JSC   "Latvijas balzams" reviewed its production capacities in 2001 and

arrived  at a conclusion that the existing capacities are sufficient to

retain the output of alcoholic beverages at present level, however, any

increase in volumes would be limited.

In  2002  the Company is planning to make investment towards increasing

its output capacities. Introduction of new technologies would allow the

Company  to  increase  its  competitive  ability in the existing market

segment, as well as to have export orders.

To  increase  the capacity utilisation rate and to expand its business,

JSC   "Latvijas  balzams"  is  planning to take orders and produce also

non-proprietary brands both for domestic and export markets.

In  2001 "Sojuzplodimport" became the major shareholder in the Company.

The  new  owner is a holder of a number of popular trademarks. However,

at  this  point it is still premature to speak about any specific large

contracts.  Presently,  discussions  are  in  progress  in Russia as to

property   issues   to  a  number  of  trademarks,  presently  held  by

"Sojuzplodimport".  JSC   "Latvijas balzams" is the owner of trademarks

"Stolichnaya"  and  "Moskovskaya"  at local market. In 2001 the Company

devoted a serious effort to settle the intellectual property issues.

Investment  plan,  together  with the business plan for 2002, has to be

approved by general meeting of shareholders in April.