company's outstanding common and preferred      
shares. However, AmBev's ADSs were not split. Prior to the stock split, each    
ADS represented 20 common or preferred shares of AmBev. Since the stock split   
did not affect AmBev's ADSs, after the stock split each ADS represented 100     
common or preferred shares of AmBev. Consequently, the stock split did not      
have a significant impact on the price of our ADRs.                             

As of May 31, 2004, there were 19 registered holders of our 
preferred ADSs, with approximately 99.9% of the preferred ADSs registered in    
the name of The Depository Trust Company. As of May 31, 2004, there were 12     
registered holders of the common ADSs, with approximately 99.9% of the ADSs     
registered in the name of The Depository Trust Company.                         

    The information presented in the table below represents, for the
indicated periods, the reported high and low closing sales prices of AmBev      
ADRs quoted in U.S. dollars on the New York Stock Exchange. All prices quoted   
below relating to periods prior to September 15, 2000, relate to the reported   
high and low closing sales prices of the ADRs of Brahma, AmBev's predecessor,   
quoted in dollars on the New York Stock Exchange.                               

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TRADING PRICES ON THE NEW YORK STOCK EXCHANGE:  
ADRS REPRESENTING 100 PREFERRED SHARES(1)   
----------------------------------------------  
                                    PER 100 PREFERRED SHARE ADRS
                                    ----------------------------
                                    HIGH                 LOW
                                    --------              ------
                                      (in U.S.$)
ANNUAL                                                                          
-----------------------------                                                   
2003.........................              U.S.$25.51           U.S.$13.00      
2002.........................                   21.49                10.70      
2001.........................                   28.70                14.20      
2000.........................                   25.50                11.81      
1999.........................                   14.50                 7.00      
1998.........................                   15.56                 6.63      

QUARTERLY                                                                       
-----------------------------                                                   
2003                                                                            
First Quarter.............              U.S.$16.61           U.S.$13.00   
Second Quarter............                   21.31                17.15   
Third Quarter.............                   24.06                18.18   
Fourth Quarter............                   25.51                21.02   
2002                                                                            
First Quarter.............              U.S.$21.49           U.S.$18.30   
Second Quarter............                   21.30                14.21   
Third Quarter.............                   16.05                10.72   
Fourth Quarter............                   15.56                10.70   

MONTHLY                                                                         
-----------------------------                                                   
2003                                                                            
January...................              U.S.$16.61           U.S.$13.00   
February..................                   14.42                13.20   
March.....................                   16.61                13.75   
April.....................                   19.99                17.15   
May.......................                   21.31                19.50   
June......................                   20.97                19.59   
July......................                   21.23                19.85   
August....................                   22.19                18.18   
September.................                   24.06                20.60   
October...................                   23.05                21.20   
November..................                   24.07                21.02   
December..................                   25.51                22.50   

Source: The Bank of New York                                                    

(1)  For a period of time commencing on September 17, 1999, two business days   
after the Antarctica conversion, and prior to September 15, 2000, the 
  first date following the Brahma conversion, there did exist two separate
  trading markets for the shares of AmBev and Brahma, AmBev's predecessor.
Due to the limited trading volume in AmBev's shares throughout this   
period, however, this chart only relates to the stock prices of Brahma
  shares for the period of time commencing on September 17, 1999 and prior
to September 15, 2000.                                                

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TRADING PRICES ON THE NEW YORK STOCK EXCHANGE:  
ADRS REPRESENTING 100 COMMON SHARES(1)  
----------------------------------------------  
                 PER 100 COMMON SHARE ADRS
                  ----------------------------------
                  HIGH                 LOW
                 --------------        -----------
                    (in U.S.$)
ANNUAL                                                                          
2003.........................    U.S.$22.00           U.S.$10.00                
2002.........................         18.75                10.18                
2001.........................         26.00                10.00                
2000.........................         19.88                 9.00                
1999.........................         10.25                 7.31                
1998.........................         13.75                 6.63                

QUARTERLY                                                                       
2003                                                                            
First Quarter.............    U.S.$14.11           U.S.$10.00             
Second Quarter............         18.10                10.00             
Third Quarter.............         19.00                14.00             
Fourth Quarter............         22.00                15.00             
2002                                                                            
First Quarter.............    U.S.$18.75           U.S.$15.50             
Second Quarter............         17.50                14.00             
Third Quarter.............         14.30                12.50             
Fourth Quarter............         13.50                10.18             

MONTHLY                                                                         
2003                                                                            
January...................    U.S.$14.08           U.S.$11.47             
February..................         13.00                11.73             
March.....................         14.11                10.00             
April.....................         16.10                10.00             
May.......................         17.20                15.00             
June......................         18.10                15.00             
July......................         17.59                15.00             
August....................         18.91                14.00             
September.................         19.00                15.00             
October...................         21.39                15.00             
November..................         21.46                17.00             
December..................         22.00                17.00             

Source: The Bank of New York                                                    

(1)  For a period of time commencing on September 17, 1999, two business days   
after the Antarctica conversion, and prior to September 15, 2000, the 
  first date following the Brahma conversion, there did exist two separate
  trading markets for the shares of AmBev and Brahma, AmBev's predecessor.
Due to the limited trading volume in AmBev's shares throughout this   
period, however, this chart only relates to the stock prices of Brahma
  shares for the period of time commencing on September 17, 1999 and prior
to September 15, 2000.                                                

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REGULATION OF THE BRAZILIAN SECURITIES MARKET 

        The Brazilian securities markets are regulated by the CVM, which has
general authority over the stock exchanges and securities markets, as well as   
by the Central Bank, which has, among other powers, licensing authority over    
brokerage firms and regulates foreign investment and foreign exchange           
transactions. The Brazilian securities markets are governed by Law No. 6,385    
dated December 7, 1976 (the "Brazilian Securities Law"), and by Law No. 6,404   
of December 15, 1976 (the "Brazilian Corporate Law"), which were amended and    
supplemented by Law No. 10,198/01, dated February 14, 2001, Law No. 10,303/01,  
dated October 31, 2001, and Law No. 10,411/02, dated February 26, 2002, which   
introduced new concepts and several changes, and by regulations issued by the   
CVM, the Conselho Monetario Nacional (National Monetary Council) and the        
Central Bank. These laws and regulations, among others, provide for disclosure  
requirements, restrictions on insider trading and price manipulation, and       
protection of minority shareholders. They also provide for licensing and        
oversight of brokerage firms and governance of Brazilian stock exchanges.       
However, the Brazilian securities markets are not as highly regulated and       
supervised as U.S. securities markets.                                          

    Under Brazilian Corporate Law, a company is either publicly held
(listed), a companhia aberta, such as AmBev, whose shares are publicly traded   
on the Sao Paulo Stock Exchange (Bovespa), or privately held (unlisted), a      
companhia fechada. All listed companies are registered with the CVM and are     
subject to reporting and regulatory requirements. The Brazilian Corporate Law   
allows the CVM to classify listed companies according to the kind of            
securities they issue. A company registered with the CVM may trade its          
securities either on the Brazilian stock exchanges or in the Brazilian          
over-the-counter market. Shares of companies like AmBev traded on the Sao       
Paulo Stock Exchange may not also be traded on the Brazilian over-the-counter   
market. The shares of a listed company, including AmBev, may also be traded     
privately subject to several limitations. To be listed on the Sao Paulo Stock   
Exchange a company must apply for registration with the CVM.                    

     The trading of securities on the Brazilian stock exchanges may be
halted at the request of a company in anticipation of a material announcement.  
Companies are sometimes required by law to request such suspension. Trading     
may also be suspended on the initiative of a Brazilian stock exchange or the    
CVM, among other reasons, based on or due to a belief that a company has        
provided inadequate information regarding a significant event or has provided   
inadequate responses to inquiries by the CVM or a stock exchange.               

TRADING ON THE BRAZILIAN STOCK EXCHANGES                                        

 On January 27, 2000, a formal protocol was signed merging the
previous nine Brazilian stock exchanges. Following the merger, the Sao Paulo    
Stock Exchange is the only Brazilian stock exchange on which private equity     
and private debt may be traded. The Sao Paulo Stock Exchange is a               
not-for-profit entity owned by its member brokerage firms. Trading on the Sao   
Paulo Stock Exchange is limited to member brokerage firms and a limited number  
of authorized non-members.                                                      

       The Sao Paulo Stock Exchange outcry trading sessions are from 10:00
a.m. to 1:00 p.m. and from 2:00 p.m. to 4:45 p.m., subject to change during     
daylight savings time in the United States. There is also an on-line Sao Paulo  
Stock Exchange Trading System called Mega Bolsa which trades all stocks that    
are not traded in the floor, the simultaneously trade of some stocks being      
permitted (from 10:00 a.m. to 5 p.m. and from 4:45 p.m. to 5:00 p.m. there is   
a closing call). The Sao Paulo Stock Exchange also permits trading from 5:45    
p.m. to 7:00 p.m. on an                                                         

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on-line system connected to traditional and Internet brokers called the After   
Market. The After Market session is restricted to certain stocks that were      
traded in the floor during the outcry session demonstrating certain liquidity   
characteristics. Trading on the After Market is subject to regulatory limits    
on price volatility and on the volume of shares transacted through Internet     
brokers. CVM has discretionary authority to suspend trading in shares of a      
particular issuer under specific circumstances. Securities listed on the Sao    
Paulo Stock Exchange may also be traded off the exchange under specific         
circumstances, but such trading is very limited.                                

        Settlement of transactions is effected three business days after the
trade date. Delivery of and payment for shares are made through the facilities  
of separate clearing houses for each exchange, which maintain accounts for the  
member brokerage firms. The seller is ordinarily required to deliver the        
shares to the exchange on the second business day following the trade date.     
The clearing house for the Sao Paulo Stock Exchange is Companhia Brasileira de  
Liquidacao e Custodia (CBLC), which is owned by the Sao Paulo Stock Exchange    
and its members.                                                                

       In order to better control volatility, the Sao Paulo Stock Exchange
has adopted a "circuit breaker" mechanism pursuant to which trading sessions    
may be suspended for a period of 30 minutes whenever the index of the stock     
exchange falls 10% compared to the previous day's closing index. After that,    
if the market falls more 5%, the Circuit Breaker is triggered again for one     
more hour. If the market falls more than 15% compared to the previous day no    
more pauses are taken. The "circuit breaker" is not allowed to be started       
during the last 30 minutes of the trading session (from 4:15p.m. to 4:45        
p.m.).                                                                          

      Although the Brazilian equity market is Latin America's largest in
terms of market capitalization, it is smaller, more volatile and less liquid    
than the major U.S. and European securities markets. At December 31, 2002, the  
aggregate market capitalization of all the companies listed on Sao Paulo Stock  
Exchange was equivalent to approximately R$ 438 billion. Although all of the    
outstanding shares of a listed company are actually available for trading by    
the public, in most cases fewer than half of the listed shares are actually     
traded by the public because the remainder of a listed company's shares are     
usually held by small groups of controlling persons, by governmental entities   
or by one principal shareholder. For this reason, data showing the total        
market capitalization of Brazilian stock exchanges tend to overstate the        
liquidity of the Brazilian equity securities market.                            

      There is also significantly greater concentration in the Brazilian
securities markets. During the year ended December 31, 2002, the ten most       
actively traded issues represented approximately 55.77% of the total volume of  
shares traded on the Sao Paulo Stock Exchange, comparable to the 53.47% of      
total volume in 2001.                                                           

      Trading on Brazilian stock exchanges by non-residents of Brazil is
subject to limitations under Brazilian foreign investment legislation. See      
"Key Information--Exchange Rate Information--Exchange Controls" and             
"Additional Information--Memorandum and Articles of Association--Restrictions   
on Foreign Investment".                                                         

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Additional Information                                                          

MEMORANDUM AND ARTICLES OF ASSOCIATION  

 Set forth below is a brief summary of the material provisions
concerning our preferred shares, common shares, bylaws and the Brazilian        
Corporate Law. In Brazil, the principal governing document of a corporation is  
the company's bylaws ("Estatuto Social"). This description is qualified in its  
entirety by reference to Brazilian Corporate Law and our bylaws. An English     
translation of our bylaws has been filed with the Securities and Exchange       
Commission of the United States (SEC) as an exhibit to this annual report. A    
copy of our bylaws (together with an English translation) is also available     
for inspection at the principal office of the Depositary. Information on the    
trading market for our preferred shares is set forth under "The Offer and       
Listing-Principal Market and Trading Market Price Information" and information  
on ownership of our shares is set forth under "Major Shareholders and Related   
Party Transactions-Major Shareholders".                                         

 Our capital stock is comprised of preferred shares and common
shares, all without par value. At May 31, 2004, there were 21,732,192,808       
total preferred shares ("acoes preferenciais") outstanding and 15,631,332,792   
total common shares ("acoes ordinarias") outstanding. We are authorized to      
increase our capital upon the decision of our Board of Directors, without the   
need to amend our bylaws, up to 45,000,000,000 shares, limited to               
27,000,000,000 preferred shares and 18,000,000,000 common shares. There are no  
other classes or series of preferred shares outstanding.                        

      Each AmBev common share entitles the holder thereof to one vote at
meetings of our shareholders. Holders of common shares are not entitled to any  
preference relating to our dividends or other distributions or any preference   
upon our liquidation.                                                           

       Each AmBev preferred share is non-voting, may not be converted into
a common share, and is entitled to:                                             

      (i)  priority in the reimbursement of capital in case of company's
liquidation; and                                  

       (ii) the right to receive dividends in an amount per share at least
            10% higher than the amount per share paid to holders of common
shares.                                           

        See "Voting Rights" for more information regarding the voting rights
of our preferred shares.                                                        

      Although Law No. 10,303/01 has amended the Brazilian Corporate Law
to establish that the number of non-voting shares or shares with limited        
voting rights, such as our preferred shares, may not exceed half (50%) of the   
total number of issued shares, since AmBev has been incorporated prior to the   
enactment of Law No. 10,303/01, it is allowed by law to keep the existing       
proportion between common shares and preferred shares - i.e. the number of its  
non-voting shares may not exceed two-thirds of the total number of its shares.  

        The majority of members of our Board of Directors will be elected by
the controlling shareholders of our common shares. Board members, regardless    
the shareholder they represent, owe fiduciary duties towards our Company and    
all of our shareholders. At the same time, any director appointed by            
shareholders bound by a shareholders' agreement is also bound by the            

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terms of such agreement. For further information on this matter see "Major      
Shareholders and Related Party Transactions--AmBev's Shareholders Agreement".   

GENERAL                                                     

        Our registered name is Companhia de Bebidas das Americas - AmBev and
our registered office is in Sao Paulo, SP, Brazil. Our registration number      
with the Brazilian Commercial Registry is 35,300,157,770. AmBev's principal     
corporate purposes include the production and sale of beer, soft drinks and     
other beverages. A more detailed description of AmBev's purposes can be found   
in Chapter I, Article 3 of AmBev's bylaws.                                      

BOARD OF DIRECTORS                                          

        According to the Brazilian Corporate Law, any matters subject to the
approval of the Board of Directors can be approved by a "simple majority" of    
votes of the members present at the meeting, unless the company's bylaws        
establish a higher quorum (which is not the case with respect to AmBev's        
bylaws). Therefore, any matters requiring the approval of AmBev's Board of      
Directors will be approved by the affirmative vote of a majority of its Board   
members present at the relevant meeting.                                        

       According to the general principles of the Brazilian Corporate Law,
if a director or an executive officer has a conflict of interest with the       
company in connection with any proposed transaction, the director or executive  
officer may not vote in any decision of the board of directors or of the board  
of executive officers regarding such transaction and must disclose the nature   
and extent of the conflicting interest for transcription in the minutes of the  
meeting. In any case, a director or an executive officer may not transact any   
business with the company, including any borrowings, except on reasonable or    
fair terms and conditions that are identical to the terms and conditions        
prevailing in the market or offered by third parties. Any transaction that a    
director may have an interest in can only be approved if carried out on an      
arm's-length basis.                                                             

Our bylaws and the Brazilian Corporate Law require that our 
directors be shareholders of the Company. Ownership of one share is sufficient  
to satisfy this condition.                                                      

DIVIDENDS AND RESERVES                                      

        The discussion below summarizes the main provisions of the Brazilian
Corporate Law regarding the establishment of reserves by corporations and       
rules with respect to the distribution of dividends, including provisions       
regarding the interest charge attributed to shareholders' equity.               

