Malt & Beverage

Demand growth still continuing

  • By 2010 global demand for malt is expected to increase by 27% to reach 19 Mt and world trade to expand by 8%.
  • Most demand growth for malting barley and malt during the next five years will be in countries with rapidly expanding beer production, eg China (18% growth), Russia and Eastern Europe (17% growth), South America (17% growth) and Africa (21% growth).
  • A few major groups dominate the brewing industry worldwide and this impacts on the drivers for malt demand.
  • Chinese consumption of barley has risen by 15% in the last four years with imports rising from 1.8Mt to 2.2Mt during that period.

Supply of Malt and Malt Barley

  • South Australia has increased malt capacity to meet forecast increases in demand.
  • Availability of more reliable malting barley varieties and more success with malting barley crops will ensure sufficient malt specification barley is produced.
  • Farmer attitudes to risk of growing malting barley varieties versus feed varieties an issue.
  • South Australia is highly dependent on supplying the malting barley market in China.

 

Challenges and Opportunities

  • The world malt market has developed a ‘commodity market’ focus, which provides little opportunity for differentiation of Australian barley and malt from other global suppliers other than on price.
  • The specialty malt market accounts for only about 2% of the total market. The point of difference is rapidly moving to services and relationships which South Australia’s malting companies have been traditionally good at.
  • Limited growth in the domestic market does not provide a good basis for building a new viable export scale malt facility.
  • The future driver of market share will be SA malt price improvements owed to reduction in supply chain costs and capacity to supply premium niche malt markets including quality assurance and traceability.
  • South Australia can increase its malt market share given the changing market dynamics for supply and global demand by understanding market changes and responding.
  • Major global malt barley supplier apart from Australia is Canada, but increased barley and malt production by Russia and the Ukraine are likely to force the European Union to market malt to global breweries currently investing in China.
  • Develop closer alliances with the major brewing groups in China for share of malt market.
  • China is increasing self-sufficiency in malting barley production, but with limited natural resources may always remain a net importer for a large malting and growing brewery industry grown under tariff protection favouring malting barley imports rather than malt.
  • Australia has opportunity to increase its share in Japan with better varieties and malt.
  • Foster increased shares in Far-East countries where beer consumption is rising eg Thailand, Vietnam, and the Philippines.
  • Future supplies of barley to meet potential demand from an ethanol plant and an expanding domestic stockfeed industry that may bid the price of feed barley above export parity prices making feed/fuel grain crops more attractive option for farmers.