Calculation of Distributable Amounts                        

  o    At each Annual Shareholders' meeting, AmBev's Board of Directors is
        required to propose how the company's net earnings for the preceding
        fiscal year are to be allocated. For purposes of Brazilian Corporate
Law, a company's net income after income taxes and social   
        contribution taxes for such fiscal year, net of any cumulated losses
   from prior fiscal years and amounts allocated to employees' and
   management's participation in earnings represents its "adjusted
  income" for such fiscal year. In accordance with the Brazilian
      Corporate Law, an amount equal to such "adjusted income" (which we
will                                                        

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 refer to as the "distributable amount") will be available for
distribution to shareholders in any particular year. Such   
distributable amount is subject to:                         

   o    Reductions that may be caused by amounts contributed for the purpose
     of meeting the charges of the assistance foundation for employees
        and management of the Company and its controlled companies, with due
      regard for the rules established by the Board of Directors to this
    effect. Up to 10% of the distributable amount may be contributed
under this concept.                                         

o    Reductions caused by amounts allocated to the "Legal Reserve" or 
contingency reserves. See "--Reserves".                     

o    Increases caused by reversals of reserves constituted in prior   
years.                                                      

Mandatory Dividend                                          

        Under its bylaws, AmBev is required to distribute to shareholders as
dividends in respect to each fiscal year ending on December 31 an amount not    
less than 35% of the distributable amount ("mandatory dividend"). In addition   
to the mandatory dividend, the Board of Directors may recommend payment of      
complimentary dividends to shareholders. The limit for dividend payment is the  
distributable amount plus the balance available in our statutory "Investment    
Reserve", in which we allocate distributable amounts from previous fiscal       
years not paid as dividends. See "--Reserves". Furthermore, dividend payments   
may be implemented in advance, during the fiscal year to which it is related,   
upon decision of the Board of Directors. Any amount paid as dividend in         
advance will be considered by the end of the fiscal year as part of the         
mandatory dividend owed to shareholders.                                        

    In addition, the mandatory dividend, either the full amount or a
portion of it, may not be paid in any given year should the Board of Directors  
consider that such payment is incompatible with the company's financial         
situation and the shareholders approve. While the law does not establish the    
circumstances in which payment of the mandatory dividend is "incompatible"      
with the company's financial situation, it is generally agreed that a company   
is allowed not to pay the mandatory dividend if such payment threatens the      
existence of the company as a going concern or harms its normal course of       
operations. Company's fiscal committee ("Conselho Fiscal") must opine on the    
non-payment of mandatory dividends, and AmBev's administration is supposed to   
provide to the CVM, no later than 5 business days after such decision is        
taken, a report explaining the reasons considered by the Board of Directors.    

       Any postponed payment of mandatory dividends must be allocated as a
special reserve. Any remaining balance of such reserve not absorbed by losses   
in subsequent fiscal years must be paid to shareholders as soon as the          
company's financial allows for that.                                            

Dividend Preference of Preferred Shares                     

       Pursuant to AmBev's bylaws, AmBev's preferred shareholders, if any,
are entitled to dividends 10% greater than the dividends to be paid to its      
common shareholders.                                                            

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Payment of Dividends                                        

       Under Brazilian Corporate Law any holder of record of shares at the
time of a dividend declaration is entitled to receive dividends, which are      
generally required to be paid within 60 days following the date of such         
declaration, unless a shareholders' resolution sets forth another date of       
payment, which, in either case, must occur prior to the end of the fiscal year  
in which such dividends were declared. AmBev's bylaws do not provide for a      
time frame for payment of dividends. The mandatory dividend is satisfied        
through payments made in the form of dividends and interest attributable to     
shareholders' equity, which is equivalent, from an economic perspective, to a   
dividend, but is a more tax efficient way to distribute earnings for the        
company, as it is generally deductible for income tax purposes. Shareholders    
have a three-year period from the dividend payment date to claim the payment    
of dividends in respect of its shares, after which the company has no           
liability for such payment.                                                     

    Shareholders who are not residents of Brazil must register their
investment with the Central Bank in order for dividends, sales proceeds or      
other amounts to be eligible for remittance in foreign currency outside of      
Brazil. The preferred and common shares underlying our ADSs are held in Brazil  
by the custodian (Banco Itau S.A.), as agent for the depositary (The Bank of    
New York), which is the registered owner of AmBev shares. Payments of cash      
dividends and distributions, if any, on AmBev common and preferred shares will  
be made in Brazilian reais to the custodian on behalf of the depositary. The    
custodian will then convert such proceeds into U.S. dollars and will deliver    
such U.S. dollars to the depositary for distribution to the holders of AmBev    
ADSs. In the event that the custodian is unable to immediately convert the      
dividends in reais into U.S. dollars, holders of the preferred and common       
AmBev ADSs may be adversely affected by devaluations or other exchange rate     
fluctuations before such dividends can be converted and remitted. Fluctuations  
in the exchange rate between the real and the U.S. dollar may also affect the   
U.S. dollar equivalent of the real price of the preferred and common shares of  
AmBev in the Brazilian stock exchange.                                          

Interest Attributable to Shareholders' Equity               

        Pursuant to a change in Brazilian tax law effective January 1, 1996,
Brazilian companies are permitted to distribute earnings to shareholders under  
the concept of Interest Attributable to Shareholder's Equity. The amounts paid  
under this concept are deductible for income tax purposes and, as of the        
beginning of 1998, they also became deductible for social contribution          
purposes. The objective of the tax law change was to encourage the use of       
equity investment, as opposed to debt, to finance corporate activities. The     
amount of any such notional "interest" payment to holders of equity securities  
is limited in respect of any particular year to the minimum of (a) 50% of       
retained earnings plus any statutory earnings reserve or (b) the company's      
Shareholder's Equity multiplied by the Taxa de Juros de Longo Prazo (TJLP),     
which is the official interest rate used as reference in long-term loans        
provided by the Brazilian Development Bank.                                     

       Interest Attributable to Shareholder's Equity is treated exactly as
dividends for purposes of income distribution. The only significant difference  
is that a 15% withholding tax is due by shareholders upon receipt of such       
interest payment, which tax is collected by the company in behalf of its        
shareholders when the distribution is implemented.                              

   The net amount shareholders receive as Interest Attributable to
Shareholder's Equity is deducted from the mandatory dividend owed to            
shareholders.                                                                   

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Reserves                                                    

General                                                     
-------                                                     

       Brazilian Corporate Law provides that all discretionary allocations
of "adjusted income", including the Unrealized Income Reserve and the           
Investment Reserve, are subject to approval by shareholders and may be added    
to capital or distributed as dividends in subsequent years. In the case of Tax  
Incentive Reserve and the Legal Reserve, they are also subject to approval by   
shareholders; however, the use of their respective balances is restricted to    
being added to capital or the absorption of losses. They can not be used as a   
source for income distribution to shareholders.                                 

Legal Reserve                                               
-------------                                               

   Under Brazilian Corporate Law, corporations (such as AmBev) are
required to maintain a "Legal Reserve" to which they must allocate 5% of their  
"adjusted income" for each fiscal year until the balance of the reserve equals  
20% of their paid-in capital. Cumulated losses, if any, may be charged against  
the Legal Reserve. Other than that, the Legal Reserve can only be used to       
increase the company's capital.                                                 

Contingency Reserve                                         
-------------------                                         

 Under the Brazilian Corporate Law, a portion of our "adjusted
income" may also be discretionally allocated to a "contingency reserve" for an  
anticipated loss that is deemed probable in future years. Any amount so         
allocated in a prior year must be either reversed in the fiscal year in which   
the loss was anticipated if such loss does not in fact occur or charged off in  
the event that the anticipated loss occurs.                                     

Investment Reserve                                          
------------------                                          

Under Brazilian Corporate Law, a portion of a corporation's 
"adjusted income" may be allocated for discretionary appropriations for plant   
expansion and other fixed or working capital investment projects, including     
share buyback programs. The amounts appropriated in such reserves are based on  
a capital budget previously presented by management and approved by             
shareholders.                                                                   

   Pursuant to the Brazilian Corporate Law, the Investment Reserve
balance is not allowed to be greater than the company's capital. In the case    
such limit is reached, shareholders may vote for the amount in excess to be     
converted into capital or distributed as dividends.                             

Unrealized Income Reserve                                   
-------------------------                                   

As of March 1, 2002, under Law No. 10,313, which amended the
Brazilian Corporate Law, the amount by which the mandatory dividend exceeds     
the "realized" portion of net profits for any particular year may be allocated  
to the unrealized income reserve. The "realized" portion of net profits is the  
amount by which "adjusted income" exceed the sum of:                            

    (i)  our net positive results, if any, from the equity method of
        accounting for earnings and losses of our subsidiaries and
certain affiliates; and                           

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        (ii) the profits, gains or return obtained on transactions completed
after the end of the following fiscal year.       

Tax Incentive Reserve                                       
---------------------                                       

        Under Brazilian tax laws, a portion of "adjusted income" may also be
allocated to a general "tax incentive reserve" in amounts corresponding to      
reductions in the company's income tax generated by credits for particular      
government-approved investments. The reserve is available only in connection    
with the acquisition of capital stock of companies undertaking specific         
government-approved projects. In the case of AmBev a Tax Incentive Reserve is   
booked in the Shareholder's Equity of Companhia Brasileira de Bebidas ("CBB"),  
our main operational subsidiary.                                                

VOTING RIGHTS                                               

Each common share entitles its holder to one vote at AmBev's
shareholders meetings. Holders of preferred shares are not entitled to vote at  
AmBev's shareholders' meetings.                                                 

     Brazilian Corporate Law provides that non-voting preferred shares
entitled to receive minimum or fixed dividends acquire voting rights in the     
event that the company fails to pay the minimum or fixed dividends to which     
such shares are entitled for the period established by company's bylaws, which  
may not exceed three consecutive fiscal years. The voting rights continue       
until payment of dividends is resumed (or until all dividends due are paid, in  
the case of preferred shares with the right to receive dividends                
cumulatively). The same rule applies to preferred shares with restricted        
voting rights, causing the suspension of the restrictions in place. The         
existing preferred shares of AmBev will not acquire such voting rights as       
AmBev preferred shares are not entitled to receive minimum or fixed dividends.  

ELECTION OF DIRECTORS                                       

       Each common share of AmBev represents one vote at any shareholders'
meeting in connection with the election of the Board of Directors of AmBev.     
Due to recent changes introduced by Law No. 10,303/01, minority shareholders    
holding at least 15% of voting capital or preferred shareholders holding at     
least 10% of total capital may each elect one member of the Board of Directors  
and its alternate member. Additionally, if such shareholders do not achieve     
such percentage, they can jointly appoint one member of the Board of Directors  
and its alternate member once they represent, together, at least 10% of total   
capital. In order to exercise these minority rights, shareholders must prove    
that they have held the shares for at least the last three months.              

      If such prerogative is exercised with the adoption of a cumulative
voting procedure, the controlling shareholder will always have the right to     
elect the same number of members appointed by minority shareholders plus one,   
independently of the number of directors provided in the company's bylaws.      

    Additionally, until the 2005 Ordinary Shareholders Meetings, the
director appointed by preferred shareholders (whether or not together with      
voting minority shareholders) shall be selected from a three-name list          
previously prepared by the controlling shareholder.                             

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       Shareholders holding shares representing at least 10% of the shares
entitled to vote in the shareholders' meeting, or such smaller percentage       
applicable according to a sliding scale determined by the CVM and based on the  
capital of the company, have the right to request that a cumulative voting      
procedure be adopted. Under such procedure, each voting share shall have as     
many votes as there are positions of directors to be filled, and each           
shareholder may cast all the votes for a single candidate or distribute them    
among various candidates.                                                       

Under the bylaws of AmBev and applicable law, the number of 
directors may be reduced to a minimum of three. Under Brazilian Corporate Law,  
if the number of directors is reduced to five or less, the percentage           
necessary for any minority shareholder or group of minority shareholders to     
elect at least one member of the Board of Directors under the cumulative vote   
procedure cannot exceed 20% of the voting shares of AmBev. Because the AmBev    
shareholders' agreement provides that the FAHZ shall have the right to appoint  
four members of the Board of Directors, any reduction in the number of such     
members to fewer than four would be subject to the FAHZ's approval.             

LIQUIDATION                                                 

     In the event of liquidation, a general shareholders meeting shall
determine the form of liquidation and appoint a fiscal committee to supervise   
the process during the liquidation period. A liquidator will be appointed by    
the Board of Directors.                                                         

 Upon liquidation, the AmBev preferred shares have an absolute
preference over the AmBev common shares. In the event of a liquidation, the     
assets available for distribution to AmBev's shareholders would be distributed  
first to the preferred shareholders in an amount equal to their pro rata share  
of the legal capital of the company (AmBev's current bylaws state that its      
capital is R$3,142,055,047.38), prior to making any distributions to AmBev's    
common shareholders. In the event that the assets to be so distributed are      
insufficient to fully compensate AmBev's preferred shareholders, the preferred  
shareholders would each receive a pro rata amount (based on their pro rata      
share of the legal capital of the company excluding the common shares in such   
calculation) of any available assets.                                           

        Although the FAHZ's assets are consolidated for the purposes of U.S.
GAAP, in the event of liquidation the creditors of AmBev would not have access  
to the assets of the FAHZ.                                                      

SHAREHOLDERS' MEETING                                         

      A general meeting is convened by publishing, no later than 15 days
prior to the scheduled meeting date and no fewer than three times, a notice in  
the Diario Oficial do Estado de Sao Paulo and in a newspaper with general       
circulation in Sao Paulo, where AmBev has its registered office. The            
shareholders of AmBev have previously designated local newspapers in the        
cities of Sao Paulo for this purpose. Such notice must contain the agenda for   
the meeting.                                                                    

       A general meeting may be held if shareholders representing at least
one-quarter of the voting shares are present, except in some cases provided     
for by the law, such as for the alteration of company's bylaws, which requires  
the presence of shareholders representing at least two-thirds of the voting     
shares. If no such quorum is present, notice must again be given in the same    
manner as described above, and a meeting may then be convened without any       
specific quorum requirement, subject to the minimum quorum and voting           
requirements for specific matters, as                                           

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discussed below. Shareholders without voting rights may attend a general        
meeting and take part in the discussion of matters submitted for                
consideration.                                                                  

 Except as otherwise provided by law, resolutions of a general
meeting are passed by a simple majority vote of the shares present or           
represented at the meeting, abstentions not being taken into account. Under     
Brazilian Corporate Law, the approval of shareholders representing at least a   
majority of the issued and outstanding voting shares is required for the types  
of action described below, as well as, in the case of items (a) and (b), a      
majority of issued and outstanding shares of the affected class:                

       o    (a) creating preferred shares or increasing disproportionately
         an existing class of preferred shares relative to the other
      classes of shares, unless such action is provided for or
authorized by the bylaws;                         

o    (b) modifying a preference, privilege or condition of  
            redemption or amortization conferred on one or more classes of
    preferred shares, or creating a new class with greater
       privileges than the existing classes of preferred shares;

o    (c) reducing the mandatory dividend;                   

   o    (d) merging AmBev with another company or consolidating or
splitting it;                                     

 o    (e) participating in a centralized group of companies as
defined under Brazilian Corporate Law;            

o    (f) changing the corporate objectives of AmBev;        

o    (g) creating founders' shares; and                     

o    (h) dissolving AmBev or ceasing its liquidation status.

      General meetings can be called by the Board of Directors of AmBev.
Under the Brazilian Corporate Law, meetings can also be convened by AmBev's     
shareholders as follows: (i) by any shareholder if, under certain               
circumstances set forth in the Brazilian Corporate Law, the directors take      
more than 60 days to convene a general shareholders' meeting; (ii) by the       
shareholders of at least 5% of AmBev's total capital stock if, after a period   
of 8 days, the directors fail to call a general shareholders' meeting that has  
been requested by such shareholders; and (iii) by the shareholders of at least  
5% of either AmBev's voting capital stock or AmBev's non-voting capital stock   
if, after a period of 8 days, the directors fail to call a general meeting for  
the purpose of installing a fiscal committee that has been requested by such    
shareholders. Additionally, under certain circumstances set forth in the        
Brazilian Corporate Law, meetings can also be convened by AmBev's fiscal        
committee. For further information regarding AmBev's fiscal committee, see      
"Directors, Senior Management and Employees--Directors--Board Practices-Fiscal  
Committee".                                                                     

A shareholder may be represented at a general meeting by an 
attorney-in-fact appointed no more than one year before the meeting, who must   
be a shareholder, a company officer or a lawyer. For a public company such as   
AmBev, the attorney-in-fact may also be a financial institution.                

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 Shareholders may not exercise voting rights whenever they are
contributing assets in a capital increase paid in kind or with respect to the   
approval of its own accounts, as well as in those resolutions that may favor    
such shareholders specifically, or whenever there is a conflicting interest     
with the company. Mergers between affiliated parties are subject to a special   
statutory valuation procedure intended to determine whether the exchange ratio  
is adequate for all the parties involved, without preventing the resolution to  
be approved for lack of the statutory quorum.                                   

RESTRICTIONS ON FOREIGN INVESTMENT                            

      There are no restrictions on ownership or voting rights in respect
of capital stock of AmBev owned by individuals or legal entities domiciled      
outside Brazil. For a description of voting rights, see "--Voting Rights". The  
right to convert dividend payments and proceeds from the sale of preferred or   
common shares into foreign currency and to remit such amounts outside Brazil,   
however, is subject to exchange control restrictions and foreign investment     
legislation. For a description of these exchange control restrictions and       
foreign investment legislation, see "Key Information--Exchange Controls".       

WITHDRAWAL RIGHTS                                             

   Under Brazilian Corporate Law, a dissenting shareholder has the
right to withdraw from AmBev and be reimbursed for the value of the common or   
preferred shares held, whenever a decision is taken at a shareholders' meeting  
by a qualified quorum of shareholders representing at least 50% of the total    
outstanding voting capital to:                                                  

 o    create preferred shares or increase disproportionately an existing
      class of preferred shares relative to the other classes of shares,
       unless such action is provided for or authorized by AmBev's bylaws;

o    modify a preference, privilege or condition of redemption or     
      amortization conferred on one or more classes of preferred shares,
   or create a new class with greater privileges than the existing
classes of preferred shares;                                

o    reduce the mandatory dividend;                                   

o    merge or consolidate AmBev with another company;(1)              

o    participate in a centralized group of companies;                 

o    change the corporate objectives of AmBev;                        

-----------                                                                     
1 As defined under Law 10,303/01, withdrawal rights shall not apply in          
connection with these matters when the company's shares fulfill both            
requirements of liquidity (shares are included in securities portfolio          
negotiated in futures stock exchanges within Brazil or abroad (as determined    
by CVM) such as IBOVESPA index of the Sao Paulo Stock Exchange) and dispersion  
(less than 50% of the outstanding shares of the company are held, directly or   
indirectly, by the controlling shareholders). The latter is AmBev's current     
situation, which means dissenting shareholders of AmBev would not have          
withdrawal rights upon occurrence of any of these cases.                        

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o    transform AmBev into another corporate type;                     

   o    transfer all or a substantial part of the assets of AmBev to another
   company to create a wholly-owned subsidiary or in case AmBev is
   transformed in a wholly-owned subsidiary of another company; or

o    approve the acquisition of another company, the price of which   
exceeds the limits set forth in Brazilian Corporate Law.    

   Furthermore, if a governmental entity acquires control of AmBev
through expropriation of shares, shareholders will have the right to withdraw   
from AmBev and be reimbursed for the value of the shareholders' equity          
attributable to their equity interest.                                          

        The withdrawal rights lapse 30 days after publication of the minutes
of the relevant shareholders' meeting in the Brazilian press. AmBev would be    
entitled to reconsider any action triggering withdrawal rights within 10 days   
following the expiration of such rights if the redemption of shares of          
dissenting shareholders would jeopardize the financial stability of AmBev.      
Shares to be purchased by AmBev from the dissenting shareholders exercising     
withdrawal rights will be valued at an amount equal to the ratable portion      
attributable to such shares of the shareholders' equity of AmBev as shown on    
the last balance sheet approved at a general meeting of the shareholders (book  
value). However, if more than 60 days have elapsed since the date of such       
balance sheet; dissenting shareholders may require that the value of their      
shares be calculated on the basis of a new balance sheet. As a general rule,    
shareholders who acquire their shares after the first notice convening the      
shareholders' meeting or after the relevant press release concerning the        
meeting are published will not be entitled to withdrawal rights.                

PREEMPTIVE RIGHTS                                           

 Each shareholder of AmBev generally has a preemptive right to
subscribe for shares in capital increases, in proportion to its shareholdings.  
A minimum period of 30 days following the publication of notice of the capital  
increase is allowed for the exercise of the right and the right is negotiable.  
In the event of a capital increase which would maintain or increase the         
proportion of capital represented by preferred or common shares, holders of     
preferred ADSs or common ADSs, as the case may be, would have preemptive        
rights to subscribe only to newly issued preferred shares or common shares, as  
applicable. In the event of a capital increase which would reduce the           
proportion of capital represented by preferred shares or common shares,         
holders of preferred ADSs or common ADSs, as the case may be, would have        
preemptive rights to subscribe for preferred shares or common shares, as        
applicable, in proportion to their shareholdings only to the extent necessary   
to prevent dilution of their interest in AmBev. AmBev's bylaws provide that     
its Board of Directors may, within the limit of its authorized capital,         
withdraw preemptive rights to existing shareholders in connection with an       
increase in share capital through sale in stock exchanges, public offerings or  
public tender offers. In addition, Brazilian law provides that the              

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exercise of stock options pursuant to certain stock option plans, such as our   
stock ownership plan, is not subject to preemptive rights.                      

FORM AND TRANSFER                                           

       Brazilian law provides that ownership of shares of capital stock of
a Brazilian corporation shall generally be evidenced only by a record of        
ownership maintained by either the corporation or an accredited intermediary,   
such as a bank, acting as a registrar for the shares. Banco Itau S.A.           
currently maintains AmBev's share ownership records.                            

  Because the preferred shares and common shares of AmBev are in
registered book-entry form, a transfer of such preferred and common shares is   
made under the rules of Brazilian Corporate Law, which provides that a          
transfer of shares is effected by an entry made by the registrar for AmBev's    
shares in its books, by debiting the share account of the transferor and        
crediting the share account of the transferee.                                  

      Transfers of preferred and common shares by a foreign investor are
made in the same way and executed by such investor's local agent on the         
investor's behalf except that, if the original investment was registered with   
the Central Bank pursuant to the foreign investment regulations, the foreign    
investor should also seek amendment, if necessary, through its local agent, of  
the corresponding electronic registration to reflect the new ownership.         

      The Sao Paulo Stock Exchange operates a central clearing system. A
holder of our shares may choose, at its discretion, to participate in this      
system, and all shares elected to be put into the system will be deposited in   
custody with the stock exchange (through a Brazilian institution that is duly   
authorized to operate by the Central Bank and maintains a clearing account      
with the stock exchange). The fact that these shares are subject to custody     
with the stock exchange will be reflected in our registry of shareholders.      
Each participating shareholder will, in turn, be registered in our register of  
beneficial shareholders maintained by the stock exchange and will be treated    
in the same way as registered shareholders.                                     

DISCLOSURE OF PRINCIPAL SHAREHOLDERS                        

       Under Brazilian law, shareholders owning more than ten percent of a
company's voting shares, such as the holders of AmBev's common shares, must     
publicly disclose their shareholder ownership.                                  

   OTHER CHANGES IMPLEMENTED UNDER THE NEW BRAZILIAN CORPORATE LAW

        Besides the changes already described in this annual report, Law No.
10,303, which amended the Brazilian Corporate Law and current regulations,      
provides for the following changes:                                             

  o    upon a sale of control, the acquiror is required to launch a tender
       offer to purchase all minority voting shares at a price equal to at
least 80% of the control price;                             

  o    if provided for in the bylaws, disputes among our shareholders will
      be subject to arbitration. Our bylaws currently do not provide for
arbitration;                                                

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o    upon the occurrence of a tender offer aiming at delisting our    
      company or through which our controlling shareholders acquire more
than one-third of the float shares on September 4, 2000, the
 purchase price shall be equal to the fair value of the shares
considering the total number of outstanding shares;         

o    members of our board of directors elected by the non controlling 
shareholders will have the right to veto the choice of the  
independent accountant of the controlling shareholder;      

   o    our controlling shareholders, the shareholders that elect members to
       our board of directors and to the board of auditors, the members of
  our board of directors and board of auditors and our executive
     officers will be required to disclose any purchase or sale of our
shares to the CVM and to the Sao Paulo Stock Exchange; and  

o    the chairman of any shareholders' or board of directors' meeting 
       shall disregard any vote that is rendered against provisions of any
    shareholders' agreement if that shareholders' agreement has been
duly filed with us.                                         

MATERIAL CONTRACTS  

        The following is a summary of the material contracts to which we are
a party. For directions on how to obtain these documents, see "Exhibits and     
certifications".                                                                

SHAREHOLDERS AGREEMENT                                        

      The agreement between the shareholders of Brahma and Antarctica to
form AmBev, including the amendments inserted in connection with the            
transaction between, interalia, AmBev and Interbrew S.A., is discussed in       
"Major Shareholders and Related Party Transactions--Major Shareholders--AmBev   
Shareholders Agreement."                                                        

INCORPORACAO AGREEMENT                                      

     The agreement between AmBev, Interbrew, Labatt and Labatt Brewing
Canada Holding Ltd., with respect to AmBev's proposed acquisition of Labatt,    
is discussed in "Background of the Company-Interbrew-AmBev Transactions-Proposed
Acquisition of Labatt - Incorporacao Agreement."                                

GOVERNANCE AGREEMENT                                          

  The agreement relating to the governance of AmBev entered into
between Fundacao, Braco, ECAP, AmBev and BAC pursuant to the stock purchase     
agreement between AmBev and BAC is discussed in "Major Shareholders and         
Related Party Transactions--Major Shareholders--AmBev Share Transfer Agreement  
and AmBev Governance Agreement."                                                

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ACQUISITIONS, DISPOSITIONS AND JOINT VENTURES                 

We have discussed the details of all material acquisitions, 
dispositions and joint ventures in "Background on the Company - The             
Interbrew-AmBev Transaction", "Information on the Company - Other Acquisitions  
and Dispositions" and "Information on the Company - Joint Ventures and          
Strategic Alliances."                                                           

     "Information on the Company--Interest in Quinsa", "Information on
the Company--Other Acquisitions and Dispositions" and "Information on the       
Company--Joint Ventures and Strategic Alliances".                               

THE ANTITRUST PERFORMANCE AGREEMENT                           

      We are currently subject to one antitrust performance agreement in
effect. See "Consolidated Financial Statements and Other Financial              
Information--Legal Proceedings". This agreement was signed with CADE in Brazil  
and relates to the Brahma and Antarctica combination.                           

THE CONDITIONAL APPROVAL OF OUR DEAL WITH QUINSA              

       The completion of our deal with Quinsa required the approval of the
Comision Nacional de Defensa de la Competencia ("CNDC"), the Argentinean        
antitrust agency. The approval was obtained in January 2003 subject to the      
accomplishment of some specific conditions. For further information on this     
matter see "Information on the Company--Interest in Quinsa".                    

DEBT ISSUANCES                                                

      In August 2001, AmBev raised Japanese Yen 39,060 million through a
syndicated loan. The loan has a three-year maturity and an interest rate of     
Yen LIBOR plus 2.37% per annum. This loan is jointly guaranteed by AmBev and    
its subsidiaries and is subject to indebtedness and liquidity ratios.           

   In December 2001, CBB issued U.S.$500 million 10 1/2% notes due
December 2011 in the U.S. securities markets, fully guaranteed by AmBev. This   
offering significantly increased the average maturity of AmBev outstanding      
debt. The transaction was priced at 98.56% of the nominal principal amount      
with a coupon rate of 10.5%. On August 28, 2002, we consummated an SEC          
registered exchange offer. These notes contain certain covenants and events of  
default which, if triggered, may cause accelerated amortization.                

  In September 2003, CBB issued U.S.$500 million 8.75% notes due
September 2013 in the U.S. securities markets, fully guaranteed by AmBev. The   
transaction was priced at 99.67% of the nominal principal amount with a coupon  
rate of 8.75%. These notes contain certain covenants and events of default      
which, if triggered, may cause accelerated amortization.                        

RAW MATERIALS AND PACKAGING                                   

       We have a number of contracts to buy certain key ingredients in the
production process of both beer and soft drinks, as well as materials used in   
the packaging of our products such as aluminum, plastic and glass. See          
"Information on the Company--Production and Availability of Raw Materials" and  
"Operating and Financial Review and Prospects--Commitments and Contingencies."  

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EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY HOLDERS

  There are no restrictions on ownership of our capital stock by
individuals or legal entities domiciled outside Brazil. However, the right to   
convert dividend payments and proceeds from the sale of preferred shares or     
common shares into foreign currency and to remit such amounts outside Brazil    
is subject to restrictions under foreign investment legislation which           
generally requires, among other things, that the relevant investment be         
registered with the Central Bank of Brazil. These restrictions on the           
remittance of foreign capital abroad could hinder or prevent the custodian for  
the preferred shares or common shares represented by American Depositary        
Shares, or holders who have exchanged American Depositary Shares for preferred  
shares or common shares, from converting dividends, distributions or the        
proceeds from any sale of preferred shares or common shares, as the case may    
be, into U.S. dollars and remitting such U.S. dollars abroad. Delays in, or     
refusal to grant any required government approval for conversions of Brazilian  
currency payments and remittances abroad of amounts owed to holders of          
American Depositary Shares could adversely affect holders of American           
Depositary Receipts.                                                            

      Under Resolution No. 2,689, foreign investors may invest in almost
all financial assets and engage in almost all transactions available in the     
Brazilian financial and capital markets, provided that certain requirements     
are fulfilled. In accordance with Resolution No. 2,689, the definition of       
foreign investor includes individuals, legal entities, mutual funds and other   
collective investment entities, domiciled or headquartered abroad.              

Under Resolution No. 2,689, a foreign investor must:        

o    appoint at least one representative in Brazil, with powers to    
perform actions relating to its investment,                 

o    complete the appropriate foreign investor registration form,     

o    register as a foreign investor with the CVM, and                 

o    register its foreign investment with the Central Bank of Brazil. 

   Securities and other financial assets held by foreign investors
pursuant to Resolution No. 2,689 must be registered or maintained in deposit    
accounts or under the custody of an entity duly licensed by the Central Bank    
of Brazil or the CVM. In addition securities trading is restricted to           
transactions carried out on stock exchanges or through organized                
over-the-counter markets licensed by the CVM, except for subscription,          
bonification, conversion of debentures into shares, securities indexes,         
purchase and sale of investment funds quotas and, if permitted by the CVM,      
going private transactions, canceling or suspension of trading. Moreover, the   
offshore transfer or assignment of the securities or other financial assets     
held by foreign investors pursuant to Resolution No. 2,689 are prohibited,      
except for transfers resulting from a corporate reorganization, or occurring    
upon the death of an investor by operation of law or will.                      

       Resolution No. 1,927 of the National Monetary Council, which is the
restated and amended Annex V to Resolution No. 1,289, which we call the Annex   
V Regulations, provides for the issuance of depositary receipts in foreign      
markets in respect of shares of Brazilian issuers. It provides that the         
proceeds from the sale of American Depositary Shares by holders of American     
Depositary Receipts outside Brazil are free of Brazilian foreign investment     
controls and holders of American Depositary Shares who are not resident in a    
tax haven jurisdiction (i.e. a country or location that does not impose taxes   
on income or where the maximum income tax rate is lower than 20%, or where the  
legislation imposes restrictions on disclosure of the shareholding composition  
or the ownership of the investment) will be entitled to favorable tax           
treatment.                                                                      

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      An electronic registration has been issued by the custodian in the
name of the Bank of New York, the depositary, with respect to the American      
Depositary Shares. Pursuant to this electronic registration, the custodian and  
the depositary are able to convert dividends and other distributions with       
respect to the preferred shares or common shares represented by American        
Depositary Shares into foreign currency and to remit the proceeds outside       
Brazil. If a holder exchanges American Depositary Shares for preferred shares   
or common shares, the holder may continue to rely on the custodian's            
electronic registration for only five business days after the exchange. After   
that, the holder must seek to obtain its own electronic registration with the   
Central Bank of Brazil under Law No. 4,131 or Resolution No. 2,689.             
Thereafter, unless the holder has registered its investment with the Central    
Bank of Brazil, such holder may not convert into foreign currency and remit     
outside Brazil the proceeds from the disposition of, or distributions with      
respect to, such preferred shares or common shares. A holder that obtains an    
electronic registration generally will be subject to less favorable Brazilian   
tax treatment than a holder of American Depositary Shares. See "--Taxation".    

     There are two principal foreign exchange markets in Brazil (which
have operated under identical operational limits and had identical rates since  
February 1999):                                                                 

o    the commercial rate exchange market, and                         

o    the floating rate exchange market.                               

     Most trade and financial foreign-exchange transactions, including
transactions relating to the purchase or sale of shares or the payment of       
dividends or interest with respect to shares, are carried out on the            
commercial market. Only a Brazilian bank authorized to buy and sell currency    
in the commercial market may effect purchases of foreign currencies in that     
market. In both markets, rates are freely negotiated, but may be strongly       
influenced by Central Bank of Brazil intervention. See "Key                     
Information--Exchange Rates".                                                   

 Under Brazilian law, whenever there is a serious imbalance in
Brazil's balance of payments or reasons to foresee a serious imbalance, the     
Brazilian government may impose temporary restrictions on the remittance to     
foreign investors of the proceeds of their investments in Brazil, and on the    
conversion of Brazilian currency into foreign currencies. Such restrictions     
may hinder or prevent the custodian or holders who have exchanged American      
Depositary Shares for underlying preferred shares or common shares from         
converting distributions or the proceeds from any sale of such shares, as the   
case may be, into U.S. dollars and remitting such U.S. dollars abroad.          

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TAXATION  

        The following discussion summarizes the principal Brazilian and U.S.
Federal income tax consequences of acquiring, holding and disposing of notes,   
preferred shares or preferred ADSs or AmBev's common shares or common ADSs.     
This discussion is not a comprehensive discussion of all the tax                
considerations that may be relevant to a decision to purchase, hold or dispose  
notes, preferred shares or preferred ADSs or common shares or common ADSs and   
is not applicable to all categories of investors, some of which may be subject  
to special rules. Each prospective purchaser is urged to consult its own tax    
advisor about the particular Brazilian and U.S. tax consequences to it of an    
investment in the preferred shares or preferred ADSs or common shares or        
common ADSs.                                                                    

     The summary is based upon tax laws of Brazil and the U.S. and the
regulations thereunder, as in effect on the date hereof, which are subject to   
change (possibly with retroactive effect). Although there is at present no      
income tax treaty between Brazil and the U.S., the tax authorities of the two   
countries have had discussions that may culminate in a treaty. No assurance     
can be given, however, as to whether or when a treaty will enter into force or  
of how it will affect the U.S. Holders of, or, any of the notes, preferred      
shares, preferred ADSs, common shares, or common ADSs. This summary is also     
based on representations of the depositary and on the assumption that each      
obligation in the Deposit Agreement relating to the preferred ADSs and common   
ADSs, as applicable, and the related documents will be performed in accordance  
with its terms.                                                                 

BRAZILIAN TAX CONSIDERATIONS                                                    

   The following discussion summarizes the principal Brazilian tax
consequences of the acquisition, ownership and disposition of preferred and     
common shares of AmBev or preferred and common ADSs of AmBev by a holder that   
is not deemed to be domiciled in Brazil for purposes of Brazilian taxation      
and, in the case of a holder of preferred or common shares, which has           
registered its investment in such securities with the Central Bank as a U.S.    
dollar investment (in each case, a Non-Brazilian Holder). The discussion does   
not purport to be a comprehensive description of all tax considerations that    
may be relevant to a decision to purchase preferred or common shares or         
preferred or common ADSs. It is based on Brazilian law as currently in effect.  
Any change in such law may change the consequences described below. The         
following discussion does not specifically address all of the Brazilian tax     
considerations applicable to any particular Non-Brazilian Holder, and each      
Non-Brazilian Holder should consult his or her own tax advisor concerning the   
Brazilian tax consequences of an investment in preferred or common shares or    
preferred or common ADSs of AmBev.                                              

       Taxation of Dividends. Dividends, including dividends in kind, paid
by AmBev to The Bank of New York in respect of the preferred or common shares   
underlying the ADSs or to a Non-Brazilian Holder in respect of preferred or     
common shares generally will not be subject to Brazilian withholding tax.       
Dividends relating to profits generated prior to December 31, 1995 are subject  
to a Brazilian withholding tax of 15% to 25% according to the tax legislation   
applicable to each corresponding year. As from January 1, 1996, dividends       
relating to profits are not subject to withholding tax in Brazil.               

Taxation of Gains. Gains realized outside of Brazil by a    
Non-Brazilian Holder on the disposition of preferred or common ADSs to another  
Non-Brazilian Holder are not subject to Brazilian tax.                          

        The withdrawal of preferred or common ADSs in exchange for preferred
or common shares is not subject to Brazilian tax. The deposit of AmBev's        
preferred or common shares in connection with the issuance of preferred or      
common ADSs is not subject to Brazilian tax, provided that the preferred or     
common shares are registered under the Foreign Investment Regulations. There    
is a special taxation system applicable to Non-Brazilian Holders (provided      
investments are duly registered under the Foreign Investment Regulations and    
with CVM and other conditions are fulfilled);                                   

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however, such system is not applicable if the Non-Brazilian Holder is located   
in a jurisdiction which does not impose income tax or which has an income tax   
lower than 20%4. Upon receipt of the underlying preferred or common shares, a   
Non-Brazilian Holder who qualifies under the Foreign Investment Regulations     
will be entitled to register the U.S. dollar value of such shares with the      
Central Bank as described below.                                                

   Non-Brazilian Holders are not subject to tax in Brazil on gains
realized on sales of preferred or common shares that occur abroad. As a         
general rule, Non-Brazilian Holders are subject to a withholding tax imposed    
at a rate of 15% on gains realized on sales or exchanges of preferred or        
common shares that occur in Brazil to or with a resident of Brazil, outside a   
Brazilian stock exchange. Non-Brazilian Holders are generally subject to        
withholding tax at a rate of 20% (transactions occurred after January 1, 2002)  
on gains realized on sales or exchanges in Brazil of preferred or common        
shares that occur on a Brazilian stock exchange, unless (a) such a sale is      
made within five business days of the withdrawal of such preferred or common    
shares in exchange for ADSs and the proceeds of such sale are remitted abroad   
within such five-day period, or (b) such a sale is made under the Foreign       
Investment Regulations by Non-Brazilian Holders which register with the CVM,    
in which case such gains are exempt. If the foreign investor is located in a    
jurisdiction which does not impose income tax or which has an income tax rate   
lower than 20%, it will be subject to the same general taxation rules           
applicable to Brazilian residents. The "gain realized" as a result of a         
transaction on a Brazilian stock exchange is the difference between the amount  
in Brazilian currency realized on the sale or exchange of the shares and their  
acquisition cost, without any correction for inflation. The "gain realized" as  
a result of a transaction with shares which are registered under a certificate  
of registration of investment (other than Foreign Investment Regulations) will  
be calculated based on the foreign currency amount registered with the Central  
Bank. There can be no assurance that the current preferential treatment for     
holders of ADSs and Non-Brazilian Holders of preferred and common shares under  
the Foreign Investment Regulations will continue in the future or that it will  
not be changed in the future. Reductions in the tax rate provided for by        
Brazil's tax treaties do not apply to tax on gains realized on sales or         
exchanges of preferred or common shares.                                        

  Any exercise of preemptive rights relating to the preferred or
common shares or preferred or common ADSs of AmBev will not be subject to       
Brazilian taxation. Any gain on the sale or assignment of preemptive rights     
relating to the preferred or common shares by The Bank of New York will not be  
subject to Brazilian taxation.                                                  

     The United States and Brazil do not currently have any reciprocal
tax treaty regarding tax withholding provisions.                                

      Distributions of Interest Attributable to Shareholders' Equity. In
accordance with Law No. 9,249, dated December 26, 1995, Brazilian corporations  
may make payments to shareholders characterized as distributions of interest    
on the company's shareholders' equity. Such interest is limited to the federal  
government's long-term interest rate (TJLP) as determined by the Central Bank   
from time to time (9.75% per annum for the three-month period starting April    
2004), and cannot exceed the greater of:                                        

o    50% of net income (before taking such distribution and any       
       deductions for income taxes into account) for the period in respect
of which the payment is made; or                            

o    50% of retained earnings.                                        

-----------------------------                                                   
3 The countries currently included in this concept, according to Normative      
Instruction 188/02, are: American Samoa, Andorra, Anguilla, Antigua and         
Barbuda, Aruba, Bahamas, Bahrain, Barbados, Belize, Bermuda, British Virgin     
Islands, Campione D'Italia, Cayman Islands, Channel Islands (Jersey, Guernsey,  
Alderney and Sark), Cook Islands, Costa Rica, Cyprus, Djibouti, Dominica,       
Gibraltar, Grenada, Hong Kong, Isle of Man, Lebanon, Lebuan, Liberia,           
Liechtenstein, Luxembourg (only to holding companies governed by Law dated      
7/31/1929), Macau, Madeira Islands, Maldives, Malta, Marshall Islands,          
Mauricio, Monaco, Montserrat, Nauru, Netherland Antilles, Niue, Oman, Panama,   
Saint Kitts and Nevis, Saint Lucia, Saint Vincent and The Grenadines, San       
Marino, Seychelles, Singapore, Tonga, Turks and Caicos Islands, United Arab     
Emirates, US Virgin Islands, Vanuatu and Western Samoa.                         

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       Distributions of interest on shareholders' equity in respect of the
preferred or common shares paid to shareholders who are either Brazilian        
residents or non-Brazilian residents, including holders of ADSs, are subject    
to Brazilian withholding tax at the rate of 15% and shall be deductible by      
AmBev as long as the payment of a distribution of interest is approved in a     
general meeting of shareholders of AmBev. The distribution of interest on       
shareholders' equity may be determined by the Board of Directors of AmBev. No   
assurance can be given that the Board of Directors of AmBev will not determine  
that future distributions of profits may be made by means of interest on        
shareholders' equity instead of by means of dividends.                          

        The amounts paid as distribution of interest on shareholders' equity
are deductible for corporate income tax and social contribution on profit,      
both of which are taxes levied on AmBev's profits.                              

OTHER RELEVANT BRAZILIAN TAXES                                                  

There are no Brazilian inheritance, gift or succession taxes
applicable to the ownership, transfer or disposition of preferred or common     
shares or preferred or common ADSs by a Non-Brazilian Holder except for gift    
and inheritance taxes which are levied by some states of Brazil on gifts made   
or inheritances bestowed by individuals or entities not resident or domiciled   
in Brazil or domiciled within the state to individuals or entities resident or  
domiciled within such state in Brazil. There is no Brazilian stamp, issue,      
registration or similar taxes or duties payable by holders of preferred or      
common shares or preferred or common ADSs.                                      

Pursuant to Decree 2,219 of May 2, 1997, Brazilian currency 
resulting from the conversion of the proceeds received by a Brazilian entity    
from a foreign investment in the Brazilian securities market, including those   
in connection with the investment in the preferred or common shares of AmBev,   
the preferred or common ADSs of AmBev and those made under Foreign Investment   
Regulations, is potentially subject to a transactions tax (IOF), although at    
present the rate of such tax is zero percent. Under Law 8,894 of June 21,       
1994, such IOF tax rate may be increased at any time to a maximum of 25%, but   
any such increase will only be applicable to transactions occurring after such  
increase becomes effective.                                                     

CPMF. Financial transfers are taxed by the CPMF (Temporary  
Contribution over Financial Transactions), at a rate of 0.38%. Specifically in  
connection with foreign investments, the CPMF is levied upon the remittance of  
proceeds on the amount converted in reais of the transaction and is required    
to be withheld by the financial institution that carries out the transaction.   

   Registered Capital. The amount of an investment in preferred or
common shares held by a Non-Brazilian Holder who qualifies under the Foreign    
Investment Regulations and obtains registration with the CVM, or by The Bank    
of New York, as the depositary representing such holder, is eligible for        
registration with the Central Bank. Such registration allows the remittance     
outside of Brazil of any proceeds of distributions on the shares, and amounts   
realized with respect to disposition of such shares. The amounts received in    
Brazilian currency are converted into foreign currency through the use of the   
commercial market rate. The registered capital for preferred shares purchased   
in the form of a preferred ADS or common shares purchased in the form of a      
common ADS or purchased in Brazil, and deposited with The Bank of New York in   
exchange for a preferred or common ADS, will be equal to their purchase price   
(in U.S. dollars) to the purchaser. The registered capital for preferred or     
common shares that are withdrawn upon surrender of preferred or common ADSs,    
as applicable, will be the U.S. dollar equivalent of the average price of the   
preferred or common shares, as applicable, on the Brazilian stock exchange on   
which the greatest number of such preferred or common shares, as applicable,    
was sold on the day of withdrawal. If no preferred or common shares, as         
applicable, were sold on such day, the registered capital will refer to the     
average price on the Brazilian stock exchange on which the greatest number of   
preferred or common shares, as applicable, was sold in the 15 trading sessions  
immediately preceding such withdrawal. The U.S. dollar value of the preferred   
or common shares, as applicable, is determined on the basis                     

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of the average commercial market rate quoted by the Central Bank on such date   
or, if the average price of preferred or common shares is determined under the  
last preceding sentence, the average of such average quoted rates on the same   
15 dates used to determine the average price of the preferred or common         
shares.                                                                         

       A Non-Brazilian Holder of preferred or common shares may experience
delays in effecting such action which may delay remittances abroad. Such a      
delay may adversely affect the amount, in U.S. dollars, received by the         
Non-Brazilian Holder.                                                           

BRAZILIAN TAXATION ON THE NOTES                                                 

    This summary is limited to noteholders that are non-residents in
Brazil and is based on the tax regulations presently in force, thus not         
contemplating any possible changes in Brazilian tax legislation in the future.  

 Interest on the notes (including any additional amount) paid,
credited, delivered, used or remitted to non-residents is subject to a 15%      
withholding income tax or a lower rate if so provided for in the applicable     
tax treaty to avoid double taxation signed between Brazil and the country       
where the recipient of the note is domiciled. The rate is increased to 25% in   
case both of the following situations occur: (i) the beneficiary of the         
payment is domiciled in a tax haven jurisdiction, defined by Brazilian tax      
laws as a country that does not impose a tax on income or imposes such a tax    
at 20% or less, and (ii) if any portion of principal under any such debt        
obligation is repaid in a way that the average life of the debt obligation      
becomes less than 96 months from the disbursement date. In this case payments   
made by the obligor to those beneficiaries in respect of interest and other     
additional amounts will be retroactively subject to a withholding tax of 25%    
plus an interest penalty for late payment, calculated from the disbursement     
date onwards.                                                                   

   Brazilian tax law expressly authorizes that the payment of this
withholding income tax be borne by the Brazilian paying entity so allowing the  
payment of the remuneration free of any tax. Under the terms of the Indenture   
among CBB, as Issuer, the Bank of New York, as Trustee, and Deutsche Bank       
Luxembourg S.A., as Paying Agent, related to the notes, all payments of or in   
respect of principal and interest on the notes shall be made free and clear     
of, and without withholding or deduction for or on account of, any present or   
future taxes, penalties, fines, duties, assessments or other governmental       
charges of whatsoever nature.                                                   

Earnings or capital gains resulting from the sale, exchange,
retirement or other kind of disposition of the notes by a non-resident in       
Brazil to another person non-resident in Brazil is not subject to any           
Brazilian tax. A disposition of these notes by a non-resident to a Brazilian    
resident, in principle is not subject to taxation, but the issue is             
disputable.                                                                     

MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS                        

        The following summary describes the material U.S. Federal income tax
consequences of holding notes, preferred shares, preferred ADSs, common shares  
or common ADSs. This summary is based on the Internal Revenue Code of 1986, as  
amended (the Code), its legislative history, existing final, temporary and      
proposed Treasury Regulations, rulings and judicial decisions, all as           
currently in effect and all of which are subject to prospective and             
retroactive rulings and changes.                                                

        This summary does not purport to address all U.S. Federal income tax
consequences that may be relevant to a particular holder and you are urged to   
consult your own tax advisor regarding your specific tax situation. The         
summary applies only to holders who hold notes, preferred shares, preferred     
ADSs, common shares or common ADSs as "capital assets" (generally, property     
held for investment) under the Code, and, in the case of the notes, only        
holders who purchased their notes in the initial offering at the issue price.   

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This summary does not address the tax consequences that may be relevant to      
holders in special tax situations including, for example:                       

o    insurance companies;                                             

o    tax-exempt organizations;                                        

o    dealers in securities or currencies;                             

 o    traders in securities that elect to use a mark to market method of
accounting for their securities holdings;                   

o    banks, mutual funds or other financial institutions;             

  o    United States holders whose functional currency for tax purposes is
not the United States dollar;                               

o    United States expatriates;                                       

o    an S corporation or small business investment company;           

o    real estate investment trusts;                                   

o    investors in a pass-through entity;                              

   o    holders of notes, preferred shares, preferred ADSs, common shares or
 common ADSs as part of a hedge, straddle, conversion or other
integrated transaction, for tax purposes;                   

o    holders who own, directly, indirectly, or constructively, 10% or 
      more of the total combined voting power of our stock (including by
    way of owning preferred shares, preferred ADSs, common shares or
common ADSs); or                                            

  o    holders who acquired their notes, preferred shares, preferred ADSs,
common shares or common ADSs as compensation.               

      This summary assumes that the notes represent indebtedness of U.S.
$500 million and that we are not a passive foreign investment company (PFIC)    
for U.S. Federal income tax purposes. Please see the discussion under           
"-Taxation of U.S. Holders-Passive Foreign Investment Company Rules" below.     

      Further, this summary does not address the alternative minimum tax
consequences of holding notes, preferred shares, preferred ADSs, common shares  
or common ADSs or the indirect consequences to holders of equity interests in   
entities that own our preferred shares, preferred ADSs, common shares or        
common ADSs. In addition, this summary does not address the state, local,       
foreign or other tax consequences, if any, of holding our notes, preferred      
shares, preferred ADSs, common shares or common ADSs.                           

       You should consult your own tax advisor regarding the U.S. Federal,
state, local and foreign and other tax consequences of acquiring, owning and    
disposing of notes, preferred shares, preferred ADSs, common shares or common   
ADSs in your particular circumstances.                                          

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       WE ALSO URGE TO ALL HOLDERS TO CONSULT THEIR TAX ADVISORS REGARDING
THE CONSEQUENCES, IF ANY, OF THE JOB AND GROWTH TAX RELIEF RECONCILIATION ACT   
OF 2003 IN LIGHT OF YOUR PARTICULAR CIRCUMSTANCES.                              

Taxation of U.S. Holders                                                        

      For purposes of this summary, you are a "U.S. Holder" if you are a
beneficial owner of a note, preferred shares, preferred ADSs, common shares or  
common ADSs and you are for U.S. Federal income tax purposes:                   

o    a citizen or resident of the United States;                      

   o    a corporation, or any other entity taxable as a corporation, created
       or organized in or under the laws of the United States or any state
thereof, including the District of Columbia;                

  o    an estate the income of which is subject to U.S. Federal income tax
regardless of its source;                                   

o    a trust if a court within the United States is able to exercise  
      primary supervision over its administration and one or more United
States persons have the authority to control all substantial
decisions of the trust; or                                  

o    a person otherwise subject to U.S. Federal income taxation on its
worldwide income.                                           

   If a partnership holds notes, preferred shares, preferred ADSs,
common shares or common ADSs, the tax treatment of a partner will generally     
depend upon the status of the partner and upon the activities of the            
partnership. A prospective investor who is a partner of a partnership holding   
notes, preferred shares, preferred ADSs, common shares or common ADSs should    
consult its own tax advisor.                                                    

  A "Non-U.S. Holder" is a beneficial owner of a note, preferred
shares, preferred ADSs, common shares or common ADSs who or which is not a      
U.S. Holder.                                                                    

      For U.S. Federal income tax purposes, a U.S. Holder of an ADS will
be treated as the beneficial owner of the preferred shares or common shares     
represented by the applicable ADS.                                              

NOTES                                                                           

Interest and Additional Amounts                             

       Interest on the notes (including additional amounts) will generally
be includible in a U.S. Holder's gross income at the time the interest is       
accrued or received, in accordance with the U.S. Holder's regular method (cash  
or accrual) of tax accounting. To the extent that amounts are withheld and      
additional amounts are paid on the notes, a U.S. Holder will be required to     
report income in an amount greater than the cash received on the payments.      

Sale, Exchange, Retirement or Other Disposition             

      Unless a nonrecognition provision applies, a U.S. Holder generally
will recognize capital gain or loss upon the sale, exchange, retirement or      
other disposition of a note in an amount equal to the difference between the    
amount realized upon such sale, exchange, retirement or other disposition       
(less any accrued interest not yet taken into income which will be taxable as   
ordinary interest income) and the U.S. Holder's tax basis in such note.         

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Any such capital gain or loss will be long-term capital gain or loss if the     
U.S. Holder has held the note for more than one year at the time of sale,       
exchange, retirement or other disposition. A U.S. Holder's ability to offset    
capital losses against ordinary income is limited.                              

Foreign Tax Credit                                          

    Interest on the notes (including any additional amounts) will be
treated as foreign source income for U.S. Federal income tax purposes, which    
may be relevant to a U.S. Holder in calculating such U.S. Holder's foreign tax  
credit limitation. A U.S. Holder may be eligible, subject to a number of        
complex limitations, for a foreign tax credit or deduction against such U.S.    
Holder's U.S. Federal tax income liability for taxes withheld on the notes.     
The limitation on foreign taxes eligible for credit is calculated separately    
with respect to specific classes of income. For this purpose, interest on the   
notes (including any additional amounts) will be treated as "high withholding   
tax interest" and, if interest on the notes (including any additional amounts)  
were to become subject to a withholding tax at a rate of less than five         
percent (5%), then such interest would generally constitute "passive income".   
We urge all holders to consult their tax advisors regarding the availability    
of the U.S. foreign tax credit under their particular circumstances.            

        Any gain or loss realized on the sale, exchange, retirement or other
disposition of a note generally will be treated as U.S. source for purposes of  
computing the U.S. foreign tax credit limitation.                               

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PREFERRED SHARES, PREFERRED ADSS, COMMON SHARES, COMMON ADSS                    

       Distributions on preferred shares, preferred ADSs, common shares or
common ADSs.                                                                    

      Subject to the discussion below concerning PFICs, the gross amount
of distributions paid by us to a U.S. Holder (including amounts withheld to     
pay Brazilian withholding taxes) with respect to preferred shares, preferred    
ADSs, common shares or common ADSs (including distributions of interest on      
shareholders' equity) generally will be taxable to such U.S. Holder as          
ordinary dividend income or qualified dividend income (as further described     
below) to the extent that such distribution is paid, actually or                
constructively, out of our current or accumulated earnings and profits (as      
determined for U.S. Federal income tax purposes). Distributions in excess of    
our current or accumulated earnings and profits will be treated first as a      
non-taxable return of capital reducing (on a dollar-for-dollar basis) such      
U.S. Holder's tax basis in the preferred shares, preferred ADSs, common shares  
or common ADSs, as applicable. Any distribution in excess of such tax basis     
will be treated as capital gain and will be either long-term or short-term      
capital gain depending upon whether the U.S. Holder held the preferred shares,  
preferred ADSs, common shares or common ADSs, as applicable, for more than one  
year.                                                                           

  Dividends received by a U.S. Holder will generally be taxed at
ordinary income tax rates. However, pursuant to the Jobs and Growth Tax Relief  
Reconciliation Act of 2003, in the case of dividends that constitute qualified  
dividend income and are received by an individual U.S. Holder during the tax    
years beginning after 2002 and before 2009, such dividends will be taxed at     
the same rate that is applicable to long-term capital gains. For this purpose,  
qualified dividend income includes any dividends paid with respect to stock in  
a foreign corporation if such stock is "readily tradable on an established      
securities market in the United States". Based upon published guidance from     
the United States Internal Revenue Service, each of the preferred ADSs and      
common ADSs will be treated as traded on an established securities market in    
the U.S. because they are listed and traded on the New York Stock Exchange.     

    A U.S. Holder generally will be entitled, subject to a number of
complex rules and limitations, to claim a United States foreign tax credit in   
respect of any Brazilian withholding taxes imposed on distributions received    
on preferred shares, preferred ADSs, common shares or common ADSs. U.S.         
Holders who do not elect to claim a foreign tax credit may instead claim a      
deduction in respect of such withholdings. Dividends received with respect to   
the preferred shares, preferred ADSs, common shares or common ADSs will be      
treated as foreign source income and generally will constitute "passive         
income" for U.S. foreign tax credit limitation purposes. We urge all holders    
to consult their tax advisors regarding the availability of the foreign tax     
credit under their particular circumstances.                                    

Dividends paid by us generally will not be eligible for the 
dividends received deduction generally available to certain U.S. corporate      
shareholders.                                                                   

       The amount of any cash distribution paid in Brazilian currency will
equal the U.S. dollar value of the distribution, calculated by reference to     
the exchange rate in effect at the time                                         

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the distribution is received by the depositary (in the case of ADSs) or by the  
U.S. Holder (in the case of preferred shares or common shares held directly by  
such U.S. Holder), regardless of whether the payment is in fact converted to    
U.S. dollars at that time. A U.S. Holder should not recognize any foreign       
currency gain or loss if such Brazilian currency is converted into U.S.         
dollars on the date received. If the Brazilian currency is not converted into   
U.S. dollars on the date of receipt, however, gain or loss may be recognized    
upon a subsequent sale or other disposition of the Brazilian currency. Such     
foreign currency gain or loss, if any, generally will be U.S. source ordinary   
income or loss.                                                                 

        Section 305 of the Code provides special rules for the tax treatment
of preferred stock. According to the Treasury Regulations under that section,   
the term preferred stock generally refers to stock which enjoys certain         
limited rights and privileges (generally associated with specified dividend     
and liquidation priorities) but does not participate in corporate growth to     
any significant extent. While our preferred shares have some preferences over   
our common shares, the preferred shares are not fixed as to dividend payments   
or liquidation value; thus, although the matter is not entirely clear, we       
believe and have taken and intend to continue to take the position, that the    
preferred shares should be treated as "common stock" within the meaning of      
Section 305 of the Code. If the preferred shares are treated as "common stock"  
for purposes of Section 305 of the Code, distributions to U.S. Holders of       
additional shares of such "common stock" or preemptive rights relating to such  
"common stock" with respect to their preferred shares or preferred ADSs that    
are made as part of a pro rata distribution to all shareholders in most         
instances will not be subject to U.S. Federal income tax. On the other hand,    
if the preferred shares are treated as "preferred stock" within the meaning of  
Section 305 of the Code, and if the U.S. Holder receives a distribution of      
additional shares or preemptive rights as described in the preceding sentence,  
such distributions (including amounts withheld in respect of any Brazilian      
taxes) will be treated as dividends that can be included in the U.S. Holders'   
gross income to the same extent and in the same manner as distributions         
payable in cash. In that event, the amount of such distribution (and the basis  
of the new shares or preemptive rights so received) will equal the fair market  
value of the shares or preemptive rights on the date of distribution.           

SALE, EXCHANGE OR OTHER DISPOSITION OF PREFERRED SHARES, PREFERRED ADSS,        
COMMON SHARES OR COMMON ADSS.                                                   

        A U.S. Holder will generally recognize capital gain or loss upon the
sale, exchange or other disposition of preferred shares, preferred ADSs,        
common shares or common ADSs, as applicable, measured by the difference         
between the U.S. dollar value of the amount received and the U.S. Holder's tax  
basis (determined in U.S. dollars) in the preferred shares, preferred ADSs,     
common shares or common ADSs, as applicable. If a Brazilian tax is withheld on  
the sale or disposition of a share, the amount realized by a U.S. Holder will   
include the gross amount of the proceeds of that sale or disposition before     
deduction of the Brazilian tax. Any gain or loss will be long-term capital      
gain or loss if the preferred shares, preferred ADSs, common shares or common   
ADSs have been held for more than one year. Your ability to deduct capital      
losses is subject to limitations. Capital gain or loss, if any, realized by a   
U.S. Holder on the sale, exchange or other disposition of a                     

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common share, common ADS, preferred share or preferred ADS, as applicable,      
generally will be treated as United States source income or loss for U.S.       
foreign tax credit purposes. Consequently, in the case of a disposition of a    
common share or preferred share that is subject to Brazilian tax imposed on     
the gain (or, in the case of a deposit, in exchange for a common ADS or         
preferred ADS of a common share or preferred share, as the case may be, that    
is not registered pursuant to Resolution No. 2,689/00, on which a Brazilian     
capital gains tax is imposed (see "-Brazilian Tax Considerations-Taxation of    
Gains")), the U.S. Holder may not be able to benefit from the foreign tax       
credit for that Brazilian tax unless it can apply (subject to applicable        
limitations) the credit against U.S. tax payable on other income from foreign   
sources in the appropriate income category, or, alternatively, it may take a    
deduction for the Brazilian tax if such U.S. Holder elects to deduct all of     
its foreign income taxes.                                                       

PASSIVE FOREIGN INVESTMENT COMPANY (PFIC) RULES                                 

     Based upon the nature of its current and projected income, assets
and activities, we do not believe that we are, and we do not expect the         
preferred shares, preferred ADSs, common shares or common ADSs to be            
considered shares of, a PFIC for U.S. Federal income tax purposes. In general,  
a foreign corporation is a PFIC if, for any taxable year in which the U.S.      
Holder holds stock in the foreign corporation, at least 75% of such             
corporation's gross income is passive income or at least 50% of the value of    
such corporation's assets (determined on the basis of a quarterly average)      
produce passive income or are held for the production of passive income. The    
determination of whether the preferred shares, preferred ADSs, common shares    
or common ADSs constitute shares of a PFIC is a factual determination made      
annually and thus may be subject to change. Subject to certain exceptions,      
once a U.S. Holder's preferred shares or common shares, as applicable, are      
treated as shares in a PFIC, they remain shares in a PFIC. In addition,         
dividends received by a U.S. Holder from a PFIC will not constitute qualified   
dividend income.                                                                

    If we are treated as a PFIC, contrary to the discussion above, a
U.S. Holder would be subject to special rules with respect to (a) any gain      
realized on the sale or other disposition of common shares, common ADSs,        
preferred shares or preferred ADSs and (b) any "excess distribution" by us to   
the U.S. Holder (generally, any distribution during a taxable year in which     
distributions to the U.S. Holder on the common shares, common ADSs, preferred   
shares or preferred ADSs exceed 125% of the average annual taxable              
distribution the U.S. Holder received on the common shares, common ADSs,        
preferred shares or preferred ADSs during the preceding three taxable years     
or, if shorter, the U.S. Holder's holding period for the common shares, common  
ADSs, preferred shares or preferred ADSs). Under those rules (a) the gain or    
excess distribution would be allocated ratably over the U.S. Holder's holding   
period for the common shares, common ADSs, preferred shares or preferred ADSs,  
(b) the amount allocated to the taxable year in which the gain or excess        
distribution is realized and to taxable years before the first day we became a  
PFIC would be taxable as ordinary income, (c) the amount allocated to each      
prior year (with certain exceptions) would be subject to tax at the highest     
tax rate in effect for that year, and the interest charge generally applicable  
to underpayments of tax would be imposed in respect of the tax attributable to  
each such year.                                                                 

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       A U.S. Holder who owns common shares, common ADSs, preferred shares
or preferred ADSs during any year we are a PFIC must file Internal Revenue      
Service Form 8621. In general, if we are treated as a PFIC, the rules           
described in the second paragraph of this section can be avoided by a U.S.      
Holder that elects to be subject to a mark-to-market regime for stock in a      
PFIC. A U.S. Holder may elect mark-to- market treatment for its common shares,  
common ADSs, preferred shares or preferred ADSs, provided the common shares,    
common ADSs, preferred shares or preferred ADSs, for purposes of the rules,     
constitute "marketable stock" as defined in Treasury Regulations. A U.S.        
Holder electing the mark-to-market regime generally would treat any gain        
recognized under mark-to-market treatment or on an actual sale as ordinary      
income and would be allowed an ordinary deduction for any decrease in the       
value of common shares, common ADSs, preferred shares or preferred ADSs in any  
taxable year and for any loss recognized on an actual sale, but only to the     
extent, in each case, of previously included market-to-market income not        
offset by previously deducted decreases in value. A U.S. Holder's basis in      
common shares, common ADSs, preferred shares or preferred ADSs would increase   
or decrease by gain or loss taken into account under the mark-to-market         
regime. A market-to-market election is generally irrevocable. We do not         
currently plan to provide holders with information sufficient to permit any     
holder to make an election to treat the Company as a "qualified electing        
fund".                                                                          

DEPOSITS, WITHDRAWALS AND PRE-RELEASE                                           

   Deposits or withdrawals of preferred shares or common shares in
exchange for preferred ADSs or common ADSs, as applicable, will not result in   
the realization of any gain or loss for U.S. Federal income tax purposes. The   
U.S. Treasury Department, however, has expressed concerns that parties          
involved in transactions where depositary shares are pre-released may be        
taking actions that are not consistent with the claiming of foreign tax         
credits by the holders of the applicable ADSs. Accordingly, the analysis of     
the credibility of Brazilian taxes described above could be affected by future  
actions that may be taken by the U.S. Treasury Department.                      

TAXATION OF NON-U.S. HOLDERS                                                    

Notes                                                       

    Payments of principal or interest are currently exempt from U.S.
Federal income tax, including withholding tax, if paid to a Non-U.S. Holder.    

       A Non-U.S. Holder will not be subject to U.S. Federal income tax on
any gain realized on the redemption, sale, exchange or other dispositions of a  
note, provided that such gain is not effectively connected with the Non-U.S.    
Holder's conduct of a United States trade or business and, in the case of an    
individual, such holder is not present in the United States for a total of 183  
days or more during the taxable year in which such gain is realized and         
certain other conditions are satisfied.                                         

Preferred Shares, Preferred ADSs, Common Shares or Common ADSs.                 

  Non-U.S. Holders generally will not be subject to U.S. Federal
income or withholding tax on dividends received from us with respect to         
preferred shares, preferred ADSs, common shares or common ADSs, unless such     
income is considered effectively connected with the Non-U.S. Holder's           

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conduct of a United States trade or business (and, if required by an            
applicable income tax treaty, the income is attributable to a permanent         
establishment or fixed base maintained in the United States).                   

  Non-U.S. Holders generally will not be subject to U.S. Federal
income tax on any gain realized upon the sale, exchange or other disposition    
of preferred shares, preferred ADSs, common shares or common ADSs unless:       

o    such gain is considered effectively connected with the Non-U.S.  
  Holder's conduct of a United States trade or business (and, if
required by an applicable income tax treaty, the income is  
      attributable to a permanent establishment or fixed base maintained
in the United States); or                                   

 o    such Non-U.S. Holder is an individual who is present in the United
States for 183 days or more during the taxable year of the  
disposition and certain other conditions are met.           

      In addition, any effectively connected dividends or gains realized
by a corporate Non-U.S. Holder may also, under certain circumstances, be        
subject to an additional branch profits tax at a rate of 30% (or such lower     
rate as may be specified by an applicable income tax treaty).                   

Backup Withholding and Information Reporting                                    

In general, payments of principal and interest on the notes,
dividends paid on, or proceeds from the sale, exchange, retirement or other     
dispositions of the notes, dividends on preferred shares, preferred ADSs,       
common shares or common ADSs and payments of the proceeds of a sale, exchange,  
retirement or other disposition of notes, preferred shares, preferred ADSs,     
common shares or common ADSs, may be subject to information reporting to the    
United States Internal Revenue Service ("IRS") and, possibly, United States     
backup withholding. Backup withholding will not apply, however, to a holder     
who furnishes a correct taxpayer identification number or certificate of        
foreign status and makes any other required certification on IRS Form W-9.      
Non-U.S. Holders generally will not be subject to United States information     
reporting or backup withholding. However, Non-U.S. Holders may be required to   
provide certification of non-U.S. status in connection with payments received   
in the United States or through certain U.S related financial intermediaries.   
Amounts withheld as backup withholding may be credited against a holder's U.S.  
Federal income tax liability, and a holder may obtain a refund of any excess    
amounts withheld under the backup withholding rules by filing the appropriate   
claim for refund with the IRS and furnishing any required information.          

    THE PRECEDING DISCUSSION OF THE MATERIAL U.S. FEDERAL INCOME TAX
CONSEQUENCES IS FOR GENERAL INFORMATION ONLY AND IS NOT TAX ADVICE.             
ACCORDINGLY, EACH INVESTOR SHOULD CONSULT HIS, HER OR ITS OWN TAX ADVISOR AS    
TO THE PARTICULAR TAX CONSEQUENCES OF PURCHASING, HOLDING AND DISPOSING OF      
NOTES, PREFERRED SHARES, PREFERRED ADSs, COMMON SHARES OR COMMON ADSs,          
INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL, FOREIGN OR OTHER    
TAX LAWS AND OF ANY PROPOSED CHANGES IN APPLICABLE LAW.                         

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DOCUMENTS ON DISPLAY  

       AmBev is subject to the informational reporting requirements of the
United States Securities Exchange Act of 1934, as amended, and files with the   
SEC:                                                                            

o    annual reports;                                                  

o    certain other reports that it makes public under Brazilian law,  
files with the Brazilian stock exchanges or distributes to  
shareholders; and                                           

o    other information.                                               

     You may read and copy any reports or other information that AmBev
files at the SEC's public reference rooms at 450 Fifth Street, N.W.,            
Washington, D.C. 20549, and at the SEC's regional offices located at the        
Woolworth Building, 233 Broadway, New York, New York 10279 and Citicorp         
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Please    
call the SEC at 1-800-SEC-0330 for further information on the public reference  
rooms. Electronic filings made through the Electronic Data Gathering, Analysis  
and Retrieval System are also publicly available through the Securities and     
Exchange Commission's web site on the Internet at www.sec.gov. In addition,     
material filed by AmBev may also be inspected at the offices of the New York    
Stock Exchange at 20 Broad Street, New York, New York 10005.                    

     As a foreign private issuer, AmBev is exempt from the rules under
the Exchange Act prescribing the furnishing and content of proxy statements     
and will not be required to file proxy statements with the SEC, and its         
officers, directors and principal shareholders will be exempt from the          
reporting and "short swing" profit recovery provisions contained in Section 16  
of the Exchange Act.                                                            

      You may obtain documents from AmBev by requesting them in writing,
at the following addresses or by telephone:                                     

Companhia de Bebidas das Americas--AmBev                    
Attention:                 Investor Relations Department    
Telephone numbers:         (55-11) 2122-1415                
           (55-11) 2122-1414
Fax:                       (55-11) 2122-1526                
Email:                     ir@ambev.com.br                  

        You may obtain additional information about AmBev on its web site at
www.ambev-ir.com. The information contained therein is not part of this annual  
report.                                                                         

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Quantitative and Qualitative Disclosures about Market Risk                      

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                      

        We are exposed to various market risks, including changes in foreign
currency exchange rates and interest rates and changes in the prices of         
certain commodities, including malt, aluminum and sugar. Market risk is the     
potential loss arising from adverse changes in market rate and prices. We       
enter into derivatives and other financial instruments for purposes other than  
trading, in order to manage and reduce the impact of fluctuations in commodity  
prices (particularly for aluminum and sugar), in foreign currency exchange      
rates and in interest rates. We have established policies and procedures for    
risk assessment and the approval, reporting and monitoring of derivative        
financial activities. Decisions regarding hedging are made on a case-by-case    
basis, taking into consideration the amount and duration of the exposure,       
market volatility and economic trends.                                          

       These instruments are accounted for based on their characteristics.
See note 2(u) to our audited consolidated financial statements for a            
discussion of the accounting policies and information on derivative financial   
instruments.                                                                    

      We have a policy of entering into contracts only with parties that
have high credit ratings. The counterparties to these contracts are major       
financial institutions, and we do not have significant exposure to any single   
counterparty. We do not anticipate a credit loss from counterparty              
non-performance. Our short-term investments consist mainly of fixed-term        
obligations and government securities.                                          

COMMODITY RISK                                                                  

  We use a large volume of agricultural materials to produce our
products, including malt and hops for our beer and sugar, guarana, other        
fruits and sweeteners for our soft drinks. See "Business-Raw Materials." We     
purchase a significant portion of our malt and all of our hops outside of       
Brazil. We purchase the remainder of our malt and our sugar, guarana and other  
fruits and sweeteners locally. AmBev also purchases substantial quantities of   
aluminum cans.                                                                  

   We produce approximately 70% of our malt. The remainder and all
other commodities are purchased from third parties. We believe that adequate    
supplies of the commodities we use are available at the present time, but we    
cannot predict the future availability of these commodities or the prices we    
will have to pay for such commodities. The commodity markets have experienced   
and will continue to experience price fluctuations. We believe that the future  
price and supply of agricultural materials will be determined by, among other   
factors, the level of crop production, weather conditions, export demand, and   
government regulations and legislation affecting agriculture, and that the      
price of aluminum and sugar will be largely influenced by international market  
prices. See "Business--Raw Materials."                                          

       All of the hops we purchase in the international markets outside of
South America are paid for in U.S. dollars. In addition, although we purchase   
aluminum cans and sugar in Brazil, the price is directly influenced by the      
fluctuation of international commodity prices.                                  

   As of December 31, 2003, our derivative activities consisted of
sugar futures. The table below provides information about our significant       
commodity risk sensitive instruments as of December 31, 2003. The contract      
terms of these instruments have been categorized by expected maturity dates.    

                           PRINCIPAL MATURITY PERIODS(1)

                                                        [Enlarge/Download Table]

                                                                                           FAIR  
                            2004   2005  2006     2007     2008   THEREAFTER   TOTAL(2)  VALUE(2)
                                           (R$ MILLION, EXCEPT PRICE PER TON)                    
                                                                                                 

DERIVATIVES INSTRUMENTS                                                                          
SUGAR FUTURES (BMF)                                                                              
Notional Amount (ton)       931                                                                  
Average Price (R$/ton)   391.88                                                            0.00  
SUGAR FUTURES (LIFFE)                                                                            

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Notional Amount (ton)    22,100                                                                  
Average Price (R$/ton)   530.54                                                          -(0.08) 
Sugar Futures (NYBOT)                                                                            
Notional Amount (ton)    28.143                                                                  
Average Price (R$/ton)   370.90                                                          -(0.76) 


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

(1)  Negative notional amounts represent an excess of liabilities over assets   
at any given moment.                                                  
(2)  For cash and debt instruments, total represents the carrying value of      
those instruments within the balance sheet and is therefore directly  
comparable with the fair value of the instrument, included within the 
   fair value column. For derivative instruments, total represents the total
value of derivative instrument contracts (notional value) within the  
forward, future and swap portfolio, and not a balance sheet value. The
unrealized gain or loss on the instrument at the balance sheet date is
 included within the financial statements at fair value and is therefore
represented under the fair value column.                              

FOREIGN EXCHANGE RISK                                                           

     We are exposed to fluctuations in foreign exchange rate movements
because substantially all of our revenues are in reais, while a significant     
portion of our debt is denominated in or indexed to foreign currencies,         
particularly the U.S. dollar and the Japanese Yen. In addition, a significant   
portion of our operating expenses, in particular those related to hops, malt    
and aluminum, are also denominated in or linked to the U.S. dollar. We enter    
into derivative financial instruments to manage and reduce the impact of        
changes in foreign currency exchange rates in respect of our U.S.               
dollar-denominated and Yen-denominated or indexed debt. From January 1, 1999    
until December 31, 2003, the Brazilian real depreciated by 58.2% against the    
U.S. dollar, and, as of December 31, 2003, the commercial market rate for       
purchasing U.S. dollars was R$2.89 per U.S.$1.00. The U.S. dollar depreciated   
against the Brazilian real by 18.2% during 2003.                                

       As of December 31, 2003, derivative activities consisted of foreign
currency forward contracts, foreign currency swaps and future contracts. The    
table below provides information about our significant foreign exchange rate    
risk sensitive instruments as of December 31, 2003. The contract terms of       
these instruments have been categorized by expected maturity dates.             

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                                                      PRINCIPAL MATURITY PERIODS(1)                                  
                                                      -----------------------------                                  
                                                                                                            FAIR     
                               2004      2005      2006        2007      2008    THEREAFTER    TOTAL(2)    VALUE(2)  
                               ----      ----      ----        ----      ----    ----------    -------     --------  
                                                  (R$ IN MILLIONS, EXCEPT PERCENTAGES)                               
                                                                                                                     

DEBT INSTRUMENTS                                                                                                     
SYNDICATED LOAN (YEN)                                                                                                
Notional Amount              (1,062.96)                                                        (1,062.96)  (1,062.96)
Average Pay Rate                  2.37%                                                                              
U.S. DOLLAR DEBT                                                                                                     
DENOMINATED (FIXED RATE)                                                                                             
Notional Amount                 (173.0)    (26.2)     (19.9)     (20.1)     (18.1)  (2,890.1)   (3,157.3)   (3,157.3)
Average Pay Rate                  9.42%     9.42%      9.42%      9.42%      9.42%      9.42%                        
BNDES CURRENCY BASKET                                                                                                
DEBT (FIXED RATE)                                                                                                    
U.S. Dollar Debt                                                                                                     
INTERNATIONAL DEBT                                                                                                   
U.S. Dollar Debt                                                                                                     
Denominated (Fixed Rate)        (244.1)    (73.5)     (82.4)     (76.8)     (87.7)      (54.6)     (618.9)           
Average Pay Rate                  5.90%     5.47%      2.69%      4.25%     10.59%     11.74%                        
INTERNATIONAL DEBT                                                                                                   
U.S. Dollar Debt                                                                                                     
Denominated (Floating Rate)                            (5.8)                                        (5.8)       (5.8)
LIBOR                                                  3.44%                                                         
INTERNATIONAL DEBT                                                                                                   
Other Latin American                                                                                                 
Currency (Fixed Rate)           (234.1)                                                           (234.1)     (234.1)
Average Pay Rate                  7.86%                                                                              
CASH INSTRUMENTS                                                                                                     
CASH AND CASH EQUIVALENT                                                                                             
DENOMINATED IN U.S. DOLLAR                                                                                           
Notional Amount                  181.9                                                             181.9       181.9 
Average Interest Rate             1.12%                                                                              
U.S. SHORT-TERM INVESTMENTS                                                                                          
DENOMINATED IN U.S. DOLLAR                                                                                           
Notional Amount                   42.7                                                              42.7        42.7 
Average Interest Rate             1.12%                                                                              
BRAZILIAN REAL SHORT-TERM                                                                                            
INVESTMENTS DENOMINATED                                                                                              
IN U.S. DOLLAR                                                                                                       
Notional Amount                  131.6                                                             131.6       131.6 
Average Interest Rate             2.15%                                                                              
BRAZILIAN REAL LONG-TERM                                                                                             
INVESTMENTS DENOMINATED                                                                                              
IN U.S. DOLLAR                                                                                                       
Notional Amount                  342.2                                                             342.2       342.2 
Average Interest Rate              8.1%                                                                              
INTERNATIONAL CASH AND CASH                                                                                          
EQUIVALENT DENOMINATED                                                                                               
IN OTHER LATIN AMERICAN                                                                                              
CURRENCY                                                                                                             
Notional Amount                  295.0                                                             295.0       295.0 


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DERIVATIVES INSTRUMENTS                                                               
BM&F DDI and Dollar Future                                                            
Notional Amount             1,280.8   200.1   124.4  125.5    0.5     1,731,2    23.1 
Average Interest Rate          10.8%    2.9%   5.2%    5.6%    6.7%                   
U.S.$ X R$ CROSS CURRENCY                                                             
INTEREST RATE SWAP                                                                    
Notional Amount               605.7                          1,089.4  1,695.1    94.0 
Average Interest Rate           2.4%                            6.7%                  
YEN X U.S.$ CROSS CURRENCY                                                            
INTEREST RATE SWAP                                                                    
Notional Amount               917.9                                     917.9   142.3 
Average Interest Rate                                                                 
NDF ARGENTINE PESO ARS                                                                
X U.S.$                                                                               
Notional Amount               152.4                                     152.4  (-5.43)
Average Interest Rate          2.98                                      2.98         


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

(1) Negative notional amounts represent an excess of liabilities over assets at 
any given moment.                                                       
(2) For cash and debt instruments, total represents the carrying value of those 
 instruments within the balance sheet and is therefore directly comparable
with the fair value of the instrument, included within the fair value   
column. For derivative instruments, total represents the total value of 
   derivative instrument contracts (notional value) within the forward, future
 and swap portfolio, and not a balance sheet value. The unrealized gain or
loss on the instrument at the balance sheet date is included within our 
 financial statements at fair value and is therefore represented under the
fair value column.                                                      

                           PRINCIPAL MATURITY PERIODS(1)

                                                        [Enlarge/Download Table]

                                                                                                    FAIR  
                                   2004     2005  2006     2007     2008   THEREAFTER   TOTAL(2)  VALUE(2)
                                                    (R$ MILLION, EXCEPT PRICE PER TON)                    
                                                                                                          

INTEREST RATE SWAP LIBOR 3 MONTHS                                                                         
X FIXED NOTIONAL AMOUNT            905.0                                                 905.0      (4.8) 
AVERAGE INTEREST RATE              4.67%                                                                  
INTEREST RATE SWAP LIBOR                                                                 127.2      (0.3) 
6 MONTHS X FIXED                                                                                          
NOTIONAL AMOUNT                     66.6    60.6                                                          
AVERAGE INTEREST RATE               4.71%  4.71%                                                          

Our foreign  currency  exposure gives rise to market risks  associated  with    
exchange rate  movements,  mainly against the U.S.  dollar.  Foreign currency-  
denominated liabilities at December 31, 2003 included debt of R$3,802.4 million.

INTEREST RATE RISK                                                              

 We use interest rate swap agreements to manage interest risks
associated with changing rates. The differential to be paid or received is      
accrued as interest rates change and is recognized in interest income or        
expense, respectively, over the life of the particular contracts. We are        
exposed to interest rate volatility with respect to our cash and cash           
equivalents, short-term investments and fixed and floating rate debt. Our U.S.  
dollar-denominated cash equivalents generally bear interest at a floating       
rate.                                                                           

      We are exposed to interest rate volatility with regard to existing
issuances of fixed rate debt, existing issuances of variable rate debt,         
currency future and forward swaps agreements, cash and cash equivalents and     
short-term investments. We manage our debt portfolio in response to changes in  
interest rates and foreign currency rates by periodically retiring, redeeming   
and repurchasing debt and using derivative financial instruments.               

       The table below provides information about our significant interest
rate sensitive instruments. For variable interest rate debt, the rate           
presented is the weighted average rate calculated as of December 31, 2003. The  
contract terms of these instruments have been categorized by expected maturity  
dates.                                                                          

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Instruments with Interest Rate Risk                                             
-----------------------------------                                             

                                                        [Enlarge/Download Table]

                                                        PRINCIPAL MATURITY PERIODS(1)                                  
                                                        -----------------------------                                  
                                                                                                              FAIR     
                                 2004      2005      2006        2007      2008    THEREAFTER    TOTAL(2)    VALUE(2)  
                                 ----      ----      ----        ----      ----    ----------    -------     --------  
                                                    (R$ IN MILLIONS, EXCEPT PERCENTAGES)                               
                                                                                                                       

DEBT INSTRUMENTS                                                                                                       
SYNDICATED LOAN (YEN)                                                                                                  
Notional Amount                (1,062.96)                                                        (1,062.96)     (938.7)
Average Pay Rate                    2.37%                                                                              
U.S. DOLLAR DEBT                                                                                                       
DENOMINATED (FIXED RATE)                                                                                               
Notional Amount                   (152.8)    (16.2)                                  (2,889.2)   (3,058.3)    (3,384.4)
Average Pay Rate                    9.42%     9.42%                                     9.42%                          
INTERNATIONAL DEBT                                                                                                     
U.S. Dollar Debt                                                                                                       
Denominated (Fixed Rate)          (244.1)    (73.5)     (82.4)     (76.8)     (87.7)     (54.6)     (618.9)     (618.9)
Average Pay Rate                    5.90%     5.47%      2.69%      4.25%     10.59%     11.74%                        
INTERNATIONAL DEBT                                                                                                     
U.S. Dollar Debt                                                                                                       
Denominated (Floating Rate)                              (5.8)                                        (5.8)       (5.8)
LIBOR                                                    3.44%                                                         
INTERNATIONAL DEBT                                                                                                     
Other Latin American Currency                                                                                          
Denominated (Fixed Rate)          (234.1)                                                           (234.1)     (234.1)
Average Pay Rate                    7.86%                                                                              
REAIS DEBT DENOMINATED                                                                                                 
(FLOATING RATE--TJLP)                                                                                                  
Notional Amount                   (227.3)   (123.0)     (69.3)     (55.9)     (44.2)      (6.5)     (526.3)     (526.3)
TJLP + Average Pay Rate             3.19%     3.19%      3.19%      3.19%      3.19%      3.19%                        
REAIS DEBT--ICMS (FIXED RATE)                                                                                          
Notional Amount                    (34.6)              (213.5)                          (127.1)     (375.1)     (375.1)
Average Pay Rate                    4.93%               4.93%                             4.93%                        
CASH INSTRUMENTS                                                                                                       
CASH AND CASH EQUIVALENT                                                                                               
DENOMINATED IN U.S. DOLLAR                                                                                             
Notional Amount                    181.9                                                             181.9       181.9 
Average Interest Rate               1.12%                                                                              
U.S. SHORT-TERM INVESTMENTS                                                                                            
DENOMINATED IN U.S. DOLLAR                                                                                             
Notional Amount                     42.7                                                              42.7        42.7 
Average Interest Rate               1.12%                                                                              
BRAZILIAN REAIS SHORT-TERM                                                                                             
INVESTMENTS DENOMINATED IN                                                                                             
U.S. DOLLAR                                                                                                            
Notional Amount                    131.6                                                             131.6       131.6 
Average Interest Rate               2.15%                                                                              
BRAZILIAN REAIS LONG-TERM                                                                                              
INVESTMENTS DENOMINATED IN                                                                                             
U.S. DOLLAR                                                                                                            

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National Amount                     342.2                                       342.2    342.2 
Average Interest Rate                 8.1%                                                     
BRAZILIAN SHORT-TERM INVESTMENTS                                                               
DENOMINATED IN REAIS                                                                           
Notional Amount                   1,876.5                                     1,876.5  1,876.5 
Average Interest Rate               16.27%                                                     
INTERNATIONAL CASH AND CASH                                                                    
EQUIVALENT DENOMINATED IN                                                                      
LATIN CURRENCY                                                                                 
Notional Amount                     295.0                                       295.0    295.0 
DERIVATIVES INSTRUMENTS                                                                        
BM&F DDI and Dollar Future                                                                     
Notional Amount                   1,343.7   200.1   124.4   125.5       0.5   1,794.2     21.2 
Average Interest Rate                10.8%    2.9%    5.2%    5.6%      6.7%                   
U.S.$ X R$ CROSS CURRENCY                                                                      
INTEREST RATE SWAP                                                                             
Notional Amount                     604.9                           1,089.4   1,696.6     94.0 
Average Interest Rate                 2.4%                              6.7%                   
YEN X U.S.$ CROSS CURRENCY                                                                     
INTEREST RATE SWAP                                                                             
Notional Amount                     909.7                                       909.7    142.3 
Average Interest Rate                                                                          
INTEREST RATE SWAP LIBOR                                                                       
3 MONTHS X FIXED                                                                               
Notional Amount                     905.0                                       905.0     (4.8)
Average Interest Rate                4.67%                                                     
INTEREST RATE SWAP LIBOR                                                                       
6 MONTHS X FIXED                                                                               
Notional Amount                      66.6    60.6                               127.2     (0.3)
Average Interest Rate                4.71%   4.71%                                             

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

(1) Negative notional amounts represent an excess of liabilities over assets on 
any given moment.                                                       

(2) For cash and debt instruments, total represents the carrying value of       
those instruments within the balance sheet, and is therefore directly   
  comparable with the fair value of the instrument  included within the fair
value column. For derivative instruments, the total represents the total
value of derivative instrument contracts (notional value) within the    
forward, future and swap portfolio, and not a balance sheet value.  The 
unrealized gain or loss on the instrument at the balance sheet date is  
included within our financial statements at Fair Value, and is therefore
represented under the Fair Value column.                                

    Most of the floating rate debt accrues interest at TJLP (Taxa de
Juros de Longo Prazo) plus a spread. The TJLP is a long-term nominal interest   
rate fixed by the Brazilian government on a quarterly basis. During the period  
set forth below the TJLP was:                                                   

                                 2004      2003      2002     2001      2000
                                 ----      ----      ----     ----      ----
1st Quarter                       10.00     11.00     10.00     9.25     12.00  
2nd Quarter                        9.75     12.00      9.50     9.25     11.00  
3rd Quarter                                 12.00     10.00     9.50     10.25  
4th Quarter                                 11.00     10.00    10.00      9.75  

        We have not experienced, and do not expect to experience, difficulty
obtaining financing or refinancing existing debt.                               

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DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES                          

Not applicable.                                               

PART II 

DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES                                 

Not applicable.                                             

MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS    

Not applicable.                                             

DISCLOSURE CONTROLS AND PROCEDURES                                              

       The Company has carried out an evaluation under the supervision and
with the participation of the Company's management, including the Chief         
Executive Officer and Chief Financial Officer, of the effectiveness of the      
design and operation of the Company's disclosure controls and procedures.       
There are inherent limitations to the effectiveness of any system of            
disclosure controls and procedures, including the possibility of human error    
and the circumvention or overriding of the controls and procedures.             
Accordingly, even effective disclosure controls and procedures can only         
provide reasonable assurance of achieving their control objectives. Based upon  
and as of the date of the Company's evaluation, the Chief Executive Officer     
and Chief Financial Officer of the Company concluded that the disclosure        
controls and procedures are effective to provide reasonable assurance that      
information required to be disclosed in the reports the Company files and       
submits under the Exchange Act is recorded, processed, summarized and reported  
as and when required.                                                           

   There has been no change in the Company's internal control over
financial reporting during the Company's fiscal year ended December 31, 2003    
that has materially affected or is reasonably likely to materially affect the   
Company's internal control over financial reporting.                            

AUDIT COMMITTEE FINANCIAL EXPERT                                                

  As of yet, we have not appointed an "audit committee financial
expert", as defined by the SEC. As disclosed below, we are in the process of    
implementing a fully independent audit committee as a best corporate            
governance practice, and presently, our current audit committee does not        
follow the independence requirements of such rule as we are still exempt from   
the independence requirements until July 2005 according to Exchange Act Rule    
10A-3(a)(5)(A).                                                                 

CODE OF ETHICS                                                                  

    We have adopted a code of ethics (as defined under the rules and
regulations of the SEC) that applies to our principal executive officer,        
principal financial officer and principal accounting officer, among others.     
The code of ethics became effective in 2003 and is attached to this annual      
report as an Exhibit. If the provisions of the code of ethics that applies to   
our principal executive officer, principal financial officer or principal       
accounting officer are amended, or if a waiver therefrom is granted, we will    
disclose such amendment or waiver.                                              

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PRINCIPAL ACCOUNTANT FEES AND SERVICES                                          

PricewaterhouseCoopers Auditores Independentes, acted as our
independent auditor for the fiscal years ended December 31, 2003 and 2002. The  
chart below sets forth the total amount billed to us by PricewaterhouseCoopers  
Auditores Independentes for services performed in the years 2003 and 2002, and  
breaks down these amounts by category of service:                               

                                                                [Download Table]

                                                         2003        2002  
                                                       ---------  ---------
                                                          R$          R$   
                                                                           
Audit Fees............................................ 1,398,395   889,702 
Audit-related Fees....................................   875,864   901,742 
Tax Fees..............................................   419,048    84,825 
All Other Fees........................................   544,974  1,654,222
                                                       ---------  ---------
Total................................................. 3,238,281  3,530,491
                                                       =========  =========

AUDIT FEES                                                                      

    Audit fees are fees billed for the audit of our annual financial
statements and for the reviews of our quarterly financial statements in         
connection with statutory and regulatory filings or engagements.                

Audit-Related Fees                                                              

  Audit-related Fees in 2003 and 2002 consist of fees billed for
assurance and related services that are reasonably related to the performance   
of the audit or review of the company's financial statements or that are        
traditionally performed by the external auditor, and include consultations      
concerning financial and tax accounting, and reporting standards; internal      
control reviews; review of security controls and operational effectiveness of   
systems; and employee benefit plan audits.                                      

TAX FEES                                                                        

Tax fees in 2003 and 2002 were related to services for tax  
compliance, tax planning and tax advice.                                        

ALL OTHER FEES                                                                  

All other services include for 2002 and for 2003 other risk 
management advice and analysis or review of business plans or planning          
processes (but not design or implementation thereof).                           

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM                                   

The audited financial statements herein have been audited by
PricewaterhouseCoopers Auditores Independentes, Sao Paulo, Brazil, independent  
registered public accounting firm. Their offices are located at Avenida         
Francisco Matarazzo, 1400, 05001-901 Sao Paulo, SP, Brazil. They are members    
of the Conselho Regional de Contabilidade (Regional Board of Accountants of     
Sao Paulo) and their registration number is CRC.2.SP.000160/O-5.                

Pursuant to the audit firm rotation rules introduced by Article 31 of CVM       
Instruction No. 308/99, we were required to replace our auditors,               
PricewaterhouseCoopers Auditores Independentes, for purposes of auditing the    
financial statements to be filed with the CVM for the year ending December 31,  
2004. We have selected Deloitte Touche & Tohmatsu Auditores Independentes, to   
perform the audit of the financial statements for the year ending December 31,  
2004. The offices                                                               

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of Deloitte Touche & Tohmatsu Auditores Independentes are located at Rua        
Alexandre Dumas, 1981, 04717-906 Sao Paulo, SP, Brazil. They are members of     
the Conselho Regional de Contabilidade (Regional Board of Accountants of Sao    
Paulo) and their registration number is CRC.2.SP.011609/O-8.                    

PRE-APPROVAL POLICIES AND PROCEDURES                                            

        The audit committee approves all audit, audit-related, tax and other
services provided by PricewaterhouseCoopers Auditores Independentes. Any        
services provided by PricewaterhouseCoopers Auditores Independentes that are    
not specifically included within the scope of the audit must be pre -approved   
by the audit committee prior to any engagement. The audit committee is          
permitted to approve certain fees for audit-related services, tax services and  
other services pursuant to a de minimis exception before the completion of the  
engagement. In 2003, none of the fees paid to PricewaterhouseCoopers Auditores  
Independentes were approved pursuant to the de minimis exception.               

EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES                      

        On June 13, 2000, our board of directors approved the creation of an
audit committee (comite de auditoria), whose responsibilities are consistent    
with the U.S. Blue Ribbon Committee and the rules and regulations of the New    
York Stock Exchange. The primary responsibility of the audit committee, which   
is not independent of our management and of our independent auditors, is to     
review our financial statements and report on them to our shareholders.         

      Although we are in the process of implementing a fully independent
audit committee, presently our current audit committee does not follow the      
independence requirements of such rule as we are still exempt from the          
independence requirements until July 2005 according to Exchange Act Rule 10A-3  
(a)(5)(A).                                                                      

PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS          

Not required for the year ended December 31, 2003.          

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EXHIBITS AND CERTIFICATIONS                                                     

1.1  By-laws of Companhia de Bebidas das Americas-AmBev     
(English-language translation).                   

       1.2  Minutes of the Extraordinary Shareholders' Meeting held on May
            18, 2004 (filed with the Securities and Exchange Commission on
Form 6-K of AmBev on May 20, 2004).               

1.3  By-laws of Companhia Brasileira de Bebidas (CBB)       
          (English-language translation) (incorporated by reference to
         Exhibit 3.2 to Form F-4 filed by AmBev on August 29, 2002).

       2.1  Indenture dated September 18, 2003 between CBB and The Bank of
New York as Trustee.                              

2.2  Form of Note (contained in Exhibit 2.1).               

        2.3  Guaranty dated September 18, 2003 between AmBev and The Bank of
New York.                                         

2.4  Insurance Policy for Expropriation and Currency        
        Inconvertibility dated December 19, 2001 between Steadfast
Insurance Company and The Bank of New York.       

       2.5  Agreement Regarding the Insurance Policy for Expropriation and
          Currency Inconvertibility by the Trustee, AmBev, CBB and the
Insurer, dated September 18, 2003.                

     2.6  Application for Political Risk Insurance for Capital Markets
Transactions, executed by the Trustee             

 3.1  Amendment to the Shareholders' Agreement of Companhia de
        Bebidas das Americas-AmBev dated as of March 2, 2004 among
           FAHZ, Braco, Ecap, AmBev, Jorge Paulo Lemann, Marcel Herrmann
            Telles, and Carlos Alberto da Veiga Sicupira (English-language
        translation) (incorporated by reference to Exhibit 2.16 to
          Amendment No. 9 to Schedule 13D relating to Quinsa, filed by
AmBev on March 9, 2004).                          

    3.2  Incorporacao Agreement dated March 3, 2004 (incorporated by
          reference to Exhibit 2.13 to Amendment No. 9 to Schedule 13D
   relating to Quinsa, filed by AmBev on March 9, 2004).

       3.3  Shareholders' Voting Rights Agreement of S-Braco Participacoes
        S.A. dated as of August 30, 2002 among Santa Judith, Santa
          Irene, Santa Estela. and Santa Prudencia Participacoes S.A.,
           with Jorge Paulo Lemann, Carlos Alberto da Veiga Sicupira and
         Marcel Herrmann Telles as intervening parties, and S-Braco,
Braco, Ecap and AmBev as acknowledging parties    
          (English-language translation) (incorporated by reference to
             Exhibit C to Amendment No. 2 to Schedule 13D relating to AmBev,
  filed by FAHZ, Braco and Ecap on November 29, 2002).

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     3.4  AmBev Share Transfer Agreement dated as of January 31, 2003,
     among BAC, Braco, Ecap, FAHZ and AmBev (incorporated by
         reference to Exhibit 2.7 to Amendment No. 1 to Schedule 13D
      relating to Quinsa, filed by AmBev on February 4, 2003).

       3.5  AmBev Governance Agreement dated as of January 31, 2003, among
            BAC, Braco, Ecap, FAHZ and AmBev (incorporated by reference to
        Exhibit 2.8 to Amendment No. 1 to Schedule 13D relating to
Quinsa, filed by AmBev on February 4, 2003).      

 4.1  Purchase Agreement dated as of September 11, 2003, among
          Companhia de Bebidas das Americas-AmBev and Citigroup Global
Markets Inc.                                      

     4.2  Registration Rights Agreement dated as of September 18, 2003
      among CBB and Companhia de Bebidas das Americas-AmBev as
Guarantor and Citigroup Global Markets.           

4.3  Performance Agreement between AmBev and the Conselho   
             Administrativo de Defesa Economica (CADE), dated April 19, 2000
        (incorporated by reference to Exhibit 10.8 to the Form F-4
filed by AmBev on August 29, 2000).               

        4.4  Share Exchange Agreement dated as of May 1, 2002, between AmBev
     and Quinsa (incorporated by reference to Exhibit 2.1 to
        Schedule 13D relating to Quinsa, filed by AmBev on May 13,
2002).                                            

      4.5  Stock Purchase Agreement dated as of May 1, 2002, between BAC
             and AmBev (incorporated by reference to Exhibit 2.2 to Schedule
      13D relating to Quinsa, filed by AmBev on May 13, 2002).

        4.6  Amendment No. 1 to Stock Purchase Agreement dated as of January
           31, 2003, between BAC and AmBev (incorporated by reference to
        Exhibit 2.3 to Amendment No. 1 to Schedule 13D relating to
Quinsa, filed by AmBev on February 4, 2003).      

        4.7  Letter Agreement dated January 13, 2003, between AmBev, BAC and
           Quinsa (incorporated by reference to Exhibit 2.4 to Amendment
         No. 1 to Schedule 13D relating to Quinsa, filed by AmBev on
February 4, 2003).                                

     4.8  Quinsa Shareholders' Agreement dated as of January 31, 2003,
       among Quinsa, AmBev and BAC (incorporated by reference to
        Exhibit 2.5 to Amendment No. 1 to Schedule 13D relating to
Quinsa, filed by AmBev on February 4, 2003).      

    4.9  Registration Rights Agreement dated as of January 31, 2003,
           among BAC and AmBev (incorporated by reference to Exhibit 2.6
             to Amendment No. 1 to Schedule 13D relating to Quinsa, filed by
AmBev on February 4, 2003).                       

        4.10 Share Pledge Agreement dated as of January 31, 2003, among BAC,
           AmBev and Quinsa (incorporated by reference to Exhibit 2.9 to
          Amendment No. 1 to Schedule 13D relating to Quinsa, filed by
AmBev on February 4, 2003).                       

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        4.11 Escrow Agreement dated as of January 31, 2003, among BAC, AmBev
            and The Bank of New York (incorporated by reference to Exhibit
         2.10 to Amendment No. 1 to Schedule 13D relating to Quinsa,
filed by AmBev on February 4, 2003).              

  4.12 Resolution of the Office of Competition, Deregulation and
             Consumer Advocacy of the Ministry of Production of the Republic
          of Argentina regarding the business combination of AmBev and
          Quinsa dated January 13, 2003 (English-language translation)
           (incorporated by reference to Exhibit 2.11 to Amendment No. 1
            to Schedule 13D relating to Quinsa, filed by AmBev on February
4, 2003).                                         

      4.13 License Agreement dated as of January 31, 2003, between AmBev
           and Quinsa (filed with the Securities and Exchange Commission
           with the original 2002 annual report on Form 20-F of AmBev on
June 30, 2003).                                   

     4.14 Distribution Agreement dated as of January 31, 2003, between
      AmBev and Quinsa (filed with the Securities and Exchange
             Commission with the original 2002 annual report on Form 20-F of
AmBev on June 30, 2003).                          

  8.1  List of Material Subsidiaries of Companhia de Bebidas das
Americas-AmBev.                                   

11.1 Code of Ethics (English-language version).             

      12.1 Principal Executive Officer Certification pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.            

      12.2 Principal Financial Officer Certification pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.            

      13.1 Principal Executive Officer Certification pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.            

      13.2 Principal Financial Officer Certification pursuant to Section
906 of the Sarbanes-Oxley Act of 2002             

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SIGNATURES  

Pursuant to the requirements of Section 12 of the Securities Exchange Act of    
1934, the registrant, Companhia de Bebidas das Americas-AmBev, certifies that   
it meets all of the requirements for filing on Form 20-F and that it has duly   
caused and authorized the undersigned to sign this annual report on Form 20-F   
on its behalf.                                                                  

                                 Companhia de Bebidas das Americas-AmBev

By:   
                                    ------------------------------------
                           Name: Carlos Alves de Brito
                              Title: Chief Executive Officer

By:   
                                    ------------------------------------
                                      Name: Luis Felipe Pedreira Dutra Leite
                              Title: Chief Financial Officer

Date: June 27, 2004                                                             

192   

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘20-F’ Filing		Date		First		Last			Other Filings
		7/1/19		144
		1/31/06		7		125
		7/1/05		12					20-F,  NT 20-F,  NTN 20F
		6/30/05		12					6-K,  6-K/A
		12/31/04		131		203			20-F,  20-F/A,  6-K,  NT 20-F,  NTN 20F
		9/18/04		17		123
Filed on:		6/30/04							20-F/A,  6-K
		6/29/04		157
		6/27/04		208
		6/14/04		156
		6/3/04		151					SC 13D/A
		5/31/04		2		168
		5/27/04		157					6-K,  SC 13D/A
		5/24/04		8					6-K
		5/20/04		205					6-K
		5/18/04		153		205
		5/17/04		156
		5/9/04		84
		5/7/04		152
		5/4/04		158
		4/30/04		85
		4/28/04		131
		4/8/04		158
		3/31/04		152		158			6-K
		3/30/04		157
		3/18/04		157					6-K
		3/9/04		205					6-K,  SC 13D/A
		3/3/04		7		205			6-K,  SC 13D/A
		3/2/04		10		205			6-K,  SC 13D/A
		2/13/04		156
		2/12/04		75					6-K
For Period End:		12/31/03		1		204			20-F/A,  6-K,  6-K/A
		12/29/03		47
		11/4/03		156
		10/31/03		75		99
		10/20/03		156					6-K
		9/18/03		205		206
		9/11/03		206					6-K
		8/12/03		74		97
		7/23/03		157
		6/30/03		207					20-F,  6-K
		6/16/03		151
		6/11/03		133
		6/6/03		151
		5/9/03		7
		5/7/03		156
		4/30/03		31
		4/25/03		133
		4/24/03		156					6-K
		4/17/03		153
		4/11/03		152
		4/8/03		157
		4/1/03		64					6-K
		2/19/03		74					6-K
		2/4/03		206		207			SC 13D/A
		1/31/03		7		207			6-K
		1/13/03		69		207
		12/31/02		7		203			20-F,  20-F/A,  6-K
		12/30/02		72
		12/2/02		152
		11/29/02		205					SC 13D/A
		11/19/02		159
		10/24/02		74		97
		8/30/02		73		205
		8/29/02		205					F-4
		8/28/02		123		180
		8/20/02		73					6-K
		8/12/02		156
		7/16/02		156					6-K
		5/13/02		206					SC 13D
		5/1/02		149		206
		4/30/02		6
		4/3/02		154
		3/29/02		156
		3/21/02		159
		3/1/02		10		172
		2/26/02		166
		2/22/02		155
		2/5/02		159
		1/1/02		88		184
		12/31/01		17		137			20-F,  6-K
		12/19/01		205
		12/10/01		99
		11/28/01		157
		11/7/01		159
		11/1/01		73		99
		10/31/01		166					6-K/A
		10/15/01		155
		9/30/01		25		74			6-K
		9/11/01		43
		9/10/01		5
		7/21/01		152
		7/10/01		74
		6/30/01		88					20-F,  6-K
		6/11/01		75		155
		5/29/01		103		155
		5/24/01		65
		3/31/01		4		5			6-K
		2/14/01		73		166
		12/31/00		17		89			20-F/A
		12/20/00		6
		12/13/00		6
		12/8/00		136
		11/30/00		24		157
		11/6/00		6		99
		10/31/00		75		99
		10/27/00		88
		10/23/00		21		145
		10/20/00		160		163
		10/9/00		72
		10/6/00		73
		9/15/00		23		165
		9/14/00		4
		9/4/00		179
		8/29/00		206
		6/13/00		204
		4/28/00		160
		4/19/00		5		206
		4/7/00		5
		3/23/00		24
		2/29/00		152
		1/27/00		166
		12/31/99		14		95
		9/17/99		160		165
		9/15/99		4
		9/2/99		152
		7/14/99		5
		7/1/99		4		145
		3/3/99		25
		2/1/99		25		39
		1/15/99		25
		1/1/99		197
		12/17/98		160
		9/14/98		4
		1/1/98		94
		12/31/97		94		100
		5/2/97		185
		2/14/96		143
		1/1/96		94		183
		12/31/95		183
		12/26/95		184
		6/21/94		185
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